Virginia EDC - Taxpayer Application for Qualified Equity and Subordinated Debt Investments Credit

EDC - Taxpayer Application for Qualified Equity and Subordinated Debt Investments Credit
Form EDC - Taxpayer Application for the Qualified Equity and Subordinated Debt Investments Tax Credit
Virginia
Form EDC

Taxpayer Application for the Qualified Equity
and Subordinated Debt Investments Tax Credit

Tax Year Ending

_______ , 20______

Submit this form by April 1. Credit must be approved before being claimed on your tax return. See instructions for details.
Name (One name per application)

SSN/FEIN (One per application)

Street Address

Phone Number

City, State, and ZIP Code

Email Address

Entity Type: (Check one)	

 Individual	

 Partnership	

 LLC	

  S Corporation	

 Trust

If you made a cash investment in a qualifying business in the form of qualified equity or subordinated debt, submit this application to
the Department. The Department will determine the allowable credit amount. The credit is equal to 50% of the amount of all qualifying
investments made during the taxable year. The aggregate amount of credit that may be claimed per taxpayer per year is limited to the
amount of tax or $50,000, whichever is less. The credit is nonrefundable; however, excess credit may be carried forward for up to 15 years.
The Department will prorate the allowable credits if total annual requests exceed $5 million. Penalties and forfeiture of this credit may apply
if the equity investment is held for less than 3 years following the year the credit is allocated or on any subordinated debt investment that
is held for less than 3 years. IMPORTANT: See the instructions for details on when and where to submit the application. No application
received after April 1st will be eligible for the credit.
PART I – BUSINESS ENTITY IDENTIFICATION

Business Entity 2

Business Entity 1

Complete this section for each qualifying investment. You must have a Department-issued qualified business certification from each
qualifying business. Do not include investments in which you or any family members, or any entity affiliated with you, receives or has
received compensation from the qualified business in exchange for services provided to the business as an employee, officer, director,
manager, independent contractor, or otherwise in connection with or within 1 year before or after the date of such investment. Enclose
additional pages if needed.
1.  Name of Qualified Business Entity:
2.  Certificate Number from Form QBA Provided by the Qualified Business:
3.  Name and Type of Investment (i.e. equity or subordinated debt):
3a.	 Date Qualified Investment Made:
3b. Amount of Qualified Investment: $
3c.	 Will this investment be claimed as a subtraction for the Venture Capital Account Investment Fund
or the subtraction for Certified Virginia Real Estate Investment Trusts? . . . . . . . . . . . . . . . . . . . . 

.00
Yes	

No

1.  Name of Qualified Business Entity:
2.  Certificate Number from Form QBA Provided by the Qualified Business:
3.  Name and Type of Investment (i.e. equity or subordinated debt):
3a.	 Date Qualified Investment Made:
3b. Amount of Qualified Investment: $
3c.	 Will this investment be claimed as a subtraction for the Venture Capital Account Investment Fund
or the subtraction for Certified Virginia Real Estate Investment Trusts? . . . . . . . . . . . . . . . . . . . . 

.00
Yes	

No

PART II – TOTAL CREDIT REQUESTED
1.  TOTAL QUALIFIED INVESTMENT (including any amounts listed on separate pages).. . . . . . . . .  $

.00

2.  Multiply Total Qualified Investment (Line 1) Amount by 0.5 (50%). Enter result here.. . . . . . . . . . .  $

.00

3.  Total Number of Qualified Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
PART III – DECLARATION
Under penalty of law, I have read and understand the limitations and restrictions for this credit.
Taxpayer Signature

Date

Title

Printed Name

Phone Number

Authorized Representative

Phone Number

Address

Va. Dept. of Taxation  2601154  Rev. 08/23

Email Address

Instructions for Form EDC
Taxpayer Application for Qualified Equity
and Subordinated Debt Investments Tax Credit
General Information
Under Va. Code § 58.1-339.4 (E), the Qualified Equity and
Subordinated Debt Investments Tax Credit is capped at
$5 million annually. Of the amount of available credit, onehalf of this amount must be allocated to commercialization
investments and the other half is available for all other
qualifying investments. If credit applications for either half
exceed the allowed amount, the credits for that half will be
prorated. If credit applications for either half are less than the
allowed amount, the balance will be available for allocation
to the other type of credits.
Investments do not qualify for the credit if the same investment
was used to claim the Venture Capital Investment subtraction
or the Virginia Real Estate Investment Trust subtraction.
See Form QBA for the list of criteria a business must satisfy
in order to become a qualified business.

