1443
‘‘(A) IN
GENERAL.—The term ‘qualified
zone wages’ shall not include wages taken into
account in determining the credit under section
51.
‘‘(B) COORDINATION
WITH
PARAGRAPH
(2).—The $20,000 amount in paragraph (2)
shall be reduced for any calendar year by the
amount of wages paid or incurred during such
year which are taken into account in determin-
ing the credit under section 51.
‘‘(d) QUALIFIED ZONE EMPLOYEE.—For purposes of
this section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘qualified zone em-
ployee’ means, with respect to any period, any em-
ployee of an employer if—
‘‘(A) substantially all of the services per-
formed during such period by such employee for
such 
employer 
are 
performed 
within 
an
empowerment zone in a trade or business of the
employer, and
‘‘(B) the principal place of abode of such
employee while performing such services is
within such empowerment zone.
1444
‘‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE.—
The term ‘qualified zone employee’ shall not in-
clude—
‘‘(A) any individual described in subpara-
graph (A), (B), or (C) of section 51(i)(1),
‘‘(B) any 5-percent owner (as defined in
section 416(i)(1)(B)),
‘‘(C) any individual employed by the em-
ployer for less than 90 days,
‘‘(D) any individual employed by the em-
ployer at any facility described in section
144(c)(6)(B), and
‘‘(E) any individual employed by the em-
ployer in a trade or business the principal activ-
ity of which is farming (within the meaning of
subparagraphs 
(A) 
or 
(B) 
of 
section
2032A(e)(5)), but only if, as of the close of the
taxable year, the sum of—
‘‘(i) the aggregate unadjusted bases
(or, if greater, the fair market value) of
the assets owned by the employer which
are used in such a trade or business, and
‘‘(ii) the aggregate value of assets
leased by the employer which are used in
such a trade or business (as determined
1445
under regulations prescribed by the Sec-
retary),
exceeds $500,000.
‘‘(3) SPECIAL
RULES
RELATED
TO
TERMI-
NATION OF EMPLOYMENT.—
‘‘(A) IN
GENERAL.—Paragraph (2)(C)
shall not apply to—
‘‘(i) a termination of employment of
an individual who before the close of the
period referred to in paragraph (2)(C) be-
comes disabled to perform the services of
such employment unless such disability is
removed before the close of such period
and the taxpayer fails to offer reemploy-
ment to such individual, or
‘‘(ii) a termination of employment of
an individual if it is determined under the
applicable State unemployment compensa-
tion law that the termination was due to
the misconduct of such individual.
‘‘(B) C HANGES IN FORM OF BUSINESS.—
For purposes of paragraph (2)(C), the employ-
ment relationship between the taxpayer and an
employee shall not be treated as terminated—
1446
‘‘(i) by a transaction to which section
381(a) applies if the employee continues to
be employed by the acquiring corporation,
or
‘‘(ii) by reason of a mere change in
the form of conducting the trade or busi-
ness of the taxpayer if the employee con-
tinues to be employed in such trade or
business and the taxpayer retains a sub-
stantial interest in such trade or business.
‘‘SEC. 1397. OTHER DEFINITIONS AND SPECIAL RULES.
‘‘(a) WAGES.—For purposes of this subpart—
‘‘(1) I N GENERAL.—The term ‘wages’ has the
same meaning as when used in section 51.
‘‘(2) CERTAIN
TRAINING
AND
EDUCATIONAL
BENEFITS.—
‘‘(A) 
IN
GENERAL.—The 
following
amounts shall be treated as wages paid to an
employee:
‘‘(i) Any amount paid or incurred by
an employer which is excludable from the
gross income of an employee under section
127, but only to the extent paid or in-
curred to a person not related to the
employer.
1447
‘‘(ii) In the case of an employee who
has not attained the age of 19, any
amount paid or incurred by an employer
for any youth training program operated
by such employer in conjunction with local
education officials.
‘‘(B) R ELATED PERSON.—A person is re-
lated to any other person if the person bears a
relationship to such other person specified in
section 267(b) or 707(b)(1), or such person and
such other person are engaged in trades or
businesses under common control (within the
meaning of subsections (a) and (b) of section
52). For purposes of the preceding sentence, in
applying section 267(b) or 707(b)(1), ‘10 per-
cent’ shall be substituted for ‘50 percent’.
‘‘(b) CONTROLLED GROUPS.—For purposes of this
subpart—
‘‘(1) all employers treated as a single employer
under subsection (a) or (b) of section 52 shall be
treated as a single employer for purposes of this
subpart, and
‘‘(2) the credit (if any) determined under sec-
tion 1396 with respect to each such employer shall
1448
be its proportionate share of the wages giving rise
to such credit.
