,i #aaith ,,congress #ast ,session ,h4 ,r4 #bbib ,,in ,,the ,,house ,,of ,,representatives ,march #bd1 #bjbe,mr4 ,edwards 7for himself and ,ms4 ,crockett7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to establish special rules for capital gains invested in brownfield and superfund sites4 #a4 ,short title ,this ,act may be cited as the ,economic ,opportunity for ,distressed ,communities ,act4 #b4 ,establishment of special rules for capital gains invested in distressed opportunity zones 7a7 ,in ,general ,subchapter ,z of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #adjj,z-#c4 ,special rules for capital gains invested in distressed opportunity zones 7a7 ,in general 7#a7 ,treatment of gains ,in the case of capital gains from the sale to1 or exchange with1 an unrelated person of any property held by the taxpayer1 at the election of the taxpayer-- 7,a7 gross income for the taxable year shall not include so much of such gain as does not exceed the aggregate amount invested by the taxpayer in a qualified distressed opportunity fund during the #ahj-;day period beginning on the date of such sale or exchange1 7,b7 the amount of gain excluded by subparagraph 7,a7 shall be included in gross income as provided by subsection 7b71 and 7,c7 subsection 7c7 shall apply4 7#b7 ,election ,no election may be made under paragraph 7#a7-- 7,a7 with respect to a sale or exchange if an election previously made with respect to such sale or exchange is in effect1 or 7,b7 with respect to any sale or exchange after ,december #ca1 #bjcc4 7b7 ,deferral of gain invested in qualified distressed opportunity zone property 7#a7 ,year of inclusion ,gain to which subsection 7a77#a77;,b7 applies shall be included in income in the taxable year which includes the earlier of-- 7,a7 the date on which such investment is sold or exchanged1 or 7,b7 ,december #ca1 #bjcc4 7#b7 ,amount includible 7,a7 ,in general ,the amount of gain included in gross income under subsection 7a77#a77;,a7 shall be the excess of-- 7i7 the lesser of the amount of gain excluded under paragraph 7#a7 or the fair market value of the investment as determined as of the date described in paragraph 7#a71 over 7ii7 the taxpayer's basis in the investment4 7,b7 ,determination of basis qualified distressed opportunity zone property 7i7 ,in general ,except as otherwise provided in this clause or subsection 7c71 the taxpayer's basis in the investment shall be zero4 7ii7 ,increase for gain recognized under subsection 7a77#a77;,b7 ,the basis in the investment shall be increased by the amount of gain recognized by reason of subsection 7a77#a77;,b7 with respect to such property4 7iii7 ,investments held for #e years ,in the case of any investment held for at least #e years1 the basis of such investment shall be increased by an amount equal to #aj percent of the amount of gain deferred by reason of subsection 7a77#a77;,a74 7iv7 ,investments held for #g years ,in the case of any investment held by the taxpayer for at least #g years1 in addition to any adjustment made under clause 7iii71 the basis of such property shall be increased by an amount equal to #e percent of the amount of gain deferred by reason of subsection 7a77#a77;,a74 7c7 ,special rule for investments held for at least #aj years ,in the case of any investment held by the taxpayer for at least #aj years and with respect to which the taxpayer makes an election under this subsection1 the basis of such property shall be equal to the fair market value of such investment on the date that the investment is sold or exchanged4 7d7 ,qualified distressed opportunity fund ,for purposes of this section-- 7#a7 ,in general ,the term qualified distressed opportunity fund means any investment vehicle which is organized as a corporation or a partnership for the purpose of investing in qualified distressed opportunity zone property 7other than another qualified distressed opportunity fund7 that holds at least #ij percent of its assets in qualified distressed opportunity zone property1 determined by the average of the percentage of qualified distressed opportunity zone property held in the fund as measured-- 7,a7 on the last day of the first #f-month period of the taxable year of the fund1 and 7,b7 on the last day of the taxable year of the fund4 7#b7 ,qualified distressed opportunity zone property 7,a7 ,in general ,the term qualified distressed opportunity zone property means property which is-- 7i7 qualified distressed opportunity zone stock1 7ii7 qualified distressed opportunity zone partnership interest1 or 7iii7 qualified distressed opportunity zone business property4 7,b7 ,qualified distressed opportunity zone stock 7i7 ,in general ,except as provided in clause 7ii71 the term qualified distressed opportunity zone stock means any stock in a domestic corporation if-- 7,i7 such stock is acquired by the qualified distressed opportunity fund after ,december #ca1 #bjbe1 at its original issue 7directly or through an underwriter7 from the corporation solely in exchange for cash1 7,,ii7 as of the time such stock was issued1 such corporation was a qualified distressed opportunity zone business 7or1 in the case of a new corporation1 such corporation was being organized for purposes of being a qualified distressed opportunity zone business71 and 7,,iii7 during substantially all of the qualified distressed opportunity fund's holding period for such stock1 such corporation qualified as a qualified distressed opportunity zone business4 7ii7 ,redemptions ,a rule similar to the rule of section #abjb7;c77#c7 shall apply for purposes of this paragraph4 7,c7 ,qualified distressed opportunity zone partnership interest ,the term qualified distressed opportunity zone partnership interest means any capital or profits interest in a domestic partnership if-- 7i7 such interest is acquired by the qualified distressed opportunity fund after ,december #ca1 #bjbe1 from the partnership solely in exchange for cash1 7ii7 as of the time such interest was acquired1 such partnership was a qualified distressed opportunity zone business 7or1 in the case of a new partnership1 such partnership was being organized for purposes of being a qualified distressed opportunity zone business71 and 7iii7 during substantially all of the qualified distressed opportunity fund's holding period for such interest1 such