$2,500,000. (2) Small project For purposes of this subsection, the term small project means the rehabilitation of any qualified rehabilitated building if— (A) the qualified rehabilitation expenditures taken into account under this section (or which would be so taken into account but for paragraph (1)(B)) with respect to such rehabilitation do not exceed $3,750,000, (B) no credit was allowed under this section with respect to such building to any taxpayer for either of the 2 taxable years immediately preceding the first taxable year in which expenditures described in subparagraph (A) were paid or incurred, and (C) the taxpayer elects (at such time and manner as the Secretary may provide) to have this subsection apply with respect to such rehabilitation. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2023. 4. Modification of definition of substantially rehabilitated (a) In general Section 47(c)(1)(B)(i)(I) is amended by inserting 50 percent of before the adjusted basis . (b) Effective date The amendment made by subsection (a) shall apply to determinations with respect to 24-month periods (referred to in clause (i) of section 47(c)(1)(B) of the Internal Revenue Code of 1986) and 60-month periods (referred to in clause (ii) of such section) which begin after the date of the enactment of this Act. 5. Elimination of rehabilitation credit basis adjustment (a) In general Section 50(c) is amended by adding at the end the following new paragraph: (6) Exception for rehabilitation credit In the case of the rehabilitation credit, paragraph (1) shall not apply. . (b) Treatment in case of credit allowed to lessee Section 50(d) is amended by adding at the end the following: In the case of the rehabilitation credit, paragraph (5)(B) of the section 48(d) referred to in paragraph (5) of this subsection shall not apply. . (c) Effective date The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act. 6.