Guidelines For Form Ftb Pub.1102 Local Agency Military Base Recovery Area Tax Incentives - California Franchise Tax Board

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State of California — Franchise Tax Board
FTB Pub. 1102
Guidelines for Local Agency Military Base Recovery Area Tax Incentives
General Information
services under the terms of the federal
Step 1: 1/1/97 to 2/28/97 - 347 hours x
Job Training Partnership Act (JTPA);
$7.12 (not $8.00) = $2,471
2. Registered under the Greater Avenues
Step 2: 3/1/97 to 8/31/97 - 1,040 hours x
Local Agency Military Base Recovery Areas
for Independence Act (GAIN); or
$7.50 (not $8.00) = $7,800
(LAMBRAs) have been established to
3. Eligible under the federal Targeted
Step 3: 9/1/97 to 12/31/97 - 693 hours x
stimulate growth and development in areas
that experience military base closures.
Jobs Tax Credit Program, whether or
$7.72 (not $8.00) = $5,350
not this program is in effect.
Step 4: $2,471 + $7,800 + $5,350 = $15,621
The LAMBRA provides four business-related
Step 5: $15,621 x 50% (.50) = $7,811
Individuals who are participants or who are
tax incentives that are explained in this
This amount is your total hiring credit.
eligible for these qualifying programs should
publication:
Limitations
get Form TCA EZ1 from the agency that
1. Credit for hiring qualified employees;
administers the applicable program.
Qualified wages include only those wages
2. Credit for sales or use tax paid or incurred
paid while the LAMBRA designation is in
You may claim up to 50% of the qualified
on qualified property;
effect.
wages paid to a qualified employee as a
3. Business expense deduction for the cost
The hiring of a qualified employee must
credit against tax imposed on LAMBRA
of qualified property; and
take place after a military base has been
income. The credit is based on the lesser of
4. Net operating loss carryover.
officially designated a LAMBRA by the
the actual hourly wage paid or 150% of the
This guide briefly explains the four
Trade and Commerce Agency.
minimum hourly wage established by the
business-related tax incentives to help
At least 90% of the qualified employee’s
Industrial Welfare Commission.
investors and business operators understand
work must be directly related to a trade or
The chart below shows the actual percentage
the potential financial impact of each incentive
business activity located in a LAMBRA.
and what must be done to take advantage of
of qualified wages paid that may be claimed
At least 50% of the employee’s work must
as a credit.
them. Detailed information about the methods
be performed inside the boundaries of a
used to compute allowable tax savings is
LAMBRA.
explained in FTB 3807, Local Agency Military
Credit allowed on
Qualified wages paid by the employer,
Period of employment
qualified wages paid
Base Recovery Area Booklet.
during each qualified year 1 through 5,
LAMBRA tax incentives apply only to
1st 12 months
50%
used to calculate this credit cannot exceed
investments and business activities that are
$2 million for each taxable or income year.
2nd 12 months
40%
undertaken after a LAMBRA has received
The business must reduce any deduction
3rd 12 months
30%
final designation.
for wages by the amount of this credit.
4th 12 months
20%
The amount of LAMBRA credits (sales or
In order to qualify for the LAMBRA tax
5th 12 months
10%
use tax credit, hiring credit and credit
incentives, a business must have a net
carryovers from earlier years) claimed for
increase of one or more jobs within the first
After 60 months
0%
any year may not exceed the amount of
two taxable or income years of commencing
tax that would be imposed on the income
business within the LAMBRA. See the
The chart below lists the amount of minimum
earned solely from your business activities
Qualified Taxpayer Defined Section on
hourly wage, the period it is effective for and
in the LAMBRA.
pages 3 and 4 for additional information.
the maximum hourly wage allowed for the
If the amount of the credit for employing
credit.
qualified persons is greater than the tax on
Geographic Boundaries
LAMBRA income in any year, the excess
Wages paid or incurred during
Minimum
150% of the
credit may be carried over to future years.
Any information about geographic boundaries
the following time periods:
wage
minimum
In the case where the wage expense
wage
of a LAMBRA, dates of designation, Form
qualifies the taxpayer to take the LAMBRA
TCA EZ1 (Enterprise Zone and LAMBRA
10/1/96 to 2/28/97
$4.75
$7.12
hiring credit as well as any other additional
Hiring Voucher) or other information not
3/1/97 to 8/31/97
$5.00
$7.50
credit, the taxpayer may claim only one
related to the tax incentives is available from:
credit.
9/1/97 to 2/28/98
$5.15
$7.72
ATTN ENTERPRISE ZONE PROGRAMS
The credit cannot reduce the minimum
After 2/28/98
$5.75
$8.62
CA TRADE AND COMMERCE AGENCY
franchise tax, alternative minimum tax,
801 K STREET SUITE 1700
built-in gains tax or excess net passive
Example 1: On January 1, 1997, you hired a
SACRAMENTO CA 95814
income tax. In addition, the credit may not
qualified employee who worked 2,080 hours
Telephone: 916-324-8211
reduce regular tax below tentative
in your LAMBRA business. You paid this
FAX: 916-322-7214
minimum tax.
qualified employee minimum wage to work at
Credit Recapture
your business. Your hiring credit is computed
Hiring Credit
If this credit is allowed for wages paid to a
as follows:
qualified employee who is terminated at any
A qualified business may reduce tax by a
Step 1: 1/1/97 to 2/28/97 - 347 hours x
time during the longer of:
percentage of wages paid to one or more
$4.75 = $1,648
The first 270 days of employment (whether
qualified employees.
Step 2: 3/1/97 to 8/31/97 - 1,040 hours x
or not consecutive); or
$5.00 = $5,200
For an employer claiming this credit, a
90 days of employment plus 270 calendar
Step 3: 9/1/97 to 12/31/97 - 693 hours x
qualified employee is anyone who is hired
days,
$5.15 = $3,569
after the area is designated as a LAMBRA
Step 4: $1,648 + $5,200 + $3,569 = $10,417
an addition to tax, equal to the credit allowed,
and is:
Step 5: $10,417 x 50% (.50) = $5,209
will be due on the return filed for the year
A civilian or military employee of a base or
This amount is your total hiring credit.
during which the employee was terminated. A
former base who has been displaced as a
‘‘day of employment’’ means any day for
Example 2: Using the same facts as above,
result of a federal base closure act;
which the employee receives wage
except that the qualified employee is earning
Certified at the time of hire as:
compensation (including a paid sick day,
$8.00 an hour. Your hiring credit is computed
1. Receiving or eligible to receive
holiday or vacation day).
as follows:
subsidized employment, training or
FTB Pub. 1102 (REV. 6/1998)
Page 1

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