Ala. Code § 41-9-218

Current through the 2024 Regular Session.

Section 41-9-218 - Definitions

As used in this article, the following terms shall have the following meanings:

(1) APPLICABLE PERCENTAGE. Zero percent for the first credit allowance date, 8.33 percent for the next six credit allowance dates, for the total of 50 percent.

(2) CREDIT ALLOWANCE DATE. With respect to any qualified equity investment, the date on which such investment is initially made and each of the six anniversary dates of that date thereafter.

(3) DEPARTMENT. The Department of Commerce.

(4) LONG-TERM DEBT SECURITY. Any debt instrument issued by a qualified community development entity, at par value or a premium, with an original maturity date of at least seven years from the date of its issuance, with no acceleration of repayment, amortization, or prepayment features prior to its original maturity date. The qualified community development entity that issues the debt instrument may not make cash interest payments on the debt instrument during the period beginning on the date of issuance and ending on the final credit allowance date in an amount that exceeds the cumulative operating income, as defined by regulations adopted under Section 45D, Internal Revenue Code of 1986, as amended, of the qualified community development entity for that period prior to giving effect to the expense of such cash interest payments. The foregoing shall in no way limit the holder's ability to accelerate payments on the debt instrument in situations where the issuer has defaulted on covenants designed to ensure compliance with this article or Section 45D of the Internal Revenue Code of 1986, as amended.

(5) PURCHASE PRICE. The amount paid to the issuer of a qualified equity investment for that qualified equity investment.

(6) QUALIFIED ACTIVE LOW-INCOME COMMUNITY BUSINESS. The same meaning given that term in Section 45D(d)(2) of the Internal Revenue Code of 1986, as amended. 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.

(7) QUALIFIED COMMUNITY DEVELOPMENT ENTITY. The same meaning given that term in Section 45D of the Internal Revenue Code of 1986, as amended; provided, that the entity has entered into, or is controlled by an entity that has entered into, an allocation agreement with the Community Development Financial Institutions Fund of the U.S. Treasury Department with respect to credits authorized by Section 45D of the Internal Revenue Code of 1986, as amended, which includes the State of Alabama within the service area set forth in that allocation agreement. The term shall include affiliated entities and subordinate community development entities of any such qualified community development entity.

(8) QUALIFIED EQUITY INVESTMENT. Any equity investment in, or long-term debt security issued by, a qualified community development entity that does all of the following:

a. Is acquired after August 1, 2012, at its original issuance solely in exchange for cash.

b. Has at least 85 percent of its cash purchase price used by the issuer to make qualified low-income community investments in qualified active low-income community businesses located in the State of Alabama by the first anniversary of the issuance of the qualified equity investment.

c. Is designated by the issuer as a qualified equity investment under this article and is certified by the department as not exceeding the limitation contained in Section 41-9-219.2. This term includes any qualified equity investment that does not meet the provisions of paragraph a., if the investment was a qualified equity investment in the hands of a prior holder.

(9) QUALIFIED LOW-INCOME COMMUNITY INVESTMENT. Any capital or equity investment in, or loan to, any qualified active low-income community business. With respect to any one qualified active low-income community business, the maximum amount of qualified low-income community investments made in that business, on a collective basis with all of its affiliates that may be counted towards the satisfaction of subdivision (8), shall be ten million dollars ($10,000,000) whether issued by one or several qualified community development entities.

(10) TAX CREDIT. A credit against the state-distributed portion of the tax otherwise due under Section 27-4A-3, 27-3-29, 40-16-4, 40-18-5, or 40-18-31. A taxpayer claiming a credit against state premium tax liability earned through a qualified equity investment is not required to pay any additional retaliatory tax levied by law as a result of claiming that credit.

(11) TAXPAYER. Any individual or entity subject to the tax imposed in Section 27-4A-3, 27-3-29, 40-16-4, 40-18-5, or 40-18-31.

Ala. Code § 41-9-218 (1975)

Added by Act 2012-483,§ 3, eff. 8/1/2012.