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New York State Department of Taxation and Finance

CT-604-CP-I

Instructions for Form CT-604-CP

Claim for QEZE Credit for Real Property Taxes and

QEZE Tax Reduction Credit for Corporate Partners

The QEZE credit for real property taxes may not reduce the tax to

New for 2002

less than:

Chapter 85 of the Laws of 2002 made several changes to the

• the larger of the tax on minimum taxable income or the fixed

qualified empire zone enterprise (QEZE) credits. Included were

dollar minimum tax as computed under Article 9-A; or

changes to the computation of the employment number, the

• $250 for Article 32 or 33 filers.

addition of limitation and recapture provisions to the real property

tax credit, and restrictions on including employees in the

Any amount of the QEZE credit for real property taxes not

computation of employment number who were employed by a

deductible in the current tax year may be refunded without interest

related person, as related person is defined by IRC 465(3)(b)(C).

or applied as an overpayment against next year’s tax.

These changes have been incorporated in Form CT-604-CP for

QEZE tax reduction credit

2002. See TSB-M-02(5)C for information on these legislative

changes. Visit the Corporation Tax Up-To-Date Information page on

The QEZE tax reduction credit is allowed against the corporate

our Web site at for tax law changes or

franchise tax under Article 9-A, 32, or 33, and is the product of

forms corrections that occurred after the forms and instructions

(1) the benefit period factor, (2) the employment increase factor,

were printed.

(3) the zone allocation factor, and (4) the tax factor.

General information

The QEZE tax reduction credit may not reduce the tax to less than:

• the fixed dollar minimum tax under Article 9-A (however, a

For tax years beginning on or after January 1, 2001, the Empire

partner in a QEZE that has a zone allocation factor of 100% is

Zones Program Act provides tax credits for a QEZE: the QEZE

not subject to this limitation and may reduce the tax to zero); or

credit for real property taxes, and the QEZE tax reduction credit.

• $250 for Article 32 or 33 filers.

This form has been provided for corporate partners of a QEZE to

claim the QEZE tax credits. All other corporations complete

The QEZE tax reduction credit is not refundable. Any amount not

Form CT-604.

deductible in the current tax year cannot be refunded, carried over,

or applied as an overpayment against next year’s tax.

New York S corporations that are corporate partners do not

complete this form. However, the S corporation must provide all

Definitions

shareholders with their pro rata share of the real property tax credit

For additional definitions, see Form CT-604-I.

that the S corporation derived from the partnership. It also must

provide all shareholders with the benefit period factor, the

A qualified empire zone enterprise (QEZE) is a business enterprise

employment increase factor, and the zone allocation factor of the

that is certified as eligible to receive benefits under Article 18-B of

partnership, so that the individual shareholder can compute the tax

the General Municipal Law prior to July 1, 2005, and that annually

reduction credit on Form IT-604.

meets the employment test.

Note: If you are a partner in more than one partnership, complete

Employment increase factor is an amount which cannot exceed

a separate Form CT-604-CP for each partnership.

one. Obtain this factor from the partnership.

Benefit period factor is a number from zero to one, based on the

QEZE credit for real property taxes

tax year of the benefit period. Obtain this factor from the

The QEZE credit for real property taxes is allowed for taxes paid or

partnership.

incurred on real property owned by the QEZE and located in the

empire zone (EZ) in which the QEZE is certified, provided that the

Zone allocation factor is a percentage that represents the

taxes become a lien on the real property during a tax year in which

economic presence of the partnership in the EZ in which it is

the owner is both certified and a QEZE. The amount of the credit is

certified. Obtain this factor from the partnership.

the product of (1) the benefit period factor, (2) the employment

Eligible real property taxes are the taxes for the current tax year

increase factor, and (3) the eligible real property taxes paid or

imposed on the QEZE partnership’s real property located in the EZ

incurred by the QEZE during the current tax year.

for which the QEZE partnership is certified, provided that the taxes

For any QEZE certified on or after August 1, 2002, the real

become a lien on the real property during the tax year. In addition,

property tax credit may not exceed the credit limitation which is the

eligible real property taxes include payments made by the QEZE

greater of the employment increase limitation or the capital

partnership in lieu of taxes, (PILOT payments) to the state, to a

increase limitation. The limitation will be computed by the

municipal corporation, or to a public benefit corporation. However,

partnership. The corporate partner will report its share of the credit

PILOT payments made by the QEZE partnership under a written

after limitation on Form CT-604-CP, line 1.

agreement executed or amended on or after January 1, 2002, will

not constitute eligible real property taxes unless both the

When the QEZE’s eligible real property taxes, which were the basis

Department of Economic Development and the Office of Real

for a QEZE credit for real property taxes, are subsequently reduced

Property Services approve the written agreement.

as a result of a final order in any proceeding under Article 7 of the

real property Tax Law or other provision of law, the QEZE must

Tax factor is the tax calculated each applicable article of the Tax

recapture a portion of the credit allowed in the year the final order

Law that is based on income. If an article provides for two tax

is issued. The recapture amount is equal to the amount of credit

measures based on income, the higher of the two is the tax factor.

originally taken, less the amount of credit recalculated using the

Corporate partners compute this factor on line 14.

reduced property taxes. If the taxes are reduced for more than one

Specific instructions

year, the QEZE must determine how much of the reduction is

attributable to each year covered by the final order, and calculate

Enter on the front of Form CT-604-CP the name and the employer

the amount of credit which is required to be recaptured for each

identification number of the QEZE partnership.

year based on the reduction. The recapture will be computed by the

Line 3 - If you are applying multiple credits, see your franchise tax

partnership. The corporate partner will report its share of the credit

return instructions to determine the order of credits that applies. If

after recapture on Form CT-604-CP, line 1.

Instructions For Form Ct-604-Cp - Claim For Qeze Credit For Real Property Taxes And Qeze Tax Reduction Credit For Corporate Partners - 2002

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