§ 1400L. Tax benefits for New York Liberty Zone
(a)
Expansion of work opportunity tax credit
(1)
In general
For purposes of section
51, a New York Liberty Zone business employee shall be treated as a member of a targeted group.
(2)
New York Liberty Zone business employee
For purposes of this subsection—
(A)
In general
The term “New York Liberty Zone business employee” means, with respect to any period, any employee of a New York Liberty Zone business if substantially all the services performed during such period by such employee for such business are performed in the New York Liberty Zone.
(B)
Inclusion of certain employees outside the New York Liberty Zone
(i)
In general
In the case of a New York Liberty Zone business described in subclause (II) of subparagraph (C)(i), the term “New York Liberty Zone business employee” includes any employee of such business (not described in subparagraph (A)) if substantially all the services performed during such period by such employee for such business are performed in the City of New York, New York.
(ii)
Limitation
The number of employees of such a business that are treated as New York Liberty Zone business employees on any day by reason of clause (i) shall not exceed the excess of—
(I)
the number of employees of such business on September 11, 2001, in the New York Liberty Zone, over
(II)
the number of New York Liberty Zone business employees (determined without regard to this subparagraph) of such business on the day to which the limitation is being applied.
The Secretary may require any trade or business to have the number determined under subclause (I) verified by the New York State Department of Labor.
(C)
New York Liberty Zone business
(D)
Special rules for determining amount of credit
For purposes of applying subpart F of part IV of subchapter A of this chapter to wages paid or incurred to any New York Liberty Zone business employee—
(i)
section
51
(a) shall be applied by substituting “qualified wages” for “qualified first-year wages”,
(ii)
the rules of section
52 shall apply for purposes of determining the number of employees under this paragraph,
(iv)
in determining qualified wages, the following shall apply in lieu of section
51
(b):
(b)
Special allowance for certain property acquired after September 10, 2001
(1)
Additional allowance
In the case of any qualified New York Liberty Zone property—
(2)
Qualified New York Liberty Zone property
For purposes of this subsection—
(A)
In general
The term “qualified New York Liberty Zone property” means property—
(ii)
substantially all of the use of which is in the New York Liberty Zone and is in the active conduct of a trade or business by the taxpayer in such Zone,
(iii)
the original use of which in the New York Liberty Zone commences with the taxpayer after September 10, 2001,
(iv)
which is acquired by the taxpayer by purchase (as defined in section
179
(d)) after September 10, 2001, but only if no written binding contract for the acquisition was in effect before September 11, 2001, and
The term “termination date” means December 31, 2006 (December 31, 2009, in the case of nonresidential real property and residential rental property).
(B)
Eligible real property
Nonresidential real property or residential rental property is described in this subparagraph only to the extent it rehabilitates real property damaged, or replaces real property destroyed or condemned, as a result of the September 11, 2001, terrorist attack. For purposes of the preceding sentence, property shall be treated as replacing real property destroyed or condemned if, as part of an integrated plan, such property replaces real property which is included in a continuous area which includes real property destroyed or condemned.
(C)
Exceptions
(i)
Bonus depreciation property under section
168
(k)
Such term shall not include property to which section
168
(k) applies.
(ii)
Alternative depreciation property
The term “qualified New York Liberty Zone property” shall not include any property described in section
168
(k)(2)(D)(i).
(iii)
Qualified New York Liberty Zone leasehold improvement property
Such term shall not include any qualified New York Liberty Zone leasehold improvement property.
(iv)
Election out
For purposes of this subsection, rules similar to the rules of section
168
(k)(2)(D)(iii) shall apply.
(D)
Special rules
For purposes of this subsection, rules similar to the rules of section
168
(k)(2)(E) shall apply, except that clause (i) thereof shall be applied without regard to “and before January 1, 2013”, and clause (iv) thereof shall be applied by substituting “qualified New York Liberty Zone property” for “qualified property”.
(c)
5-year recovery period for depreciation of certain leasehold improvements
(1)
In general
For purposes of section
168, the term “5-year property” includes any qualified New York Liberty Zone leasehold improvement property.
(2)
Qualified New York Liberty Zone leasehold improvement property
(3)
Requirement to use straight line method
The applicable depreciation method under section
168 shall be the straight line method in the case of qualified New York Liberty Zone leasehold improvement property.
(5)
Election out
For purposes of this subsection, rules similar to the rules of section
168
(k)(2)(D)(iii) shall apply.
(d)
Tax-exempt bond financing
(1)
In general
For purposes of this title, any qualified New York Liberty Bond shall be treated as an exempt facility bond.
