I 

108TH CONGRESS 

2D SESSION H. R. 4901

To promote freedom, fairness, and economic opportunity by establishing a 

National Enterprise Zone system to promote prosperity in economically 

depressed areas. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 22, 2004

Mr. RYAN of Wisconsin (for himself and Ms. ROS-LEHTINEN) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL

To promote freedom, fairness, and economic opportunity by 

establishing a National Enterprise Zone system to promote prosperity in economically depressed areas.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘National Enterprise Zone Act of 2004’’. 

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

Sec. 3. National enterprise zones. 

‘‘SUBCHAPTER Z—NATIONAL ENTERPRISE ZONES

‘‘Sec. 1400M. National Enterprise Zone designation procedure. 
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‘‘Sec. 1400N. National Enterprise Zone eligibility criteria. 

‘‘Sec. 1400O. Effect of National Enterprise Zone designation on individuals, estate and trusts. 

‘‘Sec. 1400P. National Enterprise Zone individual taxable income. 

‘‘Sec. 1400Q. Effect of National Enterprise Zone designation on corporations. 

‘‘Sec. 1400R. National Enterprise Zone corporate taxable income. 

‘‘Sec. 1400S. Conduct of an active trade or business within a National Enterprise Zone by corporations, partnerships and sole proprietors. 

‘‘Sec. 1400T. Definitions and special rules.’’.

1 SEC. 2. FINDINGS. 

2 The Congress finds that—

3 (1) a higher level of private sector economic ac4 tivity is necessary to alleviate poverty and unemploy5 ment in economically depressed regions of the 

6 United States; 

7 (2) removing tax disincentives to reside or do 

8 business in economically depressed areas is an effec9 tive means of promoting economic growth, develop10 ment, employment, a higher standard of living and 

11 a higher quality of life in economically depressed 

12 areas; 

13 (3) lower marginal tax rates on work, savings 

14 and investment in economically depressed regions 

15 will promote employment, business activity and de16 velopment in economically depressed areas; and 

17 (4) improved taxation of business investment in 

18 plant, equipment and inventories in economically de19 pressed areas will encourage businesses to operate in 

20 those areas. 
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1 SEC. 3. NATIONAL ENTERPRISE ZONES. 

2 (a) IN GENERAL.—Chapter 1 of the Internal Rev3 enue Code is amended by inserting after subchapter Y the 

4 following new subchapter: 

5 ‘‘SUBCHAPTER Z—NATIONAL ENTERPRISE ZONES

‘‘Sec. 1400M. National Enterprise Zone designation procedure. 

‘‘Sec. 1400N. National Enterprise Zone eligibility criteria. 

‘‘Sec. 1400O. Effect of National Enterprise Zone designation on 

individuals, estates and trusts. 

‘‘Sec. 1400P. National Enterprise Zone individual taxable income. 

‘‘Sec. 1400Q. Effect of National Enterprise Zone designation on 

corporations. 

‘‘Sec. 1400R. National Enterprise Zone corporate taxable income. 

‘‘Sec. 1400S. Conduct of an active trade or business within a 

National Enterprise Zone by corporations, partnerships and sole proprietors. 

‘‘Sec. 1400T. Definitions and special rules.

6 ‘‘SEC. 1400M. NATIONAL ENTERPRISE ZONE DESIGNATION 

7 PROCEDURE. 

8 ‘‘(a) NOMINATED ZONE.—The governor of a State or 

9 United States territory or the Mayor of the District of 

10 Columbia may nominate one or more zones for consider11 ation by the Secretary. This nomination shall take the 

12 form of a written application submitted in the manner and 

13 form prescribed by the Secretary. Said application shall 

14 contain all of the information necessary to determine 

15 whether a nominated zone meets the National Enterprise 

16 Zone eligibility criteria. 

17 ‘‘(b) APPLICATION DEADLINE.—The nomination ap18 plication shall be submitted after January 1st and before 
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1 February 28th of the year prior to the proposed effective 

2 date of the zone. 

3 ‘‘(c) DEFICIENCIES DEADLINE.—The Secretary shall 

4 inform the nominator of any procedural noncompliance by 

5 the nominator with the application procedures or of any 

6 needed information that may be missing from the applica7 tion by issuing a deficiency notice no later than April 30th 

8 of the year that the application was submitted. 

9 ‘‘(d) CURING DEADLINE.—The nominator shall cure 

10 any deficiencies set forth in the Secretary’s deficiency no11 tice by May 31st of the year in which the deficiency notice 

12 was issued. Failure to timely cure said deficiencies shall 

13 constitute the withdraw of the nomination application. 

