RETENTION & MODERNIZATION TAX CREDIT

This program rewards existing firms in Louisiana to remain in the state and for modernizing their existing operations so as to remain competitive in the market sectors.

Eligibility Requirements:
Employers must be classified as manufacturers as defined by the North American Industry Classification Codes 113310, 211000--211999, 311000-319,999, 511000-512,999 or 541,710.

Qualified Expenditures:
Amounts classified as capital expenditures for Federal income tax purposes plus exclusions from capitalization provided for in IRS Code Section 263(a)(1)(A) thought (L) less the capitalized costs of land, capital leases of land, capitalized interest, and the capitalized cost for the purchase of an existing building. The costs of rehabilitation of an existing building are qualifying expenditures.

Modernization Defined:
Modernization means the capitalized investment by an employer in technology, machinery, building and-or equipment that meets at least one of the following criteria:

a) An increase in the maximum capacity or efficiency of greater than 10%.

b) The company is in jeopardy of closure or consolidation. The modernization must result in the facility adopting "best practices" technology for its industry and the company and the company shall establish that without the investment the facility would be a high risk for closure in the foreseeable future. Modernization does not include replacing existing technology with the same or similar technology.

c) The modernization is competitive in nature; i.e., the company is in competition for services in other states.

If approved by the Secretary of Economic Development, the Modernization Tax Credit is valued at 5% of qualifying expenditures with the credit divided in equal portions for five (5) years. The total amount of credits approved by the Secretary of Economic Development may not exceed $10 million in any calendar year on a cumulative basis for all qualifying projects. In any calendar year where the cumulative amount of Modernization Tax Credits are less than $10 million, the unused credits may be carried forward to subsequent years and may be granted in excess of the cumulative amount of $10 million. The employer earns the tax credits in the calendar year in which the project is placed in service beginning July 01, 2011. The credits may be utilized to offset corporate income tax and-or corporate franchise taxes.