For the purposes of this chapter, the term:
(1)(A) "Qualified asset" means a:
(i) Qualified stock;
(ii) Qualified partnership interest; or
(iii) Qualified business property.
(B) A qualified asset shall include property which was a qualified asset in the hands of a prior holder.
(2)(A) "Qualified business property" means tangible property if:
(i) The property was acquired by the taxpayer by purchase, as defined in section 179(d)(2) of the Internal Revenue Code of 1986, after December 31, 2000;
(ii) The original use of the property commences with the taxpayer; and
(iii) Substantially all of the use of the property was in a Qualified High Technology Company.
(B) This paragraph shall apply to real property which is substantially improved by the taxpayer before January 1, 2003, and any land on which the property is located.
(C) For the purposes of subparagraph (B) of this paragraph, real property shall be substantially improved by the taxpayer if, during any 24-month period beginning after December 31, 2000:
(i) Additions to basis with respect to the property in the hands of the taxpayer exceed the greater of:
(I) An amount equal to the adjusted basis of the property at the beginning of the 24-month period in the hands of the taxpayer; or
(II) $5,000; and
(ii) At least 51% of the additions to basis represent improvements which facilitate the conduct of a Qualified High Technology Company on the premises, including improvements to electrical wiring or telecommunications facilities serving the building.
(3) "Qualified capital gain" means gain recognized on the sale or exchange of a capital asset or property used in a trade or business, as defined in § 47- 1801.04. The term "qualified capital gain" shall not include gain which is:
(A) Treated as ordinary income under sections 1245 or 1250 of the Internal Revenue Code of 1986 if section 1250 applied to all depreciation rather than additional depreciation;
(B) Attributable to real property or an intangible asset which is not an integral part of a Qualified High Technology Company's business operations in the District; or
(C) Attributable, directly or indirectly, in whole or in part, to a transaction with a related person.
(4) "Qualified employee" means a person who is employed in the District by a Qualified High Technology Company.
(5)(A) "Qualified High Technology Company" means:
(i) An individual or entity organized for profit and maintaining an office, headquarters, or base of operations in the District of Columbia;
(ii) Having 2 or more employees; and
(iii) Deriving at least 51% of its gross revenues from:
(I) Internet-related services and sales, including website design, maintenance, hosting, or operation; Internet-related training, consulting, advertising, or promotion services; the development, rental, lease, or sale of Internet-related applications, connectivity, or digital content; or products and services that may be considered e-commerce;
(II) Information and communication technologies, equipment and systems that involve advanced computer software and hardware, data processing, visualization technologies, or human interface technologies, whether deployed on the Internet or other electronic or digital media. Such technologies shall include operating and applications software; Internet-related services, including design, strategic planning, deployment, and management services and artificial intelligence; computer modeling and simulation; high-level software languages; neural networks; processor architecture; animation and full-motion video; graphics hardware and software; speech and optical character recognition; high-volume information storage and retrieval; data compression; and multiplexing, digital signal processing, and spectrum technologies;
(III) Advanced materials and processing technologies that involve the development, modification, or improvement of one or more materials or methods to produce devices and structures with improved performance characteristics or special functional attributes, or to activate, speed up, or otherwise alter chemical, biochemical, or medical processes. Such materials and technologies shall include metal alloys; metal matrix and ceramic composites; advanced polymers; thin films; membranes; superconductors; electronic and photonic materials; bioactive materials; bioprocessing; genetic engineering; catalysts; waste emissions reduction; pharmaceuticals; and waste processing technologies;
(IV) Engineering, production, biotechnology and defense technologies that involve knowledge-based control systems and architectures; advanced fabrication and design processes, equipment, and tools; or propulsion, navigation, guidance, nautical, aeronautical and astronautical ground and airborne systems, instruments, and equipment. Such technologies shall include: computer-aided design and engineering; computer-integrated manufacturing; robotics and automated equipment; integrated circuit fabrication and test equipment; sensors; biosensors; signal and image processing; medical and scientific instruments; precision machining and forming; biological and genetic research equipment; environmental analysis, remediation, control, and prevention equipment; defense command and control equipment; avionics and controls; guided missile and space vehicle propulsion units; military aircraft; space vehicles; and surveillance, tracking, and defense warning systems; or
(V) Electronic and photonic devices and components for use in producing electronic, optoelectronic, mechanical equipment and products of electronic distribution with interactive media content. Such technologies shall include microprocessors; logic chips; memory chips; lasers; printed circuit board technology; electroluminescent, liquid crystal, plasma, and vacuum fluorescent displays; optical fibers; magnetic and optical information storage; optical instruments, lenses, and filters; simplex and duplex data bases; and solar cells.
