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Fixed Capital Investment Credit

Description

A credit may be applied against the Connecticut corporation business tax for amounts paid or incurred for fixed capital.

Definitions

Fixed capital means any new tangible personal property that meets all of the following criteria:

  • It must have a class life of more than four years;

  • It must have been purchased from someone other than a related person;

  • It is not leased to another person within 12 months of purchase; and

  • It will be held and used in Connecticut by a corporation in the ordinary course of the corporation's trade or business in Connecticut for a period of not less than five full years following its purchase.

Fixed capital does not include:

  • Inventory;

  • Land;

  • Buildings or structures; or

  • Mobile transportation property.

Related person means a corporation, partnership, association, or trust controlled by the corporation; an individual, corporation, partnership, association, or trust that is in control of the corporation; a corporation, partnership, association, or trust controlled by an individual, corporation, partnership, association, or trust that is in control of the corporation; or a member of the same controlled group as the corporation.

With respect to a corporation, control means ownership, directly or indirectly, of stock possessing 50% or more of the total combined voting power of all classes of the stock of the corporation entitled to vote; with respect to a trust, control means ownership,

directly or indirectly, of 50% or more of the beneficial interest in the principal or income of the trust. (Ownership is determined as provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding Internal Revenue Code of the United States, as from time to time amended, other than paragraph (3) of that section.)

Mobile transportation property is any transport equipment designed to move or convey people or property from one place to another, including but not limited to:

  • Trucks;

  • Buses;

  • Forklifts;

  • Snowplows; or

  • Certain construction equipment such as backhoes,

bulldozers, cement mixers, and loaders.

Credit Percentage The credit percentage is 5%.

Carryforward/Carryback Limitations

Any tax credit not used during the income year in which the acquisition was made may be carried forward to the next five succeeding income years until the entire credit is used. No carryback is allowed.

How to Apply

Complete Form CT-1120 FCIC, Fixed Capital Investment Credit, and attach it along with any required detailed schedules to Form CT-1120K, Business Tax Credit Summary.

Forms are available anytime from the DRS website at www.ct.gov/DRS or by calling the DRS Forms Unit at 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and selecting Option 2 from a touch-tone phone, or 860-297-4753 (from anywhere).

TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.

Informational Publication 2006(15), Guide to Connecticut Business Tax Credits Issued: 04/24/07

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