I
104TH CONGRESS
2D SESSION
H. R. 3241
To amend the Internal Revenue Code to allow the designation of additional
empowerment zones and provide additional incentives for empowerment
zones and enterprise communities, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 15, 1996
Mr. FOGLIETTA (for himself, Mr. BARRETT of Wisconsin, Mr. DELLUMS, Ms.
EDDIE BERNICE JOHNSON of Texas, Mr. GENE GREEN of Texas, Mr.
CLYBURN, Mr. HINCHEY, Ms. NORTON, Mr. HASTINGS of Florida, Miss
COLLINS of Michigan, and Ms. MCKINNEY) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committees on Banking and Financial Services, Government
Reform and Oversight, Transportation and Infrastructure, Economic and
Educational Opportunities, International Relations, Commerce, the Judi-
ciary, National Security, and Small Business, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code to allow the designa-
tion of additional empowerment zones and provide addi-
tional incentives for empowerment zones and enterprise
communities, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘More Power for Empowerment Zones Act of 1996’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
TITLE I—TAX TREATMENT OF EMPOWERMENT ZONES AND
ENTERPRISE COMMUNITIES
Subtitle A—Designation of Additional Empowerment Zones
Sec. 101. Designation of additional empowerment zones.
Subtitle B—Increased Incentives for Empowerments Zones and Enterprise
Communities
Sec. 111. Treatment of bonds issued by governments in empowerment zones
and enterprise communities.
Sec. 112. Expanded definition of empowerment zone for purposes of increased
expensing.
Sec. 113. Additional expensing for empowerment zones and enterprise commu-
nities.
Sec. 114. Additional incentives for empowerment zones and enterprise commu-
nities.
Sec. 115. Commercial revitalization tax credit.
Subtitle C—Brownfields Redevelopment Act
Sec. 121. Environmental remediation tax credit for contaminated sites in
empowerment zones.
Sec. 122. Use of redevelopment bonds for environmental remediation in
empowerment zones.
TITLE II—ASSISTANCE FOR INFRASTRUCTURE IMPROVEMENTS
AND DEVELOPMENT
Sec. 201. Loan guarantees.
Sec. 202. Revolving fund for loans.
Sec. 203. Grants to units of general local government.
Sec. 204. Eligible units of general local government.
Sec. 205. Infrastructure activities.
Sec. 206. Definitions.
Sec. 207. Regulations.
TITLE III—ADDITIONAL BENEFITS FOR EMPOWERMENT ZONES
AND ENTERPRISE COMMUNITIES
Sec. 301. Education grants.
Sec. 302. Minimum allocation of foreign assistance for purchase of certain
United States goods.
‘‘(E) EXEMPT
FACILITY
BONDS.—Para-
graph (1) shall not apply to any exempt facility
bond (as defined in section 1394).’’
(2) EFFECTIVE DATE.—The amendment made
by this subsection shall apply to bonds issued after
the date of the enactment of this Act.
(b) INCREASE IN LIMITATION ON TAX-EXEMPT EN-
TERPRISE ZONE FACILITY BONDS.—Subparagraph (B) of
section 1394(c)(1) of such Code (relating to tax-exempt
enterprise zone facility bonds) is amended by striking
‘‘$20,000,000’’ and inserting ‘‘$40,000,000’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to bonds issued after the date of
the enactment of this Act.
SEC. 112. EXPANDED DEFINITION OF EMPOWERMENT ZONE
FOR PURPOSES OF INCREASED EXPENSING.
(a) IN GENERAL.—Section 1397A of the Internal
Revenue Code of 1986 (relating to increase in expensing
under section 179) is amended by adding at the end the
following new subsection:
‘‘(c) ENTERPRISE ZONE BUSINESS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘enterprise zone business’ has the
meaning given such term by section 1397B, except
that subsections (b)(6) and (c)(5) of section 1397B
shall be applied by treating any empowerment zone
as including the qualified surrounding area.
‘‘(2) QUALIFIED SURROUNDING AREA.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘qualified surrounding area’
means, with respect to any empowerment zone
(or any noncontiguous portion of such zone) the
area of not more than 1 mile in radius which—
‘‘(i) surrounds and is contiguous with
such zone (or such portion),
‘‘(ii) is designated for purposes of this
paragraph by each State and local govern-
ment which nominated such zone for des-
ignation under section 1391, and
‘‘(iii) meets the requirements of sec-
tion 1392(a).
