SEC. 70421. Permanent renewal and enhancement of opportunity zones.
(a) Decennial designations.—
(1) DETERMINATION PERIOD.—Section 1400Z-1(c)(2)(B) is amended by striking “beginning on the date of the enactment of the Tax Cuts and Jobs Act” and inserting “beginning on the decennial determination date”.
(2) DECENNIAL DETERMINATION DATE.—Section 1400Z-1(c)(2) is amended by adding at the end the following new subparagraph:
“(C) DECENNIAL DETERMINATION DATE.—The term ‘decennial determination date’ means—
“(i) July 1, 2026, and
“(ii) each July 1 of the year that is 10 years after the preceding decennial determination date under this subparagraph.”.
(3) REPEAL OF SPECIAL RULE FOR PUERTO RICO.—Section 1400Z-1(b) is amended by striking paragraph (3).
(4) LIMITATION ON NUMBER OF DESIGNATIONS.—Section 1400Z-1(d)(1) is amended—
(A) in paragraph (1)—
(i) by striking “and subsection (b)(3)”, and
(ii) by inserting “during any period” after “the number of population census tracts in a State that may be designated as qualified opportunity zones under this section”, and
(B) in paragraph (2), by inserting “during any period” before the period at the end.
(5) EFFECTIVE DATES.—
(A) IN GENERAL.—Except as provided in subparagraph (B), the amendments made by this subsection shall take effect on the date of the enactment of this Act.
(B) PUERTO RICO.—The amendment made by paragraph (3) shall take effect on December 31, 2026.
(b) Qualification for designations.—
(1) DETERMINATION OF LOW-INCOME COMMUNITIES.—Section 1400Z-1(c) is amended by striking all that precedes paragraph (2) and inserting the following:
“(c) Other definitions.—For purposes of this section—
“(1) LOW-INCOME COMMUNITIES.—The term ‘low-income community’ means any population census tract if—
“(A) such population census tract has a median family income that—
“(i) in the case of a population census tract not located within a metropolitan area, does not exceed 70 percent of the statewide median family income, or
“(ii) in the case of a population census tract located within a metropolitan area, does not exceed 70 percent of the metropolitan area median family income, or
“(B) such population census tract—
“(i) has a poverty rate of at least 20 percent, and
“(ii) has a median family income that—
“(I) in the case of a population census tract not located within a metropolitan area, does not exceed 125 percent of the statewide median family income, or
“(II) in the case of a population census tract located within a metropolitan area, does not exceed 125 percent of the metropolitan area median family income.”.
(2) REPEAL OF RULE FOR CONTIGUOUS CENSUS TRACTS.—Section 1400Z-1 is amended by striking subsection (e) and by redesignating subsection (f) as subsection (e).
(3) PERIOD FOR WHICH DESIGNATION IS IN EFFECT.—Section 1400Z-1(e), as redesignated by paragraph (2), is amended to read as follows:
“(e) Period for which designation is in effect.—
“(1) IN GENERAL.—A designation as a qualified opportunity zone shall remain in effect for the period beginning on the applicable start date and ending on the day before the date that is 10 years after the applicable start date.
“(2) APPLICABLE START DATE.—For purposes of this section, the term ‘applicable start date’ means, with respect to any qualified opportunity zone designated under this section, the January 1 following the date on which such qualified opportunity zone was certified and designated by the Secretary under subsection (b)(1)(B).”.
(4) EFFECTIVE DATE.—The amendments made by this subsection shall apply to areas designated under section 1400Z-1 of the Internal Revenue Code of 1986 after the date of the enactment of this Act.
(c) Application of special rules for capital gains.—
(1) REPEAL OF SUNSET ON ELECTION.—Section 1400Z-2(a)(2) is amended to read as follows:
“(2) ELECTION.—No election may be made under paragraph (1) with respect to a sale or exchange if an election previously made with respect to such sale or exchange is in effect.”.
(2) MODIFICATION OF RULES FOR DEFERRAL OF GAIN.—Section 1400Z-2(b) is amended to read as follows:
“(b) Deferral of gain invested in opportunity zone property.—
“(1) YEAR OF INCLUSION.—Gain to which subsection (a)(1)(B) applies shall be included in gross income in the taxable year which includes the earlier of—
“(A) the date on which such investment is sold or exchanged, or
“(B) the date which is 5 years after the date the investment in the qualified opportunity fund was made.
“(2) AMOUNT INCLUDIBLE.—
“(A) IN GENERAL.—The amount of gain included in gross income under subsection (a)(1)(B) shall be the excess of—
“(i) the lesser of the amount of gain excluded under subsection (a)(1)(A) or the fair market value of the investment as determined as of the date described in paragraph (1), over
“(ii) the taxpayer’s basis in the investment.