When to Submit This Application

As the holder of this investment, you or any of your family
members (spouse, children, grandchildren, parents, spouse’s
parents, or grandparents) or any entity directly or indirectly
affiliated with you, do not and have not received compensation
from the qualified business in exchange for services provided
to such business as an employee, officer, director, manager,
independent contractor, or otherwise in connection with or
within one year before or after the date of such investment. For
the purposes hereof, reimbursement of reasonable expenses
incurred shall not be deemed to be compensation.
The statement provided to investors must be signed by a
company officer. For investors affiliated with the qualified
business, such as the Corporate Officer, CFO, etc., the
statement should be signed by another member of the
company.
Note: For married investors, the credit cannot be issued jointly.
The investment must be made individually and a separate
Form EDC and business statement must be provided for
each spouse.

Where to Submit This Application

Submit Form EDC as soon as possible after receiving all of
your Form QBA certifications for qualified investments made
during the previous taxable year and as soon as possible
BEFORE your tax filing deadline. Taxpayers making a
qualified investment during a calendar year MUST submit
this application and all supporting documentation no later
than April 1 of the following year.

Submit Form EDC and any enclosures to the Department of
Taxation, ATTN: Tax Credit Unit, P.O. Box 715, Richmond,
VA 23218-0715 or fax it to (804) 774-3902.

For any application received without a postmark, the date
received by the Department will be used to determine if the
application was received by the filing deadline. Note: the
postmark cannot be handwritten.

If the Department needs additional information, the agency
will contact you by May 1 and you will have until May 15 to
respond. If you have not received acknowledgment of your
application by May 31, call (804) 786-2992.

What to Enclose

The Department will issue the credit by June 30. If you have
not received your credit certification by July 15, call (804)
786-2992.

Enclose the following items:
•	

A copy of the qualified business certification (issued to
the business by the Department);

•	

A business entity’s statement, on the business’
letterhead, containing:
•	

the investor’s name;

•	

the investment by amount (list each amount
separately);

•	

the investment by type (equity or debt);

•	

the investment by date (specific to each investment
amount);

•	

verification that the investment meets the definition of
a “qualified investment” for purposes of claiming the
credit pursuant to Va. Code § 58.1-339.4. Title 23 of
the Virginia Administrative Code (VAC) 10‑110‑225
et seq. provide regulations on how this credit applies.

What to Expect from the Department

What Does the Taxpayer Need to Do
Upon receiving notification of the allowable credit amount,
taxpayers may claim the allowable credit amount on the
applicable Virginia income tax return and compute any
carryover credit amount.
If the tax return upon which this credit will be claimed is due on
or before May 1, you may need to either submit an extension
payment for any tax due or file an amended return once you
have received the credit certification.
IMPORTANT NOTES
•	

By providing an email address on the form, the taxpayer
consents to allow emailed communications from the
Virginia Department of Taxation related to this tax credit
application. If the taxpayer does not wish to receive
electronic communications, do not enter an email address
in the spaces provided on the form.

•	

Any business entity filing Form EDC should be registered
with the Department before completing the form. If you
are a business entity and are not registered, complete
Form R-1.

Holding Period
Required Investor Holding Period
•	

Equity received in connection with a qualified business
investment must be held by the taxpayer for at least 3
full calendar years following the calendar year for which
a tax credit is allocated.

•	

Subordinated debt received in connection with a qualified
business investment must be held by the taxpayer for at
least 3 years from the date of issuance.

•	

Holding Period Exception – Liquidation of the qualified
business issuing such equity; the merger, consolidation or
other acquisition of such business; with or by a party not
affiliated with such business or the death of the taxpayer.

Penalty for Not Meeting the Required Holding Period
If the required holding period is not met, the taxpayer must
forfeit the unused credit amount and will be assessed for the
credit utilized, to which shall be added interest, computed at
the rate of 1% per month, compounded monthly from the date
the tax credits were claimed.

Pass-Through Entities
Each pass-through entity must file Form TCA with the
Department when allocating this credit to its participants.
Form TCA should be filed within 30 days after the credit is
granted, but at least 90 days prior to the participants filing their
income tax returns. Failure to file Form TCA may result in the
credit claim being disallowed and/or a delay in processing the
participant’s return. Form TCA should be sent to: Virginia
Department of Taxation, ATTN: Tax Credit Unit, P.O. Box
715, Richmond, VA 23218-0715 or you may fax it to (804)
774-3902. Do not do both.
All pass-through entities distributing this credit to its
participants, including owners, shareholders, partners, or
members, must give each such participant a Schedule VK‑1,
Owner’s Share of Income and Virginia Modifications and
Credits.

Where to Get Help
Write to the Virginia Department of Taxation, ATTN: Tax
Credit Unit, P.O. Box 715, Richmond, VA 23218-0715 or call
(804) 786‑2992. To order forms or a copy of the regulations
call (804) 367-8031. Visit www.tax.virginia.gov to obtain
most Virginia income tax forms and additional tax information.
Forms are also available from your local Commissioner
of the Revenue, Director of Finance, or Director of Tax
Administration.