8844

OMB No. 1545-1444

Empowerment Zone Employment Credit
Form

Department of the Treasury

1998
Attachment
Internal Revenue Service © Attach to your return. Sequence No. 99
Name(s) shown on return Identifying number

Part I Tentative Empowerment Zone Employment (EZE) Credit

1 Enter the total qualified zone wages paid or incurred during calendar year 1998 (see instructions) 1
2 Current year credit. Multiply line 1 by 20% (.20) (see instructions) 2
If you are a— Then enter total of current year EZE credit(s) from—

%
3 EZE credits a Shareholder Schedule K-1 (Form 1120S), lines 12d, 12e, or 13
from flow- b Partner Schedule K-1 (Form 1065), lines 12c, 12d, or 13 3
c Beneficiary Schedule K-1 (Form 1041), line 14
through entities d Patron Written statement from cooperative
4 Total current year EZE credit. Add lines 2 and 3 4
5 EZE credit included on line 4 from passive activities (see instructions) 5
6 Subtract line 5 from line 4 6
7 EZE passive activity credit allowed for 1998 (see instructions) 7
8 Carryforward of EZE credit to 1998 8
9 Carryback of EZE credit from 1999 (see instructions) 9
10 Tentative EZE credit. Add lines 6 through 9. (S corporations, partnerships, estates, trusts, and
cooperatives, see instructions.) 10
Part II EZE Credit Limit Based on Amount of Tax
11 Regular tax before credits:

%
● Individuals. Enter amount from Form 1040, line 40
● Corporations. Enter amount from Form 1120, Schedule J, line 3 (or Form 1120-A, Part I, line 1) 11
● Other filers. Enter regular tax before credits from your return
12a Credit for child and dependent care expenses (Form 2441, line 9) 12a
b Credit for the elderly or the disabled (Sch. R (Form 1040), line 20) 12b
c Child tax credit (Form 1040, line 43) 12c
d Education credits (Form 8863, line 18) 12d
e Mortgage interest credit (Form 8396, line 11) 12e
f Adoption credit (Form 8839, line 14) 12f
g District of Columbia first-time homebuyer credit (Form 8859, line 11) 12g
h Foreign tax credit 12h
i Possessions tax credit (Form 5735, line 17 or 27) 12i
j Credit for fuel from a nonconventional source 12j
k Qualified electric vehicle credit (Form 8834, line 19) 12k
l General business credit (see instructions) 12l
m Add lines 12a through 12l 12m
13 Net regular tax. Subtract line 12m from line 11 13
14 Alternative minimum tax:

%
● Individuals. Enter amount from Form 6251, line 28
● Corporations. Enter amount from Form 4626, line 15, reduced by any credit
on Form 3800, line 37 14
● Estates and trusts. Enter amount from Form 1041, Schedule I, line 39
15 Net income tax. Add lines 13 and 14 15
16 Tentative minimum tax (see instructions) 16
17 Multiply line 16 by 75% (.75) 17
18 If line 13 is more than $25,000, enter 25% (.25) of the excess (see instructions) 18
19 Enter the greater of line 17 or line 18 19
20 Subtract line 19 from line 15. If zero or less, enter -0- 20
21 EZE credit allowed for the current year. Enter the smaller of line 10 or line 20. Complete lines 22
and 23 to determine how the credit is claimed on your tax return 21
22 Credit allowed against regular tax. Enter the smaller of line 13 or line 21 here and on Form 1040,
line 47; Form 1120, Schedule J, line 4d; Form 1120-A, Part I, line 2a; Form 1041, Schedule G, line
2c; or the applicable line of your return 22
23 Credit allowed against alternative minimum tax. If line 21 is greater than line 22, enter the excess
here and see instructions on how to claim the credit 23
For Paperwork Reduction Act Notice, see page 4. Cat. No. 16145S Form 8844 (1998)
Form 8844 (1998) Page 3

