Logosm.gif (1927 bytes)
navlinks.gif (4688 bytes)
Hruler04.gif (5511 bytes)

Back to Tax Revision Commisison main pageBack to list of research papers

Title VII of H.R. 2014

Home

Bibliography

Calendar

Columns
Dorothy Brizill
Bonnie Cain
Jim Dougherty
Gary Imhoff
Phil Mendelson
Mark David Richards
Sandra Seegars

DCPSWatch

DCWatch Archives
Council Period 12
Council Period 13
Council Period 14

Election 1998
Election 2000
Election 2002

Elections
Election 2004
Election 2006

Government and People
ANC's
Anacostia Waterfront Corporation
Auditor
Boards and Com
BusRegRefCom
Campaign Finance
Chief Financial Officer
Chief Management Officer
City Council
Congress
Control Board
Corporation Counsel
Courts
DC2000
DC Agenda
Elections and Ethics
Fire Department
FOI Officers
Inspector General
Health
Housing and Community Dev.
Human Services
Legislation
Mayor's Office
Mental Health
Motor Vehicles
Neighborhood Action
National Capital Revitalization Corp.
Planning and Econ. Dev.
Planning, Office of
Police Department
Property Management
Public Advocate
Public Libraries
Public Schools
Public Service Commission
Public Works
Regional Mobility Panel
Sports and Entertainment Com.
Taxi Commission
Telephone Directory
University of DC
Water and Sewer Administration
Youth Rehabilitation Services
Zoning Commission

Issues in DC Politics

Budget issues
DC Flag
DC General, PBC
Gun issues
Health issues
Housing initiatives
Mayor’s mansion
Public Benefit Corporation
Regional Mobility
Reservation 13
Tax Rev Comm
Term limits repeal
Voting rights, statehood
Williams’s Fundraising Scandals

Links

Organizations
Appleseed Center
Cardozo Shaw Neigh.Assoc.
Committee of 100
Fed of Citizens Assocs
League of Women Voters
Parents United
Shaw Coalition

Photos

Search

What Is DCWatch?

themail archives

TITLE VII--INCENTIVES FOR REVITALIZATION OF THE DISTRICT OF COLUMBIA

SEC. 701. TAX INCENTIVES FOR REVITALIZATION OF THE DISTRICT OF COLUMBIA.

(a) IN GENERAL — Chapter 1 is amended by adding at the end the following new subchapter:

`SUBCHAPTER W — DISTRICT OF COLUMBIA ENTERPRISE ZONE

`SEC. 1400. ESTABLISHMENT OF DC ZONE.
`SEC. 1400A. TAX-EXEMPT ECONOMIC DEVELOPMENT BONDS.
`SEC. 1400B. ZERO PERCENT CAPITAL GAINS RATE.
`SEC. 1400C. FIRST-TIME HOMEBUYER CREDIT FOR DISTRICT OF COLUMBIA.
`SEC. 1400. ESTABLISHMENT OF DC ZONE.

`(a) IN GENERAL- For purposes of this title--

`(1) the applicable DC area is hereby designated as the District of Columbia Enterprise Zone, and

`(2) except as otherwise provided in this subchapter, the District of Columbia Enterprise Zone shall be treated as an empowerment zone designated under subchapter U.

`(b) APPLICABLE DC AREA- For purposes of subsection (a), the term `applicable DC area' means the area consisting of--

`(1) the census tracts located in the District of Columbia which are part of an enterprise community designated under subchapter U before the date of the enactment of this subchapter, and

`(2) all other census tracts--

`(A) which are located in the District of Columbia, and
`(B) for which the poverty rate is not less than than 20 percent.

`(c) DISTRICT OF COLUMBIA ENTERPRISE ZONE- For purposes of this subchapter, the terms `District of Columbia Enterprise Zone' and `DC Zone' mean the District of Columbia Enterprise Zone designated by subsection (a).

`(d) SPECIAL RULES FOR APPLICATION OF EMPLOYMENT CREDIT-

`(1) EMPLOYEES WHOSE PRINCIPAL PLACE OF ABODE IS IN DISTRICT OF COLUMBIA- With respect to the DC Zone, section 1396(d)(1)(B) (relating to empowerment zone employment credit) shall be applied by substituting `the District of Columbia' for `such empowerment zone'.

