Nebraska Advantage Rural Development Act

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Terms:

Base year: the tax year preceding the year of application

Eligible Employee: A Nebraska employee subject to Nebraska income tax withholding on compensation received from the applicant or an employee of a qualified employee leasing company which employs ALL of the applicant's employees.

Teleworkers performing activities interdependent with the project may be included as an eligible employee if the teleworker resides in any county which meets the population requirements for the selected level.

NOTE: The hours worked by any person considered an independent contractor or the employee of another taxpayer shall not be used in the computation under this section.

Full-time equivalent (FTE) employees: the number of employees calculated by dividing the total hours paid in a year by the product of forty times the number of weeks in a year.

NOTE: The number of full-time equivalent employees does not equal the number of people employed in many cases. For example, part-time employees, employees who work overtime or an individual employed for only part of the year.

Nebraska employee: an individual who is either a resident or partial-year resident of Nebraska.

Year: taxable year of the taxpayer.

Employment Calculation Tips:

FTE growth is equal to the lesser of the following:
  1. Current year FTE at project minus base year FTE at the project. For this portion of the calculation, include all employees that work at the project regardless of state of residency and wage rate.
      
  2. Hours paid to Nebraska resident employees hired since the beginning of the year of application who earn the required wage. Only include the hours for which an individual earns the required wage.

NOTE: A taxpayer will only be deemed to have met the full-time equivalent levels if the growth in hours is equal to or greater than the minimum required full-time equivalent employees for the selected level times 40 hours times the number of weeks in the year. A taxpayer will not qualify when the full-time equivalent growth calculated would meet the minimum required full-time equivalent level if it were rounded up to a whole number.

Example:
 

Allowable Hours

a. Resident employee, earning $10.00 per hour, works 25 hours for the 52 weeks of the year. (25*52) 1300
b. Resident employee, earning $10.00 per hour, works 45 hours for the 52 weeks of the year. (45*52) 2340
c. Resident employee, works 40 hours a week. The employee earns $7.50 per hour for 7 weeks of the year and $10.00 per hour for 45 weeks of the year. (40*45) 1800
d. Teleworker, residing in Nebraska county meeting the population requirements for the selected level, is paid on a per-item basis. The teleworker receives wages of $6,000 for this per-item work. (6,000/qual wage of $8.93) 671
  Total allowable hours 6111
Divide allowable hours by 40 times number of weeks in the year.(6111/2080=2.94 rounded down) 2.0 FTE
Required Wage:

Calendar Year 2004 Applicants: Base hourly rate of $8.25
Calendar Year 2005 Applicants: Base hourly rate of $8.57
Calendar Year 2006 Applicants: Base hourly rate of $8.93
Calendar Year 2007 Applicants: Base hourly rate of $9.25
Calendar Year 2008 Applicants: Base hourly rate of $9.72
Exclude bonuses, overtime, and other irregular payments.

Project Base Year Employees:

Any person who is employed by the taxpayer in the base year and working at the project or as a teleworker performing interdependent activities and residing in a county meeting population requirements for the selected level.

Hourly Person:

Include all hours paid such as regular, overtime (at straight time), holiday, vacation leave, sick leave, jury duty, and funeral leave.
Exclude payments converted to hours such as vacation paid upon termination, severance, bonuses, vacation paid in cash.

Salaried Person:

A salaried person is considered to work the standard number hours of the full-time hourly employees.

Limitation:

The acquisition of an existing Nebraska business will not generate employment growth unless the acquired business expands beyond its original size. The base year is to be adjusted for the FTEs of the acquired business.

Worksheet I: Calculation of employment benefits
Complete this table and attach it to your L1L2 Application.

Click here if you prefer an Adobe Acrobat document.

Employment Base Year FTE*
a		 Application Tax Year FTE
b		 Next Tax Year FTE
c		 Higher of Column b or c**
d		 Increase In FTE
(d - a)
e
  1. Total hours paid at project (including non-residents and all pay levels) divided by 40 times the number of weeks in the tax year.
          
  1. Hours paid to resident employee hired after the base year and making the required wage divided by 40 times the number of weeks in the tax year.
  n/a        n/a
*Adjust base year hours for transfers to the project from another location within the state and for the acquisition of a business which existed in NE.

**The project must have attained minimum levels of BOTH investment and employment for the year to be eligible for this comparison.

 Enter the lesser of 1.e or 2.d   
Estimated employment benefits: Multiply by $3,000   

Horzontal Rule

Investment Calculation Tips

Investment Growth: Qualified property available for use at the end of the current year less qualified property available for use on the last day of the base year.

Qualified Property:

Level 1 and Level 2 applications: Tangible depreciable property other than motor vehicles, planes, and railroad rolling stock.

Livestock Modernization projects: Tangible depreciable buildings, facilities or equipment. Equipment does not include breeding stock, motor vehicles, planes or railroad rolling stock.

Purchased and leased property are included for Level 1, Level 2 and livestock modernization projects but are valued differently.

Purchased property is valued at tax basis before allowance for depreciation.

NOTE: The increase in investment is equal to the original tax basis of the qualified assets acquired less the original tax basis of any assets, of a qualified type, retired in the same year.

EXAMPLE: A 2006 applicant places in service a new piece of equipment with an original tax basis of $22,000. The new equipment replaces property purchased in 1995 with original tax basis $15,000. The investment growth is $7,000

Leased property for 2006 and later application is valued at the average net annual rent times the number of years of the lease for which the taxpayer was originally bound, not to exceed ten tax years.

