                                 CODE OF VIRGINIA

ENTERPRISE ZONE REAL PROPERTY INVESTMENT TAX CREDIT (§ 59.1-280.1)

A. As used in this section:
			&#8220;Large qualified zone resident&#8221; means a qualified zone resident
making qualified zone investments in excess of $100 million when such qualified
zone investments result in the creation of at least 200 permanent full-time
positions.
			&#8220;Permanent full-time position&#8221; means a job of an indefinite
duration at a business firm located within an enterprise zone requiring the
employee to report for work within the enterprise zone, and requiring either (i)
a minimum of 35 hours of an employee&#8217;s time a week for the entire normal
year of the business firm&#8217;s operations, which &#8220;normal year&#8221;
must consist of at least 48 weeks, (ii) a minimum of 35 hours of an
employee&#8217;s time a week for the portion of the taxable year in which the
employee was initially hired for, or transferred to, the business firm, or (iii)
a minimum of 1,680 hours per year if the standard fringe benefits are paid by
the business firm for the employee. Seasonal or temporary positions, or a
position created when a job function is shifted from an existing location in the
Commonwealth to a business firm located within an enterprise zone shall not
qualify as permanent full-time positions.
			&#8220;Qualified zone improvements&#8221; means the amount expended for
improvements to rehabilitate or expand depreciable real property placed in
service during the taxable year within an enterprise zone, provided that the
total amount of such improvements equals or exceeds (i) $50,000 and (ii) the
assessed value of the original facility immediately prior to the rehabilitation
or expansion. &#8220;Qualified zone expenditures&#8221; includes any such
expenditure regardless of whether it is considered properly chargeable to a
capital account or deductible as a business expense under federal Treasury
Regulations.
			Qualified zone improvements include expenditures associated with any
exterior, structural, mechanical, or electrical improvements necessary to expand
or rehabilitate a building for commercial or industrial use and excavations,
grading, paving, driveways, roads, sidewalks, landscaping, or other land
improvements. Qualified zone improvements shall include, but not be limited to,
costs associated with demolition, carpentry, sheetrock, plaster, painting,
ceilings, fixtures, doors, windows, fire suppression systems, roofing and
flashing, exterior repair, cleaning, and cleanup.
			Qualified zone improvements shall not include:

   1. The cost of acquiring any real property or building; however, the cost of
   any newly constructed depreciable nonresidential real property (excluding
   land, land improvements, paving, grading, driveways, and interest) shall be
   considered to be a qualified zone improvement eligible for the credit if the
   total amount of such expenditure is at least $250,000 with respect to a single
   facility.

   2. (i) The cost of furnishings; (ii) any expenditure associated with
   appraisal, architectural, engineering and interior design fees; (iii) loan
   fees, points, or capitalized interest; (iv) legal, accounting, realtor, sales
   and marketing, or other professional fees; (v) closing costs, permits, user
   fees, zoning fees, impact fees, and inspection fees; (vi) bids, insurance,
   signage, utilities, bonding, copying, rent loss, or temporary facilities
   incurred during construction; (vii) utility hook-up or access fees; (viii)
   outbuildings; or (ix) the cost of any well or septic or sewer system.

