Democrats Will Offset Student Loan Bill by Tightening S Corp Rules

Tougher tax requirements on S corporations could be the cost of Senate Democrats heeding President Obama's call for legislation that would prevent federal student loan interest rates from doubling on July 1, according to text of the bill. The idea is similar to language passed by the Democrat-led House in 2010 that would have cracked down on service professionals in S corporations and certain partnerships that avoid paying Medicare and Social Security taxes by giving themselves a nominal salary, then claiming that the rest of their income routed through the business is exempt from such taxes. The proposal is being considered to pay for the almost $6 billion bill to keep student loan interest rates low.

Mississippi: Stock Distribution of Controlled Corporation

H.B. 1519, effective retroactive to 01/01/2012, provides that, with respect to the distributing corporation in the distribution of stock or securities of a controlled corporation, no gain will be recognized from such distribution provided the distribution is a part of a transaction that qualifies for tax-free treatment under IRC § 355 or IRC § 368(a)(1)(D); or if the distribution is pursuant to an overall plan to facilitate an ultimate distribution that qualifies for tax-free treatment under IRC § 355 or IRC § 368(a)(1)(D).

Issuers of School Construction Bonds Asked to Describe Compliance

Some issuers of qualified school construction bonds have received an IRS check questionnaire, asking them to describe their policies and procedures, the Service announces. Notices were sent to 111 qualified school construction bond issuers, asking questions about debt management and volume cap policies and procedures, procedures for determining issue price, how the issuers handle record retention, and their procedures on the timely identification and correction of tax law violations.

Legislation Enacts Energy Efficiency Upgrade Deduction for Existing Residences

Idaho enacted legislation (H.B. 485) replacing the insulation deduction for existing residences with a deduction for energy efficiency upgrades.

Energy efficiency upgrades are improvements to the building envelope or duct system of an existing residence, which meet or exceed certain international energy conservation code standards in place in Idaho during the taxable year the improvements are made.

Upgrades include additional insulation, replacement windows, storm windows, weather stripping and caulking, and duct sealing.

The legislation, enacted April 3, amends existing law and is retroactively effective to Jan. 1.

Senate Hearing Will Consider Online Sales Tax Bills

Business activity and online sales are expected to take center stage at today's Senate Finance Committee hearing. The committee hearing is set to address state and local tax and fiscal policy, including states' use of bonds that exempt interest from federal income taxes and bonds that provide federal tax credits. The hearing likely will be a chance for lawmakers to address a variety of other state tax issues that have been considered in the House but not in the Senate.

Chemical Storage Tank Eligible for Tax Exemption

A chemical storage tank qualifies for the sales tax manufacturing machinery and equipment exemption if it is used primarily (more than 50 percent of the time) to store the chemical in its liquid state as an integral part of the production process at the plant, the Illinois Department of Revenue advised in a letter ruling (ST-12-0002-PLR).

The exemption does not apply to storage tanks or other equipment used by a distributor or transporter after the production process to store the product. In addition, the concrete foundation used to support the storage tank does not qualify for the exemption.

Materials used to construct the foundation of the storage tank may qualify for the enterprise zone building materials exemption described in Ill. Regs. Section 130.1951(d)(4) if the materials are incorporated into real estate as part of the building project in that enterprise zone.

Surface Transportation Bill headed to Conference

On April 24, the Senate sent the surface transportation bill to a joint Senate-House conference committee. H.R.4348, the Surface Transportation Extension Act of 2012, Part II, as amended with the text of S.1813, the “Moving Ahead for Progress in the 21st Century Act” or MAP-21, is the vehicle for the conference. The committee is charged with reconciling the two versions of the bill, which contain significant differences.

H.R. 4348 was approved by the House on April 18. The bill would provide for a second short-term extension of various highway-related excise tax provisions, including excise taxes on fuel used by certain buses, certain alcohol fuels, gasoline (other than aviation gasoline) and diesel fuel or kerosene, certain heavy trucks and trailers, and tires. Also included in the bill is a controversial provision permitting the Keystone XL oil pipeline from Canada. The Administration has threatened to veto the final bill if it contains the Keystone provision.

S.1813 was approved by the Senate back on March 14. The Senate's version authorizes various highway and transportation funding for two years and also provides a number of important tax changes, including pension funding relief, a higher exclusion amount for employer-provided transit and vanpooling benefits, and revised rules for certain corporate reorganizations.

Dairy Facility Investment Credit

The Governor signed Senate Bill 260 (Wisconsin Act 237), pertaining to the dairy facility investment credit. Previously, members of a dairy cooperative could claim the “dairy manufacturing facility investment income tax credit’’ based on amounts paid in the taxable year by the cooperative to modernize or expand operations. The taxpayer would claim an amount proportional to the amount of milk that the member delivered to the cooperative. The cooperative member also claimed the credit for the taxable year in which the dairy cooperative paid to modernize or expand its operations.

However, S.B. 260 modifies the program by permitting dairy cooperative members to claim the credit in either the taxable year in which the eligible expenditures are made, or in the next taxable year. The change is effective through tax year 2016.

In an analysis of the legislation, the revenue department said S.B. 260 would have “minimal’’ fiscal impact on the state.

Web-Based Computer Programs Not Taxable Software

Amounts paid for automation and tracker services represent charges for the use of web-based computer programs and are not taxable prewritten computer software, the Indiana Department of Revenue said in a March 28 letter of findings (No. 04-20110291), upholding a taxpayer's protest of an assessment of sales and use taxes.

USDA Repowering Assistance Program

The Repowering Assistance Program provides payments to eligible biorefineries to replace fossil fuels used to produce heat or power to operate the biorefineries with renewable biomass. It provides reimbursement payments to help offset the costs associated with converting existing fossil fuel systems to renewable biomass fuel systems.

The program encourages the use of renewable biomass as a replacement fuel source for fossil fuels used to provide process heat or power in the operation of eligible biorefineries.

The amount of assistance is determined by the availability of funds, the project scope, and the ability of the proposed project to meet all the scoring criteria.  In particular, the percentage reduction in fossil fuel used by the biorefinery, the quantity of fossil fuels replaced by a renewable biomass system, and the cost effectiveness of the renewable biomass system.

Payments are made for eligible post-application costs incurred during the construction phase of the repowering project.

To be eligible for the Advanced Biofuel Producer Program, an applicant must produce and sell an advanced biofuel. Conditions need to be met for the producer and for the biofuel.

What is an Advanced Biofuel Producer?

An Advanced Biofuel Producer is an individual, corporation, company, foundation, association, labor organization, firm, partnership, society, joint stock company, group of organizations, or non-profit entity that produces and sells an advanced biofuel.

What is an Advanced Biofuel?

Advanced biofuel is a fuel derived from renewable biomass, other than corn kernel starch, including:

Biofuel derived from cellulose, hemicellulose, or lignin

Biofuel derived from sugar and starch (other than corn kernel starch derived Ethanol)

Biofuel derived from waste material, including crop residue, other vegetative waste material, animal waste, food waste, and yard waste

Diesel-equivalent fuel derived from renewable biomass, including vegetable oil and animal fat

Biogas (including landfill gas and sewage waste treatment gas) produced through the conversion of organic matter from renewable biomass

Butanol or other alcohols produced through the conversion of organic matter from renewable biomass

Other fuel derived from cellulosic biomass

Biofuel eligibility

An advanced biofuel product must meet each of the following conditions to qualify for this program:

Must meet the definition of advanced biofuel and be produced in the United States

Must be a solid, liquid, or gas

Must be a final product

Must be sold as an advanced biofuel through an arm’s length transaction to a third party For additional program information, please refer to 7CFR 4288, subpart B.

USDA Rural Development Biorefinery Assistance Program

As the call for increased production of homegrown, renewable forms of fuels has grown, so has the need to develop and produce them. USDA Rural Development offers opportunities to producers to development such fuels through the Biorefinery Assistance Program. The program provides loan guarantees for the development, construction, and retrofitting of commercial-scale biorefineries.