“(B) DETERMINATION OF BASIS.—
“(i) IN GENERAL.—Except as otherwise provided in this subparagraph or subsection (c), the taxpayer’s basis in the investment shall be zero.
“(ii) INCREASE FOR GAIN RECOGNIZED UNDER SUBSECTION (a)(1)(B).—The basis in the investment shall be increased by the amount of gain recognized by reason of subsection (a)(1)(B) with respect to such investment.
“(iii) INVESTMENTS HELD FOR 5 YEARS.—
“(I) IN GENERAL.—In the case of any investment held for at least 5 years, the basis of such investment shall be increased by an amount equal to 10 percent (30 percent in the case of any investment in a qualified rural opportunity fund) of the amount of gain deferred by reason of subsection (a)(1)(A).
“(II) APPLICATION OF INCREASE.—For purposes of this subsection, any increase in basis under this clause shall be treated as occurring before the date described in paragraph (1)(B).
“(C) QUALIFIED RURAL OPPORTUNITY FUND.—For purposes of subparagraph (B)(iii)—
“(i) QUALIFIED RURAL OPPORTUNITY FUND.—The term ‘qualified rural opportunity fund’ means a qualified opportunity fund that holds at least 90 percent of its assets in qualified opportunity zone property which—
“(I) is qualified opportunity zone business property substantially all of the use of which, during substantially all of the fund’s holding period for such property, was in a qualified opportunity zone comprised entirely of a rural area, or
“(II) is qualified opportunity zone stock, or a qualified opportunity zone partnership interest, in a qualified opportunity zone business in which substantially all of the tangible property owned or leased is qualified opportunity zone business property described in subsection (d)(3)(A)(i) and substantially all the use of which is in a qualified opportunity zone comprised entirely of a rural area.
For purposes of the preceding sentence, property held in the fund shall be measured under rules similar to the rules of subsection (d)(1).
“(ii) RURAL AREA.—The term ‘rural area’ means any area other than—
“(I) a city or town that has a population of greater than 50,000 inhabitants, and
“(II) any urbanized area contiguous and adjacent to a city or town described in subclause (I).”.
(3) SPECIAL RULE FOR INVESTMENTS HELD AT LEAST 10 YEARS.—Section 1400Z-2(c) is amended by striking “makes an election under this clause” and all that follows and inserting “makes an election under this subsection, the basis of such investment shall be equal to—
“(A) in the case of an investment sold before the date that is 30 years after the date of the investment, the fair market value of such investment on the date such investment is sold or exchanged, or
“(B) in any other case, the fair market value of such investment on the date that is 30 years after the date of the investment.”.
(4) DETERMINATION OF QUALIFIED OPPORTUNITY ZONE PROPERTY.—
(A) QUALIFIED OPPORTUNITY ZONE BUSINESS PROPERTY.—Section 1400Z-2(d)(2)(D)(i)(I) is amended by striking “December 31, 2017” and inserting “the applicable start date (as defined in section 1400Z-1(e)(2)) with respect to the qualified opportunity zone described in subclause (III)”.
(B) QUALIFIED OPPORTUNITY ZONE STOCK AND PARTNERSHIP INTERESTS.—Section 1400Z-2(d)(2) is amended—
(i) by striking “December 31, 2017,” each place it appears in subparagraphs (B)(i)(I) and (C)(i) and inserting “the applicable date”, and
(ii) by adding at the end the following new subparagraph:
“(E) APPLICABLE DATE.—For purposes of this subparagraph, the term ‘applicable date’ means, with respect to any corporation or partnership which is a qualified opportunity zone business, the earliest date described in subparagraph (D)(i)(I) with respect to the qualified opportunity zone business property held by such qualified opportunity zone business.”.
(C) SPECIAL RULE FOR IMPROVEMENT OF EXISTING STRUCTURES IN RURAL AREAS.—Section 1400Z–2(d)(2)(D)(ii) is amended by inserting “(50 percent of such adjusted basis in the case of property in a qualified opportunity zone comprised entirely of a rural area (as defined in subsection (b)(2)(C)(ii))” after “the adjusted basis of such property”.
(5) EFFECTIVE DATES.—
(A) IN GENERAL.—Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to amounts invested in qualified opportunity funds after December 31, 2026.
(B) ACQUISITION OF QUALIFIED OPPORTUNITY ZONE PROPERTY.—The amendments made by subparagraphs (A) and (B) of paragraph (4) shall apply to property acquired after December 31, 2026.
(C) SUBSTANTIAL IMPROVEMENT.—The amendment made by paragraph (4)(C) shall take effect on the date of the enactment of this Act.
(d) Information reporting on qualified opportunity funds and qualified rural opportunity funds.—
(1) FILING REQUIREMENTS FOR FUNDS AND INVESTORS.—Subpart A of part III of subchapter A of chapter 61 is amended by inserting after section 6039J the following new sections:
“SEC. 6039K. Returns with respect to qualified opportunity funds and qualified rural opportunity funds.
