Section 820.515 - Corporate net(a) Credits.-- For the tax years that begin on or after January 1, 1999, a corporation that is a qualified business under this act may claim a credit against the tax imposed by Article IV of the Tax Reform Code of 1971 for tax liability attributable to business activity conducted within the subzone in the taxable year. For the tax years that begin on or after January 1, 2001, a corporation that is a qualified business under this act may claim a credit against the tax imposed by Article IV of the Tax Reform Code of 1971 for tax liability attributable to business activity conducted within the expansion subzone in the taxable year. For tax years that begin on or after January 1, 2004, a corporation which is a qualified business under this act may claim a credit against the tax imposed by Article IV of the Tax Reform Code of 1971 for tax liability attributable to business activity conducted within the improvement subzone in the taxable year. No credit may be claimed for activities conducted prior to designation of the real property as part of a subzone or expansion subzone. The business activity must be conducted directly by a corporation in the subzone, improvement subzone or expansion subzone in order for the corporation to claim the tax credit.(b) Tax liability determinations.--The corporate tax liability attributable to business activity conducted within a subzone, improvement subzone or expansion subzone shall be determined by multiplying the corporation's taxable income that is attributable to business activity conducted within the subzone or expansion subzone by the rate of tax imposed under Article IV of the Tax Reform Code of 1971 for the taxable year.(c) Determinations of attributable tax liability.--Tax liability attributable to business activity conducted within a subzone, improvement subzone or expansion subzone shall be computed, construed, administered and enforced in conformity with Article IV of the Tax Reform Code of 1971 and with specific reference to the following:(1) If the entire business of the corporation in this Commonwealth is transacted wholly within the subzone, improvement subzone or expansion subzone, the taxable income attributable to business activity within a subzone, improvement subzone or expansion subzone shall consist of the Pennsylvania taxable income as determined under Article IV of the Tax Reform Code of 1971.(2) If the entire business of the corporation in this Commonwealth is not transacted wholly within the subzone, improvement subzone or expansion subzone, the taxable income of a corporation in a subzone, improvement subzone or expansion subzone shall be determined upon such portion of the Pennsylvania taxable income of such corporation attributable to business activity conducted within the subzone, improvement subzone or expansion subzone and apportioned in accordance with subsection (d).(d) Income apportionment.--The taxable income of a corporation that is a qualified business shall be apportioned to the subzone, improvement subzone or expansion subzone by multiplying the Pennsylvania taxable income by a fraction, the numerator of which is the property factor plus the payroll factor and the denominator of which is two, in accordance with the following: (1) The property factor is a fraction, the numerator of which is the average value of the taxpayer's real and tangible personal property owned or rented and used in the subzone, improvement subzone or expansion subzone during the tax period and the denominator of which is the average value of all the taxpayer's real and tangible personal property owned or rented and used in this Commonwealth during the tax period but shall not include the security interest of any corporation as seller or lessor in personal property sold or leased under a conditional sale, bailment lease, chattel mortgage or other contract providing for the retention of a lien or title as security for the sales price of the property.(2)(i) The payroll factor is a fraction, the numerator of which is the total amount paid in the subzone, improvement subzone or expansion subzone during the tax period by the taxpayer for compensation and the denominator of which is the total compensation paid in this Commonwealth during the tax period.(ii) Compensation is paid in the subzone, improvement subzone or expansion subzone if: (A) the person's service is performed entirely within the subzone, improvement subzone or expansion subzone;(B) the person's service is performed both within and without the subzone, improvement subzone or expansion subzone, but the service performed without the subzone, improvement subzone or expansion subzone is incidental to the person's service within the subzone, improvement subzone or expansion subzone; or(C) some of the service is performed in the subzone, improvement subzone or expansion subzone and the base of operations or, if there is no base of operations, the place from which the service is directed or controlled is in the subzone, improvement subzone or expansion subzone, or the base of operations or the place from which the service is directed or controlled is not in any location in which some part of the service is performed, but the person's residence is in the subzone, improvement subzone or expansion subzone.(3) Deleted by 2008, July 10, P.L. 1014, No. 79, § 4, effective in 60 days [Sept. 8, 2008].(e) Computation.--A corporation shall compute its Commonwealth taxable income in conformity with Article IV of the Tax Reform Code of 1971 with no adjustments or subtractions for subzone, improvement subzone or expansion subzone taxable income.(f) Limitation on amount of credit.--The credit allowed under this section shall not exceed the tax liability of the taxpayer under Article IV of the Tax Reform Code of 1971 for the tax year.(g) Section not applicable to certain businesses.-- The following shall apply: (1) Any portion of the taxpayer's taxable income that is attributable to the operation of any of the following may not be used to calculate a credit under this section:(i) Any of the following that are required to use special apportionment under Article IV of the Tax Reform Code of 1971 or would be required to use special apportionment under Article IV of the Tax Reform Code of 1971 if the taxpayer had income from business activity taxable both within and without this Commonwealth: (A) A railroad, truck, bus or airline company.(B) A pipeline or natural gas company.(C) A water transportation company.(ii) A corporation that qualifies as a regulated investment company under Article IV of the Tax Reform Code of 1971.(iii) A holding company as defined in Article VI of the Tax Reform Code of 1971.(2) The prohibition under paragraph (1) shall not apply to the portion of a qualified business engaged in manufacturing or processing.Amended by P.L. 183 2012 No. 16, § 3, eff. 2/14/2012.1998, Oct. 6, P.L. 705, No. 92, § 515, imd. effective. Amended 2000, Dec. 20, P.L. 841, No. 119, § 4, imd. effective; 2002, Dec. 9, P.L. 1727, No. 217, § 6, imd. effective; 2003, Dec. 23, P.L. 360, No. 51, § 5, imd. effective; 2008, July 10, P.L. 1014, No. 79, § 4, effective in 60 days [Sept. 8, 2008].