article: SECTION 1. SHORT TITLE. This Act may be cited as the ``American Community Renewal Act of 2002''. SEC. 2. ADDITIONAL DESIGNATIONS OF RENEWAL COMMUNITIES. (a) In General.--Section 1400E of the Internal Revenue Code of 1986 (relating to designation of renewal communities) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: ``(f) Additional Designations Permitted.-- ``(1) In general.--In addition to the areas designated under subsection (a), the Secretary of Housing and Urban Development may designate in the aggregate an additional 20 nominated areas as renewal communities under this section, subject to the availability of eligible nominated areas. Of that number, not less than 5 shall be designated in areas described in subsection (a)(2)(B). ``(2) Period designations may be made and take effect.--A designation may be made under this subsection after the date of the enactment of this subsection and before January 1, 2004. Subject to subparagraphs (B) and (C) of subsection (b)(1), such designations shall remain in effect during the period beginning on January 1, 2004, and ending on December 31, 2011. ``(3) Modifications to eligibility determinations.--The rules of this section shall apply to designations under this subsection, except that population and poverty rate shall be determined by using the 2000 census.''. (b) Effective Date.--The amendments made by this section shall take effect on the date of the enactment of this Act. SEC. 3. NONRECOGNITION OF GAIN ON PROCEEDS OF SALE OF REAL PROPERTY WHICH ARE INVESTED IN RENEWAL COMMUNITY, ETC. BUSINESSES. (a) In General.--Part III of subchapter O of chapter 1 of the Internal Revenue Code of 1986 (relating to common nontaxable exchanges) is amended by adding at the end the following new section: ``SEC. 1046. NONRECOGNITION OF GAIN ON PROCEEDS OF SALE OF REAL PROPERTY WHICH ARE INVESTED IN RENEWAL COMMUNITY, ETC. BUSINESSES. ``(a) Nonrecognition of Gain.--In the case of a sale of real property held by the taxpayer for more than 1 year and with respect to which the taxpayer elects the application of this section, gain from such sale shall be recognized only to the extent that the amount realized on such sale exceeds-- ``(1) the cost of any qualified asset purchased by the taxpayer during the 60-day period beginning on the date of such sale, reduced by ``(2) any portion of such cost previously taken into account under this section. ``(b) Qualified Asset.--For purposes of this section, the term `qualified asset' means-- ``(1) any qualified empowerment zone asset (as defined in section 1397B), ``(2) any qualified community asset (as defined in section 1400F(b)), and ``(3) any property which would be a qualified empowerment zone asset (as so defined) if enterprise communities and HUB zones were treated as empowerment zones. ``(c) Special Rules.-- ``(1) Ordinary income not eligible for rollover.--This section shall not apply to any gain which is treated as ordinary income for purposes of this subtitle. ``(2) Purchase.--A taxpayer shall be treated as having purchased any property if, but for paragraph (4), the unadjusted basis of such property in the hands of the taxpayer would be its cost (within the meaning of section 1012). ``(3) Basis adjustments.--If gain from any sale is not recognized by reason of subsection (a), such gain shall be applied to reduce (in the order acquired) the basis for determining gain or loss of any qualified asset which is purchased by the taxpayer during the 60-day period described in subsection (a). This paragraph shall not apply for purposes of section 1202. ``(4) Holding period.--For purposes of determining whether the nonrecognition of gain under subsection (a) applies to any qualified asset which is sold-- ``(A) the taxpayer's holding period for such asset and the asset referred to in subsection (a)(1) shall be determined without regard to section 1223, and ``(B) only the first year of the taxpayer's holding period for the asset referred to in subsection (a)(1) shall be taken into account for purposes of paragraphs (2)(A)(iii), (3)(C), and (4)(A)(iii) of section 1400F(b) or comparable rules under section 1397B.''. (b) Technical Amendments.-- (1) Paragraph (23) of section 1016(a) of such Code is amended is amended-- (A) by striking ``or 1397B'' and inserting ``1397B, or 1046'', and (B) by striking ``or 1397B(b)(4)'' and inserting ``1397B(b)(4), or 1046(c)(4)''. (2) Paragraph (15) of section 1223 is amended by striking ``or 1397B'' and inserting ``, 1397B, or 1046''. (3) The table of sections for part III of subchapter O of chapter 1 of such Code is amended by adding at the end the following new item: ``Sec. 1046. Nonrecognition of gain on proceeds of sale of real property which are invested in renewal community, etc. businesses.'' (c) Effective Date.--The amendments made by this section shall apply to sales after the date of the enactment of this Act. SEC. 4. LOCAL ALLOCATION OF COMMERCIAL REVITALIZATION DEDUCTION AMOUNTS WHERE STATE FAILS TO ADOPT ALLOCATION PLAN. (a) In General.--Subsection (e) of section 1400I of the Internal Revenue Code of 1986 (relating to commercial revitalization deduction) is amended by adding at the end the following new paragraph: ``(3) Local allocation of revitalization amount where state fails to adopt allocation plan.--If a qualified allocation plan with respect to any State is not approved as provided in paragraph (1) before the 120th day after the date of the enactment of this paragraph, then, beginning on such 120th day-- ``(A) subsection (d)(3) shall cease to apply, and ``(B) the term `commercial revitalization agency' means, with respect to any renewal community, any agency authorized to carry out this section by the local governmental unit having within its jurisdiction the largest portion of such community.''. (b) Effective Date.--The amendment made by this section shall take effect the date of the enactment of this Act.
summary: American Community Renewal Act of 2002 - Amends the Internal Revenue Code to: (1) provide for the designation of 20 additional renewal communities; (2) permit the nonrecognition of gain on proceeds of sales of real property which are invested in qualified renewal community zone assets; and (3) provide for the local allocation of commercial revitalization expenditure amounts if a State fails to adopt a qualified allocation plan.