“(a) In general.—Every qualified opportunity fund shall file an annual return (at such time and in such manner as the Secretary may prescribe) containing the information described in subsection (b).
“(b) Information from qualified opportunity funds.—The information described in this subsection is—
“(1) the name, address, and taxpayer identification number of the qualified opportunity fund,
“(2) whether the qualified opportunity fund is organized as a corporation or a partnership,
“(3) the value of the total assets held by the qualified opportunity fund as of each date described in section 1400Z–2(d)(1),
“(4) the value of all qualified opportunity zone property held by the qualified opportunity fund on each such date,
“(5) with respect to each investment held by the qualified opportunity fund in qualified opportunity zone stock or a qualified opportunity zone partnership interest—
“(A) the name, address, and taxpayer identification number of the corporation in which such stock is held or the partnership in which such interest is held, as the case may be,
“(B) each North American Industry Classification System (NAICS) code that applies to the trades or businesses conducted by such corporation or partnership,
“(C) the population census tract or population census tracts in which the qualified opportunity zone business property of such corporation or partnership is located,
“(D) the amount of the investment in such stock or partnership interest as of each date described in section 1400Z–2(d)(1),
“(E) the value of tangible property held by such corporation or partnership on each such date which is owned by such corporation or partnership,
“(F) the value of tangible property held by such corporation or partnership on each such date which is leased by such corporation or partnership,
“(G) the approximate number of residential units (if any) for any real property held by such corporation or partnership, and
“(H) the approximate average monthly number of full-time equivalent employees of such corporation or partnership for the year (within numerical ranges identified by the Secretary) or such other indication of the employment impact of such corporation or partnership as determined appropriate by the Secretary,
“(6) with respect to the items of qualified opportunity zone business property held by the qualified opportunity fund—
“(A) the North American Industry Classification System (NAICS) code that applies to the trades or businesses in which such property is held,
“(B) the population census tract in which the property is located,
“(C) whether the property is owned or leased,
“(D) the aggregate value of the items of qualified opportunity zone property held by the qualified opportunity fund as of each date described in section 1400Z–2(d)(1), and
“(E) in the case of real property, the number of residential units (if any),
“(7) the approximate average monthly number of full-time equivalent employees for the year of the trades or businesses of the qualified opportunity fund in which qualified opportunity zone business property is held (within numerical ranges identified by the Secretary) or such other indication of the employment impact of such trades or businesses as determined appropriate by the Secretary,
“(8) with respect to each person who disposed of an investment in the qualified opportunity fund during the year—
“(A) the name, address, and taxpayer identification number of such person,
“(B) the date or dates on which the investment disposed was acquired, and
“(C) the date or dates on which any such investment was disposed and the amount of the investment disposed, and
“(9) such other information as the Secretary may require.
“(c) Statement required to be furnished to investors.—Every person required to make a return under subsection (a) shall furnish to each person whose name is required to be set forth in such return by reason of subsection (b)(8) (at such time and in such manner as the Secretary may prescribe) a written statement showing—
“(1) the name, address, and phone number of the information contact of the person required to make such return, and
“(2) the information required to be shown on such return by reason of subsection (b)(8) with respect to the person whose name is required to be so set forth.
“(d) Definitions.—For purposes of this section—
“(1) IN GENERAL.—Any term used in this section which is also used in subchapter Z of chapter 1 shall have the meaning given such term under such subchapter.
“(2) FULL-TIME EQUIVALENT EMPLOYEES.—The term ‘full-time equivalent employees’ means, with respect to any month, the sum of—
“(A) the number of full-time employees (as defined in section 4980H(c)(4)) for the month, plus
“(B) the number of employees determined (under rules similar to the rules of section 4980H(c)(2)(E)) by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.
“(e) Application to qualified rural opportunity funds.—Every qualified rural opportunity fund (as defined in section 1400Z–2(b)(2)(C)) shall file the annual return required under subsection (a), and the statements required under subsection (c), applied—
“(1) by substituting ‘qualified rural opportunity’ for ‘qualified opportunity’ each place it appears,
“(2) by substituting ‘section 1400Z–2(b)(2)(C)’ for ‘section 1400Z–2(d)(1)’ each place it appears, and
“(3) by treating any reference (after the application of paragraph (1)) to qualified rural opportunity zone stock, a qualified rural opportunity zone partnership interest, a qualified rural opportunity zone business, or qualified opportunity zone business property as stock, an interest, a business, or property, respectively, described in subclause (I) or (II), as the case may be, of section 1400Z–2(b)(2)(C)(i).
“SEC. 6039L. Information required from qualified opportunity zone businesses and qualified rural opportunity zone businesses.
