Page:United States Statutes at Large Volume 114 Part 5.djvu/649

 PUBLIC LAW 106-554—APPENDIX G 114 STAT. 2763A-609 "(2) CREDIT RECAPTURE AMOUNT.—For purposes of paragraph (1), the credit recapture amount is an amount equal to the sum of— "(A) the aggregate decrease in the credits allowed to the taxpayer under section 38 for all prior taxable years which would have resulted if no credit had been determined under this section with respect to such investment, plus "(B) interest at the underpayment rate established under section 6621 on the amount determined under subparagraph (A) for each prior taxable year for the period beginning on the due date for filing the return for the prior taxable year involved. No deduction shall be allowed under this chapter for interest described in subparagraph (B). "(3) RECAPTURE EVENT.— For purposes of paragraph (1), there is a recapture event with respect to an equity investment in a qualified community development entity if— "(A) such entity ceases to be a qualified community development entity, "(B) the proceeds of the investment cease to be used as required of subsection (b)(1)(B), or "(C) such investment is redeemed by such entity. " (4) SPECIAL RULES. — "(A) TAX BENEFIT RULE.—The tax for the taxable year shall be increased under paragraph (1) only with respect to credits allowed by reason of this section which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carryforwards and carrybacks under section 39 shall be appropriately adjusted. "(B) No CREDITS AGAINST TAX. — Any increase in tax under this subsection shall not be treated as a tax imposed by this chapter for purposes of determining the amount of any credit under this chapter or for purposes of section 55. "(h) BASIS REDUCTION. —The basis of any qualified equity investment shall be reduced by the amount of any credit determined under this section with respect to such investment. This subsection shall not apply for purposes of sections 1202, 1400B, and 1400F. "(i) REGULATIONS.— The Secretary shall prescribe such regulations as may be appropriate to carry out this section, including regulations— "(1) which limit the credit for investments which are directly or indirectly subsidized by other Federal tax benefits (including the credit under section 42 and the exclusion from gross income under section 103), "(2) which prevent the abuse of the purposes of this section, "(3) which provide rules for determining whether the requirement of subsection (b)(1)(B) is treated as met, "(4) which impose appropriate reporting requirements, and "(5) which apply the provisions of this section to newly formed entities.", (b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT.— (1) IN GENERAL.— Subsection (b) of section 38 is amended by striking "plus" at the end of paragraph (11), by striking the period at the end of paragraph (12) and inserting ", plus", and by adding at the end the following new paragraph:

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