43-1077

43-1077. Credit for employment by qualified
defense contractor

A. A credit is allowed against the taxes imposed by this title for:

1. Net increases in employment under United States department of defense contracts
during the taxable year, as computed under subsection D of this section, by a qualified
defense contractor who is certified by the department of commerce under section 41-1508.

2. Net increases in private commercial employment during the taxable year, as
computed under subsection E of this section, by a qualified defense contractor who is
certified by the department of commerce under section 41-1508 due to full-time equivalent
employee positions transferred during the taxable year by the taxpayer from exclusively
defense related activities to employment by the taxpayer in exclusively private
commercial activities.

B. The amount of the credit is a dollar amount allowed for each full-time
equivalent employee position created, determined as follows:

 1st year $2,500
 2nd year $2,000
 3rd year $1,500
 4th year $1,000
 5th year $  500
 

C. If the allowable tax credit exceeds the taxes otherwise due under this title on
the claimant's income, or if there are no taxes due under this title, the taxpayer may
carry the amount of the claim not used to offset the taxes under this title forward until
taxable years beginning from and after December 31, 2011 as a credit against subsequent
years' income tax liability, regardless of continuing certification as a qualified
defense contractor.

D. The net increase in employment under defense related contracts shall be
determined as follows:

1. Establish an employment baseline for the taxpayer based on a multiyear forecast
of employment on United States department of defense contracts that was submitted to the
department of defense before June 1, 1992. The annual average employment forecast for the
first year the taxpayer qualified is the baseline. If the taxpayer did not make such a
forecast before June 1, 1992, the baseline is the average annual employment as reported
to the department of economic security during the preceding taxable year. If a taxpayer
qualifies in the same year it relocates into this state, the taxpayer's baseline is zero.

2. For the first year of the credit, the taxpayer's net increase in average
employment is the increase in employment reported to the department of economic security
for the taxable year over the employment baseline.

3. For each succeeding year of the credit, the taxpayer's net increase in average
employment is the increase in employment reported to the department of economic security
for the taxable year over the preceding taxable year's average employment.

E. In computing the amount of credit allowed under subsection A, paragraph 2 of
this section, the taxpayer shall:

1. Prorate employment during the taxable year according to the date of transfer
from defense to private commercial activities or the date of transfer from private
commercial activities to defense.

2. Compute and subtract an amount pursuant to subsection B of this section for
full-time equivalent employee positions that were transferred during the taxable year by
the taxpayer from exclusively private commercial activities to exclusively defense
related activities.

F. The taxpayer shall account for qualifying full-time equivalent employee
positions on a first-in first-out basis. If a decrease in qualifying employment occurs,
the taxpayer shall subtract the decrease from the earliest qualifying positions.

G. A credit is not allowed under both subsection A, paragraphs 1 and 2 of this
section with respect to the same employee position. A full-time equivalent employee
position may be considered for purposes of computing the credit under either subsection
A, paragraph 1 or 2 of this section, but not both.

H. A credit is not allowed under this section with respect to employment that was
transferred from an outside contractor in this state to in-house employment by the
taxpayer solely for purposes of qualifying for the credit.

I. A taxpayer who claims a credit under section 43-1074, 43-1079 or 43-1083.01 may
not claim a credit under this section with respect to the same employee positions.

J. Co-owners of a business, including partners in a partnership and shareholders of
an S corporation, as defined in section 1361 of the internal revenue code, may each claim
only the pro rata share of the credit allowed under this section based on the ownership
interest. The total of the credits allowed all such owners may not exceed the amount
that would have been allowed for a sole owner of the business.