Agenda Package - 10-12-09 Jt. Meeting

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A~ .02 RECOVERY ZONE PROPERTY Section 14000-3(c)(1) defines the term "recovery zone property" to mean any property to which § 168 (relating to the accelerated cost recovery system) applies (or would apply but for § 179 (relating to electing to expense certain depreciable business assets)) if: (A) such property was constructed, reconstructed, renovated, or acquired by purchase (as defined in § 179(d)(2)) by the taxpayer after the date on which the designation of the recovery zone took effect; (B) the original use of which in the recovery zone commences with the taxpayer; and (C) substantially all of the use of which is in the recovery zone and is in the active conduct of a qualified business (as defined in § 14000-3(c)(2)) by the taxpayer in the recovery zone. For purposes of § 14000-3(c)(1), which provides that the term "recovery zone property" means, in part, any property to which § 168 applies (or would apply but for § 179), any property of a character generally subject to the allowance for depreciation under § 168 (or that would be generally subject to such allowance but for § 179) will be treated as "recovery zone property," without regard to whether the particular property is owned by any State or local governmental entity that is not subject to Federal income taxation, provided that such property otherwise meets the requirements under § 14000-3(c)(1). .03 USE OF RECOVERY ZONE PROPERTY IN QUALIFIED BUSINESSES Section 14000-3(c)(1)(C) requires that substantially all of the use of recovery zone property involve the active conduct of a qualified business (as defined in § 14000- 3(c)(2)) by the taxpayer in the recovery zone. Section 14000-3(c)(2) defines the term "qualified business" to mean any trade or business except that (A) the rental to others of real property located in a recovery zone shall be treated as a qualified business only if 8