(2)
Qualified New York Liberty Bond
For purposes of this subsection, the term “qualified New York Liberty Bond” means any bond issued as part of an issue if—
(3)
Limitations on amount of bonds
(A)
Aggregate amount designated
The maximum aggregate face amount of bonds which may be designated under this subsection shall not exceed $8,000,000,000, of which not to exceed $4,000,000,000 may be designated by the Governor and not to exceed $4,000,000,000 may be designated by the Mayor.
(B)
Specific limitations
The aggregate face amount of bonds issued which are to be used for—
(iii)
costs with respect to property used for retail sales of tangible property and functionally related and subordinate property shall not exceed $800,000,000.
The limitations under clauses (i), (ii), and (iii) shall be allocated proportionately between the bonds designated by the Governor and the bonds designated by the Mayor in proportion to the respective amounts of bonds designated by each.
(4)
Qualified project costs
For purposes of this subsection—
(A)
In general
The term “qualified project costs” means the cost of acquisition, construction, reconstruction, and renovation of—
(B)
Costs for certain property outside zone included
Such term includes the cost of acquisition, construction, reconstruction, and renovation of nonresidential real property (including fixed tenant improvements associated with such property) located outside the New York Liberty Zone but within the City of New York, New York, if such property is part of a project which consists of at least 100,000 square feet of usable office or other commercial space located in a single building or multiple adjacent buildings.
(5)
Special rules
In applying this title to any qualified New York Liberty Bond, the following modifications shall apply:
(B)
Section
147
(d) (relating to acquisition of existing property not permitted) shall be applied by substituting “50 percent” for “15 percent” each place it appears.
(C)
Section
148
(f)(4)(C) (relating to exception from rebate for certain proceeds to be used to finance construction expenditures) shall apply to the available construction proceeds of bonds issued under this section.
(D)
Repayments of principal on financing provided by the issue—
(ii)
must be used not later than the close of the 1st semiannual period beginning after the date of the repayment to redeem bonds which are part of such issue.
The requirement of clause (ii) shall be treated as met with respect to amounts received within 10 years after the date of issuance of the issue (or, in the case of a refunding bond, the date of issuance of the original bond) if such amounts are used by the close of such 10 years to redeem bonds which are part of such issue.
(6)
Separate issue treatment of portions of an issue
This subsection shall not apply to the portion of an issue which (if issued as a separate issue) would be treated as a qualified bond or as a bond that is not a private activity bond (determined without regard to paragraph (1)), if the issuer elects to so treat such portion.
(e)
Advance refundings of certain tax-exempt bonds
(1)
In general
With respect to a bond described in paragraph (2) issued as part of an issue 90 percent (95 percent in the case of a bond described in paragraph (2)(C)) or more of the net proceeds (as defined in section 150(a)(3)) of which were used to finance facilities located within the City of New York, New York (or property which is functionally related and subordinate to facilities located within the City of New York for the furnishing of water), one additional advanced refunding after the date of the enactment of this section and before January 1, 2006, shall be allowed under the applicable rules of section
149
(d) if—
(2)
Bonds described
A bond is described in this paragraph if such bond was outstanding on September 11, 2001, and is—
(A)
a State or local bond (as defined in section
103
(c)(1)) which is a general obligation of the City of New York, New York,
(3)
Aggregate limit
For purposes of paragraph (1), the maximum aggregate face amount of bonds which may be designated under this subsection by the Governor shall not exceed $4,500,000,000 and the maximum aggregate face amount of bonds which may be designated under this subsection by the Mayor shall not exceed $4,500,000,000.
(4)
Additional requirements
The requirements of this paragraph are met with respect to any advance refunding of a bond described in paragraph (2) if—
(A)
no advance refundings of such bond would be allowed under any provision of law after September 11, 2001,
(f)
Increase in expensing under section
179
(1)
In general
For purposes of section
179—
(g)
Extension of replacement period for nonrecognition of gain
Notwithstanding subsections (g) and (h) of section
1033, clause (i) of section
1033
(a)(2)(B) shall be applied by substituting “5 years” for “2 years” with respect to property which is compulsorily or involuntarily converted as a result of the terrorist attacks on September 11, 2001, in the New York Liberty Zone but only if substantially all of the use of the replacement property is in the City of New York, New York.
(h)
New York Liberty Zone
For purposes of this section, the term “New York Liberty Zone” means the area located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York.
(i)
References to Governor and Mayor
For purposes of this section, the terms “Governor” and “Mayor” mean the Governor of the State of New York and the Mayor of the City of New York, New York, respectively.