Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report

2. Credit for Savings-and-Loan Association Fees (R.C.

16, 2009 (the effective date of R.C. 5725.33 as enacted by HB

5733.063). Savings-and-loan associations are permitted a credit

1) a qualiﬁ ed equity investment in a CDE at its original issuance.

against the total tax due equal to the amount of the annual

The CDE in turn must use at least 85% of the taxpayer’s equity

assessment the association paid during the taxable year to the

investment purchase price to make capital investments in or loans

Ohio Division of Savings and Loan Associations under R.C.

to businesses in low-income communities and at least a portion

1155.13 less the amount the association paid in supervisory fees

of the CDE’s investments must be in active businesses located in

during the taxable year to the Federal Savings-and-Loan Insurance

Ohio low-income communities.

Corporation or in the case of a savings and loan association not

In order to claim the credit for a particular tax year, a ﬁ nancial

insured by the Federal Savings-and-Loan Insurance Corporation,

institution must hold a qualiﬁ ed equity investment on the credit

the amount it would have paid if insured thereby. To qualify for this

allowance date occurring in the calendar year immediately preceding

credit, the association must ﬁ le with the franchise report a document

the tax year. On the other hand, insurance companies must hold a

certiﬁ ed by the Superintendent of the Division of Savings-and-Loan

qualiﬁ ed equity investment on the credit allowance date occurring

Associations verifying the amount of state annual assessment fees

in the calendar year for which the tax is due. For qualiﬁ ed equity

and supervisory fees paid by the association during the taxable year.

investments made after Oct. 16, 2009 and before Jan. 1, 2010, the

3. Ethanol plant investment credit (R.C. 5733.46 and R.C.

taxpayer’s credit allowance dates are Jan. 1, 2010 and Jan. 1 of

901.13). This nonrefundable franchise tax and individual income tax

the six following years. For qualiﬁ ed equity investments made on

credit equals 50% of the amount of money that the taxpayer invests

or after Jan. 1, 2010, the taxpayer’s credit allowance dates are the

in R.C. 901.13 certiﬁ ed ethanol plants in the calendar year preceding

date on which the taxpayer made the qualiﬁ ed equity investment

the tax year (the investment period is the calendar year preceding

and the anniversary of that date in each of the six following years.

the tax year regardless of whether the taxpayer’s taxable year is

The Ohio new markets credit is computed by multiplying the adjusted

a calendar year). The credit is limited to $5,000 per taxpayer per

purchase price of the taxpayer’s qualiﬁ ed equity investment in

certiﬁ ed ethanol plant regardless of the number of years in which the

the qualiﬁ ed community development entity by the applicable

taxpayer makes such investments. The credit applies to tax years

percentage on the credit allowance date. See the formulas below.

2003 through 2013. Credits not used in the tax year following the

The applicable percentage is 0% for each of the ﬁ rst two credit

calendar year in which the taxpayer makes the investment may be

allowance dates, 7% for the third credit allowance date, and 8%

carried forward for three tax years.

for each of the four following credit allowance dates. Thus, the total

4. Credit for Taxes Paid by a Qualifying Pass-Through Entity

Ohio credit over the seven credit allowance dates equals 39% of

(R.C. 5733.0611). Upon ﬁ ling a corporation franchise tax report, a

the adjusted purchase price.

qualifying investor corporation in a qualifying pass-through entity can

The adjusted purchase price of the taxpayer’s qualiﬁ ed equity

claim a nonrefundable credit equal to the corporation’s proportionate

investment is equal to the amount that the taxpayer paid for the

share of the tax paid by the qualifying pass-through entity. To claim

qualiﬁ ed equity investment in the CDE multiplied by a fraction the

this credit, the qualifying investor must attach to its franchise tax

numerator of which is qualiﬁ ed low-income community investments

report a copy of the IRS form K-1 indicating the qualifying investor’s

made by the CDE in projects located in Ohio on the credit allowance

proportionate share of the amount of the pass-through entity tax

date and the denominator of which is the total amount of qualiﬁ ed

for which the qualifying investor seeks to claim a credit. For an

low-income community investments made by the CDE in projects

explanation of the tax on qualifying pass-through entities see the

located in all states on the credit allowance date. However, the

instructions for Ohio form IT 1140, Tax Return for Pass-Through

qualiﬁ ed low-income community investments made by the issuer

Entities and Trusts. This credit has an unlimited carryforward period.

in projects located in Ohio is equal to the sum of the qualiﬁ ed

5. New Markets Tax Credit (R.C. 5725.33, 5729.16 and 5733.58).

low-income community investments in each qualiﬁ ed active low-

The new markets credit cannot be claimed for tax year 2012 because

income community business in Ohio and the amount included in

the credit percentage for the taxpayer’s ﬁ rst two “credit allowance

the numerator for each such investment is limited to $2,564,000.

dates” is zero. Accordingly, the new markets credit is not included

Credit

Adjusted

Applicable %

on the 2012 franchise tax report for ﬁ nancial institutions, Ohio form

purchase price

on credit

FT 1120FI.

allowance date

The Ohio new markets credit is similar in concept and deﬁ nition

Adjusted

Amount paid for

Issuer’s QLIC

to the federal new markets credit (IRC section 45D). However, the

purchase price

qualiﬁ ed equity

investments in Ohio on

Ohio credit applies only to ﬁ nancial institutions as a nonrefundable

investments

credit allowance date.

credit against the franchise tax and to insurance companies as a

Issuer’s QLIC

credit against the premiums tax. In addition, the Ohio new markets

investments in all states

credit applies only to the extent that the community development

on credit allowance date

entity (in which the ﬁ nancial institution or insurance company

The issuing qualiﬁ ed community development entity’s qualiﬁ ed low-

holds an equity investment) invests in qualiﬁ ed active low-income

income community (QLIC) investments in Ohio projects is limited to

community businesses in Ohio. The aggregate total Ohio credit

investments in qualiﬁ ed active low-income community businesses

is limited to $10 million per year. Credits not used in the year that

in Ohio and each such investment is not to exceed $2,564,000.

they otherwise could have been claimed can be carried forward for

four years. (Terms in italics are deﬁ ned in R.C. 5725.33 and/or in

For additional information visit the ODOD’s web site at

http://

IRC section 45D.)

development.ohio.gov/Urban/ONM/

or call 614-995-2292.

Speciﬁ cally, the Ohio new markets credit applies to taxpayer

Schedule A-2

ﬁ nancial institutions and insurance companies that purchase and

Refundable Credits

hold on the credit allowance date a qualiﬁ ed equity investment in

an IRC section 45D community development entity (CDE) whose

1. Refundable jobs creation tax credit (JCTC). (R.C. 122.17.)

service area includes (at least some portion of) Ohio. The ﬁ nancial

For credit agreements entered into on or after the Oct. 16, 2009

institution or insurance company must acquire for cash after Oct.

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Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report - 2012 Page 19

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