Form 500cr - Income Tax Credits - 2011 Page 15
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19PART P - I CALCULATION OF TAXABLE INCOME,
Article.
WITHHOLDING, QUALIFIED EMPLOYEES AND TAX
Section B This section is used to calculate the qualified business
LIABILITY
entity’s total state tax liability, and to separate the state tax liability on
NOTE: Part P-I has two columns. Column 1 is used by all qualified
project taxable income (the amount computed on Section A, line 2)
business entities, except PTE members. Column 2 is used by PTE
and the state tax liability on non-project taxable income (the amount
members only and should reflect a member’s allocable or pro-rata
on Section A, line 3).
share of the reported items, except lines 4a through 4d (see the
This section also reflects the application of the prorate factor to the
instructions below for Part P-I, Section A). PTEs complete only
tax liabilities computed on line 7a and 8a, when a qualified business
Sections A and C of Part P-I. Read the Special Instructions For
entity has between 10 and 24 employees, but has had at least 25
Qualified Entities That Are Pass-Through Entities.
qualified employees for at least five years since they have been
PTE members must read the Special Instructions For Members
eligible for this tax credit.
Of Qualified Business Entities That Are Pass-Through Entities
PTEs do not complete Section B but continue on Section C of Part P-I.
BEFORE completing PART P-I.
Section C Enter on line 9 the total eligible project costs for the
Section A This section is used to separate the qualified business
eligible economic development project. Eligible project costs are
entity’s Maryland taxable income from the project (the “project taxable
the costs and expenses that a qualified business entity incurs to
income”) from the Maryland taxable income not associated with the
acquire, construct, rehabilitate, install, or equip the eligible economic
project (the “non-project taxable income”). Project taxable income
development project. The total eligible project costs must be at least
is the income generated by or arising out of the eligible economic
$500,000, but not to exceed $5,000,000.
development project.
Enter on line 11 the total eligible start-up costs to establish or expand
To calculate the project taxable income, proceed as follows: (1) If
a business facility in a qualified distressed county. The total amount
the project is a totally separate facility, then project income is figured
of eligible start-up costs cannot exceed $500,000. Eligible start-up
by using separate accounting, reflecting only the gross income,
costs are costs to furnish and equip a new or expanding location for
deductions, expenses, gains, and losses that are directly attributable
ordinary business functions and those expenses for moving costs,
to the facility and overhead expenses apportioned to the facility. (2)
separation costs, and any other expenses directly related to a move
If the project is an expansion to a previously existing facility, then
from an existing non-Maryland location to a location in a qualified
figure net income attributable to the entire facility by using separate
distressed Maryland county.
accounting reflecting only the gross income, deductions, expenses,
gains, and losses directly attributable to the facility and overhead
Enter on line 13 the number of qualified employees employed at the
expenses apportioned to the facility and net income attributable to
new or expanded business facility (from PART P-I, line 4a) multiplied
the project. Next, figure the project income by apportioning the entire
by $10,000.
facility income to the project. Or, (3) if separate accounting method
is shown to be not practicable, use an alternate method approved by
PTEs stop here. PTEs do not complete the remainder of Part P.
the Comptroller of Maryland or the Maryland Department of Business
and Economic Development.
PART P - II CREDITS AGAINST TAX LIABILITY AND TAX
ON INCOME FROM THE PROJECT
Enter on line 4a the number of qualified employees (this number is
not allocated or pro-rated; a PTE would report this same number on
Beginning with Part P-II, the computation returns to one column and
Form 510 Schedule K-1s to all PTE members). A qualified employee
is used by all taxpayers eligible to claim this credit except for PTEs.
is an employee filling a qualified position. Generally, this is a position
that is full-time and of indefinite duration, is paid at least 150% of the
Part P-II is used to calculate the credits that can be claimed for the
federal minimum wage, is located in a qualified distressed Maryland
project credit and the start-up credit during nonrefundable tax years
county, and is newly created as a result of the establishment of a
for the One Maryland Economic Development Tax Credit.
business facility.
The nonrefundable tax years consist of the initial tax year and any
If line 4a is less than 10, do not continue further. You are not eligible
carryover years. During this period, these credits are limited up to a
to claim the tax credit for this year.
certain amount of the entity’s state tax liability.
Enter a “Y” or an “N” to the question on line 4b of whether or not the
A carryover credit may be claimed for the project tax credit against
qualified business entity had maintained at least 25 qualified positions
the state income tax on the project taxable income until the earlier
for at least five years. If the answer is “N” AND the number on line
of the full amount of excess eligible project costs is used, or until the
4a is less than 25, a credit may not be claimed for this year.
14th tax year following the tax year in which the eligible economic
project is placed in service. A carryover credit may be claimed for
Enter on line 4c the tax year the project was put into service.
the start-up tax credit against state income tax until the earlier of the
full amount of the excess eligible startup costs, or until the 14th tax
Calculate the prorate factor on line 4d. If line 4a is greater than or
year following the tax year in which the entity locates in a qualified
equal to 25, this should be equal to 1.000000.
distressed county.
A PTE will report the same numbers and information that appears
Part P-II is also used to calculate a certain nonrefundable portion
on lines 4a through 4d of its Form 500CR on its members Form 510,
of the project credit and the nonrefundable start-up credit that may
Schedule K-1. Do not report the distributive share of this information
be claimed during the tax years when these credits also may have
on the K-1.
refundable portions.
Enter on line 5 the amount of Maryland income tax the qualified
Section A - Project Costs Tax Credit
business entity was required to withhold during this tax year from
the wages of qualified employees under § 10-908 of the Tax-General
On line 14 enter the sum of the amount of the project credits allowed
11-49
Rev 9/12
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