(1)

in paragraph (1), by striking For purposes and inserting Except as provided in paragraph (3), for purposes, and

(2)

by adding at the end the following new paragraphs:

(3) Applicable rural projects

(A) In general

In the case of any applicable rural project—

(i)

paragraph (1) shall not apply for any qualified rehabilitation expenditures with respect to such project, and

(ii)

for the taxable year in which such project is placed in service, the rehabilitation credit for such taxable year is an amount equal to—

(I)

in the case of a project which is an affordable housing project, 40 percent of the qualified rehabilitation expenditures with respect to such project, or

(II)

in the case of a project which is not an affordable housing project, 30 percent of the qualified rehabilitation expenditures with respect to such project.

(B) Applicable rural project

(i) In general

For purposes of this section, the term applicable rural project means a qualified rehabilitated building which is located in a rural area.

(ii) Limitation

In the case of any applicable rural project, the total amount of qualified rehabilitation expenditures which may be taken into account under this section with respect to such project may not exceed $5,000,000.

(iii) Rural area

For purposes of this paragraph, the term rural area means any area other than—

(I)

a city or town that has a population of greater than 50,000 inhabitants, or

(II)

the urbanized area contiguous and adjacent to a city or town described in subclause (I), as defined by the Bureau of the Census based on the latest decennial census of the United States.

(C) Affordable housing project

(i) In general

For purposes of this paragraph, the term affordable housing project means a project—

(I)

in which—

(aa)

not less than 50 percent of the aggregate square feet of the completed project is housing, and

(bb)

with respect to the housing described in item (aa), not less than 50 percent of the aggregate square feet of such housing—

(AA)

is new affordable housing, or

(BB)

continues to provide affordable housing, or

(II)

in which not less than 33 percent of the aggregate square feet of the completed project—

(aa)

is new affordable housing, or

(bb)

continues to provide affordable housing.

(ii) Affordable housing

For purposes of this paragraph, the term affordable housing means a decent, safe, and sanitary dwelling, apartment, or other living accommodation for a household whose income does not exceed 80 percent of the median income for the market area (as defined by the Secretary of Housing and Urban Development under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f)).

(4) Transfer of credit for applicable rural projects

(A) In general

Subject to subparagraph (B) and such regulations or other guidance as the Secretary may provide, the taxpayer may transfer all or a portion of the credit determined under paragraph (3) for an applicable rural project.

(B) Certification

(i) In general

A transfer under subparagraph (A) shall be accompanied by a certificate which includes—

(I)

the certification for the certified historic structure referred to in subsection (c)(3),

(II)

the taxpayer’s name, address, tax identification number, date of project completion, and the amount of credit being transferred,

(III)

the transferee’s name, address, tax identification number, and the amount of credit being transferred, and

(IV)

such other information as may be required by the Secretary.

(ii) Transferability of certificate

A certificate issued under this section to a taxpayer shall be transferable to any other taxpayer.

(C) Tax treatment relating to certificate

(i) Disallowance of deduction

No deduction shall be allowed for the amount of consideration paid or incurred by the transferee.

(ii) Allowance of credit

The amount of credit transferred under subparagraph (A)—

(I)

shall not be allowed to the transferor for any taxable year, and

(II)

shall be allowable to the transferee as a credit determined under this section for the taxable year of the transferee in which such credit is transferred.

(iii) Exclusion

Gross income shall not include any amount received in connection with the transfer of the certificate.

(D) Recapture and other special rules

The taxpayer who claims a credit determined under this section by reason of a transfer of an amount of credit under subparagraph (A) with respect to an applicable rural project shall be treated as the taxpayer with respect to such project for purposes of section 50.

(E) Information reporting

The transferor and the transferee shall each make such reports regarding the transfer of an amount of credit under paragraph (A) and containing such information as the Secretary may require. The reports required by this subsection shall be filed at such time and in such manner as may be required by the Secretary.

(F) Regulations

The Secretary shall prescribe regulations or other guidance to carry out this paragraph in a manner which is consistent with applicable requirements with respect to transfer of credits under section 6418.

(1) In general

Section 50(a) of the Internal Revenue Code of 1986 is amended—

(2) Conforming amendments