Economic Impact Zone Credit[NOTE]

An income tax investment credit is allowed for qualifying property placed in service in a taxable year in an economic impact zone. (Recapture of the credit will be required if the taxpayer disposes of or removes the property from the economic impact zone before the useful life (per section 168(e) of the Internal Revenue Code) of the property.)

For the purposes of this credit:

Economic impact zone qualified manufacturing and productive equipment property" means any property:
1. which is used as an integral part of manufacturing or production, or used as an integral part of extraction of or furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services in the economic impact zone;
2. which is tangible property to which Section 168 of the Internal Revenue Code applies;
3. which is Section 1245 property (as defined in Section 1245(a)(3) of the Internal Revenue Code); and
4. (i) the construction, reconstruction, or erection of which is completed by the taxpayer in the economic impact zone; or (ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer inside the economic impact zone.
In the case of any computer software which is used to control or monitor a manufacturing or production process inside the economic impact zone and with respect to which depreciation (or amortization in lieu of depreciation) is allowable, the software must be treated as qualified manufacturing and productive equipment property.
This section does not apply to any property to which the other tax credits would apply unless the taxpayer elects to waive the application of the other credits to the property.
Whether property is three-year property, five-year property, seven-year property, ten-year property or fifteen-year property is determined based on the applicable recovery period for such property under Section 168(e) of the Internal Revenue Code.
"Economic impact zone" means a county or municipality, any portion of which is located within fifty miles of the boundaries of an applicable federal military installation, and any area not otherwise included as part of the economic impact zone if the State Budget and Control Board determines the area to be adversely impacted by the closing or realignment of an applicable federal military installation. An applicable federal military installation is one which is closed or realigned under:
1. The Defense Base Closure and Realignment Act of 1990;
2. Title II of the Defense Authorization Amendments and Base Closure and Realignment Act; or
3. Section 2687 of Title 10, United States Code.

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