‘‘(c) CERTAIN OTHER RULES MADE APPLICABLE.—
For purposes of this subpart, rules similar to the rules
of section 51(k) and subsections (c), (d), and (e) of section
52 shall apply.
‘‘(d) N OTICE OF AVAILABILITY OF ADVANCE PAY-
MENT
OF EARNED INCOME CREDIT.—Each employer
shall take reasonable steps to notify all qualified zone em-
ployees of the availability to eligible individuals of receiv-
ing advanced payments of the credit under section 32 (re-
lating to the earned income credit).
‘‘Subpart B—Zone Resident Empowerment Savings
Credit
‘‘Sec. 1397A. Zone resident empowerment savings credit.
‘‘SEC. 1397A. ZONE RESIDENT EMPOWERMENT SAVINGS
CREDIT.
‘‘(a) G ENERAL RULE.—For purposes of section 38,
the amount of the zone resident empowerment savings
credit determined under this section with respect to any
employer for any taxable year is 50 percent of the quali-
fied savings contributions for the taxable year.
‘‘(b) QUALIFIED
SAVINGS
CONTRIBUTIONS.—For
purposes of this section—
1449
‘‘(1) IN GENERAL.—The term ‘qualified savings
contribution’ means any contribution by an employer
to a defined contribution plan—
‘‘(A) which is made on behalf of an em-
ployee in connection with services performed by
such employee while such employee is a quali-
fied zone employee, and
‘‘(B) with respect to which the employee
has a nonforfeitable right.
‘‘(2) L IMITATION BASED ON COMPENSATION.—
‘‘(A) I N GENERAL.—The qualified savings
contributions taken into account with respect to
any qualified zone employee for any taxable
year shall not exceed an amount equal to 2 per-
cent of so much of the employee’s compensation
(as defined in section 414(s)) as does not
exceed $35,000.
‘‘(B) Z ONE DESIGNATION IN EFFECT FOR
PARTIAL YEAR.—If a designation of an area as
an empowerment zone is in effect for less than
the entire taxable year, the $35,000 amount
under subparagraph (A) shall be ratably re-
duced to reflect the portion of the year such
designation is not in effect.
1450
‘‘(3) CERTAIN
CONTRIBUTIONS
EXCLUDED.—
The term ‘qualified savings contribution’ shall not
include any contribution—
‘‘(A) to a plan subject to the funding re-
quirements of section 412,
‘‘(B) to a tax credit employee stock owner-
ship plan (as defined in section 409(a)) or to an
employee stock ownership plan (as defined in
section 4975(e)(7)),
‘‘(C) to a stock bonus plan, or
‘‘(D) which is an elective deferral (within
the meaning of section 402(g)(3)).
‘‘(4) S IMPLIFIED EMPLOYEE PENSION.—A con-
tribution to an individual savings plan pursuant to
a simplified employee pension (as defined in section
408(k)) shall be treated as a contribution to a de-
fined contribution plan.
‘‘(c) EMPLOYER REQUIREMENTS.—This section shall
apply to an employer for any taxable year only if—
‘‘(1) the employer elects the application of this
section, and
‘‘(2) the plan pursuant to which any qualified
savings contribution is made provides that any con-
tribution to such plan (whether or not a qualified
savings contribution) may be withdrawn by a quali-
1451
fied zone employee as described in section 72(t)(2)
(B) or (D).
‘‘(d) D EFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED ZONE EMPLOYEE.—The term
‘qualified zone employee’ has the meaning given such
term by section 1396(d).
‘‘(2) DEFINED
CONTRIBUTION
PLAN.—The
term ‘defined contribution plan’ means a defined
contribution plan (as defined in section 414(i))
which is described in section 401(a) and includes a
trust exempt from tax under section 501(a).
‘‘(e) T REATMENT OF PLANS.—A plan shall not be
treated as failing to meet any requirement of part I of
subchapter D of chapter 1 by reason of permitting with-
drawals required to be permitted under subsection (c)(2).
‘‘Subpart C—Depreciation and Other Incentives
‘‘Sec. 1397B. Depreciation benefits.
‘‘Sec. 1397C. Additional exclusion from volume cap for certain en-
terprise zone facility bonds.
‘‘Sec. 1397D. Enterprise zone business.
‘‘SEC. 1397B. DEPRECIATION BENEFITS.
