-
At least 50% of business income is
derived from the active
conduct of a trade or business within the RC
-
A substantial portion of the use of the tangible
property (owned
or leased) of the business is within the RC
-
A substantial portion
of the intangible property of the business is used in the active
conduct of business in the RC
-
A substantial portion of services
performed for the business by its employees is performed in the RC
-
Less than 5% of the
average of aggregate unadjusted bases of the property of the
business is attributable to collectibles (art work, wine, antiques)
other than collectibles held primarily for sale to customers in the
ordinary course of business
-
Less than 5% of the average of the aggregate
unadjusted bases of the property of the business is attributable to
“non-qualified financial property” (debt, stock, partnership
interests, options, futures contracts) other than reasonable amounts
of working capital held in cash, cash equivalents or debt
instruments with a term of no more than 18 months)
Non-Qualified
Businesses Defined
-
Business predominately
involved in the development or holding of intangibles for sale or
license (such as software).
- Rental of commercial
real estate unless at least 50% of gross rental income is from RC
businesses.
- The rental of
residential real estate or tangible personal property unless at
least 50% of rentals are to RC businesses or RC residents.
- Country clubs, massage
parlors, hot tubs, racetracks and other facilities used for
gambling, private or commercial golf courses, suntan facilities.
- Stores for which the principal business is the sale of
alcoholic beverages for consumption off premises.
- Farming unless the aggregate unadjusted bases of the
assets owned or leased by the taxpayer that are used in the trade or
business of farming are less than $500,000 as of the close of the
taxable year.
Qualified
Employee Defined
A qualified employee
is any employee who meets the following criteria.
- The employee performs
substantially all of his or her services for you within a renewal
community and in your trade or business.
- While performing those
services, the employee has his or her main home within that renewal
community. (Employers in the North Louisiana RC must hire employees
who reside in the North Louisiana RC; Employers in the Central
Louisiana RC must hire employees who reside in the Central Louisiana
RC.)
- A resident of the
Renewal Community in which your company is located, i.e. if your
business is in the North Louisiana Rural Renewal Community the
employee must reside in a designated area within the same
RC. To determine
if your employee is located in the same Renewal Community as your
business, go to
www.hud.gov/crlocator
then type in your employee's home address and zip code where
indicated. Note:
you must use a street address, not a P. O. Box number.
Non-Qualified
Employee Defined
The following
individuals are not qualified RC employees.
- An individual you
employ for less than 90 days. However,
this 90-day requirement does not apply in either of the following
situations.
- You terminate the
employee because of misconduct as determined under the state
unemployment compensation law that applies.
- The employee becomes disabled before the 90th
day. However, if
the disability ends before the 90th day, you must
offer to reemploy the former employee.
- Certain related taxpayers.
- Certain dependents.
- Any 5% owner.
- An individual you employ at any:
- Private or commercial golf course,
- Country club,
- Massage parlor,
- Hot tub facility,
- Suntan facility,
- Racetrack, or other facility used for gambling, or
- An employee residing in a different RC from the one in
which your business is located or in a Census Tract not included in
the RC cannot be considered a qualified employee.
(The North and Central Louisiana Rural RCs are considered
separate entities.)
Summary
of Tax Incentives
|
INCENTIVE
|
DESCRIPTION
|
COMMENT
|
|
RC
Wage Credit
|
Credit against Federal taxes up
to $1,500 per qualified employee for each year.
|
Available through December 31,
2009
|
|
Increased
Section 179 Deduction
|
Allows qualified business to
claim Increased Section 179 deduction of up to $35,000 for
property acquired after December 31, 2001.
|
Can be claimed on certain
depreciable property such as machinery and equipment.
|
|
Commercial
Revitalization Deduction
|
Deduction of either one-half of
qualified revitalization expenditures (QREs) in the first
year a building is placed in service or all of QREs on
ratable basis over 10 years if QREs have been allocated to
revitalization of a commercial building located in an RC
|
State approval must be obtained
before deduction may be claimed.
Application information must be submitted to The
Coordinating and Development for further processing.
(See Community Revitalization Deduction section for
required application information)
|
|
Zero
Percent Capital Gains Rate for RC Assets
|
The holder of an RC asset
acquired between January 1, 2002 and December 31, 2014
will not have to include in its gross income any qualified
capital gain from the sale or exchange of the asset
|
Asset must be held for a minimum
of five years. Exclusion
applies only to an interest in, or property of, certain
businesses operating in an RC.
|
|
|
