Table of Contents
- Empowerment Zones
- Renewal Communities
- Enterprise Communities
- New York Liberty Zone
- New Markets Credit
- Tax-Exempt Bond Financing
- Qualified Zone Academy Bonds
- Work Opportunity Credit
- Welfare-to-Work Credit
- State certification required.
- Nonqualified wages.
- Qualified first-year wages.
- Qualified second-year wages.
- Successor employer.
- Effect on salary and wage deduction.
- Effect on empowerment zone and renewal community employment credits.
- Effect of work opportunity credit.
- Effect of New York Liberty Zone business employee credit.
- Indian Employment Credit
- Depreciation of Property Used on Indian Reservations
- Capital Gain Exclusion for DC Zone Assets
- How To Get Tax Help
Table 1. Tax Incentives for Distressed Communities
Type of Benefit | Empowerment Zones (EZs) |
Enterprise Communities (ECs) |
Renewal Communities (RCs) |
Credits | |||
EZ Employment Credit | X | ||
RC Employment Credit | X | ||
Work Opportunity Credit | X | X | X |
Welfare-to-Work Credit | X | X | X |
Indian Employment Credit | X | X | X |
New Markets Credit | X | X | X |
Deductions | |||
Increased Section 179 Deduction | X | X | |
Commercial Revitalization Deduction | X | ||
Depreciation of Property Used on Indian Reservations | X | X | X |
Bond Financing | |||
Enterprise Zone Facility Bonds | X | X | |
Qualified Zone Academy Bonds (QZABs) | X | X | X |
Capital Gains | |||
Capital Gain Exclusion for RC and DC Zone Assets | X * | ||
Rollover of Gain from Sale of EZ Assets | X | ||
Increased Exclusion of Gain From Qualified Small Business Stock | X | ||
* Also applicable to District of Columbia Enterprise Zone. |
This section describes the areas that have been designated empowerment zones and explains the tax benefits available to businesses in those zones.
The following paragraphs describe current designations of empowerment zones. The empowerment zone designations will generally remain in effect until the end of 2009.
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Pulaski County, AR
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Tucson, AZ
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Fresno, CA
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Los Angeles, CA (city and county)
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Santa Ana, CA
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New Haven, CT
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Jacksonville, FL
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Miami/Dade County, FL
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Chicago, IL
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Gary/Hammond/East Chicago, IN
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Boston, MA
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Baltimore, MD
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Detroit, MI
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Minneapolis, MN
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St. Louis, MO/East St. Louis, IL
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Cumberland County, NJ
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New York, NY
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Syracuse, NY
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Yonkers, NY
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Cincinnati, OH
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Cleveland, OH
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Columbus, OH
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Oklahoma City, OK
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Philadelphia, PA/Camden, NJ
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Columbia/Sumter, SC
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Knoxville, TN
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El Paso, TX
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San Antonio, TX
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Norfolk/Portsmouth, VA
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Huntington, WV/Ironton, OH
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Desert Communities, CA (part of Riverside County)
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Southwest Georgia United, GA (part of Crisp County and all of Dooly County)
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Southernmost Illinois Delta, IL (parts of Alexander and Johnson Counties and all of Pulaski County)
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Kentucky Highlands, KY (part of Wayne County and all of Clinton and Jackson Counties)
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Aroostook County, ME (part of Aroostook County)
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Mid-Delta, MS (parts of Bolivar, Holmes, Humphreys, Leflore, Sunflower, and Washington Counties)
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Griggs-Steele, ND (part of Griggs County and all of Steele County)
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Oglala Sioux Tribe, SD (part of Jackson County and all of Bennett and Shannon Counties)
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Middle Rio Grande FUTURO Communities, TX (parts of Dimmit, Maverick, Uvalde, and Zavala Counties)
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Rio Grande Valley, TX (parts of Cameron, Hidalgo, Starr, and Willacy Counties)
The empowerment zone employment credit provides businesses with an incentive to hire individuals who both live and work in an empowerment zone. (An exception applies to the Washington, DC empowerment zone. Individuals who work in the Washington, DC empowerment zone may live anywhere in the District of Columbia.) You can claim the credit if you pay or incur “qualified zone wages” to a “qualified zone employee.”
The credit is 20% of the qualified zone wages paid or incurred during a calendar year. The amount of qualified zone wages you can use to figure the credit cannot be more than $15,000 for each employee for each calendar year. As a result, the credit can be as much as $3,000 (20% of $15,000) per qualified zone employee each year.
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The employee performs substantially all of his or her services for you within an empowerment zone and in your trade or business.
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While performing those services, the employee's main home is within that empowerment zone (for services performed within the DC Zone, the employee's main home may be anywhere within the District of Columbia).
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An individual you employ for less than 90 calendar days. However, this 90-day requirement does not apply in either of the following situations.
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You terminate the employee because of misconduct as determined under the state unemployment compensation law that applies.
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The employee becomes disabled before the 90th day. However, if the disability ends before the 90th day, you must offer to reemploy the former employee.
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Certain related taxpayers.
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Certain dependents.
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Any 5% owner.
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An individual you employ at any:
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Private or commercial golf course,
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Country club,
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Massage parlor,
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Hot tub facility,
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Suntan facility,
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Racetrack, or other facility used for gambling, or
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Store whose principal business is the sale of alcoholic beverages for off-premise consumption.
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Any individual you employ in a farming trade or business if, at the close of the tax year, the sum of the following amounts is more than $500,000.
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The larger of the unadjusted bases or fair market value of the farm assets you own.
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The value of the farm assets you lease.
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Example.
Your tax year begins on February 1 and ends on January 31 of the next year. You use the cash method of accounting and have one employee, whom you hired in March 2003 and pay $1,000 a month. You paid that employee qualified zone wages of $10,000 in calendar year 2003 and $1,000 in January 2004. When you figure your credit for the tax year ending January 31, 2004, you use the $10,000 paid in 2003 but cannot use the $1,000 paid in January 2004. That amount will be used to figure the credit on your next tax return.
Section 179 of the Internal Revenue Code allows you to choose to deduct all or part of the cost of certain qualifying property in the year you place it in service. You can do this instead of recovering the cost by taking depreciation deductions over a specified recovery period. There are limits, however, on the amount you can deduct in a tax year.
You may be able to claim an increased section 179 deduction if your business qualifies as an “enterprise zone business.” The increase can be as much as $35,000. This increased section 179 deduction applies to “qualified zone property” you place in service in an empowerment zone.
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Every trade or business of the corporation or partnership is the active conduct of a qualified business (defined later) within an empowerment zone. (This rule does not apply to a sole proprietorship.)