`(2) NO DECREASE OF PERCENTAGE IN 2002- In the case of the DC Zone, section 1396 (relating to empowerment zone employment credit) shall be applied by substituting `20' for `15' in the table contained in section 1396(b). The preceding sentence shall apply only with respect to qualified zone employees, as defined in section 1396(d), determined by treating no area other than the DC Zone as an empowerment zone or enterprise community.

`(e) SPECIAL RULE FOR APPLICATION OF ENTERPRISE ZONE BUSINESS DEFINITION- For purposes of this subchapter and for purposes of applying subchapter U with respect to the DC Zone, section 1397B shall be applied without regard to subsections (b)(6) and (c)(5) thereof.

`(f) TIME FOR WHICH DESIGNATION APPLICABLE-

`(1) IN GENERAL- The designation made by subsection (a) shall apply for the period beginning on January 1, 1998, and ending on December 31, 2002.

`(2) COORDINATION WITH DC ENTERPRISE COMMUNITY DESIGNATED UNDER SUBCHAPTER U- The designation under subchapter U of the census tracts referred to in subsection (b)(1) as an enterprise community shall terminate on December 31, 2002.

`SEC. 1400A. TAX-EXEMPT ECONOMIC DEVELOPMENT BONDS.

`(a) IN GENERAL- In the case of the District of Columbia Enterprise Zone, subparagraph (A) of section 1394(c)(1) (relating to limitation on amount of bonds) shall be applied by substituting `$15,000,000' for `$3,000,000'.

`(b) PERIOD OF APPLICABILITY- This section shall apply to bonds issued during the period beginning on January 1, 1998, and ending on December 31, 2002.

`SEC. 1400B. ZERO PERCENT CAPITAL GAINS RATE.

`(a) EXCLUSION- Gross income shall not include qualified capital gain from the sale or exchange of any DC Zone asset held for more than 5 years.

`(b) DC ZONE ASSET- For purposes of this section--

`(1) IN GENERAL- The term `DC Zone asset' means--

`(A) any DC Zone business stock,

`(B) any DC Zone partnership interest, and

`(C) any DC Zone business property.

`(2) DC ZONE BUSINESS STOCK-

`(A) IN GENERAL- The term `DC Zone business stock' means any stock in a domestic corporation which is originally issued after December 31, 1997, if--

`(i) such stock is acquired by the taxpayer, before January 1, 2003, at its original issue (directly or through an underwriter) solely in exchange for cash,

`(ii) as of the time such stock was issued, such corporation was a DC Zone business (or, in the case of  a new corporation, such corporation was being organized for purposes of being a DC Zone business), and

`(iii) during substantially all of the taxpayer's holding period for such stock, such corporation qualified as a DC Zone business.

`(B) REDEMPTIONS- A rule similar to the rule of section 1202(c)(3) shall apply for purposes of this paragraph.

`(3) DC ZONE PARTNERSHIP INTEREST- The term `DC Zone partnership interest' means any capital or profits interest in a domestic partnership which is originally issued after December 31, 1997, if--

`(A) such interest is acquired by the taxpayer, before January 1, 2003, from the partnership solely in exchange for cash,

`(B) as of the time such interest was acquired, such partnership was a DC Zone business (or, in the case of a new partnership, such partnership was being organized for purposes of being a DC Zone business), and

`(C) during substantially all of the taxpayer's holding period for such interest, such partnership qualified as a DC Zone business. A rule similar to the rule of paragraph (2)(B) shall apply for purposes of this paragraph.

`(4) DC ZONE BUSINESS PROPERTY-

`(A) IN GENERAL- The term `DC Zone business property' means tangible property if--

`(i) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after December 31, 1997, and before January 1, 2003,

`(ii) the original use of such property in the DC  Zone commences with the taxpayer, and

`(iii) during substantially all of the taxpayer's holding period for such property, substantially all of the use of such property was in a DC Zone business of the taxpayer.

`(B) SPECIAL RULE FOR BUILDINGS WHICH ARE SUBSTANTIALLY IMPROVED-

`(i) IN GENERAL- The requirements of clauses (i) and (ii) of subparagraph (A) shall be treated as met with respect to--

`(I) property which is substantially improved by the taxpayer before January 1, 2003, and

`(II) any land on which such property is located.