“(a) In general.—Every applicable qualified opportunity zone business shall furnish to the qualified opportunity fund described in subsection (b) a written statement at such time, in such manner, and setting forth such information as the Secretary may by regulations prescribe for purposes of enabling such qualified opportunity fund to meet the requirements of section 6039K(b)(5).
“(b) Applicable qualified opportunity zone business.—For purposes of subsection (a), the term ‘applicable qualified opportunity zone business’ means any qualified opportunity zone business—
“(1) which is a trade or business of a qualified opportunity fund,
“(2) in which a qualified opportunity fund holds qualified opportunity zone stock, or
“(3) in which a qualified opportunity fund holds a qualified opportunity zone partnership interest.
“(c) Other terms.—Any term used in this section which is also used in subchapter Z of chapter 1 shall have the meaning given such term under such subchapter.
“(d) Application to qualified rural opportunity businesses.—Every applicable qualified rural opportunity zone business (as defined in subsection (b) determined after application of the substitutions described in this sentence) shall furnish the written statement required under subsection (a), applied—
“(1) by substituting ‘qualified rural opportunity’ for ‘qualified opportunity’ each place it appears, and
“(2) by treating any reference (after the application of paragraph (1)) to qualified rural opportunity zone stock, a qualified rural opportunity zone partnership interest, or a qualified rural opportunity zone business as stock, an interest, or a business, respectively, described in subclause (I) or (II), as the case may be, of section 1400Z–2(b)(2)(C)(i).”.
(2) PENALTIES.—
(A) IN GENERAL.—Part II of subchapter B of chapter 68 is amended by inserting after section 6725 the following new section:
“SEC. 6726. Failure to comply with information reporting requirements relating to qualified opportunity funds and qualified rural opportunity funds.
“(a) In general.—If any person required to file a return under section 6039K fails to file a complete and correct return under such section in the time and in the manner prescribed therefor, such person shall pay a penalty of $500 for each day during which such failure continues.
“(b) Limitation.—
“(1) IN GENERAL.—The maximum penalty under this section on failures with respect to any 1 return shall not exceed $10,000.
“(2) LARGE QUALIFIED OPPORTUNITY FUNDS.—In the case of any failure described in subsection (a) with respect to a fund the gross assets of which (determined on the last day of the taxable year) are in excess of $10,000,000, paragraph (1) shall be applied by substituting ‘$50,000’ for ‘$10,000’.
“(c) Penalty in cases of intentional disregard.—If a failure described in subsection (a) is due to intentional disregard, then—
“(1) subsection (a) shall be applied by substituting ‘$2,500’ for ‘$500’,
“(2) subsection (b)(1) shall be applied by substituting ‘$50,000’ for ‘$10,000’, and
“(3) subsection (b)(2) shall be applied by substituting ‘$250,000’ for ‘$50,000’.
“(d) Inflation adjustment.—
“(1) IN GENERAL.—In the case of any failure relating to a return required to be filed in a calendar year beginning after 2025, each of the dollar amounts in subsections (a), (b), and (c) shall be increased by an amount equal to—
“(A) such dollar amount, multiplied by
“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year determined by substituting ‘calendar year 2024’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
“(2) ROUNDING.—
“(A) IN GENERAL.—If the $500 dollar amount in subsection (a) and (c)(1) or the $2,500 amount in subsection (c)(1), after being increased under paragraph (1), is not a multiple of $10, such dollar amount shall be rounded to the next lowest multiple of $10.
“(B) ASSET THRESHOLD.—If the $10,000,000 dollar amount in subsection (b)(2), after being increased under paragraph (1), is not a multiple of $10,000, such dollar amount shall be rounded to the next lowest multiple of $10,000.
“(C) OTHER DOLLAR AMOUNTS.—If any dollar amount in subsection (b) or (c) (other than any amount to which subparagraph (A) or (B) applies), after being increased under paragraph (1), is not a multiple of $1,000, such dollar amount shall be rounded to the next lowest multiple of $1,000.”.
(B) INFORMATION REQUIRED TO BE SENT TO OTHER TAXPAYERS.—Section 6724(d)(2), as amended by the preceding provisions of this Act, is amended—
(i) by striking “or” at the end of subparagraph (LL),
(ii) by striking the period at the end of subparagraph (MM) and inserting a comma, and
(iii) by inserting after subparagraph (MM) the following new subparagraphs:
“(NN) section 6039K(c) (relating to disposition of qualified opportunity fund investments), or
“(OO) section 6039L (relating to information required from certain qualified opportunity zone businesses and qualified rural opportunity zone businesses).”.
(3) ELECTRONIC FILING.—Section 6011(e) is amended by adding at the end the following new paragraph:
“(8) QUALIFIED OPPORTUNITY FUNDS AND QUALIFIED RURAL OPPORTUNITY FUNDS.—Notwithstanding paragraphs (1) and (2), any return filed by a qualified opportunity fund or qualified rural opportunity fund under section 6039K shall be filed on magnetic media or other machine-readable form.”.
