QBA: Application for Designation as a Qualified Business for the Qualified Equity and Subordinated Debt Investments Tax Credit (2024)
Virginia · Virginia Tax · Used for tax years 2024
Virginia Form QBA is an application for designation as a qualified business for the Qualified Equity and Subordinated Debt Investments Tax Credit. It collects business information, qualification details, a description of business activities, and planned equity or subordinated deb
Who files this form
Businesses that want to issue equity or subordinated debt investments eligible for the Virginia Qualified Equity and Subordinated Debt Investments Tax Credit must file Form QBA.
To qualify, a business must:
- Have annual gross revenues of no more than $3 million in its most recent fiscal year.
- Have its principal office or facility in Virginia.
- Be primarily engaged in business in Virginia or do substantially all of its production in Virginia.
- Have received no more than $3 million in total gross cash proceeds from equity or debt issuances during its existence, excluding commercial loans from chartered banking or savings and loan institutions.
- Be primarily engaged, or organized to engage, in one of the technology-related fields listed in the qualified-business definition.
Special rules apply to businesses in their first taxable year with a Virginia commercial domicile. They are treated as meeting the revenue and Virginia business activity and production requirements.
The designation is valid only for the calendar year of the application. A separate application is required each year.
When it's due
For the 2024 application, Form QBA may be filed any time during the calendar year. You must reapply each year you want the business to be designated as qualified.
Form QBA does not have to be filed before issuing the investments.
What you'll need
Have these details ready to complete Form QBA:
- Business name, FEIN, trading name, incorporation date, address, and NAICS description and code.
- Entity type and business field.
- Information about any research commercialization relationship with an institution of higher education.
- Virginia office and business activity information, most recent fiscal-year gross revenues, and total proceeds from equity and debt issuances.
- A detailed description of business activities. Enclose extra pages if needed.
- The type of investment planned, estimated amount, and anticipated first issuance date.
- The authorized signer's name, title, signature, date, and contact information.
Businesses should be registered with the Department before completing Form QBA. If the business is not registered, complete Form R-1.
How to file
Complete the calendar year and Parts I through VII, including the declaration and authorized signature.
Mail Form QBA to:
Virginia Department of Taxation
Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715
You may instead fax it to (804) 774-3902. Do not both mail and fax the application.
Common mistakes
- Sending the application twice: The filing directions say to mail or fax it, not both.
- Assuming designation continues automatically: You must reapply each year.
- Skipping registration: Businesses should register with the Department before completing Form QBA. Use Form R-1 if not registered.
- Ignoring the stop instructions: The business does not qualify if it fails the Virginia office or activity requirements, exceeds the revenue limit, or exceeds the limit on proceeds from equity and debt issuances.
- Treating a married couple's investment credit as joint: Investments must be made individually, with a separate Form EDC and business statement for each spouse.
Questions people ask
Does the business need to file Form QBA before issuing investments?
No. The form expressly says it does not have to be filed before making issuances.
What counts as primarily doing business or substantially all production in Virginia?
Primarily doing business means at least 50% of the entity's gross receipts come from Virginia sources. Substantially all production means at least 80% of its expenses are incurred in Virginia.
What must the business give investors?
Upon issuance, provide each investor with a copy of the Department's qualified-business certification and a statement on business letterhead. The statement must include the investor's name, each investment's amount, type and date, and the required verification that it qualifies. It must also include the required equity- or debt-specific terms and be signed as directed. The investor must enclose the statement with Form EDC.
How much is the investor's credit?
The credit equals 50% of qualifying investments made during the taxable year. The amount usable each year is limited to the lesser of the tax imposed or $50,000. It is nonrefundable, and excess credits may be carried forward for up to 15 years. Annual credit limits may result in proration.