`(ii) SUBSTANTIAL IMPROVEMENT- For purposes of clause (i), property shall be treated as substantially improved by the taxpayer only if, during any 24-month period beginning after December 31, 1997, additions to basis with respect to such property in the hands of the taxpayer exceed the greater of--

`(I) an amount equal to the adjusted basis of such property at the beginning of such 24-month period in the hands of the taxpayer,or

`(II) $5,000.

`(6) TREATMENT OF SUBSEQUENT PURCHASERS, ETC- The term `DC Zone asset' includes any property which would be a DC Zone asset but for paragraph (2)(A)(i), (3)(A), or (4)(A)(ii) in the hands of the taxpayer if such property was a DC Zone asset in the hands of a prior holder.

`(7) 5-YEAR SAFE HARBOR- If any property ceases to be a DC Zone asset by reason of paragraph (2)(A)(iii), (3)(C), or (4)(A)(iii) after the 5-year period beginning on the date the taxpayer acquired such property, such property shall continue to be treated as meeting the requirements of such paragraph; except that the amount of gain to which subsection (a) applies on any sale or exchange of such property shall not exceed the amount which would be qualified capital gain had such property been sold on the date of such cessation.

`(c) DC ZONE BUSINESS- For purposes of this section, the term `DC Zone business' means any entity which is an enterprise zone business (as defined in section 1397B), determined--

`(1) after the application of section 1400(e),

`(2) by substituting `80 percent' for `50 percent' in subsections (b)(2) and (c)(1) of section 1397B, and

`(3) by treating no area other than the DC Zone as an empowerment zone or enterprise community.

`(d) TREATMENT OF ZONE AS INCLUDING CENSUS TRACTS WITH 10 PERCENT POVERTY RATE- For purposes of applying this section (and for purposes of applying this subchapter and subchapter U with respect to this section), the DC Zone shall be treated as including all census tracts--

`(1) which are located in the District of Columbia, and

`(2) for which the poverty rate is not less than 10 percent.

`(e) OTHER DEFINITIONS AND SPECIAL RULES- For purposes of this section--

`(1) QUALIFIED CAPITAL GAIN- Except as otherwise provided in this subsection, the term `qualified capital gain' means any gain recognized on the sale or exchange of--

`(A) a capital asset, or

`(B) property used in the trade or business (as defined in section 1231(b)).

`(2) GAIN BEFORE 1998 OR AFTER 2007 NOT QUALIFIED- The term `qualified capital gain' shall not include any gain attributable to periods before January 1, 1998, or after December 31, 2007.

`(3) CERTAIN GAIN NOT QUALIFIED- The term `qualified capital gain' shall not include any gain which would be treated as ordinary income under section 1245 or under section 1250 if section 1250 applied to all depreciation rather than the additional depreciation.

`(4) INTANGIBLES AND LAND NOT INTEGRAL PART OF DC ZONE BUSINESS- The term `qualified capital gain' shall not include any gain which is attributable to real property, or an intangible asset, which is not an integral part of a DC Zone business.

`(5) RELATED PARTY TRANSACTIONS- The term `qualified capital gain' shall not include any gain attributable, directly or indirectly, in whole or in part, to a transaction with a related person. For purposes of this paragraph, persons are related to each other if such persons are described in section 267(b) or 707(b)(1).

`(f) CERTAIN OTHER RULES TO APPLY- Rules similar to the rules of subsections (g), (h), (i)(2), and (j) of section 1202 shall apply for purposes of this section.

`(g) SALES AND EXCHANGES OF INTERESTS IN PARTNERSHIPS AND S CORPORATIONS WHICH ARE DC ZONE BUSINESSES- In the case of the sale or exchange of an interest in a partnership, or of stock in an S corporation, which was a DC Zone business during substantially all of the period the taxpayer held such interest or stock, the amount of qualified capital gain shall be determined without regard to--

`(1) any gain which is attributable to real property, or an intangible asset, which is not an integral part of a DC Zone business, and

`(2) any gain attributable to periods before January 1, 1998, or after December 31, 2007.

`SEC. 1400C. FIRST-TIME HOMEBUYER CREDIT FOR DISTRICT OF COLUMBIA.

`(a) ALLOWANCE OF CREDIT- In the case of an individual who is a first-time homebuyer of a principal residence in the District of Columbia during any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to so much of the purchase price of the residence as does not exceed $5,000.

