26 U.S.C. § 1397D — Qualified zone property defined

(a) General rule. For this part: (1) In general. “Qualified zone property” means property to which section 168 applies, or would apply but for section 179, if all of the following are true: (A) The taxpayer acquired the property by purchase, as “purchase” is defined in section 179(d)(2), after the date the empowerment zone designation took effect. (B) The taxpayer is the first user of the property in an empowerment zone. (C) Substantially all use of the property is in an empowerment zone and in the active conduct of a qualified business by the taxpayer in that zone. This section does not define “qualified business,” “empowerment zone,” “substantially all,” or “active conduct.” (2) Special rule for substantial renovations. For property the taxpayer substantially renovates, the requirements in paragraph (1)(A) and (B) are treated as satisfied. Property is treated as substantially renovated by the taxpayer if, during any 24-month period that begins after the empowerment-zone designation took effect, additions to the property’s basis in the taxpayer’s hands exceed the greater of— (i) an amount equal to the property’s adjusted basis in the taxpayer’s hands at the beginning of that 24-month period; or (ii) $5,000. (b) Special rules for sale-leasebacks. For subsection (a)(1)(B), if the taxpayer sells property and leases it back within 3 months after the date the property was originally placed in service, the property is treated as originally placed in service no earlier than the date the taxpayer uses it under the leaseback.