Instrictions For Form Qba Qualified Business Designation Application printable pdf download

Instructions for the Qualified Business Designation Application - Form QBA

2601695

Qualified Equity and Subordinated Debt Investments Tax Credit

Pursuant to Code of Virginia § 58.1-339.4, this credit is effective for taxable years beginning on and after January 1, 1999. Title 23 of the Virginia

Administrative Code (VAC) 10-110-225 et seq. provides additional information on this credit, including definitions of terms used in this

application. For a copy of this regulation or additional forms, see Where to Get Help on Form QBA.

no re paym e nt of principal f or t h e f irs t t h re e ye ars af t e r is s uance ; (ii) is not

ENERAL

NFORMATI ON

ONCERNI NG TH I S

REDI T

guarant e e d by any ot h e r pe rs on or e nt it y, or s e cure d by any as s e t s of t h e

Th e Qual if ie d Eq uit y and Subordinat e d De bt I nve s t m e nt s Tax Cre dit is

is s ue r or any ot h e r pe rs on or e nt it y; and (iii) is s ubordinat e d t o al l

al l ow abl e t o t axpaye rs m ak ing a q ual if ie d inve s t m e nt in t h e f orm of e q uit y

inde bt e dne s s and obl igat ions of t h e is s ue r t o nat ional or s t at e -ch art e re d

or s ubordinat e d de bt f rom a q ual if ying bus ine s s w h ich is e ngage d in

bank ing or s avings and l oan ins t it ut ions .

bus ine s s or doe s s ubs t ant ial l y al l of it s product ion in V irginia.

"Qual if ie d inve s t m e nt " m e ans a cas h inve s t m e nt in a q ual if ie d bus ine s s

in t h e f orm of e q uit y or s ubordinat e d de bt . An inve s t m e nt s h al l not be

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q ual if ie d, h ow e ve r, if t h e t axpaye r w h o h ol ds s uch inve s t m e nt , or any of

Bus ine s s e s w h o w ant t o s e l l e q uit y and s ubordinat e d de bt inve s t m e nt s f or

s uch t axpaye r's f am il y m e m be rs , or any e nt it y af f il iat e d w it h s uch

w h ich t axpaye rs m ay cl aim cre dit f or t h e Qual if ie d Eq uit y and

t axpaye r, re ce ive s or h as re ce ive d com pe ns at ion f rom t h e q ual if ie d

Subordinat e d De bt I nve s t m e nt s Tax Cre dit .

bus ine s s in e xch ange f or s e rvice s provide d t o s uch bus ine s s as an

e m pl oye e , of f ice r, di r e ct or, m anage r, inde pe nde nt cont ract or or ot h e rw is e

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in conne ct ion w it h or w it h in one ye ar be f ore or af t e r t h e dat e of s uch

Fil e Form QBA t o appl y f or de s ignat ion as a q ual if ie d bus ine s s at l e as t

inve s t m e nt . For purpos e s h e re of , re im burs e m e nt of re as onabl e e xpe ns e s

9 0 days be f ore is s uing any e q uit y or s ubordinat e d de bt ins t rum e nt s ;

incurre d s h al l not be de e m e d t o be com pe ns at ion. A q ual if ie d inve s t m e nt

ot h e rw is e , t h e is s uance w il l not q ual if y f or t h e t ax cre dit . Th e De part m e nt

s h al l not incl ude e xis t ing inve s t m e nt s or ins t rum e nt s t h at h ave be e n

of Taxat ion w il l is s ue a ce rt if icat e of q ual if icat ion if it de t e m ine s t h e

purch as e d, t rans f e rre d, or ot h e rw is e obt aine d w it h out providing ne w

bus ine s s e nt it y is q ual if ie d. De s ignat ion as a q ual if ie d bus ine s s is val id

capit al t o a q ual if ie d bus ine s s .

onl y f or t h e cal e ndar ye ar of is s uance .

"Qual if ie d bus ine s s " m e ans a bus ine s s w h ich (i) h as annual gros s

re ve nue s of no m ore t h an f ive m il l ion dol l ars in it s m os t re ce nt t ax ye ar,

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(ii) is com m e rcial l y dom icil e d in t h e Com m onw e al t h , (iii) is prim aril y

Fil e Form QBA w it h t h e De part m e nt of Taxat ion, Eq uit y and Subordinat e d

e ngage d in bus ine s s or doe s s ubs t ant ial l y al l of it s product ion in t h e

De bt I nve s t m e nt s Tax Cre dit , P. O. Box 715, Rich m ond, V A 23218-0715.

