Source: https://www.law.cornell.edu/uscode/text/26/1397C?quicktabs_8=0
Timestamp: 2016-02-13 01:43:59
Document Index: 106236071

Matched Legal Cases: ['§ 1397', '§ 1397', '§ 1397', '§\u202f1397', '§\u202f13301', '§\u202f1397', '§\u202f1703', '§\u202f956', '§\u202f532', '§\u202f1397', '§\u202f1', '§\u202f116', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956', '§\u202f956']

26 U.S. Code § 1397C - Enterprise zone business defined | US Law | LII / Legal Information Institute
U.S. Code › Title 26 › Subtitle A › Chapter 1 › Subchapter U › Part III › Subpart D › § 1397C 26 U.S. Code § 1397C - Enterprise zone business defined
§ 1397C.
Enterprise zone business defined
(a) In generalFor purposes of this part, the term “enterprise zone business” means—
any qualified business entity, and
any qualified proprietorship.
(b) Qualified business entityFor purposes of this section, the term “qualified business entity” means, with respect to any taxable year, any corporation or partnership if for such year—
every trade or business of such entity is the active conduct of a qualified business within an empowerment zone,
at least 50 percent of the total gross income of such entity is derived from the active conduct of such business,
a substantial portion of the use of the tangible property of such entity (whether owned or leased) is within an empowerment zone,
a substantial portion of the intangible property of such entity is used in the active conduct of any such business,
a substantial portion of the services performed for such entity by its employees are performed in an empowerment zone,
at least 35 percent of its employees are residents of an empowerment zone,
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
(c) Qualified proprietorshipFor purposes of this section, the term “qualified proprietorship” means, with respect to any taxable year, any qualified business carried on by an individual as a proprietorship if for such year—
at least 50 percent of the total gross income of such individual from such business is derived from the active conduct of such business in an empowerment zone,
a substantial portion of the use of the tangible property of such individual in such business (whether owned or leased) is within an empowerment zone,
a substantial portion of the intangible property of such business is used in the active conduct of such business,
a substantial portion of the services performed for such individual in such business by employees of such business are performed in an empowerment zone,
at least 35 percent of such employees are residents of an empowerment zone,
less than 5 percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business 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
less than 5 percent of the average of the aggregate unadjusted bases of the property of such individual which is used in such business is attributable to nonqualified financial property.
For purposes of this subsection, the term “employee” includes the proprietor.
(d) Qualified businessFor purposes of this section—
Except as otherwise provided in this subsection, the term “qualified business” means any trade or business.
(2) Rental of real propertyThe rental to others of real property located in an empowerment zone shall be treated as a qualified business if and only if—
the property is not residential rental property (as defined in section 168(e)(2)), and
at least 50 percent of the gross rental income from the real property is from enterprise zone businesses.
For purposes of subparagraph (B), the lessor of the property may rely on a lessee’s certification that such lessee is an enterprise zone business.
The term “qualified business” shall not include any trade or business consisting predominantly of the development or holding of intangibles for sale or license.
(5) Certain businesses excludedThe term “qualified business” shall not include—
any trade or business consisting of the operation of any facility described in section 144(c)(6)(B), and
(B) any trade or business the principal activity of which is farming (within the meaning of subparagraphs [1] (A) or (B) of section 2032A(e)(5)), but only if, as of the close of the taxable year, the sum of—
the aggregate unadjusted bases (or, if greater, the fair market value) of the assets owned by the taxpayer which are used in such a trade or business, and
the aggregate value of assets leased by the taxpayer which are used in such a trade or business,
(e) Nonqualified financial propertyFor purposes of this section, the term “nonqualified financial property” means debt, stock, partnership interests, options, futures contracts, forward contracts, warrants, notional principal contracts, annuities, and other similar property specified in regulations; except that such term shall not include—
reasonable amounts of working capital held in cash, cash equivalents, or debt instruments with a term of 18 months or less, or
debt instruments described in section 1221(a)(4).
(f) Treatment of businesses straddling census tract linesFor purposes of this section, if—
a business entity or proprietorship uses real property located within an empowerment zone,
the business entity or proprietorship also uses real property located outside the empowerment zone,
the amount of real property described in paragraph (1) is substantial compared to the amount of real property described in paragraph (2), and
the real property described in paragraph (2) is contiguous to part or all of the real property described in paragraph (1),
(Added Pub. L. 103–66, title XIII, § 13301(a), Aug. 10, 1993, 107 Stat. 552, § 1397B; amended Pub. L. 104–188, title I, § 1703(m), Aug. 20, 1996, 110 Stat. 1877; Pub. L. 105–34, title IX, § 956(a), Aug. 5, 1997, 111 Stat. 890; Pub. L. 106–170, title V, § 532(c)(4), Dec. 17, 1999, 113 Stat. 1931; renumbered § 1397C, Pub. L. 106–554, § 1(a)(7) [title I, § 116(a)(2)], Dec. 21, 2000, 114 Stat. 2763, 2763A–602.)
2000—Pub. L. 106–554 renumbered section 1397B of this title as this section.
1999—Subsec. (e)(2). Pub. L. 106–170 substituted “section 1221(a)(4)” for “section 1221(4)”.
1997—Subsec. (b)(2). Pub. L. 105–34, § 956(a)(1), substituted “50 percent” for “80 percent”.
Subsec. (b)(3). Pub. L. 105–34, § 956(a)(2), substituted “a substantial portion” for “substantially all”.
Subsec. (b)(4). Pub. L. 105–34, § 956(a)(2), (3), substituted “a substantial portion” for “substantially all” and struck out “, and exclusively related to,” after “entity is used in”.
Subsec. (b)(5). Pub. L. 105–34, § 956(a)(2), substituted “a substantial portion” for “substantially all”.
Subsec. (c)(1). Pub. L. 105–34, § 956(a)(1), substituted “50 percent” for “80 percent”.
Subsec. (c)(2). Pub. L. 105–34, § 956(a)(2), substituted “a substantial portion” for “substantially all”.
Subsec. (c)(3). Pub. L. 105–34, § 956(a)(2), (3), substituted “a substantial portion” for “substantially all” and struck out “, and exclusively related to,” after “business is used in”.
Subsec. (c)(4). Pub. L. 105–34, § 956(a)(2), substituted “a substantial portion” for “substantially all”.
Subsec. (d)(2). Pub. L. 105–34, § 956(a)(4), inserted concluding provisions.
Subsec. (d)(3). Pub. L. 105–34, § 956(a)(5), substituted “at least 50 percent” for “substantially all”.
Subsec. (f). Pub. L. 105–34, § 956(a)(6), added subsec. (f).
1996—Subsec. (d)(5)(B). Pub. L. 104–188 struck out “preceding” before “taxable year” in introductory provisions.
Pub. L. 105–34, title IX, § 956(b), Aug. 5, 1997, 111 Stat. 891, provided that:
The amendments made by this section [amending this section] shall apply to taxable years beginning on or after the date of the enactment of this Act [Aug. 5, 1997].
“(2)Special rule for enterprise zone facility bonds.—
For purposes of section 1394(b) of the Internal Revenue Code of 1986, the amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.”