Dooly County Economic Development Commission

Wage Credit

Provides businesses with incentives to hire individuals who both live and work in the empowerment zone. The credit is 20% of the qualified zone wages paid or incurred during a tax year, and based on a $15,000 salary, the credit for each employee is $3,000 per employee per year. Use Form 8844 to claim the credit.

Increased Section 179 Deduction

Qualified businesses can choose to deduct all or part of the cost of certain qualifying property in the year it is placed in service. This deduction comes instead of recovering the cost by taking depreciation deductions over a specified recovery period. Beginning with tax year 2002, the deduction can be up to $35,000. See Publication 954 for eligibility requirements.

Rollover of Gain from Sale of Empowerment Zone Assets

A business may qualify for a tax-free rollover of certain gains from the sale of qualified empowerment zone assets. If the business buys certain replacement property and makes the choice to rollover the assets, it can postpone part or all of the recognition of gain. Qualifications include: 1) the business holds the qualified empowerment zone asset for more than one year and sell it at a gain; 2) the gain from the sale is a capital gain; and 3) during the 60 day period beginning on the date of the sale, the business buys a replacement qualified empowerment zone asset in the same zone as the asset sold.

Increased
Exclusion of Gain from Qualified Small Business Stock

Taxpayers other than corporations generally can exclude from income 50% of their gain from the sale or trade of qualified small business stock held more than five years. Qualified empowerment zone businesses, during substantially all of the time they hold the stock, can exclude 60% of the gain. To claim this increased exclusion, the stock must have been acquired after December 21, 2000.

Tax-Exempt Bond Financing

Rural Empowerment Zones received allocations of $60 million in tax-free bond financing that was split $30 million each for Crisp and Dooly Counties. The local government can issue facility bonds and at least 95% of the net proceeds from the bond issue must be used to finance 1) qualified zone property whose principal user is an empowerment zone business and 2) certain land for related purposes (for example, land where the business is located and a parking lot for customers and employees). Tax-exempt bonds generally have lower interest rates than conventional financing.

New Markets Credit

Businesses can claim a tax credit for a qualified equity investment in a qualified community development entity made after December 31, 2000. The credit can be claimed for up to seven years. To find the amount of credit, multiply the amount you paid for qualified community development entity for your investment by the following percentage: 5% for years 1-3 years and 6% for years 4-7, totaling the credit at 39% over a seven year period.