New Markets Tax Credits
Wednesday, November 19, 2008
12:00 - 1:15 p.m.
Matthew B. Wexler of Holt, Wexler & Farnam will provide an introduction to the New Markets Tax Credit and will discuss how the credit can be used by for-profit entities, municipalities, and not-for-profit organizations to finance real estate and business development.
The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investments must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.