The Biorefinery Assistance Program was established to assist in the development of new and emerging technologies for the development of advanced biofuels and aims to accomplish the following:

Increase the energy independence of the United States

Promote resource conservation, public health, and the environment

Diversify markets for agricultural and forestry products and agricultural waste materials

Create jobs and enhance economic development in rural America

Eligibility for the Biorefinery Assistance Program is broken into three parts; lenders, borrowers, and projects. All three areas must be met to be considered eligible for the program.

Who is an Eligible Lender?

Most lenders are eligible, including any Federal or State chartered bank, Farm Credit Bank, other Farm Credit System institution with direct lending authority, and a Bank for Cooperatives.

Who is an Eligible Borrower?

The borrower must be one of the following:

Individual

Entity

Indian tribe

Unit of State or local government

Corporation

Farm cooperative

Farmer cooperative organization

Association of agricultural producers

National Laboratory

Institution of higher education

Rural electric cooperative

Public power entity

Consortium of any of the above entities

What is an Eligible Project?

The project must be located in the United States, Commonwealth of Puerto Rico, Virgin Islands of the United States, Guam, American Samoa, Commonwealth of the Northern Mariana Islands, Republic of Palau, the Federated States of Micronesia, or Republic of the Marshall Islands.  The project must meet the following criteria:

The project must be for the development and construction of commercial-scale biorefineries using eligible technology or retrofitting of existing facilities with eligible technology.

The project must use an eligible feedstock for the production of advanced biofuels and biobased products.  Examples of eligible feedstocks include, but are not limited to, renewable biomass, biosolids, treated sewage sludge, and byproducts of the pulp and paper industry.

The majority of the biorefinery production must be an advanced biofuel.  A project that creates an advanced biofuel that is converted to another form of energy for sale will still be considered an advanced biofuel.

The project must provide funds of not less than 20 percent of eligible project costs.

Refinancing, under certain circumstances, may be eligible.

USDA Community Facilities Direct and Guaranteed Loans

Who may apply: Community Programs can make and guarantee loans to develop essential community facilities in rural areas and towns of up to 20,000 in population. Loans and guarantees are available to public entities such as municipalities, counties, and special-purpose districts, as well as to non-profit corporations and tribal governments.

Applicants must have the legal authority to borrow and repay loans, to pledge security for loans, and to construct, operate, and maintain the facilities. They must also be financially sound and able to organize and manage the facility effectively.

Repayment of the loan must be based on tax assessments, revenues, fees, or other sources of money sufficient for operation and maintenance, reserves, and debt retirement. Feasibility studies are normally required when loans are for start-up facilities or existing facilities when the project will significantly change the borrower’s financial operations. The feasibility study should be prepared by an independent consultant with recognized expertise in the type of facility being financed.

Community Programs can guarantee loans made and serviced by lenders such as banks, savings and loans, mortgage companies which are part of bank holding companies, banks of the Farm Credit System, or insurance companies regulated by the National Association of Insurance Commissioners. Community Programs may guarantee up to 90% of any loss of interest or principal on the loan. Community Programs can also make direct loans to applicants who are unable to obtain commercial credit.

Fund Uses: Loan funds may be used to construct, enlarge, or improve community facilities for health care, public safety, and public services. This can include costs to acquire land needed for a facility, pay necessary professional fees, and purchase equipment required for its operation.

Refinancing existing debts may be considered an eligible direct or guaranteed loan purpose if the debt being refinanced is a secondary part of the loan, is associated with the project facility, and if the applicant’s creditors are unwilling to extend or modify terms in order for the new loan to be feasible.

Rates and Terms: For the direct loan program there are three levels of interest rates available (poverty, intermediate, and market) each on a fixed basis. The poverty rate is set at 4.5%. The market rate is indexed to the eleventh bond buyers rate as determined by the U. S. Treasury Department. The intermediate rate is set halfway between the market and the poverty rates. Eligibility for these different interest rates is determined by the median household income (MHI) of the area being served and the type of project. The intermediate and market interest rates are adjusted quarterly. Contact your Rural Development State Office to determine the eligible interest rate for your area.

For the guaranteed loan program, the interest rate is the lender’s customary interest rate for similar projects. The interest rates for guaranteed loans may be fixed or variable and are determined by the lender and borrower, subject to HCFP review and approval.

Loan repayment terms may not exceed the applicant’s authority (under State law or organizational structure), the useful life of the facility, or a maximum 40 years.

Security Requirements: Bonds or notes pledging taxes, assessments, or revenues will be accepted as security if they meet statutory requirements. Where State laws permit, a mortgage may be taken on real and personal property. Tax-exempt notes or bonds may be issued to secure direct loans, but cannot be used for guaranteed loans.

Application Processing: Applications are handled by USDA Rural Development field offices. Rural Development staff will be glad to discuss a community's needs and the services available from HCFP and other agencies within USDA. Field staff can provide application materials and current program information, and assist in the preparation of an application.

The CF application process is a two-stage procedure (preapplication and application). Approximately 45 days is required to determine applicant eligibility, project priority status, and funding availability. After an application is submitted, time to process the application depends upon the scope of the project, environmental review, and legal issues.

HUD Designates QCTs

The U.S. Department of Housing and Urban Development (HUD) has designated qualified census tracts (QCTs) for 2013 for purposes of the low-income housing tax credit (LIHTC) under Section 42 of the Internal Revenue Code (IRC). HUD based the 2013 QCTs on new data from the 2010 Decennial Census and the 2006-2010 tabulations of American Community Survey. This is the first time since 2007 that the QCTs have changed substantially, and the 2010 census tract boundaries and numbers may differ from those established in 2000. The 2013 QCTs will take effect on January 1, 2013. The 2012 difficult development areas (DDAs) designated in the October 27, 2011 Federal Register remain in effect.

Amazon, Nevada Announce Agreement on Collection of Sales Tax

Online retailer Amazon.com Inc. and Nevada Gov. Brian Sandoval announced an agreement to allow the state to collect sales tax revenue on the company's sales to Nevada customers, beginning in 2014.

Sandoval and Paul Misener, Amazon vice president for global public policy, also agreed to work for congressional passage of legislation that would create a simplified framework for sales tax collection.

Under the agreement, Amazon will voluntarily begin to collect and remit Nevada sales tax beginning Jan. 1, 2014, or as of the effective date of federal legislation, whichever is earlier.

Amazon has a distribution center in Fernley, Nev., and a subsidiary, Zappos, in Las Vegas.

Start-up Expenses

Are you starting a new business?

If so, your “start-up” expenses generally can't be currently deducted. You can, however, elect to deduct a limited amount of start-up costs for the tax year in which the active trade or business begins (up to $5,000 ($10,000 for a tax year beginning in 2010), reduced by the amount by which the start-up costs exceed $50,000 ($60,000 for a tax year beginning in 2010)), with the remainder amortizable ratably over a 180-month period beginning with the month in which the active trade or business begins. This election is only available for start-up expenses that relate to an active trade or business, and not to investments.

One way to avoid or minimize start-up expenses that are nondeductible or which must be amortized over a 180-month period is to buy an activity that has already been developed by another taxpayer to the point of being an active trade or business. Once an active business is acquired, amounts spent to expand it generally won't be subject to the special rule barring the deduction of start-up expenses.

“Start-up” expenses subject to the special election include those incurred in: investigating the acquisition or creation of an active trade or business; creating an active trade or business; or carrying on an activity engaged in for profit before the activity becomes an active trade or business, in anticipation of the activity becoming an active trade or business.

The rule generally barring the current deduction of start-up expenses ceases to apply once the business becomes active, nor does the prohibition apply at any time to certain interest, taxes and research expenditures. Also, the rule generally barring the current deduction of start-up expenses doesn't apply to the cost of expanding an already existing active trade or business.

Has your business reached the “active” stage?

The rule barring current deduction of start-up expenses only applies to expenses incurred before the activity becomes an active trade or business. Also, 180-month amortization begins with the month in which this happens and the election to amortize must be made with the return for the tax year in which the business reaches the active stage.

