TITLE 30

State Taxes

Income, Inheritance and Estate Taxes

CHAPTER 20. BUSINESS TAX CREDITS AND DEDUCTIONS

Subchapter VII. Alternative Tax Calculation, Credit and License Fee Reduction for Headquarters Management Corporations


(a) Except in the case of a Headquarters Management Corporation described in subsection (b) of this section (but only to the extent that paragraph (1) of such subsection does not apply), during each of the 10 taxable years commencing with the first taxable year following the effective date of a Headquarters Management Corporation's original license under Chapter 23 of this title (but contingent upon the subsequent certification by the Director of Revenue as a Headquarters Management Corporation within 12 months of the effective date of such original license), the tax determined under § 6402 of this title shall be credited during such taxable year, but not below the tax payable under § 6402(2) of this title, in the amount of:

(1) Twenty percent for each qualified employee of the taxpayer within this State during such taxable year, to a maximum reduction of 99%; or

(2) Two percent for each expenditure during the taxable year (not including any payment of wages, salaries or benefits to or for the benefit of qualified employees) by the taxpayer in this State of $7,500 in excess of 100% of its operating expenses, if any, allocated to this State in the most recent taxable year of the taxpayer ending before the effective date of its original license, to a maximum reduction of 99%; or

(3) Any combination of the reduction for new employment under paragraph (a)(1) of this section and the reduction for new expenditures under paragraph (a)(2) of this section, to a maximum reduction of 99%.

(b) In the case of a Headquarters Management Corporation that conducted any business in this State (or any member of whose affiliated group conducted any business in this State) before the effective date of its original license under Chapter 23 of this title, during each of the 10 years commencing with the first taxable year beginning on the effective date of such original license (but contingent upon the subsequent certification by the Director of Revenue as a Headquarters Management Corporation within 12 months of the effective date of such original license), the tax determined under § 6402 of this title shall be credited during such taxable year, but not below the tax payable under § 6402(2) of this title, in the amount of:

(1) To the extent set forth in subsection (a) of this section with respect to Headquarters Management Corporation taxable income derived solely from investment activities; and

(2) With respect to Headquarters Management Corporation taxable income derived from headquarters services, by:

a. 20% for each qualified employee of the taxpayer within this State during such taxable year, conditioned upon the employment by the taxpayer within this State during such taxable year of a total number of qualified employees that is 25% or more greater than the total number of individuals employed within this State before the effective date of such original license (except that, for purposes of counting the total number of individuals employed within this State before the effective date of such original license, individuals employed solely by corporations whose activities within this State were confined to investment activities as defined in § 6401(8) of this title shall not be counted) by (i) itself and all members of its affiliated group, and (ii) entities that become members of its affiliated group by merger or acquisition on or after the effective date of such original license, to a maximum reduction of 99%; or

b. 2% for each expenditure during the taxable year (not including any payment of wages, salaries or benefits to or for the benefit of qualified employees) by the taxpayer in this State of $7,500 certified to be in excess of 125% of its operating expenses allocated to this State in the most recent taxable year of the taxpayer ending before the effective date of such original license (except that, for purposes of counting operating expenses allocated to this State before the effective date of such original license, operating expenses incurred solely by corporations whose activities within this State were confined to investment activities as defined in § 6401(8) of this title shall not be counted) by (i) itself and all members of its affiliated group, and (ii) entities that become members of its affiliated group by merger or acquisition on or after the effective date of such original license, to a maximum reduction of 99%; or

c. Any combination of the reduction for new employment under paragraph (b)(2)a. of this section and the reduction for new expenditures under paragraph (b)(2)b. of this section, to a maximum reduction of 99%.

(c) For purposes of calculating the credit under subsection (a) or (b) of this section, Headquarters Management Corporations electing to file consolidated income tax returns may elect to combine the calculations of employment and expenditures of all Headquarters Management Corporation members of the affiliated group.

74 Del. Laws, c. 256, § 2[1]; 75 Del. Laws, c. 123, §§ 3-7.;

(a) Except in the case of a Headquarters Management Corporation subject to the tax payable under § 6402(2) of this title, any Headquarters Management Corporation that at all times during any taxable year consisting of 12 full months employs 5 or more qualified employees shall be allowed a credit against the income tax otherwise imposed by Chapter 64 of this title that is in excess of $5,000 for such taxable year and for each of the 4 immediately following taxable years in which all conditions set forth in this section shall be met, in the amount determined under subsection (b) of this section.

(b) Subject to the limitation contained in subsection (c) of this section, the amount of the credit allowable under subsection (a) of this section with respect to the qualified employees employed during each taxable year falling within the 5-year life of such credit shall be the sum of $400 multiplied by that number that is the difference between:

(1) The number of qualified employees employed by the taxpayer on the last day of such taxable year, and

(2) The number of individuals, if any, that were employed by the taxpayer in this State on the day immediately preceding the effective date of its original license as a Headquarters Management Corporation under Chapter 64 of this title.

(c) The amount of the credit allowable under this section for any taxable year shall not:

(1) Exceed 50% of the amount of tax imposed upon the taxpayer by § 6402(1) of this title for such taxable year (computed without regard to this section) that is in excess of the minimum tax required by § 6402(2) of this title, nor

(2) Reduce the tax imposed upon the taxpayer below the minimum tax required by § 6402(2) of this title.

(d) The amount of the credit determined under this section for any taxable year that is not allowable for such taxable year solely as a result of the limitation contained in subsection (c) of this section shall be a credit carryover to each of the following taxable years that fall within the 5-year life of the credit. The entire amount of the credit that is not so allowable shall be carried to the earliest of such following taxable years.

74 Del. Laws, c. 256, § 2[1].;

(a) A Headquarters Management Corporation shall obtain a license pursuant to the provisions of Chapter 21 and § 2301(a) of this title.

(b) A Headquarters Management Corporation shall be exempt from payment of fees set forth in subsections (b) and (d) of § 2301 of this title.

74 Del. Laws, c. 256, § 2[1].;

The Director of Revenue is authorized to promulgate rules, regulations and decisions not inconsistent with this subchapter and require such facts and information to be reported as the Director deems necessary for its administration and enforcement. No rule or regulation adopted pursuant to the authority granted by this section shall extend, modify or conflict with any law of this State, or the reasonable implications thereof.

74 Del. Laws, c. 256, § 2[1].;