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| The Shasta Valley Enterprise Zone is one of 25 state-designated economic development areas created to stimulate business and industrial growth within California. The Shasta Valley Enterprise Zone includes the cities of Montague, Weed, Yreka and adjacent portions of the Siskiyou County, including the Siskiyou County Airport. Businesses located within its boundaries can receive five highly valuable state tax credits and deductions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| One of the most important benefits is the timely and cost effective manner in which the community and its local governments are prepared to support your plans with special state and local community incentives. Local incentives vary by community, call (530) 842-1638 for Shasta Valley information. Following is a highlight of the five (5) California state tax incentives available to you. This information is provided for general use and not to be used for tax planning; refer to forms FTB 1047 and 3805Z for laws and regulations. |
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Enterprise zone business may reduce state taxes by the amount of sales or use tax paid on certain machinery and parts purchased for exclusive use in an enterprise zone. Example: ABC Corporation purchased $250,000 worth of machinery for exclusive use in the enterprise zone. The corporation is allowed an $18,125 reduction of income on the sales tax paid (7.25% on purchase price). If the amount of credit is greater than the tax on the corporation's income in any year, the excess credit may be carried over to the future years. |
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| The net interest earned on loans made to businesses within an enterprise zone ia tax free to institutional and private lenders. Net interest is defined as the full amount of the interest, less any direct expenses incurred in making the loan. Types of loans that qualify for this deduction include business, mortgage and loans from non-commercial sources. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| During the first year of employment you may reduce your state income tax by up to 50 percent of the wages paid to one or more qualified employees. (Qualified Employee: An individual that is vouchered through the California Employment Development Dept., Siskiyou Training and Employment Program, or the Siskiyou County GAIN Program.) The credit percentage decreases by 10% annually, Phasing out after five years, or 60 months. The maximum hourly wage which this credit may be based is $6.37, or 150% of the state minimum hourly wage. Example: ABC Corporation relocates into an enterprise zone and hires 10 employees the first year, and 20 new employees the second year. Assuming half of the new employees each year are eligible for tax credits, each employee is paid $7.50 per hour, and works a 2000 hours per year, the computation would be as follows. Computation for Year 1 5 new eligible employees x 2000 hours worked x $6.37 x 50% credit allowed = $31,850 Total Year 1 = $31,850 Computation for Year 2 10 new eligible employees x 2000 hours worked x $6.37 x 50% credit allowed = $63,700 5 eligible employees from year 1 @ 40% credit allowed = $25,480 Total Year 2 = $89,180 Refer to summary of Tax Credits Available for ABC Corporation on the back of this brochure for a six year computation of hiring credits for this example. |
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| The cost of qualified property purchased for exclusive use in an enterprise zone may be deducted as a business expense in the first year it is place into service. A maximum deduction of $22,500 at established intervals may be taken for qualified property. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Net operating losses of individuals or corporations doing business in an enterprise zone may be carried over to future years to reduce the amount of taxable enterprise zone income for those years. Example: At the close of the first year of business in the zone, ABC Corporation experiences a $25,000, net operating loss that is the exclusive result of its enterprise zone activities. One hundred percent of the loss may be carried over to future years and the corporation may owe no tax its first year's enterprise zone income.
* Assumes qualified property purchased and placed into service. |
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