OTHER SIMPLIFICATION AND REFORM OF LOW-INCOME HOUSING TAX INCENTIVES.

SEC. 3004. OTHER SIMPLIFICATION AND REFORM OF LOW-INCOME HOUSING TAX INCENTIVES.(a) Repeal Prohibition on Moderate Rehabilitation Assistance.—Paragraph (2) of section 42(c) (defining qualified low-income building) is amended by striking the flush sentence at the end.(b) Modification of Time Limit for Incurring 10 Percent of Project’s Cost.—Clause (ii) of section 42(h)(1)(E) is amended by striking “(as of the later of the date which is 6 months after the date that the allocation was made or the close of the calendar year in which the allocation is made)” and inserting “(as of the date which is 1 year after the date that the allocation was made)”.(c) Repeal of Bonding Requirement on Disposition of Building.—Paragraph (6) of section 42(j) (relating to no recapture on disposition of building (or interest therein) where bond posted) is amended to read as follows:122 STAT. 2883 “(6) No recapture on disposition of building which continues in qualified use.—“(A) In general.—The increase in tax under this subsection shall not apply solely by reason of the disposition of a building (or an interest therein) if it is reasonably expected that such building will continue to be operated as a qualified low-income building for the remaining compliance period with respect to such building.“(B) Statute of limitations.—If a building (or an interest therein) is disposed of during any taxable year and there is any reduction in the qualified basis of such building which results in an increase in tax under this subsection for such taxable or any subsequent taxable year, then—“(i) the statutory period for the assessment of any deficiency with respect to such increase in tax shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may prescribe) of such reduction in qualified basis, and“(ii) such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”.(d) Energy Efficiency and Historic Nature Taken Into Account in Making Allocations.—Subparagraph (C) of section 42(m)(1) (relating to plans for allocation of credit among projects) is amended by striking “and” at the end of clause (vii), by striking the period at the end of clause (viii) and inserting a comma, and by adding at the end the following new clauses:“(ix) the energy efficiency of the project, and“(x) the historic nature of the project.”.(e) Continued Eligibility for Students Who Received Foster Care Assistance.—Clause (i) of section 42(i)(3)(D) is amended by striking “or” at the end of subclause (I), by redesignating subclause (II) as subclause (III), and by inserting after subclause (I) the following new subclause:“(II) a student who was previously under the care and placement responsibility of the State agency responsible for administering a plan under part B or part E of title IV of the Social Security Act, or”.(f) Treatment of Rural Projects.—Section 42(i) (relating to definitions and special rules) is amended by adding at the end the following new paragraph:“(8) Treatment of rural projects.—For purposes of this section, in the case of any project for residential rental property located in a rural area (as defined in section 520 of the Housing Act of 1949), any income limitation measured by reference to area median gross income shall be measured by reference to the greater of area median gross income or national non-metropolitan median income. The preceding sentence shall not apply with respect to any building if paragraph (1) of section 42(h) does not apply by reason of paragraph (4) thereof to any portion of the credit determined under this section with respect to such building.”.122 STAT. 2884(g) Clarification of General Public Use Requirement.—Subsection (g) of section 42 is amended by adding at the end the following new paragraph:“(9) Clarification of general public use requirement.—A project does not fail to meet the general public use requirement solely because of occupancy restrictions or preferences that favor tenants—“(A) with special needs,“(B) who are members of a specified group under a Federal program or State program or policy that supports housing for such a specified group, or“(C) who are involved in artistic or literary activities.”.(h) GAO Study Regarding Modifications to Low-Income Housing Tax Credit.—Not later than December 31, 2012, the Comptroller General of the United States shall submit to Congress a report which analyzes the implementation of the modifications made by this subtitle to the low-income housing tax credit under section 42 of the Internal Revenue Code of 1986. Such report shall include an analysis of the distribution of credit allocations before and after the effective date of such modifications.(i) Effective Date.—(1) In general.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to buildings placed in service after the date of the enactment of this Act.(2) Repeal of bonding requirement on disposition of building.—The amendment made by subsection (c) shall apply to—(A) interests in buildings disposed after the date of the enactment of this Act, and(B) interests in buildings disposed of on or before such date if—(i) it is reasonably expected that such building will continue to be operated as a qualified low-income building (within the meaning of section 42 of the Internal Revenue Code of 1986) for the remaining compliance period (within the meaning of such section) with respect to such building, and(ii) the taxpayer elects the application of this subparagraph with respect to such disposition.(3) Energy efficiency and historic nature taken into account in making allocations.—The amendments made by subsection (d) shall apply to allocations made after December 31, 2008.(4) Continued eligibility for students who received foster care assistance.—The amendments made by subsection (e) shall apply to determinations made after the date of the enactment of this Act.(5) Treatment of rural projects.—The amendment made by subsection (f) shall apply to determinations made after the date of the enactment of this Act.(6) Clarification of general public use requirement.—The amendment made by subsection (g) shall apply to buildings placed in service before, on, or after the date of the enactment of this Act.122 STAT. 2885