(4) CLERICAL AMENDMENTS.—
(A) The table of sections for subpart A of part III of subchapter A of chapter 61 is amended by inserting after the item relating to section 6039J the following new items:
“Sec. 6039K. Returns with respect to qualified opportunity funds and qualified rural opportunity funds.
“Sec. 6039L. Information required from qualified opportunity zone businesses and qualified rural opportunity zone businesses.”.
(B) The table of sections for part II of subchapter B of chapter 68 is amended by inserting after the item relating to section 6725 the following new item:
“Sec. 6726. Failure to comply with information reporting requirements relating to qualified opportunity funds and qualified rural opportunity funds.”.
(5) EFFECTIVE DATE.—The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.
(e) Secretary reporting of data on opportunity zone and rural opportunity zone tax incentives.—
(1) IN GENERAL.—In addition to amounts otherwise available, there is appropriated, out of any money in the Treasury not otherwise appropriated, $15,000,000, to remain available until September 30, 2028, for necessary expenses of the Internal Revenue Service to make the reports described in paragraph (2).
(2) REPORTS.—As soon as practical after the date of the enactment of this Act, and annually thereafter, the Secretary of the Treasury, or the Secretary’s delegate (referred to in this section as the “Secretary”) shall make publicly available a report on qualified opportunity funds.
(3) INFORMATION INCLUDED.—The report required under paragraph (2) shall include, to the extent available, the following information:
(A) The number of qualified opportunity funds.
(B) The aggregate dollar amount of assets held in qualified opportunity funds.
(C) The aggregate dollar amount of investments made by qualified opportunity funds in qualified opportunity fund property, stated separately for each North American Industry Classification System (NAICS) code.
(D) The percentage of population census tracts designated as qualified opportunity zones that have received qualified opportunity fund investments.
(E) For each population census tract designated as a qualified opportunity zone, the approximate average monthly number of full-time equivalent employees of the qualified opportunity zone businesses in such qualified opportunity zone for the preceding 12-month period (within numerical ranges identified by the Secretary) or such other indication of the employment impact of such qualified opportunity fund businesses as determined appropriate by the Secretary.
(F) The percentage of the total amount of investments made by qualified opportunity funds in—
(i) qualified opportunity zone property which is real property; and
(ii) other qualified opportunity zone property.
(G) For each population census tract, the aggregate approximate number of residential units resulting from investments made by qualified opportunity funds in real property.
(H) The aggregate dollar amount of investments made by qualified opportunity funds in each population census tract.
(4) ADDITIONAL INFORMATION.—
(A) IN GENERAL.—Beginning with the report submitted under paragraph (2) for the 6th year after the date of the enactment of this Act, the Secretary shall include in such report the impacts and outcomes of a designation of a population census tract as a qualified opportunity zone as measured by economic indicators, such as job creation, poverty reduction, new business starts, and other metrics as determined by the Secretary.
(B) SEMI-DECENNIAL INFORMATION.—
(i) IN GENERAL.—In the case of any report submitted under paragraph (2) in the 6th year or the 11th year after the date of the enactment of this Act, the Secretary shall include the following information:
(I) For population census tracts designated as a qualified opportunity zone, a comparison (based on aggregate information) of the factors listed in clause (iii) between the 5-year period ending on the date of the enactment of Public Law 115–97 and the most recent 5-year period for which data is available.
(II) For population census tracts designated as a qualified opportunity zone, a comparison (based on aggregate information) of the factors listed in clause (iii) for the most recent 5-year period for which data is available between such population census tracts and similar population census tracts that were not designated as a qualified opportunity zone.
(ii) CONTROL GROUPS.—For purposes of clause (i), the Secretary may combine population census tracts into such groups as the Secretary determines appropriate for purposes of making comparisons.
(iii) FACTORS LISTED.—The factors listed in this clause are the following:
(I) The unemployment rate.
(II) The number of persons working in the population census tract, including the percentage of such persons who were not residents in the population census tract in the preceding year.
(III) Individual, family, and household poverty rates.
(IV) Median family income of residents of the population census tract.
(V) Demographic information on residents of the population census tract, including age, income, education, race, and employment.
(VI) The average percentage of income of residents of the population census tract spent on rent annually.
(VII) The number of residences in the population census tract.
(VIII) The rate of home ownership in the population census tract.
(IX) The average value of residential property in the population census tract.
(X) The number of affordable housing units in the population census tract.
(XI) The number of new business starts in the population census tract.
(XII) The distribution of employees in the population census tract by North American Industry Classification System (NAICS) code.
