Amended in Senate August 5, 2014

Amended in Senate July 2, 2014

Amended in Assembly May 15, 2014

Amended in Assembly April 30, 2014

Amended in Assembly April 1, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1999

Introduced by Assembly Member Atkins

February 20, 2014

An act begin insert to amend Section 23036 of, and end insert to add and repeal Sections begin delete 38.9, 17053.86, and 23686 end delete begin insert 38.10, 17053.91, and 23686.1 end insert of begin insert , end insert the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1999, as amended, Atkins. Personal income and corporation taxes: credits: rehabilitation.

The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws.

This bill would allow a credit against those taxes for each taxable year beginning on or after January 1, 2015, and before January 1, 2023, in an amount, determined begin delete pursuant to end delete begin insert in modified conformity with end insert a specified section of the Internal Revenue Code, begin delete that is paid or incurred during the taxable year end delete for rehabilitation of certified historic structures. This bill would provide for a 20% credit, or 25% credit begin insert , of qualified rehabilitation expenditures end insert if the structure meets specified criteria, for rehabilitation of a certified historic structure within the state to be allocated by the Governor’s Office of Business and Economic Development begin delete in an end delete begin insert , which shall consult with the Office of Historic Preservation, as provided. The end insert aggregate amount of begin insert credit would be end insert $80,000,000 per calendar year, as specified. This bill would require the Legislative Analyst to, on an annual basis, collaborate with the Governor’s Office of Business and Economic Development to review the tax credit, as provided.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

(a) The Legislature finds and declares that
California’s historic buildings are an important asset to
communities throughout the state, and that the preservation and
restoration of these buildings is important to enhancing civic pride,
increasing tourism, and maintaining vibrant neighborhoods.

(b) The Legislature further finds and declares all of the
following:

(1) The federal Historic Preservation Tax Incentives program,
currently available to California’s income producing historic
properties, has generated nearly $1.5 billion in investment during
the last 10 years.

(2) While 35 states have similar state tax credits or incentives
for historic preservation, no such incentive exists in California.

(3) States that have partnered a state incentive with the federal
Historic Preservation Tax Incentive have reaped significant
economic development benefits, including construction and
building industry job creation, increased state tax revenues through
increased employment and wages, increased local property tax
revenues through increased property values, and increased local
tax revenues through sales taxes and heritage tourism.

(4) Over the last 10 years, California has had 129 projects
qualify for the federal Historic Preservation Tax Incentives
program. These projects have been located in 20 different counties.

(5) As California communities continue to adjust and adapt to
the dissolution of redevelopment agencies, proven tools are still
needed to incentivize economic development and revitalize
economically distressed areas.

SEC. 2.  

Section begin delete 38.9 end delete begin insert 38.10 end insert is added to the Revenue and
Taxation Code, to read:

begin delete 38.9. end delete
begin insert 38.10. end insert   

(a) The Legislative Analyst shall, on an annual basis
beginning January 1, 2016, collaborate with the Governor’s Office
of Business and Economic Development to review the effectiveness
of the tax credits allowed by Sections 17053.86 and 23686. The
review shall include, but is not limited to, an analysis of the demand
for the tax credit, the types and uses of projects receiving the tax
credit, the jobs created by the use of the tax credits, and the
economic impact of the tax credits.

(b) This section shall remain in effect only until January 1, 2024,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2024, deletes or extends that date.

SEC. 3.  

Section begin delete 17053.86 end delete begin insert 17053.91 end insert is added to the Revenue
and Taxation Code, to read:

begin delete 17053.86. end delete
begin insert 17053.91. end insert   

For each taxable year beginning on or after January
1, 2015, and before January 1, 2023, there shall be allowed as a
credit against the “net tax,” as defined in Section 17039, an amount
determined in accordance with Section 47 of the Internal Revenue
Code, except as follows:

(a) (1) In lieu of the percentages specified in Section 47(a) of
the Internal Revenue Code, except as provided in paragraph (2),
the applicable percentage shall be 20 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure.

(2) The applicable percentage shall be 25 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure if that certified historic structure meets one of the
following criteria:

(A) The rehabilitated structure is located on federal surplus
property, if obtained by a local agency under Section 54142 of the
Government Code, on surplus state real property, as defined by
Section 11011.1 of the Government Code, or on surplus land, as
defined by subdivision (b) of Section 54221 of the Government
Code.

