Rural Benefits Comparison Table

Round I and Round II Benefits for Rural Empowerment Zones

Round I

Round II

Period

From December 21, 1994 (Designation Date) to December 31, 2009

December 31, 2009

Title XX of the Social Security Act Appropriations

2 grants aggregating $40,000,000 per rural zone

To be determined.

Tax Exempt Bonds

A new category of tax-exempt private activity bonds was authorized for certain zone facilities. Issues are subject to state private activity bond cap levels on total issuances, and special limits on issue size.

Also available to Round I ECs

Round II rural zones can each issue up to $60,000,000 in "new bonds" to finance zone facilities in addition to Round I type tax exempt bonds

Round II "new bonds" are not subject to private activity bond volume caps or the special limits on issue size applicable to Round I type issues.

Wage Credit Provision:

20% wage credit for the first $15,000 of qualified wages paid to a zone resident who works in the zone, with a phaseout beginning in 2002. "Qualified zone wages" may not include wages for which a work opportunity tax credit is claimed (see next)

Also available to Round II EZs

Work Opportunity Tax Credit

(not exclusive to EZs; expires 12/31/05)

Available to Round I EZs

Also available to Round I ECs

40% of qualified first-year wages paid to a member of a targeted group, where first-year wages taken into account may not exceed $6,000. Targeted employees include high risk youth residents of EZs and ECs, food stamp and SSI recipients, vocational rehabilitation referrals and others.

Internal Revenue Code

26 U.S.C. § 179 Expensing:

Capital costs of some kinds of business property which must otherwise be capitalized and depreciated over time may be deducted in the year incurred under section 179. For a zone business, the annual expensing allowance for section 179 property is increased by the lesser of (1) $20,000 or (2) actual cost of property placed in service during the year. Eligible types of property do not include buildings. The phaseout provision of section 179 that would otherwise apply to eligible 179 property is reduced for zone property

As with Round I EZs, up to $20,000 of additional section 179 expensing, however, the property in question must be on the parcels qualified under the poverty rate criteria.

Property on parcels included under the "developable site" per that eligibility provision is not eligible property (see Eligibility Criteria Table, below.)

Brownfields Deductible Expense

(not exclusive to EZs and ECs)

Certain environmental remediation expenditures that would otherwise be capitalized into the cost of the land may be deducted if the costs are paid or incurred prior to January 1, 2001.

Also available to Round I ECs

Also available to Round II EZs

Qualified Zone Academy Bonds

(A national limitation across all empowerment zones and enterprise communities of up to $400 million each year for years 1998 and 1999)

Tax credit bonds whereby certain financial institutions (i.e., banks, insurance companies, and corporations actively engaged in the business of lending money) that hold "qualified zone academy bonds" are entitled to a nonrefundable tax credit in an amount equal to a credit rate (set by the Treasury Department) multiplied by the face amount of the bond. They may or may not be interest bearing; if so, the interest is taxable.

The credit is effective for obligations issued after December 31, 1997.

Also available to Round I ECs

Also available to Round II EZs

The statute does not expressly provide for an allocation to rural empowerment zones or enterprise communities.

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	Round I	Round II
Period	From December 21, 1994 (Designation Date) to December 31, 2009	December 31, 2009
Title XX of the Social Security Act Appropriations	2 grants aggregating $40,000,000 per rural zone	To be determined.
Tax Exempt Bonds	A new category of tax-exempt private activity bonds was authorized for certain zone facilities. Issues are subject to state private activity bond cap levels on total issuances, and special limits on issue size. Also available to Round I ECs	Round II rural zones can each issue up to $60,000,000 in "new bonds" to finance zone facilities in addition to Round I type tax exempt bonds Round II "new bonds" are not subject to private activity bond volume caps or the special limits on issue size applicable to Round I type issues.
Wage Credit Provision:	20% wage credit for the first $15,000 of qualified wages paid to a zone resident who works in the zone, with a phaseout beginning in 2002. "Qualified zone wages" may not include wages for which a work opportunity tax credit is claimed (see next)	Also available to Round II EZs
Work Opportunity Tax Credit (not exclusive to EZs; expires 12/31/05)	Available to Round I EZs Also available to Round I ECs	40% of qualified first-year wages paid to a member of a targeted group, where first-year wages taken into account may not exceed $6,000. Targeted employees include high risk youth residents of EZs and ECs, food stamp and SSI recipients, vocational rehabilitation referrals and others.
Internal Revenue Code 26 U.S.C. § 179 Expensing:	Capital costs of some kinds of business property which must otherwise be capitalized and depreciated over time may be deducted in the year incurred under section 179. For a zone business, the annual expensing allowance for section 179 property is increased by the lesser of (1) $20,000 or (2) actual cost of property placed in service during the year. Eligible types of property do not include buildings. The phaseout provision of section 179 that would otherwise apply to eligible 179 property is reduced for zone property	As with Round I EZs, up to $20,000 of additional section 179 expensing, however, the property in question must be on the parcels qualified under the poverty rate criteria. Property on parcels included under the "developable site" per that eligibility provision is not eligible property (see Eligibility Criteria Table, below.)
Brownfields Deductible Expense (not exclusive to EZs and ECs)	Certain environmental remediation expenditures that would otherwise be capitalized into the cost of the land may be deducted if the costs are paid or incurred prior to January 1, 2001. Also available to Round I ECs	Also available to Round II EZs
Qualified Zone Academy Bonds (A national limitation across all empowerment zones and enterprise communities of up to $400 million each year for years 1998 and 1999)	Tax credit bonds whereby certain financial institutions (i.e., banks, insurance companies, and corporations actively engaged in the business of lending money) that hold "qualified zone academy bonds" are entitled to a nonrefundable tax credit in an amount equal to a credit rate (set by the Treasury Department) multiplied by the face amount of the bond. They may or may not be interest bearing; if so, the interest is taxable. The credit is effective for obligations issued after December 31, 1997. Also available to Round I ECs	Also available to Round II EZs The statute does not expressly provide for an allocation to rural empowerment zones or enterprise communities.