July 1, 2016, marked the beginning of the second year in Ohio’s FY 2016-2017 budget — and the last scheduled year for the state’s popular InvestOhio tax credit program. At least through June 30, 2017, this program still offers a valuable incentive for taxpayers making new equity investments in either new or existing qualifying Ohio small businesses.

It’s a win-win-win for taxpayers, businesses and communities. Investors, including individuals, estates, trusts and certain pass-through entities, can receive a credit of up to 10% of the qualifying investment and as much as $1 million in credits during a fiscal biennium, and can even carry forward those credits up to seven years. Qualifying businesses can use the new funds to reinvest in their business by purchasing tangible and intangible personal property, real property, business vehicles or using the funds for new employee compensation. Communities benefit from thriving businesses.

There are stipulations to follow. Businesses in which you are investing must qualify under the program’s rules. For example, businesses must meet an asset or receipts test and must acquire the credit approved property/people within six months of the investor’s qualifying investment. Additionally, investors must hold their investment and businesses must hold the purchased property for a two-year period before receiving the credit. Ohio will dole out up to $100 million in credits every two years. Credits are awarded on a first-come, first-served basis, meaning applying for the credit as soon as possible is critical to taking advantage of the program.

We have worked with numerous companies in structuring qualifying transactions and assisting with the application and subsequent reporting requirements. If you are a making an investment in an Ohio business and have questions on whether your investment qualifies for InvestOhio, please contact Karen Raghanti at kraghanti@cohencpa.com or a member of your service team.

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Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.