Farm Employment and Enterprise Development Act of 1987

Farm Employment and Enterprise Development Act of 1987 - Title I: Designation of Enterprise Zones - Amends the Internal Revenue Code to provide for the designation of enterprise zones by the Secretary of Agriculture (Secretary) for purposes of providing tax and regulatory relief and improving local services. Specifies that States and local governments shall nominate areas for such designation. Limits to 100 the total number of areas which may be designated as enterprise zones. Limits the period during which: (1) the Secretary has authority to designate such zones; and (2) the designations may remain in effect.

Authorizes the Secretary to designate such zones only if: (1) the area is within the jurisdiction of a local government; (2) the boundary of the area is continuous; (3) the area has a population of at least 1,000 or is entirely within an Indian reservation; and (4) the area meets specified unemployment and poverty requirements.

Requires nominating local 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, and providing job training to residents of the area.

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

Requires the Secretary to report to the Congress every four years on the effects of such enterprise zones' designation in accomplishing the purposes of this Act.

Requires that any property tax reduction effected by a local government under the terms of this Act be disregarded for purposes of determining the eligibility of a State or local government for Federal assistance or benefits.

States that the designation of an enterprise zone shall not give displaced persons from such an area any rights or benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. Provides that such enterprise zones shall be treated for all purposes under Federal law as labor surplus areas.

Title II: Federal Income Tax Incentives - Subtitle A: Credits for Employers and Employees - Allows employers located in rural enterprise zones a nonrefundable income tax credit for qualified increased employment expenditures and employment of the disadvantaged. 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 through the first 20 years of the enterprise zone designation. Phases out such credit in the last four years of the enterprise zone designation. Disallows a deduction for the portion of wages taken into account for such credit.

Allows a nonrefundable income tax credit to enterprise zone employees for five percent of wages earned (taking into account up to $10,500 per year). Phases out such credit in the last four years of the enterprise zone designation.

Subtitle B: Credits for Investment in Tangible Property in Enterprise Zones - Allows businesses an additional investment tax credit for investments made in certain enterprise zone construction property located in enterprise zones. Limits such credit to ten percent for new enterprise zone construction property, including rental property. Requires that the property subject to such credit be located in an enterprise zone, be predominantly used in the zone, be either constructed, reconstructed, renovated, etc. during the period of zone designation or acquired during such period, and not be acquired from relatives or related corporations. Requires the recapture of such credit upon the early disposition of the property. Provides for a phase-out of the tax credit as the enterprise zone ends. Provides for an adjustment to the basis of the enterprise zone construction property to reflect the tax credit.

Subtitle C: Nonrecognition of Qualified Enterprise Zone Capital Gain Where Acquisition of Enterprise Zone Business Property - Provides for the nonrecognition of capital gain on the sale of property if, within one year after such sale, the taxpayer acquires qualified replacement property (generally defined as property related to an enterprise zone or to a business within such a zone). Limits such nonrecognition of gain to the amount by which the gain does not exceed the cost of the replacement property.

Sets forth special rules and provisions relating to this subtitle.

Subtitle D: Deduction for Purchase of Enterprise Stock - Allows a taxpayer to deduct up to $100,000 of the aggregate amount paid during the taxable year for the purchase of enterprise stock on the original issue of such stock by a qualified issuer.

Requires that the gain from the disposition of the stock be treated as ordinary income. Includes provisions to govern situations in which: (1) the stock is transferred within three years of its purchase; or (2) the issuer ceases to be a qualified issuer of enterprise stock within five years of its issue.

Requires the basis of such stock to be reduced by the amount of the deduction. Exempts this deduction from calculations with respect to the limitation of an individual taxpayer's miscellaneous itemized deductions to two percent of adjusted gross income.

Subtitle E: Rules Relating to Industrial Development Bonds - Provides that limitations on the cost recovery deductions for property financed with tax-exempt bonds shall not apply to 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. Modifies certain small issue volume limitations with respect to enterprise zone facilities. Requires that five percent of the private activity bond volume cap of a State that has at least one enterprise zone shall be set aside for use only in such zones.

Subtitle F: Ordinary Loss Deduction for Securities of Enterprise Zone Business Which Become Worthless - Permits an ordinary loss deduction for securities of enterprise zone businesses which become worthless during the taxable year.

Subtitle G: Increase in Research Credit for Research Conducted in Enterprise Zones - Increases from 20 to 30 percent the tax credit for increasing research conducted in enterprise zones.

Subtitle H: Sense of the Congress with Respect to Tax Simplification - Expresses the sense of the Congress that the Internal Revenue Service should simplify the administration and enforcement of any provision of the Internal Revenue Code affected by this Act.

Subtitle I: Regulations - Directs the Secretary of the Treasury to issue regulations to carry out the provisions of this Act not later than six months after the date of enactment.

Title III: Regulatory Flexibility - Revises the definition of "small entity" for purposes of the analysis of regulatory functions to include qualified business, government, and nonprofit enterprises operating within enterprise zones.

Authorizes Federal agencies, upon request by a designating government, to waive or modify rules and regulations pertaining to the implementation of projects or activities within an enterprise zone. Requires agencies to approve such request if the resulting benefits of job creation, community development, or economic revitalization outweigh the public interest in retaining the rule unchanged.

Disallows waiver or modification of a rule that would directly violate a statutory requirement (including the Davis-Bacon Act and Fair Labor Standards Act) or present a danger to the public health and safety. Provides that such waivers or modifications of a rule shall remain in effect only as long as the affected zone designation.

Amends the Department of Housing and Urban Development Act to direct the Secretary of Housing and Urban Development to promote the coordination of all enterprise zone programs and to consolidate all periodic reports required under such programs into one summary report.

Title IV: Establishment of Foreign-Trade Zones in Enterprise Zones - Requires the Foreign-Trade Board to consider on a priority basis and to expedite the processing of applications for the establishment of foreign-trade zones within 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 enterprise zones.