‘‘(B) EXPANSION
TO
2-MILE
RADIUS
BY
APPROPRIATE SECRETARY.—Upon the request
of each of the States and local governments re-
ferred to in subparagraph (A)(ii), the appro-
priate Secretary may increase the 1 mile dis-
tance under subparagraph (A) by not more
than 1 additional mile. Such Secretary shall de-
termine whether and by how much to increase
such distance based on criteria published by
such Secretary.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 113. ADDITIONAL EXPENSING FOR EMPOWERMENT
ZONES AND ENTERPRISE COMMUNITIES.
(a) IN GENERAL.—Section 1397A of the Internal
Revenue Code of 1986 (relating to increase in expensing
under section 179) is amended—
(1) in subparagraph (A) of subsection (a)(1),
by striking ‘‘$20,000’’ and inserting ‘‘$35,000’’, and
(2) by adding at the end the following new sub-
section:
‘‘(c) ENTERPRISE ZONE BUSINESS.—For purposes of
this section, the term ‘enterprise zone business’ has the
meaning given such term by section 1397B, except that
in applying such section references to empowerment zones
shall be treated as including references to enterprise com-
munities.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 114. ADDITIONAL INCENTIVES FOR EMPOWERMENT
ZONES AND ENTERPRISE COMMUNITIES.
(a) IN GENERAL.—Subchapter U of chapter 1 of the
Internal Revenue Code of 1986 (relating to designation
and treatment of empowerment zones, enterprise commu-
nities, and rural development investment areas) is amend-
ed—
(1) by redesignating part IV as part V,
(2) by redesignating section 1397D as section
1397F, and
(3) by inserting after part III the following new
part:
‘‘PART 
IV—ADDITIONAL 
INCENTIVES 
FOR
EMPOWERMENT ZONES AND ENTERPRISE
COMMUNITIES
‘‘Sec. 1397D. Empowerment zone and enterprise community cap-
ital gain.
‘‘Sec. 1397E. Empowerment zone and enterprise community
stock.
‘‘SEC. 1397D. EMPOWERMENT ZONE AND ENTERPRISE COM-
MUNITY CAPITAL GAIN.
‘‘(a) GENERAL RULE.—Gross income does not in-
clude any qualified capital gain recognized by a qualified
taxpayer on the sale or exchange of a qualified zone asset
held for more than 5 years.
‘‘(b) QUALIFIED ZONE ASSET.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘qualified zone
asset’ means—
‘‘(A) any qualified zone stock,
‘‘(B) any qualified zone business property,
and
‘‘(C) any qualified zone partnership inter-
est.
‘‘(2) QUALIFIED ZONE STOCK.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘qualified zone
stock’ means any stock in a domestic corpora-
tion if—
‘‘(i) such stock is acquired by the tax-
payer on original issue from the corpora-
tion solely in exchange for cash,
‘‘(ii) as of the time such stock was is-
sued, such corporation was an enterprise
zone business (or, in the case of a new cor-
poration, such corporation was being orga-
nized for purposes of being an enterprise
zone business), and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such stock,
such corporation qualified as an enterprise
zone business.
‘‘(B) EXCLUSION OF STOCK FOR WHICH
DEDUCTION
UNDER
SECTION
1397E
AL-
LOWED.—The term ‘qualified zone stock’ shall
not include any stock the basis of which is re-
duced under section 1397E.
‘‘(C) REDEMPTIONS.—The term ‘qualified
zone stock’ shall not include any stock acquired
from a corporation which made a substantial
stock redemption or distribution (without a
bona fide business purpose therefor) in an at-
tempt to avoid the purposes of this section.
‘‘(3) QUALIFIED ZONE BUSINESS PROPERTY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
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 the date on which
the designation of the empowerment zone
or enterprise community took effect,
‘‘(ii) the original use of such property
in the empowerment zone or enterprise
community commences with the taxpayer,
and
‘‘(iii) during substantially all of the
taxpayer’s holding period for such prop-
erty, substantially all of the use of such
property was in an enterprise zone busi-
ness of the taxpayer.
‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM-
PROVEMENTS.—
‘‘(i) IN GENERAL.—The requirements
of clauses (i) and (ii) of subparagraph (A)
shall be treated as satisfied with respect
to—
‘‘(I) property which is substan-
tially improved by the taxpayer, 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 if, during any 24-month period
beginning after the date on which the des-
ignation of the empowerment zone or en-
terprise community took effect, additions
to basis with respect to such property in
the hands of the taxpayer exceed the great-
er of—
‘‘(I) an amount equal to the ad-
justed basis at the beginning of such
24-month period in the hands of the
taxpayer, or
‘‘(II) $5,000.
‘‘(C) LIMITATION
ON
LAND.—The term
‘qualified zone business property’ shall not in-
clude land which is not an integral part of an
enterprise zone business.
‘‘(4) QUALIFIED
ZONE
PARTNERSHIP
INTER-
EST.—The term ‘qualified zone partnership interest’
means any interest in a partnership if—
‘‘(A) such interest is acquired by the tax-
payer from the partnership solely in exchange
for cash,
‘‘(B) as of the time such interest was ac-
quired, such partnership was an enterprise zone
business (or, in the case of a new partnership,
such partnership was being organized for pur-
poses of being an enterprise zone business), and
‘‘(C) during substantially all of the tax-
payer’s holding period for such interest, such
partnership qualified as an enterprise zone
business.
A rule similar to the rule of paragraph (2)(C) shall
apply for purposes of this paragraph.
‘‘(5) 
TREATMENT
OF
SUBSEQUENT
PUR-
CHASERS.—The term ‘qualified zone asset’ includes
any property which would be a qualified zone asset
but for paragraph (2)(A)(i), (3)(A)(ii), or (4)(A) in
the hands of the taxpayer if such property was a
qualified zone asset in the hands of all prior holders.
‘‘(6) 10-YEAR SAFE HARBOR.—If any property
ceases to be a qualified zone asset by reason of para-
graph (2)(A)(iii), (3)(A)(iii), or (4)(C) after the 10-
year period beginning on the date the taxpayer ac-
quired 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.
‘‘(7) TREATMENT OF ZONE TERMINATIONS.—
The termination of any designation of an area as an
empowerment zone or enterprise community shall be
disregarded for purposes of determining whether any
property is a qualified zone asset.
‘‘(c) 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 long-term capital
gain recognized on the sale or exchange of a quali-
fied zone asset held for more than 5 years.
‘‘(2) CERTAIN GAIN ON REAL PROPERTY NOT
QUALIFIED.—The term ‘qualified capital gain’ shall
not include any gain which would be treated as ordi-
nary income under section 1250 if section 1250 ap-
plied to all depreciation rather than the additional
depreciation.
‘‘(3) GAIN ATTRIBUTABLE TO PERIODS AFTER
TERMINATION OF ZONE DESIGNATION NOT QUALI-
FIED.—The term ‘qualified capital gain’ shall not in-
clude any gain attributable to periods after the ter-
mination of any designation of an area as an
empowerment zone or enterprise community.
‘‘(4) 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.
‘‘(5) QUALIFIED TAXPAYER.—The term ‘quali-
fied taxpayer’ means any taxpayer if the amount in-
vested by the taxpayer in infrastructure activities (as
defined in section 205 of the More Power for
Empowerment Zones Act of 1996, as in effect imme-
diately after the enactment of this section) in any
empowerment zone or enterprise community during
the taxable year is equal to 50 percent or more of
the qualified capital gain recognized in such taxable
year.
‘‘(6) ENTERPRISE ZONE BUSINESS.—The term
‘enterprise zone business’ has the meaning given
such term by section 1394(b)(3), except that, in ap-
plying section 1394(b)(3), the term ‘qualified busi-
ness’ shall not include any trade or business of pro-
ducing property of a character subject to the allow-
ance for depletion under section 611.
‘‘(d) TREATMENT OF PASS-THRU ENTITIES.—
‘‘(1) SALES
AND
EXCHANGES.—Gain on the
sale or exchange of an interest in a pass-thru entity
held by the taxpayer (other than an interest in an
entity which was an enterprise zone business during
substantially all of the period the taxpayer held such
interest) for more than 5 years shall be treated as
gain described in subsection (a) to the extent such
gain is attributable to amounts which would be
qualified capital gain on qualified zone assets (deter-
mined as if such assets had been sold on the date
of the sale or exchange) held by such entity for more
than 5 years and throughout the period the taxpayer
held such interest. A rule similar to the rule of para-
graph (2)(C) shall apply for purposes of the preced-
ing sentence.
