Could a newly created, disregarded single-member LLC be included in its corporate owner's Florida Capital Investment Tax Credit project?

Plain-English summary

Florida agreed to include a newly created single-member LLC in its corporate owner's certified Capital Investment Tax Credit project.

The taxpayer was the LLC's sole member. The LLC was disregarded for federal tax purposes and therefore treated as a branch or division of the taxpayer for Florida corporate income-tax purposes. Its property, payroll, and any income flowed through to the owner, and the LLC had no independent project income.

The Department of Economic Opportunity had amended the project certification to include the LLC's capital investment. Florida included the entity in the project but kept the project-income methodology from the prior TAA unchanged.

What this means for you

Capital-project owners

Adding a disregarded entity can require both an amended program certification and a revised taxpayer-specific TAA.

Corporate tax teams

The LLC's disregarded status was central. A separately taxed entity could require a different analysis.

Common questions

Was the new LLC included in the project? Yes.

Why? Florida treated the disregarded single-member LLC as a branch or division of its corporate owner.

Did the income-calculation method change? No. The Department maintained the prior methodology.

Citations and references

• Fla. Stat. Sec. 220.191
• Fla. Admin. Code R. 12C-1.0191
• Fla. Admin. Code R. 12C-1.022(1)(b)2.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 21C1-011

Original ruling text

Florida Department of Revenue
Technical Assistance and Dispute Resolution

5050 West Tennessee Street Tallahassee FL 32399

Jim Zingale
Executive Director

floridarevenue.com

QUESTION: Taxpayer requests the prior TAA be revised to include a newly created LLC in the
project.

ANSWER: The Department is inclined to include LLC in the project. However, Taxpayer was
reminded that should the facts provided in its request be determined to be substantially
different, this TAA would not apply, and the methodology may be deemed inappropriate.

December 13, 2021
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX

Re:

Technical Assistance Advisement – 21C1-011
Revision to include XXXXXXX (“LLC”)
Sections 220.11, 220.13, 220.15, 220.191, Florida Statutes (“F.S.”)
Rule 12C-1.0191, Florida Administrative Code (“F.A.C.”)
XXXXX (“Taxpayer”)
FEIN: XXXXX
Project ID: XXXXX
Florida Department of Economic Opportunity (“DEO”)
Enterprise Florida, Inc. (“EFI”)

Dear XXXXX:
This is in response to your request dated XXXXX, for a Technical Assistance Advisement (“TAA”)
pursuant to section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the inclusion of

Technical Assistance Advisement
Page 2

XXXXXX in the qualifying Capital Investment Tax Credit (“CITC”) project for the purposes of
determining project income.
Section 220.191(5), F.S., addresses applications for CITC. That statute provides:
Applications shall be reviewed and certified pursuant to s. 288.061. The Department of
Economic Opportunity, upon recommendation by Enterprise Florida, Inc., shall first certify
a business as eligible to receive tax credits pursuant to this section prior to the
commencement of operations of a qualifying project, and such certification shall be
transmitted to the Department of Revenue. Upon receipt of the certification, the
Department of Revenue shall enter into a written agreement with the qualifying business
specifying, at a minimum, the method by which income generated by or arising out of the
qualifying project will be determined.
Pursuant to Rule 12C-1.0191, F.A.C., the Department of Revenue has adopted TAAs as the
method for entering into such written agreements.
On XXXXX, DEO certified Taxpayer as eligible to receive tax credits under s. 220.191, F.S. DEO
issued an Amended and Restated Capital Investment Tax Credit (“CITC”) Certification to include
LLC in the project’s capital investment on XXXXX. The Department of Revenue, having received
said certification, has examined your letter and has established that you have complied with
the statutory and regulatory requirements for issuance of a TAA. Therefore, the Department of
Revenue is hereby granting your request for a TAA. The Department of Revenue, in issuing this
TAA, has relied on the representations of Taxpayer and the certification of the Department of
Economic Opportunity. This response to your request constitutes a Technical Assistance
Advisement under Chapter 12-11, F.A.C., and is issued to you under authority of s. 213.22, F.S.
ISSUE PRESENTED
In its letter dated XXXXX, Taxpayer requests that TAA 20C1-005 be revised to include XXXXX, in
the project.
FACTS SUPPLIED BY TAXPAYER
Taxpayer states that on XXXXX, LLC, a XXXXX Limited Liability Company, was created. Taxpayer is
the sole member. The LLC was formed XXXXX the project. LLC is a disregarded single-member
limited liability company for federal purposes. Therefore, the LLC is treated as a branch or
division of Taxpayer for Florida purposes.
The LLC will XXXXX (the project). Additionally, LLC will XXXXX. The LLC will not have any
independent income associated with the implementation of the qualifying project. All income
arising from the project will flow directly through Taxpayer. All payroll, property, and income, if
any, associated with LLC will flow through to Taxpayer.

