Nebraska Advantage Rural Development Act
Base year: the tax year preceding the year of application
Eligible Employee: An 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.
As of October 1, 2009, any new applicant under the Nebraska Advantage Rural Development Tax Credit Act is required to use E-Verify, a federal electronic verification program, to ensure that Nebraska employees hired after the date of application are legally able to work in Nebraska. An applicant must provide proof that it has registered for E-Verify at the time fo application.
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.
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 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.
Nebraska Employee: an individual who works in Nebraska at the project.
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.
Year: taxable year of the taxpayer.
Employment Calculation Tips:
FTE growth is equal to the lesser of the following:
- 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.
- Hours paid to Nebraska resident employees working at the project 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.
|a. Resident employee, earning $15.00 per hour, works 25 hours for the 52 weeks of the year.
|b. Resident employee, earning $15.00 per hour, works 45 hours for the 52 weeks of the year.
|c. Resident employee, works 40 hours a week. The employee earns $9.00 per hour for 7 weeks of the year and $15.00 per hour for 45 weeks of the year.
|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 $10.28)
||Total allowable hours
|Divide allowable hours by 40 times number of weeks in the year.(6023/2080=2.84 rounded down)
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
Calendar Year 2009 Applicants: Base hourly rate of $10.28
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.
||Include all hours paid such as regular, overtime (actual hours), 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.
A salaried person is considered to work the standard number hours of the full-time hourly employees. (General 2080, 40 hours a week)
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 Worksheet I and attach it to your L1L2 Application.
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.
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.
Livestock modernization or expansion does not include any improvements made to correct a violation of the Environmental Protective Act, the Intergrated Solid Waste Management Act, the Livestock Waste Management Act, a rule or regulation adopted and promulgated pursuant to such acts, or any order of the Department of Environmental Quality undertaken within five years after a complaint issued from the Director of Environmental Quality.
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.
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 Worksheet II and attach it to your L1L2 Application:
Worksheet II, for 2004 or 2005 Applications
Worksheet II, for Applications 2006 or Later
Worksheet LM: Calculation of investment benefits for livestock modernization applicants:
Complete Worksheet LM and attach it to your LM Application.
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