(B) The rehabilitated structure includes affordable housing for
lower-income households, as defined by Section 50079.5 of the
Health and Safety Code.

(C) The structure is located in a designated census tract, as
defined in paragraph (7) of subdivision (b) of Section 17053.73.

(D) The structure is a part of a military base reuse authority
established pursuant to Title 7.86 (commencing with Section
67800) of the Government Code.

(E) The structure is a transit-oriented development that is a
higher-density, mixed-use development within a walking distance
of one-half mile of a transit station.

begin insert

(3) The credit shall be allowed for qualified rehabilitation
expenditures for an owner-occupied residence determined by the
Governor’s Office of Business and Economic Development and
the Office of Historic Preservation to have a public benefit in the
year of completion in the amounts specified in paragraphs (1) and
(2), as applicable, for those amounts that are equal to or more
than five thousand dollars ($5,000) but do not exceed twenty-five
thousand dollars ($25,000).

end insert

(b) For purposes of this section, begin delete a certified end delete begin insert the following
definitions shall apply: end insert

begin insert (1) end insert begin insert   end insert begin insert “Certified end insert historic begin delete structure end delete begin insert structure” has the same meaning
as defined in Section 47(c)(3), of the Internal Revenue Code, and
additionally end insert means a structure in this state that begin delete appears on either
the National Register of Historic Places or end delete begin insert is listed below end insert the
California Register of Historical Resources.

begin insert

(2) “Owner-occupied residence” means a building that will be
owned and occupied by an individual tax payer, who has a
household income of two hundred thousand dollars ($200,000) or
less, as the taxpayer’s principal residence.

end insert begin insert

(3) (A) “Qualified rehabilitation expenditure” has the same
meaning as that term is defined in Section 47(c) of the Internal
Revenue Code, except that qualified rehabilitation expenditures
may include expenditures in connection with the rehabilitation of
a building without regard to whether any portion of the building
is or is reasonably expected to be tax exempt use property.

end insert begin insert

(B) “Qualified rehabilitation expenditure” also means
rehabilitation expenditures incurred by the taxpayer with respect
to an owner-occupied principal residence for the rehabilitation of
the exterior of the building or rehabilitation necessary for the
functioning of the home, including, but not limited to, rehabilitation
of the electrical, plumbing, or foundation of the principal residence.

end insert

(c) A deduction shall not be allowed under this part for any
expense for which a credit is allowed by this section.

(d) If a credit is allowed under this section with respect to any
property, the basis of that property shall be reduced by the amount
of the credit allowed.

(e) In the case where the credit allowed by this section exceeds
the “net tax,” the excess may be carried over to reduce the “net
tax” in the following year, and the seven succeeding years if
necessary, until the credit is exhausted.

(f) For purposes of this section, the Governor’s Office of
Business and Economic Development shall do the following:

(1)  begin delete (A) end delete begin delete   end delete On and after January 1, 2015, and before January 1,
2023, allocate tax credits to applicants.

begin delete

(B) (i) The credit shall be allocated to the partners of a
partnership owning the project in accordance with the partnership
agreement, regardless of how the federal historic rehabilitation tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the
agreement has substantial economic effect, within the meaning of
Section 704(b) of the Internal Revenue Code.

end delete begin delete

(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made prior
to the expiration of the federal credit shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until, and treated as if, it occurred in the first
taxable year immediately following the taxable year in which the
federal credit period expires for the project described in clause (i).

end delete

(2) Establish a procedure for applicants to file with the
Governor’s Office of Business and Economic Development a
written application, on a form jointly prescribed by that office and
the Office of Historic Preservation for the allocation of the tax
credit.

(3)  Establish criteria consistent with the requirements of this
section, for allocating tax credits. Criteria shall include, but are
not limited to, the following:

(A) The number of jobs created by the rehabilitation project,
both during and after the rehabilitation of the structure.

(B) The expected increase in state and local tax revenues derived
from the rehabilitation project, including those from increased
wages and property taxes.

(C) Any additional incentives or contributions included in the
rehabilitation project from federal, state, or local governments.

begin insert

(D) For the qualified rehabilitation expenditures with respect
to an owner-occupied principal residence, the rehabilitation has
a public benefit, as determined jointly with the Office of Historic
Preservation.

end insert

(4) Determine and designate, in consultation with the Office of
Historic Preservation, applicants that meet the requirements of this
section to ensure that the rehabilitation project upholds historical
values in terms of architectural and aesthetic standards.

