Exclusion of Capital Gains From DC Zone Assets If you hold a District of Columbia Enterprise Zone (DC Zone) assetmore than 5 years, you will not have to include any "qualifiedcapital gain" from its sale or exchange in your gross income. Thisexclusion applies to an interest in, or property of, certainbusinesses operating in the District of Columbia. DC Zone Asset A DC Zone asset is any of the following. ERROR MSGDC Zone business stock. DC Zone partnership interest. DC Zone business property. Caution: In determining whether any property is a DC Zone asset, continue totreat the DC Zone as an empowerment zone for years after 2002. DC Zone business stock.DC Zone business stock is any stock in a U.S. corporation that isoriginally issued after 1997, if all of the following requirements aremet. You acquired the stock before January 1, 2003, at itsoriginal issue solely in exchange for cash. (This requirement is alsomet if you acquired the stock before, on, or after January 1, 2003,from another person in whose hands it was DC Zone businessstock.) The corporation was a DC Zone business (or was beingorganized as a DC Zone business) at the time the stock wasissued. The corporation qualified as a DC Zone business duringsubstantially all of your holding period for the stock. (Thisrequirement is also met if the corporation ceased to qualify as a DCZone business after the 5-year period beginning on the date youacquired the stock. However, your qualified capital gain cannot bemore than what it would have been if you had sold the stock on thedate the corporation ceased to qualify.) Redemptions of business stock.Stock will not qualify as DC Zone business stock if the issuingcorporation makes certain redemptions of its stock within 2 yearsbefore or 2 years after the date the stock was issued. For details,see Internal Revenue Code sections 1400B(b)(2)(B) and 1202(c)(3). DC Zone partnership interest.A DC Zone partnership interest is any capital or profits interestin a U.S. partnership that is originally issued after 1997, if all ofthe following requirements are met. You acquired the partnership interest from the partnershipbefore January 1, 2003, in exchange for cash. (This requirement isalso met if you acquired the partnership interest before, on, or afterJanuary 1, 2003, from another person in whose hands it was a DC Zonepartnership interest.) The partnership was a DC Zone business (or was beingorganized as a DC Zone business) at the time the partnership interestwas acquired. The partnership qualified as a DC Zone business duringsubstantially all of your holding period for the partnership interest.(This requirement is also met if the partnership ceased to qualify asa DC Zone business after the 5-year period beginning on the date youacquired the partnership interest. However, your qualified capitalgain cannot be more than what it would have been if you had sold thepartnership interest on the date the partnership ceased toqualify.) Redemptions of partnership interest.A partnership interest will not qualify as a DC Zone partnershipinterest if the partnership makes certain acquisitions of itspartnership interests within 2 years before or 2 years after the datethe partnership interest was issued. For details, see Internal RevenueCode sections 1400B(b)(3), 1400B(b)(2)(B), and 1202(c)(3). DC Zone business property.DC Zone business property is tangible property acquired after 1997that meets all of the following requirements. apartments accommodation Port DouglasYou acquired the property before January 1, 2003. (Thisrequirement is also met if you acquired the property before, on, orafter January 1, 2003, from another person in whose hands it was DCZone business property.) You did not acquire the property from a related person ormember of a controlled group of which you are a member. Your basis in the property is not determined either by itsadjusted basis in the hands of the person from whom you acquired it orunder the stepped-up basis rules for property acquired from adecedent. cheap hotel in RiminiYou were the first person to use the property in the DCZone. (This requirement is also met if you acquired the property fromanother person in whose hands it was DC Zone businessproperty.) Substantially all of the use of the property was in your DCZone business during substantially all of your holding period for thatproperty. (This requirement is also met if you stopped using theproperty in your DC Zone business, or your business ceased to qualifyas a DC Zone business, after the 5-year period beginning on the dateyou acquired the property. However, your qualified capital gain cannotbe more than what it would have been if you had sold the property onthe date you stopped using the property in your DC Zone business or onthe date your business ceased to qualify.) Special rule for substantially improved buildings.Buildings (and land on which they are located) will be treated ashaving met requirements (1) through (4), listed earlier under DCZone business property, ERROR MSGif you substantially improved thebuildings before January 1, 2003. Buildings are substantially improvedif, during any 24-month period beginning after 1997, your additions tothe basis of the property are more than the greater of the followingamounts. 100% of the adjusted basis of the property at the beginningof the 24-month period. $5,000. DC Zone business.A DC Zone business for this capital gains exclusion is anenterprise zone business as defined earlier under IncreasedSection 179 Deduction, with the following exceptions. The 35% employee residence requirement listed in item (6)does not apply. The 50% of gross income requirement listed in item (2) isincreased to 80%. No area other than the DC Zone can be treated as anempowerment zone or enterprise community. For this purpose, the DC Zone is treated as including allcensus tracts in the District of Columbia with a poverty rate of 10%or more as determined by the 1990 census. Qualified Capital Gain Qualified capital gain is any gain recognized on the sale orexchange of a DC Zone asset that is a capital asset or property usedin a trade or business as defined in section 1231(b) of the InternalRevenue Code (generally real property or depreciable personalproperty). But it does not include any of the following gains. Gain attributable to periods before 1998 or after December31, 2007. Section 1245 gain. See chapter 3 in Publication 544,Sales and Other Dispositions of Assets. Section 1250 gain figured as if section 1250 applied toall depreciation rather than the additional depreciation.See chapter 3 in Publication 544. Gain attributable to real property or an intangible assetthat is not an integral part of a DC Zone business. Gain attributable, directly or indirectly, in whole or inpart, to a transaction with a related person. For the definition of arelated person, see chapter 2 in Publication 544. Other rules.Hoofddorp hôtelsRules similar to certain rules in section 1202 of the InternalRevenue Code apply to interests in pass-through entities, certaintax-free transfers, contributions to capital after the original stockissuance date, and short positions.