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LEGAL AUTHORITY
Section 220.11, F.S., states in part:
(1) A tax measured by net income is hereby imposed on every taxpayer for each taxable
year commencing on or after January 1, 1972, and for each taxable year which begins
before and ends after January 1, 1972, for the privilege of conducting business, earning or
receiving income in this state, or being a resident or citizen of this state. Such tax shall be
in addition to all other occupation, excise, privilege, and property taxes imposed by this
state or by any political subdivision thereof, including any municipality or other district,
jurisdiction, or authority of this state….
Section 220.191, F.S., states in part:
(f) “Qualifying business” means a business which establishes a qualifying project in this
state and which is certified by the Department of Economic Opportunity to receive tax
credits pursuant to this section.
Rule 12C-1.022(1)(b)2., F.A.C., provides:

2. A single member limited liability company or qualified subchapter S corporation
   that is disregarded for Florida and Federal tax purposes is not required to file a
   separate Florida corporate income tax return. However, the income of the company is
   not exempt from tax. If it is owned by a corporation, whether directly or indirectly, the
   corporation is required to file Form F-1120 reporting its own income, together with
   the income of the single member limited liability company.
   DISCUSSION
   Given that LLC is a single-member limited liability company with Taxpayer as its sole member
   and Florida’s treatment of single-member limited liability companies (Rule 12C-1.022(1)(b)2.,
   F.A.C.), the Department recognizes LLC as a branch or division of Taxpayer and therefore, is
   included in the project.
   The Department maintains its position regarding the methodology to determine project income
   as provided in TAA 20C1-005.
   CONCLUSION
   Given the specific circumstances involved in this case, and based on the representation of the
   Taxpayer, the Department concurs with Taxpayer’s request to include LLC in the qualifying
   project based upon s. 220.191, F.S., and Rule 12C-1.0191, F.A.C. However, Taxpayer is
   reminded that should the facts provided in its request of XXXXX, be determined to be incorrect

Technical Assistance Advisement
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or changed, the computation for the income generated by or arising out of the project could be
substantially different from what has been agreed upon in this TAA.
This response constitutes a Technical Assistance Advisement under section 213.22, F.S., which
is binding on the Department only under the facts and circumstances described in the request
for this advice as specified in section 213.22, F.S. Our response is based on those facts and
specific situation summarized above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the statutes or rules upon this advice is
based may subject future transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are
public records under Chapter 119, F.S., and are subject to disclosure to the public under the
conditions of section 213.22, F.S. Confidential information must be deleted before public
disclosure. In an effort to protect confidentiality, we request you provide the undersigned with
an edited copy of your request for Technical Assistance Advisement, the backup material and
this response, deleting names, addresses and any other details which might lead to
identification of the taxpayer. Your response should be received by the Department within 15
days of the date of this letter.
Sincerely,
Susan R Coxwell
Susan R Coxwell
Tax Law Specialist
Technical Assistance and Dispute Resolution
CC: XXXXX