Vermont Tax Credits Earned, Applied, Expired, And Carried Forward (Instructions)

Tax Credits Earned, Applied, Expired, And Carried Forward (Instructions) 
BA-404 (Instructions)
SCHEDULE BA-404 Instructions
Tax Credits Earned, Applied, Expired, and Carried Forward
General Information
Schedule BA-404 must be completed and attached to an income tax return if any tax credits are earned, applied,
expired or carried forward. Generally, tax credits are limited to a percentage of the tax attributable
to the income generated by the entity authorized for the credit. For details, review the guidelines of
the credit program in which you are participating. The credits listed on Schedule BA-404 are the
only credits allowed in Vermont.
For any credit type being claimed, complete all applicable columns of Schedule BA-404. In most cases, Column D
(Amount Carried Forward to Future Years) should equal Column A (Amount Carried Forward from
Prior Years) plus Column B (Amount Earned Current Year) minus Column C (Amount Applied
Current Year). However, in cases where a credit expires without being used, the expired credit should
further reduce the value reported in Column D. Complete Line 11, Total for all Credits.
32 V.S.A. § 5862(d) is amended as of January 1, 2023 to read: (d) A taxable corporation that is part of an affiliated
group engaged in a unitary business shall be treated as a single taxpayer and shall file a group return
containing the combined net income of the affiliated group and such other informational returns as
the Commissioner shall require by rule. A unitary combined return shall include the income and
apportionment factors of any taxable corporation incorporated in the United States or formed under
the laws of any state, the District of Columbia, or any territory or possession of the United States and
in a unitary relationship with the taxpayer. The income, gain, or losses from members of a combined
group shall be combined to the extent allowed under the Internal Revenue Code for consolidated
filing as if the combined group was a consolidated filing group, provided that a state tax credit
shall not be combined and shall be limited to the member to which the credit is attributed.

Credit Documentation

Research and Development Tax Credit (Line 1)
	
Include a copy of federal Form 6765, Credit for Increasing Research Activities. If the federal
credit was earned based on expenditures both in and out of Vermont, provide a breakdown of the
expenditure amounts and a recomputed credit calculation based only on the expenditures that
occurred in Vermont. If you have received grants or assistance for financing the expenditures from
any other public or private source, the basis expenditure amount for the credit calculation must be
adjusted downward to account for the assistance. Your expenditures must be eligible for and receive
the federal tax credit to claim the Vermont tax credit.
Credit Amount: 27% of the amount of the federal tax credit allowed in the taxable year for eligible
research and development expenditures under 26 U.S.C. § 41(a) which are made within Vermont.
Any unused credit may be carried forward for up to 10 years.
Investment Tax Credit - Solar Energy - § 5822(d) (Line 9)
	

Include a copy of the federal credit calculation Form 3468, Investment Credit, and Form 3800, General
Business Credit. This credit is not available to C Corporations. See Technical Bulletin TB‑45, Solar
Energy Investment Tax Credit, on the Department’s website, for a full explanation. If the federal
credit was earned based on investments both in and out of Vermont, provide a breakdown of the
Form BA-404 Instructions

tax.vermont.gov

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investment amounts and a recomputed credit calculation based only on investments that occurred in
Vermont. If you have received grants or assistance for financing the project from any other public or
private source, the basis investment amount for the credit calculation must be adjusted downward
to account for the assistance. Your project must be eligible for and receive the federal tax credit to
claim the Vermont tax credit.
Credit Amount: 24% of federal investment tax credit attributable to the Vermont-property portion
of the investment for the current year. Any unused business solar energy investment tax credit under
this section may be carried forward for no more than five years following the first year in which the
credit is claimed. Any other investment tax credit is only available in the year it is earned.
Note that the Investment Tax Credit, Line 9, is only available to Business Income Tax filers. See
instructions below for claiming the credit by the business entity’s shareholders, partners, or members,
or by a business entity filing a composite return.
Investment Tax Credit - Other - § 5822(d) (Line 10)
	
On Line 10, include the portion of Investment Tax Credit that is not related to the Solar Energy
Investment Tax Credit. Copies of the federal credit calculation Form 3468, Investment Credit, and
Form 3800, General Business Credit, should also be included.
If the federal credit was earned based on investments both in and out of Vermont, provide a
breakdown of the investment amounts and a recomputed credit calculation based only on investments
that occurred in Vermont. If you have received grants or assistance for financing the project from
any other public or private source, the basis investment amount for the credit calculation must be
adjusted downward to account for the assistance. Your project must be eligible for and receive the
federal tax credit to claim the Vermont tax credit.
Credit Amount: 24% of federal investment tax credit attributable to the Vermont-property portion
of the investment for the current year. Any unused business solar energy investment tax credit under
this section may be carried forward for no more than five years following the first year in which the
credit is claimed. Any other investment tax credit is only available in the year it is earned.
All other credit types
	
All other credit types must include a copy of the authorization document, a detailed description of
the activity that generated the credit, and a calculation schedule.

Applying Credits to Offset Tax

Form CO-411 - C-Corporation – Stand-Alone
	
Enter the total amount of credits applied on Form CO-411, Corporate Income Tax Return, Line 14.
Form CO-411 - Unitary Businesses
	
If multiple entities within the unitary group are reporting credits, complete and attach a single
Schedule BA-404 with the return package. Combine all credit amounts on Schedule BA-404 and
attach a statement that breaks down the totals by entity.
Form BI-471 - Business Income Tax Return
For S-Corporations, Partnerships, and LLCs treated as pass-through entities for tax purposes, tax
credits are generally distributed to the owners of the entity in the same proportion that income or
loss is distributed and are not transferrable.
Form BA-404 Instructions
tax.vermont.gov

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Report the allocation of credits earned in a given tax year using as many Schedules BA-406, Credit
Allocation Schedule as necessary. Generally, prepare one Schedule BA-406 for each shareholder,
partner, or member, and include as part of Form BI-471, Business Income Tax Return, return
package. If the entity is filing a composite return, prepare a single Schedule BA-406 that includes
the combined credit amounts for all shareholders, partners, or members included in the composite
filing. Review the instructions of that form for further details.
Credits are applied on the Vermont income tax return of the individual or entity with the tax
liability. Credits are reported on Schedule IN-112, Vermont Income Adjustments and Credits, or
Schedule IN-119, Vermont Tax Adjustments and Nonrefundable Credits, of Form IN-111, Vermont
Individual Income Tax Return.
If any or all of the entity income is taxed at the composite level, enter the amount of credits applied
on Schedule BI-473, Composite Schedule, Line 10.
For further details, refer to the statutes and program guidelines for the specific credit program in
which you are participating.
Form BI-476 - Business Income Tax Return for Resident Only
	

Same as for Form BI-471.

Contacting the Department
	

Mailing address:	
	
Vermont Department of Taxes	
133 State Street	
Montpelier, VT 05633-1401	

Taxpayer Services:	
Email Address:	
Web site Address:	
Forms:		

(802) 828-5723
[email protected]
tax.vermont.gov
(802) 828-2515

Form BA-404 Instructions
tax.vermont.gov

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