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Submitting a Credit Claim Request for the Capital Credit for Pass-Through Entities

  • Submitting a Credit Claim Request for the Capital Credit for Pass-Through Entities

The instructions below are for pass-through entities only. C-corporations and financial institutions do not have to complete the following steps.

  • Login to My Alabama Taxes.
  • Once logged in, navigate to the Pass-through Entity, and under Incentives click on ‘Submit a credit claim’.
  • Fill in the required fields in the next window:
    • Credit type – Income Tax Capital Credit.
    • Project number – Enter the 10-digit project number.
    • Filing period – The period in which you are claiming the credit.
    • Annual Capital Credit available – The amount of credit available for this tax year under Form AR-PTE, Part IV Project.
    • Owner’s information – Manually input or import owners’ information, including pro rata share of ownership.
      • Tip for entering Owner Information: Entities with numerous partners can select “Download Owner Information Spreadsheet” to enter owner information and percentage of ownership. Once downloaded, save the file. Then use the Import Tab to load the table in the credit claim. For future claims you can modify the spreadsheet as needed (i.e. adding/deleting partners or changing ownership percentage).
    • Attachments – Attach all Form KRCCs to be distributed to owners of the project. The credit claim will not be processed without the owners’ Form K-RCCs.

Upon submission of the above information, ALDOR will review and a web notification is sent to the project entity notifying the approval status of the claim request. Note! If the project entity has a loss year, the Form KRCCs are not required and will not be processed by ALDOR. If approved, each member of the project entity will receive a letter from ALDOR detailing the procedures on how to claim the credit on their respective returns. Depending on the type of entity, the letter will include the following information:

  • A Business Income Tax taxpayer taking the credit must report the credit on Form 20C using Schedule BC to claim the credit against business income taxes due.
  • A Financial Institution Excise Taxpayer taking the credit will report the credit on Form ET-1 using Schedule EC to take the credit against financial institution excise taxes due.
  • A Pass-Through Entity taxpayer passing the credit to its members must log in to their My Alabama Taxes account, select the “Pass-Through Entity” account type, and under “I Want To” choose “Submit a Credit Claim.” After completing the process through My Alabama Taxes, the credit must be reported on the Schedule PC and on the pass-through members’ Schedule K1(s) when filing the Form 65 or Form 20S.
  • A Fiduciary taxpayer can (a) claim the credit by reporting the credit on Form 41 using Schedule FC to take the credit against taxes due by the fiduciary, or (b) pass the credit through to their beneficiaries by logging in to their My Alabama Taxes account, selecting the “Fiduciary” account type, and under “I Want To” choose to “Submit a Credit Claim.” After completing the process through My Alabama Taxes, the credit must be reported on Schedule FC and on the beneficiaries’ Schedule K1(s) when filing the Form 41.