Generally speaking, if the activities of a taxpayer have advanced to the extent necessary to establish the nature of its business operations, the taxpayer will be considered to have begun an active business. For example, the acquisition of operating assets which are necessary to the type of an active business contemplated may constitute the beginning of an active business. On the other hand, the receipt of income, in and of itself, doesn't necessarily mean that the active business stage has been reached. And even if all necessary business assets are on hand, IRS and some courts may require something more under certain circumstances before an activity is deemed to be an active business, for example, the commencement of marketing activities or the actual operation of business assets.

The time at which an activity becomes an active business is an important determination because a miscalculation on this point can cause the loss of important tax benefits. For instance, the election to deduct/amortize start-up expenditures must be made not later than the due date of the taxpayer's return (including extensions) for the tax year in which the active business begins. If a taxpayer has any doubt as to when the active business began, an election should be made in the year the expenditures are paid or incurred, or at least in the first year there is any reason to believe IRS might take the position that business began. Otherwise, the right to make the election would be lost if IRS successfully claimed that the business actually began in an earlier year.

Do you expect to pay interest, taxes or research expenses in starting a new business?

Otherwise deductible interest, taxes and research expenses aren't subject to the rule that generally bars the current deduction of start-up expenses.

Do you plan to expand an already existing active business?

Ordinary and necessary business expenses incurred in expanding an already existing active trade or business (whether purchased or created by the taxpayer) aren't subject to the special limits on start-up expenses and are generally deductible.

Whether a taxpayer is expanding an old business or starting a new one can be a tricky determination in certain cases, especially where there is a change in the kind of business done as well as in the size of the old business.

If in doubt, consider treating the outlays in question as start-up expenses while making the amortization election. In the event that it's later determined that you were in fact expanding an old business (and not creating a new one), it's possible that you will still be able to deduct the expenses by filing an amended return. On the other hand, if the election isn't made and the outlays are later determined to be start-up expenses, you will be stuck with expenditures that have to be capitalized and can't be amortized.

If the intention is to expand an old business through a new and different entity (for example, through a newly organized partnership or corporate subsidiary), the expenses generally can't be currently deducted.

Do you plan to expand an old business through a new entity?

If so, the special exception for expenses incurred to expand an old business may not apply. This is because the trade or business activities of one tax entity can't be attributed to another for this purpose. For instance, if a partnership incurs expense to create additional branches or units for its already existing business to be carried on by separate tax entities, for example by newly organized corporations to be owned by the partnership, the expenses won't qualify under the exception. One solution to this problem would be to have the partnership or other original entity first transfer part of its old business to the new corporation, then have the new corporation expand it. Or buy an old corporation that's already in the same line of business and then have the old corporation expand that business. In either case, the corporation would be able to deduct the expansion outlays.

In the case of a corporate parent-subsidiary situation, a special rule may allow the deduction of expansion expenses incurred before the sub comes into existence if (1) the parent and the sub are in the same business, (2) the customers of the sub have the right to obtain goods or services from the parent if the sub can't provide them, and (3) gross receipts from the expansion are reported as income on the affiliated group's consolidated return. This might apply, for example, to a chain of health clubs.

Does the contemplated business require a license or franchise or other outlay that ordinarily must be capitalized?

The deduction/amortization election only applies to outlays that would be currently deductible if it weren't for the start-up expense limitation. As a result, items that ordinarily have to be capitalized, such as the cost of acquiring a license or a franchise, don't qualify for the election. However, the cost of a license or franchise may be amortizable.

Do you expect to incur syndication or organizational expenses?

Starting a new business may involve partnership or corporation organization expenditures. You can elect to deduct a limited amount of these expenditures (up to $5,000, reduced by the amount by which the organizational expenses exceed $50,000), with the remainder amortizable over a 180-month period beginning with the month in which the active trade or business begins. If the election isn't made, no deduction would generally be allowed until the organization goes out of existence. Also, the deduction/amortization election doesn't apply to partnership syndication expenses, which must always be capitalized.

Have you tried to start a new business, then given up on the project?

The deduction/amortization election doesn't apply to unsuccessful search, investigatory, or pre-opening expenditures for a new business or a for-profit investment transaction. In the case of a corporation, these fruitless start-up costs can be deducted as a loss when the project is abandoned. But the unsuccessful start-up expenses of noncorporate taxpayers not engaged in a trade or business when the start-up costs are paid or incurred are, with one exception discussed below, treated as nondeductible, personal expenses.

Where a noncorporate taxpayer has gone beyond a general search for a new business to focus on a specific enterprise, the unsuccessful start-up expenses are deductible as a loss.

Noncorporate taxpayers contemplating substantial expenditures in investigating a new business should consider organizing a small business corporation to undertake the search and, if successful, to conduct the new business. If the search or investigation proves fruitless, the stockholders are entitled to an ordinary loss deduction on their small business corporation stock.

Do you plan to use depreciable assets in starting a new business?

Ordinarily, depreciation deductions are not available until the asset is placed in service in the taxpayer's trade or business. However, elective deduction/amortization is available for amounts that would be deductible if paid or incurred in an existing business. Thus, the cost, for example, of a computer or word processor used to train new employees or to set up an accounting system, to the extent depreciable during the start-up period, should qualify for the deduction/amortization election.

New Markets Tax Credit Modeled After Federal Program Is Enacted

Nebraska enacted the New Markets Job Growth Investment Act (L.B. 1128), which creates a nonrefundable, nontransferable income tax credit for “qualified equity investments” in entities that, in turn, invest in low-income community businesses.

The credit, which is modeled after the federal New Markets Tax Credit program, is available over a seven-year period, and no credits are allowed for the first two years of investment.

The credit is allowed for the next five years, and is 7 percent in the third year, increases to 8 percent for the next four years.

According to the legislation, a “qualified equity investment” is defined as any equity investment in, or long-term debt security issued by, a qualified community development entity that: is acquired after Jan. 1, 2012, at its original issuance solely in exchange for cash; has at least 85 percent of the cash purchase price used by the issuer to make qualified low-income community investments in qualified active low-income community businesses located in Nebraska by the first anniversary of the initial credit allowance date; carries the designation of qualified equity investment by the issuer; and is certified by the tax commissioner as not exceeding the $15 million credit limitation

Certifying Equity Investments

For an equity investment or long-term debt security to be designated as a qualified equity investment and eligible for credits, the qualified community development entity must apply to the commissioner. The legislation provides information about the application.

The commissioner will certify qualified equity investments in the order applications are received, and applications received on the same day will be deemed to have been received simultaneously.

However, the credit is subject to recapture if: any amount of the federal tax credit is recaptured; the issuer redeems or makes principal repayment with respect to a qualified equity investment prior to the seventh credit allowance date; or the issuer fails to invest and maintain the level of investment until the last credit allowance date.

The legislation was enacted April 10 and took effect Jan. 1.

Virginia Corporate Income Tax International Trade Facility Tax Credit

The Virginia Department of Taxation issued guidelines relating to the international trade facility tax credit. This is an income tax credit for either capital investment in an “international trade facility” or increasing jobs related to such facility. The amount of the credit is equal to either $3,000 per qualified full-time employee that results from increased qualified trade activities by the taxpayer or 2% of the capital investment made by the taxpayer to facilitate the increased qualified trade activities. The guidelines discuss: the requirements for an international trade facility; the criteria for qualified full-time employees; related party rules; the criteria for capital investments; the computation and carryover of credits; the recapture of certain credits; the treatment of affiliated companies; the treatment of international trade facilities in tobacco-dependent localities; and the administration of the credit. Various examples are provided. The guidelines do not constitute formal rulemaking and therefore do not have the force and effect of law or regulation. (Virginia Public Document Ruling 12-45, 04/17/2012)

Texas Franchise Tax Credit for Capital Investments Disallowed

A taxable entity could not claim the credit for capital investments under the pre-2008 Texas franchise tax due to its failure to meet the three statutory requirements. The entity was unable to provide clear and convincing evidence that it: paid an average weekly wage at the location for which the credit was claimed that was at least 110% of the county average weekly wage; offered coverage to all full-time employees by a group health benefit plan, for which the business paid at least 80% of the premiums or other charges assessed under the plan for the employees at the location for which the credit was claimed; and, made the required minimum qualified capital investment. ( Texas Comptroller.s Decision 103,734, 03/05/2012 .)