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At least 50% of its total gross income is from the active conduct of a qualified business within a zone.
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A substantial part of the use of its tangible property is within a zone.
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A substantial part of its intangible property is used in the active conduct of the business.
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A substantial part of the employees' services are performed within a zone.
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At least 35% of the employees are residents of an empowerment zone. (This rule does not apply to businesses in the DC Zone.)
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Less than 5% of the average of the total unadjusted bases of the property owned by the business is from:
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Nonqualified financial property (generally, debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, and annuities), or
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Collectibles not held primarily for sale to customers.
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You acquired the property after the zone designation took effect.
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You did not acquire the property from a related person or member of a controlled group of which you are a member.
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Your basis in the property is not determined either by its adjusted basis in the hands of the person from whom you acquired it or under the stepped-up basis rules for property acquired from a decedent.
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You were the first person to use the property in an empowerment zone.
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At least 85% of the property's use is in an empowerment zone and in the active conduct of a qualified trade or business in the zone.
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100% of the adjusted basis of the property at the beginning of the 24-month period.
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$5,000.
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The cost of that property.
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$35,000.
Table 2. Maximum Dollar Limits
Maximum | ||
Maximum | Dollar Limit | |
For Tax Years | Section 179 | With Qualified |
Beginning In: | Dollar Limit | Zone Property |
2002 | $ 24,000 | $ 59,000 |
2003 | 100,000 | 135,000 |
2004 | 102,000 * | 137,000 * |
2005 | Inflation
Adjusted |
Inflation
Adjusted |
*Inflation-adjusted amount for 2004 |
For 2005, the threshold amount used to figure any reduction in the dollar limit will be increased to reflect an adjustment for inflation. The inflation-adjusted amount for 2004 is $410,000 (rounded to the nearest multiple of $10,000).
Example.
In 2003, your enterprise zone business placed in service section 179 property that is qualified zone property costing $820,000. Because all of this property is qualified zone property, only $410,000 (one-half of its cost) is used to figure the investment limit. Because $410,000 is $10,000 more than $400,000, you must reduce the maximum dollar limit by $10,000. Your maximum dollar limit for 2003 is $135,000. You can claim a section 179 deduction of $125,000 ($135,000 – $10,000) for 2003 (if your taxable income from trades or businesses is at least $125,000).
If you sold a qualified empowerment zone asset that you held for more than one year, you may be able to elect to postpone part or all of the gain that you would otherwise include on Schedule D. If you make the election, the gain on the sale generally is recognized only to the extent, if any that the amount realized on the sale exceeds the cost of qualified empowerment zone assets (replacement property) you purchased during the 60-day period beginning on the date of the sale. The following rules apply.
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No portion of the cost of the replacement property may be taken into account to the extent the cost is taken into account to exclude gain on a different empowerment zone asset.
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The replacement property must qualify as an empowerment zone asset with respect to the same empowerment zone as the asset sold.
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You must reduce the basis of the replacement property by the amount of postponed gain.
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This election does not apply to any gain (a) treated as ordinary income or (b) attributable to real property, or an intangible asset, which is not an integral part of an enterprise zone business.
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The District of Columbia enterprise zone is not treated as an empowerment zone for this purpose.
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The election is irrevocable without IRS consent.
• Tangible property, if |
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• Stock in a domestic corporation or a capital or profits
interest in a domestic partnership, if: |
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Taxpayers other than corporations generally can exclude from income 50% of their gain from the sale or trade of qualified small business stock held more than 5 years. If the stock is in a corporation that qualifies as an enterprise zone business (defined earlier under Increased Section 179 Deduction) during substantially all of the time you hold the stock, you can exclude 60% of your gain.
To claim this increased exclusion, you must have acquired the stock after December 21, 2000. Gain from periods after 2014 will not qualify for the increased exclusion.
The requirement that the corporation must qualify as an enterprise zone business during substantially all of the time you hold the stock will still be met if the corporation ceased to qualify after the 5-year period beginning on the date you acquired the stock. However, the gain that qualifies for the 60% exclusion cannot be more than the gain you would have had if you had sold the stock on the date the corporation ceased to qualify.
If you sell the stock after 2009, disregard the end of the empowerment zone designation on December 31, 2009, in determining whether the corporation qualified as an enterprise zone business during substantially all of the time you held the stock.
For more information about this exclusion, including a definition of qualified small business stock, see chapter 4 of Publication 550, Investment Income and Expenses.
This section describes the areas that have been designated renewal communities and explains the tax benefits available to businesses in those renewal communities.
The Secretary of Housing and Urban Development (HUD) has designated the parts of the following areas as renewal communities. The designation will generally remain in effect until December 31, 2009. The designation may be revoked if the state or local government modifies the boundaries of the area or does not keep certain commitments.
You can find out if a business or an employee's residence is located within a renewal community by using the RC/EZ/EC Address Locator at www.hud.gov/crlocator or by calling HUD at 1-800-998-9999.
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Greene-Sumter County, AL
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Mobile County, AL
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Southern Alabama
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Los Angeles, CA
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Orange Grove, CA
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Parlier, CA
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San Diego, CA
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San Francisco, CA
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Atlanta, GA
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Chicago, IL
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Eastern KY
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Central Louisiana
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New Orleans, LA
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Northern Louisiana
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Ouachita Parish, LA
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Lawrence, MA
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Lowell, MA
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Detroit, MI
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Flint, MI
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West Central Mississippi
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Turtle Mountain Band of Chippewa, ND
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Camden, NJ
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Newark, NJ
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Buffalo-Lackawanna, NY
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Jamestown, NY
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Niagara Falls, NY
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Rochester, NY
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Schenectady, NY
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Hamilton, OH
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Youngstown, OH
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Philadelphia, PA
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Charleston, SC
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Chattanooga, TN
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Memphis, TN
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Corpus Christi, TX
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El Paso County, TX
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Burlington, VT
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Tacoma, WA
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Yakima, WA
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Milwaukee, WI
The renewal community employment credit provides businesses with an incentive to hire individuals who both live and work in a renewal community. You can claim the credit if you pay or incur “qualified wages” to a “qualified employee.” The credit is for wages paid or incurred after 2001.
The credit is 15% of the qualified wages paid or incurred during a calendar year. The amount of qualified wages you can use to figure the credit cannot be more than $10,000 for each employee for each calendar year. As a result, the credit can be as much as $1,500 (15% of $10,000) per qualified employee each year.
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The employee performs substantially all of his or her services for you within a renewal community and in your trade or business.
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While performing those services, the employee's main home is within that renewal community.
Example.
