Biotech Investment Incentive Tax Credit An individual or business may be allowed a tax credit of up to 50% of an eligible investment

in a qualified Maryland biotechnology company (QMBC), up to $250,000. The investor, after

making the proposed investment, cannot own or control more than 25% of the

biotechnology company.

The credit may be taken against corporate income tax or personal income tax.

Sole proprietorships, corporations and pass-through entities, such as partnerships,

subchapter S corporations, limited liability companies and business trusts, may claim the tax credit.

To qualify for the credit:

Qualified investors must contribute at least $25,000 in cash or cash-equivalent to a QMBC

that is certified by the Maryland Department of Business and Economic Development (DBED).

A QMBC must:

Have its headquarters and base of operations in Maryland;

Have fewer than 50 full-time employees

Have been in active business for no longer than 10 years from the date it received its

first qualified investment; and Not have any securities publicly traded companion any exchange.

A QMBC may include a company that has been an active business for up to 12 years, with

DBED approval.

Qualified investors are also required to file an income tax return. Credits may be claimed for

no more than $250,000 per investment in a qualified biotechnology company. DBED may

not certify tax credits for investments in a single qualified biotechnology company that are

in the aggregate more than 15% of the total amount appropriated to the Maryland

Biotechnology Investment Tax Credit Reserve Fund for that fiscal year. DBED may not issue

initial credit certificates in excess of the amount appropriated to the Reserve Fund for that

fiscal year in the state budget as approved by the General Assembly.

At least 30 days before making an investment, the business must submit an initial credit

certificate application to DBED. Upon approval (within 30 days of DBED’s receipt of the

application), the applicant will receive an initial credit certificate stating the amount of the

tax credit and will have 30 days to make the investment. Within the following 10 days, the

investor must notify DBED that the investment has been made. A final credit certificate will

be issued to the applicant stating the amount of the tax credit to which the applicant is

entitled. A copy of the final credit certificate must be filed with the taxpayer’s income tax return.

How the credit is calculated:

The credit allowed is 50% of an eligible investment contributed during the tax year, not to

exceed $250,000. The amount in excess of the state tax liability may be refunded. The total

amount of final tax credit certificates issued by DBED each year is limited to the amount

appropriated to the Reserve Fund in the State budget. Applications are reviewed and approved on a first come, first served basis.

Documentation required:

For taxable years beginning after December 31, 2012, this credit is available only with an

electronically-filed return. A copy of the certification issued by DBED must be included with the electronic return, and the. Form 500CR section of the return must be completed.

Contact:

Maryland Department of Business and Economic Development

Office of Finance Programs, Tax Incentives Group

401 E. Pratt Street

Baltimore, MD 21202

Phone: 410-767-6438 or 410-767-4980

E-mail: taxincentives@choosemaryland.org

McMillan Consulting

828A E. Baltimore St.

Baltimore, MD 21202

Phone: 410-775-6226

Web: http://mcmillancos.com E-mail: info@mcmillancos.com

McMillan Consulting is not affiliated with the state of Maryland. This document is for

informational purposes. Contact us, the appropriate agency for this credit or your tax

professional for further assistance. You can view Maryland's tax credits by visiting

http://macadvises.net/mdtaxsignal.php and clicking on the MD Business Tax

Credits link. We can send you a hard copy of this or any of our info sheets for Maryland tax credits.