14 ‘‘(e) DESIGNATION DEADLINE.—The Secretary shall 

15 make a determination with respect to any nomination ap16 plication no later than September 30th of the year in 

17 which the application was received. If the Secretary finds 

18 that a nominated zone meets the National Enterprise 

19 Zone eligibility criteria set forth in section 1400N, then 

20 the Secretary shall designate said zone as a National En21 terprise Zone no later than September 30th of the year

22 that the application was submitted. If the Secretary finds 

23 that a nominated zone does not meet the National Enter24 prise Zone eligibility criteria set forth in section 1400N 

25 or that the application does not contain sufficient informa-
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1 tion to determine whether a nominated zone meets the Na2 tional Enterprise Zone eligibility criteria set forth in sec3 tion 1400N, then the Secretary shall decline to designate 

4 said zone as a National Enterprise Zone and shall, not 

5 later than October 31st of the year the application was 

6 submitted, provide to the nominator a rejection notice set7 ting forth with particularly the reasons why the applica8 tion was rejected. 

9 ‘‘(f) NO PREJUDICE WITH RESPECT TO PREVIOUSLY

10 NOMINATED ZONES.—Whether a zone or a substantially 

11 similar zone has been nominated in previous years shall 

12 not be regarded by the Secretary as relevant when evalu13 ating whether to designate a nominated zone as a National 

14 Enterprise Zone. 

15 ‘‘(g) APPLICATION CONTENTS.—The application sub16 mitted by the nominator shall contain—

17 ‘‘(1) an enumeration of all of the census tracts 

18 to be included in the zone; 

19 ‘‘(2) census data for each tract as to median 

20 household income in that tract; 

21 ‘‘(3) census data for each tract as to the pov22 erty rate in that tract; 

23 ‘‘(4) the state, territorial or District of Colum24 bia law that conforms to the requirements of section 

25 1400N; and 
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1 ‘‘(5) such other information as the Secretary 

2 may require. 

3 ‘‘(h) EFFECTIVE DATE OF ZONE DESIGNATION.—

4 The effective date of the designation of any zone as a Na5 tional Enterprise Zone pursuant to this section shall be 

6 January 1 of the year following its designation. The des7 ignation shall continue indefinitely. However, the zone 

8 shall be subject to annual eligibility reviews after it has 

9 been effective five years. 

10 ‘‘(i) ANNUAL ELIGIBILITY REVIEW.—Between Janu11 ary 1 and April 30 of the sixth year of a National Enter12 prise Zone’s initial effective date and each year thereafter, 

13 the Secretary shall undertake a review of each National 

14 Enterprise Zone designation whereby the Secretary shall 

15 determine whether the zone continues to meet the Na16 tional Enterprise Zone Eligibility Criteria established by 

17 section 1400N. If this review determines that a National 

18 Enterprise Zone no longer meets the National Enterprise 

19 Zone Eligibility Criteria established by section 1400N, 

20 then the Secretary shall revoke the designation effective 

21 the end of the calendar year. No later than June 30 after 

22 said determination, the Secretary shall issue a notice to 

23 the nominator and to all taxpayers making National En24 terprise Zone elections with respect to said zone in the 

25 taxpayer’s previous taxable year that the designation will 
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1 be revoked at the end of the calendar year for said Na2 tional Enterprise Zone. The Secretary shall publish the 

3 annual eligibility review results for all National Enterprise 

4 Zones no later than June 30 of each year. 

5 ‘‘SEC. 1400N. NATIONAL ENTERPRISE ZONE ELIGIBILITY 

6 CRITERIA. 

7 ‘‘(a) NATIONAL ENTERPRISE ZONE ELIGIBILITY

8 CRITERIA.—A National Enterprise Zone must—

9 ‘‘(1) be composed of contiguous census tracts 

10 (none of which may be part of an existing National 

11 Enterprise Zone); 

12 ‘‘(2) have greater than 10,000 residents; 

13 ‘‘(3) have a poverty rate two times the national 

14 poverty rate; 

15 ‘‘(4) have a median household income less than 

16 60 percent of the national median household income; 

17 ‘‘(5) have an unemployment rate 2.5 times the 

18 national average unemployment rate; and 

19 ‘‘(6) be located entirely within a state, territory 

20 or the District of Columbia that the Secretary cer21 tifies has enacted conforming laws within the mean22 ing of subsection (e). 

