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refundable. Under prior law the taxpayer had a choice of taking this

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

credit as a refundable credit or as a nonrefundable credit.

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

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

3. Refundable Ohio historic preservation credit. (R.C. 149.311).

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

Administered by the ODSA, the refundable historic preservation

applications.

credit applies to owners or qualiﬁ ed lessees of certain historic Ohio

buildings for the expenditures paid or incurred to rehabilitate such

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

buildings provided that ODSA approves the proposed rehabilitation

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

project. If ODSA approves the project, the credit equals 25% of the

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

owner or qualiﬁ ed lessee’s “qualiﬁ ed rehabilitation expenditures”

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

(QREs) paid or incurred during the 24- or 60-month rehabilitation

While the franchise tax historic building preservation credit remains

period shown on the taxpayer’s tax credit certiﬁ cate issued by

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

ODSA. The historic building’s owners or qualiﬁ ed lessees can claim

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

the credit against their franchise tax, dealer in intangibles tax or

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

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As originally enacted, the law provided for two credit application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, ODSA 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

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

that ODSA had already approved exceeded the amount that had

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

been budgeted for the credit. Following suspension of the review

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

and approval process, the Ohio General Assembly amended the

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

law.

ownership interests or in such proportions or amounts as the equity

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

owners mutually agree. This provision applies to credits claimed

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

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

summarized below. The law as amended:

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

law did not speciﬁ cally address credit allocation, the department

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

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

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

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

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

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

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

the tax credit certiﬁ cate request.)

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

showing that the rehabilitation project would yield a net revenue

Additional information is available on ODSA’s Web site at

http://

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

development.ohio.gov. Please direct your questions and comments

current law requires consideration of the proposed project’s

regarding the Ohio Historic Preservation Tax Credit to the ODSA’s

“potential economic impact and a regional distributive balance

Urban Development Division from their Web site or call (614) 995-

of credits throughout the state.”

2292 or (800) 848-1300

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

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

approving credit applications.

5747.66 and sections 812.2 and 701.9 of Amended Substitute

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

House Bill 1, 128

General Assembly)

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

A motion picture company whose motion picture was precertiﬁ ed by

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

the director of the ODSA as a tax credit-eligible production may apply

not limit the credit to 25% of estimated QREs.

to the director of the ODSA on or after July 1, 2009 for a refundable

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

credit equal to a percentage of the motion picture company’s eligible

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

production expenditures with respect to the tax credit eligible

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

production. (Terms in italics are deﬁ ned in R.C. 122.85.)

per application period.

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

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

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

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

2010 to applications that were ﬁ led during the period beginning

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

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

determined by an independent CPA hired at the motion picture

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

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

total number of projects that could be approved with respect

the sum of the following:

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

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

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

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

expenditure amounts excluding budgeted or actual eligible

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

expenditures for cast and crew wages for Ohio residents;

credit to $60 million), and

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

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

crew wages of Ohio residents.

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

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

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

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

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

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

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Form Ft 1120fi - Ohio Corporation Franchise Tax Instructions For Financial Institutions - 2013 Page 20

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