The
Benefits | Direct Equity Investments
A Zone certified business may offer a potential investor
an immediate 25% NYS tax credit for the amount of his/her investment into
the business. This is in addition to any return-on-investment offerings
the business and investor may also negotiate.
An Empire Zone certified business must request from the
local Zone Administrative Board an allocation of credits prior to making
any offerings to an investor. This request must be in the form of a written
summary including the number of jobs to be created in ratio to the amount
of investment; a description of any equipment to be purchased and the
economic impact the equipment will have on the operations of the business.
An Empire Zone certified business must employ
250 or fewer workers during the 12 month period preceding the month in
which the investment is made.
The investor may not be an owner, existing stockholder
or partner of the business.
The investment must contribute significantly to
an activity which has tangible economic benefits, such as a start-up,
expansion or modernization.
The investment must have the potential to create
new jobs.
The investment must increase the capital available
to the business, not merely replace existing debt or equity.
An Empire Zone certified business must discuss its project
with the local Zone Administrative Board and its staff in order to determine
the amount of credits the business will be allowed to offer potential
investors.
Once a commitment is made by the Board (by official
resolution), the business owners may begin negotiations with potential
investors.
The investor must complete Form Z5 Application for Eligibility
to Claim a Zone Capital Credit Direct Equity investment and forward to
the certified business owner for further processing.
The Zone certified business owner must complete
Form Z5a-List of Direct Equity Investors in EZ-Certified Business. A package,
which includes (1) Form Z5a (2) Form Z5 from each investor, and (3), all
necessary exhibits must be sent to the Clinton County Zone Administrative
Board for approval.
The Board forwards the approved application to
Empire State Development for final approval.
Once approved by the State, a credit certificate
(Form Z10) will be issued for each investor. Each taxpayer is limited
to at $100,000 tax credit in this category which translates to a maximum
direct equity investment of $400,000 in the business.
The Z10s will be sent to the Zone Coordinator
who must obtain the signature of the Zone Board Chairperson on each form.
The Coordinator then forwards the Z10 to each investor.
The investor attaches Form Z10 to the NYS Taxation
& Finance DTF-602 form at the time of the investor’s annual
tax filing period.
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