Form 1120b-Me - Maine Franchise Tax Instructions

SPECIFIC INSTRUCTIONS, continued

Clean Fuel Credit*:

Machinery and Equipment Investment Tax Credit:

The credit is based on the expenditures paid

Enter

the amount of the credit carried forward to this tax year. Attach a

or incurred for construction, installation of, or improvements to any

filling station or charging station in Maine for the purpose of pro-

schedule verifying the amount carried forward.

viding clean fuels to the general public for use in motor vehicles.

Solid Waste Reduction Investment Tax Credit:

Clean fuel is defined as any product or energy source, other than

Enter the

conventional gasoline, diesel or reformulated gasoline, that lowers

amount of the credit carried forward to this tax year. Attach a sched-

emissions of certain pollutants. Clean fuel includes, but is not lim-

ule verifying the amount carried forward to this tax year.

ited to, compressed natural gas, liquefied natural gas, liquefied pe-

troleum gas, hydrogen, hythane, dynamic flywheels, solar energy,

Research Expense Tax Credit*:

The credit is 5% of qualified

alcohol fuels, and electricity. The credit applies to expenditures

research expenses incurred during the taxable year that exceed the

incurred on or after January 1, 1999 and automatically expires

average qualified research expense for the previous 3 tax years, plus

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

7.5% of the basic research payments determined pursuant to IRC §

41(e)(1)(A). Only expenditures for research conducted in Maine

Historic Rehabilitation Credit*:

qualify for the credit. The term “qualified research” is defined in IRC

A taxpayer is allowed a credit

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

§ 41(d). The credit is limited to the first $25,000 of tax liability before

rehabilitation of certified historic structures located in Maine. The

credits plus 75% of the tax liability that exceeds $25,000. Carryover

credit is nonrefundable and is limited to $100,000 annually per tax-

provisions apply. 36 M.R.S.A. § 5219-K.

payer. The credit is subject to the same recapture provisions as

Super Research and Development Credit*:

under the Internal Revenue Code. 36 M.R.S.A. § 5219-R.

Businesses

whose Maine research expenses increase by more than 50% over

Family Development Account Credit*:

Contributors to fam-

the average research expenses incurred in the three years immedi-

ily development matching fund accounts are eligible for a credit.

ately preceding June 12, 1997 qualify for this credit. The credit is

The credit per tax return is equal to the lesser of $25,000 or 50% of

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

the amount contributed. The credit is limited to the tax liability on

limited to 50% of the net income tax due after other credits and may

the return and must be taken after the allowance of all other credits.

not reduce the tax liability below the liability of the previous year

after the allowance of all other credits. Carryover provisions apply.

The aggregate allowable credit amount in a state fiscal year is lim-

ited to $200,000. The Finance Authority of Maine certifies the allow-

36 M.R.S.A. § 5219-L.

able credit for each contributor. Call 207-623-3263 for further infor-

High-Technology Investment Tax Credit*:

mation. 36 M.R.S.A. § 5216-C.

Businesses en-

gaged primarily in high-tech activities are eligible for this credit.

(NOTE: The total of all credits cannot exceed the tax liability on

The credit is equal to the adjusted basis of eligible equipment on the

date that equipment is placed in service in Maine, net of any lease

line 3c of Form 1120B-ME.)

payments received during the year. Lessors may claim the credit

* Complete and attach worksheets showing your calcula-

only if the lessee waives its entitlement to the credit. The credit may

tions for the credits claimed. Credit worksheets are avail-

not reduce current year’s tax liability below the liability of the previ-

able at

ous year after the allowance of all other credits. The credit is limited

to $100,000 per year ($200,000 in certain cases) and may not reduce

Line 5b. Penalty for Underpayment of Estimated Tax:

the tax liability below zero. Carryover provisions apply. Also, the

the financial institution underpaid estimated tax, complete and at-

12-year reimbursement period under the Business Equipment Tax

tach Form 2220ME, available at

Reimbursement Program must be reduced one year for every year

the qualified equipment was included in the Investment Tax Credit

Line 7a. Credited:

Use this line only if you elect to have all or a

base. 36 M.R.S.A. § 5219-M.

portion of the overpayment on line 6 credited to your next year’s

Credit for Dependent Health Benefits Paid*:

Employers that

estimated Maine franchise tax.

offer a qualified health benefit plan and that employ fewer than five

Line 7b. Refunded:

Enter here the difference between lines 6

employees may qualify for this credit. The credit is equal to the

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

lesser of 20% of the dependent health benefits paid by the employer

or $125 per employee with dependent health benefits coverage. A

IMPORTANT: IF ALL REQUIRED LINES AND SCHEDULES

taxpayer that employs five or more employees after qualifying for

(INCLUDING FORM CRB) ARE NOT COMPLETED, THE RE-

the credit may continue to qualify for the credit for another two

TURN IS INCOMPLETE AND WILL NOT BE CONSIDERED

years. Otherwise, a taxpayer may claim a credit only for those peri-

A FILED RETURN. ALSO, PAGES 1 - 4 OF THE FEDERAL

ods during which the employer: 1) offers a qualified health benefit

RETURN MUST BE ATTACHED TO YOUR MAINE FRAN-

plan that is made available to all of its low-income employees; 2)

CHISE RETURN.

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

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

dependent health insurance benefits for children under 19 who are

dependents of a low-income employee under the plan. The credit is

limited to 50% of the income tax due. Any unused credit may be

carried over for two years. 36 M.R.S.A. § 5219-O.

Form 1120b-Me - Maine Franchise Tax Instructions - 2002 Page 5

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