This publication is for business owners who want to find out whether they qualify for certain tax incentives. These incentives are intended to help empowerment zones, enterprise communities, renewal communities, and other distressed communities. A distressed community is any area whose poverty rate or other conditions cause any of these tax incentives to apply. The requirements for each tax incentive are different. The following paragraphs may guide you in using this publication.
To find out whether your area has been designated an empowerment zone read Designated Zones on page 3. To find out whether your area has been designated a renewal community, read Designated Renewal Communities on page 8. To find out whether your area has been designated an enterprise community, read Enterprise Communities on page 13.
If you know that your area has been designated as an empowerment zone, enterprise community, or renewal community, skip the sections on designated zones and communities and begin by reading the first few paragraphs of each of the other sections of the publication. Then, read the details of the sections that apply to you.
If you know that your area has not been designated as a zone or community, you should still read the first few paragraphs of each section. Some of these incentives are available in distressed communities that have not been designated as empowerment zones, enterprise communities, or renewal communities. Read the details of the sections that apply to you.taxmap/pubs/p954-000.htm#TXMP518f09f0
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Internal Revenue Service
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We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.taxmap/pubs/p954-000.htm#TXMP4576b2ef
You may want to see:
Publication 946 How To Depreciate Property Form (and Instructions) 3800: General Business Credit 5884: Work Opportunity Credit 8844: Empowerment Zone and Renewal taxmap/pubs/p954-000.htm#TXMP3e8629f4
Community Employment Credit 8845: Indian Employment Credit 8850: Pre-Screening Notice and Certification
Request for the Work Opportunity and Welfare-to-Work Credits 8860: Qualified Zone Academy Bond Credit 8861: Welfare-to-Work Credit 8874: New Markets Credit 8884: New York Liberty Zone Business
Table 1. Tax Incentives for Distressed Communities
|Type of Benefit|| Empowerment Zones |
|Enterprise Communities |
|Renewal Communities |
|Credits|| || || |
|EZ Employment Credit||X|| || |
|RC Employment Credit|| || ||X|
|Work Opportunity Credit||X||X||X|
|Indian Employment Credit||X||X||X|
|New Markets Credit||X||X||X|
|Deductions|| || || |
|Increased Section 179 Deduction||X|| ||X|
|Commercial Revitalization Deduction|| || ||X|
|Depreciation of Property Used on Indian Reservations||X||X||X|
|Bond Financing|| || || |
|Enterprise Zone Facility Bonds||X||X|| |
|Qualified Zone Academy Bonds (QZABs)||X||X||X|
|Capital Gains|| || || |
|Capital Gain Exclusion for RC and DC Zone Assets|| || ||X *|
|Rollover of Gain from Sale of EZ Assets||X|| || |
|Increased Exclusion of Gain From Qualified Small Business Stock||X|| || |
|* Also applicable to District of Columbia Enterprise Zone.|