Indian Economic Development Act of 1987

Indian Economic Development Act of 1987 - Title I: Designation of Indian Enterprise Zones - Amends the Internal Revenue Code to provide for the designation of Indian enterprise zones by the Secretary of the Interior (Secretary) for purposes of providing tax relief and increasing the economic stake of tribal residents in their community and its development. Limits the period during which: (1) the Secretary has authority to designate such Indian enterprise zones; and (2) such designations may remain in effect.

Provides that tribal governments shall nominate areas for such designation.

Authorizes the Secretary to designate such zones only if the boundary of the area is continuous and when the area: (1) is within the jurisdiction of the tribal government; (2) is determined by the Secretary to be Indian lands; and (3) meets specified unemployment and poverty criteria.

Requires nominating tribal governments, as a condition of the Secretary's designation, to agree in writing to follow a course of action which may include reducing tax rates, improving local services, simplifying or streamlining regulation of business, receiving commitments of private entities to assist employees and residents of the area, or formulating tribal plans, with proper zoning designation and enforcement.

Describes areas to which the Secretary may give preference in selecting nominated areas for designation as Indian enterprise zones.

Requires the Secretary to prepare and submit to the Congress every four years a report on the effects of such Indian enterprise zones' designation.

Requires that any tax reduction effected by a tribal commitment under the terms of this Act shall be disregarded for purposes of determining the eligibility of a tribe for Federal assistance or benefits.

Specifies that a designation of an Indian enterprise zone shall not give displaced persons from such an area any rights or benefits under the Uniform Relocation Assistance and Real Property Acquired Policies Act of 1970.

Exempts Indian enterprise zones from certain requirements relating to Federal environmental policy.

Title II: Federal Income Tax Incentives - Subtitle A: Credits for Employers - Allows employers located in Indian enterprise zones a nonrefundable income tax credit for qualified increased employment expenditures and for certain wages paid to economically disadvantaged individuals. Sets the credit at ten percent of such qualified increased expenditures plus a specified percentage of wages paid to economically disadvantaged individuals. Allows a three-year carryback and a 15-year carryover of such credit. Sets the amount of such credit at ten percent of the increase in payroll (taking into account $17,500 in wages per year per employee) plus a specified percentage of wages paid to certain disadvantaged workers for the first seven years of the Indian enterprise zone designation.

Limits any such credit to the excess of the taxpayer's regular tax liability (minus certain credits) for the given taxable year over the tentative minimum tax for that year.

Phases out such credit in the last three years of the enterprise zone designation. Disallows a deduction for the portion of wages taken into account for such credit.

Addresses adjustments to the credit amount because of: (1) limitations on the amount of unused credit for carryback and carryover purposes; (2) duplication of employer benefits in certain cases involving Federal payments for on-the-job training and individuals within the framework of the targeted jobs tax credit; (3) Indian enterprise zone designation in effect for less than one year; (4) the early termination of employment of qualified economically disadvantaged individuals; and (5) changes in the form of the affected business.

Subtitle B: Credits for Investment in Tangible Property in Indian Enterprise Zones - Allows businesses an additional investment tax credit for investment in certain tangible property located in Indian enterprise zones. Limits such credit to five percent for zone personal property, ten percent for new zone construction property, and 20 percent for zone infrastructure investment as these respective categories are defined in this Act. Phases out such credit in the last three years of the enterprise zone designation. Requires the recapture of such credit upon early disposition of the property. Extends the investment credit carryover period applicable to Indian enterprise zone credits.

Subtitle C: Exclusion from Gross Income for Qualified Indian Enterprise Zone Capital Gain - Excludes from gross income any long-term capital gain attributable to the sale or exchange of certain real or tangible personal property or business interests (including real estate rentals) substantially related to the active conduct of a trade or business within an Indian enterprise zone. Permits property to remain qualified, in certain cases, for purposes of such capital gains treatment after a designation of an enterprise zone has terminated.

Subtitle D: Rules Relating to Private Activity Bonds - Provides that limitations on the cost recovery deductions for property financed with tax-exempt bonds shall not apply to Indian enterprise zone property. Provides that the termination of the small issue exemption shall not apply to bonds whose proceeds are used to finance facilities in such enterprise zones.

Accords tax-exempt status to certain private activity bonds issued by Indian tribal governments.

Title III: Establishment of Foreign-Trade Zones in Indian Enterprise Zones - Requires the Foreign Trade Zone Board to consider on a priority basis and to expedite the processing of applications for the establishment of foreign-trade zones within Indian enterprise zones. Requires the Secretary of the Treasury to give priority to, and expedite applications for, the establishment of ports of entry necessary to establish such zones. States that, to the maximum extent practicable, foreign-trade zones should be established within Indian enterprise zones.

Title IV: Conflict Resolution in Indian Enterprise Zones - Authorizes the Secretary of the Interior to approve plans, pursuant to a tribal economic development plan, that include provisions for conflict resolution between enterprise zone parties. Requires that such plans not encumber the trust assets of the tribe.

Title V: Amendment to Indian Self-Determination and Education Assistance Act - Amends the Indian Self-Determination and Education Assistance Act to permit to contractors of a Federal agency additional compensation equal to five percent of certain payments made to a subcontractor or supplier that is an Indian organization or Indian-owned economic enterprise.