(B) "Qualified High Technology Company" shall not include:
(i) An individual or entity that derives 51% or more of its gross revenues from the operation in the District of:
(I) A retail store; or
(II) An electronic equipment facility that is primarily occupied, or intended to be occupied, by electronic and computer equipment that provides electronic data switching, transmission, or telecommunication functions between computers, both inside and outside the facility;
(ii) A professional athletic team, as defined in § 47-2002.05(a)(3); or
(iii) A business entity located in the DC Ballpark TIF Area, as defined in [§ 2-1217.12a(a)].
(6) "Qualified partnership interest" means a capital or profits interest in a partnership, formed under the laws of the District of Columbia or any state of the United States of America, which is originally issued after December 31, 2000, if:
(A) The interest is acquired by the taxpayer from the partnership solely in exchange for cash;
(B) On the date of acquisition, the partnership was a Qualified High Technology Company (or, in the case of a new partnership, the partnership was organized for purposes which would qualify it as a Qualified High Technology Company); and
(C) During substantially all of the taxpayer's holding period for the interest, the partnership qualified as a Qualified High Technology Company.
(7) "Qualified stock" means stock in a corporation, formed under the laws of the District of Columbia or any state of the United States of America, which is originally issued after December 31, 2000, if:
(A) The stock is originally issued to the taxpayer, directly or through an underwriter, solely in exchange for cash;
(B) On the date of issuance, the corporation was a Qualified High Technology Company (or, in the case of a new corporation, the corporation was being organized for purposes which would qualify it as a Qualified High Technology Company); and
(C) During substantially all of the taxpayer's holding period for the stock, the corporation qualified as a Qualified High Technology Company.
(Apr. 3, 2001, D.C. Law 13-256, § 101(a)(2), 48 DCR 730; Apr. 8, 2005, D.C. Law 15-320, § 110(c), 52 DCR 1757.)
HISTORICAL AND STATUTORY NOTES
Effect of Amendments
D.C. Law 15-320 rewrote par. (5)(B) which had read:
"(B) 'Qualified High Technology Company' shall not include an individual or entity that derives 51% or more of its gross revenues from the operation in the District of:
"(i) A retail store; or
"(ii) An electronic equipment facility that is primarily occupied, or intended to be occupied, by electronic and computer equipment that provides electronic data switching, transmission, or telecommunication functions between computers, both inside and outside the facility."
Emergency Act Amendments
For temporary (90 day) amendment of section, see § 201(a) of Ballpark Omnibus Financing and Revenue Tax Provisions Emergency Amendment Act of 2004 (D.C. Act 15-719, January 4, 2005, 52 DCR 1790).
For temporary (90 day) amendment of section, see § 201(a) of Ballpark Omnibus Financing and Revenue Tax Provisions Congressional Review Emergency Act of 2005 (D.C. Act 16-25, February 17, 2005, 52 DCR 2981).
Legislative History of Laws
Law 13-256, the "New E-Conomy Transformation Act of 2000", was introduced in Council and assigned Bill No. 13-752, which was referred to the Committee on Finance and Revenue. The Bill was adopted on first and second readings on November 8, 2000, and December 5, 2000, respectively. Signed by the Mayor on December 21, 2000, it was assigned Act No. 13-543 and transmitted to both Houses of Congress for its review. D.C. Law 13-256 became effective on April 3, 2001.
For Law 15-320, see notes following § 47-368.03.
(a) If the accounting method used by the taxpayer for income tax purposes does not readily permit the verification of revenue for the purposes of determining the status of a corporation as a Qualified High Technology Company, the taxpayer may petition for, or the Chief Financial Officer may employ, a cost of performance method as described in subsection (b) of this section, which method is intended to function in the same manner as § 47-441.
(b) To be certified as a Qualified High Technology Company, a corporation may provide:
(1) An analysis of the operations of the business that identifies the functions of the business in broad categories and specifically identifies those activities within each category that meet the definition of a Qualified High Technology Company;
(2) Evidence of the costs associated with each activity identified as a Qualified High Technology Company activity, consistent with industry standards; and
(3) An income calculation determined by multiplying the total gross revenue reported on its District franchise tax return as total gross income by a fraction, the numerator of which is the total expenses of all Qualified High Technology Company activities and the denominator of which is the total expenses claimed on the current District franchise tax return as total deduction.
(c) If the amount determined in subsection (b) of this section is 51% or more of total gross revenue, the taxpayer shall be certified as a Qualified High Technology Company.
