Discharge of indebtedness relating to affordable housing

(a) In general Section 108(a)(1) of the Internal Revenue Code of 1986 is amended by striking or at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting, or, and by adding at the end the following new subparagraph: (F) in the case of an eligible taxpayer, the indebtedness discharged is qualified affordable housing indebtedness.. (b) Reduction of tax attributes Section 108(b)(1) of such Code is amended by striking or (C) and inserting (C), or (F). (c) Definitions Section 108 of such Code is amended by adding at the end the following new subsection: (j) Rules related to qualified affordable housing indebtedness For purposes of this section— (1) Qualified affordable housing loan The term qualified affordable housing loan means indebtedness incurred pursuant to a loan— (A) which is made by the United States, a State or any political subdivision thereof, a possession of the United States, or any organization described in section 501(c)(3) and exempt from tax under section 501(a), and (B) the purpose of which is to finance the development or rehabilitation of affordable housing (as defined in section 139M(c)). (2) Eligible taxpayer The term eligible taxpayer has the meaning given to such term under section 139M.. (d) Treatment of Indian tribal governments Section 7871(a)(8) of the Internal Revenue Code of 1986, as added by section 2, is amended by inserting and section 108(j) (relating to affordable housing loans) and before section 139M. (e) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.