Qualified Business Venture
The Qualified Business Investment Tax Credit Program administered by the office of the N.C. Secretary of State offers investors in certain types of businesses a credit against state tax liability which can be as much as 25% of the amount invested. In order for the investor to be eligible for the credit, the investment must be made in a business registered with the Securities Division as a Qualified Business Venture, Qualified Grantee Business or a Qualified Licensee Business.
A Qualified Business Venture (QBV) is a business organized to engage primarily in manufacturing, processing, warehousing, wholesaling, research and development, or a service-related industry. To be eligible for registration as a QBV, the business must have been organized in the same year as the year in which it applies for registration, or it must not have generated more than $5,000,000 (five million dollars) in gross revenues as of its last fiscal year. Furthermore, it cannot engage to any substantial degree in the following: providing professional services, contracting or construction, selling or leasing at retail, investing, entertainment or recreation, or managing or operating real estate.
An individual investor is limited to $50,000 in tax credits for all "qualified" investments he or she makes in a calendar year. The credit is first applied against his tax liability for the year following the year of the investment, and unused credits can be carried forward for five additional years. The investor can claim credits for investments made directly in qualified businesses, and can also claim his allocable share of credits for investments in qualified businesses made by "pass-through entities" (e.g., S corporations, limited partnerships, and limited liability companies) of which he or she is an owner.
To be eligible for the tax credit, an individual investor must file Form D-499 (this link will open a PDF in a new window) — Application for Tax Credit for Qualified Business Investments — with the Department of Revenue on or before April 15 of the year following the calendar year in which the investment was made. An investor should contact the Department of Revenue for additional application requirements.
Up to $6 million of credits are available annually for investments in "qualified businesses."
Read the legislation outlining the Qualified Business Investment Tax Credit Program in the North Carolina General Statutes, Sections 105-163.010 through 105-163.014.
For more information, please contact:
The Qualified Business Investment Tax Credit Program
N.C. Department of the Secretary of State
P.O. Box 29622
Raleigh, NC 27626-0525