26 U.S.C. § 1397D: Qualified zone property defined

(a) General rule For purposes of this part—

(1) In general The term “qualified zone property” means any property to which section 168 applies (or would apply but for section 179) if—

“any property to which section 168 applies (or would apply but for section 179)” Opening words

Textual readingALL OF= qualified zone propertyGate Wizard 🧙

(A) such property was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) after the date on which the designation of the empowerment zone took effect, needs § 179(d)(2)

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(B) the original use of which in an empowerment zone commences with the taxpayer, and

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(C) substantially all of the use of which is in an empowerment zone and is in the active conduct of a qualified business by the taxpayer in such zone.

“Substantially” implies facts and circumstances. No regulation cites this provision (eCFR, Oct 19, 2026)

§ 179(d)(2)

For purposes of paragraph (1), the term “purchase” means any acquisition of property, but only if—

“any acquisition of property, but” Opening words

Textual readingALL OF= a purchase

“the property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267(b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants),” § 179(d)(2)(A)

“the property is not acquired by one component member of a controlled group from another component member of the same controlled group, and” § 179(d)(2)(B)

“the basis of the property in the hands of the person acquiring it is not determined— in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or under section 1014(a) (relating to property acquired from a decedent).” § 179(d)(2)(C)

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(2) Special rule for substantial renovations In the case of any property which is substantially renovated by the taxpayer, the requirements of subparagraphs (A) and (B) of paragraph (1) shall be treated as satisfied. For purposes of the preceding sentence, property shall be treated as substantially renovated by the taxpayer if, during any 24-month period beginning after the date on which the designation of the empowerment zone took effect, additions to basis with respect to such property in the hands of the taxpayer exceed the greater of (i) an amount equal to the adjusted basis at the beginning of such 24-month period in the hands of the taxpayer, or (ii) $5,000.

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