(d) The final approval to grant an alternative method for determining a Qualified High Technology Company shall rest with the Chief Financial Officer and the approval shall not be unreasonably withheld.
(Dec. 7, 2004, D.C. Law 15-205, § 1082(b), 51 DCR 8441.)
HISTORICAL AND STATUTORY NOTES
Emergency Act Amendments
For temporary (90 day) addition, see § 1082(b) of Fiscal Year 2005 Budget Support Emergency Act of 2004 (D.C. Act 15-486, August 2, 2004, 51 DCR 8236).
For temporary (90 day) addition, see § 1082(b) of Fiscal Year 2005 Budget Support Congressional Review Emergency Act of 2004 (D.C. Act 15-594, October 26, 2004, 51 DCR 11725).
Legislative History of Laws
For Law 15-205, see notes following § 47-903.
Miscellaneous Notes
Short title of subtitle H of title I of Law 15-205: Section 1081 of D.C. Law 15-205 provided that subtitle H of title I of the act may be cited as the New E-Conomy Refinement Act of 2004.
Applicability of subtitle H of title I of Law 15-205: Section 1083 of D.C. Law 15-205 provides:
"This subtitle shall apply as of January 1, 2004."
(a) For the purposes of this section, the term "relocation costs" means amounts paid to, or on behalf of, a qualified employee:
(1) For reimbursement of actual moving expenses; or
(2) To assist the employee in financing the purchase of a residence, or the required security deposit or lease payments for the first 12 months of a lease for a residence under a lease of at least one year, which purchase or lease is entered into after December 31, 2000.
(b)(1) Except as provided in subsection (c) of this section, for taxable years beginning after December 31, 2000, a Qualified High Technology Company shall be allowed a credit not to exceed:
(A) $5,000 against the tax imposed by § 47-1817.06 for the relocation costs for each qualified employee relocated to the District from a location outside the District; or
(B) $7,500 against the tax imposed by § 47-1817.06 for the relocation costs for each qualified employee relocated to the District from a location outside the District, which employee also relocates his or her principal residence into the District.
(2) The credit may be claimed for costs incurred after December 31, 2000, in connection with qualified employees relocated to the District after that date.
(c)(1) The annual credit under subsection (b) of this section shall not exceed, in the aggregate:
(A) $250,000 for the credit allowed under subsection (b)(1)(A) of this section; and
(B) $1,000,000 for the credit allowed under subsection (b)(1)(B) of this section.
(2) The credit under subsection (b) of this section shall not be allowed:
(A) Until the Qualified High Technology Company relocates at least 2 qualified employees into the District;
(B) Until the Qualified High Technology Company has employed the qualified employee for at least 6 months in the District;
(C) As a credit for employees who work less than 35 hours per week;
(D) If the qualified employee is a member of the board of directors of the Qualified High Technology Company, directly or indirectly owns a majority of its stock, or is related to a member of the board of directors or a majority stockholder as a spouse, domestic partner, or a relative listed in the definition of "dependent" in section 152 of the Internal Revenue Code of 1986, without regard to source of income; or
(E) If the Qualified High Technology Company has claimed a deduction for the relocation costs.
(d) If the amount of the credit allowable under this section exceeds the tax otherwise due from a Qualified High Technology Company, the unused amount of the credit may be carried forward for 10 years.
(Apr. 3, 2001, D.C. Law 13-256, § 201(b), 48 DCR 730; Sept. 12, 2008, D.C. Law 17-231, § 41(n), 55 DCR 6758.)
HISTORICAL AND STATUTORY NOTES
Effect of Amendments
D.C. Law 17-231, in subsec. (c)(2)(D), substituted "spouse, domestic partner," for "spouse".
Legislative History of Laws
For Law 13-256, see notes following § 47-1817.01.
For Law 17-231, see notes following § 47-802.
(a) Except as provided in subsection (b) of this section, for taxable years beginning after December 31, 2000, a Qualified High Technology Company shall be allowed a credit against the tax imposed by § 47-1817.06 equal to 10% of the wages paid during the first 24 calendar months of employment to a qualified employee hired after December 31, 2000.
(b) The credit under subsection (a) of this section shall not be allowed:
(1) To exceed, for each qualified employee, $5,000 in a taxable year;
(2) If the Qualified High Technology Company accords the qualified employee lesser benefits or rights than it accords other employees in similar jobs;
(3) If the qualified employee was employed as the result of:
(A) The displacement, other than for cause, of another employee;
(B) A strike or lockout;
(C) A layoff in which other employees are awaiting recall; or
(D) A reduction of the regular wages, benefits, or rights of other employees in similar jobs; or
(4) If the qualified employee is a member of the board of directors of the Qualified High Technology Company or, directly or indirectly, owns a majority of its stock.