Your tax year begins on February 1 and ends on January 31 of the next year. You use the cash method of accounting and have one employee, whom you hired in March 2003 and pay $500 a month. You pay that employee qualified wages of $5,000 in calendar year 2003 and $500 in January 2004. When you figure your credit for the tax year ending January 31, 2004, you use the $5,000 paid in 2003 but cannot use the $500 paid in January 2004. That amount will be used to figure the credit on your next tax return.
Section 179 of the Internal Revenue Code allows you to choose to deduct all or part of the cost of certain qualifying property in the year you place it in service. You can do this instead of recovering the cost by taking depreciation deductions over a specified recovery period. There are limits, however, on the amount you can deduct in a tax year.
You may be able to claim an increased section 179 deduction if your business qualifies as a renewal community business. The increase can be as much as $35,000. This increased section 179 deduction applies to “qualified renewal property” you acquire after 2001 and before 2010 and place in service in a renewal community.
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Every trade or business of the corporation or partnership is the active conduct of a qualified business (defined later) within a renewal community. (This rule does not apply to a sole proprietorship.)
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At least 50% of its total gross income is from the active conduct of a qualified business within a renewal community.
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A substantial part of the use of its tangible property is within a renewal community.
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A substantial part of its intangible property is used in the active conduct of the business.
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A substantial part of the employees' services are performed within a renewal community.
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At least 35% of the employees are residents of a renewal community.
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Less than 5% of the average of the total unadjusted bases of the property owned by the business is from:
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Nonqualified financial property (generally, debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, and annuities), or
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Collectibles not held primarily for sale to customers.
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You acquired the property after the renewal community designation is in effect.
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You did not acquire the property from a related person or member of a controlled group of which you are a member.
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Your basis in the property is not determined either by its adjusted basis in the hands of the person from whom you acquired it or under the stepped-up basis rules for property acquired from a decedent.
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You were the first person to use the property in a renewal community.
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At least 85% of the property's use is in a renewal community and in the active conduct of a qualified trade or business in the community.
You can elect to treat qualified revitalization expenditures chargeable to a capital account for any qualified revitalization building in either of the following ways:
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Deduct half of the expenditures for the tax year the building is placed in service, or
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Amortize all the expenditures over a 120-month period beginning with the month the building is placed in service.
If you elect to take this deduction, you cannot take a depreciation deduction for the same expenditures. Claiming this deduction enables you to recover half (or all) of your qualified revitalization expenditures over a shorter period of time than depreciation. The commercial revitalization deduction is also allowed for both regular tax and alternative minimum tax purposes.
The election must be made by the due date (including extensions) of your return for the tax year the building is placed in service. If you timely filed your return without making the election, you can still make the election by filing an amended return within 6 months of the due date (excluding extensions). Enter “Filed pursuant to section 301.9100-2” on the amended return. Once made, the election may be revoked only with IRS consent. To do so, you must submit a request for a letter ruling under the provisions of Rev. Proc. 2004-1 (or its successor). See Rev. Proc. 2004-1 on page 1 of Internal Revenue Bulletin 2004-1 at www.irs.gov/pub/irs-irbs/irb04-01.pdf.
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The adjusted basis of the building at the beginning of the 24-month period, or at the beginning of your holding period for the building, whichever is later.
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$5,000.
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Nonresidential real property, or
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Section 1250 property that is functionally related and subordinate to nonresidential real property. Section 1250 property is depreciable real property that is not and never has been section 1245 property. Section 1245 property is defined in Publication 544, Sales and Other Dispositions of Assets.
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$10 million, or
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The commercial revitalization expenditure amount allocated to the building by the commercial revitalization agency for the state in which the building is located.
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The cost of acquiring a building that you substantially rehabilitate, to the extent that cost is more than 30% of the total qualified revitalization expenses for the building (not counting the cost of the building itself).
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Expenditures you use to figure any allowable credit (such as the rehabilitation credit).
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An allocation made during the calendar year in which a qualified revitalization building is placed in service.
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A binding commitment to make an allocation of a specified dollar amount to a qualified revitalization building during the calendar year in which the building is placed in service. A binding commitment is not, in and of itself, an allocation.
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A carryover allocation for a single-building project or a multi-building project.
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Name, address, and taxpayer identification number of the commercial revitalization agency making the commercial revitalization expenditure.
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The name, address, and taxpayer identification number of the taxpayer receiving the allocation.
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The address or specific location of each qualified revitalization building.
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The date of the allocation of the expenditure amount.
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The commercial revitalization expenditure amount allocated to each qualified revitalization building on that date.
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A certification under penalties of perjury by an authorized official of the commercial revitalization agency that the official has examined the document, and to the best of the official's knowledge and belief, the information in the document is true, correct, and complete.
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The taxpayer's reasonably expected basis in the project (land and depreciable property) as of the end of the second calendar year following the calendar year during which the allocation was made.
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The date that each qualified revitalization building is expected to be placed in service.
If you hold a qualified community asset more than 5 years, you will not have to include any “qualified capital gain” from its sale or exchange in your gross income. This exclusion applies to an interest in, or property of, certain businesses operating in a renewal community.
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Qualified community stock.
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Qualified community partnership interest.
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Qualified community business property.
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You acquired the stock after 2001 and before 2010 at its original issue solely in exchange for cash. (This requirement is also met if you acquired the stock at any time from another person in whose hands it was qualified community stock.)
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The corporation was a renewal community business (or was being organized as a renewal community business) at the time the stock was issued.
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The corporation qualified as a renewal community business during substantially all of your holding period for the stock. (This requirement is also met if the corporation ceased to qualify as a renewal community business after the 5-year period beginning on the date you acquired the stock. However, your qualified capital gain cannot be more than what it would have been if you had sold the stock on the date the corporation ceased to qualify.)
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You acquired the partnership interest from the partnership after 2001 and before 2010 solely in exchange for cash.
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The partnership was a renewal community business (or was being organized as a renewal community business) at the time the partnership interest was acquired.
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The partnership qualified as a renewal community business during substantially all of your holding period for the partnership interest. (This requirement is also met if the partnership ceased to qualify as a renewal community business after the 5-year period beginning on the date you acquired the partnership interest. However, your qualified capital gain cannot be more than what it would have been if you had sold the partnership interest on the date the partnership ceased to qualify.)
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You acquired the property after 2001 and before 2010.
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You did not acquire the property from a related person or member of a controlled group of which you are a member.
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Your basis in the property is not determined either by its adjusted basis in the hands of the person from whom you acquired it or under the stepped-up basis rules for property acquired from a decedent.
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You were the first person to use the property in the renewal community.
