Volume 17, Issue 24 - Virginia



DEPARTMENT OF TAXATION

Title of Regulation: Qualified Equity and Subordinated Debt Investments Tax Credit Program.

23 VAC 10-110-10 et seq. Individual Income Tax (adding 23 VAC 10-110-225 through 23 VAC 10-110-229).

Statutory Authority: §§ 58.1-203 and 58.1-339.4 of the Code of Virginia.

Public Hearing Date: September 24, 2001 - 10 a.m.

Public comments may be submitted until October 12, 2001.

(See Calendar of Events section

for additional information)

Agency Contact: David Mason, Senior Tax Policy Analyst, Department of Taxation, P.O. Box 1880, Richmond, VA 23220-1880, telephone (804) 367-6585 or FAX (804) 367-0045.

Basis: Chapter 2 (§ 58.1-203) of Title 58.1 of the Code of Virginia authorizes the Commissioner of the Department of Taxation to promulgate regulations relating to the interpretation and enforcement of the laws of the Commonwealth governing taxes administered by the department. In addition § 58.1-339.4 G of the Code of Virginia requires the department to promulgate a regulation governing the Qualified Equity and Subordinated Debt Program.

Purpose: The Department of Taxation is promulgating a new regulation 23 VAC 10-110-225 et seq. governing the Qualified Equity and Subordinated Debt Investments Tax Credit Program. An emergency regulation adopted by the department expired in February 2000.

The 1998 session of the General Assembly enacted Chapter 491 that established a new program in the Commonwealth to stimulate capital investment in selected small businesses. The Qualified Equity and Subordinated Debt program provides for a maximum tax credit equal to 50% of the amount of the investment. The amount of the credit that may be taken in any taxable year is limited to the lesser of the income tax imposed on the taxpayer for the taxable year, or $50,000. The proposed regulation sets forth the operating procedures of the program including the process for applying for the credit, what types of businesses are eligible and ineligible, and the procedures to be used to ensure that the dollar volume of tax credits requested for a given taxable year does not exceed the statutory limit of $5,000,000.

The department has concluded that the regulation is essential for the efficient and economical performance of this economic development incentive. The regulation is necessary to comply with the statutory provisions of § 58.1-339.4 of the Code of Virginia. The emergency regulation promulgated under this mandate has expired. It is essential that the department promulgate a permanent regulation to outline the tax credit application and allocation procedures for both qualified small businesses and their individual investors.

Substance: The proposed regulation sets forth the procedures to be used to qualify for the Qualified Equity and Subordinated Debt Tax Credit Program. The program, effective for taxable years beginning on and after January 1, 1999, is designed to stimulate capital investment in selected small businesses that meet the statutory eligibility guidelines. The credit available to a taxpayer in a taxable year is limited to the lesser of the tax imposed for the taxable year or $50,000. Where the aggregate amount of the requested credits for investments made in a calendar year exceed $5 million, the department will allocate the available tax credits pro rata among the approved tax credit applicants. Unused credits may be carried forward to offset future income tax liability for up to 15 taxable years.

Issues: There are no disadvantages to the public or the Commonwealth as a result of the implementation of this program.

Department of Planning and Budget's Economic Impact Analysis: The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 9-6.14:7.1 G of the Administrative Process Act and Executive Order Number 25 (98). Section 9-6.14:7.1 G requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. The analysis presented below represents DPB’s best estimate of these economic impacts.

Summary of the proposed regulation. The Department of Taxation (department) proposes to add four sections to the Individual Income Tax regulations in order to govern the Qualified Equity and Subordinated Debt Investments Tax Credit program. The proposed new sections have been in effect as emergency regulations, which expired in February 2000.

Estimated economic impact. The 1998 session of the General Assembly enacted Chapter 491 that established a new program in the Commonwealth to stimulate capital investment in selected small businesses. The Qualified Equity and Subordinated Debt Investments Tax Credit program provides for a maximum tax credit equal to 50% of the amount of the investment. The amount of the credit that may be taken in any taxable year is limited to the lesser of the state income tax imposed on the taxpayer for the taxable year, or $50,000. In order for an investment to qualify under this program, the investment must be in a qualified business. According to § 58.1-339.4 of the Code of Virginia, “qualified” businesses are required to have gross revenues of no more than $5 million, be domiciled in Virginia, and conduct most of their business in the Commonwealth. Several types of businesses do not qualify as “qualified” businesses, including but not limited to financial institutions, professional service corporations, governmental and charitable institutions, real estate firms, and business consulting firms. An investment shall not be qualified if the taxpayer who has made the investment, or any of such taxpayer’s family members, or any entity affiliated with such taxpayer, receives or has received compensation from the qualified business in exchange for services provided to such businesses as an employee, officer, director, manager, or independent contractor.

The proposed new sections of the regulations set forth the operating procedures of the program, including the process for applying for a credit, what types of businesses are eligible and ineligible, and the procedures to be used to ensure that the dollar volume of tax credits awarded for a given taxable year does not exceed the statutory limit of $5,000,000. If the value of tax credits correctly claimed in a given taxable year exceed $5,000,000, then each taxpayer will be awarded prorated credits. Specifically, the new sections of the regulations state that “the amount of such prorated credit shall be determined by multiplying a fraction, the numerator of which shall be the credit requested by the eligible taxpayer for such year, and the denominator of which shall be the total credits requested by all eligible taxpayers for such taxable year, by the Commonwealth’s annual fiscal limitation of $5 million.” For example, if $10 million in tax credits are correctly requested in a given taxable year, each qualified taxpayer will be awarded 50%1 of the credit correctly requested for that year. Individual taxpayers may use only $50,000 of the awarded prorated credit in any given year. If the awarded prorated credit exceeds $50,000 for an individual taxpayer, the credit may be taken in annual increments of $50,000 for up to 15 years.

For taxable year 1999, requested credits totaled $8.24 million, exceeding the $5 million statutory cap. Qualified investors were awarded a 60.67% proration of their requested credit.2 According to the department, applications received for taxable year 2000 indicate that the cap will again be exceeded; approved applicants will receive a yet to be determined prorated credit.

Under the proration system, taxpayers are uncertain as to how much in tax credits they will receive for their qualified investments at the time the investment decision is made. The uncertainty may discourage some potential investments. But the uncertainty of the proration system seems necessary with the presence of the cap on tax credits under this program.

A limited number of investors (164 in taxable year 1999)3 will clearly benefit from the Qualified Equity and Subordinated Debt Investments Tax Credit program, in the form of lower state taxes due. Also, some small businesses (62 in 1999, 54 in 2000)4 will benefit by receiving additional investment. Some of the investments that are declared qualified for this program would likely have been made even without this program. Other investments, or increases in the quantity of investments made, will likely be due to the tax credit incentives of the program. The additional investments made in small businesses due to the incentives of this program may allow some businesses to expand and others to avoid bankruptcy who otherwise would have been unable to do so. This may lead to the creation or preservation of jobs, and increasing or preservation of demand for supplies and services from other businesses, etc, that otherwise would not have occurred. No data is available indicating the number of jobs that will be created or maintained due to investments prompted by this program; nor is there data indicating by how much demand for supplies and services from other businesses will increase due to investments prompted by this program.

On the other hand, the Commonwealth will award $5 million a year in tax credits.5 The amount of tax credits actually used from those earned under this program may be more or less than $5 million in any given year. The credits will create lost revenue for the Commonwealth. These dollars, if not issued as tax credits under this program, could be used for expenditures on programs that benefit citizens of the Commonwealth, funding for the Revenue Stabilization Fund, or tax cuts for a broader or different portion of Virginia taxpayers. Governing the Qualified Equity and Subordinated Debt Investments Tax Credit program will also create administrative costs. For Fiscal Year 2001, the department has $203,574 budgeted to run three programs that include tax credit caps. The preponderance of that cost is attributable to the Qualified Equity and Subordinated Debt Investments Tax Credit program.6 Since there are some initial costs associated with setting up systems to run the program that will not exist or will be smaller in future years, the administrative cost of running the program is expected to be somewhat smaller in future years.

Whether the benefits of the program outweigh the costs depend on how the benefits and costs are valued. In order for a fair comparison to be made, reasonable estimates of the following benefit components are necessary: the portion of qualified investments that would have not been made without the existence of this program, the number and value of jobs that are created or preserved due to the qualified investments that would have not been made without the existence of this program, and the value of increased or preserved demand for goods and services from suppliers of the qualified businesses that otherwise would not have occurred, etc. Since none of this data is available, an accurate comparison of the benefits with the costs of the program cannot be made.