23 ‘‘(b) SPECIAL RULE FOR SMALL INCORPORATED CIT24 IES OR SMALL COUNTIES.—Paragraph (2) of subsection 

25 (a) shall not apply to a zone if the zone comprises an en-
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1 tire incorporated city or an entire county provided that 

2 said incorporated city or county existed on the date of en3 actment of this subchapter. 

4 ‘‘(c) NO OVERLAP WITH EXISTING ZONES OF DIF5 FERENT TYPE.—No part of a National Enterprise Zone 

6 may also be a part of an Empowerment Zone, Enterprise 

7 Community, or Rural Development Investment Area (Sub8 chapter U zones), District of Columbia Enterprise Zone 

9 (subchapter W zones). However, the nominator of a pro10 posed National Enterprise Zone may indicate in his appli11 cation that the some or all of an existing subchapter U 

12 or subchapter W zone shall lose that designation upon its 

13 designation as all or part of a National Enterprise Zone. 

14 Said existing subchapter U or subchapter W zone shall 

15 lose said designation upon its designation as all or part 

16 of a National Enterprise Zone in a manner prescribed by 

17 the Secretary. 

18 ‘‘(d) DATA.—No later than November 30th of each 

19 year, the Secretary shall designate which data as of which 

20 date shall be used by nominators to perform the calcula21 tions required in subsection (a) in applications made the 

22 following year. 

23 ‘‘(e) CONFORMING LAWS.—A state, territory or the 

24 District of Columbia shall be deemed to have enacted con25 forming laws if it is in substantial compliance with—
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1 ‘‘(1) the No Child Left Behind Act of 2001 

2 (Public Law 107–110), and 

3 ‘‘(2) its tax laws provide for either—

4 ‘‘(A) a substantially similar income tax 

5 base with respect to business income arising 

6 from the conduct of an active trade or business 

7 within a National Enterprise Zone as that pro8 vided for Federal income tax purposes and tax 

9 rates no higher than that imposed on businesses 

10 without a National Enterprise Zone, or 

11 ‘‘(B) the imposition of no income tax with 

12 respect to business income arising from the con13 duct of an active trade or business within a Na14 tional Enterprise Zone. 

15 ‘‘SEC. 1400O. EFFECT OF NATIONAL ENTERPRISE ZONE 

16 DESIGNATION ON INDIVIDUALS, ESTATES 

17 AND TRUSTS. 

18 ‘‘(a) INDIVIDUAL ALTERNATIVE NATIONAL ENTER19 PRISE ZONE TAX.—If for any taxable year, any individual 

20 taxpayer who is resident in a National Enterprise Zone

21 for the entire taxable year has any National Enterprise 

22 Zone taxable income, then, in lieu of any tax imposed by 

23 section 1 or section 55, said individual taxpayer may elect, 

24 in a form prescribed by the Secretary, to pay a tax which 

25 shall consist of the sum of—
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1 ‘‘(1) a tax computed on the taxable income re2 duced by the amount of National Enterprise Zone 

3 tentative taxable income (if greater than zero), at 

4 the rates and in the manner as if this subsection 

5 had not been enacted, plus 

6 ‘‘(2) a tax of 17 percent of the National Enter7 prise Zone taxable income. 

8 ‘‘(b) INDIVIDUAL TAXPAYER.—For purposes of this 

9 section, an individual taxpayer shall include an—

10 ‘‘(1) individual, 

11 ‘‘(2) married individual making a single return 

12 jointly with his spouse, 

13 ‘‘(3) surviving spouse, 

14 ‘‘(4) head of household, 

15 ‘‘(5) married individual who does not make a 

16 single return jointly with his or her spouse, 

17 ‘‘(6) estate, or 

18 ‘‘(7) trust. 

19 ‘‘(c) CERTAIN INDIVIDUALS, ESTATES AND

20 TRUSTS.—

21 ‘‘(1) JOINT FILERS.—In the case of married in22 dividuals making a single return jointly, both indi23 viduals must have been residents in a National En24 terprise Zone for their entire taxable year to qualify 

25 to file jointly under this section. 
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1 ‘‘(2) INDIVIDUALS RESIDENT IN MULTIPLE

2 ZONES.—Individuals who were residents of two or 

3 more National Enterprise Zones during their taxable 

4 year but were residents of a National Enterprise 

5 Zone for their entire taxable year shall be eligible 

6 under this section. 