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Substantially all of the use of the property was in your renewal community business during substantially all of your holding period for that property. (This requirement is also met if you stopped using the property in your renewal community business, or your business ceased to qualify as a renewal community business, after the 5-year period beginning on the date you acquired the property. However, your qualified capital gain cannot be more than what it would have been if you had sold the property on the date you stopped using it in your renewal community business or on the date your business ceased to qualify.)
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100% of the adjusted basis of the property at the beginning of the 24-month period.
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$5,000.
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Gain attributable to periods before 2002 or after 2014.
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Ordinary (section 1245) gain. See chapter 3 in Publication 544, Sales and Other Dispositions of Assets.
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Section 1250 gain figured as if section 1250 applied to all depreciation rather than the additional depreciation.
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Gain attributable to real property or an intangible asset that is not an integral part of a renewal community business.
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Gain attributable, directly or indirectly, in whole or in part, to a transaction with a related person. For the definition of a related person, see chapter 2 in Publication 544.
There are currently 49 urban areas that were designated as urban enterprise communities by the Secretary of Housing and Urban Development (HUD) on December 21, 1994. There are also currently 28 rural areas that were designated as rural enterprise communities by the Secretary of Agriculture (USDA) on December 21, 1994. These designations will remain in effect until the end of 2004. The 20 additional rural enterprise communities designated by USDA on December 24, 1998 (“Round II” enterprise communities) are not treated as enterprise communities for Federal tax purposes.
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Birmingham, AL
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Little Rock/Pulaski, AR
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Phoenix, AZ
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Oakland, CA
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Denver, CO
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Bridgeport, CT
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New Haven, CT
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Washington, DC
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Wilmington, DE
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Miami/Dade, FL
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Tampa, FL
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Albany, GA
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Des Moines, IA
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East St. Louis, IL
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Springfield, IL
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Indianapolis, IN
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Louisville, KY
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Boston, MA
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Springfield, MA
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Muskegon, MI
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Minneapolis, MN
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St. Paul, MN
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Kansas City/Kansas City KS, MO
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St. Louis, MO
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Jackson, MS
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Charlotte, NC
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Omaha, NE
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Manchester, NH
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Albuquerque, NM
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Las Vegas, NV
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Newburgh/Kingston, NY
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Akron, OH
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Cleveland, OH
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Columbus, OH
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Oklahoma City, OK
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Portland, OR
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Harrisburg, PA
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Pittsburgh, PA
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Providence, RI
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Nashville/Davidson, TN
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Dallas, TX
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El Paso, TX
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Houston, TX
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San Antonio, TX
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Waco, TX
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Ogden, UT
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Norfolk, VA
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Seattle, WA
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Huntington, WV
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Chambers County, AL
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East Arkansas, EC
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Mississippi County, AR
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Arizona Border Region, AZ
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Imperial County, CA
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City of Watsonville, CA
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Jackson County, FL
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Central Savannah River Area, GA
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Crisp/Dooly, GA
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Northeast Louisiana Delta, LA
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Lake County, MI
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City of East Prairie, MO
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North Delta Mississippi, MS
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Halifax/Edgecombe/Wilson, NC
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Robeson County, NC
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La Jicarita, NM
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Greater Portsmouth, OH
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Southeast Oklahoma, OK
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Josephine County, OR
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City of Lock Haven, PA
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Williamsburg-Lake City, SC
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Beadle/Spink, SD
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Fayette/Haywood County, TN
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Scott/McCreay Area, TN
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Accomack-Northampton, VA
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Lowe Yakima County Rural, WA
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Central Appalachia, WV
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McDowell County, WV
The tax incentives described below apply to the parts of New York City damaged in the terrorist attack on September 11, 2001. This area is referred to as the New York Liberty Zone.
The New York Liberty Zone business employee credit is part of the work opportunity credit (discussed later). You can claim the credit if you pay or incur “qualified wages” to a “Liberty Zone business employee.” The credit is for wages paid or incurred to new and existing employees for work performed during 2002 or 2003.
This credit is set to expire for wages paid to employees for work performed after 2003. However, at the time this publication was issued, Congress was considering legislation that would allow this credit with respect to work performed by qualified employees during 2004. See What's Hot in Tax Forms, Pubs, and Other Tax Products at www.irs.gov/formspubs to find out if this legislation was enacted.
The credit is 40% (25% for employees who worked for you at least 120 hours but fewer than 400 hours) of the qualified wages for the year. The amount of the qualified wages you can use to figure the credit cannot be more than $6,000 for each employee for each calendar year. As a result, the credit can be as much as $2,400 (40% of $6,000) for each employee each year.
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In the Liberty Zone (defined earlier), or
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Elsewhere in New York City for a business that relocated from the Liberty Zone due to the destruction or damage of its place of business by the September 11, 2001, terrorist attack.
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The number of employees of the business on September 11, 2001, in the Liberty Zone, over
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The number of Liberty Zone business employees (determined without regard to employees described in (2) above) of the business on the day to which the limit is being applied.
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Does not work for you at least for 120 hours, or
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Is your relative or dependent.
You can take a special Liberty Zone depreciation allowance for qualified Liberty Zone property you place in service during the tax year. The allowance is an additional 30% deduction and it applies for the year you place the property in service. You can take the additional 30% deduction after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service. To figure the depreciable basis, you must first multiply the property's cost or other basis by the percentage of business/investment use and then reduce that amount by any section 179 deduction and certain other deductions and credits for the property.
The allowance is deductible for both regular tax and alternative minimum tax (AMT) purposes. There is no AMT adjustment required for any depreciation figured on the remaining basis of the property.
You can claim the allowance only for the year the property is placed in service. In the year you claim the allowance, you must reduce the basis of the property by the allowance before figuring the regular depreciation deduction.
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It is one of the following types of property.
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Property depreciated under MACRS with a recovery period of 20 years or less.
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Water utility property.
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Computer software that is not a section 197 intangible as described in Publication 946. (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS.)
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Certain nonresidential real property and residential rental property (defined later).
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It meets all the following tests (explained later under Tests to be met).
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Acquisition date test.
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Placed in service date test.
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Substantial use test.
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Original use test.
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It is not excepted property (explained later under Excepted property).
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Property eligible for the special depreciation allowance explained earlier under Special depreciation allowance.
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Property required to be depreciated using the Alternative Depreciation System (ADS). This includes listed property used 50% or less in a qualified business use.
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Qualified New York Liberty Zone leasehold improvement property (defined later under New York Liberty Zone Leasehold Improvement Property).
Section 179 of the Internal Revenue Code allows you to choose to deduct all or part of the cost of certain qualifying property in the year you place it in service. You can do this instead of recovering the cost by taking depreciation deductions over a specified recovery period. There are limits, however, on the amount you can deduct in a tax year.