Businesses and entities affected. The proposed new sections to the regulations will affect taxpayers who wish to apply for the tax credit, and the small businesses that those taxpayers invest in. For taxable year 1999, there were 164 taxpayers who applied for and were approved for the tax credit. For taxable year 1999, there were 62 businesses that had applications for the “qualified business” designation approved. For taxable year 2000, there were 54 businesses that had their applications approved.7 According to the department, “the largest number of applications were made by manufacturers and technology businesses (ISPs, computer and information services, biotech and dotcoms). In addition, there is a wide diversity of companies that were approved, including commercial fishing, chemical manufacturing, electronic voting, scrape metal recycling, farming, and a manufacturer of three dimensional holograms.”

Localities particularly affected. The proposed regulations potentially affect investors and small businesses throughout the Commonwealth.

Projected impact on employment. The Qualified Equity and Subordinated Debt Investments Tax Credit program will likely encourage some investments in small businesses that otherwise would not have occurred. These investments may allow some businesses to expand and others to avoid bankruptcy. Thus, the program will likely have a positive impact on employment.

Effects on the use and value of private property. Since the program will likely encourage private investment, the value of small businesses that receive such investments will increase.

Agency's Response to the Department of Planning and Budget's Economic Impact Analysis: The Department of Taxation has reviewed the economic impact analysis prepared by the Department of Planning and Budget and is in agreement with their analysis.

Summary:

The proposed action replaces expired emergency regulations with permanent regulations for claiming the Qualified Equity and Subordinated Debt Investment Tax Credit and for allocating tax credits if total credit requests exceed $5 million in a calendar year.

23 VAC 10-110-225. Qualified Equity and Subordinated Debt Investments Tax Credit; Definitions.

The following words and terms when used in this regulation shall have the following meanings, unless the context clearly indicates otherwise:

"Affiliated" means a direct or indirect ownership interest of at least 80% in an entity. An indirect ownership interest includes, but is not limited to, direct ownership interests held by a taxpayer's family members or an entity affiliated with such taxpayer or family members, or any combination of these.

"Equity" means common stock or preferred stock, regardless of class or series, of a corporation; a partnership interest in a limited partnership; or a membership interest in a limited liability company, any of which is not required, or subject to an option on the part of the taxpayer, to be redeemed by the issuer within five years from the date of issuance.

"Family member" means, when applied with respect to an individual taxpayer, (i) spouse, (ii) children, (iii) grandchildren, (iv) parents, (v) spouse's parents, and (vi) grandparents.

"Primarily engaged in business in the Commonwealth" means 50% or more of the entity's gross receipts are derived from sources within Virginia.

"Qualified business" means a business which (i) has annual gross revenues of no more than $5 million in its most recently completed taxable year, (ii) is commercially domiciled in the Commonwealth, (iii) is primarily engaged in business or does substantially all of its production in the Commonwealth, and (iv) is not primarily engaged, or is not primarily organized to engage, in any of the following types of businesses:

1. Banks;

2. Savings and loan institutions;

3. Credit or finance;

4. Financial, broker or investment;

5. Businesses organized for the primary purpose of rendering professional services as defined in Chapter 7 (§ 13.1-542 et seq.) of Title 13.1 of the Code of Virginia;

6. Accounting;

7. Government, charitable, religious or trade institutions or organizations;

8. Conventional coal, oil and gas, and mineral exploration;

9. Insurance;

10. Real estate design or engineering;

11. Construction or construction contracting;

12. Business consulting or business brokering;

13. Residential housing, real estate brokerage, sale or leasing businesses, or real estate development; or

14. Any business that is in violation of the law, and such others as the Department of Taxation may designate.

A business in its first taxable year of operation will be deemed to have annual gross revenues of no more than $5 million and be primarily engaged in business and do substantially all of its production in the Commonwealth if the commercial domicile pursuant to 23 VAC 10-120-140 of such business is within the Commonwealth.

"Qualified investment" means a cash investment in a qualified business in the form of equity or subordinated debt. An investment shall not be qualified, however, if the taxpayer who holds such investment, or any of such taxpayer's family members, or any entity affiliated with such taxpayer, receives or has received compensation, as defined in § 58.1-302 of the Code of Virginia, from the qualified business in exchange for services provided to such business as an employee, officer, director, manager, consultant, independent contractor or otherwise in connection with or within one year before or after the date of such investment. For purposes hereof, reimbursement of reasonable expenses incurred shall not be deemed to be compensation. A qualified investment shall not include existing investments or instruments that have been purchased, transferred, or otherwise obtained without providing new capital to a qualified business.

