The Qualified Business Tax Credit Program administered by the Secretary of State
offers investors in certain types of businesses a credit against state tax liability
which can be as much as 25% of the amount invested. In order for the investor to
be eligible for the credit, the investment must be made in a business registered
with the Securities Division as a Qualified Business Venture, Qualified Grantee
Business or a Qualified Licensee Business.
Qualified Business Venture (QBV) is a business organized to engage
primarily in manufacturing, processing, warehousing, wholesaling, research and development,
or a service-related industry. To be eligible for registration as a QBV, the business
must have been organized in the same year as the year in which it applies for registration,
or it must not have generated more than $5,000,000 (Five Million Dollars)
in gross revenues during its last fiscal year. Furthermore, it cannot engage to
any substantial degree in the following: providing professional
services, contracting or construction, selling or leasing at retail, investing,
entertainment or recreation, or managing or operating real estate.
Under current law, a Qualified Grantee Business (QGB) is a business
which during the three years prior to registration as a QGB has received a grant
or other funding from a federal agency under the Small Business Innovation Research
Program administered by the United States Small Business Administration or from
a granting entity. A "granting entity" is an organization that has as its principal
purpose the stimulation of the development of the biotechnology industry or is conducting
research and development in electronic, photonic, information, or other technologies
or has as a principal purpose the stimulation of economic development based on the
advancement of science, engineering, and technology.
A Qualified Licensee Business (QLB) is a business that has been
certified by a constituent institution of The University of North Carolina or a
research university as currently performing under a licensing agreement with the
institution or university for the purpose of commercializing technology developed
at the institution or university.
An individual investor is limited to $50,000 in tax credits for all "qualified"
investments he or she makes in a calendar year. The credit is first applied against
his tax liability for the year following the year of the investment, and unused
credits can be carried forward for five additional years. The investor can claim
credits for investments made directly in qualified businesses, and can also claim
his allocable share of credits for investments in qualified businesses made by "pass-through
entities" (e.g., S corporations, limited partnerships, and limited liability companies)
of which he or she is an owner.
To be eligible for the tax credit, an individual investor must file Form D-499,
Application for Tax Credit for Qualified Business Investments,
with the Department of Revenue on or before April 15 of the year following the calendar
year in which the investment was made. An investor should contact the Department
of Revenue for additional application requirements.
Under current law, for investments made on or after January 1, 2008, up to $7,500,000
(Seven Million Five Hundred Thousand Dollars) of credits are available
annually for investments in "qualified businesses".
You should understand that the details of the Qualified Business Tax Credit Program
are intricate and complicated, and you are advised to consult an experienced accountant
or tax attorney before structuring a business transaction intended to be eligible
for the benefits of the program. Details on the Qualified Business Tax Credit Program may be found at Sections 105-163.010 through 105-163.015 of the North Carolina General Statutes and Rules 06A.1601-06A.1606 of the North Carolina Administrative Code. Click
here to view the statutes. Click
here to view the rules.
For more information, please contact us at:
The Qualified Business Investment Tax Credit Program
Department of the Secretary of State
P.O. Box 29622
Raleigh, NC 27626-0622
Telephone: (919) 733-3924
Facsimile: (919) 807-2183