1.This Act may be cited as the Urban Competitiveness Act
.
2.Zero capital gains rate for certain new investments in specified areas
(a)Subchapter Y of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:
IVCertain new investments in specified areas
Sec. 1400V. Zero capital gains rate for certain new investments.
1400V.Zero capital gains rate for certain new investments
(a)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)For purposes of this section—
(1)The term specified new investment
means—
(A)any qualified stock,
(B)any qualified partnership interest, and
(C)any qualified business property.
(2)
(A)Except as provided in subparagraph (B), the term qualified stock
means any stock in a domestic corporation if—
(i)such stock is acquired by the taxpayer during the 1-year period beginning on the date of the enactment of this section, at its original issue (directly or through an underwriter) from the corporation 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 corporation, such corporation was being organized 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)A rule similar to the rule of section 1202(c)(3) shall apply for purposes of this paragraph.
(3)Qualified partnership interestThe term qualified partnership interest
means any capital or profits interest in a domestic partnership if—
(A)such interest is acquired by the taxpayer during the 1-year period beginning on the date of the enactment of this section, from the partnership solely in exchange for cash,
(B)as of the time such interest was acquired, such partnership was a specified area business (or, in the case of a new partnership, such partnership was being organized for purposes of being a specified area business), and
(C)during substantially all of the taxpayer’s holding period for such interest, such partnership qualified as a specified area business.A rule similar to the rule of paragraph (2)(B) shall apply for purposes of this paragraph.
(4)Qualified business property
(A)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
(iii)during substantially all of the taxpayer’s holding period for such property, substantially all of the use of such property was in a specified area business of the taxpayer.
(B)Special rule for substantial improvementsThe 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 substantially 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)For purposes of this section—
(1)Except as otherwise provided in this subsection, the term qualified capital gain
means any gain recognized on the sale or exchange of—
(A)a capital asset, or
(B)property used in the trade or business (as defined in section 1231(b)).
(2)Gain before enactment not qualifiedThe term qualified capital gain
shall not include any gain attributable to periods before the date of the enactment of this section.
(3)Rules similar to the rules of paragraphs (3), (4), and (5) of section 1400B(e) shall apply for purposes of this subsection.
(d)For purposes of this section, the term specified area business
means any enterprise zone business (as defined in section 1397C), determined—
(1)without regard to subsections (b)(6) and (c)(5) thereof,
(2)by substituting 80 percent
for 50 percent
in subsections (b)(2) and (c)(1) thereof,
(3)by treating each specified area as an empowerment zone (and by treating no area other than a specified area as an empowerment zone).
(e)For purposes of this section, the term specified area
means any principal city of a metropolitan 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 calendar 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)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 before the date of the enactment of section 1400V
for before January 1, 1998, or after December 31, 2014
.
(g)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..
(b)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)The amendments made by this section shall apply to property acquired after the date of the enactment of this Act.