Instructions For Form 500cr - Business Income Tax Credits

2013

BUSINESS INCOME TAX

MARYLAND

FORM

CREDITS INSTRUCTIONS

500CR

expenses apportioned to the facility.

amount on line 1, Section A, by the highest rate used to calculate

the tax on your Maryland tax return. Enter this amount on line 6.

If the project is an expansion to a previously existing facility,

then figure net income attributable to the entire facility by

Enter on line 7a, Section B, the State tax on the amount of income

using separate accounting reflecting only the gross income,

reported on line 2, Section B. Corporations multiply this income by

deductions, expenses, gains, and losses directly attributable

8.25%. Individuals may use the highest tax rate used to calculate

to the facility and overhead expenses apportioned to the

tax on their individual returns if they have no other reasonable

facility and net income attributable to the project. Next,

basis for determining the tax amount.

figure the project income by apportioning the entire facility

PTE members of qualified business entities must multiply the

income to the project.

amount on line 2 by the highest rate used to calculate the tax on

their Maryland tax returns. Enter this amount on line 7a.

Or,

If separate accounting method is shown to be not

This section also reflects the application of the prorate factor to

practicable, use an alternate method approved by the

the tax liabilities computed on line 7a and 8a, when a qualified

Comptroller of Maryland or the Maryland Department of

business entity has between 10 and 24 employees, but has had at

Business and Economic Development (DBED).

least 25 qualified employees for at least five years since they have

been eligible for this tax credit.

Enter the non-project Maryland taxable income on line 3. This

result is determined by subtracting line 2 from line 1. If less than

Multiply the tax amount entered on line 7a by the prorate factor

0, enter 0.

on line 4d and enter the result on line 7b.

Calulate the tax on nonproject income by subtracting line 7a from

Enter on line 4a the number of qualified employees. This number

is not allocated or pro-rated; a PTE would report this same number

line 6 and enter the result on line 8a. If the amount is less than

on Maryland Form 510 Schedule K-1 to all PTE members.

0, enter 0.

A qualified employee is an employee filling a qualified position.

Mutiply the amount of tax calculated on line 8a by the prorate

Generally, this is a position that is full-time and of indefinite

factor on line 4d and enter the result on line 8b.

duration, is paid at least 150% of the federal minimum wage, is

Section C

located in a qualified distressed Maryland county, and is newly

Note: PTE members will enter the distributive or pro rata share

created as a result of the establishment of a business facility.

of the total eligible project and start-up costs as stated on their

Note: If the number of employees entered on line 4a is fewer

Maryland Form 510 Schedule K-1 when completing Column 2.

than 10, do not continue. You are not eligible to claim the tax

Project costs Eligible project costs are the costs and expenses that

credit for this year.

a qualified business entity incurs to acquire, construct, rehabilitate,

Enter a “Yes” or a “No” to the question on line 4b, whether the

install, or equip the eligible economic development project.

qualified business entity had maintained at least 25 qualified

Enter on line 9, the total eligible project costs for the eligible

positions for at least five years. If the answer is “No” AND the

economic development project.

number of employees entered on line 4a is fewer than 25, a credit

may not be claimed for this year.

Enter on line 10 the lesser of the amount reported on line 9

or $5,000,000. The total eligible project costs must be at least

Enter in the box on line 4c the tax year the project was put into

$500,000, and cannot exceed $5,000,000.

service.

Start-up costs Eligible start-up costs to furnish and equip a

Calculate the prorate factor on line 4d. If line 4a is greater than or

new or expanding location for ordinary business functions and

equal to 25, enter 1.000000.

those expenses for moving costs, separation costs, and any other

A PTE will report the same numbers and information that appear

expenses directly related to a move from an existing non-Maryland

on lines 4a through 4d of its Form 500CR to its members using

location to a location in a qualified distressed Maryland county.

Maryland Form 510 Schedule K-1. Do not report the distributive

Enter on line 11, the total eligible start-up costs to establish or

share of this information on the K-1.

expand a business facility in a qualified distressed county.

Enter on line 5 the amount of Maryland income tax the qualified

Enter of line 12, the lesser of the amount reported on line 11

business entity was required to withhold during this tax year from

or $500,000. The total amount of eligible start-up costs cannot

the wages of qualified employees under §10-908 of the Tax-General

exceed $500,000.

Article.

Enter on line 13 the number of qualified employees employed

If you are a PTE, skip Section B. Continue to Section C. All

at the new or expanded business facility (from line 4a, Part P-I)

other taxpayers complete Part B.

multiplied by $10,000.

Section B This section is used to calculate the qualified business

PTEs stop here. PTEs do not complete the remainder of Part P.

entity’s total State tax liability, and to separate the State tax liability

on project taxable income (the amount computed on line 2, Section

PART P-II - CREDITS AGAINST TAX LIABILITY AND TAX ON

A) and the State tax liability on non-project taxable income (the

INCOME FROM THE PROJECT

amount on line 3, Section A).

Beginning with Part P-II, the computation returns to one column and

Enter on line 6:

is used by all taxpayers eligible to claim this credit except for PTEs.

•

The total tax liability from line 14 of Maryland Corporation

Part P-II is used to calculate the credits that can be claimed for

Form 500;

the project credit and the start-up credit during nonrefundable tax

years for the One Maryland Economic Development Tax Credit.

•

The total tax liability from line 22 less any amounts from lines

23 though 25 of Form 502 (if you are not a PTE member

The nonrefundable tax years consist of the initial tax year and any

of a qualified business entity); or,

carryover years. During this period, these credits are limited up to

a certain amount of the entity’s State tax liability.

•

The total tax liability from line 32c less any amounts from

lines 33 though 35 of Form 505 (if you are not a PTE

A carryover credit may be claimed for the project tax credit against

member of a qualified business entity).

the State income tax on the project taxable income until the earlier

of the full amount of excess eligible project costs is used, or until the

If you are a PTE member of a qualified business entity, multiply the

13-49

Instructions For Form 500cr - Business Income Tax Credits - 2013 Page 10

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