Page:United States Statutes at Large Volume 114 Part 5.djvu/645

 PUBLIC LAW 106-554—APPENDIX G 114 STAT. 2763A-605 (c) EFFECTIVE DATE.— The amendments made by this section shall apply to stock acquired after the date of the enactment of this Act. Subtitle C—New Markets Tax Credit SEC. 121. NEW MARKETS TAX CREDIT. (a) IN GENERAL.— Subpart D of part IV of subchapter A of chapter 1 (relating to business-related credits) is amended by adding at the end the following new section: "SEC. 45D. NEW MARKETS TAX CREDIT. " (a) ALLOWANCE OF CREDIT.— "(1) IN GENERAL.— For purposes of section 38, in the case of a taxpayer who holds a qualified equity investment on a credit allowance date of such investment which occurs during the taxable year, the new markets tax credit determined under this section for such taxable year is an amount equal to the applicable percentage of the amount paid to the qualified community development entity for such investment at its original issue. "(2) APPLICABLE PERCENTAGE. —For purposes of paragraph (1), the applicable percentage is— "(A) 5 percent with respect to the first 3 credit allowance dates, and "(B) 6 percent with respect to the remainder of the credit allowance dates. "(3) CREDIT ALLOWANCE DATE.— For purposes of paragraph (1), the term 'credit allowance date' means, with respect to any qualified equity investment— "(A) the date on which such investment is initially made, and "(B) each of the 6 anniversary dates of such date thereafter. "(b) QUALIFIED EQUITY INVESTMENT. — For purposes of this section— "(1) IN GENERAL.— The term 'qualified equity investment' means any equity investment in a qualified community development entity if— "(A) such investment is acquired by the taxpayer at its original issue (directly or through an underwriter) solely in exchange for cash, "(B) substantially all of such cash is used by the qualified community development entity to make qualified lowincome community investments, and "(C) such investment is designated for purposes of this section by the qualified community development entity. Such term shall not include any equity investment issued by a qualified community development entity more than 5 years after the date that such entity receives an allocation under subsection (f). Any allocation not used within such 5-year period may be reallocated by the Secretary under subsection (f). "(2) LIMITATION.—The maximum amount of equity investments issued by a qualified community development entity which may be designated under paragraph (1)(C) by such entity

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