`(b) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME-

`(1) IN GENERAL- The amount allowable as a credit under subsection (a) (determined without regard to this subsection) for the taxable year shall be reduced (but not below zero) by the amount which bears the same ratio to the credit so allowable as--

`(A) the excess (if any) of--

`(i) the taxpayer's modified adjusted gross income for such taxable year, over

`(ii) $70,000 ($110,000 in the case of a joint return), bears to

`(B) $20,000.

`(2) MODIFIED ADJUSTED GROSS INCOME- For purposes of paragraph (1), the term `modified adjusted gross income' means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.

`(c) FIRST-TIME HOMEBUYER- For purposes of this section--

`(1) IN GENERAL- The term `first-time homebuyer' has the same meaning as when used in section 72(t)(8)(D)(i), except that `principal residence in the District of Columbia during the 1-year period' shall be substituted for `principal residence during the 2-year period' in subclause (I) thereof.

`(2) ONE-TIME ONLY- If an individual is treated as a first-time homebuyer with respect to any principal residence, such individual may not be treated as a first-time homebuyer with respect to any other principal residence.

`(3) PRINCIPAL RESIDENCE- The term `principal residence' has the same meaning as when used in section 121.

`(d) CARRYOVER OF CREDIT- If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under subpart A of part IV of subchapter A (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

`(e) SPECIAL RULES- For purposes of this section--

`(1) ALLOCATION OF DOLLAR LIMITATION-

`(A) MARRIED INDIVIDUALS FILING SEPARATELY- In the case of a married individual filing a separate return, subsection (a) shall be applied by substituting `$2,500' for `$5,000'.

`(B) OTHER TAXPAYERS- If 2 or more individuals who are not married purchase a principal residence, the amount of the credit allowed under subsection (a) shall be allocated among such individuals in such manner as the Secretary may prescribe, except that the total amount of the credits allowed to all such individuals shall not exceed $5,000.

`(2) PURCHASE-

`(A) IN GENERAL- The term `purchase' means any acquisition, but only if--

`(i) the property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267 (b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants), and

`(ii) the basis of the property in the hands of the person acquiring it is not determined--

`(I) in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or

`(II) under section 1014(a) (relating to property acquired from a decedent).

`(B) CONSTRUCTION- A residence which is constructed by the taxpayer shall be treated as purchased by the taxpayer.

`(3) PURCHASE PRICE- The term `purchase price' means the adjusted basis of the principal residence on the date of acquisition (within the meaning of section 72(t)(8)(D)(iii)).

`(f) REPORTING- If the Secretary requires information reporting under section 6045 by a person described in subsection (e)(2) thereof to verify the eligibility of taxpayers for the credit allowable by this section, the exception provided by section 6045(e)(5) shall not apply.

`(g) CREDIT TREATED AS NONREFUNDABLE PERSONAL CREDIT- For purposes of this title, the credit allowed by this section shall be treated as a credit allowable under subpart A of part IV of subchapter A of this chapter.

`(h) BASIS ADJUSTMENT- For purposes of this subtitle, if a credit is allowed under this section with respect to the purchase of any residence, the basis of such residence shall be reduced by the amount of the credit so allowed.

`(i) TERMINATION- This section shall not apply to any property purchased after December 31, 2000.'.

(b) CONFORMING AMENDMENTS-

(1) Subsection (d) of section 39 is amended by adding at the end the following new paragraph:

`(8) NO CARRYBACK OF DC ZONE CREDITS BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the credits allowable under subchapter U by reason of section 1400 may be carried back to a taxable year ending before the date of the enactment of section 1400.'.

(2) Subsection (a) of section 1016 is amended by striking `and' at the end of paragraph (25), by striking the period at the end of paragraph (26) and inserting `, and', and by adding at the end thereof the following new paragraph:

`(27) in the case of a residence with respect to which a credit was allowed under section 1400C, to the extent provided in section 1400C(h).'.

(c) CLERICAL AMENDMENT- The table of subchapters for chapter 1 is amended by adding at the end the following new item:

`SUBCHAPTER W. DISTRICT OF COLUMBIA ENTERPRISE ZONE.'.

(d) EFFECTIVE DATE- Except as provided in subsection (c), the amendments made by this section shall take effect on the date of the enactment of this Act.

Back to top of page


Send mail with questions or comments to webmaster@dcwatch.com
Web site copyright ©DCWatch (ISSN 1546-4296)