General Instructions ● Rio Grande Valley, Texas (parts of ● Any person who owns (or is
Cameron, Hidalgo, Starr, and Willacy considered to own under section 318)
Section references are to the Internal counties). more than 5% of the outstanding or
Revenue Code. voting stock of the employer, or if not a
Under section 1400, parts of
Washington, DC, are treated as an corporate employer, more than 5% of
Changes To Note empowerment zone. For more details, the capital or profits interest in the
● Effective January 1, 1998, parts of see Notice 98-57, 1998-47 I.R.B. 9. employer.
Washington, DC, are treated as an You may call HUD at 1-800-998-9999 ● Any individual employed by the
empowerment zone (the “DC zone”). for information on the urban employer for less than 90 days. For
However, the following special rules empowerment zones. You may call the exceptions, see Early Termination of
apply to the DC zone: USDA at 1-800-645-4712 about the rural Employee below.
1. The designation of this zone will empowerment zones. On the Internet, ● Any individual employed by the
end on December 31, 2002. visit the EZ/EC Home Page at employer at any private or commercial
2. A qualified zone employee may live www.ezec.gov. golf course, country club, massage
anywhere in the District of Columbia (not Except for the DC zone, each parlor, hot tub facility, suntan facility,
just in the empowerment zone). designation remains in effect until the racetrack or other facility used for
earliest of: gambling, or any store the principal
3. The credit rate for the DC zone will business of which is the sale of alcoholic
remain at 20% for calendar year 2002. 1. December 31, 2004. beverages for consumption off premises.
● For credits arising in tax years 2. The termination date designated by ● Any individual employed by the
beginning after December 31, 1997, the the state and local governments in their employer in a trade or business, the
carryback and carryforward rules have zone application, or principal activity of which is farming
changed. Unused credits are now 3. The date HUD or USDA revokes a (within the meaning of section
carried back 1 year and then forward 20 designation. 2032A(e)(5)(A) or (B)), if at the close of
years. However, the old rules continue to the tax year the sum of the following
apply to credits that arose in prior tax The designation of the DC zone will
end on December 31, 2002. amounts exceeds $500,000:
years.
Qualified zone employee means any 1. The larger of the unadjusted bases
Purpose of Form employee of the employer who: or fair market value of the farm assets
owned by the employer, and
Use Form 8844 to claim the ● Performs substantially all of the
empowerment zone employment (EZE) services for that employer within an 2. The value of the farm assets leased
credit. The credit is 20% of an empowerment zone in the employer’s by the employer.
employer’s current year qualified wages trade or business, and
and certain training and educational ● Has his or her principal residence
Early Termination of
expenses paid or incurred on behalf of within that empowerment zone while Employee
qualified zone employees. performing these services (anywhere in Generally, an individual is not a qualified
Although the EZE credit is a the District of Columbia for the DC zone employee unless employed for at
component of the general business zone). least 90 days. The 90-day requirement
credit, a special tax liability limit applies Both full-time and part-time does not apply in the following
to this credit. The credit is, therefore, employees may qualify. situations:
figured separately and is never carried to The following are not qualified zone ● The employee is terminated because
Form 3800, General Business Credit. employees: of misconduct as determined under the
● Any relative of the employer described applicable state unemployment
Definitions compensation law.
in sections 152(a)(1) through 152(a)(8).
Empowerment zones are the areas
● A dependent of the employer ● The employee becomes disabled
designated from qualifying areas before the 90th day. However, if the
nominated by state and local described in section 152(a)(9).
disability ends before the 90th day, the
governments. The Secretary of Housing ● If the employer is a corporation, any employer must offer to reemploy the
and Urban Development (HUD) individual who bears any of the former employee.
designated parts of the following cities relationships described in sections
as urban empowerment zones: 152(a)(1) through 152(a)(8) to, or is a An employee is not treated as
dependent described in section 152(a)(9) terminated if the corporate employer is
● Atlanta, GA (9.29 square miles); acquired by another corporation under
of, an individual who owns (or is
● Baltimore, MD (6.8 square miles); considered to own under section 267(c)) section 381(a) and the employee
● Chicago, IL (14.33 square miles); more than 50% in value of the continues to be employed by the
outstanding stock of the corporation. acquiring corporation. Nor is a mere
● Detroit, MI (18.3 square miles); change in the form of conducting the
● New York, NY (Manhattan and the ● If the employer is an entity other than trade or business treated as a
Bronx) (7.6 square miles); and a corporation, any individual who owns termination if the employee continues to
directly or indirectly more than 50% of be employed in such trade or business
● Philadelphia, PA/Camden, NJ (4.4 the capital and profits interest, including
square miles). and the taxpayer retains a substantial
constructive ownership, in the entity. interest therein.
The Secretary of Agriculture (USDA) ● If the employer is an estate or trust,
designated the following rural any individual who is a grantor, Specific Instructions
empowerment zones: beneficiary, or fiduciary of the estate or Complete lines 1 and 2 to figure the
● The Kentucky Highlands (part of trust (or a dependent, as described in current year credit for your trade or
Wayne and all of Clinton and Jackson section 152(a)(9), of that individual), or business. Skip lines 1 and 2 if you are
counties); any individual who is a relative, as claiming only a credit that was allocated
● Mid-Delta, Mississippi (parts of Bolivar, described in sections 152(a)(1) through to you from a flow-through entity.
Holmes, Humphreys, Leflore, Sunflower, 152(a)(8), of the grantor, beneficiary, or
and Washington counties); and fiduciary of the estate or trust.
Form 8844 (1998) Page 4