(5)  Process and approve, or reject, all applications.

(6) Subject to the annual cap established as provided in
subdivision (g), allocate an aggregate amount of credits under this
section and Section begin delete 23686, end delete begin insert 23686.1, end insert and allocate any carryover
of unallocated credits from prior years.

(7) Certify tax credits allocated to taxpayers.

(8) Provide the Franchise Tax Board an annual list of the
taxpayers that were allocated a credit pursuant to this section and
Section 23686, including each taxpayer’s taxpayer identification
number, and the amount allocated to each taxpayer.

(g) The aggregate amount of credits that may be allocated in
any calendar year pursuant to this section and Section 23686 shall
be an amount equal to the sum of all of the following:

(1) Eighty million dollars ($80,000,000) in tax credits for the
2015 calendar year and each calendar year thereafter, through and
including the 2022 calendar year.

(2) The unused allocation tax credit amount, if any, for the
preceding calendar year.

begin insert

(h) In the case of any application for tax credits by an entity
treated as a partnership or “S” corporation for income tax
purposes:

end insert begin insert

(1) (A) Credits awarded to a partnership shall be allocated to
the partners of that partnership in accordance with the partnership
agreement, regardless of how the federal historic rehabilitation
tax credit with respect to the project is allocated to the partners,
or whether the allocation of the credit under the terms of the
partnership agreement has substantial economic effect, within the
meaning of Section 704(b) of the Internal Revenue Code.

end insert begin insert

(B) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made
prior to the expiration of the tax credit recapture period for the
project described in subparagraph (A) shall not be allowed in the
taxable year in which the sale or other disposition occurs, but
shall instead be deferred until, and treated as if, it occurred in the
first taxable year immediately following the taxable year in which
the tax credit recapture period expires for the project described
in subparagraph (A). The credits awarded to a partnership shall
be allocated to the partners of that partnership in accordance with
the partnership agreement.

end insert begin insert

(2) Credits awarded to an “S” corporation shall be allocated
among the shareholders of that “S” corporation pro rata in
accordance with their respective pro rata shares, determined in
accordance with Subchapter S of Chapter 1 of the Internal Revenue
Code and the regulations promulgated thereunder.

end insert begin insert

(i) Section 183 of the Internal Revenue Code shall not apply
with respect to the credit allowed by this section.

end insert begin insert

(j) For purposes of this section, the provisions of subsection (a)
of Section 50 of the Internal Revenue Code shall apply.

end insert begin insert

(k) The Governor’s Office of Business and Economic
Development may adopt a reasonable fee in an amount sufficient
to cover the expenses incurred by the Governor’s Office of Business
and Economic Development and the Office of Historic Preservation
in fulfilling the responsibilities described in paragraphs (4) and
(5) of subdivision (f) and paragraphs (4) and (5) of subdivision (f)
of Section 23686.

end insert begin delete

(h)

end delete

begin insert (l) end insert  This section shall remain in effect only until December 1,
2023, and as of that date is repealed.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 23036 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

23036.  

(a) (1) The term “tax” includes any of the following:

(A) The tax imposed under Chapter 2 (commencing with Section
23101).

(B) The tax imposed under Chapter 3 (commencing with Section
23501).

(C) The tax on unrelated business taxable income, imposed
under Section 23731.

(D) The tax on begin delete S end delete begin insert end insert begin insert “ end insert begin insert S” end insert corporations imposed under Section
23802.

(2) The term “tax” does not include any amount imposed under
paragraph (1) of subdivision (e) of Section 24667 or paragraph (2)
of subdivision (f) of Section 24667.

(b) For purposes of Article 5 (commencing with Section 18661)
of Chapter 2, Article 3 (commencing with Section 19031) of
Chapter 4, Article 6 (commencing with Section 19101) of Chapter
4, and Chapter 7 (commencing with Section 19501) of Part 10.2,
and for purposes of Sections 18601, 19001, and 19005, the term
“tax” also includes all of the following:

(1) The tax on limited partnerships, imposed under Section
17935, the tax on limited liability companies, imposed under
Section 17941, and the tax on registered limited liability
partnerships and foreign limited liability partnerships imposed
under Section 17948.

(2) The alternative minimum tax imposed under Chapter 2.5
(commencing with Section 23400).

(3) The tax on built-in gains of begin delete S end delete begin insert “S” end insert corporations, imposed
under Section 23809.