(5) PROTECTION OF IDENTIFIABLE RETURN INFORMATION.—In making reports required under this subsection, the Secretary—
(A) shall establish appropriate procedures to ensure that any amounts reported do not disclose taxpayer return information that can be associated with any particular taxpayer or competitive or proprietary information, and
(B) if necessary to protect taxpayer return information, may combine information required with respect to individual population census tracts into larger geographic areas.
(6) DEFINITIONS.—Any term used in this subsection which is also used in subchapter Z of chapter 1 of the Internal Revenue Code of 1986 shall have the meaning given such term under such subchapter.
(7) REPORTS ON QUALIFIED RURAL OPPORTUNITY FUNDS.—The Secretary shall make publicly available, with respect to qualified rural opportunity funds, separate reports as required under this subsection, applied—
(A) by substituting “qualified rural opportunity” for “qualified opportunity” each place it appears,
(B) by substituting a reference to this Act for “Public Law 115–97”, and
(C) by treating any reference (after the application of subparagraph (A)) to qualified rural opportunity zone stock, qualified rural opportunity zone partnership interest, qualified rural opportunity zone business, or qualified opportunity zone business property as stock, interest, business, or property, respectively, described in subclause (I) or (II), as the case may be, of section 1400Z–2(b)(2)(C)(i) of the Internal Revenue Code of 1986.
SEC. 70422. Permanent enhancement of low-income housing tax credit.
(a) Permanent State housing credit ceiling increase for low-income housing credit.—
(1) IN GENERAL.—Section 42(h)(3)(I) is amended—
(A) by striking “2018, 2019, 2020, and 2021,” and inserting “beginning after December 31, 2025,”,
(B) by striking “1.125” and inserting “1.12”, and
(C) by striking “2018, 2019, 2020, and 2021” in the heading and inserting “calendar years after 2025”.
(2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to calendar years beginning after December 31, 2025.
(b) Tax-exempt bond financing requirement.—
(1) IN GENERAL.—Section 42(h)(4) is amended by striking subparagraph (B) and inserting the following:
“(B) SPECIAL RULE WHERE MINIMUM PERCENT OF BUILDINGS IS FINANCED WITH TAX-EXEMPT BONDS SUBJECT TO VOLUME CAP.—For purposes of subparagraph (A), paragraph (1) shall not apply to any portion of the credit allowable under subsection (a) with respect to a building if—
“(i) 50 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more obligations described in subparagraph (A), or
“(ii) (I) 25 percent or more of the aggregate basis of such building and the land on which the building is located is financed by 1 or more obligations described in subparagraph (A), and
“(II) 1 or more of such obligations—
“(aa) are part of an issue the issue date of which is after December 31, 2025, and
“(bb) provide the financing for not less than 5 percent of the aggregate basis of such building and the land on which the building is located.”.
(2) EFFECTIVE DATE.—
(A) IN GENERAL.—The amendment made by this subsection shall apply to buildings placed in service in taxable years beginning after December 31, 2025.
(B) REHABILITATION EXPENDITURES TREATED AS SEPARATE NEW BUILDING.—In the case of any building with respect to which any expenditures are treated as a separate new building under section 42(e) of the Internal Revenue Code of 1986, for purposes of subparagraph (A), both the existing building and the separate new building shall be treated as having been placed in service on the date such expenditures are treated as placed in service under section 42(e)(4) of such Code.
SEC. 70423. Permanent extension of new markets tax credit.
(a) In general.—Section 45D(f)(1)(H) is amended by striking “for for each of calendar years 2020 through 2025” and inserting “ for each calendar year after 2019”.
(b) Carryover of unused limitation.—Section 45D(f)(3) is amended—
(1) by striking “If the” and inserting the following:
“(A) IN GENERAL.—If the”, and
(2) by striking the second sentence and inserting the following:
“(B) LIMITATION.—No amount may be carried under subparagraph (A) to any calendar year afer the fifth calendar year after the calendar year in which the excess described in such subparagraph occurred. For purposes of this subparagraph, any excess described in subparagraph (A) with respect to any calendar year before 2026 shall be treated as occurring in calendar year 2025.”.
(c) Effective date.—The amendments made by this section shall apply to calendar years beginning after December 31, 2025.
SEC. 70424. Permanent and expanded reinstatement of partial deduction for charitable contributions of individuals who do not elect to itemize.
(a) In general.—Section 170(p) is amended—
(1) by striking “$300 ($600” and inserting “$1,000 ($2,000”, and
(2) by striking “beginning in 2021”.
(b) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70425. 0.5 percent floor on deduction of contributions made by individuals.