You may be able to claim an increased section 179 deduction if the property you place in service is qualified Liberty Zone property. The increase can be as much as $35,000.
-
The cost of that property.
-
$35,000.
Table 3. Maximum Dollar Limits
Maximum | ||
Maximum | Dollar Limit | |
For Tax Years | Section 179 | With Qualified |
Beginning In: | Dollar Limit | Zone Property |
2002 | $ 24,000 | $ 59,000 |
2003 | 100,000 | 135,000 |
2004 | 102,000 * | 137,000 * |
2005 | Inflation
Adjusted |
Inflation
Adjusted |
*Inflation-adjusted amount for 2004 |
For 2005, the threshold amount used to figure any reduction in the dollar limit will be increased to reflect an adjustment for inflation. The inflation-adjusted amount for 2004 is $410,000 (rounded to the nearest multiple of $10,000).
Qualified New York Liberty Zone leasehold improvement property is classified as 5-year property. This means that it is depreciated over a recovery period of 5 years. The straight-line method must be used.
Under ADS, the recovery period is 9 years.
-
The improvement is to a building located in the New York Liberty Zone (defined earlier).
-
The improvement is placed in service after September 10, 2001, and before January 1, 2007.
-
No written binding contract for the improvement was in effect before September 11, 2001.
-
The improvement is made under or pursuant to a lease by the lessee (or any sublessee) or the lessor of that part of the building.
-
That part of the building is to be occupied exclusively by the lessee (or any sublessee) of that part.
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The improvement is placed in service more than 3 years after the date the building was first placed in service.
-
The enlargement of the building.
-
Any elevator or escalator.
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Any structural component benefiting a common area.
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The internal structural framework of the building.
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Members of an affiliated group.
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The persons listed in items (1) through (9) under Related persons in chapter 1 of Publication 946 (except that “80% or more” should be substituted for “more than 10%” each place it appears).
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An executor and a beneficiary of the same estate.
The replacement period has been extended from 2 years to 5 years for certain property involuntarily converted in the Liberty Zone as a result of the terrorist attack on September 11, 2001, but only if substantially all the use of the replacement property is in New York City.
If you buy replacement property within the replacement period, you may be able to postpone any gain you have had on the involuntary conversion.
You can claim a tax credit for a qualified equity investment in a qualified community development entity (CDE) made after April 19, 2001. This is called the new markets credit.
-
5% for the year the investment is made and each of the next 2 years, and
-
6% for each of the next 4 years.
-
Its primary mission is serving, or providing investment capital for, low-income communities or persons.
-
It maintains accountability to residents of low-income communities through their representation on any governing or advisory boards of the entity.
-
It is certified by the CDFI Fund of the Department of Treasury.
-
The corporation or partnership is a qualified CDE (defined earlier).
-
You acquire the investment on the original issue date for cash. The cash may be from borrowed funds, including a nonrecourse loan.
-
At least 85% of the cash is used to make qualified low-income community investments (defined later), or at least 85% of the entity's total gross assets are in qualified low-income community investments. The 85% requirement is reduced to 75% for the seventh year of the 7-year credit period.
-
The qualified CDE designates the investment as a qualified equity investment on its books and records for purposes of the new markets credit.
-
Any capital or equity investment in, or loan to, any QALICB (defined below).
-
The purchase from another qualified CDE of any loan made by that entity provided that it was a qualified low-income community investment at the time it made or sold the loan.
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Providing financial advice about organizing or operating a business to QALICBs and residents of low-income communities.
-
Any equity investment in, or loan to, any qualified CDE used to make other qualified low-income community investments.
-
At least 50% of its total gross income is from the active conduct of a qualified business (defined next) within a low-income community.
-
At least 40% of the use of its tangible property (whether owned or leased) is within a low-income community.
-
At least 40% of its employees' services are performed in a low-income community.
-
Less than 5% of the average of the total unadjusted bases of the property of the entity is from:
-
Nonqualified financial property (generally, debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, and annuities), or
-
Collectibles not held primarily for sale to customers in the ordinary course of its business.
-
-
The poverty rate is at least 20%.
-
If the tract is not located within a metropolitan area, the median family income is not more than 80% of statewide median family income.
-
If the tract is located within a metropolitan area, the median family income is not more than 80% of the greater of the statewide median family income or the metropolitan area median family income.
-
The equity investment was made after April 19, 2001, and the designation of the equity investment as a qualified equity investment is made for a credit allocation received under an allocation application timely submitted to the CDFI Fund no later than August 29, 2002. For details, see Notice 2003-9 on page 369 of Internal Revenue Bulletin 2003-5 at www.irs.gov/pub/irs-irbs/irb03-05.pdf.
-
The equity investment was made after July 17, 2003, and the designation of the equity investment as a qualified equity investment is made for a credit allocation received under an allocation application submitted to the CDFI Fund under a Notice of Allocation Availability (NOAA) published by the CDFI Fund in the Federal Register on or before the date the equity investment was made. If the entity in which the equity investment is made does not receive an allocation under that NOAA, the equity investment is not eligible to be designated as a qualified equity investment under future NOAAs. For details, see Notice 2003-56, on page 396 of Internal Revenue Bulletin 2003-34 at www.irs.gov/pub/irs-irbs/irb03-34.pdf.