7 ‘‘(3) ESTATES AND CERTAIN TRUSTS.—The es8 tate of an individual and testamentary trusts of said 

9 individual shall be eligible under this section if the 

10 decedent was a resident of a National Enterprise 

11 Zone for at least two complete taxable years prior to 

12 the individual’s death. 

13 ‘‘SEC. 1400P. NATIONAL ENTERPRISE ZONE INDIVIDUAL 

14 TAXABLE INCOME. 

15 ‘‘(a) NATIONAL ENTERPRISE ZONE INDIVIDUAL

16 TENTATIVE TAXABLE INCOME.—National Enterprise 

17 Zone tentative individual taxable income shall be equal to 

18 taxable income (as defined by section 63 without regard 

19 to section 179(e)) plus the additions set forth in sub20 section (b) less the deductions set forth in subsection (c). 

21 ‘‘(b) ADDITIONS TO TAXABLE INCOME TO DETER22 MINE NATIONAL ENTERPRISE INDIVIDUAL TENTATIVE

23 TAXABLE INCOME.—The following amounts shall be 

24 added to taxable income for purposes of determining Na-
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1 tional Enterprise Zone individual tentative taxable in2 come—

3 ‘‘(1) any amount excluded by section 103; 

4 ‘‘(2) any amount excluded by section 105; 

5 ‘‘(3) any amount excluded by section 106; and 

6 ‘‘(4) any amount excluded by section 125. 

7 ‘‘(c) DEDUCTIONS FROM TAXABLE INCOME TO DE8 TERMINE NATIONAL ENTERPRISE INDIVIDUAL TEN9 TATIVE TAXABLE INCOME.—The following amounts shall 

10 be deducted from taxable income for purposes of deter11 mining National Enterprise Zone individual tentative tax12 able income—

13 ‘‘(1) the taxpayer’s distributive share of any 

14 partnership item (within the meaning of section 

15 702) that is not attributable to the conduct of an ac16 tive trade or business within a National Enterprise 

17 Zone; 

18 ‘‘(2) the taxpayer’s pro rata share of any S cor19 poration item (within the meaning of section 1366) 

20 that is not attributable to the conduct of an active 

21 trade or business within a National Enterprise Zone; 

22 and 

23 ‘‘(3) income derived from business that does not 

24 constitute the conduct of an active trade or business 

25 within a National Enterprise Zone. 
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1 ‘‘(d) NATIONAL ENTERPRISE ZONE INDIVIDUAL

2 TAXABLE INCOME.—National Enterprise Zone individual 

3 taxable income shall be National Enterprise Zone tentative 

4 individual taxable income less—

5 ‘‘(1) net savings (as defined in subsection e); 

6 ‘‘(2) capital gains subject to tax by section 1 

7 provided that the property disposed of, the disposi8 tion of which gave rise to the gain or loss, was ac9 quired by the taxpayer at a time the taxpayer was 

10 a resident of a National Enterprise Zone; 

11 ‘‘(3) expenditures made to acquire inventory 

12 property; 

13 ‘‘(4) the amount, if any, the taxpayer elects to 

14 deduct pursuant to 179(e) that exceeds the limita15 tions in section 179(b); 

16 ‘‘(5) deductions reduced pursuant to section 68; 

17 and 

18 ‘‘(6) amounts by which the exemption was re19 duced pursuant to section 151(d)(3). 

20 ‘‘(e) NET SAVINGS.—

21 ‘‘(1) GENERAL RULE.—Net savings means de22 posits or contributions to non-qualified financial ac23 counts less withdraws or distributions from non24 qualified financial accounts held. 
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1 ‘‘(2) NONQUALIFIED FINANCIAL ACCOUNTS.—A 

2 non-qualified financial account means an account 

3 maintained with a bank (other than a checking ac4 count), a regulated investment company, an invest5 ment bank or brokerage firm that is not a qualified 

6 trust or account within the meaning of subchapter 

7 D. 

8 ‘‘(f) TAX UPON LEAVING ZONE.—The cumulative 

9 sum of net savings deducted pursuant to subsection (d)(1) 

10 (if greater than zero) shall be includible in gross income 

11 and taxed at a 17 percent rate upon a person becoming 

12 a non-resident of a National Enterprise Zone. 