Line 1. Enter the total qualified zone business in which you did not materially ● Corporations: Enter the amount from
wages paid or incurred during calendar participate. Rental activities are generally Form 4626, line 13.
year 1998. considered passive activities, whether or ● Estates and trusts: Enter the amount
Qualified zone wages are wages not you materially participate. For from Form 1041, Schedule I, line 37.
paid or incurred by an employer for details, see Form 8582-CR, Passive
Activity Credit Limitations (for Line 18. See section 38(c)(3) for special
services performed by an employee rules that apply to married individuals
while the employee is a qualified zone individuals, trusts, and estates), or Form
8810, Corporate Passive Activity Loss filing separate returns, controlled groups,
employee (see page 3). Wages have the regulated investment companies, real
same meaning as given in section 51, and Credit Limitations (for corporations).
estate investment trusts, and estates
and are generally defined as those Line 7. Enter the passive activity credit and trusts.
wages subject to the Federal allowed for the 1998 EZE credit from
Unemployment Tax Act without regard to Form 8582-CR or Form 8810. See the Line 21. Because the EZE credit is
the dollar limitation. instructions for the applicable form for allowed against both the regular tax and
details. AMT, you must allocate the credit
For each qualified zone employee, the between the two taxes by completing
amount of qualified zone wages that Line 8. Enter the amount of the EZE lines 22 and 23.
may be taken into account for a credit you carried forward from 1997.
calendar year is limited to the first If you cannot use all of the credit
Line 9. Use only if you amend your 1998 because of the tax liability limit (line 21
$15,000. Wages do not include any return to carry back an unused EZE
amount taken into account in figuring is smaller than line 10), carry the excess
credit from 1999. credit back 1 year and then forward for
the work opportunity credit on Form
5884. The $15,000 limit is reduced by Line 10. Flow-through entities allocate 20 years.
the amount of wages paid or incurred the credit as follows: Line 23. Reduce the amount of AMT
during the year that are used in figuring S corporations and partnerships. that you figured on Form 6251, Form
the work opportunity credit for that Allocate the line 10 credit among the 4626, or Form 1041, Schedule I, by the
employee. shareholders or partners. Attach Form line 23 amount and enter the reduced
Also treated as wages paid to an 8844 to the return and show the credit AMT amount on your income tax return
employee are: for each shareholder or partner on (Form 1040, line 51; Form 1120,
Schedule K-1. Electing large Schedule J, line 9; Form 1120-A, Part I,
● Amounts paid or incurred by the partnerships, include this credit in line 6; or Form 1041, Schedule G, line
employer as educational assistance “general credits.” 6). On the dotted line to the left of the
payments excludable from the AMT entry, write “EZE” and the line 23
employee’s gross income under section Estates and trusts. The line 10 credit
is allocated between the estate or trust dollar amount.
127, but only if paid or incurred to a
person who is not related to the and the beneficiaries in proportion to the
employer. For this purpose, a person is income allocable to each. On the dotted Paperwork Reduction Act Notice. We
related to the employer only if that line to the left of the amount on line 10, ask for the information on this form to
person has a relationship to the the estate or trust should enter its part carry out the Internal Revenue laws of
