Instructions For Arizona Form 306 - Military Reuse Zone Credit

Arizona Form 306

Provided it maintains its businesses in the military reuse

Part 6 - S Corporation Credit Election and

zone, a taxpayer may carry forward the amount of the unused

Shareholder's Share of Credit

military reuse zone credit for a period not to exceed five

Line 25 -

taxable years. However, if the taxpayer moves its business

outside of the military reuse zone or the military reuse zone is

This portion of Form 306 must be completed by all

terminated, the carryover of the tax credit is lost. If a portion

S corporations in order for the S corporation or its shareholders

of its business is moved outside of the military reuse zone,

to claim the military reuse zone credit. The S corporation must

the portion of the carryforward attributable to that portion of

make an irrevocable election either to claim the credit or to

the business is lost.

pass the credit through to its shareholders. The election

statement must be signed by one of the officers of the

Enter the taxable year(s) from which you are carrying over

S corporation who is also a signatory to Arizona Form 120S. If

the credit on line 34 in columns (a) through (e). On line 35,

the S corporation elects to claim the credit itself, it can skip

enter the credit originally computed for that taxable year. On

lines 26 through 29 and complete Parts 8 and 9.

line 36, enter the amount of the credit from that taxable year

already used. Subtract the amount on line 36 from the amount

Lines 26 through 29 -

on line 35 and enter the result on line 37. On line 38, enter the

If the S corporation elects to pass the credit through to its

amount of credit that is unallowable because the business is

shareholders, it must complete lines 26 through 29 separately

no longer located in the military reuse zone or the zone has

for each shareholder.

been terminated. Subtract the amount entered on line 38 from

line 37, and enter the result on line 39.

Each S corporation shareholder is entitled to only a pro rata

share of pass-through credit based on ownership interest in

Add the amounts in columns (a) through (e) on line 39. Enter

the S corporation. The total of the credit allowed to all

the total in column (f) on line 40. This is the total military

shareholders may not exceed the amount that would have

reuse zone credit carryover for the current taxable year.

been allowed for a sole owner.

Part 9 - Total Available Credit

The S corporation must furnish each shareholder with a copy

Line 41 -

of pages 1, 2 and 3 of Form 306. Each shareholder must

complete Parts 8 and 9.

Individuals, corporations (including S corporations that

elected to claim the credit), and exempt organizations with

NOTE: Taxpayers who are partners or shareholders in

UBTI - enter the current year's credit for dislocated military

multiple entities operating in military reuse zones must

base employees from Part 4, line 18, column (c).

complete a schedule detailing the amount of the credit passed

through from each partnership or S corporation, and include

S corporation shareholders - enter the amount from Part 6,

the schedule with their tax returns.

line 28.

Part 7 - Partner's Share of Credit

Partners of a partnership - enter the amount from Part 7, line

32.

Lines 30 through 33 -

Line 42 -

Complete Part 7, lines 30 through 33, separately for each

Individuals, corporations (including S corporations that

partner.

elected to claim the credit), and exempt organizations with

Each partner is entitled to only a pro rata share of the credit

UBTI - enter the current year's credit for non-dislocated

based on the partner’s ownership interest in the partnership.

military base employees from Part 5, line 24, column (c).

The total of the credit allowed to all partners may not exceed

S corporation shareholders - enter the amount from Part 6,

the amount that would have been allowed for a sole owner.

line 29.

The partnership must furnish each partner with a copy of

Partners of a partnership - enter the amount from Part 7, line

pages 1, 2 and 3 of Form 306. Each partner must complete

33.

Parts 8 and 9.

Line 43 -

NOTE: Taxpayers who are partners or shareholders in

multiple entities operating in military reuse zones must

Enter the amount from Part 8, line 40, column (f). This is the

complete a schedule detailing the amount of the credit passed

total available credit carryover.

through from each partnership or S corporation, and include

Line 44 -

the schedule with their tax returns.

Add lines 41, 42, and 43. This is the total available military

Part 8 - Available Credit Carryover

reuse zone credit that may be applied to the current taxable

year's tax liability.

Lines 34 through 40 -

Corporations, exempt organizations with UBTI and S corporations -

Use Part 8 to figure the total available credit carryover.

enter the total here and on Form 300, Part 1, line 3.

Complete lines 34 through 40 if you claimed the credit on a

Individuals - enter the total here and on Form 301, Part 1, line 3.

prior year return and the credit was more than your tax.

Instructions For Arizona Form 306 - Military Reuse Zone Credit - 2014 Page 4

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