Credit For Qualified Business Investments

A tax credit is allowed on your North Carolina income tax return for qualifying investments made in the equity securities or subordinated debt of a qualified business. The credit will either increase your refund or decrease the tax you owe.

The credit is allowed in the tax year beginning during the calendar year following the calendar year in which you made the investment. The credit cannot be claimed for the tax year in which the investment was made. To receive the credit, you must file Form D-499, Application For Tax Credit For Qualified Business Investments with the Secretary of Revenue. The application should be filed on or before April 15 and no later than October 15 of the year following the calendar year in which the investment was made. Include with the application copies of canceled checks or other documents which verify your investment, copies of stock certificates or subordinated debt instruments issued by the qualified business, and the Certificate of Qualified Status for each organization for which credit is claimed. Do not attach the application to your North Carolina income tax return. The application should be mailed separately to the address shown at the bottom of the application. An application filed after October 15 will not be accepted.

The credit is 25 percent of the amount you invested or $50,000, whichever is less. The total credits allowable to all taxpayers for each year may not exceed $7,500,000. If the Revenue Department receives applications for which the total credits exceeds that amount, the $7,500,000 in credits will be allocated in proportion to the size of the credit claimed by each taxpayer. Your basis in the equity securities or subordinated debt acquired because of your investment must be reduced by the amount of the credit.

Claim the credit on line 24 of Form D-400TC. You may carry forward any unused credit for the next five years. Be sure to include your Form D-400TC (tax credit schedule) when filing your return.

Note: This credit is not available for investments made on or after January 1, 2014. However, you may continue to take any remaining carryforwards of this credit as allowed under N.C. General Statute 105-163.012.