Each of the options requires a stated increase in the investment and employment levels by the end of the attainment period.
The increase in investment is equal to the value of qualified property placed in service at the project after the date of application. Qualified property means any tangible property of a type subject to depreciation, amortization, or other recovery under the Internal Revenue Code of 1986, as amended, or the components of such property, that will be located and used at the project or at the residence of a teleworker working in Nebraska. Qualified property does not include aircraft, barges, motor vehicles, railroad rolling stock, or watercraft or property rented to another person.
The increase in employment is equal to the number of new full-time equivalent (FTE) employees at the project. The number of new, FTE employees is calculated using the number of hours paid in the year. One FTE employee is equal to 40 hours per week for the entire year. A taxpayer in a qualified business may file an application electing one of the following options:
- $20 Million in Investment
- $3 Million in Investment and 30 FTE Employees. One FTE is equal to 40 times the number of weeks in a year.
- $10 Million in Investment and 100 FTE Employees. A taxpayer applying under this option has a two-part agreement. When the project attains the minimum required levels of $3 million investment in qualified property and 30 FTEs, the project is eligible for all benefits of a $3 million and 30 FTE project. When the project attains the $10 million and 100 FTEs, the taxpayer is also eligible for certain property tax exemptions.
Year means the federal taxable year of the taxpayer.
The base year is the year immediately preceding the year during which the application was filed.
The attainment period is the number of years, including the year of application, in which the taxpayer must meet the minimum levels of investment and employment required for benefits. All options must meet the minimum required levels within seven years.
The entitlement period is the time period within which the taxpayer generally can both earn and use incentives. This period includes the year the taxpayer meets the minimum chosen levels of investment and employment, and the next six years.
During the carryover period, no additional credits are earned, but unused credits earned before the end of the entitlement period may be used. The carryover period begins the year after the end of the entitlement period and ends at the end of the eighth year after the entitlement period.
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Benefits by Application Level
A direct refund is the refund of Nebraska and local sales and use taxes paid on the purchase of qualified property for use at the project, or on the purchase or lease of aircraft for use in connection with the project, which is placed in service during the attainment and entitlement periods. The aircraft may not be used to transport an elected official, or for fundraising for an elected official.
Qualified property is any tangible property of a type subject to depreciation, amortization, or other recovery under the Internal Revenue Code of 1986, or the components of such property, that will be used at the project. Qualified property does not include aircraft, barges, motor vehicles, railroad rolling stock, watercraft, or property that is rented to another person.
Investment credit is a credit equal to ten percent of the investment made in qualified property at the project during the attainment or entitlement periods. The credit on qualified property placed in service, from date of application through the end of the tax year in which the minimum required levels are met, is earned in the qualification year. A credit is also earned on qualified property placed in service in other years of the entitlement period.
Investment credits may be used for a sales and use tax refund or an income tax refund.
For each year of the entitlement period, the compensation credit is equal to five percent times the increase in compensation at the project. The increase in compensation is equal to the taxable compensation of resident employees and base-year employees at the project in the current year minus the average compensation at the project in the year times the number of base-year employees.
The compensation credit may be used for a sales and use tax refund or an income tax refund.
Personal Property Tax Exemption
A taxpayer may claim a personal property tax exemption on three types of property acquired after the date of application:
- Turbine powered aircraft;
- Computer systems and specific peripherals that require environmental controls of temperature and power; and
- Business equipment involved directly in the processing of agricultural products.
Turbine powered aircraft may be exempted from the first January 1 following the date of acquisition of the property through the sixteenth December 31 after the filing of the application.The aircraft may not be used to transport an elected official, or for fundraising for an elected official.
The computer systems and peripherals and agricultural processing equipment may be exempted from the first January 1 following the end of the year during which the required levels were exceeded through the sixteenth December 31 after the filing of the application.
Sales and Use Tax Refund
This is a refund of Nebraska and local sales and use taxes paid on otherwise non-refundable purchases used at the project. The credits must be earned in a prior tax year and can be used during the entitlement and carryover periods.
Income Tax Refund
Credits may be used to reduce the income tax liability of the taxpayer's entire unitary group. The credits may be used in the year earned and are available during the entitlement and carryover periods.
Credits earned by a partnership, limited liability company, a subchapter S corporation, or an estate or trust may be distributed in the same ratio as income. The recipient of the distributed credit may use the credit to reduce their income tax liability from the year of distribution through the end of the carryover period.