I 
112TH CONGRESS 
2D SESSION 
H. R. 6658 
To amend the Internal Revenue Code of 1986 to provide a zero capital 
gains rate for certain new investments in specified areas made during 
a temporary period. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 13, 2012 
Mr. CLARKE of Michigan (for himself, Mr. FRANKS of Arizona, and Mr. 
HULTGREN) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
a zero capital gains rate for certain new investments 
in specified areas made during a temporary period. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Urban Competitiveness 
Act’’. 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with
SEC. 2. ZERO CAPITAL GAINS RATE FOR CERTAIN NEW IN-
VESTMENTS IN SPECIFIED AREAS. 
(a) IN GENERAL.—Subchapter Y of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new part: 
‘‘PART IV—CERTAIN NEW INVESTMENTS IN 
SPECIFIED AREAS 
‘‘Sec. 1400V. Zero capital gains rate for certain new investments. 
‘‘SEC. 1400V. ZERO CAPITAL GAINS RATE FOR CERTAIN NEW 
INVESTMENTS. 
‘‘(a) IN GENERAL.—Gross income does not include 
any qualified capital gain from the sale or exchange of 
a specified new investment held for more than 1 year. 
‘‘(b) SPECIFIED NEW INVESTMENT.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘specified new in-
vestment’ means— 
‘‘(A) any qualified stock, 
‘‘(B) any qualified partnership interest, 
and 
‘‘(C) any qualified business property. 
‘‘(2) QUALIFIED STOCK.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘qualified stock’ 
means any stock in a domestic corporation if— 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with
‘‘(i) such stock is acquired by the tax-
payer during the 1-year period beginning 
on the date of the enactment of this sec-
tion, at its original issue (directly or 
through an underwriter) from the corpora-
tion solely in exchange for cash, 
‘‘(ii) as of the time such stock was 
issued, such corporation was a specified 
area business (or, in the case of a new cor-
poration, such corporation was being orga-
nized for purposes of being a specified area 
business), and 
‘‘(iii) during substantially all of the 
taxpayer’s holding period for such stock, 
such corporation qualified as a specified 
area business. 
‘‘(B) REDEMPTIONS.—A rule similar to 
the rule of section 1202(c)(3) shall apply for 
purposes of this paragraph. 
‘‘(3) QUALIFIED
PARTNERSHIP
INTEREST.— 
The term ‘qualified partnership interest’ means any 
capital or profits interest in a domestic partnership 
if— 
‘‘(A) such interest is acquired by the tax-
payer during the 1-year period beginning on the 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with
date of the enactment of this section, from the 
partnership solely in exchange for cash, 
‘‘(B) as of the time such interest was ac-
quired, such partnership was a specified area 
business (or, in the case of a new partnership, 
such partnership was being organized for pur-
poses of being a specified area business), and 
‘‘(C) during substantially all of the tax-
payer’s holding period for such interest, such 
partnership qualified as a specified area busi-
ness. 
A rule similar to the rule of paragraph (2)(B) shall 
apply for purposes of this paragraph. 
‘‘(4) QUALIFIED BUSINESS PROPERTY.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
business property’ means tangible property if— 
‘‘(i) such property was acquired by 
the taxpayer by purchase (as defined in 
section 179(d)(2)) during the 1-year period 
beginning on the date of the enactment of 
this section, 
‘‘(ii) the original use of such property 
in the specified area commences with the 
taxpayer, and 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with
‘‘(iii) during substantially all of the 
taxpayer’s holding period for such prop-
erty, substantially all of the use of such 
property was in a specified area business 
of the taxpayer. 
‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM-
PROVEMENTS.—The requirements of clauses (i) 
and (ii) of subparagraph (A) shall be treated as 
satisfied with respect to— 
‘‘(i) property which is substantially 
improved by the taxpayer before the end of 
the period described in subparagraph 
(A)(i), and 
‘‘(ii) any land on which such property 
is located. 
The determination of whether a property is sub-
stantially improved shall be made under clause 
(ii) of section 1400B(b)(4)(B), except that ‘the 
date of the enactment of section 1400V’ shall 
be substituted for ‘December 31, 1997’ in such 
clause. 
‘‘(c) QUALIFIED CAPITAL GAIN.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified capital 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with
gain’ means any gain recognized on the sale or ex-
change of— 
‘‘(A) a capital asset, or 
‘‘(B) property used in the trade or busi-
ness (as defined in section 1231(b)). 
‘‘(2) GAIN
BEFORE
ENACTMENT
NOT
QUALI-
FIED.—The term ‘qualified capital gain’ shall not in-
clude any gain attributable to periods before the 
date of the enactment of this section. 
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar 
to the rules of paragraphs (3), (4), and (5) of sec-
tion 1400B(e) shall apply for purposes of this sub-
section. 
‘‘(d) SPECIFIED AREA BUSINESS.—For purposes of 
this section, the term ‘specified area business’ means any 
enterprise zone business (as defined in section 1397C), de-
termined— 
‘‘(1) without regard to subsections (b)(6) and 
(c)(5) thereof, 
‘‘(2) by substituting ‘80 percent’ for ‘50 per-
cent’ in subsections (b)(2) and (c)(1) thereof, 
‘‘(3) by treating each specified area as an em-
powerment zone (and by treating no area other than 
a specified area as an empowerment zone). 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with
‘‘(e) SPECIFIED AREA.—For purposes of this section, 
the term ‘specified area’ means any principal city of a met-
ropolitan statistical area (as determined by the Office of 
Management and Budget)— 
‘‘(1) which had an average unemployment rate 
of not less than 150 percent of the national average 
rate for the last calendar year ending before the cal-
endar year which includes the date of the enactment 
of this Act, and 
‘‘(2) which experienced a population loss of at 
least 20 percent during the 10-year period beginning 
with calendar year 2000. 
‘‘(f) CERTAIN RULES TO APPLY.—For purposes of 
this section, rules similar to the rules of paragraphs (6) 
and (7) of subsection (b), and subsections (f) and (g), of 
section 1400B shall apply; except that for such purposes 
section 1400B(g)(2) shall be applied by substituting ‘be-
fore the date of the enactment of section 1400V’ for ‘be-
fore January 1, 1998, or after December 31, 2014’. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out the 
purposes of this section, including regulations to prevent 
the abuse of the purposes of this section.’’. 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with
(b) CLERICAL AMENDMENT.—The table of parts for 
subchapter Y of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘PART IV. CERTAIN NEW INVESTMENTS IN SPECIFIED AREAS.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property acquired after the date 
of the enactment of this Act. 
Æ 
VerDate Mar 15 2010 
19:02 Dec 19, 2012
Jkt 029200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6301
E:\BILLS\H6658.IH
H6658
tkelley on DSK3SPTVN1PROD with