(4) The tax on excess passive investment income of begin delete S end delete begin insert “S” end insert
corporations, imposed under Section 23811.

(c) Notwithstanding any other provision of this part, credits are
allowed against the “tax” in the following order:

(1) Credits that do not contain carryover provisions.

(2) Credits that, when the credit exceeds the “tax,” allow the
excess to be carried over to offset the “tax” in succeeding taxable
years, except for those credits that are allowed to reduce the “tax”
below the tentative minimum tax, as defined by Section 23455.
The order of credits within this paragraph shall be determined by
the Franchise Tax Board.

(3) The minimum tax credit allowed by Section 23453.

(4) Credits that are allowed to reduce the “tax” below the
tentative minimum tax, as defined by Section 23455.

(5) Credits for taxes withheld under Section 18662.

(d) Notwithstanding any other provision of this part, each of
the following applies:

(1) A credit may not reduce the “tax” below the tentative
minimum tax (as defined by paragraph (1) of subdivision (a) of
Section 23455), except the following credits:

(A) The credit allowed by former Section 23601 (relating to
solar energy).

(B) The credit allowed by former Section 23601.4 (relating to
solar energy).

(C) The credit allowed by former Section 23601.5 (relating to
solar energy).

(D) The credit allowed by Section 23609 (relating to research
expenditures).

(E) The credit allowed by former Section 23609.5 (relating to
clinical testing expenses).

(F) The credit allowed by Section 23610.5 (relating to
low-income housing).

(G) The credit allowed by former Section 23612 (relating to
sales and use tax credit).

(H) The credit allowed by Section 23612.2 (relating to enterprise
zone sales or use tax credit).

(I) The credit allowed by former Section 23612.6 (relating to
Los Angeles Revitalization Zone sales tax credit).

(J) The credit allowed by former Section 23622 (relating to
enterprise zone hiring credit).

(K) The credit allowed by Section 23622.7 (relating to enterprise
zone hiring credit).

(L) The credit allowed by former Section 23623 (relating to
program area hiring credit).

(M) The credit allowed by former Section 23623.5 (relating to
Los Angeles Revitalization Zone hiring credit).

(N) The credit allowed by former Section 23625 (relating to
Los Angeles Revitalization Zone hiring credit).

(O) The credit allowed by Section 23633 (relating to targeted
tax area sales or use tax credit).

(P) The credit allowed by Section 23634 (relating to targeted
tax area hiring credit).

(Q) The credit allowed by former Section 23649 (relating to
qualified property).

(R) For taxable years beginning on or after January 1, 2011, the
credit allowed by Section 23685 (relating to qualified motion
pictures).

begin insert

(S) The credit allowed by Section 23686.1 (relating to credits
for rehabilitation of certified historic structures).

end insert

(2) A credit against the tax may not reduce the minimum
franchise tax imposed under Chapter 2 (commencing with Section
23101).

(e) Any credit which is partially or totally denied under
subdivision (d) is allowed to be carried over to reduce the “tax”
in the following year, and succeeding years if necessary, if the
provisions relating to that credit include a provision to allow a
carryover of the unused portion of that credit.

(f) Unless otherwise provided, any remaining carryover from a
credit that has been repealed or made inoperative is allowed to be
carried over under the provisions of that section as it read
immediately prior to being repealed or becoming inoperative.

(g) Unless otherwise provided, if two or more taxpayers share
in costs that would be eligible for a tax credit allowed under this
part, each taxpayer is eligible to receive the tax credit in proportion
to his or her respective share of the costs paid or incurred.

(h) Unless otherwise provided, in the case of an begin delete S end delete begin insert “S” end insert
corporation, any credit allowed by this part is computed at the begin delete S end delete
begin insert “S” end insert corporation level, and any limitation on the expenses
qualifying for the credit or limitation upon the amount of the credit
applies to the begin delete S end delete begin insert “S” end insert corporation and to each shareholder.

(i) (1) With respect to any taxpayer that directly or indirectly
owns an interest in a business entity that is disregarded for tax
purposes pursuant to Section 23038 and any regulations thereunder,
the amount of any credit or credit carryforward allowable for any
taxable year attributable to the disregarded business entity is limited
in accordance with paragraphs (2) and (3).