   3. The basis of any property: (i) for which a credit under this section was
   previously granted; (ii) which was previously placed in service in Virginia by
   the taxpayer, a related party as defined by Internal Revenue Code &#xA7; 267
   (b), or a trade or business under common control as defined by Internal
   Revenue Code &#xA7; 52 (b); or (iii) which was previously in service in
   Virginia and has a basis in the hands of the person acquiring it, determined
   in whole or in part by reference to the basis of such property in the hands of
   the person from whom acquired or Internal Revenue Code &#xA7; 1014 (a).
   				&#8220;Qualified zone investments&#8221; means the sum of qualified zone
   improvements and the cost of machinery, tools and equipment used in
   manufacturing tangible personal property within an enterprise zone. For
   purposes of this section, machinery, tools and equipment shall only be deemed
   to include the cost of such property which is placed in service in the
   enterprise zone on or after July 1, 1995. Machinery, tools and equipment shall
   not include the basis of any property: (i) for which a credit under this
   section was previously granted; (ii) which was previously placed in service in
   Virginia by the taxpayer, a related party as defined by Internal Revenue Code
   &#xA7; 267 (b), or a trade or business under common control as defined by
   Internal Revenue Code &#xA7; 52 (b); or (iii) which was previously in service
   in Virginia and has a basis in the hands of the person acquiring it,
   determined in whole or part by reference to the basis of such property in the
   hands of the person from whom acquired, or Internal Revenue Code &#xA7; 1014
   (a).
   				&#8220;Qualified zone resident&#8221; means an owner or tenant of real
   property located in an enterprise zone who expands or rehabilitates such real
   property to facilitate the conduct of a trade or business within the
   enterprise zone.
   				&#8220;Real property investment tax credit&#8221; means a credit against
   the taxes imposed by Articles 2 (&#xA7; 58.1-320 et seq.) and 10 (&#xA7;
   58.1-400 et seq.) of Chapter 3, Chapter 12 (&#xA7; 58.1-1200 et seq.), Article
   1 (&#xA7; 58.1-2500 et seq.) of Chapter 25, or Article 2 (&#xA7; 58.1-2620 et
   seq.) of Chapter 26 of Title 58.1.
   				&#8220;Small qualified zone resident&#8221; means any qualified zone
   resident other than a large qualified zone resident.

B. For all taxable years beginning on and after July 1, 1995, but before July 1,
2005, a qualified zone resident shall be allowed a real property investment tax
credit as set forth in this section.

C. For any small qualified zone resident, a real property investment tax credit
shall be allowed in an amount equaling 30 percent of the qualified zone
improvements. Any tax credit granted pursuant to this subsection is refundable;
however, in no event shall the cumulative credit allowed to a small qualified
zone resident pursuant to this subsection exceed $125,000 in any five-year
period.

D. For any large qualified zone resident, a real property investment tax credit
shall be allowed in an amount of up to five percent of such qualified zone
investments. The percentage amount of the real property investment tax credit
granted to a large qualified zone resident shall be determined by agreement
between the Department and the large qualified zone resident, provided such
percentage amount shall not exceed five percent. The real property investment
tax credit provided by this subsection shall not exceed the tax imposed for such
taxable year, but any credit not usable for the taxable year generated may be
carried over until the full amount of such credit has been utilized.

E. The Department shall certify the nature and amount of qualified zone
improvements and qualified zone investments eligible for a real property
investment tax credit in any taxable year. Only qualified zone improvements and
qualified zone investments that have been properly certified shall be eligible
for the credit. Any form filed with the Department of Taxation or State
Corporation Commission for the purpose of claiming the credit shall be
accompanied by a copy of the certification furnished to the taxpayer by the
Department. Any certification by the Department pursuant to this section shall
not impair the authority of the Department of Taxation or State Corporation
Commission to deny in whole or in part any claimed tax credit if the Department
of Taxation or State Corporation Commission determines that the taxpayer is not
entitled to such tax credit. The Department of Taxation or State Corporation
Commission shall notify the Department in writing upon determining that a
taxpayer is ineligible for such tax credit.

F. In the case of a partnership, limited liability company or S corporation, the
term &#8220;qualified zone resident&#8221; as used in this section means the
partnership, limited liability company or S corporation. Credits granted to a
partnership, limited liability company or S corporation shall be passed through
to the partners, members or shareholders, respectively.

G. The Tax Commissioner shall have the authority to issue regulations relating
to the computation and carryover of the credit provided under this section.

H. In the first taxable year only, the credit provided in this section shall be
prorated equally against the taxpayer&#8217;s estimated payments made in the
third and fourth quarters and the final payment, if such taxpayer is required to
make quarterly payments.

I. Tax credits awarded under this section and under &#xA7; 59.1-280 shall not
exceed $7.5 million annually until the end of fiscal year 2019.

J. The provisions of this section shall apply only as follows:

   1. To those large qualified zone residents that have initiated use of
   enterprise zone tax credits pursuant to this section on or before July 1,
   2005;

   2. To those large qualified zone residents that have signed agreements with
   the Commonwealth regarding the use of enterprise zone tax credits in
   accordance with this section on or before July 1, 2005.

HISTORY: 1995, c. 792; 1997, cc. 517, 634, 669; 1998, c. 759; 2005, cc. 863,
884; 2017, c. 451.