Program Type:
Tax Incentive
Eligible Geography:
Alabama
Summary:
New Market Development tax credits allow state income and premium tax credits for certain qualified community businesses in low-income communities. The program can provide up to 50 percent of the taxpayer's equity investment in tax credit.
Eligible Recipients:
Non-Profit Organization; For-Profit Business
Eligible Recipients Detail:
Investors are eligible to receive tax credits by making investments in securities issued by a qualified community development entity (CDE). The applying entity must be registered as a community development entity (CDE) for federal purposes and must be authorized to serve businesses in Alabama. The CDE must use the equity investment to invest in qualified low-income businesses (QLICB).
Eligible Purpose:
Building Infrastructure; Last Mile Infrastructure
Eligible Purpose Detail:
Program can only be applied to those areas within the State of Alabama which qualify as a "low income community" pursuant to Section 45D of the Internal Revenue Code. In order to qualify, the investment must be made in a qualified low-income business (QLCIB). QLCIBs are any for‐profit or non‐profit corporation or partnership if:
- At least 50 percent of the total gross income of that business is derived from the active conduct of its business within any qualified low-income community (QLIC),
- A substantial portion (defined as at least 40 percent) of the use of the tangible property of that business (whether owned or leased) is within any QLIC,
- Substantial portion (defined as at least 40 percent) of the services performed by that business' employees are performed in any QLIC; the business is not primarily holding collectibles. If (ii) or (iii) are 50 percent or more than (i) is deemed to have been met.
- A business shall be considered a qualified active low-income community business for the duration of the qualified community development entity's investment in, or loan to, the business if the entity reasonably expects, at the time the qualified community development entity makes the investment or loan, that the business may continue to satisfy the requirements for being a qualified active low-income community business throughout the entire period of the investment or loan.
- No qualified active low-income community business that receives a qualified low-income community investment from a qualified community development entity that issues qualified equity investments under the Act may directly or indirectly (i) own or have the right to acquire an ownership interest in a qualified community development entity or member or affiliate of a qualified community development entity or (ii) loan to or invest in a qualified community development entity or member or affiliate of a qualified community development entity.
Source:
https://www.novoco.com/resource-centers/new-markets-tax-credits/state-nmtc-programs#ms