Page:United States Statutes at Large Volume 111 Part 1.djvu/890

 Ill STAT. 866 PUBLIC LAW 105-34—AUG. 5, 1997 to basis with respect to such property in the hands of the taxpayer exceed the greater of— "(I) an amount equal to the adjusted basis of such property at the beginning of such 24-month period in the hands of the taxpayer, or " (II) $5,000. " (6) TREATMENT OF SUBSEQUENT PURCHASERS, ETC. —The term 'DC Zone asset' includes any property which would be a DC Zone asset but for paragraph (2)(A)(i), (3)(A), or (4)(A)(ii) in the hands of the taxpayer if such property was a DC Zone asset in the hands of a prior holder. "(7) 5-YEAR SAFE HARBOR. — If any property ceases to be a DC Zone asset by reason of paragraph (2)(A)(iii), (3)(C), or (4)(A)(iii) after the 5-year period beginning on the date the taxpayer acquired such property, such property shall continue to be treated as meeting the requirements of such paragraph; except that the amount of gain to which subsection (a) applies on any sale or exchange of such property shall not exceed the amount which would be qualified capital gain had such property been sold on the date of such cessation. "(c) DC ZONE BUSINESS.— For purposes of this section, the term 'DC Zone business' means any entity which is an enterprise zone business (as defined in section 1397B), determined— "(1) after the application of section 1400(e), "(2) by substituting "80 percent" for "50 percent" in subsections (b)(2) and (c)(1) of section 1397B, and "(3) by treating no area other than the DC Zone as an empowerment zone or enterprise community. " (d) TREATMENT OF ZONE AS INCLUDING CENSUS TRACTS WITH 10 PERCENT POVERTY RATE.—For purposes of applying this section (and for purposes of applying this subchapter and subchapter U with respect to this section), the DC Zone shall be treated as including all census tracts— "(1) which are located in the District of Columbia, and "(2) for which the poverty rate is not less than 10 percent. "(e) OTHER DEFINITIONS AND SPECIAL RULES. —For purposes of this section— "(1) QUALIFIED CAPITAL GAIN.— 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 IQQS OR AFTER 2007 NOT QUALIFIED.— The term 'qualified capital gain' shall not include any gain attributable to periods before January 1, 1998, or after December 31, 2007. "(3) CERTAIN GAIN NOT QUALIFIED.—The term 'qualified capital gain' shall not include any gain which would be treated as ordinary income under section 1245 or under section 1250 if section 1250 applied to all depreciation rather than the additional depreciation. "(4) INTANGIBLES AND LAND NOT INTEGRAL PART OF DC ZONE BUSINESS.— The term 'qualified capital gain' shall not include any gain which is attributable to real property, or an intangible asset, which is not an integral part of a DC Zone business.

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