Page:United States Statutes at Large Volume 122.djvu/2913

 12 2 STA T . 2 890PUBLIC LA W 110 – 289 —J UL Y3 0, 2008 ‘ ‘ (2)ther e sid e nc eis f in a nced by the p r o ceeds of a qu a l ified m ort g age issue the interest on w hich is e x empt from tax under section 103, ‘‘(3) the taxpayer is a nonresident alien, or ‘‘( 4 ) the taxpayer disposes of such residence (or such resi - dence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer ’ s spouse)) before the close of such taxable year . ‘‘(e) REPORTING . —I f the S ecretary requires information reporting under section 6 04 5 by a person described in subsection (e)(2) thereof to v erify the eligibility of taxpayers for the credit allowable by this section, the exception provided by section 6045(e) shall not apply. ‘‘(f) RE CA PT U REO FC RE D IT.— ‘‘(1) IN GENERA L .— E xcept as otherwise provided in this subsection, if a credit under subsection (a) is allowed to a taxpayer, the tax imposed by this chapter shall be increased by6 2⁄3 percent of the amount of such credit for each taxable year in the recapture period. ‘‘(2) A CCELERATION OF RECAPTURE.—If a taxpayer disposes of the principal residence with respect to which a credit was allowed under subsection (a) (or such residence ceases to be the principal residence of the taxpayer (and, if married, the taxpayer’s spouse)) before the end of the recapture period— ‘‘(A) the tax imposed by this chapter for the taxable year of such disposition or cessation shall be increased by the excess of the amount of the credit allowed over the amounts of tax imposed by paragraph (1) for preceding taxable years, and ‘‘( B ) paragraph (1) shall not apply with respect to such credit for such taxable year or any subsequent taxable year. ‘‘(3) L I M ITATION B A S ED ON GAIN.—In the case of the sale of the principal residence to a person who is not related to the taxpayer, the increase in tax determined under paragraph (2) shall not exceed the amount of gain (if any) on such sale. Solely for purposes of the preceding sentence, the ad j usted basis of such residence shall be reduced by the amount of the credit allowed under subsection (a) to the extent not pre- viously recaptured under paragraph (1). ‘‘(4) E X CEPTIONS.— ‘‘(A) D EAT H OF TAXPA Y ER.— P aragraphs (1) and (2) shall not apply to any taxable year ending after the date of the taxpayer’s death. ‘‘(B) IN V OLUNTARY CONVERSION.—Paragraph (2) shall not apply in the case of a residence which is compulsorily or involuntarily converted (within the meaning of section 1033(a)) if the taxpayer acquires a new principal residence during the 2-year period beginning on the date of the disposition or cessation referred to in paragraph (2). Para- graph (2) shall apply to such new principal residence during the recapture period in the same manner as if such new principal residence were the converted residence. ‘‘(C) T RANSFERS BET W EEN SPOUSES OR INCIDENT TO DIVORCE.—In the case of a transfer of a residence to which section 1041(a) applies—

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