‘‘(2) INCOME INCLUSIONS.—
‘‘(A) IN GENERAL.—Any amount included
in income by reason of holding an interest in a
pass-thru entity (other than an entity which
was an enterprise zone business during substan-
tially all of the period the taxpayer held the in-
terest to which such inclusion relates) shall be
treated as gain described in subsection (a) if
such amount meets the requirements of sub-
paragraph (B).
‘‘(B) REQUIREMENTS.—An amount meets
the requirements of this subparagraph if—
‘‘(i) such amount is attributable to
qualified capital gain recognized on the
sale or exchange by the pass-thru entity of
property which is a qualified zone asset in
the hands of such entity and which was
held by such entity for the period required
under subsection (a), and
‘‘(ii) such amount is includible in the
gross income of the taxpayer by reason of
the holding of an interest in such entity
which was held by the taxpayer on the date
on which such pass-thru entity acquired
such asset and at all times thereafter be-
fore the disposition of such asset by such
pass-thru entity.
‘‘(C) LIMITATION
BASED
ON
INTEREST
ORIGINALLY
HELD
BY
TAXPAYER.—Subpara-
graph (A) shall not apply to any amount to the
extent such amount exceeds the amount to
which subparagraph (A) would have applied if
such amount were determined by reference to
the interest the taxpayer held in the pass-thru
entity on the date the qualified zone asset was
acquired.
‘‘(3) PASS-THRU ENTITY.—For purposes of this
subsection, the term ‘pass-thru entity’ means—
‘‘(A) any partnership,
‘‘(B) any S corporation,
‘‘(C) any regulated investment company,
and
‘‘(D) any common trust fund.
‘‘(e) SALES
AND EXCHANGES
OF INTERESTS
IN
PARTNERSHIPS
AND
S CORPORATIONS
WHICH
ARE
QUALIFIED 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 an enterprise 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 intangible, and any land, which is not
an integral part of any qualified business (as defined
in section 1397B(d) except that references to
empowerment zones shall be treated as including ref-
erences to enterprise communities), and
‘‘(2) gain attributable to periods before the des-
ignation of an area as an empowerment zone or en-
terprise community.
‘‘(f) CERTAIN TAX-FREE AND OTHER TRANSFERS.—
For purposes of this section—
‘‘(1) IN GENERAL.—In the case of a transfer of
a qualified zone asset to which this subsection ap-
plies, the transferee shall be treated as—
‘‘(A) having acquired such asset in the
same manner as the transferor, and
‘‘(B) having held such asset during any
continuous period immediately preceding the
transfer during which it was held (or treated as
held under this subsection) by the transferor.
‘‘(2) TRANSFERS TO WHICH SUBSECTION AP-
PLIES.—This subsection shall apply to any trans-
fer—
‘‘(A) by gift,
‘‘(B) at death, or
‘‘(C) from a partnership to a partner
thereof of a qualified zone asset with respect to
which the requirements of subsection (d)(2) are
met at the time of the transfer (without regard
to the 5-year holding requirement).
‘‘(3) CERTAIN
RULES
MADE
APPLICABLE.—
Rules similar to the rules of section 1244(d)(2) shall
apply for purposes of this section.
‘‘SEC. 1397E. EMPOWERMENT ZONE AND ENTERPRISE COM-
MUNITY STOCK.
‘‘(a) GENERAL RULE.—At the election of any individ-
ual, the aggregate amount paid by such taxpayer during
the taxable year for the purchase of enterprise zone stock
on the original issue of such stock by a qualified issuer
shall be allowed as a deduction.
‘‘(b) LIMITATIONS.—
‘‘(1) CEILING.—
‘‘(A) 
IN
GENERAL.—The 
maximum
amount allowed as a deduction under subsection
(a) to a taxpayer shall not exceed—
‘‘(i) $100,000 for any taxable year,
and
‘‘(ii) when added to the aggregate
amount allowed as a deduction under this
section in all prior years, $500,000.
‘‘(B) EXCESS
AMOUNTS.—If the amount
otherwise deductible by any person under sub-
section (a) exceeds the limitation under—
‘‘(i) subparagraph (A)(i), the amount
of such excess shall be treated as an
amount paid in the next taxable year, and
‘‘(ii) subparagraph (A), the deduction
allowed for any taxable year shall be allo-
cated proportionately among the enterprise
zone stock purchased by such person on
the basis of the respective purchase prices
per share.