13 ‘‘SEC. 1400Q. EFFECT OF NATIONAL ENTERPRISE ZONE 

14 DESIGNATION ON CORPORATIONS. 

15 ‘‘(a) CORPORATE ALTERNATIVE NATIONAL ENTER16 PRISE ZONE TAX.—If for any taxable year, any corpora17 tion (other than an S corporation) has any National En18 terprise Zone taxable income, then, in lieu of any tax im19 posed by section 11 or section 55, said corporation may 

20 elect, in a form prescribed by the Secretary, to pay a tax 

21 which shall consist of the sum of—

22 ‘‘(1) a tax computed on the taxable income re23 duced by the amount of National Enterprise Zone 

24 tentative corporate taxable income (if greater than 
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1 zero) at the rates and in the manner as if this sub2 section had not been enacted, plus 

3 ‘‘(2) a tax of 17 percent of the National Enter4 prise Zone taxable income. 

5 ‘‘SEC. 1400R. NATIONAL ENTERPRISE ZONE CORPORATE 

6 TAXABLE INCOME. 

7 ‘‘(a) IN GENERAL.—National Enterprise Zone Cor8 porate tentative taxable income shall be taxable income 

9 (without regard to section 179(e)) arising from the con10 duct of an active trade or business within one or more 

11 National Enterprise Zones. 

12 ‘‘(b) ADJUSTMENTS.—National Enterprise Zone Cor13 porate taxable income shall be equal to National Enter14 prise Zone Corporate tentative taxable income less—

15 ‘‘(1) expenditures made to acquire inventory 

16 property held in a National Enterprise Zone, and 

17 ‘‘(2) the amount, if any, the taxpayer elects to 

18 deduct pursuant to 179(e) that exceeds the limita19 tions in section 179(b). 

20 ‘‘SEC. 1400S. CONDUCT OF AN ACTIVE TRADE OR BUSINESS 

21 WITHIN A NATIONAL ENTERPRISE ZONE BY 

22 CORPORATIONS, PARTNERSHIPS AND SOLE 

23 PROPRIETORS. 

24 ‘‘(a) ACTIVE TRADE OR BUSINESS.—For purposes of 

25 subchapter Z, the conduct of active trade or business 
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1 means the conduct of a trade or business that derives no 

2 more than 5 percent of its gross income from passive ac3 tivities (as defined by section 469). 

4 ‘‘(b) INCOME AND EXPENSES WITHIN A NATIONAL

5 ENTERPRISE ZONE.—

6 ‘‘(1) GROSS INCOME.—Gross income from with7 in a National Enterprise Zone shall mean—

8 ‘‘(A) compensation for labor or personal 

9 services performed by a natural person who is 

10 based in a National Enterprise Zone; 

11 ‘‘(B) rentals or royalties from property lo12 cated in a National Enterprise Zone; 

13 ‘‘(C) gains, profits and income derived 

14 from the sale of inventory property held within 

15 a National Enterprise Zone; and 

16 ‘‘(D) income from the sale of property that 

17 is produced, created, fabricated, manufactured, 

18 extracted, processed, cured, aged, grown or har19 vested within the zone. 

20 ‘‘(2) EXPENSES.—Expenses shall be allocated 

21 and apportioned to the income producing activities 

22 to which they are related. Expenses which are not 

23 allocable or apportioned to any specific income pro24 ducing activities shall be allocated on the basis of 

25 gross income such that the ratio of the expense allo-
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1 cated to the National Enterprise Zone is the same 

2 as the ratio of gross income within the National En3 terprise Zone to all gross income within the United 

4 States of the taxpayer or controlled group (in the 

5 case of a corporation that is a member of a con6 trolled group). 

7 ‘‘(c) ALTERNATIVE FORMULARY METHOD.—

8 ‘‘(1) IN GENERAL.—A corporation (or con9 trolled group in the case of a corporation that is a 

10 member of a controlled group), partnership or sole 

11 proprietor that so elects, in a form and manner pre12 scribed by the Secretary, may determine the share of 

13 its income, expense and other items attributable to 

14 the conduct of an active trade or business within a 

15 National Enterprise Zone by multiplying its appor16 tionment ratio by the amount of the income, expense 

17 and other items for purposes of determining its Na18 tional Enterprise Zone Corporate taxable income. 

19 ‘‘(2) APPORTIONMENT RATIO.—The apportion20 ment ratio shall be the ratio of—

21 ‘‘(A) the sum of the remaining basis in de22 preciable property held in zone for the entire 

23 taxable year, of the inventory held in a zone at 

24 the end of the taxable year and of the com-
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1 pensation paid to zone-based employees during 

2 the taxable year, and 

3 ‘‘(B) the sum of the remaining basis in de4 preciable property held in the United States for 

5 the entire taxable year, of the inventory held in 

6 the United States at the end of the taxable year 

7 and of the compensation paid to employees 

8 within the United States during the taxable 

9 year. 

