26 USC 1394 - Tax-exempt enterprise zone facility bonds

Collapse to view only § 1394. Tax-exempt enterprise zone facility bonds

§ 1394. Tax-exempt enterprise zone facility bonds

§ 1394. Tax-exempt enterprise zone facility bonds

(a) In general

(b) Enterprise zone facility

For purposes of this section—

(1) In general

(2) Qualified zone property

The term “qualified zone property” has the meaning given such term by section 1397D; except that—

(A) the references to empowerment zones shall be treated as including references to enterprise communities, and

(B) section 1397D(a)(2) shall be applied by substituting “an amount equal to 15 percent of the adjusted basis” for “an amount equal to the adjusted basis”.

(3) Enterprise zone business

(A) In general

(B) Modifications

In applying section 1397C for purposes of this section—

(i) Businesses in enterprise communities eligible(I) In general(II) Special rule for employee residence test

(ii) Waiver of requirements during startup period

A business shall not fail to be treated as an enterprise zone business during the startup period if—

(I) as of the beginning of the startup period, it is reasonably expected that such business will be an enterprise zone business (as defined in section 1397C as modified by this paragraph) at the end of such period, and(II) such business makes bona fide efforts to be such a business.

(iii) Reduced requirements after testing period

For purposes of subparagraph (B)—

(i) In general

The term “qualified low-income community” means any population census tract if—

(I) the poverty rate for such tract is at least 20 percent, or(II) the median family income for such tract does not exceed 80 percent of statewide median family income (or, in the case of a tract located within a metropolitan area, metropolitan area median family income if greater).

Subclause (II) shall be applied using possessionwide median family income in the case of census tracts located within a possession of the United States.

(ii) Targeted populations

(iii) Areas not within census tracts

(iv) Modification of income requirement for census tracts within high migration rural counties(I) In general(II) High migration rural county

(D) Other definitions relating to subparagraph (B)

For purposes of subparagraph (B)—

(i) Startup period

The term “startup period” means, with respect to any property being provided for any business, the period before the first taxable year beginning more than 2 years after the later of—

(I) the date of issuance of the issue providing such property, or(II) the date such property is first placed in service after such issuance (or, if earlier, the date which is 3 years after the date described in subclause (I)).

(ii) Testing period

(iii) Applicable nominating jurisdiction

(E) Portions of business may be enterprise zone business

(1) In general

Subsection (a) shall not apply to any issue if the aggregate amount of outstanding enterprise zone facility bonds allocable to any person (taking into account such issue) exceeds—

(A) $3,000,000 with respect to any 1 empowerment zone or enterprise community, or

(B) $20,000,000 with respect to all empowerment zones and enterprise communities.

(2) Aggregate enterprise zone facility bond benefit

(d) Acquisition of land and existing property permitted

(e) Penalty for ceasing to meet requirements

(1) Failures corrected

An issue which fails to meet 1 or more of the requirements of subsections (a) and (b) shall be treated as meeting such requirements if—

(A) the issuer and any principal user in good faith attempted to meet such requirements, and

(B) any failure to meet such requirements is corrected within a reasonable period after such failure is first discovered.

(2) Loss of deductions where facility ceases to be qualified

No deduction shall be allowed under this chapter for interest on any financing provided from any bond to which subsection (a) applies with respect to any facility to the extent such interest accrues during the period beginning on the first day of the calendar year which includes the date on which—

(A) substantially all of the facility with respect to which the financing was provided ceases to be used in an empowerment zone or enterprise community, or

(B) the principal user of such facility ceases to be an enterprise zone business (as defined in subsection (b)).

(3) Exception if zone ceases

(4) Exception for bankruptcy

(f) Bonds for empowerment zones

(1) In general

In the case of an empowerment zone facility bond—

(A) such bond shall not be treated as a private activity bond for purposes of section 146, and

(B) subsection (c) of this section shall not apply.

(2) Limitation on amount of bonds

(A) In general

(B) Limitation on bonds designated

The aggregate face amount of bonds which may be designated under subparagraph (A) with respect to any empowerment zone shall not exceed—

(i) $60,000,000 if such zone is in a rural area,

(ii) $130,000,000 if such zone is in an urban area and the zone has a population of less than 100,000, and

(iii) $230,000,000 if such zone is in an urban area and the zone has a population of at least 100,000.

(i) Coordination with limitation in subsection (c)

(ii) Current refunding not taken into account

In the case of a refunding (or series of refundings) of a bond designated under this paragraph, the refunding obligation shall be treated as designated under this paragraph (and shall not be taken into account in applying subparagraph (B)) if—

(I) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, and(II) the refunded bond is redeemed not later than 90 days after the date of issuance of the refunding bond.

(3) Empowerment zone facility bond

For purposes of this subsection, the term “empowerment zone facility bond” means any bond which would be described in subsection (a) if—

(A) in the case of obligations issued before January 1, 2002, only empowerment zones designated under section 1391(g) were taken into account under sections 1397C and 1397D, and

(B) in the case of obligations issued after December 31, 2001, all empowerment zones (other than the District of Columbia Enterprise Zone) were taken into account under sections 1397C and 1397D.

(Added Pub. L. 103–66, title XIII, § 13301(a), Aug. 10, 1993, 107 Stat. 548; amended Pub. L. 104–188, title I, § 1703(n)(7), Aug. 20, 1996, 110 Stat. 1877; Pub. L. 105–34, title IX, §§ 953(a), 955(a), (b), Aug. 5, 1997, 111 Stat. 887, 889, 890; Pub. L. 106–554, § 1(a)(7) [title I, §§ 115(a), 116(b)(3), (4)], Dec. 21, 2000, 114 Stat. 2763, 2763A–601, 2763A–603; Pub. L. 107–147, title IV, § 417(16), Mar. 9, 2002, 116 Stat. 56; Pub. L. 113–295, div. A, title II, § 220(o), (p), Dec. 19, 2014, 128 Stat. 4036; Pub. L. 114–113, div. Q, title I, § 171(b)–(d), Dec. 18, 2015, 129 Stat. 3070, 3071; Pub. L. 115–141, div. U, title IV, § 401(a)(195), Mar. 23, 2018, 132 Stat. 1193.)