(c) If the amount of the credit allowable under this section exceeds the tax otherwise due from a Qualified High Technology Company, the unused amount of the credit may be carried forward for 10 years.
(Apr. 3, 2001, D.C. Law 13-256, § 202(b), 48 DCR 730.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-256, see notes following § 47-1817.01.
(a)(1) For purposes of this section, the term "qualified disadvantaged employee" means a District resident who:
(A) Is a recipient of Temporary Assistance for Needy Families ("TANF");
(B) Was a recipient of TANF in the period immediately proceeding employment;
(C) Was released from incarceration within 24 months before the date of employment by a Qualified High Technology Company; or
(D) Is an employee hired, or relocated to the District, after December 31, 2000 and for which a Qualified High Technology company also is eligible to claim the Welfare to Work Tax Credit or the Work Opportunity Tax Credit under the Internal Revenue Code of 1986.
(2) The term "qualified disadvantaged employee" shall not mean or include:
(A) A temporary or seasonal employee; or
(B) An employee who was employed as the result of:
(i) The displacement, other than for cause of another employee;
(ii) A strike or lockout;
(iii) A layoff in which other employees are awaiting recall; or
(iv) A reduction of the regular wages, benefits, or rights of other employees in similar jobs.
(b) For taxable years beginning after December 31, 2000, a Qualified High Technology Company shall be allowed a credit against taxes imposed by § 47- 1817.06 for expenditures paid or incurred during the taxable year for retraining of a qualified disadvantaged employee.
(c) Qualified disadvantaged employee retraining expenditures which are eligible for the tax credit are:
(1) Tuition, costs, or fees for credit or noncredit courses leading to academic degrees or certification of professional, technical, or administrative skills taken at District-based accredited colleges or universities or the cost for formal enrollment in training programs offered by nonprofit training providers (including community or faith-based organizations certified for the provision of training or job-readiness preparation at skill levels suitable for immediate performance of entry-level jobs), in demand among technology companies in general, and information and telecommunications companies in particular. Eligible training programs, other than those at District-based accredited colleges or universities, shall be pre-qualified for participation under this section by the Department of Employment Services; and
(2) Worker retraining programs undertaken through an apprenticeship agreement approved by the District of Columbia Apprenticeship Council.
(d) The credit claimed under this section shall be limited to $20,000 for each qualified disadvantaged employee during the first 18 months of employment.
(e) If the amount of the credit allowable under this section exceeds the tax otherwise due from a Qualified High Technology Company, the unused amount of the credit may be:
(1) Carried forward for 10 years; or
(2) Taken as a refundable credit in an amount up to 50% of the credit.
(Apr. 3, 2001, D.C. Law 13-256, § 203(b), 48 DCR 730; Oct. 26, 2001, D.C. Law 14-42, § 10(i), 48 DCR 7612.)
HISTORICAL AND STATUTORY NOTES
Effect of Amendments
D.C. Law 14-42, in subsec. (a)(1), deleted the second subparagraph (B) which had read as follows:
"(B) An employee who was employed as the result of:
"(i) The displacement, other than for cause, of another employee;
"(ii) A strike or lockout;
"(iii) A layoff in which other employees are awaiting recall; or
"(iv) A reduction of the regular wages, benefits, or rights of other employees in similar jobs."
Emergency Act Amendments
For temporary (90 day) amendment of section, see § 10(i) of Technical Amendments Emergency Act of 2001 (D.C. Act 14-108, August 3, 2001, 48 DCR 7622).
Legislative History of Laws
For Law 13-256, see notes following § 47-1817.01.
For Law 14-42, see notes following § 47-1361.
(a) Except as provided in subsection (b) of this section, for taxable years beginning after December 31, 2000, a Qualified High Technology Company shall be allowed a credit against the tax imposed by § 47-1817.06 equal to 50% of the wages paid to a qualified disadvantaged employee, as defined in § 47- 1817.04, during the first 24 calendar months of employment.
(b) The credit under subsection (a) of this section shall not be allowed:
(1) To exceed $15,000 in a taxable year for a qualified disadvantaged employee; or
(2) If the Qualified High Technology Company accords the qualified disadvantaged employee lesser benefits or rights than it accords other employees in similar jobs.