Mississippi New Markets Tax Credit Transactions

HB 1257, effective 07/01/2012, authorizes public entities to create public benefit corporations for the purpose of entering into financing agreements and engaging in new markets tax credit transactions which include arrangements to plan, acquire, renovate, construct, lease, sublease, manage, operate and or improve new or existing public property or facilities located within the boundaries or service area of the public entity. The law also extends, from 30 to 60 days, the time within which a qualified community development entity allocated a qualified equity investment tax credit must issue the qualified equity investment for which the credit was allocated.

Biomass Research and Development Initiative (BRDI)

A joint funding effort between the U.S. Department of Agriculture (USDA) and the U.S. Department of Energy (DOE) for fiscal year (FY) 2012 was recently announced and requires that funded projects integrate all three legislatively mandated technical areas. These areas include: (1) Feedstocks development, (2) Biofuels and biobased products development, and (3) Biofuels and biobased products development analysis.

Feedstocks Development: Research, development, and demonstration activities regarding feedstocks and feedstock logistics (including harvest, handling, transport, preprocessing, and storage) relevant to production of raw materials for conversion to biofuels and biobased products.

Biofuels and Biobased Products Development: Research, development, and demonstration (R,D,&D) activities to support: (i) Development of diverse cost-effective technologies for the use of cellulosic biomass in the production of biofuels, bioenergy, and biobased products; and (ii) Product diversification through technologies relevant to the production of a range of biobased products (including chemicals, animal feeds, and cogeneration power) that potentially can increase the feasibility of fuel production in a biorefinery.

Biofuels and Biobased Products Development Analysis: The intent of this section and integrating all technical areas is to apply systems evaluation methods that can be used to optimize system performance and market potential and to quantify the project's impact on sustainability; therefore, successful applications will consider the life-cycle (cradle-to-grave) impacts including environmental, social, and economic implications that are attributable to the project. Successful projects should include these sustainability data in engineering process models and be used over the life of the project to improve the system and quantify sustainability impacts.

Light-Duty Fuel Cell Electric Vehicle Validation Data

The Light-Duty Fuel Cell Electric Vehicle Validation Data Announcement (FOA), the Fuel Cell Technologies (FCT) Program seeks to fund the collection, analysis, and validation of light-duty hydrogen fuel cell electric vehicle (FCEV) performance data operating in real-world environments. Feedback will be provided to the DOE hydrogen and fuel cell R&D projects and industry partners to help determine what additional R&D is required to move the technology forward. The total DOE funding available for new awards is estimated to be $6,000,000. The full Funding Opportunity Announcement (FOA) is posted on the EERE Exchange website at https://eere-exchange.energy.gov. Applications must be submitted through the EERE Exchange website to be considered for award. The applicant must first register and create an account on the EERE Exchange website. The Users' guide for applying to Department of Energy (DOE), Energy Efficiency and Renewable Energy's (EERE) Funding opportunity Announcements (FOA) through the Exchange website can be found at https://eere-exchange.energy.gov/Manuals.aspx. Information on where to submit questions regarding the content of the announcement and where to submit questions regarding submission of applications is found in the full FOA posted on the EERE Exchange website.

Quarterly Coal Report

The Quarterly Coal Report (QCR) presents U.S. coal production, exports, imports, receipts, prices, consumption, coal quality, and stocks data. In addition, the report offers U.S. coke production, consumption, stocks, imports, and exports data. Data for 2010 and prior years are final; all data for 2011 are final, with the exception of coal production, and electric utility stocks and consumption.
The Full Report

Solar Leases Attracting New Demographic

The sun is shining on homeowners in less affluent neighborhoods who are discovering they can afford solar energy after all — by leasing rather than buying the panels on their roofs.

The new business model lets homeowners save money the very first month, rather than breaking even a decade after an initial investment of $5,000 to $10,000.

Article

California's Franchise Tax Board Drops Effort to Limit Property Tax Deductions Based on New IRS Guidance

The Franchise Tax Board has halted an initiative launched in November 2011 to ensure taxpayers do not deduct portions of their property tax bills that are not based on property values, and will issue guidance for taxpayers soon in light of new advice from the Internal Revenue Service that the portions may be deductible for federal income tax purposes.

FTB removed material from its website about the Real Estate Tax Deduction Educational Campaign and will update its instructions and forms once IRS revises its instructions and forms to clarify deductibility of property taxes, the state tax agency said in a posting to its website April 13. The agency also dropped its plans to require 2012 tax returns to include parcel numbers and itemized tax amounts.

Upcoming guidance will advise taxpayers on filing amended returns if they relied on FTB's earlier guidance that portions of their property tax bills were not deductible.

At issue are portions of county property tax bills that are not levied on an ad valorem basis. When it launched the education campaign, FTB said it relied on long-standing IRS guidance that property tax items are deductible only if they are based on property value.

State, Local Financing Benefits in Tax Code as Part of Tax Reform Review

Tax reform could have an impact on the way many states and local governments finance themselves because of the broad benefits that can come from the use of bonds that exempt interest from federal income taxes and bonds that provide federal tax credits, according to a Joint Committee on Taxation report issued April 23.

The report (JXC-36-12), prepared ahead of an April 24 Senate Finance Committee hearing on the issue, noted that the use of tax-favored bonds offers key benefits to state and local governments because it allows them to obtain financing for their projects at a lower cost.

JCT also provided background material on the state and local tax deduction allowed by the federal government, saying it estimates that 44.8 million tax returns will include $174 billion in deductions for real property taxes in 2012.

It also said that 42.5 million returns will include state and local income tax deductions worth $291.5 billion.

Energy Department to Back $30 Million Storage Competition

The Energy Department on April 11 announced a $30 million research competition for improving the performance and safety of energy storage devices, including hybrid energy storage modules being developed by the U.S. Department of Defense for military applications.

DOE, through its Advanced Research Projects Agency - Energy (ARPA-E), is funding the Advanced Management and Protection of Energy-storage Devices (AMPED) program. It is designed to seek out transformational, breakthrough energy storage technologies that are too risky for private-sector investment.

Specifically, AMPED technologies have the potential to create a new generation of electric and hybrid-electric vehicles; increase the fuel efficiency of military generators to help reduce the need for fuel convoys on the battlefield; improve the reliability of military aircraft generators to help to reduce operation and maintenance costs; enable next-generation high-power weapons systems and fuel-efficient operations for U.S. Navy ships; and enhance the efficiency and reliability of the U.S. electricity grid.

Hydropower Gets a $5 Million Energy Department Opportunity

The Energy Department on April 17 announced that up to $5 million is available this year to assess opportunities to increase power production at up to 40 existing hydropower facilities around the nation. Through this competitive funding opportunity, the Energy Department will work with hydropower professionals to conduct standardized assessments to identify opportunities to increase generation and value at hydropower plants.

As much of America's aging hydropower infrastructure is more than 50 years old, this effort could help accelerate the deployment of upgrades at existing hydropower facilities, creating jobs and increasing the supply of renewable energy to American families and businesses. Conventional hydropower already supplies more than 6% of the nation's electricity. The assessments to be completed through this solicitation are part of the Energy Department's larger Hydropower Advancement Project, which seeks to accelerate the improvement and expansion of U.S. hydropower plants.

Energy Department Offers $2.5 Million for Biomass Stoves

The Energy Department announced on April 13 that up to $2.5 million will be available this year for applied research to advance clean biomass cookstove technologies for use in developing countries. The funding will support the development of innovative cookstove designs that allow users to burn wood or crop residues more efficiently and with less smoke than open fires and traditional stoves. DOE, along with other federal agencies, is a founding partner of the Global Alliance for Clean Cookstoves, a public-private partnership to advance cookstove technologies that improve indoor air quality, reduce carbon emissions, and deliver important benefits for developing nations around the world.

