(a) Current year credit.

(b) Allowance of credit.

(1) In general.

(2) Credit allowance date.

(3) Applicable percentage.

(4) Amount paid at original issue.

(c) Qualified equity investment.

(1) In general.

(2) Equity investment.

(3) Equity investments made prior to allocation.

(i) In general.

(ii) Exceptions.

(A) Allocation applications submitted by August 29, 2002.

(B) Other allocation applications.

(iii) Failure to receive allocation.

(iv) Initial investment date.

(4) Limitations.

(i) In general.

(ii) Allocation limitation.

(5) Substantially all.

(i) In general.

(ii) Direct-tracing calculation.

(iii) Safe harbor calculation.

(iv) Time limit for making investments.

(v) Reduced substantially-all percentage.

(vi) Examples.

(6) Aggregation of equity investments.

(7) Subsequent purchasers.

(8) Non-real estate qualified equity investment.

(d) Qualified low-income community investments.

(1) In general.

(i) Investment in a qualified active low-income community business or a non-real estate qualified active low-income community business.

(ii) Purchase of certain loans from CDEs.

(A) In general.

(B) Certain loans made before CDE certification.

(C) Intermediary CDEs.

(D) Examples.

(iii) Financial counseling and other services.

(iv) Investments in other CDEs.

(A) In general.

(B) Examples.

(2) Payments of, or for, capital, equity or principal.

(i) In general.

(ii) Subsequent reinvestments.

(iii) Special rule for loans.

(iv) Example.

(3) Special rule for reserves.

(4) Qualified active low-income community business.

(i) In general.

(A) Gross-income requirement.

(B) Use of tangible property.

(1) In general.

(2) Example.

(C) Services performed.

(D) Collectibles.

(E) Nonqualified financial property.

(1) In general.

(2) Construction of real property.

(ii) Proprietorships.

(iii) Portions of business.

(A) In general.

(B) Examples.

(iv) Active conduct of a trade or business.

(A) Special rule.

(B) Example.

(5) Qualified business.

(i) In general.

(ii) Rental of real property.

(iii) Exclusions.

(A) Trades or businesses involving intangibles.

(B) Certain other trades or businesses.

(C) Farming.

(6) Qualifications.

(i) In general.

(ii) Control.

(A) In general.

(B) Definition of control.

(C) Disregard of control.

(7) Financial counseling and other services.

(8) Special rule for certain loans.

(i) In general.

(ii) Example.

(9) Targeted populations.

(i) Low-income persons.

(A) Definition.

(1) In general.

(2) Area median family income.

(3) Individual's family income.

(B) Qualified active low-income community business requirements for low-income targeted populations.

(1) In general.

(2) Employee.

(3) Owner.

(4) Derived from.

(5) Fair market value of sales, rentals, services, or other transactions.

(C) 120-percent-income restriction.

(1) In general.

(2) Population census tract location.

(D) Rental of real property for low-income targeted populations.

(1) In general.

(2) Special rule for entities whose sole business is the rental to others of real property.

(ii) Individuals who otherwise lack adequate access to loans or equity investments.

(A) In general.

(B) GO Zone Targeted Population.

(C) Qualified active low-income community business requirements for the GO Zone Targeted Population.

(1) In general.

(2) Location.

(i) In general.

(ii) Determination.

(D) 200-percent-income restriction.

(1) In general.

(2) Population census tract location.

(E) Rental of real property for the GO Zone Targeted Population.

(10) Non-real estate qualified active low-income community business.

(i) Definition.

(ii) Payments of, or for, capital, equity or principal with respect to a non-real estate qualified active low-income community business.

(A) In general.

(B) Seventh year of the 7-year credit period.

(C) Amounts received from a qualifying entity.

(D) Definition of qualifying entity.

(e) Recapture.

(1) In general.

(2) Recapture event.

(3) Redemption.

(i) Equity investment in a C corporation.

(ii) Equity investment in an S corporation.

(iii) Capital interest in a partnership.

(4) Bankruptcy.

(5) Waiver of requirement or extension of time.

(i) In general.

(ii) Manner for requesting a waiver or extension.

(iii) Terms and conditions.

(6) Cure period.

(7) Example.

(f) Basis reduction.

(1) In general.

(2) Adjustment in basis of interest in partnership or S corporation.

(g) Other rules.

(1) Anti-abuse.

(2) Reporting requirements.

(i) Notification by CDE to taxpayer.

(A) Allowance of new markets tax credit.

(B) Recapture event.

(ii) CDE reporting requirements to Secretary.

(iii) Manner of claiming new markets tax credit.

(iv) Reporting recapture tax.

(3) Other Federal tax benefits.

(i) In general.

(ii) Low-income housing credit.

(4) Bankruptcy of CDE.

(h) Effective/applicability dates.

(1) In general.

(2) Exception for certain provisions.

(3) Targeted populations.

(4) Investments in non-real estate businesses.