(2) The amount of any credit otherwise allowed under this part,
including any credit carryover from prior years, that may be applied
to reduce the taxpayer’s “tax,” as defined in subdivision (a), for
the taxable year is limited to an amount equal to the excess of the
taxpayer’s regular tax (as defined in Section 23455), determined
by including income attributable to the disregarded business entity
that generated the credit or credit carryover, over the taxpayer’s
regular tax (as defined in Section 23455), determined by excluding
the income attributable to that disregarded business entity. A credit
is not allowed if the taxpayer’s regular tax (as defined in Section
23455), determined by including the income attributable to the
disregarded business entity is less than the taxpayer’s regular tax
(as defined in Section 23455), determined by excluding the income
attributable to the disregarded business entity.

(3) If the amount of a credit allowed pursuant to the section
establishing the credit exceeds the amount allowable under this
subdivision in any taxable year, the excess amount may be carried
over to subsequent taxable years pursuant to subdivisions (d), (e),
and (f).

(j) (1) Unless otherwise specifically provided, in the case of a
taxpayer that is a partner or shareholder of an eligible pass-thru
entity described in paragraph (2), any credit passed through to the
taxpayer in the taxpayer’s first taxable year beginning on or after
the date the credit is no longer operative may be claimed by the
taxpayer in that taxable year, notwithstanding the repeal of the
statute authorizing the credit prior to the close of that taxable year.

(2) For purposes of this subdivision, “eligible pass-thru entity”
means any partnership or begin delete S end delete begin insert “S” end insert corporation that files its return on
a fiscal year basis pursuant to Section 18566, and that is entitled
to a credit pursuant to this part for the taxable year that begins
during the last year a credit is operative.

(3) This subdivision applies to credits that become inoperative
on or after the operative date of the act adding this subdivision.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Section begin delete 23686 end delete begin insert 23686.1 end insert is added to the Revenue and
Taxation Code, to read:

begin delete 23686. end delete
begin insert 23686.1. end insert   

For each taxable year beginning on or after January
1, 2015, and before January 1, 2023, there shall be allowed as a
credit against the “tax,” as defined in Section 23036, an amount
determined in accordance with Section 47 of the Internal Revenue
Code, except as follows:

(a) (1) In lieu of the percentages specified in Section 47(a) of
the Internal Revenue Code, except as provided in paragraph (2),
the applicable percentage shall be 20 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure.

(2) The applicable percentage shall be 25 percent of the qualified
rehabilitation expenditures with respect to a certified historic
structure if that historic structure meets one of the following
criteria:

(A) The rehabilitated structure is located on federal surplus
property, if obtained by a local agency under Section 54142 of the
Government Code, on surplus state real property, as defined by
Section 11011.1 of the Government Code, or on surplus land, as
defined by subdivision (b) of Section 54221 of the Government
Code.

(B) The rehabilitated structure includes affordable housing for
lower-income households, as defined by Section 50079.5 of the
Health and Safety Code.

(C) The structure is located in a designated census tract, as
defined in paragraph (7) of subdivision (b) of Section 17053.73.

(D) The structure is a part of a military base reuse authority
established pursuant to Title 7.86 (commencing with Section
67800) of the Government Code.

(E) The structure is a transit-oriented development that is a
higher-density, mixed-use development within a walking distance
of one-half mile of a transit station.

(b) For purposes of this section, begin delete a certified historic structure end delete begin insert the
following shall apply: end insert

begin insert (1) end insert begin insert   end insert begin insert “Certified historic structure” has the same meaning as
defined in Section 47(c)(3) of the Internal Revenue Code and
additionally end insert means a structure in this state that begin delete appears on either
the National Register of Historic Places or end delete begin insert is listed on end insert the
California Register of Historical Resources.

begin insert

(2) “Qualified rehabilitation expenditure” has the same meaning
as that term is defined in Section 47(c) of the Internal Revenue
Code, except that qualified rehabilitation expenditures may include
expenditures in connection with the rehabilitation of a building
without regard to whether any portion of the building is or is
reasonably expected to be tax exempt use property.

end insert

(c) A deduction shall not be allowed under this part for any cost
for which a credit is allowed by this section.

(d) If a credit is allowed under this section with respect to any
property, the basis of that property shall be reduced by the amount
of the credit allowed.

(e) In the case where the credit allowed by this section exceeds
the “tax,” the excess may be carried over to reduce the “tax” in
the following year, and the seven succeeding years if necessary,
until the credit is exhausted.

