qualified low-income community
(3) Enterprise zone business (A) In general Except as modified in this paragraph, the term “enterprise zone business” has the meaning given such term by section 1397C. (B) Modifications In applying section 1397C for purposes of this section— (i) Businesses in enterprise communities eligible (I) In general Except as provided in subclause (II), references in section 1397C to empowerment zones shall be treated as including references to enterprise communities. (II) Special rule for employee residence test For purposes of subsections (b)(6) and (c)(5) of section 1397C, an employee shall be treated as a resident of an empowerment zone if such employee is a resident of an empowerment zone, an enterprise community, or a qualified low-income community within an applicable nominating jurisdiction. (ii) Waiver of requirements during startup period A business shall not fail to be treated as an enterprise zone business during the startup period if— (I) as of the beginning of the startup period, it is reasonably expected that such business will be an enterprise zone business (as defined in section 1397C as modified by this paragraph) at the end of such period, and (II) such business makes bona fide efforts to be such a business. (iii) Reduced requirements after testing period A business shall not fail to be treated as an enterprise zone business for any taxable year beginning after the testing period by reason of failing to meet any requirement of subsection (b) or (c) of section 1397C if at least 35 percent of the employees of such business for such year are residents of an empowerment zone, an enterprise community, or a qualified low-income community within an applicable nominating jurisdiction. The preceding sentence shall not apply to any business which is not a qualified business by reason of paragraph (1), (4), or (5) of section 1397C(d). (C) Qualified low-income community For purposes of subparagraph (B)— (i) In general The term “qualified low-income community” means any population census tract if— (I) the poverty rate for such tract is at least 20 percent, or (II) the median family income for such tract does not exceed 80 percent of statewide median family income (or, in the case of a tract located within a metropolitan area, metropolitan area median family income if greater). Subclause (II) shall be applied using possessionwide median family income in the case of census tracts located within a possession of the United States. (ii) Targeted populations The Secretary shall prescribe regulations under which 1 or more targeted populations (within the meaning of section 103(20) of the Riegle Community Development and Regulatory Improvement Act of 1994) may be treated as qualified low-income communities. (iii) Areas not within census tracts In the case of an area which is not tracted for population census tracts, the equivalent county divisions (as defined by the Bureau of the Census for purposes of defining poverty areas) shall be used for purposes of determining poverty rates and median family income. (iv) Modification of income requirement for census tracts within high migration rural counties (I) In general In the case of a population census tract located within a high migration rural county, clause (i)(II) shall be applied to areas not located within a metropolitan area by substituting “85 percent” for “80 percent”. (II) High migration rural county For purposes of this clause, the term “high migration rural county” means any county which, during the 20-year period ending with the year in which the most recent census was conducted, has a net out-migration of inhabitants from the county of at least 10 percent of the population of the county at the beginning of such period. (D) Other definitions relating to subparagraph (B) For purposes of subparagraph (B)— (i) Startup period The term “startup period” means, with respect to any property being provided for any business, the period before the first taxable year beginning more than 2 years after the later of— (I) the date of issuance of the issue providing such property, or (II) the date such property is first placed in service after such issuance (or, if earlier, the date which is 3 years after the date described in subclause (I)). (ii) Testing period The term “testing period” means the first 3 taxable years beginning after the startup period. (iii) Applicable nominating jurisdiction The term “applicable nominating jurisdiction” means, with respect to any empowerment zone or enterprise community, any local government that nominated such community for designation under section 1391. (E) Portions of business may be enterprise zone business The term “enterprise zone business” includes any trades or businesses which would qualify as an enterprise zone business (determined after the modifications of subparagraph (B)) if such trades or businesses were separately incorporated.