The World Health Organization cites indoor smoke from cooking and heating as one of the top 10 threats to public health in developing countries, contributing to nearly two million deaths each year. Clean cookstoves with reduced emissions and increased energy efficiency will help prevent some of these deaths caused by smoke exposure. Energy-efficient cookstoves also reduce fuel use, slow deforestation, and reduce the time families have to spend collecting fuel.

The Energy Department encourages organizations including small businesses, non-profits, universities, and national laboratories, to submit proposals for applied research and development grants to develop clean and efficient cookstoves. To help ensure the technologies developed will be usable and adopted, the research and development work will be based on assessments of user needs, and prototypes will be tested in the laboratory and in the field. DOE is also interested in supporting the development of a software tool that integrates research findings to help stove designers and manufacturers improve a wide range of cookstoves.

U.S. Wind Industry Grew 31% in 2011 over Previous Year: Report

The U.S. wind industry installed 6,816 megawatts (MW) of energy in 2011, a 31% gain over 2010, according to a report released April 12 by the American Wind Energy Association (AWEA). The U.S. wind industry's trade association reported a total of 46,916 MW installed in the United States last year. The report noted that more than 8,300 MW are under construction.

Five states received more than 10% of their electricity from wind in 2011, with South Dakota leading the way with 22.3%. Iowa, North Dakota, Minnesota, and Wyoming completed the list. In terms of wind power under construction, Kansas leads with 1,189 MW, followed by Texas, California, Oregon, and Illinois.

Florida Reinstates Renewable Energy Tax Incentives

The Florida Legislature has enacted legislation that reinstates: a sales tax exemption for equipment used for renewable energy technologies, a credit for investment in renewable energy technologies, and a renewable energy production credit. The bill also amends the tax refund program for qualified target industry businesses. (L. 2012, H7177, effective 07/01/2012.)

Renewable energy technologies equipment exemption. The bill reinstates a sales tax exemption for equipment, machinery, and other materials for renewable energy technologies. (A previous exemption for renewable energy equipment expired in 2010.) The reinstated tax exemption includes the sale of materials used in the distribution of biodiesel, ethanol, and other renewable fuels, including fueling infrastructure, transportation, and storage, up to a limit of $1 million in tax each state fiscal year for all taxpayers. Gasoline fueling station pump retrofits for biodiesel, ethanol, and other renewable fuel distribution qualify for this exemption. The exemption will be available to a purchaser only through a refund of previously paid taxes. This exemption expires July 1, 2016.

Credit for investment in renewable energy technologies. In addition, the bill reinstates a corporate income tax credit for investment in renewable energy technologies. (A previous credit for renewable energy investments also expired in 2010.) The bill reinstates the biofuel portion of the renewable energy technologies investment tax credit for four years and expands it to include materials used in the distribution of other renewable fuels, up to a limit of $10 million in taxes each state fiscal year for all taxpayers. The credit can be used for tax years beginning on or after January 1, 2013, and will be granted in an amount equal to the eligible costs (75% of all capital costs, operation and maintenance costs, and research and development costs in connection with an investment in the production, storage, and distribution of biodiesel, ethanol, and other renewable fuel in the state, including the costs of constructing, installing, and equipping such technologies in Florida) incurred between July 1, 2012, and June 30, 2016.

Renewable energy production credit. The bill reinstates and modifies the corporate income tax credit for renewable energy production for electricity produced and sold on or after January 1, 2013, through June 30, 2016. The term “new facility” means a new renewable energy facility that was operationally placed in service after May 1, 2006, and as amended includes a Florida renewable energy facility that has had an expansion operationally placed in service after May 1, 2006, and whose cost exceeded 50% of the assessed value of the facility immediately before the expansion. An “expanded facility” is one that increased electrical production and sale by more than 5% over what it produced during 2011. The bill amends current law to provide that for a new facility, the credit will be based on the taxpayer's sale of the facility's entire electrical production, and for an expanded facility, the credit will be based on the increases in the facility's electrical production that are achieved after May 1, 2012, rather than after May 1, 2006.

Qualified target industry businesses—tax refund program. The bill also amends the tax refund program for qualified target industry businesses, by clarifying that an electrical utility company that is excluded from the definition of “target industry business” is any municipal electric utility, investor-owned electric utility, or rural electric cooperative that owns, maintains, or operates an electric generation, transmission, or distribution system within Florida. This will allow renewable energy producers who only sell electricity to a utility at wholesale to be eligible for the tax refund. This refund program applies to the corporate income, sales and use, property, stamp taxes, and the state communications services taxes administered under Chapter 202, Fla. Stat.

Ways & Means Releases Committee Report on Small Business Tax Cut Act

The House Ways & Means Committee recently released H. Rept 112-425, the Committee Report for H.R. 9, the “Small Business Tax Cut Act.” The House Report contains an explanation of the bill provisions, estimated revenue effects, and text of the proposed legislation. H. Rept 112-425 also contained a dissenting statement by the Democratic minority. The White House has said the President would veto the measure if it passes Congress because the Administration believes that “this bill is not an effective way to incentivize small business investment and job creation.”

H.R. 9, which was introduced by House Majority Leader Eric Cantor (R-VA), would allow qualified small businesses (those with fewer than 500 employees) to claim a new 20% deduction. In general, the deduction, which would be similar to the Code Sec. 199 domestic production activities deduction (and would be coordinated with that deduction), would be equal to 20% of the lesser of:

(1) qualified domestic business income (generally, domestic business gross receipts less cost of goods sold allocable to such receipts, less other expenses, losses or deductions allocable to such receipts); o

(2) taxable income (without regard to the new deduction) for the tax year.

The new small business deduction couldn't exceed 50% of the greater of: (a) W-2 wages paid to non-owners of the business; or (2) W-2 wages paid to non-owner family members of direct owners, plus W-2 wages paid to 10%-or-less direct owners. Certain partners' distributive shares of partnership items could be treated as W-2 wages for purposes of the new deduction.

For a qualified small business that is a partnership and that so elects, the portion of the entity's qualified domestic business taxable income for the tax year that is allocable to each qualified service-providing partner would be treated as W-2 wages paid during that tax year to an employee who is a 10%-or-less direct owner. The domestic business gross receipts of the partnership for the tax year would have to be reduced by any amount treated as W-2 wages under this rule. Under an amendment in the nature of a substitute to H.R. 9, a qualified service-providing partner would be any partner who is a 10%-or-less direct owner and who materially participates in the trade or business to which the income relates.

Gross receipts and W-2 wages taken into account under the new deduction could not be taken into account for Code Sec. 199 purposes.

The bill, which would apply for the first tax year of the taxpayer beginning after Dec. 31, 2011, does not carry any offsets to pay for the small business deduction.

Washington Renewable Energy System Cost Recovery

The Department of Revenue has readopted, on an emergency basis, amendments to WAC 458-20-273 (Renewable energy system cost recovery), which provides appeal rights to a determination by the Department regarding: (1) a revocation or denial of approval to certify a renewable energy system for eligibility in the incentive payment program; or (2) a revocation or denial of approval to certify a module, inverter, or blade as manufactured in Washington state for purposes of increased factors in calculating the amount of incentive payments. The amended rule had previously been adopted on an emergency basis, and there are no changes from the version previously filed. The amended rule may be used to determine tax liability until August 3, 2012, unless the Department adopts a permanent rule prior to that date.

Arizona Renewable Energy Credits

Arizona SB 1229, effective retroactively to taxable periods beginning from and after 12/31/2006, creates an exclusion from tax imposed on the retail classification for sales and other transfers of renewable energy credits or other unit created to track energy derived from renewable energy resources. The legislation also creates a corresponding use tax exclusion. “Renewable energy credit” is defined as a unit created administratively by the corporation commission or governing body of a public power entity to track kilowatt hours of electricity derived from a renewable energy resource or the kilowatt hour equivalent of conventional energy resources displaced by distributed renewable energy resources. The legislation also specifies that the term “business” does not include the transfer of electricity from a solar photovoltaic generation system to an electric utility distribution system and that the utility classification does not include sales and other transfers of renewable energy credits or other unit created to track energy derives from renewable energy resources. Lastly, there is a deduction from the tax base for the utilities classification for the portion of gross proceeds of sales or gross income attributable to transfer of electricity by any retail electric customer owning a solar photovoltaic energy generating system to an electric distribution system, if the electricity transferred is generated by the customer's system.

