EDC: Taxpayer Application for Qualified Equity and Subordinated Debt Investments Credit (2024)
Virginia · Virginia Tax · Used for tax years 2024
Virginia Form EDC is an application for the Qualified Equity and Subordinated Debt Investments Tax Credit. It reports qualifying businesses, investment types, dates and amounts, and the total credit requested for the Department of Taxation to determine the allowable credit.
Who files this form
Submit Form EDC if you made a cash investment in a qualifying business as qualified equity or subordinated debt and want to apply for the credit. The Department determines the allowable credit amount.
The form lists these applicant types: individual, partnership, LLC, S corporation, and trust. You must have a Department-issued qualified business certification for each qualifying business.
Married investors cannot receive the credit jointly. Each spouse must make an individual investment and provide a separate Form EDC and business statement.
When it's due
For qualified investments made in calendar tax year 2024:
- April 1, 2025: Submit Form EDC and all supporting documents no later than this date. Apply as soon as possible after receiving all Form QBA certifications and before your tax filing deadline.
- May 1, 2025: The Department will contact you by this date if it needs more information.
- May 15, 2025: Deadline to respond to that request.
- May 31, 2025: If you have not received acknowledgment of your application by this date, call (804) 786-2992.
- June 30, 2025: The Department will issue the credit by this date.
- July 15, 2025: If you have not received your credit certification by this date, call (804) 786-2992.
If the return claiming the credit is due on or before May 1, you may need to make an extension payment for any tax due or file an amended return after receiving certification.
What you'll need
Enclose:
- A copy of the Department-issued qualified business certification for each qualifying business.
- A statement on the business's letterhead listing your name and each investment's amount, type, and date separately. It must also verify that the investment meets the definition of a qualified investment.
The business statement must be signed by a company officer. For an investor affiliated with the business, such as a corporate officer or CFO, another company member should sign it.
Have your SSN or FEIN, contact information, tax year ending date, and each business's Form QBA certificate number ready. Include additional pages if needed to list all qualifying investments.
How to file
- Enter one applicant name and one SSN or FEIN, and select your entity type.
- Complete Part I for each qualifying investment, including its business certification number, type, date, amount, and the subtraction question.
- In Part II, total all qualified investments, including those on extra pages. Multiply the total by 0.5 and enter the number of qualified investments.
- Sign and date the declaration in Part III and attach the required documents.
Mail Form EDC and enclosures to:
Department of Taxation
ATTN: Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715
Or fax them to (804) 774-3902.
Wait for approval before claiming the credit on your applicable Virginia income tax return.
Pass-through entities allocating the credit must also file Form TCA within 30 days after the credit is granted, but at least 90 days before participants file their income tax returns. Send it to the same address or fax number, not both. Give each participant receiving a share of the credit a Schedule VK-1.
Common mistakes
- Claiming the credit before approval. The Department must approve it first.
- Overlooking the postmark rule. Without a postmark, the Department uses the date it receives the application to determine timeliness. A handwritten postmark is not accepted.
- Using the same investment for both benefits. An investment does not qualify if it was used for the Venture Capital Investment subtraction or Virginia Real Estate Investment Trust subtraction.
- Including investments affected by compensation restrictions. Do not include investments where you, covered family members, or an affiliated entity receive or received compensation for services to the business in connection with the investment or within one year before or after it. Reimbursement of reasonable expenses is not treated as compensation.
- Filing a joint application for spouses. Each spouse needs a separate application and business statement.
- Skipping business registration. A business entity should be registered with the Department before completing Form EDC. If not registered, complete Form R-1.
- Entering an email address without wanting email communications. Providing an email address consents to emailed communications about this application. Leave it blank if you do not want them.
Questions people ask
How much is the credit?
The credit equals 50% of qualifying investments made during the taxable year. The amount claimed per taxpayer per year is limited to the amount of tax or $50,000, whichever is less. Annual credit allocations are capped at $5 million and may be prorated.
Can I get a refund or carry unused credit forward?
The credit is nonrefundable. Excess credit may be carried forward for up to 15 years.
How long must I hold the investment?
Qualified equity must be held for at least three full calendar years following the calendar year for which the credit is allocated. Subordinated debt must be held for at least three years from issuance. The text lists exceptions for liquidation, certain mergers or acquisitions involving an unaffiliated party, and the taxpayer's death. Otherwise, failing the holding period means forfeiting unused credit and being assessed for credit used, plus interest at 1% per month, compounded monthly from when the credits were claimed.
Where can I get help?
Call the Department's Tax Credit Unit at (804) 786-2992. To order forms or regulations, call (804) 367-8031. Most Virginia income tax forms are also available at www.tax.virginia.gov.