(c) If the amount of the credit allowable under this section exceeds the tax otherwise due from a Qualified High Technology Company, the unused amount of the credit may be carried forward for 10 years.
(Apr. 3, 2001, D.C. Law 13-256, § 203(b), 48 DCR 730.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-256, see notes following § 47-1817.01.
(a)(1) Notwithstanding any other provision of this chapter, and in lieu of the tax on taxable income imposed by § 47-1807.02, subject to the credits applicable thereto, a tax on taxable income at a rate of 6% shall be imposed upon Qualified High Technology Companies which are corporations, except as provided for in paragraph (2) of this subsection.
(2)(A) For purposes of this paragraph, the term "high technology development zones" mean the geographic areas described in the priority development areas listed in § 2-1219.20 and as designated under subparagraph (B) of this paragraph.
(B) The Mayor may propose regulations designating additional high technology development zones. The Mayor shall transmit the proposed regulations to the Council for a 45-day period of review. If the Council does not approve the regulations, in whole or in part, by resolution within the 45-day review period, the regulations shall be deemed approved.
(C) A Qualified High Technology Company within a high technology development zone shall not be subject to the tax imposed by this chapter for 5 years after the date that the Qualified High Technology Company commences business in the high technology development zone.
(b) The transfer of ownership of a Qualified High Technology Company shall not affect eligibility under this section.
(c) The Mayor may issue regulations to carry out the provisions of this section.
(Apr. 3, 2001, D.C. Law 13-256, § 403(b), 48 DCR 730.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-256, see notes following § 47-1817.01.
(a) For purposes of this section, the term "qualified stock" means stock of a company which is qualified small business stock, as defined under section 1202(c) of the Internal Revenue Code of 1986, and issued by a Qualified High Technology Company.
(b)(1) In the case of a sale of qualified stock held by a taxpayer other than a corporation for more than 6 months and with respect to which the taxpayer elects the application of this section, gain from the sale shall be recognized to the extent the amount realized on the sale exceeds the cost of qualified stock purchased by the taxpayer during the 60-day period beginning on the date of the sale, reduced by the amount of the gain, not to exceed such cost, previously deferred under this paragraph.
(2) A taxpayer shall be treated as having purchased qualified stock if, but for paragraph (3) of this subsection, the adjusted basis of the property in the hands of the taxpayer would be its cost.
(3)(A) If gain from a sale is not recognized under paragraph (1) of this subsection, the unrecognized gain shall reduce the basis of qualified stock, in the order acquired, which is purchased by the taxpayer during the 60-day period described in paragraph (1) of this subsection.
(B) For purposes of determining whether the nonrecognition of gain under paragraph (1) of this subsection applies to qualified stock which is sold:
(i) The taxpayer's holding period for the stock and the stock referred to in this subsection shall be determined without regard to section 1223 of the Internal Revenue Code of 1986; and
(ii) Only the first 6 months of the taxpayer's holding period for the stock referred to in this subsection shall be taken into account for purposes of applying section 1202(c)(2) of the Internal Revenue Code of 1986.
(c) This section shall not apply to any gain which is treated as ordinary income under the Internal Revenue Code of 1986.
(Apr. 3, 2001, D.C. Law 13-256, § 407(b), 48 DCR 730.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-256, see notes following § 47-1817.01.
If any provision of this title relating to a Qualified High Technology Company is held to be invalid:
(1) Any tax abatement, credit, or other benefit provided under this title shall not be increased, and the amount of tax imposed under this title shall not be decreased, as a result of such invalidity; and
(2) A Qualified High Technology Company shall not pay additional taxes under this title to the District of Columbia until any proceedings to contest such taxes become final.
(Apr. 3, 2001, D.C. Law 13-256, § 408, 48 DCR 730.)
HISTORICAL AND STATUTORY NOTES
Temporary Addition of Section
For temporary (225 day) addition of section, see 2(b) of CareFirst Economic Assistance Temporary Act of 2002 (D.C. Law 14-246, March 25, 2003, law notification 50 DCR 2759).
Emergency Act Amendments
For temporary (90 day) addition of §§ 47-1850.01 to 47-1850.04, see § 2(e) of Homestead and Senior Citizen Real Property Tax Legislative Review Emergency Act of 2001 (D.C. Act 14-226, January 8, 2002, 49 DCR 668).
For temporary (90 day) addition of § 47-1818.01, see § 2(b) of CareFirst Economic Assistance Emergency Act of 2002 (D.C. Act 14-460, July 26, 2002, 49 DCR 8175).
Legislative History of Laws
For Law 13-256, see notes following § 47-1817.01.
