Instructions For Maine Franchise Tax Form 1120b-Me (Page 4 of 6) in pdf

SPECIFIC INSTRUCTIONS (continued)

compressed natural gas, liquefied natural gas, liquefied

Research Expense Tax Credit:

The credit is 5% of qualified

petroleum gas, hydrogen, hythane, dynamic flywheels, solar

research expenses incurred during the taxable year that

energy, alcohol fuels, and electricity. The credit applies to

exceed the average qualified research expense for the

expenditures incurred on or after January 1, 1999 and

previous 3 tax years, plus 7.5% of the basic research payments

automatically expires January 1, 2006. 36 M.R.S.A. § 5219-

determined pursuant to IRC § 41(e)(1)(A). Only expenditures

for research conducted in Maine qualify for the credit. The

term “qualified research” is defined in IRC § 41(d). For

Historic Rehabilitation Credit:

A taxpayer is allowed a credit

corporations, the credit is limited to the first $25,000 of tax

equal to the amount of the federal credit, including carryovers,

liability before credits plus 75% of the tax liability that exceeds

for rehabilitation of certified historic structures located in Maine.

$25,000. Carryover provisions apply. 36 M.R.S.A. § 5219-K.

The credit is nonrefundable and is limited to $100,000 annually

per taxpayer. The credit is subject to the same recapture

Super Research and Development Credit:

Businesses

provisions as under the Internal Revenue Code. 36 M.R.S.A.

whose Maine research expenses increase by more than 50%

§ 5219-R.

over the average research expenses incurred in the three years

immediately preceding June 12, 1997 qualify for this credit.

Family Development Account Credit:

Contributors to family

The credit is equal to the excess over 150% of the 3-year

development matching fund accounts are eligible for a credit.

average. The credit is limited to 50% of the net income tax

The credit per tax return is equal to the lesser of $25,000 or

due after other credits and may not reduce the tax liability

50% of the amount contributed. The credit is limited to the

below the liability of the previous year after the allowance of

tax liability on the return and must be taken after the allowance

all other credits. Carryover provisions apply. 36 M.R.S.A. §

of all other credits. The aggregate allowable credit amount in

5219-L.

a state fiscal year is limited to $200,000. The Finance Authority

of Maine certifies the allowable credit for each contributor.

High-Technology Investment Tax Credit:

Businesses

Call 207-623-3263 for further information. 36 M.R.S.A. § 5216-

engaged primarily in high-technology activities are eligible for

this credit. The credit is equal to the adjusted basis of eligible

equipment on the date that equipment is placed in service in

Pine Tree Development Zone Credit:

For tax years begin-

Maine, net of any lease payments received during the year.

ning on or after January 1, 2004, a taxpayer engaged in the

Lessors may claim the credit only if the lessee waives its

business of financial services, manufacturing or a targeted

entitlement to the credit. Other restrictions apply to lessors.

technology, as defined by 5 M.R.S.A. § 15301, that is located

The credit may not reduce current year’s tax liability below the

within a Pine Tree Development Zone may be eligible for this

liability of the previous year after the allowance of all other credits.

credit. To be eligible, the taxpayer must add new, full-time

The credit is limited to $100,000 per year ($200,000 in certain

jobs that meet certain wage requirements and offer the new

cases) and may not reduce the tax liability below zero. Carryover

employees retirement and health care benefits. The credit is

provisions apply. Also, the 12-year reimbursement period under

equal to 100% of the tax liability related to qualified business

the Business Equipment Tax Reimbursement Program must

activity for each of the first five years after the start of quali-

be reduced one year for every year the qualified equipment

fied business activity. The credit is 50% of the Maine tax

was included in the investment tax credit base. 36 M.R.S.A. §

liability related to qualified business activity for years 6 through

5219-M.

10. No carryback or carryforward of unused credit is allowed.

Eligible businesses may qualify for other tax benefits under

Credit for Dependent Health Benefits Paid:

Employers that

the Pine Tree Development Zone program. 36 M.R.S.A. §

offer a qualified health benefit plan and that employ fewer

5219-W.

than five employees may qualify for this credit. The credit is

equal to the lesser of 20% of the dependent health benefits

Line 4f. Total Credits:

Enter the the total of any previously

paid by the employer or $125 per employee with dependent

remitted tax payments from lines 4a, 4b and 4c as well as any

health benefits coverage. A taxpayer that employs five or more

tax credits from lines 4d and 4e. The total amount entered on

employees after qualifying for the credit may continue to qualify

line 4f may exceed the Total Tax liability on line 3c. However,

for the credit for another two years. Otherwise, a taxpayer

the total amount of tax credit from lines 4d and 4e that is

may claim a credit only for those periods during which the

used to reduce tax liability this year can not by itself

employer: 1) offers a qualified health benefit plan that is made

exceed the Total Tax liability on line 3c.

available to all of its low-income employees; 2) pays at least

Line 5b. Penalty for Underpayment of Estimated Tax:

80% of the health insurance costs for each low-income

the financial institution underpaid estimated tax, complete and

employee under the plan, and; 3) pays at least 60% of the

attach Form 2220ME, available at

cost of dependent health insurance benefits for children under

forms.

19 who are dependents of a low-income employee under the

Line 7a. Credited:

Use this line only if you elect to have all

plan. The credit is limited to 50% of the income tax due. Any

or a portion of the overpayment on line 6 credited to your next

unused credit may be carried over for two years. 36 M.R.S.A.

§ 5219-O.

year’s estimated Maine franchise tax.

Line 7b. Refunded:

Enter here the difference between lines

Clean Fuel Credit:

The credit is based on the expenditures

6 and 7a. Refunds of $1.00 or more will be mailed to you.

paid or incurred for construction, installation of, or

improvements to any filling station or charging station in Maine

IMPORTANT

for the purpose of providing clean fuels to the general public

IF ALL REQUIRED LINES AND SCHEDULES (INCLUDING

for use in motor vehicles. Clean fuel is defined as any product

FORM CRB) ARE NOT COMPLETED, THE RETURN IS

or energy source, other than conventional gasoline, diesel or

INCOMPLETE AND WILL NOT BE CONSIDERED A FILED

reformulated gasoline, that lowers emissions of certain

RETURN. PAGES 1 - 4 OF THE FEDERAL RETURN MUST

pollutants. Clean fuel includes, but is not limited to,

BE ATTACHED TO YOUR MAINE FRANCHISE RETURN.

REV. 12/05

Instructions For Maine Franchise Tax Form 1120b-Me Page 4

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