NOTE: Leased property should be valued and included in the computation of investment at the end of year measuring point for each year the lease is still in place and the equipment is in use at the project. Leases also need to be included in the base year investment calculation.

EXAMPLE: A 2006 applicant with a December 31 tax year end enters into a three year lease for computer hardware which begins on November 1, 2006, and ends on October 31, 2009. The lessee is required to pay $10,000 per year.

The value of the lease for investment purposes is $30,000 for the tax years ending December 31, 2006, 2007, and 2008. The value of the lease at December 31, 2009 is zero.

Limitation

The acquisition of an existing Nebraska business will not generate investment growth unless the business acquired expands beyond its original size. The property acquired through the acquisition of a business is to be added to the base year investment.

Worksheet II: Calculation of investment benefits
Complete this table and attach it to your L1L2 Application:

Click here for 2004 or 2005 applications.

Click here for 2006 or later applications.

2004 or 2005 Applications
Investment End of Prior Tax Year
 a		 Additions in Current Tax Year
 b		 Retirements, Canceled or Expired Leases
 c		 End of Application Tax Year
(a + b - c)
 d		 Additions in Next Tax Year
 e		 Retirements, Canceled or Expired Leases
 f		 End of Next Tax Year
(d + e - f)
 g		 Higher of Column d or g**
 h		 Increase In Investment
(h-a)
 i
Tax Basis
  1. Building
               n/a n/a
  1. Building/Leasehold Improvements
               n/a n/a
  1. Equipment
               n/a n/a
  1. Furniture and Fixtures
               n/a n/a
  1. Computers and Canned Software
               n/a n/a
  1. Other Qualified Property
                 
Lease
  1. Annual lease obligation times 8

 

             n/a n/a
 
  1. Subtotal (sum of lines 1 through 7)
               n/a n/a
Deduct
  1. Motor vehicle, railroad rolling stock and planes (if included above)
               n/a n/a
  Total for Year (line 8 minus line 9)                  

**The project must have attained minimum levels of BOTH investment and employment for the year to be eligible for this comparison.

 Divide by $50,000 (round down)   
Multiply by $2,750  

Horizontal Rule

2006 or Later Applications
Investment End of Prior Tax Year
 a		 Additions in Current Tax Year
 b		 Retirements, Canceled or Expired Leases
 c		 End of Application Tax Year
(a + b - c)
 d		 Additions in Next Tax Year
 e		 Retirements, Canceled or Expired Leases
 f		 End of Next Tax Year
(d + e - f)
 g		 Higher of Column d or g**
 h		 Increase In Investment
(h-a)
 i
Tax Basis
  1. Building
               n/a n/a
  1. Building/Leasehold Improvements
               n/a n/a
  1. Equipment
               n/a n/a
  1. Furniture and Fixtures
               n/a n/a
  1. Computers and Canned Software
               n/a n/a
  1. Breeding stock
                 
  1. Other Qualified Property
               n/a n/a
Lease
  1. Average Net Annual Rent times term of lease, not to exceed 10 tax years

 

             n/a n/a
 
  1. Subtotal (sum of lines 1 through 8)
                  
Deduct
  1. Motor vehicle, railroad rolling stock and planes (if included above)
               n/a n/a
  Total for Year (line 9 minus line 10)                  

**The project must have attained minimum levels of BOTH investment and employment for the year to be eligible for this comparison.

 Divide by $50,000 (round down)   
Multiply by $2,750  

Horizontal Rule

Worksheet LM: Calculation of investment benefits for livestock modernization applicants:
 
Complete this table and attach it to your LM Application.

Click here if you prefer an Adobe Acrobat document.

Worksheet LM
Investment End of Prior Tax Year

 a		 Additions in Current Tax Year

 b

Retirements

 c

 End of Application Tax Year
(a + b - c)
 d		 Increase in Investment
(column d - a)

 e		 Additions in Next Tax Year

 f

Retirements

 g

 End of Next Tax Year
(d + f - g)

 h		 Increase In Investment
(column h-a)

 i
PART A: Buildings and equipment used for livestock housing, confinement, feeding, production, and waste management
Tax Basis

1. Building

                  

2. Building/Leasehold Improvements

                 

3. Equipment

                  
Lease

4. Average Net Annual Rent (lines 1 through 3 property) times term of lease, not to exceed 10 tax years

                 

5. Subtotal (lines 1 through 4)

                 
Deduct

6. Motor Vehicle, Railroad Rolling Stock, and Planes included in lines 1 through 4

                 

7. Other Qualified Property

                 
PART B: Additional Depreciable Property Not Listed Above
Tax Basis

8. Building (not for livestock)

                 

9. Building/Leasehold Improvements (not for livestock)

                 

10. Equipment (not for livestock)

                 

11. Furniture and Fixtures

                 

12. Computers and Canned Software

                 

13. Other Depreciable Property

                 
Lease

14. Average Net Annual Rent (lines 8 through 13 property) times term of lease, not to exceed 10 tax years

                 

15. Subtotal (lines 8 through 14)

                 
Deduct

16. Motor Vehicle, Railroad Rolling Stock, and Planes included in lines 8 through 14

                 

17. Part B Total (line 15 minus line 16)

                 
TOTAL PROJECT
18. Part A plus Part B (line 7 plus line 17)                  
19. Comparison of Part A to Total Project                (lesser of line 7 or line 18, not less than zero)      
 
20. Investment Growth in Livestock Modernization (line 19e or 19i, whichever is greater)    

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