‘‘(a) INCREASE
IN EXPENSING UNDER SECTION
179.—
‘‘(1) IN GENERAL.—In the case of an enterprise
zone business, for purposes of section 179—
‘‘(A) qualified zone property shall be treat-
ed as section 179 property,
1452
‘‘(B) 
the 
limitation 
under 
section
179(b)(1) shall be increased by the lesser of—
‘‘(i) $50,000, or
‘‘(ii) the cost of qualified zone prop-
erty placed in service during the taxable
year, and
‘‘(C) section 179(b)(2) shall be applied by
substituting ‘by one-half of the amount by
which the cost of qualified zone property (other
than real property) and other section 179 prop-
erty’ for ‘by the amount by which the cost of
section 179 property’.
‘‘(b) ACCELERATED DEPRECIATION.—
‘‘(1) IN
GENERAL.—For purposes of section
168(a), with respect to qualified zone property of an
enterprise zone business, the applicable recovery pe-
riod shall be determined in accordance with the table
contained in paragraph (2) in lieu of the table con-
tained in section 168(c).
‘‘(2) APPLICABLE
RECOVERY
PERIOD
FOR
QUALIFIED ZONE PROPERTY.—For purposes of para-
graph (1)—
The applicable
‘‘In the case of:
recovery period is:
3-year property ........................................................................
2 years
5-year property ........................................................................
3 years
7-year property ........................................................................
4 years
10-year property ......................................................................
6 years
15-year property ......................................................................
9 years
1453
The applicable
‘‘In the case of:
recovery period is:
20-year property ......................................................................
12 years
Nonresidential real property ....................................................
22 years.
‘‘(3) DEDUCTION
ALLOWED
IN
COMPUTING
MINIMUM TAX.—Paragraph (1) shall apply for pur-
poses of determining alternative minimum taxable
income under section 55.
‘‘(c) QUALIFIED ZONE PROPERTY.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘qualified zone
property’ means any property to which section 168
applies (or would apply but for section 179) if—
‘‘(A) such property was acquired by the
taxpayer by purchase (as defined in section
179(d)(2)) after the date on which the designa-
tion of the empowerment zone took effect,
‘‘(B) the original use of which in an
empowerment zone commences with the tax-
payer, and
‘‘(C) substantially all of the use of which
is in an empowerment zone and is in the active
conduct of a trade or business by the taxpayer
in such zone.
‘‘(2) SPECIAL RULE FOR SUBSTANTIAL REN-
OVATIONS.—In the case of any property which is
substantially renovated by the taxpayer, the require-
1454
ments of subparagraphs (A) and (B) of paragraph
(1) shall be treated as satisfied. For purposes of the
preceding sentence, property shall be treated as sub-
stantially renovated by the taxpayer if, during any
24-month period beginning after the date on which
the designation of the empowerment zone took ef-
fect, 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 at the be-
ginning of such 24-month period in the hands of the
taxpayer, or (ii) $5,000.
‘‘(3) E XCEPTION FOR ALTERNATIVE DEPRECIA-
TION PROPERTY.—The term ‘qualified zone prop-
erty’ does not include any property to which the al-
ternative depreciation system under section 168(g)
applies, determined—
‘‘(A) without regard to section 168(g)(7)
(relating to election to use alternative deprecia-
tion system), and
‘‘(B) after the application of section
280F(b) (relating to listed property with limited
business use).
‘‘(d) S PECIAL RULES FOR SALE-LEASEBACKS.—For
purposes of subsection (c)(1)(B), if property is sold and
leased back by the taxpayer within 3 months after the date
1455
such property was originally placed in service, such prop-
erty shall be treated as originally placed in service not ear-
lier than the date on which such property is used under
the leaseback.
‘‘(e) R ECAPTURE.—Rules similar to the rules under
section 179(d)(10) shall apply with respect to any quali-
fied zone property of any business which ceases to be an
enterprise zone business.
‘‘SEC. 1397C. ADDITIONAL EXCLUSION FROM VOLUME CAP
FOR CERTAIN ENTERPRISE ZONE FACILITY
BONDS.
‘‘(a) I N GENERAL.—Section 1394(b)(5) shall be ap-
plied by substituting ‘75 percent’ for ‘50 percent’ in the
case of any bond described in section 1394(b)(1) issued
as part of an issue 95 percent or more of the net proceeds
(as defined in section 150(a)(3)) of which are used to pro-
vide qualified zone property the principal user of which
is any enterprise zone business if the ownership require-
ments of subsection (b) are met with respect to such
business.
