PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3375
"(I) the excess described in clause (ii) with respect to such unit is not greater than 15 percent of the cost described in clause (iiXII), and "(II) the taxpayer elects to exclude from the eligible basis of such building the excess described in clause (ii) with respect to such unit, "(ii) EXCESS.—The excess described in this clause with respect to any unit is the excess of— "(I) the cost of such unit, over "(II) the amount which would be the cost of such unit if the average cost per square foot of lowincome units in the building were substituted for the cost per square foot of such unit. The Secretary may by regulation provide for the determination of the excess under this clause on a basis other than square foot costs." (5) Subparagraph (A) of section 42(d)(5) of the 1986 Code is amended by inserting before the period "(increased, in the case of an existing building which meets the requirements of paragraph (2)(B), by the amounts described in paragraph (2)(A)(i)(II))". (6)(A) Paragraph (5) of section 42(d) of the 1986 Code is amended by adding at the end thereof the following new subparagraph: "(C) ELIGIBLE BASIS NOT TO INCLUDE EXPENDITURES WHERE 167 (k) ELECTED.—The eligible basis of any building shall not include any portion of its adjusted basis which is attributable to amounts with respect to which an election is made under section 167(k)." (B) Subparagraph (A) of section 42(d)(5) of the 1986 Code is amended by striking out "subparagraph (B)" and inserting in lieu thereof "subparagraphs (B) and (C). (7) Subparagraph (A) of section 42(d)(6) of the 1986 Code is amended by inserting "or" at the end of clause (i), by striking out ", or" at the end of clause (ii) and inserting in lieu thereof a period, and by striking out clause (iii). (8) Clause (ii) of section 42(d)(6)(B) of the 1986 Code (defining federally assisted building) is amended by striking out "of 1934". (9)(A) Paragraph (3) of section 42(f) of the 1986 Code is amended to read as follows:
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"(3) DETERMINATION OF APPLICABLE PERCENTAGE WITH RESPECT TO INCREASES IN QUALIFIED BASIS AFTER 1ST YEAR OF CREDIT PERIOD.—
"(A) IN GENERAL.—In the case of any building which was Disadvantaged a qualified low-income building as of the close of the 1st persons. year of the credit period, if^ "(i) as of the close of any taxable year in the compliance period (after the 1st year of the credit period) the qualified basis of such building exceeds "(ii) the qualified basis of such building as of the close of the 1st year of the credit period, the applicable percentage which shall apply under subsection (a) for the taxable year to such excess shall be the percentage equal to % of the applicable percentage which (after the application of subsection (h)) would but for this paragraph apply to such basis.
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