ADOR > Alabama Tax Incentives > Income Tax Capital Credit > Capital Credit Forms

Printable Forms in .pdf format

Application Forms
Form INT (with instructions)(fill in & print)     Allocation Schedule for INT Forms
Form INT-2 (with instructions)     Form INT-4 (with instructions)

Forms filed with tax returns
Form AR     Form K-RCC

When Each Form Should Be Filed

   A company seeking to use the Alabama income tax capital credit (and additional non-tax incentives) must notify the Director of the Alabama Development Office (ADO) under the provisions of Section 41-9-202.1, Code of Alabama 1975. The Director of ADO must acknowledge receipt of this notification. The "written statement of intent" to claim the income tax capital credit (Form INT below) must include the "notification acknowledgment letter" from the Director of ADO. For more information about the requirements of Section 41-9-202.1, please contact: Director, Alabama Development Office, 334-242-0400.
    There are five Alabama Department of Revenue forms related to the Alabama income tax capital credit program:
    The first three ADOR forms are to notify the Alabama Department of Revenue of intent to utilize the capital credit, notify the department that the project has been placed in service, and to notify the department of any administrative changes in the project owners.
    The last two ADOR forms are to be attached to the Alabama income tax return of the project to compute project income and to attach to the Alabama income tax return of the recipient of the credit to compute the amount of credit to be utilized by the recipient.
 

ADOR Application Forms

These are the first three forms, to be filed with the Commissioner's Office of ADOR:

Report of Intent to Invest in Project (Form INT) - Should be filed before the project is placed in service. The date of receipt of this form will constitute the date of filing the statement of intent required by law.
    In order to qualify for the capital credit, a project must file the Form INT. Only one Form INT is to be filed per project; however, a company or venture may have more than one project.
NOTE:  If the Form INT is not received by the Department of Revenue before the project is placed in service, the project will not be approved for the capital credit.
    When a completed Form INT is received, it is reviewed to determine that all necessary information is included and that the application is complete. A Schedule of Allocations of Capital Credit must accompany each Form INT. Once the form has been approved by the Department of Revenue, an approval letter indicating the project number, a Form INT-2 and an accounting practices agreement will be sent to the company.

Accounting Practices Agreement - The accounting practices agreement serves as an agreement between the project and the department for the determination of income at the project as required by law. The agreement indicating the preferred income determination method on the Form INT will be mailed to the companies with the project approval letter. There are three types of agreements available: three factor method, two factor method, and separate accounting.

The appropriate accounting practices agreements are generated according to the method of income determination indicated on the Form INT. However, the project may change which type of method of accounting they have chosen prior to the acceptance of the accounting practices agreement. Once the agreement has been signed and remitted by the project, the Department Secretary will sign the agreement on behalf of the department. A copy of the signed agreement will then be sent to the project.

Report of Investment in Project (Form INT-2) - Should be filed when the project has been placed in service. Although the law and regulations do not specifically address the deadline for filing of the form, it is imperative that this form is received prior to the filing of the first Alabama income tax return utilizing the credit. This requirement is due to the fact that the 5% credit is computed using the actual capital costs provided on this form.

For purposes of the capital credit a qualifying project shall be considered placed in service on the earlier of the following days neither of which shall be deemed to have occurred prior to the first day on which the qualifying project's total capital costs have been incurred:
(i) the day on which, under the taxpayer's depreciation practice, the period for depreciation with respect to such qualifying project begins; or
(ii) the day on which the qualifying project begins a specifically designed function for the production of revenues.
Once the project has been placed in service, a Form INT-2 will need to be filed by the project stating the actual amounts for all items included on the form. The actual amount of capital costs reported on Form INT-2 is used to compute the five percent (5%) credit for each year to be allowed to the project and its recipients. This form must be filed after the project is placed in service and before the project claims the credit on an Alabama income tax return.

Notice of Change of Ownership, Interest, or Participation of Interest in Project (Form INT-4) - If at any time after filing the Form INT the project has a change in ownership, interest, or participation of interest in the project, the project should file a Form INT-4 indicating the current recipients of the capital credit. This form should be completed in its entirety. This form will assist the department in determining the companies that will be utilizing the credit.

ADOR Forms attached to Alabama Income Tax Returns

These two forms are to be filed annually by companies to receive the capital credit by attaching them to their Alabama income tax return:

Annual Report (Form AR) - Should be completed and attached to the Alabama income tax return of the project. Although several companies may combine to form a joint venture, the companies must form a joint entity for Alabama income tax purposes. Therefore, this form is to be attached to the Alabama income tax return of the project entity (or joint entity) which reports the income from the project.

Each project entity will file one (1) Form AR each year for each project. It will be attached to the Alabama income tax return of the project entity. This form will indicate that the requirements for the capital credit have been maintained for the tax year. It will also provide the computation for the income attributable to the project. The two and three factor methods are computed similarly to computation for the Alabama corporate income tax return. However, instead of a fraction consisting of Alabama to Everywhere, the fraction shall consist of Project to Alabama.

In year one, the credit will be pro-rated for the portion of the year that the project was in service. The remainder of the 5% credit from year one will be applied to the tax year after the last full year of available credit.

A project, however, may also file a short year return. This will occur mostly in new projects where the company did not previously have sufficient nexus in Alabama and is placed in service in the middle of a tax year. This computation will mirror the computation for the part year filers.

Schedule of Recipient's Share of Capital Credit (Form K-RCC) - Should be completed and distributed to all recipients receiving the capital credit. The Form K-RCC must be attached to the recipient's Alabama income tax return to receive the credit. This form shows the income from the project which is distributed to the recipient. Therefore, the amount of credit available to the recipient can be accurately computed for audit purposes. If the project will not distribute the income and capital credit among shareholders, member, partners, or beneficiaries, etc., this form should be attached to the project entity's return along with the Form AR.

A Form K-RCC will be filed by all recipients of the capital credit. The project entity will complete Lines 1-3, 5, and 6 while the recipient of the credit will complete lines 4 and 7 (see further instructions below for applicable project entity).