‘‘(b) OWNERSHIP REQUIREMENTS.—The ownership
requirements of this subsection are met with respect to
an enterprise zone business if—
1456
‘‘(1) in the case of a sole proprietorship, the
principal place of abode of the proprietor is in an
empowerment zone,
‘‘(2) in the case of a corporation, more than 50
percent of the stock (by vote and value) in the cor-
poration is owned (directly or indirectly) by individ-
uals whose principal place of abode is in an
empowerment zone, and
‘‘(3) in the case of a partnership, more than 50
percent of the capital and profits interests in the
partnership is owned (directly or indirectly) by indi-
viduals whose principal place of abode is in an
empowerment zone.
‘‘SEC. 1397D. ENTERPRISE ZONE BUSINESS DEFINED.
‘‘(a) IN GENERAL.—For purposes of this subpart, the
term ‘enterprise zone business’ means—
‘‘(1) any qualified business entity, and
‘‘(2) any qualified proprietorship.
‘‘(b) Q UALIFIED BUSINESS ENTITY.—For purposes
of this section, the term ‘qualified business entity’ means,
with respect to any taxable year, any corporation or part-
nership if for such year—
‘‘(1) every trade or business of such entity is
the active conduct of a qualified business within an
empowerment zone,
1457
‘‘(2) at least 80 percent of the total gross in-
come of such entity is derived from the active con-
duct of such business,
‘‘(3) substantially all of the use of the tangible
property of such entity (whether owned or leased) is
within an empowerment zone,
‘‘(4) substantially all of the intangible property
of such entity is used in, and exclusively related to,
the active conduct of any such business,
‘‘(5) substantially all of the services performed
for such entity by its employees are performed in an
empowerment zone,
‘‘(6) at least 35 percent of its employees are
residents of an empowerment zone,
‘‘(7) less than 5 percent of the average of the
aggregate unadjusted bases of the property of such
entity is attributable to collectibles (as defined in
section 408(m)(2)) other than collectibles that are
held primarily for sale to customers in the ordinary
course of such business, and
‘‘(8) less than 5 percent of the average of the
aggregate unadjusted bases of the property of such
entity is attributable to nonqualified financial prop-
erty.
1463
(b) ECONOMICALLY
DISADVANTAGED
EMPOWER-
MENT ZONE RESIDENT.—Section 51(d) is amended by re-
designating paragraphs (13) through (16) as paragraphs
(14) through (17), respectively, and by inserting after
paragraph (12) the following new paragraph:
‘‘(13) 
ECONOMICALLY
DISADVANTAGED
EMPOWERMENT ZONE RESIDENT.—The term ‘eco-
nomically disadvantaged empowerment zone resi-
dent’ means an individual—
‘‘(A) whose principal place of abode while
performing services for the employer is within
an empowerment zone, and
‘‘(B) who is certified by the designated
local agency as being a member of an economi-
cally disadvantaged family (as determined
under paragraph (11)).
Such term shall not include a qualified zone em-
ployee (as defined in section 1396(d) without regard
to paragraph (2) thereof).’’
(c) C ONFORMING AMENDMENT.—Subparagraph (C)
of section 51(d)(12) is amended by striking ‘‘paragraph
(14)’’ and inserting ‘‘paragraph (15)’’.
SEC. 14303. TECHNICAL AND CONFORMING AMENDMENTS.
(a) CERTAIN CREDITS PART OF GENERAL BUSINESS
CREDIT.—
1503
made under that subparagraph if that Act had
applied through fiscal year 1998, with adjust-
ments in new budget authority occurring
through fiscal year 1995 and in outlays through
fiscal year 1998), or (ii) 1 percent of the discre-
tionary limit on outlays for that year.
‘‘(c) DISCRETIONARY SCORECARD: 1994–1998.—
‘‘(1) ESTABLISHMENT OF SCORECARD.—Start-
ing for budget year 1994 and ending for fiscal year
1998, there shall be a scorecard upon which shall be
entered the amount of discretionary new budget au-
thority and outlays enacted into law for the budget
year and the current year (except current year
1993). Entries shall be made separately for each fis-
cal year. Discretionary new budget authority and
outlays for the budget year resulting from the enact-
ment of a law in a previous session shall be attrib-
uted to the corresponding law enacted in the current
session. Reductions in new budget authority and
outlays through the imposition of a sequestration
under this section shall also be entered upon the
scorecard. Amounts shall be entered on the score-
card within 5 days after the enactment of each such
law or the imposition of any sequestration, shall
equal the amounts contained in the bill cost reports