‘‘(2) RELATED
PERSON.—The taxpayer and
members of the taxpayer’s family shall be treated as
one person for purposes of paragraph (1) and the
limitations contained in such paragraph shall be al-
located among the taxpayer and such members in
accordance with their respective purchases of enter-
prise zone stock. For purposes of this paragraph, an
individual’s family includes only such individual’s
spouse and minor children.
‘‘(3) PARTIAL TAXABLE YEAR.—If designation
of an area as an empowerment zone or enterprise
community occurs, expires, or is revoked pursuant to
section 1391 on a date other than the first or last
day of the taxable year of the taxpayer, or in the
case of a short taxable year, the limitations specified
in paragraph (1) shall be adjusted on a pro rata
basis (based upon the number of days).
‘‘(c) ENTERPRISE ZONE STOCK.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘enterprise zone
stock’ means stock of a corporation if—
‘‘(A) such stock is acquired on original
issue from the corporation, and
‘‘(B) such corporation is, at the time of
issue, a qualified enterprise zone issuer.
‘‘(2) PROCEEDS MUST BE INVESTED IN QUALI-
FIED ENTERPRISE ZONE PROPERTY.—
‘‘(A) IN GENERAL.—Such term shall in-
clude such stock only to the extent that the pro-
ceeds of such issuance are used by such issuer
during the 12-month period beginning on the
date of issuance to purchase (as defined in sec-
tion 179(d)(2)) qualified enterprise zone prop-
erty.
‘‘(B) QUALIFIED ENTERPRISE ZONE PROP-
ERTY.—For purposes of this section, the term
‘qualified enterprise zone property’ means prop-
erty to which section 168 applies (or would
apply but for section 179)—
‘‘(i) the original use of which com-
mences in an empowerment zone or enter-
prise community with the issuer, and
‘‘(ii) substantially all of the use of
which is in such empowerment zone or en-
terprise community.
‘‘(3) REDEMPTIONS.—The term ‘enterprise
zone stock’ shall not include any stock acquired from
a corporation which made a substantial stock re-
demption or distribution (without a bona fide busi-
ness purpose therefor) in an attempt to avoid the
purposes of this section.
‘‘(d) QUALIFIED ENTERPRISE ZONE ISSUER.—For
purposes of this section, the term ‘qualified enterprise
zone issuer’ means any domestic C corporation if—
‘‘(e) DISPOSITIONS OF STOCK.—
‘‘(1) BASIS REDUCTION.—For purposes of this
title, the basis of any enterprise zone stock shall be
reduced by the amount of the deduction allowed
under this section with respect to such stock.
‘‘(2) DEDUCTION
RECAPTURED
AS
ORDINARY
INCOME.—For purposes of section 1245—
‘‘(A) any stock the basis of which is re-
duced under paragraph (1) (and any other
property the basis of which is determined in
whole or in part by reference to the adjusted
basis of such stock) shall be treated as section
1245 property, and
‘‘(B) any reduction under paragraph (1)
shall be treated as a deduction allowed for de-
preciation.
If an exchange of any stock described in paragraph
(1) qualifies under section 354(a), 355(a), or
356(a), the amount of gain recognized under section
1245 by reason of this paragraph shall not exceed
the amount of gain recognized in the exchange (de-
termined without regard to this paragraph).
‘‘(3) CERTAIN EVENTS TREATED AS DISPOSI-
TIONS.—For purposes of determining the amount
treated as ordinary income under section 1245 by
reason of paragraph (2), paragraph (3) of section
1245(b) (relating to certain tax-free transactions)
shall not apply.
‘‘(4) INTEREST
CHARGED
IF
DISPOSITION
WITHIN 5 YEARS OF PURCHASE.—
‘‘(A) IN GENERAL.—If—
‘‘(i) a taxpayer disposes of any enter-
prise zone stock with respect to which a
deduction was allowed under subsection (a)
(or any other property the basis of which
is determined in whole or in part by ref-
erence to the adjusted basis of such stock)
before the end of the 5-year period begin-
ning on the date such stock was purchased
by the taxpayer, and
‘‘(ii) section 1245(a) applies to such
disposition by reason of paragraph (2),
then the tax imposed by this chapter for the
taxable year in which such disposition occurs
shall be increased by the amount determined
under subparagraph (B).
