Form 500cr - Maryland Business Income Tax Credits - 2012 Page 13
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172012
FORM
MARYLAND BUSINESS INCOME
500CR
TAX CREDITS INSTRUCTIONS
PART P - ONE MARYLAND ECONOMIC DEVELOPMENT TAX
by apportioning the entire facility income to the project. Or, (3) if
CREDIT
separate accounting method is shown to be not practicable, use
an alternate method approved by the Comptroller of Maryland or
General requirements Credits may be claimed for eligible project
the Maryland Department of Business and Economic Development.
costs and for eligible start-up costs incurred to establish, relocate or
expand a business facility in a distressed Maryland county. In order
Enter on line 4a the number of qualified employees (this number is
to qualify for the credit for project costs, a minimum of $500,000
not allocated or pro-rated; a PTE would report this same number
must be spent on eligible project costs. At least 25 newly hired
on Form 510 Schedule K-1s to all PTE members). A qualified
qualified employees must be employed for at least one year
employee is an employee filling a qualified position. Generally, this
at the new or expanded facility. This credit may also be claimed
is a position that is full-time and of indefinite duration, is paid at
by tax-exempt nonprofit organizations.
least 150% of the federal minimum wage, is located in a qualified
distressed Maryland county, and is newly created as a result of
If claiming a credit for multiple projects, complete a separate Part
the establishment of a business facility.
P for each project.
If line 4a is less than 10, do not continue further. You are not
For information on distressed counties, qualified employees, eligible
eligible to claim the tax credit for this year.
costs, and other requirements businesses must satisfy to qualify
for credit, contact:
Enter a “Y” or an “N” to the question on line 4b of whether or not
the qualified business entity had maintained at least 25 qualified
Maryland Department of Business and Economic Development
positions for at least five years. If the answer is “N” AND the
401 E. Pratt St.
Baltimore, MD 21202
number on line 4a is less than 25, a credit may not be claimed
410-767-6438 or 410-767-4980
for this year.
Enter on line 4c the tax year the project was put into service.
Pass-through entities (PTEs), filing Maryland Form 510, with eligible
project costs and eligible start-up costs must follow the additional
Calculate the prorate factor on line 4d. If line 4a is greater than
instructions following Part P – IV Summary.
or equal to 25, this should be equal to 1.000000.
NOTE. For tax years beginning before January 1, 2011, a qualified
A PTE will report the same numbers and information that appears
business entity may carry over excess tax credit to a succeeding
on lines 4a through 4d of its Form 500CR on its members Form
tax year if during the succeeding tax year, the qualified business
510, Schedule K-1. Do not report the distributive share of this
entity continues to employ at least 25 qualified employees at the
information on the K-1.
project. For taxable years beginning after December 31, 2010,
a qualified business entity, which has been certified for the tax
Enter on line 5 the amount of Maryland income tax the qualified
credit, may claim a prorated share of this credit, if: (1) the number
business entity was required to withhold during this tax year
of qualified positions falls below 25, but does not fall below 10,
from the wages of qualified employees under § 10-908 of the
and (2) the qualified business entity has maintained at least 25
Tax-General Article.
qualified positions for at least five years.
Section B This section is used to calculate the qualified business
P A R T P - I C A L C U L A T I O N O F T A X A B L E I N C O M E ,
entity’s total state tax liability, and to separate the state tax liability
WITHHOLDING, QUALIFIED EMPLOYEES AND TAX LIABILITY
on project taxable income (the amount computed on Section A,
line 2) and the state tax liability on non-project taxable income
NOTE: Part P-I has two columns. Column 1 is used by all qualified
(the amount on Section A, line 3).
business entities, except PTE members. Column 2 is used by PTE
members only and should reflect a member’s allocable or pro-rata
This section also reflects the application of the prorate factor to
share of the reported items, except lines 4a through 4d (see the
the tax liabilities computed on line 7a and 8a, when a qualified
instructions below for Part P-I, Section A). PTEs complete only
business entity has between 10 and 24 employees, but has had
Sections A and C of Part P-I. Read the Special Instructions
at least 25 qualified employees for at least five years since they
For Qualified Entities That Are Pass-Through Entities.
have been eligible for this tax credit.
PTE members must read the Special Instructions For
PTEs do not complete Section B but continue on Section C of Part
Members Of Qualified Business Entities That Are Pass-
P-I.
Through Entities 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
the costs and expenses that a qualified business entity incurs
taxable income”) from the Maryland taxable income not associated
to acquire, construct, rehabilitate, install, or equip the eligible
with the project (the “non-project taxable income”).
Project
economic development project. The total eligible project costs must
taxable income is the income generated by or arising out of the
be at least $500,000, but not to exceed $5,000,000.
eligible economic development project.
Enter on line 11 the total eligible start-up costs to establish or
To calculate the project taxable income, proceed as follows: (1)
expand a business facility in a qualified distressed county. The total
If the project is a totally separate facility, then project income is
amount of eligible start-up costs cannot exceed $500,000. Eligible
figured by using separate accounting, reflecting only the gross
start-up costs are costs to furnish and equip a new or expanding
income, deductions, expenses, gains, and losses that are directly
location for ordinary business functions and those expenses for
attributable to the facility and overhead expenses apportioned to
moving costs, separation costs, and any other expenses directly
the facility. (2) If the project is an expansion to a previously existing
related to a move from an existing non-Maryland location to a
facility, then figure net income attributable to the entire facility
location in a qualified distressed Maryland county.
by using separate accounting reflecting only the gross income,
deductions, expenses, gains, and losses directly attributable to the
Enter on line 13 the number of qualified employees employed at
facility and overhead expenses apportioned to the facility and net
the new or expanded business facility (from PART P-I, line 4a)
income attributable to the project. Next, figure the project income
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