The Gulf Opportunity Zone Act of 2005 Page: 3 of 6
6 p.View a full description of this report.
Extracted Text
The following text was automatically extracted from the image on this page using optical character recognition software:
CRS-3
selling alcoholic beverages for consumption off premises or (2) gambling and animal
property, which is the equipment, furniture, software and other property used directly in
connection with gambling, the racing of animals, or the on-site viewing of such activity,
and any portion of at least 100 square feet of real property dedicated to those activities.
Net Operating Losses. Under IRC 172, net operating losses (NOL) may
generally be carried back for two years. The act allows GO Zone NOL to be carried back
for five years. The GO Zone loss is the lesser of (a) the year's NOL with adjustment or
(b) the deductions used in computing the year's NOL for GO Zone casualty losses,
employment-related moving expenses due to Hurricane Katrina, temporarily housing
employees, depreciation of GO Zone property, and hurricane-related repair expenses.
Property that is disqualified under the depreciation provision discussed above does not
qualify as GO Zone property or its loss as a GO Zone casualty loss.
Expensing. In general, capital expenditures must be added to the property's basis
rather than being expensed (i.e., deducted in the current year). IRC 179 provides an
exception so that a business may expense the costs of certain property in the year it is
placed in service. The total cost of the property that the business elects to treat as section
179 property cannot exceed $100,000. Additionally, for every dollar that the total cost
of all property that the business places in service in the year exceeds $400,000, the
maximum deduction is decreased by one dollar. Both limitations are adjusted for
inflation, and are $105,000 and $450,000 in 2005. IRC 198 contains another exception
to the rule against expensing capital expenditures. It allows taxpayers to expense
environmental remediation costs from the abatement or control of hazardous substances
at a qualified contaminated site. It does not apply to costs paid after December 31, 2005.
The act increases the $100,000 limitation in IRC 179 by up to $100,000 and the
$400,000 limitation by up to $600,000 for qualified GO Zone property. Qualified
property does not include the property that is disqualified from the depreciation and NOL
provisions discussed above. The act amends IRC 198 for sites in the GO Zone by
extending the current deadline to December 31, 2007, and treating petroleum products as
a hazardous substance. It also allows taxpayers to expense 50% of qualified clean-up
costs paid or incurred between August 27, 2005, and January 1, 2008, for the removal of
debris or the demolition of structures on business real property in the GO Zone.
Rehabilitation Credit. Under IRC 47, taxpayers may claim a credit equal to
10% of the qualifying expenditures to rehabilitate a qualified building or 20% of such
expenditures for a certified historic structure. The act increases these amounts to 13% and
26% for building and structures in the GO Zone for expenditures between August 27,
2005, and January 1, 2009.
Small Timber Producers. The act creates two special rules for timber producers
with less than 501 acres of timber property. Under IRC 194, taxpayers may expense up
to $10,000 of qualifying reforestation expenditures. The act increases that limit by up to
$10,000 for expenditures made for qualified timber property in the GO Zone, Rita GO
Zone, or Wilma GO Zone. Under IRC 172, the general rule is that taxpayers may carry
net operating losses back for two years. The act increases this to five years for certain
losses attributable to timber property in any of the three zones.
Upcoming Pages
Here’s what’s next.
Search Inside
This report can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Report.
Lunder, Erika. The Gulf Opportunity Zone Act of 2005, report, February 14, 2006; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc808494/m1/3/: accessed May 6, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.