Incentives for certain empowerment zone real property

(a)

In general

Subchapter U of chapter 1 of the Internal Revenue Code of 1986 is amended by redesignating part V as part VI, by redesignating section 1397F as section 1397G, and by inserting after part IV the following new part:

Incentive for empowerment zone real property

1397F.

Income attributable to empowerment zone real property excluded from gross income

(a)

In general

Gross income shall not include income or gain attributable to qualified real property for any taxable year beginning during the exclusion period. (b)

Definitions

For purposes of this section— (1)

Qualified real property

(A)

In general

The term qualified real property means any real property— (i)which is certified by the State or local zoning authority, and any economic development board, with respect to such property as meeting the requirements of subparagraph (B), and (ii)with respect to which an election has been made (at such time and in such form and manner as the Secretary shall by regulation prescribe) to have this section apply. (B)

Requirements

Property meets the requirements of this subparagraph if such property— (i)is zoned for commercial use, (ii)has been undeveloped and vacant during the 2-year period ending on the date of certification, and (iii)is located within a qualified census tract. (C)

Qualified census tract

The term qualified census tract means any census tract which— (i)(I)has an average poverty rate exceeding the national average poverty rate, or (II)has an unemployment rate above the national unemployment rate, and (ii)exhibits another condition of distress, such as high crime, deteriorating infrastructure, or population decline.

Poverty rates shall be determined by using 2010 census data, and unemployment rates shall be determined by reference to the rate of unemployment announced by the Bureau of Labor Statistics of the Department of Labor for the months in the 2 most recently ended calendar quarters.

(D)

Economic development board

The term economic development board means, with respect to any property, any entity established by law to oversee the economic development of an area within which such property is located. (2)

Exclusion period

The term exclusion period means, with respect to a taxable year, the 10 taxable year period beginning with the first taxable year beginning after the date of the enactment of this section for which the income attributable to the qualified real property exceeds the pre-depreciation expenses attributable to such real property. (c)

Special rules

For purposes of this section— (1)

Subsequent taxpayers

Subsection (a) shall only apply to a taxpayer who has an ownership interest in the qualified real property on the first day of the exclusion period with respect to such property. (2)

Limitation on application of section

An election to have this section apply may only be made once with respect to any property. (3)

Tax-exempt use property

This section shall not apply to any property which is tax-exempt use property (as defined in section 168(h)). (d)

Regulations

The Secretary may prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including methods for allocating income and expenses to property and rules to prevent abuse of this section.

(b)

Clerical amendment

The table of parts for subchapter U of chapter 1 of such Code is amended by striking the item relating to part V and inserting the following new items:

Part V. Incentive for empowerment zone real property.

Part VI. Regulations.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.