To amend the Internal Revenue Code of 1986 to treat options held by certain tax-exempt organizations to acquire low-income housing in the same manner as such options held by tenants of the housing.

Amends the Internal Revenue Code to treat options held by certain tax-exempt qualified nonprofit organizations to acquire low-income housing in the same manner as options held by tenants of the housing. Limits such treatment to organizations actively engaged in fostering low-income housing for at least three years, with boards of directors made up largely of local residents.

 
HR 5668 IH
101st CONGRESS
2d Session
 H. R. 5668
To amend the Internal Revenue Code of 1986 to treat options held by certain
tax-exempt organizations to acquire low-income housing in the same manner
as such options held by tenants of the housing.
IN THE HOUSE OF REPRESENTATIVES
September 19, 1990
Mr. DONNELLY introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to treat options held by certain
tax-exempt organizations to acquire low-income housing in the same manner
as such options held by tenants of the housing.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. TREATMENT OF OPTIONS HELD BY CERTAIN TAX-EXEMPT ORGANIZATIONS TO
ACQUIRE LOW-INCOME HOUSING.
  (a) IN GENERAL- Paragraph (8) of section 42(i) of the Internal Revenue
  Code of 1986 (relating to impact of tenant's right of 1st refusal to
  acquire property) is amended by adding at the end thereof the following
  new subparagraph:
  `(C) COMPARABLE RULE FOR RIGHTS HELD BY CERTAIN TAX-EXEMPT ORGANIZATIONS-
  Subparagraph (A) shall be applied by substituting `a qualified nonprofit
  organization (as defined in subsection (h)(5)(C))' for `the tenants of
  the building' if the option may be exercised only by such an organization--
  `(i) which at the time of its exercise, has been actively engaged in
  fostering low-income housing for at least 3 years and which will  operate
  the building during the remainder of the extended use period in accordance
  with the organization's exempt purpose, and
  `(ii) which has a board of directors a majority of whom are residents of
  the area in which the building is located (and have been residents of such
  area for at least 3 years).'
  (b) CLARIFICATION OF OPTION OF TENANTS TO ACQUIRE THE BUILDING- Paragraph
  (8) of section 42(i) of such Code is amended by striking the paragraph
  heading and subparagraph (A) and inserting the following:
  `(7) IMPACT OF OPTION OF TENANTS TO ACQUIRE THE BUILDING-
  `(A) IN GENERAL- If the taxpayer offers the tenants of a qualified low-income
  building an option to purchase the property (or all the ownership interests
  in the property), no Federal tax benefit shall fail to be allowable to the
  taxpayer with respect to such building merely by reason of such option if
  the option may be exercised only--
  `(i) after the close of the compliance period,
  `(ii) for a price which is not less than the minimum purchase price
  determined under subparagraph (B), and
  `(iii) by tenants occupying the low-income units of the building.'
  (c) EFFECTIVE DATE- The amendments made by this section shall take effect
  as if included in section 7108 of the Revenue Reconciliation Act of 1989.