Pew Study on State Taxes Shows Billions In Incentives, Little Measure of Effectiveness

In their quest to strengthen their economies, particularly in the wake of the Great Recession, states continue to rely heavily on tax incentives, including credits, exemptions, and deductions, to encourage businesses to locate, hire, expand, and invest within their borders.  Yet half the states have not taken basic steps to produce and connect policy makers with good evidence of whether these tools deliver a strong return on taxpayer dollars.
Pew Study

California Commits $100 Million to Build EV-Charging Stations

California Governor Edmund G. Brown, Jr. joined with the California Public Utilities Commission on March 23 to announce a $100 million dollar fund for the construction of a statewide network of charging stations for electric vehicles (EVs). The plan calls for at least 200 public fast-charging stations and another 10,000 plug-in units at 1,000 locations across the state. The funds come from a $120 million settlement with NRG Energy, Inc. that stems from ten-year-old claims during the state's energy crisis. The settlement did not involve EVs.

The network of charging stations funded by the settlement will be installed in the San Francisco Bay Area, the San Joaquin Valley, the Los Angeles Basin, and San Diego County. The goal is to support cleaner air and reduce dependence on foreign oil. Governor Brown also announced that he has signed an executive order laying the foundation for 1.5 million zero-emission vehicles on California's roadways by 2025. In January, the California Air Resources Board voted to require the largest automakers to derive 15%, or about 1.4 million, of their annual California sales from EVs or other zero- or near-zero emissions vehicles by 2025.

Transportation Department Awards $13.1 Million for Green Transit

The U.S. Department of Transportation on April 2 awarded $13.1 million to fund 11 innovative research and demonstration projects under the Federal Transit Administration's (FTA) National Fuel Cell Bus Program. The program advances hydrogen fuel cell power for transit buses and is designed to reduce U.S. dependence on foreign oil and promote cleaner air.

The funds are shared by three consortia: Calstart in Pasadena, California; the Center for Transportation and the Environment in Atlanta, Georgia; and the Northeast Advanced Vehicle Consortium in Boston, Massachusetts. The projects will directly impact organizations and municipalities in seven states, including California, Georgia, Ohio, Massachusetts, New York, North Carolina, and South Carolina. All three consortia will engage in work to develop various fuel cell components, test U.S.-made buses under real-world conditions powered by fuel cells, and conduct educational outreach.

According to DOE's National Renewable Energy Laboratory and the FTA, every fuel cell-powered bus put into service in the United States could reduce the amount of carbon released into the atmosphere by 100 tons annually and eliminate the need for 9,000 gallons of fuel every year over the life of the vehicle. For buses currently running on diesel fuel, that translates into a savings of more than $37,000 per year, per vehicle.

Interior Department Announces Next Steps for Atlantic Offshore Energy

The U.S. Department of the Interior (DOI) and the Bureau of Ocean Energy Management (BOEM) announced on March 28 that DOI is taking steps to assess the conventional and renewable energy resource potential in the Mid- and South Atlantic. The draft programmatic environmental impact statement (PEIS) released for public comment will help inform future decisions about whether, and if so where, leasing would be appropriate.

This milestone advances BOEM's regionally tailored approach to Outer Continental Shelf (OCS) exploration and development, which stresses the importance of better understanding resource potential in the Mid- and South Atlantic. The draft PEIS assesses proposed geological and geophysical activities, including seismic and other offshore surveys, in the Mid- and South-Atlantic planning areas.

The PEIS also evaluates the potential environmental effects of multiple geological and geophysical activities in these OCS planning areas and, where needed, outlines mitigation and monitoring measures that will reduce or eliminate potential impacts. A variety of techniques is also used to understand the potential to site renewable energy structures and locate marine mineral resources such as sand and gravel. BOEM also uses geological and geophysical information to fulfill its statutory responsibilities to oversee the safety of offshore operations; support environmental impact analyses and protect the environment; ensure receipt of fair market value for leased federal lands; and conserve oil and gas resources.

Energy Department Offers up to $15 Million for Biomass Fuel Supplements

The Energy Department announced on April 6 up to $15 million is available to demonstrate biomass-based oil supplements that can be blended with petroleum. Known as "bio-oils," these precursors for completely renewable transportation fuels could be integrated into the oil refining processes that make conventional gasoline, diesel, and jet fuels without requiring modifications to existing fuel distribution networks or engines. The goal is to help reduce U.S. use of foreign oil and diversify the nation's energy portfolio.
The Energy Department expects to fully fund between five and ten projects in fiscal year 2012 to produce bio-oil prototypes that can be tested in oil refineries and used to develop comprehensive technical and economic analyses of how bio-oils could work. The prototype bio-oils will be produced from a range of feedstocks. Domestic industry, universities, and laboratories are all eligible to apply. The results will inform future efforts directed at advancing bio-oil technologies and bringing these renewable fuels to market.

Connecticut OKs $1.4M to make solar system installation more affordable

A state-backed program designed to make it more affordable for Connecticut residents to install photovoltaic solar electric systems at their homes has attracted considerable interest.

The Clean Energy Finance and Investment Authority said Monday that it has approved 126 applications for photovoltaic systems since its Residential Solar Investment Program debuted a month ago.

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Greater Cincinnati Foundation invests in Energy Alliance

The Greater Cincinnati Foundation has supplied the The Greater Cincinnati Energy Alliance with grants since its inception. Last week, the Energy Alliance received a $500,000 from the GCF to help fund their GC-HELP loan program.

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Treasury's Section 1603 Program Created Widespread Positive Economic Impact

The U.S. Department of the Treasury's popular Section 1603 program, which expired at the end of 2011, provided a significant economic boost to the U.S., according to a new analysis performed by the U.S. Department of Energy's (DOE) National Renewable Energy Laboratory (NREL).

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Connecticut Approves $2 Million Brownfield Redevelopment Loan For Component Manufacturer

EDAC Technologies Corporation, a designer, manufacturer and servicer of precision components for aerospace and industrial applications, purchased an 181,000-square-foot, $2.65 million, manufacturing facility in Plainville, Connecticut.

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Early Seed and Angel Investment Credits

S.B. 463, effective on day after date of publication, provides that a person receiving an angel investment credit or early stage seed investment credit must keep the investment in a certified business, or with a certified fund manager, for no less than 3 years, unless the person's investment becomes worthless, as determined by the Wisconsin Economic Development Corporation (WEDC), during the 3-year period or the person has kept the investment for no less than 12 months and a bona fide liquidity event, as determined by the WEDC, occurs during the 3-year period. The requirements for certification of businesses under the angel investment and early stage seed investment tax credit programs are modified, so that the following certification requirements apply only to the initial certification of the business: (1) the requirement to have less than 100 employees; (2) the requirement to have been in operation instate for not more than 10 consecutive years; and (3) the requirement to have not received an aggregate private equity investment in cash of more than $10 million before being certified as a qualified new business venture. In addition, to obtain certification a business must agree that it will not relocate outside Wisconsin during the three years after it receives an investment for which a person can claim an angel investment credit and agrees to pay a prescribed penalty if it does relocate. For this purpose, a business relocates outside Wisconsin when the business locates more than 51% of any of the following outside the state: (a) the business's employees; (b) the business's total payroll; (c) the activities of the businesses's headquarters, as determined by the WEDC.

