Changes to Carryovers of Repealed Enterprise Zone Credits
Assembly Bill 93, signed into law on July 11, 2013, repeals all enterprise zones on January 1, 2014. Another major change limits any credit carryovers for qualified employers, including entity flow-through owners, to 10 years for taxable years beginning on or after January 1, 2014. Qualifying and vouchered employees hired prior to January 1, 2014, will continue to generate credits for any remaining portion of the 60-month period from the commencement of employment.
Likewise, any unused enterprise zone sales and use tax credit remaining for carryover to taxable years beginning on or after January 1, 2014, may now only be carried forward 10 subsequent years.
As always, the credit carryover is subject to the business income limitation. Specifically, the credit carryover may only be used against the net tax that would have been imposed on the income attributable to activities within the respective former enterprise zone.In the coming weeks, information and frequently asked questions about the new California Competes Tax Credit and the New Employment Credit, created by Assembly Bill 93 and modified by Senate Bill 90, and the repeal of the enterprise zones will be available at ftb.ca.gov