An investment which would otherwise qualify for this credit will not be allowed if 50% or more of the proceeds resulting from the investment are used within one year of the cash investment to retire or reduce debt or equity of a qualified business that was incurred prior to the investment.

"Subordinated debt" means indebtedness of a corporation, general or limited partnership, or limited liability company that (i) by its terms requires no repayment of principal for the first three years after issuance; (ii) is not guaranteed by any other person or entity or secured by any assets of the issuer or any other person or entity; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions.

"Substantially all of its production in the Commonwealth" means 80% or more of the entity's expenses are incurred within Virginia.

23 VAC 10-110-226. Qualified Equity and Subordinated Debt Investments Tax Credit; general credit provisions.

A. For taxable years beginning on or after January 1, 2001, a taxpayer shall be allowed a credit against the taxes imposed by Articles 2 (Individual Income Tax; § 58.1-320 et seq.) and 6 (Taxation for Estates and Trusts; § 58.1-360 et seq.) of Chapter 3 of Title 58.1 of the Code of Virginia in an amount equal to 50% of such taxpayer's qualified investments made during such taxable year.

B. The aggregate amount of the credit that may be used by any taxpayer per taxable year shall not exceed the lesser of (i) the tax imposed for such taxable year or (ii) $50,000. The credit is not refundable and may not be carried back. Any credit, or portion thereof, not usable for the taxable year in which the credit was earned may be, to the extent allowable, carried over for the next 15 succeeding taxable years or until the total amount of the tax credit earned has been taken, whichever occurs first.

C. The total amount of tax credits available for the Commonwealth's fiscal year shall not exceed $5 million. In the event that the total eligible credit requests exceed the Commonwealth's annual fiscal limitation, each taxpayer shall be granted a pro rata amount as determined by the Department of Taxation. The amount of such prorated credit shall be determined by multiplying a fraction, the numerator of which shall be the credit requested by the eligible taxpayer for such year, and the denominator of which shall be the total credits requested by all eligible taxpayers for such taxable year, by the Commonwealth's annual fiscal limitation of $5 million.

D. The amount of any credit attributable to a qualified investment by a partnership, electing small business corporation (S corporation), or limited liability company shall be allocated to the individual partners, shareholders, or members, as they may determine.

The limitation in subsection B (ii) of this section shall be construed to allow individual partners, shareholders, or members to each claim annual credits of $50,000.

23 VAC 10-110-227. Qualified Equity and Subordinated Debt Investments Tax Credit; qualified business application procedure.

A. Every eligible entity desiring to be designated as a qualified business for purposes of this tax credit must make an application on the Application for Designation as a Qualified Business for the Qualified Equity and Subordinated Debt Investments Tax Credit to the Department of Taxation. Such application must be made prior to the issuance of any equity or subordinated debt; otherwise, the issuance shall not qualify for the tax credit, except as provided in subsection B of this section.

1. A qualified business application must be made at least 90 days prior to the issuance of any equity or subordinated debt to ensure that the Department of Taxation's determination regarding the entity's qualification will be made prior to the issuance date.

2. A qualified business application may be made less than 90 days prior to the issuance of any equity or subordinated debt; however, the Department of Taxation cannot ensure that its determination regarding the entity's qualification will be made prior to the issuance date.

B. A qualified business application will not be accepted after the issuance date of any equity or subordinated debt, except in the following instances:

1. Issuances of equity or subordinated debt made between January 1, 2001, and before September 1, 2001, the qualified business application is made by October 1, 2001;

2. Issuances of equity or subordinated debt made on or after September 1, 2001, and before January 1, 2002, the qualified business application is made prior to the issuance date as described in subdivisions A 1 and 2 of this section. (For example, issuances made on September 1, 2001 and before January 1, 2002, will require a qualified business application no later than June 1, 2001, to ensure that the Department of Taxation’s determination will be made prior to the issuance date); and

3. Issuances of equity or subordinated debt made on or after January 1, 2002, but within three months of the end of the most recently completed taxable year of the qualified business, the application is made by the first business day of the fourth month following the end of the most recently completed taxable year.

C. The entity seeking designation as a qualified business shall make application by completing and submitting the Application for Designation as a Qualified Business for the Qualified Equity and Subordinated Debt Investments Tax Credit to the Department of Taxation.

