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

credit applies to owners of certain historic Ohio buildings for the

ODOD will apply the law as amended by HB 554 (see #1 through

expenditures paid or incurred to rehabilitate such buildings provided

#7 above) to those completed applications that as of March 13,

that ODOD approves the proposed rehabilitation project. If ODOD

2008 ODOD had not approved for the credit. ODOD refers to such

approves the project, the credit equals 25% of the owner’s “qualiﬁ ed

applications as “in queue” or “Round 2” applications.

rehabilitation expenditures” (QREs) paid or incurred during the

While the franchise tax historic building preservation credit remains

24- or 60-month rehabilitation period shown on the taxpayer’s tax

entirely refundable under current law, such is not the case for the

credit certiﬁ cate issued by ODOD. The historic building’s owners

income tax credit and the dealer in intangibles credit. Current law

can claim the credit against their franchise tax, dealer in intangibles

provides that if any amount of the income tax credit or dealer in

tax or income tax liability.

intangibles tax credit is refunded, then the sum of the amount

As originally enacted, the law provided for two credit application

refunded and the amount applied to reduce the tax otherwise due

periods: one beginning July 1, 2007 and ending June 30, 2008, the

in that year may not exceed $3 million. The unused credit balance

other beginning July 1, 2008 and ending June 30, 2009. However,

can be carried forward for ﬁ ve years.

on March 13, 2008, ODOD suspended further consideration of

Amended Substitute House Bill 1, 128

General Assembly amended

pending applications for the application period that began July 1,

R.C. 5733.47 & 5747.76 to speciﬁ cally provide that if a pass-through

2007 after the potential credits for the 41 rehabilitation projects that

entity (PTE) owns and restores a historic building with respect to

ODOD had already approved exceeded the amount that had been

which the ODOD issued a preservation tax credit certiﬁ cate for the

budgeted for the credit. Following suspension of the review and

PTE’s “qualiﬁ ed rehabilitation expenditures”, the PTE can allocate

approval process, the Ohio General Assembly amended the law.

the credit among the PTE’s equity owners in proportion to their

Amended Substitute House Bill (HB) 554, 127th General Assembly,

ownership interests or in such proportions or amounts as the equity

effective Sept. 11, 2008, substantially amended the credit as

owners mutually agree. This provision applies to credits claimed

summarized below. The law as amended:

with respect to certiﬁ cates issued in taxable years ending on or

after Oct. 16, 2009. See section 803.20 of the Bill. (While prior

1. Eliminates the credit application period July 1, 2008 through

law did not speciﬁ cally address credit allocation, the Department

June 30, 2009, and creates two new application periods: one

maintained that the pass-through entity must allocate the credit to

beginning July 1, 2009, the other beginning July 1, 2010.

each equity investor in accordance with the investor’s interest in

2. Eliminates the cost-beneﬁ t analysis from the application review

the pass-through entity on the date that the pass-through entity ﬁ led

and approval process. Prior law required a cost beneﬁ t analysis

the tax credit certiﬁ cate request.)

showing that the rehabilitation project would yield a net revenue

gain in state and local taxes. In place of the cost-beneﬁ t analysis,

Additional information is available on ODOD’s Web site at

http://

current law requires consideration of the proposed project’s

development.ohio.gov/Urban/ohptc/. Please direct your questions

“potential economic impact and a regional distributive balance

and comments regarding the Ohio Historic Preservation Tax Credit

of credits throughout the state.”

to the ODOD’s Urban Development Division from their Web site or

3. Eliminates the ﬁ rst-come-ﬁ rst-serve order of reviewing and

call (614) 995-2292 or (800) 848-1300

approving credit applications.

4. Refundable motion picture credit. (R. C. 122.85, 5733.59 and

4. Limits the credit per project to the lesser of (a) $5 million or (b)

5747.66 and sections 812.2 and 701.9 of Amended Substitute

25% of estimated QREs shown on the application. Prior law did

House Bill 1, 128

General Assembly)

not limit the amount of the credit per project and prior law did

A motion picture company whose motion picture was precertiﬁ ed

not limit the credit to 25% of estimated QREs.

by the director of the ODOD as a tax credit-eligible production

5. Limits the total aggregate credit divided-up among all applicants

may apply to the director of the ODOD on or after July 1, 2009

to $60 million for each of application periods beginning July 1,

for a refundable credit equal to a percentage of the motion picture

2009 and July 1, 2010. Prior law did not limit the aggregate credit

company’s eligible production expenditures with respect to the

per application period.

tax credit eligible production. (Terms in italics are deﬁ ned in R.C.

6. Earmarks $45 million of the $60 million total aggregate credit for

122.85.)

each of the application periods beginning July 1, 2009 and July 1,

2010 to applications that were ﬁ led during the period beginning

If the lesser of (a) total budgeted eligible production expenditures

July 1, 2007 but had not been approved by March 1, 2008.

as stated in the application for certiﬁ cation as a tax credit eligible

7. Eliminates the provision under prior law that limited to 100 the

production, or (b) the actual eligible production expenditures as

total number of projects that could be approved with respect

determined by an independent CPA hired at the motion picture

to an application period. That is, current law does not limit the

company’s expense, is greater than $300,000, the credit equals

number of projects that can be approved for the credit for each

the sum of the following:

application period (but as noted above, the law as amended

limits the credit per project to $5 million and the total aggregate

(i) 25% of the lesser of such budgeted or actual eligible

credit to $60 million), and

expenditure amounts excluding budgeted or actual eligible

8. Speciﬁ cally provides that the owner of a historic building may

expenditures for cast and crew wages for Ohio residents;

not include the state, a state agency, or any political subdivision

(ii) 35% of budgeted or actual eligible expenditures for cast and

(which has been ODOD’s position since the credit’s enactment).

crew wages of Ohio residents.

ODOD will apply prior law (the law as it existed prior to amendment

If the lesser of the amounts described in (a) and (b) above is less

by HB 554) to those applications that as of March 1, 2008 ODOD

than or equal to $300,000, the credit does not apply.

had approved for the credit. Thus, for the 41 credit applications

that ODOD had approved by that date, the credit is not limited to

If the motion picture company is a pass-through entity whose owners

$5 million per application, and the aggregate limit of $60 million

include C corporations and/or individuals, each C corporation can

does not apply. ODOD refers to such applications as “Round 1”

claim its share of the credit against the franchise tax and each

applications.

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Instructions For Ohio Form Ft 1120fi - Ohio Corporation Franchise Tax Report - 2012 Page 21

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