Table 4. 2002 New Markets Credit Allocation Awardees
Name of Awardee | City and State | Credit Allocation | |
---|---|---|---|
Alaska Growth Capital BIDCO, Inc. | Anchorage, AK | $5,000,000 | |
Advantage Capital Community Development Fund, L.L. | New Orleans, LA | $110,000,000 | |
ASB Community Development Corp | Portsmouth, OH | $2,000,000 | |
Bethel New Life, Inc. | Chicago, IL | $4,000,000 | |
Border Communities Capital Company, LLC | Solana Beach, CA | $50,000,000 | |
Cahaba Community Development, LLC | Birmingham, AL | $40,000,000 | |
Campus Partners for Community Urban Redevelopment | Columbus, OH | $35,000,000 | |
CBSI Development Fund, Inc. | New Albany, IN | $3,000,000 | |
Central Ohio Loan Services, Inc. | Waverly, OH | $6,000,000 | |
CFBanc Corporation | Washington, DC | $73,000,000 | |
Citizens Business Development Company, LLC | Jackson, KY | $3,000,000 | |
Citizens Tri-County Development Corporation | Dunlap, TN | $1,000,000 | |
Clearinghouse CDFI | Lake Forest, CA | $56,000,000 | |
Cleveland New Markets Investment Fund LLC | Cleveland, OH | $15,000,000 | |
CNC Development Foundation, Inc. | Paintsville, KY | $2,000,000 | |
Coastal Enterprises, Inc. | Wiscasset, ME | $65,000,000 | |
Community Development Funding, LLC | Clarksville, MD | $25,000,000 | |
Community Development New Markets I LLC | Cleveland, OH | $150,000,000 | |
Community Economic Redevelopment Corporation | Chicago, IL | $6,000,000 | |
Community Loan Fund of New Jersey, Inc. | Trenton, NJ | $15,000,000 | |
Community Trust Community Development Corporation | Pikeville, KY | $7,000,000 | |
Community Ventures Corporation, Inc. | Lexington, KY | $12,000,000 | |
Delaware Community Investment Corporation (DCIC) | Wilmington, DE | $15,000,000 | |
Eclypse Development Partners I LLC | Atlanta, GA | $22,000,000 | |
Empowerment Reinvestment Fund, LLC | New York City, NY | $10,000,000 | |
Enterprise Corporation of the Delta | Jackson, MS | $15,000,000 | |
ESIC New Markets Partners Limited Partnership | Columbia, MD | $90,000,000 | |
First State Development Corp. | Union City, TN | $7,000,000 | |
Greater Jamaica Local Development Company, Inc. | Jamaica, NY | $21,000,000 | |
GS New Markets Fund | New York, NY | $75,000,000 | |
HEDC New Markets, Inc. | New York, NY | $30,000,000 | |
Illinois Facilities Fund, The | Chicago, IL | $10,000,000 | |
Impact Community Capital CDE, LLC | San Francisco, CA | $40,000,000 | |
Impact Seven, Inc. | Almena, WI | $21,000,000 | |
KHC New Markets CDE, LLC Series A | Carlsbad, CA | $134,000,000 | |
LA Charter School New Markets CDE LLC | Santa Monica, CA | $36,000,000 | |
Lenders for Community Development | San Jose, CA | $25,000,000 | |
Liberty Bank and Trust Company | New Orleans, LA | $50,000,000 | |
Local Initiatives Support Corporation (LISC) | New York, NY | $65,000,000 | |
MetaFund Corporation | Oklahoma City, OK | $54,000,000 | |
MHIC, LLC | Boston, MA | $25,000,000 | |
Mid-City Community CDE, LLC | Silver Spring, MD | $36,000,000 | |
National Community Capital | Philadelphia, PA | $8,000,000 | |
National New Markets Tax Credit Fund, Inc. | Minneapolis, MN | $162,500,000 | |
National Trust Community Investment Corporation | Washington, DC | $127,000,000 | |
Neighborhood Bancorp | National City, CA | $5,000,000 | |
New Markets Community Capital, LLC | Los Angeles, CA | $30,000,000 | |
Norfolk Redevelopment & Housing Authority | Norfolk, VA | $15,000,000 | |
North Coast Community Development Corporation | Lorain, OH | $9,000,000 | |
Northside Community Development Fund | Pittsburgh, PA | $500,000 | |
Nuestra Development Fund | Roxbury, MA | $1,000,000 | |
Ohio Community Development Finance Fund | Columbus, OH | $15,000,000 | |
Paramount Community Development Fund, LLC | Granville, OH | $75,000,000 | |
Phoenix Community Development and Investment Corporation | Phoenix, AZ | $170,000,000 | |
Prince George's Community Capital Corporation | Largo, MD | $10,000,000 | |
REI New Markets Investment, LLC | Durant, OK | $80,000,000 | |
Rural Community Assistance Corporation | West Sacramento, CA | $8,000,000 | |
Self-Help Ventures Fund | Durham, NC | $75,000,000 | |
Southeast Indiana Community Development | Dillsboro, IN | $3,000,000 | |
Southern Appalachian Fund | Oak Ridge, TN | $2,000,000 | |
The Association For Theater-Based Community Development | Columbus, OH | $6,000,000 | |
Urban Development Fund, LLC | Chicago, IL | $15,000,000 | |
Wachovia Community Development Enterprises, LLC | Charlotte, NC | $150,000,000 | |
West Virginia Community Development Loan Fund, Inc. | Barboursville, WV | $4,000,000 | |
WNC National Community Development Advisors, LLC | Costa Mesa, CA | $50,000,000 | |
123 New Market Investors LLC | Washington, DC | $13,000,000 |
State or local governments can issue enterprise zone facility bonds (a type of exempt facility tax-exempt bond) to raise funds to provide an “enterprise zone business” with “qualified zone property.” At least 95% of the net proceeds from the bond issue must be used to finance:
-
Qualified zone property whose principal user is an enterprise zone business, and
-
Certain land used for a related purpose (for example, land where the business is located and a parking lot for customers and employees).
Tax-exempt bonds generally have lower interest rates than conventional financing.
Contact the appropriate state or local government agency to find out if this type of financing is available in your empowerment zone or enterprise community.
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Every trade or business of the corporation or partnership is the active conduct of a qualified business (defined later) within an empowerment zone or an enterprise community. (This rule does not apply to a sole proprietorship.)
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At least 50% (80% for bonds issued before August 6, 1997) of its total gross income is from the active conduct of a qualified business within a zone or community.
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A substantial part of the use of its tangible property is within a zone or community. (For bonds issued before August 6, 1997, at least 85% of the use of its tangible property must be within a zone or community.)
-
A substantial part of its intangible property is used in the active conduct of the business. (For bonds issued before August 6, 1997, at least 85% of its intangible property must be used in, and exclusively related to, the active conduct of the business.)
-
A substantial part of the employees' services are performed within a zone or community. (For bonds issued before August 6, 1997, at least 85% of the employees' services must be performed within a zone or community.)
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At least 35% of the employees are residents of an empowerment zone or enterprise community. (This rule does not apply to businesses in the DC Zone.)
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Less than 5% of the average of the total unadjusted bases of the property owned by the business is from:
-
Nonqualified financial property (generally, debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, and annuities), or
-
Collectibles not held primarily for sale to customers.
-
-
It is reasonable, at the beginning of the start-up period, to expect the business to be an enterprise zone business by the end of the start-up period.
-
The business makes bona fide efforts to be an enterprise zone business.
-
The issue date of the bond issue financing the qualified zone property.
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The date this property is first placed in service (or, if earlier, the date that is 3 years after the issue date).
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Any business that consists primarily of the development or holding of intangibles for sale or license.
-
Any business listed earlier in item (5) or item (6) under Nonqualified employees in the Empowerment Zone Employment Credit section.
-
You acquired the property after the zone or community designation is in effect.