partnership qualified as a qualified distressed opportunity zone business4 7,d7 ,qualified distressed opportunity zone business property 7i7 ,in general ,the term qualified distressed opportunity zone business property means tangible property used in a trade or business of the qualified distressed opportunity fund if-- 7,i7 such property was acquired by the qualified distressed opportunity fund by purchase 7as defined in section #agi7;d77#b77 after ,december #ca1 #bjbe1 7,,ii7 the original use of such property in the qualified distressed opportunity zone commences with the qualified distressed opportunity fund or the qualified distressed opportunity fund substantially improves the property1 and 7,,iii7 during substantially all of the qualified distressed opportunity fund's holding period for such property1 substantially all of the use of such property was in a qualified distressed opportunity zone4 7ii7 ,substantial improvement ,for purposes of subparagraph 7,a77ii71 property shall be treated as substantially improved by the qualified distressed opportunity fund only if1 during any #cj-month period beginning after the date of acquisition of such property1 additions to basis with respect to such property in the hands of the qualified distressed opportunity fund exceed an amount equal to the adjusted basis of such property at the beginning of such #cj-month period in the hands of the qualified distressed opportunity fund4 7iii7 ,related party ,for purposes of subparagraph 7,a77i71 the related person rule of section #agi7;d77#b7 shall be applied pursuant to subsection 7e77#b7 in lieu of the application of such rule in section #agi7;d77#b77;,a74 7#c7 ,qualified distressed opportunity zone business 7,a7 ,in general ,the term qualified distressed opportunity zone business means a trade or business-- 7i7 in which substantially all of the tangible property owned or leased by the taxpayer is qualified distressed opportunity zone business property 7determined by substituting qualified distressed opportunity zone business for qualified distressed opportunity fund each place it appears in subparagraph 7,d771 7ii7 which satisfies the requirements of paragraphs 7#b71 7#d71 and 7#h7 of section #acig;,c7b71 and 7iii7 which is not described in section #add7;c77#f77;,b74 7,b7 ,special rule ,for purposes of subparagraph 7,a71 tangible property that ceases to be a qualified distressed opportunity zone business property shall continue to be treated as a qualified distressed opportunity zone business property for the lesser of-- 7i7 #e years after the date on which such tangible property ceases to be so qualified1 or 7ii7 the date on which such tangible property is no longer held by the qualified distressed opportunity zone business4 7#d7 ,qualified distressed opportunity zone ,the term qualified distressed opportunity zone means-- 7,a7 a brownfield site 7as defined in section #aja7ci7 of the ,comprehensive ,environmental ,response1 ,compensation1 and ,liability ,act of #aihj71 or 7,b7 a facility that is included on the ,national ,priorities ,list developed by the ,president in accordance with section #aje7;a77#h77;,b7 of the ,comprehensive ,environmental ,response1 ,compensation1 and ,liability ,act of #aihj4 7e7 ,applicable rules 7#a7 ,treatment of investments with mixed funds ,in the case of any investment in a qualified distressed opportunity fund only a portion of which consists of investments of gain to which an election under subsection 7a7 is in effect-- 7,a7 such investment shall be treated as #b separate investments1 consisting of-- 7i7 one investment that only includes amounts to which the election under subsection 7a7 applies1 and 7ii7 a separate investment consisting of other amounts1 and 7,b7 subsections 7a71 7b71 and 7c7 shall only apply to the investment described in subparagraph 7,a77i74 7#b7 ,related persons ,for purposes of this section1 persons are related to each other if such persons are described in section #bfg7;b7 or #gjg7;b77#a71 determined by substituting #bj percent for #ej percent each place it occurs in such sections4 7#c7 ,decedents ,in the case of a decedent1 amounts recognized under this section shall1 if not properly includible in the gross income of the decedent1 be included in gross income as provided by section #fia4 7#d7 ,regulations ,the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section1 including-- 7,a7 rules for the certification of qualified distressed opportunity funds for the purposes of this section1 7,b7 rules to ensure a qualified distressed opportunity fund has a reasonable period of time to reinvest the return of capital from investments in qualified distressed opportunity zone stock and qualified distressed opportunity zone partnership interests1 and to reinvest proceeds received from the sale or disposition of qualified distressed opportunity zone property1 and 7,c7 rules to prevent abuse4 7f7 ,failure of qualified distressed opportunity fund ,to maintain investment standard 7#a7 ,in general ,if a qualified distressed opportunity fund fails to meet the #ij-percent requirement of subsection 7d77#a71 the qualified distressed opportunity fund shall pay a penalty for each month it fails to meet the requirement in an amount equal to the product of-- 7,a7 the excess of-- 7i7 the amount equal to #ij percent of its aggregate assets1 over 7ii7 the aggregate amount of qualified distressed opportunity zone property held by the fund1 multiplied by 7,b7 the underpayment rate established under section #ffba7;a77#b7 for such month4 7#b7 ,special rule for partnerships ,in the case that the qualified distressed opportunity fund is a partnership1 the penalty imposed by paragraph 7#a7 shall be taken int account proportionately as part of the distributive share of each partner of the partnership4 7#c7 ,reasonable cause exception ,no penalty shall be imposed under this subsection with respect to any failure if it is shown that such failure is due to reasonable cause4 4 7b7 ,clerical amendment ,the table of sections for subchapter ,z of chapter #a is amended by adding at the end the following new item3 ,sec4 #adjj,z-#c4 ,special rules for capital gains invested in distressed opportunity zones4 4 7c7 ,effective date ,the amendments made by this section shall apply to amounts invested after the date of the enactment of this ,act4