Substantially all
Substantially all means at least 85 percent. The substantially-all requirement must be satisfied for each annual period in the 7-year credit period using either the direct-tracing calculation underparagraph (c)(5)(ii)of this section, or the safe harbor calculation underparagraph (c)(5)(iii)of this section. For the first annual period, the substantially-all requirement is treated as satisfied if either the direct-tracing calculation underparagraph (c)(5)(ii)of this section, or the safe-harbor calculation underparagraph (c)(5)(iii)of this section, is performed on a single testing date and the result of the calculation is at least 85 percent. For each annual period other than the first annual period, the substantially-all requirement is treated as satisfied if either the direct-tracing calculation underparagraph (c)(5)(ii)of this section, or the safe harbor calculation underparagraph (c)(5)(iii)of this section, is performed every six months and the average of the two calculations for the annual period is at least 85 percent. For example, the CDE may choose the same two testing dates for all qualified equity investments regardless of the date each qualified equity investment was initially made underparagraph (b)(2)(i)of this section, provided the testing dates are six months apart. The use of the direct-tracing calculation underparagraph (c)(5)(ii)of this section (or the safe harbor calculation underparagraph (c)(5)(iii)of this section) for an annual period does not preclude the use of the safe harbor calculation underparagraph (c)(5)(iii)of this section (or the direct-tracing calculation underparagraph (c)(5)(ii)of this section) for another annual period, provided that a CDE that switches to a direct-tracing calculation must substantiate that the taxpayer's investment is directly traceable to qualified low-income community investments from the time of the CDE's initial investment in a qualified low-income community investment. For purposes of this paragraph (c)(5)(i), the7-year credit periodmeans the period of 7 years beginning on the date the qualified equity investment is initially made. Seeparagraph (c)(6)of this section for circumstances in which a CDE may treat more than one equity investment as a single qualified equity investment.