Form 506 Draft - Investment/new Jobs Credit

2016 Form 506 - Page 3

Investment/New Jobs Credit Instructions

Draft

68 OS Sec. 2357.4 and Rule 710:50-15-74

9/29/16

Investment Credit

Column 5: Enter the amount invested in qualified depreciable property placed in service, in the State of Oklahoma,

during the taxable year. The investment must be at least $50,000 in qualified depreciable property used in

manufacturing or in a web search portal establishment in this state. The credit shall not be allowed if such

investment is the direct cause of a decrease in the number of employees. Qualified property shall be limited

to machinery, fixtures, equipment, buildings or substantial improvements thereto, placed in service in this state

during the taxable year. The investment in Oklahoma Qualified Property must be reduced when the property

is sold, disposed of or transferred. Provide a detailed schedule showing the description of the qualified

property, the amount invested (cost), and the date the assets were placed in service.

Column 7: The credit is 1%* of the cost of the qualified depreciable property. Multiply the amount of Column 5 by Column

6. This is the amount of the allowable credit if you qualify for the Investment Credit.

*NOTE:

If the box on page 1 is checked, indicating the facility is located in an enterprise zone, the credit is 2% of the

cost of the qualified depreciable property.

Allowable Credit - Carryover **

NOTE: Effective for tax years beginning on or after January 1, 2016 and ending on or before December 31, 2018, no more

than $25 million of credit may be allowed as an offset in a taxable year. For tax year 2016, the credit is limited to 43.4% of the

otherwise allowable credit. Any credits carried over into or earned during the 2016, 2017 and 2018 tax years but which are

not allowed to be offset against income tax due to the application of the $25 million cap shall carry forward to offset income

tax in subsequent tax years. The total Investment/New Jobs Credit will be adjusted on Form 511CR to limit the amount used

to offset tax.

Column 9:

The credit is allowed for the greater of New Jobs Credit or Investment Credit, but not both. Enter the greater

amount from Column 4 or Column 7. Once the type of allowable credit is determined in the first year, that

type of credit will be used in all remaining tax years on that particular Form 506.

Column 10: Enter the amount of credit used this tax year.

Column 11: Enter the amount of credit not used this tax year. Any credit claimed and not used in any taxable year may

be carried over, in order, to each of the four years following the year of qualification and to the extent not

used in those years, in order, to each of the fifteen years following the initial five-year period. To the extent

not used, any credit from qualified depreciable property may be utilized in subsequent tax years after the

initial twenty-year period. Provide schedule showing all carryover credits by tax year claimed and used.

** If a C corporation that otherwise qualified for the credits under subsection A of 68 OS Sec. 2357.4 subsequently changes

its operating status to that of a pass-through entity which is being treated as the same entity for federal tax purposes, the

credits will continue to be available as if the pass-through entity had originally qualified for the credits subject to the limitations

of such Section. The pass-through entity shall provide, to each member, documentation showing their share of the credit.

Such documentation must be provided with the member’s income tax return when their share of the credit is being claimed.

Notices:

• If the business entity manufactures any product described in Division D of Part I of the Standard Industrial Classification

Manual, latest revision, they may be entitled to double their Investment/New Jobs Credit. To qualify for the double credit the

total cost of qualified depreciable property used in the manufacture of such product must be at least $40 million dollars and

be placed in service in this state within 3 years from the date of the initial qualifying expenditure. The credit for each new

employee in Column 4 will be $1,000 and the rate for qualified depreciable property in column 6 will be 2%. Enter the amount

of doubled credit in Column 4 and/or Column 7 and note the reason for the double credit.

• If you receive an incentive payment under one of the Quality Jobs incentives (such as 68 OS Sec. 3601, 3801, 3901 or

3911) or under one of the Quality Investment incentives (such as 68 OS Sec. 4101 or 4201) you may not be eligible for

this credit.

• Credit may not be claimed during the period of time that any withholding taxes are being paid to the Community Eco-

nomic Development Pooled Finance Revolving Fund or in any manner used for the payment of principal, interest or other

costs associated with any obligation issued by the Oklahoma Development Finance Authority in accordance with the

“Oklahoma Community Economic Development Pooled Finance Act”.

(62 OS Sec. 891.12)

• Credit may not be claimed for jobs created or capital investments made as a direct result of bond proceeds which are

“Oklahoma Quality Jobs Incentive Leverage Act”

provided in accordance with the

pursuant to a second irrevocable elec-

tion. (68 OS Sec. 3651)

• Tax credits transferred or allocated must be reported on Oklahoma Tax Commission (OTC) Form 569. Failure to file

Form 569 will result in the affected credits being denied by the OTC pursuant to 68 OS Sec. 2357.1A-2.

Form 506 Draft - Investment/new Jobs Credit - 2016 Page 3

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