La. Admin. Code tit. 10 § XV-1711

Current through Register Vol. 50, No. 11, November 20, 2024

Section XV-1711 - Income Tax Credits

A. Pursuant to R.S. 51:3084(6), an investment for the purposes of earning income tax credits means a transaction that, in substance and in form, is the investment of cash in exchange for either:

1. common stock, preferred stock, or an equivalent ownership interest in a LCDFI; or

2. a loan receivable or note receivable from a LCDFI which has a stated final maturity date of not less than five years from the origination date of the loan or note and is repaid in a manner which results in the loan or note being fully repaid or otherwise satisfied in equal amounts over the stated maturity of the loan or note.

B. In order to be eligible for any income tax credits, debentures, notes or any other quasi-equity/debt instruments shall have an original maturity date of not less than five years from the date of issuance. If an investment is in the form of stock, partnership interest, or any other equivalent ownership interest, such investment shall not be subject to redemption or repurchase within five years from the date of issuance. Except in the case where a LCDFI voluntarily decertifies and preserves all income tax credits, if debentures, notes or any other quasi-equity/ debt instruments or stock, partnership interests, or other equivalent ownership interests are redeemed or repurchased within five years from issuance, any income tax credits previously taken, to the extent applicable to the investment redeemed or repurchased, shall be repaid to the Department of Revenue and Taxation at the time of redemption, and any remaining tax credits shall be forfeited, pursuant to R.S. 51:3088. Amortization of a note over its stated maturity does not constitute a redemption or repurchase under this Chapter.

1. No LCDFI certified after December 1 of any year shall be entitled to receive an allocation pursuant to R.S. 51:3085 for the same calendar year in which it was certified.

2. By December 10, the commissioner shall review all requests for allocation of income tax credits and notify the LCDFI of the amount of certified capital for which income tax credits are allowed to the investors in such institution. During this 10 day review period, no investor substitutions will be allowed.

3. If a LCDFI does not receive an investment of certified capital equaling the amount of the allocation made pursuant to R.S. 51:3085 within 10 days of its receipt of notice of such allocation, that portion of the allocation will be forfeited and reallocated to the remaining LCDFIs on a pro rata basis.

C. Conditions to Sell or Transfer Income Tax Credits

1. The transfer or sale of income tax credits, pursuant to R.S. 51:3085(A), will be restricted to transfers or sales between affiliates and sophisticated investors, collectively referred to as acquirers. Furthermore, even though a transfer or sale of credits may involve several entities, only one election may be made during any calendar quarter. Therefore, an investor in a LCDFI may only transfer or sell credits once during a calendar quarter and the entity that purchases or acquires the credits may not transfer credits obtained during the calendar quarter of purchase. In any subsequent calendar quarter, the purchaser or acquirer of the credits may make one election per calendar quarter, if needed.

2. Companies and/or individuals shall submit to the Louisiana Department of Revenue and Taxation in writing, a notification of any transfer or sale of income tax credits at least 30 days prior to the transfer or sale of such credits. The notification shall include the original investor's income tax credit balance prior to transfer, the projected remaining balance after transfer, all tax identification numbers for both transferor and acquirer, the date of transfer, and the amount transferred.

3. If income tax credits are transferred between affiliates or sophisticated investors (acquirers), the notification submitted to the Department of Revenue and Taxation must include a worksheet, which the transferor and each acquirer shall also attach to their Louisiana corporate and/or individual income tax returns, which shall contain the following information for each corporation or individual involved:

a. name of transferor and each acquirer;

b. the gross Louisiana corporation or individual income tax liability of the transferor and each acquirer; and

c. credits taken by the transferor and each acquiror under R.S. 51:3085(A) and (B).

4. The transfer or sale of income tax credits, pursuant to R.S. 51:3085(A), shall not affect the time schedule for taking such tax credits, as provided in R.S. 51:3085(A) and (C), respectively. Any income tax credits transferred or sold, which credits are subject to recapture pursuant to R.S. 51:3088, shall be the liability of the taxpayer that actually claimed the credit.

La. Admin. Code tit. 10, § XV-1711

Promulgated by the Office of the Governor, Office of Financial Institutions, LR 32:844 (May 2006).

AUTHORITY NOTE: Promulgated in accordance with R.S. 51:3081 et seq.