Fillable Form 8844 - Empowerment Zone Employment Credit

Form 8844 (2001)

Page

● Has his or her principal residence within that

General Instructions

empowerment zone while performing these services

Section references are to the Internal Revenue Code.

(anywhere in the District of Columbia for the DC zone).

Both full-time and part-time employees may qualify.

Purpose of Form

The following are not qualified zone employees.

Use Form 8844 to claim the empowerment zone

● Any relative of the employer described in sections

employment (EZE) credit. For tax years beginning in

152(a)(1) through 152(a)(8).

2001, the credit is 20% of an employer’s calendar year

● A dependent of the employer described in section

2001 qualified wages and certain training and

educational expenses paid or incurred on behalf of

152(a)(9).

qualified zone employees.

● If the employer is a corporation, any individual who

bears any of the relationships described in sections

Although the EZE credit is a component of the

152(a)(1) through 152(a)(8) to, or is a dependent

general business credit, a special tax liability limit

described in section 152(a)(9) of, an individual who

applies. The allowable credit, therefore, is figured on

owns (or is considered to own under section 267(c))

Form 8844 and is not carried to Form 3800, General

more than 50% in value of the outstanding stock of

Business Credit.

the corporation.

Definitions

● If the employer is an entity other than a corporation,

any individual who owns directly or indirectly more

Empowerment zones are the areas designated from

than 50% of the capital and profits interest, including

qualifying areas nominated by state and local

constructive ownership, in the entity.

governments. For purposes of the EZE credit for

● If the employer is an estate or trust, any individual

calendar year 2001, the Secretary of Housing and

Urban Development (HUD) has designated parts of the

who is a grantor, beneficiary, or fiduciary of the estate

following cities as urban empowerment zones.

or trust (or a dependent, as described in section

● Atlanta, GA (9.29 square miles).

152(a)(9), of that individual), or any individual who is a

relative, as described in sections 152(a)(1) through

● Baltimore, MD (6.8 square miles).

152(a)(8), of the grantor, beneficiary, or fiduciary of the

● Chicago, IL (14.33 square miles).

estate or trust.

● Cleveland, OH (7.0 square miles).

● Any person who owns (or is considered to own

● Detroit, MI (18.3 square miles).

under section 318) more than 5% of the outstanding or

voting stock of the employer, or if not a corporate

● Los Angeles, CA (city and county) (19.7 square

employer, more than 5% of the capital or profits

miles).

interest in the employer.

● New York, NY (Manhattan and the Bronx) (7.6 square

● Any individual employed by the employer for less

miles).

than 90 days. For exceptions, see Early Termination

● Philadelphia, PA/Camden, NJ (4.4 square miles).

of Employee below.

For purposes of the EZE credit for calendar year

● Any individual employed by the employer at any

2001, the Secretary of Agriculture (USDA) has

private or commercial golf course, country club,

designated the following rural empowerment zones.

massage parlor, hot tub facility, suntan facility,

● The Kentucky Highlands (part of Wayne and all of

racetrack or other facility used for gambling, or any

Clinton and Jackson counties).

store the principal business of which is the sale of

● Mid-Delta, Mississippi (parts of Bolivar, Holmes,

alcoholic beverages for consumption off premises.

● Any individual employed by the employer in a trade

Humphreys, Leflore, Sunflower, and Washington

counties).

or business, the principal activity of which is farming

● Rio Grande Valley, Texas (parts of Cameron, Hidalgo,

(within the meaning of section 2032A(e)(5)(A) or (B)), if

at the close of the tax year the sum of the following

Starr, and Willacy counties).

amounts exceeds $500,000.

Under section 1400, parts of Washington, DC, are

1. The larger of the unadjusted bases or fair market

treated as an empowerment zone. For details, see

value of the farm assets owned by the employer.

Notice 98-57, 1998-2 C.B. 671.

2. The value of the farm assets leased by the

You may call HUD at 1-800-998-9999 for information

employer.

on the urban empowerment zones. You may call the

USDA at 1-800-645-4712 about the rural

Early Termination of Employee

empowerment zones. On the Internet, visit the EZ/EC

Home Page at

Generally, an individual is not a qualified zone

Qualified zone employee means any employee of

employee unless employed for at least 90 days. The

90-day requirement does not apply in the following

the employer who:

situations.

● Performs substantially all of the services for that

employer within an empowerment zone in the

employer’s trade or business and

Form 8844 - Empowerment Zone Employment Credit - 2001 Page 2

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