(a) In general.—
(1) IN GENERAL.—Paragraph (1) of section 170(b) is amended by adding at the end the following new subparagraph:
“(I) 0.5-PERCENT FLOOR.—Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section shall be allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base for the taxable year. The preceding sentence shall be applied—
“(i) first, by taking into account charitable contributions to which subparagraph (D) applies to the extent thereof,
“(ii) second, by taking into account charitable contributions to which subparagraph (C) applies to the extent thereof,
“(iii) third, by taking into account charitable contributions to which subparagraph (B) applies to the extent thereof,
“(iv) fourth, by taking into account charitable contributions to which subparagraph (E) applies to the extent thereof,
“(v) fifth, by taking into account charitable contributions to which subparagraph (A) applies to the extent thereof, and
“(vi) sixth, by taking into account charitable contributions to which subparagraph (G) applies to the extent thereof.”.
(2) APPLICATION OF CARRYFORWARD.—Paragraph (1) of section 170(d) is amended by adding at the end the following new subparagraph:
“(C) CONTRIBUTIONS DISALLOWED BY 0.5-PERCENT FLOOR CARRIED FORWARD ONLY FROM YEARS IN WHICH LIMITATION IS EXCEEDED.—
“(i) IN GENERAL.—In the case of any taxable year from which an excess is carried forward (determined without regard to this subparagraph) under any carryover rule, the applicable carryover rule shall be applied by increasing the excess determined under such applicable carryover rule for the contribution year (before the application of subparagraph (B)) by the amount attributable to the charitable contributions to which such rule applies which is not allowed as a deduction for the contribution year by reason of subsection (b)(1)(I).
“(ii) CARRYOVER RULE.—For purposes of this subparagraph, the term ‘carryover rule’ means—
“(I) subparagraph (A) of this paragraph,
“(II) subparagraphs (C)(ii), (D)(ii), (E)(ii), and (G)(ii) of subsection (b)(1), and
“(III) the second sentence of subsection (b)(1)(B).
“(iii) APPLICABLE CARRYOVER RULE.—For purposes of this subparagraph, the term ‘applicable carryover rule’ means any carryover rule applicable to charitable contributions which were (in whole or in part) not allowed as a deduction for the contribution year by reason of subsection (b)(1)(I).”.
(3) COORDINATION WITH DEDUCTION FOR NONITEMIZERS.—Section 170(p), as amended by this Act, is further amended by inserting “, (b)(1)(I),” after “subsections (b)(1)(G)(ii)”.
(b) Modification of limitation for cash contributions.—
(1) IN GENERAL.—Clause (i) of section 170(b)(1)(G) is amended to read as follows:
“(i) IN GENERAL.—For taxable years beginning after December 31, 2017, any contribution of cash to an organization described in subparagraph (A) shall be allowed as a deduction under subsection (a) to the extent that the aggregate of such contributions does not exceed the excess of—
“(I) 60 percent of the taxpayer’s contribution base for the taxable year, over
“(II) the aggregate amount of contributions taken into account under subparagraph (A) for such taxable year.”.
(2) COORDINATION WITH OTHER LIMITATIONS.—
(A) IN GENERAL.—Clause (iii) of section 170(b)(1)(G) is amended—
(i) by striking “subparagraphs (A) and (B)” in the heading and inserting “subparagraph (A)”, and
(ii) in subclause (II), by striking “, and subparagraph (B)” and all that follows through “this subparagraph”.
(B) OTHER CONTRIBUTIONS.—Subparagraph (B) of section 170(b)(1) is amended—
(i) by striking “to which subparagraph (A)” both places it appears and inserting “to which subparagraph (A) or (G)”, and
(ii) in clause (ii), by striking “over the amount” and all that follows through “subparagraph (C)).” and inserting “over—
“(I) the amount of charitable contributions allowable under subparagraph (A) (determined without regard to subparagraph (C)) and subparagraph (G), reduced by
“(II) so much of the contributions taken into account under subparagraph (G) as does not exceed 10 percent of the taxpayer’s contribution base.”.
(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70426. 1-percent floor on deduction of charitable contributions made by corporations.
(a) In general.—Section 170(b)(2)(A) is amended to read as follows:
“(A) IN GENERAL.—Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section for any taxable year, other than any contribution to which subparagraph (B) or (C) applies, shall be allowed only to the extent that the aggregate of such contributions—
“(i) exceeds 1 percent of the taxpayer’s taxable income for the taxable year, and
“(ii) does not exceed 10 percent of the taxpayer’s taxable income for the taxable year.”.
(b) Application of carryforward.—Section 170(d)(2) is amended to read as follows:
“(2) CORPORATIONS.—
“(A) IN GENERAL.—Any charitable contribution taken into account under subsection (b)(2)(A) for any taxable year which is not allowed as a deduction by reason of clause (ii) thereof shall be taken into account as a charitable contribution for the succeeding taxable year, except that, for purposes of determining under this subparagraph whether such contribution is allowed in such succeeding taxable year, contributions in such succeeding taxable year (determined without regard to this paragraph) shall be taken into account under subsection (b)(2)(A) before any contribution taken into account by reason of this paragraph.