-
You did not acquire the property from a related person or member of a controlled group of which you are a member.
-
Your basis in the property is not determined either by its adjusted basis in the hands of the person from whom you acquired it or under the stepped-up basis rules for property acquired from a decedent.
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You were the first person to use the property in an empowerment zone or enterprise community.
-
At least 85% of the property's use is in an empowerment zone or enterprise community and in the active conduct of a qualified trade or business in the zone or community.
-
15% (100% for bonds issued before August 6, 1997) of the adjusted basis of the property at the beginning of the 24-month period.
-
$5,000.
-
The issue date of the bond issue financing the qualified zone property.
-
The date this property is first placed in service (or, if earlier, the date that is 3 years (5 years for certain construction projects) after the issue date).
-
Substantially all of the facility that was financed ceases to be used in an empowerment zone or enterprise community.
-
The principal user of the facility ceases to be an enterprise zone business.
Beginning in 1998, state or local governments can issue qualified zone academy bonds to raise funds for the use of a “qualified zone academy.” However, these bonds require a private business contribution. Certain banks, insurance companies, and corporations actively engaged in the business of lending money can receive a tax credit as an incentive to hold these bonds. For more information about claiming the credit, see Form 8860.
The national qualified academy zone bond limit for 2003 was $400 million, but is zero for 2004 (excluding any carryover limitation). However, at the time this publication was issued, Congress was considering legislation that would establish a national limitation amount for 2004. See What's Hot in Tax Forms, Pubs, and Other Tax Products at www.irs.gov/formspubs to find out if this legislation was enacted.
Contact the appropriate state or local government agency to find out if qualified zone academy bonds are available in your area.
-
Equipment for use in the qualified zone academy.
-
Technical assistance in developing curriculum or in training teachers to promote appropriate market driven technology in the classroom.
-
Services of employees as volunteer mentors.
-
Internships, field trips, or other educational opportunities outside the academy for students.
-
Any other property or service specified by the local educational agency.
-
A donation of cash is generally a qualified contribution if it is to be used to buy any property or service described in this list.
The work opportunity credit provides businesses with an incentive to hire individuals from groups that have a particularly high unemployment rate or other special employment needs. Your business does not have to be in an empowerment zone, enterprise community, or renewal community to qualify for this credit. You can claim the credit if you pay or incur “qualified first-year wages” to a “targeted group employee.”
The work opportunity credit includes New York Liberty Zone business employees. This part of the work opportunity credit is called the New York Liberty Zone business employee credit. It has a different tax liability limit and is figured separately on Form 8884. For details, see New York Liberty Zone Business Employee Credit, earlier.
This credit is set to expire for individuals who begin work for you after December 2003. However, at the time this publication was issued, Congress was considering legislation that would allow this credit with respect to employees who began work for you in 2004. See What's Hot in Tax Forms, Pubs, and Other Tax Products at www.irs.gov/formspubs to find out if this legislation was enacted.
-
Recipient of assistance under Temporary Assistance for Needy Families (TANF),
-
Veteran,
-
Ex-felon,
-
High-risk youth, age 18 to 24 who lives in an empowerment zone, enterprise community, or renewal community,
-
Vocational rehabilitation referral,
-
Summer youth employee, age 16 or 17 who lives in an empowerment zone, enterprise community, or renewal community,
-
Food stamp recipient, or
-
Supplemental security income (SSI) recipient.
-
Receive the certification by the day the individual begins work, or
-
Do both of the following:
-
Complete Form 8850 by the day you offer the individual a job, and
-
Submit the form to your SESA by the 21st day after the individual begins work.
-
-
Has worked for you for more than 1 year,
-
Is your relative or dependent,
-
You rehired, or
-
Does not work for you for at least 120 hours.
The welfare-to-work credit provides businesses with an incentive to hire long-term family assistance recipients. Your business does not have to be in an empowerment zone, enterprise community, or renewal community to qualify for this credit. You can claim the credit if you pay or incur “qualified wages” during the first 2 years of employment to a “long-term family assistance recipient.”
This credit is set to expire for individuals who begin work for you after December 2003. However, at the time this publication was issued, Congress was considering legislation that would allow this credit with respect to employees who began work for you in 2004. See What's Hot in Tax Forms, Pubs, and Other Tax Products at www.irs.gov/formspubs to find out if this legislation was enacted.
-
Has received assistance payments from Temporary Assistance for Needy Families (TANF) for at least 18 consecutive months ending on the hiring date,
-
Receives assistance payments from TANF for any 18 months (whether or not consecutive) beginning after August 5, 1997, and is hired not more than 2 years after the end of the earliest 18-month period, or
-
Stops being eligible after August 5, 1997, for assistance payments because federal or state law limits the maximum period that assistance is payable, and is hired not more than 2 years after that eligibility for assistance ends.
-
Receive the certification by the day the individual begins work, or
-
Do both of the following:
-
Complete Form 8850 by the day you offer the individual a job, and
-
Submit the form to your SESA by the 21st day after the individual begins work.
-
-
Amounts received for medical care under accident and health plans.
-
Employer-provided coverage under accident and health plans.
-
Certain amounts excludable under an educational assistance program.
-
Amounts excludable under a dependent care assistance program.
-
Has worked for you for more than 2 years,
-
Is your relative or dependent, or
-
Does not either:
-
Work for you for at least 180 days, or
-
Complete at least 400 hours of service.
-
The Indian employment credit provides businesses with an incentive to hire certain individuals who live on or near an Indian reservation. Your business does not have to be in an empowerment zone, enterprise community, or renewal community to qualify for this credit. You can claim the credit if you pay or incur “qualified wages” to a “qualified employee.”
At the time this publication was printed, this credit was set to expire for tax years beginning after 2004.
-
The employee is an enrolled member of an Indian tribe or the spouse of an enrolled member of an Indian tribe.
-
The employee performs substantially all of his or her services for you within an Indian reservation.
-
While performing those services, the employee has his or her main home on or near that reservation.
-
Any employee to whom you pay or incur wages (including wages for services outside an Indian reservation) at a rate that would cause you to pay the employee more than the wage limit if the rate applied for an entire year. (The wage limit was $35,000 for 2003 but may be adjusted for inflation for tax years beginning after 2003.)
-
Certain related taxpayers.
-
Certain dependents.
-
Any 5% owner.
-
Any individual who performs services involving certain gaming activities.
-
Any individual who performs services in a building housing certain gaming activities.
-
The employee voluntarily quits.
-
The employee is terminated because of misconduct.
-
The employee becomes disabled. However, if the disability ends before the end of the first year of employment, you must offer reemployment to the former employee.
