------------------------------------------------------------------------------------------------------------
Alpha-Mail                                               logo web sm 12mb
 A Tax Professional's Guide to Credits and Incentives, Courtesy of Alpharesults
 Vol. IX No. 2 February 2015
------------------------------------------------------------------------------------------------------------
In this issue
Out of State Owners and Tax Credits
Spotlight on Virginia Credits and Incentives

Hello!

Welcome to Alpha-Mail, the monthly newsletter about tax credits and incentives for tax professionals.

This month, learn more about how to help your clients understand tax credits for their out of state owners.  Also, some of you may have clients with operations in Virginia, so be sure to see our overview of Virginia credits and incentives. We hope you can use this information to strengthen your client relationships! 

 

Thank you for reading Alpha-Mail -- please click reply to tell us what you think.

 

All the best, 

Dale&JimSigsSM1     

 Dale Stapler    Jim Tinsley
     Alpharesults, LLC 

 

 

 

Out of State Owners and Tax Credits                    
-------------------------------------------------------------------------

 

You may have difficulty determining if a company can benefit from Georgia tax credits if it is a pass-though (such as LLC or S corporation) AND has equity owners that live outside of Georgia (non-residents). This can get complex quickly. Here are some areas to consider:

  • States with no personal income taxes (i.e., FL, TN, NV) - The equity owners may be able to benefit from Georgia tax credits.
  • States with personal income tax (such as AL) may provide no benefit since AL taxes will increase if Georgia's decrease as a result of tax credits (net benefit = zero).
  • Composite Return - If the company files a Georgia Composite Return, the company may be able to benefit from the tax credits (click here).
  • Mixed results- Some shareholders may benefit while others can't. For example, most of the equity owners live in Florida and can use the tax credits, but the others live in Alabama and cannot benefit.
  • Operating Agreement - The agreement may stipulate specific distributions for income tax payments and tax credits to the equity owners.
  • Changes in equity ownership - new equity owners, buy-ins, transactions, recaps, and other related changes may impact this area.

You need to review this issue every year to look for changes in equity ownership, company tax structure, and each home state's tax laws. You can also use this topic to start a great discussion with your prospective clients new to Georgia and/or with out of state owners.

 

So to summarize -- Depending on the situation, your client and/or the equity owners may or may not benefit from Georgia tax credits - is this clear as mud?

 

 

JimSig  

 

 


Virginia Credits and Incentives            
-------------------------------------------------------------------------
      

As we've mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.

 

One of our clients recently asked about credits and incentives for their location in Virginia. I was able to speak with some Virginia economic development professionals and learned some of their details (Virginia Economic Development Partnership (YesVirginia) site click here).

 

Virginia compares favorably with most other states with low corporate tax rates.  Virginia ranks 26th in the The Tax Foundation's 2014 Business Tax Climate Index (click here).

Virginia offers a wide array of incentives, credits, and funding programs to assist businesses in locating or expanding in Virginia jobs and development.  Several discretionary incentives are available for large business location and expansion projects.  Statutory income tax credits are fairly limited in scale and not very competitive with other states.  Special Zones provide reduced or eliminated costs for property taxes, customs duties, sales taxes, and other categories.

One consideration -- an application and approval process is required for most of Virginia's primary incentives.  And, Virginia's credits and incentives can be more complicated than other competitive states.
 
Compared to Georgia, Virginia has:
  • Higher taxes:  Similar corporate income taxes.  Similar personal income taxes.  Higher sales taxes and higher property taxes.
  • A narrower range of industries eligible for incentives if adding jobs, a similar range for capital investments, and far smaller incentives for training and workforce development.     
  • FEW opportunities for incentives unless pre-approved by state and/or local officials.
  • Location, location, location -- if that's what is important to the business 
To summarize, Virginia is not highly competitive for new and expanding businesses, unless those businesses really need Virginia's prime location for government markets, corporate headquarters, transportation and culture. 
 
Do any of your clients have Virginia connections?  Make sure you review their potential qualifying activities early to maximize their $$ benefits!!

 
DaleSig

   

 


About Us
-------------------------------------------------------------------------

Alpharesults has assembled a team with the specialized knowledge and approach required to obtain state tax credits and incentives.  We are not a public accounting firm.  Rather, our business services complement those of public accounting firms and do not create conflicted loyalties, because our professionals do not perform attestation work or other external audit functions.  

 

We focus on small to medium-sized businesses and work with a wide variety of accounting firms.  For more information on our services, follow this link. 

 
Quick Links...
-------------------------------------------------------------------------

Contact Information
-------------------------------------------------------------------------
email:  alpha-mail@alpharesults.com                   phone: 770-667-1332
-------------------------------------------------------------------------


Forward Alpha-Mail to a Friend!

Click link below: