NOTICE

The Renewal Community Program expired at the end of 2009.  However, as of the middle of January 2010, there are several bills pending in Congress to extend the program through December 31, 2010.  As new information becomes available as to whether the RC program has been or will be extended, it will be posted here.  Please check back at a later date.

RENEWAL COMMUNITY INITIATIVE

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|  Wage Tax Credits  |  Increased Section 179 Deduction  |

|  Commercial Revitalization Deduction  |  Zero Percent Capital Gains Rate  |

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In December 2000, Congress approved the designation of Renewal Communities (RCs) to help promote economic development in distressed communities.  The state of Louisiana received authority to offer two Rural Renewal Communities – the North Louisiana Rural Renewal Community and the Central Louisiana Rural Renewal Community.  Qualified businesses located in the either of these Rural Renewal Communities will be eligible to take advantage of Federal tax incentives to hire residents and to expand or improve their operations.

Eight of the ten parishes served by The Coordinating & Development Corporation in Northwest Louisiana have been included in the State of Louisiana's Rural Renewal Communities.  These parishes are:

North Louisiana Rural Renewal Community

Bienville (entire Parish)

Claiborne (entire Parish)

DeSoto (selected census tracts)

Lincoln (selected census tracts)

Red River (selected census tracts)

Central Louisiana Rural Renewal Community

Natchitoches (selected census tracts)

Sabine (selected census tracts)

To determine if you business address is in and/or your employees reside in a Renewal Community, go to http://egis.hud.gov/egis/cpd/rcezec/ezec_open.htm and enter a street address and zip code.

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Tax Credit Benefits

The Federal tax benefits available in RCs are designed to encourage businesses to invest in these areas.  Expanding business development and commerce leads to greater job opportunities for residents, and to improved access to goods and services, both of which help energize long-term revitalization.  The tax incentives offered through this program are substantial, and are available to businesses creating or retaining new jobs through December 31, 2009. 

Wage Tax Credit

 

The renewal community employment credit provides businesses with an incentive to hire individuals who both live and work in a renewal community.  You can claim the credit if you pay or incur “qualified wages” to a “qualified employee.”  The credit is for wages paid or incurred after 2001 and continues through December 31, 2009.  The credit is 15% of the qualified wages paid or incurred during a calendar year.  The amount of qualified wages you can use to figure the credit cannot be more than $10,000 for each employee for each calendar year.  As a result, the credit can be as much as $1,500 (15% of $10,000) per qualified employee each year. Note: Employees must be residents of the same Renewal Community as that in which the business is located. 

 

Increased Section 179 Deduction

 

Section 179 of the United States Internal Revenue Code (26 U.S.C. § 179), allows businesses to immediately deduct the cost of certain types of property (machinery and equipment) on their income taxes.  This property is generally limited to tangible personal property such as equipment and vehicles.  Buildings are not eligible for section 179 deductions.  Depreciable property that is not eligible for a section 179 deduction is still deductible over a number of years through MACRS depreciation.  The section 179 deduction is intended for small businesses.  The maximum section 179 deduction a company may take in 2009 is $250,000 if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $800,000 or a total of $285,000 for companies in qualified renewal community areas.             www.irs.gov/formspubs/article/0,,id=177054,00.html

 

Commercial Revitalization Deduction

 

Businesses that construct or rehabilitate commercial property in Renewal Communities (RCs) can deduct a portion of the costs of acquisition and rehabilitation over a shorter period of time than permitted under standard depreciation rules.  A business can elect a deduction of one-half of “qualifying revitalization expenditures” (QRE) up to $10 million for any one project in the year the building is placed in service or can deduct all QRE pro rata over 10 years.  Note: State authorization is required before a company or investor(s) may take the Commercial Revitalization Deduction (CRD).  A Community Revitalization Agency Board created by the State of Louisiana will review all applications and approve those that the Board believes most benefits the State's economic development activities.  To obtain a copy of the application, go to: www.renewallouisiana.com, or contact The Coordinating and Development Corporation, (318) 632-2022.

 

Zero Percent Capital Gains Rate

 

If a business holds a Renewal Community Business asset acquired after December 31, 2001 and before January 1, 2010 for a minimum of 5 years, the business does not have to include any “qualified capital gain” from the asset’s sale or exchange in its gross income.  This exclusion applies only to an interest in, or property of, certain businesses operating in a Renewal Community (RC).  The following qualify as RC assets: RC business stock, RC partnership interests, RC business properties.  Only gain attributable to the period from January 1, 2002 through December 31, 2014 may be excluded for RCs.

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Staff Contact: 

Buck Trussell

Vice-President

Division of Marketing and Industrial Recruitment

Phone: (318) 632-2022

E-mail: btrussell@cdconline.org