Com m onw e al t h , and (iv) is not prim aril y e ngage d, or is not prim aril y

organiz e d t o e ngage , in any of t h e f ol l ow ing t ype s of bus ine s s e s :

)

NFORMATI ON TO

ROV I DED TO

AXPAYERS

NV ESTORS

1. Bank s ;

Upon is s uance of e q uit y or s ubordinat e d de bt , t h e q ual if ie d bus ine s s m us t

2. Savings and l oan ins t it ut ions ;

provide e ach t axpaye r w it h a s t at e m e nt cont aining:

3. Cre dit or f inance ;

C A copy of t h e q ual if ie d bus ine s s ce rt if icat ion f rom t h e De part m e nt of

4. Financial , brok e r or inve s t m e nt ;

Taxat ion, a de s cript ion of e ach inve s t m e nt by am ount and t ype (i.e .,

5. Bus ine s s e s organiz e d f or t h e prim ary purpos e of re nde ring

e q uit y or s ubordinat e d de bt ), and ve rif icat ion t h at t h e inve s t m e nt

prof e s s ional s e rvice s as de f ine d in Ch apt e r 7 (§ 13.1-542 e t s e q .)

m e e t s t h e de f init ion of a q ual if ie d inve s t m e nt f or purpos e s of cl aim ing

of Tit l e 13.1;

t h e t ax cre dit purs uant t o 23 V AC 10-110-225 e t s e q .

6. Account ing;

C If an e q uit y inve s t m e nt , t h e s t at e m e nt m us t s ay t h e is s uance is

7. Gove rnm e nt , ch arit abl e , re l igious or t rade ins t it ut ions or

original , , providing ne w capit al t o t h e q ual if ie d bus ine s s and t h at it is

organiz at ions ;

not re q uire d, or s ubj e ct t o an opt ion, t h at t h e is s ue r re de e m t h e

8. Conve nt ional coal , oil and gas , and m ine ral e xpl orat ion;

is s uance w it h in f ive ye ars of is s uance dat e .

9 . Ins urance ;

C In a s ubordinat e d de bt inve s t m e nt , t h e s t at e m e nt m us t s ay t h at t h e

10. Re al e s t at e de s ign or e ngine e ring;

is s uance is original , providing ne w capit al t o t h e q ual if ie d bus ine s s

11. Cons t ruct ion or cons t ruct ion cont ract ing;

and t h at , by it s t e rm s , re q uire s no re paym e nt of principal f or t h re e

12. Bus ine s s cons ul t ing or bus ine s s brok e ring;

ye ars af t e r is s uance , is not guarant e e d nor s e cure d by as s e t s of t h e

13. Re s ide nt ial h ous ing, re al e s t at e brok e rage , s al e or l e as ing

is s ue r nor by any ot h e r pe rs on or e nt it y, and is s ubordinat e t o al l

bus ine s s e s , or re al e s t at e de ve l opm e nt ; or

is s ue r’ s inde bt e dne s s and obl igat ions t o nat ional or s t at e ch art e re d

14. Any bus ine s s w h ich is in viol at ion of t h e l aw .

bank ing or s avings and l oan ins t it ut ions .

"Com m e rcial dom icil e " m e ans t h e s t at e w h e re t h e principal of f ice f rom

Th e t axpaye r is re q uire d t o at t ach t h is s t at e m e nt t o t h e ir Qual if ie d Eq uit y

w h ich t h e bus ine s s af f airs of t h e corporat ion are norm al l y dire ct e d or

and Subordinat e d De bt I nve s t m e nt s Tax Cre dit Appl icat ion(Form EDC).

m anage d. Se e 23 V AC 10-120-140 D.

EFINI TI ONS

“ Prim aril y e ngage d in bus ine s s in t h e Com m onw e al t h ” m e ans 50% or

"Eq uit y" m e ans com m on s t ock or pre f e rre d s t ock , re gardl e s s of cl as s or

m ore of t h e e nt it y’ s gros s re ce ipt s are de rive d f rom s ource s w it h in

s e rie s , of a corporat ion; a part ne rs h ip int e re s t in a l im it e d part ne rs h ip; or

V irginia."Subs t ant ial l y al l of it s product ion in t h e Com m onw e al t h " m e ans

a m e m be rs h ip int e re s t in a l im it e d l iabil it y com pany, any of w h ich is not

80% or m ore of t h e e nt it y's e xpe ns e s are incurre d w it h in V irginia.

re q uire d or s ubj e ct t o an opt ion on t h e part of t h e t axpaye r t o be

re de e m e d by t h e is s ue r w it h in f ive ye ars f rom t h e dat e of is s uance .

"Subordinat e d de bt " m e ans inde bt e dne s s of a corporat ion, ge ne ral or

l im it e d part ne rs h ip, or l im it e d l iabil it y com pany t h at (i) by it s t e rm s re q uire s

Instrictions For Form Qba Qualified Business Designation Application

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