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year ending immediately preceding the franchise tax year

Speciﬁ cally, the Ohio new markets credit applies to taxpayer

for which the ﬁ nancial institution is claiming the credit.

ﬁ nancial institutions and insurance companies that purchase and

(ii) The dealer in intangibles’ “percentage allocable to Ohio”

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

ratio included in Exhibit B or C of dealers in intangibles

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

Ohio form 980 for the calendar year immediately preced-

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

ing the franchise tax year for which the ﬁ nancial institution

institution or insurance company must acquire for cash after Oct.

is claiming the credit.

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

(iii) The dealer in intangible tax rate for the calendar year

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

immediately preceding the franchise tax year for which

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

the ﬁ nancial institution is claiming the credit.

investment purchase price to make capital investments in or loans

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

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

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

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

Ohio low-income communities.

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

assessment the association paid during the taxable year to the

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

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

institution must hold a qualiﬁ ed equity investment on the credit

1155.13 less the amount the association paid in supervisory fees

allowance date occurring in the calendar year immediately

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

preceding the tax year. On the other hand, insurance companies

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

must hold a qualiﬁ ed equity investment on the credit allowance

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

date occurring in the calendar year for which the tax is due. For

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

qualiﬁ ed equity investments made after Oct. 16, 2009 and before

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

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

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

2010 and Jan. 1 of the six following years. For qualiﬁ ed equity

Associations verifying the amount of state annual assessment fees

investments made on or after Jan. 1, 2010, the taxpayer’s credit

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

allowance dates are the date on which the taxpayer made the

qualiﬁ ed equity investment and the anniversary of that date in

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

each of the six following years.

901.13). This nonrefundable franchise tax and individual income tax

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

The Ohio new markets credit is computed by multiplying the adjusted

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

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

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

the qualiﬁ ed community development entity by the applicable

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

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

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

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

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

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

taxpayer makes such investments. The credit applies to tax years

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

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

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

calendar year in which the taxpayer makes the investment may be

the adjusted purchase price.

carried forward for three tax years.

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

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

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

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

qualiﬁ ed equity investment in the CDE multiplied by a fraction

qualifying investor corporation in a qualifying pass-through entity can

the numerator of which is qualified low-income community

claim a nonrefundable credit equal to the corporation’s proportionate

investments made by the CDE in projects located in Ohio on the

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

credit allowance date and the denominator of which is the total

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

amount of qualiﬁ ed low-income community investments made by

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

the CDE in projects located in all states on the credit allowance

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

date. However, the qualiﬁ ed low-income community investments

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

made by the issuer in projects located in Ohio is equal to the

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

sum of the qualiﬁ ed low-income community investments in each

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

qualiﬁ ed active low-income community business in Ohio and the

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

amount included in the numerator for each such investment is

limited to $2,564,000.

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

Credit

Adjusted

Applicable %

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

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

purchase price

on credit

allowance date

Ohio credit applies only to ﬁ nancial institutions as a nonrefundable

credit against the franchise tax and to insurance companies as a

Adjusted

Amount paid for

Issuer’s QLIC

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

purchase price

qualiﬁ ed equity

investments in Ohio on

credit applies only to the extent that the community development

investments

credit allowance date.

entity (in which the ﬁ nancial institution or insurance company

Issuer’s QLIC

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

investments in all states

community businesses in Ohio. The aggregate total Ohio credit

on credit allowance date

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

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

they otherwise could have been claimed can be carried forward for

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

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

investments in qualiﬁ ed active low-income community businesses

IRC section 45D.)

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

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Form Ft 1120fi - Ohio Corporation Franchise Tax Instructions For Financial Institutions - 2013 Page 18

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