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The four primary tax incentives available to
businesses in the
Renewal
Community (RC) are:
Renewal
Community Wage Credit
Commercial
Revitalization Deduction
Capital Gain
Exclusion
Increased
Section 179 Deduction
Other tax
incentives available to businesses include:
Federal New Markets Tax Credit
Map of eligible area
Federal
Worker Opportunity Tax Credit (WOTC)
State of WI -
Development Zone Tax Credit
State of WI
- Technology Zone
Summary of Renewal Community Tax Incentives
As a result of a Federal designation, businesses located in Milwaukee’s Renewal
Community (RC) have access to special tax incentives to spur economic
development and promote job growth. Milwaukee’s RC spans an area of more than 120,000
residents and encompasses thousands of businesses.
The tax incentives accompanying this special designation will be available from
January 1, 2002 through December 31, 2009. Unlike some Federal tax incentives,
these incentives are easy to use; only one involves a selection process. For a
complete guide to tax incentives, see IRS’s
Publication 954*
and HUD's publication
Tax Incentive Guide for Businesses*.
*
these publications and all links below are
pdf documents)
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Name: |
Renewal Community Wage
Credit |
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Target user: |
Businesses with employees that live and work
within the Renewal Community boundaries.
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Summary: |
Credit against Federal taxes up to $1,500 for
each year of Renewal Community designation for every employee (existing and
new hire) who lives and works in the Renewal Community area. Tax credit for
15% of first $10,000 in wages per employee may be taken annually through
2009. Unused credits can be carried forward for up to 20 years.
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Name: |
Commercial Revitalization
Deduction |
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Target user: |
Property owners who are substantially renovating
an existing building or developing a new building for commercial use within
the Renewal Community. |
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Summary: |
An accelerated depreciation deduction period for
commercial real property, either new construction or substantial (more than
the adjusted basis) rehabilitation. The taxpayer/property owner can choose
one of two methods to use this incentive: depreciate 50% of qualified
capital expenditures in the year the building is placed in service then
depreciate the remaining balance over 39 years or depreciate 100% of the
qualified capital expenditures over a 120-month period. This incentive is
limited to $10 million per project.
The property owner must receive the allocation
of the deduction from the Redevelopment Authority of the City of Milwaukee,
who will serve as Milwaukee’s Commercial Revitalization Authority.
Businesses must submit an application to be considered for the CRD.
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Name: |
Capital Gain Exclusion |
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Target user: |
“Renewal Community Business” as defined by the
Internal Revenue Code: 85% of property in RC, 50% of gross income from RC,
35% of employees live in RC.
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Summary: |
Allows a 0% capital gains rate for Renewal
Community assets held for a minimum of 5 years. An asset could include
tangible property in the RC, stock, capital interests or profit interests in
a Renewal Community Business acquired for cash. The rate applies to gains
after December 31,2001 and before January 1, 2015. The taxpayer is not
required to sell the asset in 2015, but must determine and substantiate the
gain for that period.
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Name: |
Increased Section 179
Deduction |
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Target user: |
“Renewal Community Business” as defined by the
Internal Revenue Code: 85% of property in RC, 50% of gross income from RC,
35% of employees live in RC – with less than $200,000 in new equipment needs
annually. |
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Summary: |
Up to an additional $35,000 immediate
depreciation expense for machinery or equipment, including computers, placed
in service in that year. For example, this incentive allows an “RC Business”
to take up to a total of $59,000 “write-off” in 2002 on Form 4562.
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For a printer-friendly summary of tax incentives, see
TaxIncentivesPrint.
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