§ 47–1817.01. Definitions.

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

(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 leasing or owning an office in the District of Columbia;

(ii) Having 10 or more qualified employees in the District; and

(iii) Deriving at least 51% of its gross revenues earned in the District 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, including 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, including 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; propulsion, navigation, guidance, nautical, aeronautical and astronautical ground and airborne systems, instruments, and equipment, including 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, including 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) An on-line or brick and mortar retail store;

(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; or

(III) A building or construction company.

(ii) A professional athletic team, as defined in § 47-2002.05(a)(3)

(iii) A business entity located in the DC Ballpark TIF Area, as defined in [§ 2-1217.12a(a)]; or

(iv) A holder of a sports wagering license listed in [§ 36-621.05(b)(1)].

(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; Mar. 5, 2013, D.C. Law 19-211, § 2(c), 59 DCR 13281; Feb. 26, 2015, D.C. Law 20-155, § 7172, 61 DCR 9990; May 3, 2019, D.C. Law 22-312, § 3(a), 66 DCR 1402; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(2), 67 DCR 10493.)

Section References

This section is referenced in § 2-1221.01, § 10-803.01, § 47-462, § 47-1801.04, and § 47-1818.01.

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.”

The 2013 amendment by D.C. Law 19-211 substituted “employees in the District” for “employees” in (5)(A)(ii); and substituted “gross revenues earned in the District” for “gross revenues” in (5)(A)(iii).

The 2015 amendment by D.C. Law 20-155 rewrote (5)(A) and (5)(B)(i).

Cross References

Assistance for qualified high technology companies, see § 2-1221.01 et seq.

Applicability

Applicability of D.C. Law 22-312: § 7177 of D.C. Law 23-16 amended § 5(a) of D.C. Law 22-312 to repeal the delayed applicability affecting this section. Therefore the amendment of this section by D.C. Law 22-312 has been implemented.

Applicability of D.C. Law 22-312: § 5 of D.C. Law 22-312 provided that the change made to this section by § 3(a) of D.C. Law 22-312 is subject to the inclusion of the law’s fiscal effect in an approved budget and financial plan. Therefore that amendment has not been implemented.

Emergency Legislation

For temporary (90 days) amendment of this section, see § 3 of Sports Wagering Lottery Emergency Amendment Act of 2018 (D.C. Act 22-630, Jan. 30, 2019, 66 DCR 1745).

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).

For temporary (90 days) amendment of this section, see § 7182 of the Fiscal Year 2015 Budget Support Emergency Act of 2014 (D.C. Act 20-377, July 14, 2014, 61 DCR 7598, 20 STAT 3696).

For temporary (90 days) amendment of this section, see §§ 7172 and 7173 of the Fiscal Year 2015 Budget Support Congressional Review Emergency Act of 2014 (D.C. Act 20-449, October 10, 2014, 61 DCR 10915, 20 STAT 4188).

For temporary (90 days) addition of D.C. Law 20-155, § 7173, concerning applicability of D.C. Law 20-155, § 7172, see § 2(o) of the Fiscal Year 2015 Budget Support Clarification Emergency Act of 2014 (D.C. Act 20-461, November 6, 2014, 61 DCR 11784, 20 STAT 4368).

For temporary (90 days) amendment of this section, see §§ 7172 and 7173 of the Fiscal Year 2015 Budget Support Second Congressional Review Emergency Act of 2014 (D.C. Act 20-566, January 9, 2015, 62 DCR 884, 21 STAT 541).

For temporary (90 days) addition of D.C. Law 20-155, § 7173, an applicability clause, see § 7016(z)(1) of the Fiscal Year 2016 Budget Support Emergency Act of 2015 (D.C. Act 21-127, July 27, 2015, 62 DCR 10201).

Temporary Legislation

For temporary (225 days) addition of D.C. Law 20-155, § 7173, see § 2(u)(1) of the Fiscal Year 2015 Budget Support Clarification Temporary Amendment Act of 2014 (D.C. Law 20-179, March 7, 2015, 62 DCR 424).

Editor's Notes

Applicability of D.C. Law 20-155: Section 7173 of D.C. Law 20-155, as amended by D.C. Law 21-36, § 7024(e), provided that § 7173 of the act shall be applicable for tax years beginning after December 31, 2014.