Virginia Data Center Exemption

H.B. 216 clarifies that the sales and use tax exemption for certain computer equipment or enabling software purchased or leased for use in a qualifying data center (under Va. Code Ann. § 58.1-609.3(18) ) applies to the data center operator and the tenants of the data center if they collectively meet the exemption's requirements. This legislation is effective for purchases made on or after July 1, 2012, for use in a data center that: (1) meets the requirements of the exemption on or after January 1, 2009, and (2) enters into a memorandum of understanding on or after January 1, 2009, with the Virginia Economic Development Partnership Authority prior to claiming the exemption.

Power Purchase Agreements Excluded from Purchase Price

Power purchase agreements (PPAs) are excluded from the purchase price allocation on wind transactions, according to Private Letter Ruling 201214007 issued Friday by the Internal Revenue Service (IRS). The ruling could have significance to outright project purchases, project purchases via the sale leaseback structure, midstream purchases and other PPA arrangements. The ruling was directed to the taxpayer who requested it and may not be used or cited as precedent, according to the IRS.

Department of Energy Wireless Charging for Electric Vehicles

The Department of Energy's (DOE) National Energy Technology Laboratory (NETL), on behalf of the DOE Office of Energy Efficiency and Renewable Energy (EERE), Vehicle Technologies (VT) Program, is issuing a Funding Opportunity Announcement (FOA) entitled “Wireless Charging for Electric Vehicles.”

The objective of this FOA is to research and develop a production-feasible wireless charging system, integrate the system into a production-intent vehicle, and to demonstrate the technology’s readiness to deliver the benefits of static (and possibly quasi-dynamic) wireless charging to drivers of light-duty (10,000 lb Gross Vehicle Weight Rating or less) Grid-Connected Electric Drive Vehicles (GCEDV). While the primary focus of this project is the advancement of static and possibly quasi-dynamic charging, the Department of Energy (DOE) recognizes that the research and demonstration results of this FOA may contribute to the future development of dynamic charging capability. This project shall demonstrate wireless charging technology while being cost competitive and compliant with safety standards.

Department of Energy Small Business Technology Transfer Program

The Department of Energy is making available up to $9 million for roughly 50 energy efficiency and renewable energy projects through the Department’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which help small businesses develop technologies with a strong potential for commercialization and job creation. SBIR and STTR programs are funded by federal agencies with large research and development budgets that set aside a fraction of their funding for competitions among small businesses. Small businesses that win awards in these programs keep the rights to any technologies they develop and are encouraged to commercialize them. The programs help small businesses bring innovative technologies to market that help spur economic growth and diversify the nation's energy portfolio.

DOE Announces Up to $15 Million to Research Biomass-Based Supplements for Traditional Fuels

The Energy Department recently announced up to $15 million available to demonstrate biomass-based oil supplements that can be blended with petroleum, helping the United States to reduce foreign oil use, diversify the nation's energy portfolio, and create jobs for American workers. Known as "bio-oils," these precursors for fully renewable transportation fuels could be integrated into the oil refining processes that make conventional gasoline, diesel, and jet fuels without requiring modifications to existing fuel distribution networks or engines.

The Department expects to fully fund between five to ten projects in fiscal year 2012 to produce bio-oil prototypes that can be tested in oil refineries and used to develop comprehensive technical and economic analyses of how bio-oils could work. The proto-type bio-oils will be produced from a range of feedstocks that could include algae, corn and wheat stovers, dedicated energy crops or wood residues. Domestic industry, universities, and laboratories are all eligible to apply.

Business Plan Financial Projections

The financials should be developed after you've analyzed the market and set clear objectives. That's when you can allocate resources efficiently. The following is a list of the critical financial statements to include in your business plan packet.

Historical Financial Data

If you own an established business, you will be requested to supply historical data related to your company's performance. Most creditors request data for the last three to five years, depending on the length of time you have been in business.

The historical financial data you would want to include would be your company's income statements, balance sheets, and cash flow statements for each year you have been in business (usually for up to three to five years). Often creditors are also interested in any collateral that you may have that could be used to ensure your loan, regardless of the stage of your business.

Prospective Financial Data

All businesses, whether startup or growing, will be required to supply prospective financial data. Most of the time, creditors will want to see what you expect your company to be able to do within the next five years. Each year's documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, you should supply monthly or quarterly projections. After that, you can stretch it to quarterly and/or yearly projections for years two through five.

Make sure that your projections match your funding requests; creditors will be on the lookout for inconsistencies. It's much better if you catch mistakes before they do. If you have made assumptions in your projections, be sure to summarize what you have assumed. This way, the reader will not be left guessing.

Finally, include a short analysis of your financial information. Include a ratio and trend analysis for all of your financial statements (both historical and prospective). Since pictures speak louder than words, you may want to add graphs of your trend analysis (especially if they are positive).

Funding Request in Your Business Plan

If you are seeking funding for your business venture, use this section to outline your requirements.

Your funding request should include the following information:

Your current funding requirement

Any future funding requirements over the next five years

How you intend to use the funds you receive: Is the funding request for capital expenditures? Working capital? Debt retirement? Acquisitions? Whatever it is, be sure to list it in this section.

Any strategic financial situational plans for the future, such as: a buyout, being acquired, debt repayment plan, or selling your business.  These areas are extremely important to a future creditor, since they will directly impact your ability to repay your loan(s).

When you are outlining your funding requirements, include the amount you want now and the amount you want in the future. Also include the time period that each request will cover, the type of funding you would like to have (e.g., equity, debt), and the terms that you would like to have applied.

Business Plan Marketing & Sales Management

Marketing is the process of creating customers, and customers are the lifeblood of your business. In this section, the first thing you want to do is define your marketing strategy. There is no single way to approach a marketing strategy; your strategy should be part of an ongoing business-evaluation process and unique to your company. However, there are common steps you can follow which will help you think through the direction and tactics you would like to use to drive sales and sustain customer loyalty.

An overall marketing strategy should include four different strategies:

A market penetration strategy.

A growth strategy. This strategy for building your business might include: an internal strategy such as how to increase your human resources, an acquisition strategy such as buying another business, a franchise strategy for branching out, a horizontal strategy where you would provide the same type of products to different users, or a vertical strategy where you would continue providing the same products but would offer them at different levels of the distribution chain.

Channels of distribution strategy. Choices for distribution channels could include original equipment manufacturers (OEMs), an internal sales force, distributors, or retailers.

Communication strategy. How are you going to reach your customers? Usually a combination of the following tactics works the best: promotions, advertising, public relations, personal selling, and printed materials such as brochures, catalogs, flyers, etc.

After you have developed a comprehensive marketing strategy, you can then define your sales strategy. This covers how you plan to actually sell your product.

Your overall sales strategy should include two primary elements:

A sales force strategy. If you are going to have a sales force, do you plan to use internal or independent representatives? How many salespeople will you recruit for your sales force? What type of recruitment strategies will you use? How will you train your sales force? What about compensation for your sales force?

Your sales activities. When you are defining your sales strategy, it is important that you break it down into activities. For instance, you need to identify your prospects. Once you have made a list of your prospects, you need to prioritize the contacts, selecting the leads with the highest potential to buy first. Next, identify the number of sales calls you will make over a certain period of time. From there, you need to determine the average number of sales calls you will need to make per sale, the average dollar size per sale, and the average dollar size per vendor.

Service or Product Line

This section is your opportunity to describe your service or product, emphasizing the benefits to potential and current customers. Focus on why your particular product will fill a need for your target customers.

What to Include in Your Service or Product Line Section

A Description of Your Product / Service

Include information about the specific benefits of your product or service – from your customers' perspective. You should also talk about your product or service's ability to meet consumer needs, any advantages your product has over that of the competition, and the current development stage your product is in (e.g., idea, prototype).

Details About Your Product’s Life Cycle

Be sure to include information about where your product or service is in its life cycle, as well as any factors that may influence its cycle in the future.

Intellectual Property

If you have any existing, pending, or any anticipated copyright or patent filings, list them here. Also disclose whether any key aspects of a product may be classified as trade secrets.  Last, include any information pertaining to existing legal agreements, such as nondisclosure or non-compete agreements.