D. If the Department of Taxation determines the entity is a qualified business, the Department of Taxation shall issue a certification to the entity stating the same. Such designation shall be valid only for the calendar year of issuance.

E. Upon issuance of equity or subordinated debt to taxpayers, the qualified business shall issue a statement to each taxpayer for attachment to the taxpayer's tax credit application. Such statement shall contain the following information:

1. The qualified business certification granted by the Department of Taxation;

2. The type of investment at issue (i.e., equity or subordinated debt) and the amount; and

3. That the investment at issue meets the definition of a qualified investment for purposes of this credit.

a. If the investment at issue is equity, the statement must also indicate that such issuance is an original issuance which provides new capital to the qualified business, and that it is not required or subject to an option on the part of the taxpayer to be redeemed by the issuer within five years from the date of issuance.

b. If the investment at issue is subordinated debt, the statement must also indicate that such issuance is an original issuance which provides new capital to the qualified business, and that (i) by its terms requires no repayment of principal for the first three years after issuance; (ii) is not guaranteed by any other person or entity, or secured by any assets of the issuer or any other person or entity; and (iii) is subordinated to all indebtedness and obligations of the issuer to national or state-chartered banking or savings and loan institutions.

23 VAC 10-110-228. Qualified Equity and Subordinated Debt Investments Tax Credit; tax credit application procedure.

A. Eligible taxpayers who qualify for the equity and subordinated debt investment tax credit must make an application on the Taxpayer Application for the Qualified Equity and Subordinated Debt Investments Tax Credit to the Department of Taxation. For any taxable year that ends after January 1, and on or before December 31 of a calendar year, eligible taxpayers must submit an application and supporting documentation requesting the tax credit no later than April 1 of the subsequent calendar year. Subject to the provisions of 23 VAC 10-110-227, for example, eligible taxpayers that have taxable years ending after December 31, 2000, and before January 1, 2002, an application and supporting documentation requesting the tax credit must be submitted no later than April 1, 2002.

B. Applications must be made on the form prescribed by the Department of Taxation and sent by certified mail with a return receipt requested and postmarked no later than the date specified in this section.

C. Each taxpayer shall timely supply all information the Department of Taxation deems necessary to properly determine the allowable credit amount. Such information shall include, but shall not be limited to, the following:

1. A copy of the statement issued by the qualified business pursuant to 23 VAC 10-110-227 D.

2. The taxable year during which the qualified investment was made.

3. The name, address, federal identification number, and Virginia account number of the taxpayer.

4. A certification by the taxpayer, under penalty of perjury, that the qualified investment meets all conditions outlined in § 58.1-339.4 of the Code of Virginia and these regulations.

5. In the case of a partnership, electing small business corporation (S corporation), or limited liability company, the application shall include the name, address, and social security number of each of its individual partners, shareholders, or members, and a statement as to how any allowable credit shall be distributed to each of its individual partners, shareholders, or members. Notification of the allowable credit amount shall be sent to the entity, and a copy of such notification shall be attached to each individual taxpayer's Virginia income tax return on which the credit is claimed.

D. The Department of Taxation shall review all applications for completeness and notify taxpayers of any questions, omissions, errors, or concerns, no later than June 1. Taxpayers must fully respond to any such notices no later than the two-week period ending no later than June 15.

E. All eligible taxpayers shall be notified by June 30 as to the amount of applicable tax credit that may be claimed for the taxable year for which the request was made.

1. In the case of a partnership, electing small business corporation (S corporation), or limited liability company, notification of the allowable credit amount shall be sent to the entity, and a copy of such notification shall be included with each individual taxpayer's Virginia income tax return on which the credit is claimed.

2. Each S corporation shall attach to its annual income tax return, when filed, a schedule listing the name, address, social security number, and allocable credit amount for each of its individual shareholders.

3. Each partnership and limited liability company shall provide a schedule listing the name, address, social security number, and allocable credit amount for each of its individual partners or members to the Department of Taxation within 60 days of the Department of Taxation’s notice certifying the amount of allowable credit.

F. Eligible taxpayers who will not receive the final certification of their credits prior to the due date of their individual state income tax returns must either file the appropriate return extension request or file their income tax return by the due date, and then amend their return after receiving a credit certification. Amended returns to claim the tax credit must be filed within the applicable statute of limitations.

23 VAC 10-110-229. Qualified Equity and Subordinated Debt Investments Tax Credit; required equity and subordinated debt investment holding period.