‘‘(B) ADDITIONAL AMOUNT.—For purposes
of subparagraph (A), the additional amount
shall be equal to the amount of interest (deter-
mined at the rate applicable under section
6621(a)(2)) that would accrue—
‘‘(i) during the period beginning on
the date the stock was purchased by the
taxpayer and ending on the date of such
disposition by the taxpayer, and
‘‘(ii) on an amount equal to the aggre-
gate decrease in tax of the taxpayer result-
ing from the deduction allowed under this
subsection (a) with respect to such stock.
‘‘(C) SPECIAL RULE.—Any increase in tax
under subparagraph (A) shall not be treated as
a tax imposed by this chapter for purposes of—
‘‘(i) determining the amount of any
credit allowable under this chapter, and
‘‘(ii) determining the amount of the
tax imposed by section 55.
‘‘(f) DISQUALIFICATION.—
‘‘(1) ISSUER CEASES TO QUALIFY.—If, during
the 10-year period beginning on the date enterprise
zone stock was purchased by the taxpayer, the issuer
of such stock ceases to be a qualified enterprise zone
issuer (determined without regard to subsection
(d)(3)), then notwithstanding any provision of this
subtitle other than paragraph (2), the taxpayer shall
be treated for purposes of subsection (e) as dispos-
ing of such stock (and any other property the basis
of which is determined in whole or in part by ref-
erence to the adjusted basis of such stock) during
the taxable year during which such cessation occurs
at its fair market value as of the 1st day of such
taxable year.
‘‘(2) CESSATION OF ENTERPRISE ZONE STATUS
NOT
TO
CAUSE
RECAPTURE.—A corporation shall
not fail to be treated as a qualified enterprise zone
issuer for purposes of paragraph (1) solely by reason
of the termination or revocation of a designation as
an empowerment zone or enterprise community, as
the case may be.
‘‘(g) OTHER SPECIAL RULES.—
‘‘(1) APPLICATION
OF
LIMITS
TO
PARTNER-
SHIPS AND S CORPORATIONS.—In the case of a part-
nership or an S corporation, the limitations under
subsection (b) shall apply at the partner and share-
holder level and shall not apply at the partnership
or corporation level.
‘‘(2) DEDUCTION NOT ALLOWED TO ESTATES
AND TRUSTS.—Estates and trusts shall not be treat-
ed as individuals for purposes of this section.’’
(b) TECHNICAL AMENDMENT.—Subsection (a) of
section 1016 of such Code (relating to adjustments to
basis) is amended by striking ‘‘and’’ at the end of para-
graph (24), by striking the period at the end of paragraph
(25) and inserting ‘‘, and’’; and by adding at the end the
following new paragraph:
‘‘(26) to the extent provided in section
1397E(e), in the case of stock with respect to which
a deduction was allowed or allowable under section
1397E(a).’’
(c) CLERICAL AND CONFORMING AMENDMENTS.—
(1) The table of parts for subchapter U of such
Code is amended by striking the item relating to
part IV and inserting the following new items:
‘‘Part IV. Additional incentives for empowerment zones and en-
terprise communities.
‘‘Part V.
Regulations.’’
(2) The table of sections for part V of sub-
chapter U of chapter 1 of such Code, as redesig-
nated by this section, is amended by redesignating
the item relating to section 1397D as section
1397F.
(3) Section 1397F of such Code, as so redesig-
nated, is amended by striking ‘‘and III’’ each place
it appears and inserting ‘‘, III, and IV’’.
(d) EFFECTIVE DATE.—The amendments made by
this section apply to taxable years ending after the date
of the enactment of this Act.
SEC. 115. COMMERCIAL REVITALIZATION TAX CREDIT.
(a) ALLOWANCE OF CREDIT.—Section 46 of the In-
ternal Revenue Code of 1986 (relating to investment cred-
it) is amended by striking ‘‘and’’ at the end of paragraph
(2), by striking the period at the end of paragraph (3)
and inserting ‘‘, and’’, and by adding at the end the follow-
ing new paragraph:
‘‘(4) the commercial revitalization credit.’’
(b) COMMERCIAL REVITALIZATION CREDIT.—Sub-
part E of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to rules for com-
puting investment credit) is amended by inserting after
section 48 the following new section:
‘‘SEC. 48A. COMMERCIAL REVITALIZATION CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 46,
except as provided in subsection (e), the commercial revi-
talization credit for any taxable year is an amount equal
to the applicable percentage of the qualified revitalization
expenditures with respect to any qualified revitalization
building.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
this section—