“(B) 5-YEAR CARRYFORWARD.—No charitable contribution may be carried forward under subparagraph (A) to any taxable year following the fifth taxable year after the taxable year in which the charitable contribution was first taken into account. For purposes of the preceding sentence, contributions shall be treated as allowed on a first-in first-out basis.
“(C) CONTRIBUTIONS DISALLOWED BY 1-PERCENT FLOOR CARRIED FORWARD ONLY FROM YEARS IN WHICH 10 PERCENT LIMITATION IS EXCEEDED.—In the case of any taxable year from which a charitable contribution is carried forward under subparagraph (A) (determined without regard this subparagraph), subparagraph (A) shall be applied by substituting ‘clause (i) or (ii)’ for ‘clause (ii)’.
“(D) SPECIAL RULE FOR NET OPERATING LOSS CARRYOVERS.—The amount of charitable contributions carried forward under subparagraph (A) shall be reduced to the extent that such carryfoward would (but for this subparagraph) reduce taxable income (as computed for purposes of the second sentence of section 172(b)(2)) and increase a net operating loss carryover under section 172 to a succeeding taxable year.”.
(c) Conforming amendments.—Subparagraphs (B)(ii) and (C)(ii) of section 170(b)(2) are each amended by inserting “other than subparagraph (C) thereof” after “subsection (d)(2)”.
(d) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70427. Permanent increase in limitation on cover over of tax on distilled spirits.
(a) In general.—Paragraph (1) of section 7652(f) is amended to read as follows:
“(1) $13.25, or”.
(b) Effective date.—The amendment made by this section shall apply to distilled spirits brought into the United States after December 31, 2025.
SEC. 70428. Nonprofit community development activities in remote native villages.
(a) In general.—For purposes of subchapter F of chapter 1 of the Internal Revenue Code of 1986, any activity substantially related to participation or investment in fisheries in the Bering Sea and Aleutian Islands statistical and reporting areas (as described in Figure 1 of section 679 of title 50, Code of Federal Regulations) carried on by an entity identified in section 305(i)(1)(D) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1855(i)(1)(D)) (as in effect on the date of enactment of this section) shall be considered substantially related to the exercise or performance of the purpose constituting the basis of such entity’s exemption under section 501(a) of such Code if the conduct of such activity is in furtherance of 1 or more of the purposes specified in section 305(i)(1)(A) of such Act (as so in effect). For purposes of this paragraph, activities substantially related to participation or investment in fisheries include the harvesting, processing, transportation, sales, and marketing of fish and fish products of the Bering Sea and Aleutian Islands statistical and reporting areas.
(b) Application to certain wholly owned subsidiaries.—If the assets of a trade or business relating to an activity described in subsection (a) of any subsidiary wholly owned by an entity identified in section 305(i)(1)(D) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1855(i)(1)(D)) (as in effect on the date of enactment of this section) are transferred to such entity (including in liquidation of such subsidiary) not later than 18 months after the date of the enactment of this Act—
(1) no gain or income resulting from such transfer shall be recognized to either such subsidiary or such entity under such Code, and
(2) all income derived from such subsidiary from such transferred trade or business shall be exempt from taxation under such Code.
(c) Effective date.—This section shall take effect on the date of the enactment of this Act and shall remain effective during the existence of the western Alaska community development quota program established by Section 305(i)(1) of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1855(i)(1)), as amended.
SEC. 70429. Adjustment of charitable deduction for certain expenses incurred in support of Native Alaskan subsistence whaling.
(a) In general.—Section 170(n)(1) of the Internal Revenue Code of 1986 is amended by striking “$10,000” and inserting “$50,000”.
(b) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
SEC. 70430. Exception to percentage of completion method of accounting for certain residential construction contracts.
(a) In general.—Section 460(e) is amended—
(1) in paragraph (1)—
(A) by striking “home construction contract” both places it appears and inserting “residential construction contract”, and
(B) by inserting “(determined by substituting ‘3-year’ for ‘2-year’ in subparagraph (B)(i) for any residential construction contract which is not a home construction contract)” after “the requirements of clauses (i) and (ii) of subparagraph (B)”,
(2) by striking paragraph (4) and redesignating paragraph (5) as paragraph (4), and
(3) in subparagraph (A) of paragraph (4), as so redesignated, by striking “paragraph (4)” and inserting “paragraph (3)”.
(b) Application of exception for purposes of alternative minimum tax.—Section 56(a)(3) is amended by striking “any home construction contract (as defined in section 460(e)(6))” and inserting “any residential construction contract (as defined in section 460(e)(4))”.
(c) Effective date.—The amendments made by this section shall apply to contracts entered into in taxable years beginning after the date of the enactment of this Act.