A. Equity received in connection with a qualified business investment must be held by the taxpayer for at least five full calendar years following the calendar year for which a tax credit for a qualified investment is earned except in any of the following instances: (i) the liquidation of the qualified business issuing such equity; (ii) the merger, consolidation or other acquisition of such business with or by a party not affiliated with such business; or (iii) the death of the taxpayer.

B. The five-calendar year holding period is to be distinguished from the redemption period (five years from the date of issuance) during which an equity investment cannot be required, or be subject to an option on the part of the taxpayer, to be redeemed by the issuer. The redemption period requirement must be met in order to qualify an equity investment for credit eligibility. The five-calendar year holding period must be met in order to avoid recapture of the credit.

C. A subordinated debt instrument received in connection with a qualified business investment must be held by the taxpayer for at least three years after the date of issuance except in any of the following instances: (i) the liquidation of the qualified business issuing such subordinated debt; (ii) the merger, consolidation or other acquisition of such business with or by a party not affiliated with such business; or (iii) the death of the taxpayer.

D. If the holding period requirement for the equity or subordinated debt is not met, the taxpayer shall immediately notify the Department of Taxation of such failure and forfeit all used and unused tax credits. The notice of failure to meet the statutory requirements shall specify the aggregated credits claimed to date. The notice shall be deemed a tax assessment, to which the Department of Taxation shall add a penalty equal to the amount of the forfeit credits. In addition thereto, interest on the tax assessment and penalty shall be assessed at the rate of 1.0% per month, compounded monthly, from the date the tax credits were claimed by the taxpayer.

E. Upon written request, the Department of Taxation shall have the discretion to abate any assessed penalty, in full or in part, if the taxpayer establishes reasonable cause for the failure to hold such equity for the five-calendar year holding period. The reason for any such abatement shall be preserved among the records of the Department of Taxation.

NOTICE: The forms used in administering 23 VAC 10-110-10 et seq., Individual Income Tax, are listed below. Any amended or added forms are reflected in the listing and are published following the listing.

FORMS

Virginia Consumers Use Tax Return for Individuals, Form CU-7 (eff. 9/93).

Virginia Individual Resident Income Tax Return (Booklet - Instructions for Form 760 and 760S), Form 760 and 760S.

Underpayment of Estimated Tax by Individuals, Estates and Trusts, Form 760 C.

Virginia Tentative Tax Return an Application for Extension of Time to File Individual or Fiduciary Income Tax Return, Form 760E (eff. 8/93).

Virginia Estimated Individual Income Tax Declaration and Forms for Individuals, Estates and Trusts (Booklet - Instructions for Form 760ES), Form 760ES.

Underpayment of Estimated Tax by Farmers and Fishermen, Form 760F.

Virginia Part-Year Resident Individual Income Tax Return (Booklet - Instructions for Form 760PY), Form 760PY.

Short Individual Resident Income Tax Return (Booklet - Instructions for Form 760 and 760S), Form 760S.

Virginia Nonresident Individual Income Tax Return (Booklet - Instructions for Form 763), Form 763.

Virginia Special Nonresident Claim for Individual Income Tax Withheld, Form 763-S.

Credit Computation Schedule, Schedule CR, Form 760.

Schedule for Computing the Age Deduction for Taxpayers 62 and Over, Out-of-State Tax Credit or State of Residence and the Addition to Tax, Penalty and Interest, Schedule NPY, Forms 760PY and 763.

Enterprise Zone Credit, Form 301 (eff. 9/92).

Computation of ACRS Subtraction, Form 302 (eff. 8/92).

Application for Designation as a Qualified Business for the Qualified Equity and Subordinated Debt Investments Tax Credit, Form QBA, 2601695, with instructions (eff. 1/01).

Taxpayer Application for Qualified Equity and Subordinated Debt Investments Tax Credit, Form EDC, 2601154, with instructions (eff. 7/00).

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VA.R. Doc. No. R99-146; Filed July 25, 2001, 9:27 a.m.

1 Calculation: $5 million divided by $10 million equals 0.5 or 50%.

2 Source: Department of Taxation

3 Source: Department of Taxation

4 Ibid

5 Less than $5 million in tax credits may be requested and approved in some future years. Thus far though, the amount requested and approved has been well above $5 million.

6 Source: Department of Taxation

7 The Department of Taxation provided all of the data in this paragraph.

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