Research and Development (R&D) Activities

Outline any R&D activities that you are involved in or are planning. What results of future R&D activities do you expect? Be sure to analyze the R&D efforts of not only your own business, but also of others in your industry.

Organization & Management, Business Plan

This section should include: your company's organizational structure, details about the ownership of your company, profiles of your management team, and the qualifications of your board of directors.

Who does what in your business? What is their background and why are you bringing them into the business as board members or employees? What are they responsible for? These may seem like unnecessary questions to answer in a one- or two-person organization, but the people reading your business plan want to know who's in charge, so tell them. Give a detailed description of each division or department and its function.

This section should include who's on the board (if you have an advisory board) and how you intend to keep them there. What kind of salary and benefits package do you have for your people? What incentives are you offering? How about promotions? Reassure your reader that the people you have on staff are more than just names on a letterhead.

Organizational Structure

A simple but effective way to lay out the structure of your company is to create an organizational chart with a narrative description. This will prove that you're leaving nothing to chance, you've thought out exactly who is doing what, and there is someone in charge of every function of your company. Nothing will fall through the cracks, and nothing will be done three or four times over. To a potential investor or employee, that is very important.

Ownership Information

This section should also include the legal structure of your business along with the subsequent ownership information it relates to. Have you incorporated your business? If so, is it a C or S corporation? Or perhaps you have formed a partnership with someone. If so, is it a general or limited partnership? Or maybe you are a sole proprietor.

Important ownership information that should be incorporated into your business plan includes:

Names of owners

Percentage ownership

Extent of involvement with the company

Forms of ownership (i.e., common stock, preferred stock, general partner, limited partner)

Outstanding equity equivalents (i.e., options, warrants, convertible debt)

Common stock (i.e., authorized or issued)

Management Profiles

Experts agree that one of the strongest factors for success in any growth company is the ability and track record of its owner/management team, so let your reader know about the key people in your company and their backgrounds. Provide resumes that include the following information:

Name

Position (include brief position description along with primary duties)

Primary responsibilities and authority

Education

Unique experience and skills

Prior employment

Special skills

Past track record

Industry recognition

Community involvement

Number of years with company

Compensation basis and levels (make sure these are reasonable -- not too high or too low)

Be sure you quantify achievements (e.g. "Managed a sales force of ten people," "Managed a department of fifteen people," "Increased revenue by 15 percent in the first six months," "Expanded the retail outlets at the rate of two each year," "Improved the customer service as rated by our customers from a 60 percent to a 90 percent rating").

Also highlight how the people surrounding you complement your own skills. If you're just starting out, show how each person's unique experience will contribute to the success of your venture.

Board of Directors' Qualifications

The major benefit of an unpaid advisory board is that it can provide expertise that your company cannot otherwise afford. A list of well-known, successful business owners/managers can go a long way toward enhancing your company's credibility and perception of management expertise.

If you have a board of directors, be sure to gather the following information when developing the outline for your business plan:

Names

Positions on the board

Extent of involvement with company

Background

Historical and future contribution to the company's success

Business Plan, What to Include in Your Market Analysis

Industry Description and Outlook -- Describe your industry, including its current size and historic growth rate as well as other trends and characteristics (e.g., life cycle stage, projected growth rate). Next, list the major customer groups within your industry.

Information About Your Target Market -- Narrow your target market to a manageable size. Many businesses make the mistake of trying to appeal to too many target markets. Research and include the following information about your market:

Distinguishing characteristics – What are the critical needs of your potential customers? Are those needs being met?  What are the demographics of the group and where are they located? Are there any seasonal or cyclical purchasing trends that may impact your business?

Size of the primary target market – In addition to the size of your market, what data can you include about the annual purchases your market makes in your industry? What is the forecasted market growth for this group? For more information, see our market research guide for tips and free government resources that can help you build a market profile.

How much market share can you gain? – What is the market share percentage and number of customers you expect to obtain in a defined geographic area? Explain the logic behind your calculation.

Pricing and gross margin targets – Define your pricing structure, gross margin levels, and any discount that you plan to use.

When you include information about any of the market tests or research studies you have completed, be sure to focus only on the results of these tests. Any other details should be included in the appendix.

Competitive Analysis -- Your competitive analysis should identify your competition by product line or service and market segment. Assess the following characteristics of the competitive landscape:

Market share

Strengths and weaknesses

How important is your target market to your competitors?

Are there any barriers that may hinder you as you enter the market?

What is your window of opportunity to enter the market?

Are there any indirect or secondary competitors who may impact your success?

What barriers to market are there (e.g., changing technology, high investment cost, lack of quality personnel)?

Regulatory Restrictions

Include any customer or governmental regulatory requirements affecting your business, and how you’ll comply. Also, cite any operational or cost impact the compliance process will have on your business.

What to Include in Your Executive Summary

If You Are an Established Business

If you are an established business, be sure to include the following information:

The Mission Statement – This explains what your business is all about. It should be between several sentences and a paragraph.

Company information – Include a short statement that covers when your business was formed, the names of the founders and their roles, your number of employees, and your business location(s).

Growth highlights – Include examples of company growth, such as financial or market highlights (for example, “XYZ Firm increased profit margins and market share year-over-year since its foundation). Graphs and charts can be helpful in this section.

Your Products/Services -- Briefly describe the products or services you provide.

Financial information – If you are seeking financing, include any information about your current bank and investors.

Summarize future plans – Explain where you would like to take your business.

With the exception of the mission statement, all of the information in the executive summary should be covered in a concise fashion and kept to one page. The executive summary is the first part of your business plan many people will see: therefore, each word should count.

If You Are a Startup or New Business

If you are just starting a business, you won't have as much information as an established company. Instead, focus on your experience and background as well as the decisions that led you to start this particular enterprise.

Demonstrate that you have done thorough market analysis. Include information about a need or gap in your target market, and how your particular solutions can fill it. Convince the reader that you can succeed in your target market, then address your future plans.

$35 Million VC Fund in Ohio

Ohio State University and Ohio University have teamed up to create a $35 million venture-capital fund to turn campus research discoveries into products and jobs.

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Low-Interest Loans Support New Manufacturing Jobs

New state investments approved by the Pennsylvania Industrial Development Authority (PIDA) will support the creation of 134 new jobs and the retention of 74 jobs in Monroe and Westmoreland counties.

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Bill Wipes Out Ethanol Tax Credit to Restore Highway Funding

Governor Signs Wyoming Gov. Matt Mead (R) signed a bill (S.F. 8) repealing the gasoline tax credit of 40 cents per gallon provided to producers of ethanol, among critics of the subsidy who said it was time for the ethanol industry to stand on its own.

Under the measure, the repeal of the ethanol fuel tax credit will allow the state Highway Fund and local governments to resume collecting millions in fuel taxes on Wyoming-produced ethanol.

The measure, approved Feb. 17 by the Senate and on March 2 by the House, takes effect July 1, 2015. It was signed March 22 by Mead.

Alternative Energy Development, Manufacturing Tax Credits Enacted

A new alternative energy development tax credit and alternative energy manufacturing tax credit have been enacted in Utah for tax years starting by Jan. 1, 2012.
A nonrefundable credit is now available to entities involved in alternative energy development, equaling up to 75 percent of new state revenues generated by projects that either generate utility scale alternative energy or extract alternative fuels.

The credit is available to “alternative energy entities” that conduct business within the state and enter into an agreement with the Office of Energy Development. “Alternative energy projects” are defined as projects involving a new or expanding operation in the state and either utility-scale alternative energy generation or the extraction of alternative fuels.

Coalfield Employment Enhancement Tax Credit

Virginia extends the coalfield employment enhancement credit through tax years beginning before January 1, 2017. Prior to this legislation, the credit applied to tax years beginning before January 1, 2015.

Virginia Governor approves “Amazon Law”

Virginia Governor Bob McDonnell signed “Amazon legislation” that creates a presumption of sales and use tax nexus for an out-of-state seller if a commonly controlled person maintains a distribution center, warehouse, fulfillment center, office, or similar location within Virginia that facilitates the delivery of tangible personal property sold by the seller to its customers.