(f) For purposes of this section, the Governor’s Office of
Business and Economic Development shall do the following:

(1)  begin delete (A) end delete begin delete   end delete On and after January 1, 2015, and before January 1,
2023, allocate tax credits to applicants.

begin delete

(B) (i) The credit shall be allocated to the partners of a
partnership owning the project in accordance with the partnership
agreement, regardless of how the federal historic rehabilitation tax
credit with respect to the project is allocated to the partners, or
whether the allocation of the credit under the terms of the
agreement has substantial economic effect, within the meaning of
Section 704(b) of the Internal Revenue Code.

(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made prior
to the expiration of the federal credit shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until, and treated as if, it occurred in the first
taxable year immediately following the taxable year in which the
federal credit period expires for the project described in clause (i).

end delete

(2) Establish a procedure for applicants to file with the
Governor’s Office of Business and Economic Development a
written application, on a form jointly prescribed by that office and
the Office of Historic Preservation for the allocation of the tax
credit.

(3)  Establish criteria consistent with the requirements of this
section, for allocating tax credits. Criteria shall include, but are
not limited to, the following:

(A) The number of jobs created by the rehabilitation project,
both during and after the rehabilitation of the structure.

(B) The expected increase in state and local tax revenues derived
from the rehabilitation project, including those from increased
wages and property taxes.

(C) Any additional incentives or contributions included in the
rehabilitation project from federal, state, or local governments.

(4) Determine and designate, in consultation with the Office of
Historic Preservation, applicants that meet the requirements of this
section to ensure that the rehabilitation project upholds historical
values in terms of architectural and aesthetic standards.

(5)  Process and approve, or reject, all applications.

(6) Subject to the annual cap established as provided in
subdivision (g), allocate an aggregate amount of credits under this
section and Section 17053.86, and allocate any carryover of
unallocated credits from prior years.

(7) Certify tax credits allocated to taxpayers.

(8) Provide the Franchise Tax Board an annual list of the
taxpayers that were allocated a credit pursuant to this section and
Section 17053.86, including each taxpayer’s taxpayer identification
number, and the amount allocated to each taxpayer.

(g) The aggregate amount of credits that may be allocated in
any calendar year pursuant to this section and Section begin delete 17053.86 end delete
begin insert 17053.91 end insert shall be an amount equal to the sum of all of the
following:

(1) Eighty million dollars ($80,000,000) in tax credits for the
2015 calendar year and each calendar year thereafter, through and
including the 2022 calendar year.

(2) The unused allocation tax credit amount, if any, for the
preceding calendar year.

begin insert

(h) In the case of any application for tax credits by an entity
treated as a partnership or “S” corporation for income tax
purposes:

end insert begin insert

(1) (A) Credits awarded to a partnership shall be allocated to
the partners of that partnership in accordance with the partnership
agreement, regardless of how the federal historic rehabilitation
tax credit with respect to the project is allocated to the partners,
or whether the allocation of the credit under the terms of the
partnership agreement has substantial economic effect, within the
meaning of Section 704(b) of the Internal Revenue Code.

end insert begin insert

(B) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made
prior to the expiration of the tax credit recapture period for the
project described in subparagraph (A) shall not be allowed in the
taxable year in which the sale or other disposition occurs, but
shall instead be deferred until, and treated as if, it occurred in the
first taxable year immediately following the taxable year in which
the tax credit recapture period expires for the project described
in subparagraph (A). The credits awarded to a partnership shall
be allocated to the partners of that partnership in accordance with
the partnership agreement.

end insert begin insert

(2) Credits awarded to an “S” corporation shall be allocated
among the shareholders of that “S” corporation pro rata in
accordance with their respective pro rata shares, determined in
accordance with Subchapter S of Chapter 1 of the Internal Revenue
Code and the regulations promulgated thereunder.

end insert begin insert

(i) Section 183 of the Internal Revenue Code shall not apply
with respect to the credit allowed by this section.

end insert begin insert

(j) For purposes of this section, the provisions of subsection (a)
of Section 50 of the Internal Revenue Code shall apply.

end insert begin insert

(k) The Governor’s Office of Business and Economic
Development may adopt a reasonable fee in an amount sufficient
to cover the expenses incurred by the Governor’s Office of Business
and Economic Development and the Office of Historic Preservation
in fulfilling the responsibilities described in paragraphs (4) and
(5) of subdivision (f) and paragraphs (4) and (5) of subdivision (f)
of Section 17053.91.

end insert begin delete

(h)

end delete

begin insert (l) end insert  This section shall remain in effect only until December 1,
2023, and as of that date is repealed.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.