employer described in section 267(b) or of the total credit. Label it “1041 the United States. You are required to
707(b)(1) (substituting “10 percent” PORTION” and use this amount in Part II give us the information. We need it to
where “50 percent” appears in these to figure the credit to claim on Form ensure that you are complying with
sections), or the employer and that 1041, U.S. Income Tax Return for these laws and to allow us to figure and
person are engaged in trades or Estates and Trusts. collect the right amount of tax.
businesses under common control Cooperatives. Most tax-exempt You are not required to provide the
(within the meaning of subsections (a) organizations cannot take the EZE information requested on a form that is
and (b) of section 52). credit, but a cooperative described in subject to the Paperwork Reduction Act
● Amounts paid or incurred by the section 1381(a) takes the credit to the unless the form displays a valid OMB
employer on behalf of an employee extent of its tax liability. Allocate the control number. Books or records
under age 19 for a youth training credit in excess of the tax liability limit to relating to a form or its instructions must
program operated by that employer in the patrons of the cooperative. be retained as long as their contents
conjunction with local education officials. Line 12. The credits listed on lines 12a may become material in the
through line 12l reduce your regular tax administration of any Internal Revenue
Line 2. In general, you must reduce your law. Generally, tax returns and return
deduction on your return for salaries and before the EZE credit. This includes all
other allowed credits that make up the information are confidential, as required
wages and certain educational and by section 6103.
training costs by the line 2 credit general business credit. If you filed Form
amount. You must make this reduction 3800, enter on line 12l the credit from The time needed to complete and file
even if you cannot take the full credit line 18 of Form 3800. If you had only a this form will vary depending on
this year because of the tax liability limit. single separate general business credit individual circumstances. The estimated
If you capitalized any costs on which form, enter on line 12l the credit from average time is:
you figured the credit, reduce the the last line of the credit form (e.g., line Recordkeeping 9 hr., 5 min.
depreciable basis by the amount of the 17 of Form 8586, Low-Income Housing
Credit). Learning about the
credit attributable to these costs. law or the form 1 hr., 41 min.
Members of a controlled group of Line 16. Although you may not owe
alternative minimum tax (AMT), you Preparing and sending
corporations and businesses under the form to the IRS 1 hr., 55 min.
common control are treated as a single generally must still compute the
employer in determining the credit. The tentative minimum tax (TMT) to figure If you have comments concerning the
members share the credit in the same your credit. For a small corporation accuracy of these time estimates or
proportion that they paid or incurred exempt from the AMT under section suggestions for making this form
qualifying wages. 55(e), enter zero. Otherwise, enter the simpler, we would be happy to hear from
TMT that was figured on the appropriate you. See the instructions for the tax
Line 5. Enter the amount included on AMT form or schedule: return with which this form is filed.
line 4 that is from a passive activity.
Generally, a passive activity is a trade or ● Individuals: Enter the amount from
Form 6251, line 26.