10 ‘‘(3) MANDATORY USE OF ALTERNATIVE FOR11 MULARY METHOD.—If a taxpayer—

12 ‘‘(A) derives greater than 10 percent of its 

13 gross income from sales to related parties (as 

14 defined in section 1313(c)), or 

15 ‘‘(B) expenses attributable to purchases 

16 from related parties (as defined in section 

17 1313(c)) account for greater than 10 percent of 

18 its expenses,

19 then said taxpayer must use the alternative for20 mulary method. 

21 ‘‘SEC. 1400T. DEFINITIONS AND SPECIAL RULES. 

22 ‘‘(a) BASED IN A NATIONAL ENTERPRISE ZONE.—

23 A person is based in a National Enterprise Zone if that 

24 person works out of an office, factory, store or other facil25 ity located in a National Enterprise Zone not less than 
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1 80 percent of the hours worked by said person in a cal2 endar year. In the case of a person that works for an em3 ployer for less than the full calendar year or was engaged 

4 in the conduct of an active trade or business within a Na5 tional Enterprise Zone for less than the full calendar year, 

6 then a person shall be deemed based in a National Enter7 prise Zone if that person worked out of an office, factory, 

8 store or other facility located in a National Enterprise 

9 Zone not less than 80 percent of the hours worked by said 

10 person while employed by said employer or engaged in the 

11 conduct of an active trade or business within a National 

12 Enterprise Zone. 

13 ‘‘(b) INVENTORY.—

14 ‘‘(1) INVENTORY PROPERTY.—For purposes of 

15 sections 1400P and 1400R, inventory property shall 

16 mean property described in section 1221(a)(1) and 

17 any expenditures that were capitalized pursuant to 

18 section 263A. 

19 ‘‘(2) NO DOUBLE COUNTING.—The deductions 

20 afforded by section 1400P(d)(3) and 1400R(b)(1) 

21 are in lieu of the deduction provided upon the sale 

22 of inventory property. 

23 ‘‘(c) NOMINATOR.—Nominator means the governor of 

24 a state or territory or the Mayor of the District of Colum-
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1 bia who nominated a zone by application to be a National 

2 Enterprise Zone. 

3 ‘‘(d) RESIDENCY.—For purposes of this subchapter, 

4 a person is resident in national enterprise zone for the 

5 entire taxable year if—

6 ‘‘(1) his or her principal residence (within the 

7 meaning of section 121) is within the national enter8 prise zone, and 

9 ‘‘(2) he or she was present (within the meaning 

10 of section 7701(b)(3)) in the national enterprise 

11 zone no fewer than 245 calendar days during the 

12 taxable year. 

13 ‘‘(e) SECRETARY.—Secretary shall mean the Sec14 retary of the Treasury.’’. 

15 (b) CONFORMING AMENDMENTS.—

16 (1) Section 179 of the Internal Revenue Code 

17 is amended by inserting at the end the following new 

18 subsection: 

19 ‘‘(e) NO LIMITATION ON AMOUNT IN NATIONAL EN20 TERPRISE ZONES.—

21 ‘‘(1) IN GENERAL.—The limitations of sub22 section (b) shall not apply with respect to property 

23 placed in service in a National Enterprise Zone. 

24 ‘‘(2) PROPERTY REMOVED FROM NATIONAL EN25 TERPRISE ZONE.—Property expensed pursuant to 
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1 section 179 that is removed from service within a 

2 National Enterprise Zone but not disposed of by the 

3 taxpayer shall be treated as if it had been, as of the 

4 date of the removal, disposed of by the taxpayer and 

5 repurchased by the taxpayer at a price equal to what 

6 its remaining basis would have been if the section 

7 179 election had not been exercised with respect to 

8 the property.’’. 

9 (2) Subsection (d) of section 243 of such Code 

10 is amended by adding a new paragraph (5) at the 

11 end of said subsection as follows: 

12 ‘‘(5) a domestic corporation which is subject to 

13 taxation under this chapter shall include any cor14 poration organized under the laws of the Common15 wealth of Puerto Rico in any taxable year it has 

16 made a section 1400Q election.’’. 

17 (c) CLERICAL AMENDMENT.—The table of sub18 chapters for chapter 1 of such Code is amended by insert19 ing after the item relating to subchapter Y the following 

20 new subchapter:

‘‘Subchapter Z—National Enterprise Zones.’’.

21 (d) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to taxable years beginning after 

23 December 31, 2005.

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