Depreciation is a loss in the value of property over the time the property is being used. You can get back your cost of certain property by taking deductions for depreciation. This includes the cost of certain buildings and equipment you use in your business.
Special depreciation rules apply to qualified property that you place in service on an Indian reservation after 1993 and before 2005. These special rules allow you to use shorter recovery periods to figure your depreciation deduction for qualified property. As a result, your deduction is larger. Your business does not have to use the property in an empowerment zone, enterprise community, or renewal community to use these special rules.
The special depreciation rules that apply to qualified Indian reservation property is set to expire for property placed in service after 2004. However, at the time this publication was issued, Congress was considering legislation that would apply the special rules for property placed in service in 2005. See What's Hot in Tax Forms, Pubs, and Other Tax Products at www.irs.gov/formspubs to find out if this legislation was enacted
-
Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property.
-
Property acquired directly or indirectly from certain related persons.
-
Property placed in service for purposes of conducting or housing certain gaming activities.
-
Any property you must depreciate under the Alternative Depreciation System (ADS).
-
It is qualified property, as defined earlier (except that it is outside the reservation).
-
It benefits the tribal infrastructure.
-
It is available to the general public.
-
It is placed in service in connection with the active conduct of a trade or business within a reservation.
If you hold a District of Columbia Enterprise Zone (DC Zone) asset more than 5 years, you will not have to include any “qualified capital gain” from its sale or exchange in your gross income. This exclusion applies to an interest in, or property of, certain businesses operating in the District of Columbia.
-
DC Zone business stock.
-
DC Zone partnership interest.
-
DC Zone business property.
In determining whether any property is a DC Zone asset, continue to treat the DC Zone as an empowerment zone for years after 2003.
-
You acquired the stock before 2004 at its original issue solely in exchange for cash. (This requirement is also met if you acquired the stock at any time from another person in whose hands it was DC Zone business stock.)
-
The corporation was a DC Zone business (or was being organized as a DC Zone business) at the time the stock was issued.
-
The corporation qualified as a DC Zone business during substantially all of your holding period for the stock. (This requirement is also met if the corporation ceased to qualify as a DC Zone business after the 5-year period beginning on the date you acquired the stock. However, your qualified capital gain cannot be more than what it would have been if you had sold the stock on the date the corporation ceased to qualify.)
-
You acquired the partnership interest from the partnership before 2004 in exchange for cash. (This requirement is also met if you acquired the partnership interest at any time from another person in whose hands it was a DC Zone partnership interest.)
-
The partnership was a DC Zone business (or was being organized as a DC Zone business) at the time the partnership interest was acquired.
-
The partnership qualified as a DC Zone business during substantially all of your holding period for the partnership interest. (This requirement is also met if the partnership ceased to qualify as a DC Zone business after the 5-year period beginning on the date you acquired the partnership interest. However, your qualified capital gain cannot be more than what it would have been if you had sold the partnership interest on the date the partnership ceased to qualify.)
-
You acquired the property before 2004. (This requirement is also met if you acquired the property at any time from another person in whose hands it was DC Zone business property.)
-
You did not acquire the property from a related person or member of a controlled group of which you are a member.
-
Your basis in the property is not determined either by its adjusted basis in the hands of the person from whom you acquired it or under the stepped-up basis rules for property acquired from a decedent.
-
You were the first person to use the property in the DC Zone. (This requirement is also met if you acquired the property from another person in whose hands it was DC Zone business property.)
-
Substantially all of the use of the property was in your DC Zone business during substantially all of your holding period for that property. (This requirement is also met if you stopped using the property in your DC Zone business, or your business ceased to qualify as a DC Zone business, after the 5-year period beginning on the date you acquired the property. However, your qualified capital gain cannot be more than what it would have been if you had sold the property on the date you stopped using the property in your DC Zone business or on the date your business ceased to qualify.)
-
100% of the adjusted basis of the property at the beginning of the 24-month period.
-
$5,000.
-
The 35% employee residence requirement listed in item (6) does not apply.
-
The 50% of gross income requirement listed in item (2) is increased to 80%.
-
No area other than the DC Zone can be treated as an empowerment zone or enterprise community.
-
Gain attributable to periods before 1998 or after 2008.
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Ordinary (section 1245) gain. See chapter 3 in Publication 544, Sales and Other Dispositions of Assets.
-
Section 1250 gain figured as if section 1250 applied to all depreciation rather than the additional depreciation. See chapter 3 in Publication 544.
-
Gain attributable to real property or an intangible asset that is not an integral part of a DC Zone business.
-
Gain attributable, directly or indirectly, in whole or in part, to a transaction with a related person. For the definition of a related person, see chapter 2 in Publication 544.
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
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sometimes listen in on or
record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
Walk-in. Many products and services are available on a walk-in basis.
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Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
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Services. You can walk in to your local Taxpayer Assistance Center every business day to ask tax questions or get help with a tax problem. An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. You can set up an appointment by calling your local Center and, at the prompt, leaving a message requesting Everyday Tax Solutions help. A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. To find the number, go to www.irs.gov or look in the phone book under “United States Government, Internal Revenue Service.”
Mail. You can send your order for forms, instructions, and publications to the Distribution Center nearest to you and receive a response within 10 workdays after your request is received. Use the address that applies to your part of the country.
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Western part of U.S.:
Western Area Distribution Center
Rancho Cordova, CA 95743–0001 -
Central part of U.S.:
Central Area Distribution Center
P.O. Box 8903
Bloomington, IL 61702–8903 -
Eastern part of U.S. and foreign addresses:
Eastern Area Distribution Center
P.O. Box 85074
Richmond, VA 23261–5074
CD-ROM for tax products. You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain:
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Current-year forms, instructions, and publications.
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Prior-year forms and instructions.
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Frequently requested tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
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Internal Revenue Bulletins.
Buy the CD-ROM from National Technical Information Service (NTIS) on the Internet at www.irs.gov/cdorders for $22 (no handling fee) or call 1–877–233–6767 toll free to buy the CD-ROM for $22 (plus a $5 handling fee). The first release is available in early January and the final release is available in late February.
CD-ROM for small businesses. IRS Publication 3207, Small Business Resource Guide, is a must for every small business owner or any taxpayer about to start a business. This handy, interactive CD contains all the business tax forms, instructions and publications needed to successfully manage a business. In addition, the CD provides an abundance of other helpful information, such as how to prepare a business plan, finding financing for your business, and much more. The design of the CD makes finding information easy and quick and incorporates file formats and browsers that can be run on virtually any desktop or laptop computer.
It is available in early April. You can get a free copy by calling 1–800–829–3676 or by visiting the website at www.irs.gov/smallbiz.
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