Instructions For Form D-499 - Tax Credit For Qualified Business Investments - Georgia Department Of Revenue

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(G. S . 105-163.010 - G. S . 105-163.014)
A. T ax Credit
• This credit is not allowed to individuals or to
F.
R egis tration • A Qualified Business Venture and a Qualified
pass• through entities for investments in a qualified business if a
Grantee Business must be registered with the Securities Division of
broker’s fee or commission or other similar remuneration is paid or
the Office of the Secretary of State. Information on the qualifying
given directly or indirectly for soliciting the purchase.
conditions under which they are registered can be obtained from the
Secretary of State. An investment made prior to the effective date of
Individuals • An individual who purchases the equity securities or
the registration or after the revocation of the registration does not
subordinated debt of a qualified business venture or a qualified
qualify for the tax credit. The effective date of registration of a
grantee business is allowed a creditagainst the tax for the taxable year
qualified business whose application is approved for registration is
equal to 25% of the amount invested or $50,000, whichever is less.
the filing date of its application.
The credit is not allowable for the year in which the investment was
made, but is allowable for the taxable year beginning during the
G. F orfeiture of Credit • The credit is forfeited by the taxpayer if:
calendar year following the calendar year in which the investment
(1) within three years after the investment was made, the taxpayer
was made.
participates in the operation of the qualified business. A taxpayer
participates in the operation of the qualified business if the
P as s - T hrough E ntities • A pass- through entity that purchases
taxpayer, the taxpayer’s spouse, parent, brother or sister, child,
the equity securities or subordinated debt of a qualified grantee
or an employee of any of these individuals, or of a business
business or a qualified business venture is allowed a tax credit for the
controlled by any of these individuals, provides services of any
taxable year equal to 25% of the amount invested or $750,000,
nature to the qualified business for compensation, whether as an
whichever is less. This credit is not allowed to a pass- through entity
employee, a contractor, or otherwise.
that has committed capital under management in excess of
(2) the registration of the qualified business is revoked because the
$5,000,000. Each individual who is an owner of a pass- through
qualified business provided false information to the Secretary of
entity is allowed a credit equal to his allocated share of the credits (not
State on its registration application.
to exceed $50,000) for which the pass-through entity is eligible. If
(3) the taxpayer transfers the securities received in the investment to
the owner’s share of the pass- through entity’ s credit is limited due to
another person or entity within one year except in the case of (a)
the maximum allowable credit for a taxable year, the pass-through
the death of the taxpayer, (b) a final distribution in liquidation,
entity and its owners may not reallocate the unused credit among the
or (c) a merger consolidation, or other similar transaction in
other owners.
which no cash or tangible property is received.
(4) The organization in which the investment was made makes a
B . Application • To be eligible for the tax credit, this application
redemption of the securities within five years.
must be filed with the Secretary of Revenue on or before April 15 of
If the tax credit is forfeited, the taxpayer is liable for all past taxes
the year following the calendar year in which the investment was
avoided as a result of the credit, plus interest computed from the date
made. The application for a qualified business investment by a
the taxes would have been due had the credit not been allowed. The
pass- through entity must be filed by the pass- through entity. If the
past taxes and interest are due 30 days after the date the credit is
investment was paid for other than in money, the taxpayer must
forfeited. Any additional tax due as a result of forfeiture of the credit
include with the application a certified appraisal of the value of the
may be assessed within three years after the date of forfeiture.
property used to pay for the investment. Pursuant to rule .0612,
subchapter 6B, Title 17 of the North Carolina Administrative
H. Definitions
Code, the date set for filing the application may be extended
provided a written statement is furnished by April 15 requesting
E quity s ecurity • Common stock, preferred stock, or an interest in
additional time to file the application; however, this application
a partnership, or subordinated debt that is convertible into, or entitles
must be filed by September 15. An extension of time to file an
the holder to receive upon its exercise, common stock, preferred
individual income tax return (Form D- 400) does not extend the
stock, or an interest in a partnership.
time for filing Form D-499.
S ubordinated debt • Indebtedness that (1) by its terms matures
C. L imit • The credit may not exceed the amount of tax liability for
five or more years after it issuance, (2) is not secured, and (3) is
the taxable year reduced by the sum of all other credits allowable,
subordinated to all other indebtedness of the issuer issued or to be
except tax payments. Any unused credit may be carried forward for
issued to a financial institution other than a financial institution
the next five succeeding years. Annual limitations on the amount of
described in G. S. 105- 163.010(5). Any portion of indebtedness that
credit do not apply to unused amounts carried forward.
matures earlier than five years after its issuance is not subordinated
debt.
D. Ceiling • The total amount of all tax credits allowed for qualified
business investments in a calendar year may not exceed $6,000,000.
P as s -through entity • An entity or business, including a limited
The Secretary of Revenue will calculate the total credits from the
partnership, a general partnership, a joint venture, a Subchapter S
applications filed. If the total for the calendar year exceeds
Corporation, or a limited liability company, all of which is treated as
$6,000,000, a portion of the credits claimed will be allowed by
owned by individuals or other entities under the federal tax laws, in
allocating the $6,000,000 in proportion to the size of the credit
which the owners report their share of the income, losses, and credits
claimed by each taxpayer. The Secretary of Revenue will notify each
from the entity or business on their income tax returns filed with this
taxpayer on or before December 31 of the year following the calendar
State. An owner of a pass- through entity is an individual or entity
year in which the investment was made, if the credit applied for is
who is treated as an owner under the federal tax laws.
approved or if the amount of the credit has been reduced.
Control • A person controls an entity if the person owns, directly or
E . R eduction in B as is • A taxpayer’s basis in the equity securities or
indirectly more than ten percent (10%) of the voting securities of that
subordinated debt acquired as a result of an investment in a qualified
entity.
business venture or qualified grantee business must be reduced by the
amount of allowable credit.

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