Every year, Chattanooga has $12M to award to businesses for accelerated depreciation of expenses associated with capital costs of qualifying building projects. (See 2002 Winners) Recipients can take up to 50% deduction allowed in the first year a building is placed into service, or 10% per year for 10 years can be taken from qualified expenses related to acquisition and/or improvement to properties located in the RC Zone that will be used for commercial or business purposes.
To qualify for a CRD Award, a business must:

• Must be located in the RC zone (see the map of Chattanooga's Renewal Community Zone)
• Must be non-residential and used for business purposes (commercial, retail or industrial)
• Can apply to only portions of building projects related to business uses, if mixed use
• Cannot include expenses used to calculate historical tax credits
• Can be new construction or rehab projects (if rehab, improvements must at least equal as much as the basis cost of the building to qualify)
• In Chattanooga, #1 priority given to projects resulting in creation of new jobs
• Other influencing factors:
1. Above average wages paid to employees
2. Helping to put abandoned properties into service
3. Project readiness- does the applicant have the capacity to execute the project through completion?

• Your project must meet all IRS eligibility requirements first (see "Quick Test" for a short list of key issues; however, please make sure your project satisfies all IRS requirements)
• Helpful Publications and Resources:
1. IRS Publication 954
2. On-line Presentation "Commercial Revitalization Deduction"
3. Attend workshops
4. A List of Frequently Asked Questions to the IRS about the CRD has many useful answers to common questions
• Once you are sure your project meets federal qualifications, you must fill out and turn in the Chattanooga application. Just because your project qualifies by the federal guidelines it does not mean you will be awarded tax deductions for your project.
• Pay attention to the priorities that the CRD Authority has established: quality building projects without demonstrating the addition of new permanent jobs are not likely to get CRD awards. Hint: If a project results in lease space available, make sure to line up tenants before applying that are either new-to-Chattanooga or expanding as a result of the project.

• The RC office will notify you initially of your award status and any updates.
• If you are informed of an award, at the end of the year in which you applied for a CRD Award, you will receive an official letter and CRD Agreement Form from the Mayor confirming the amount of your award.
• You must sign and turn in the CRD Agreement Form to fully activate your award from the City of Chattanooga.
• If your project is approved, your company may take advantage of the accelerated deduction of expenses on your federal tax returns beginning in the tax year that the building is placed into service. As you know, even though local and state approval has been given, you are still responsible for satisfying all internal revenue service requirements for this deduction as well.
• You may elect to take your award in one of 2 ways:
1. 50% Provision: 50% of the approved award amount + an additional amount equal up to 30% of the awarded amount for initial capital purchase costs (building) = total deductions you can take during the year the project is placed into service.
• Tax Preparation: the full amount taken under the 50% provision is recorded on your tax form under "Expenses" on your regular business tax return. List under "Other Expenses". Identify this as a "Commercial Revitalization Deduction " and enter the total amount (as determined above).
• The remaining capital expenses for your project then are deducted over the regular 39-year period as usual.
2. 10% Provision: the total approved award amount + an additional amount equal up to 30% of the awarded amount for initial capital purchase costs (building) = total deductions you will be able to take on an accelerated schedule at a rate of 10% of the total each year for 10 years
• Eligible to take accelerated deduction during the year the building is placed into service
• Tax Preparation: show on Form 4562, line 42, describe as "Commercial Revitalization Deduction- 10 year amortization" (as determined above).
• Any remaining capital expenses more than the amount approved for accelerated deduction under the CRD would then be deducted over the regular 39 year period as usual.