On a short-period Nebraska return under the Employment Expansion and Investment Incentive Act, do I change how I figure the qualified-employee and qualified-investment credits on Form 3800N?

Plain-English summary

Nebraska's Employment Expansion and Investment Incentive Act credit is figured on Form 3800N (the Nebraska Employment and Investment Credit Computation), which normally measures employment across a full year of quarters and investment across the year plus three prior years. This ruling explains what changes when the return covers a short tax period rather than a full 12 months.

The core holding: for a short period return, the Qualified Employee Calculation must be modified, but the Qualified Investment Calculation is not modified.

When a short-period Form 3800N comes up. A Form 3800N may be filed for a short tax period when:

• a new business is created;
• an existing business first moves into Nebraska; or
• an existing business creates a new location or changes form (for example, a sole proprietorship becoming a corporation).

How the employee calculation is modified. On Form 3800N's qualified employee calculation:

• (a) Employment is entered in column A only if the taxpayer had a preceding tax year.
• (b) Employment is entered in the quarterly columns (B through D) for any calendar quarter that both began and ended during the taxable year.
• (c) Employment at the end of the tax year is entered in column E.
• (d) The employment columns are totaled and divided by the number of columns for which employment was properly entered -- rather than always dividing by the usual number of columns. This gives an average that fits the shorter period instead of understating it by dividing by a full year's worth of quarters.

Why the investment calculation stays the same. The qualified investment calculation "does not change for short period returns." A beginning-of-the-year investment and an end-of-the-year investment are entered on Form 3800N, and the end-of-year investment is compared to the beginning-of-year investment and the average investment for each of the three preceding years. The investment increase equals the amount by which the end-of-year investment exceeds the greater of the beginning-of-year investment or the average investment during each of the three preceding years.

The ruling includes a worked example (X Corporation, which incorporates June 1, 1990 with a short tax year running through December 31, 1990, adding employees during the year and $300,000 of investment by year-end). Because the ruling is a scanned image, the attached sample Form 3800N did not convert cleanly to text; the operative rules and the narrative above are legible, but the line-by-line figures on the attached form are not reproduced here -- see the linked source PDF.

What this means for you

A business filing a short first Nebraska year under this program

Adjust only the employee side of Form 3800N: total the columns you actually used and divide by that number of columns, instead of dividing by a full year's worth. Leave the investment calculation alone -- it works the same as on a full-year return.

Preparers handling new entities, relocations, or entity-form changes

The short-period trigger covers new businesses, first moves into Nebraska, and new locations or form changes (like sole proprietor to corporation). Enter column A only if there was a preceding tax year, use the interior quarterly columns only for quarters that both began and ended in the period, and put year-end employment in the final column.

Common questions

Q: Does a short period change how I compute the Employment Expansion Act credit?
A: Yes for the qualified-employee calculation, which is modified, and no for the qualified-investment calculation, which is not modified.

Q: What is the key employee-calculation change?
A: You total the employment columns actually used and divide by the number of columns for which employment was properly entered, rather than dividing by a full year's worth of columns.

Q: When can I file a short-period Form 3800N?
A: When a new business is created, when an existing business first moves into Nebraska, or when an existing business creates a new location or changes its form (such as a sole proprietorship becoming a corporation).

Q: Can I rely on this ruling today?
A: It is the Department's general policy and is "binding on the Nebraska Department of Revenue until amended," but the program has since evolved and the source is a scanned document. Confirm current law and consult a Nebraska tax professional.

Citations and references

• Nebraska Revenue Ruling 29-90-1, "Economic Development Tax Incentives -- Short Period Returns" (Nebraska Department of Revenue, issued late December 1990; approved by State Tax Commissioner John M. Boehm). The legible ruling text cites no statute sections; it interprets how Form 3800N (Nebraska Employment and Investment Credit Computation) is completed for a short-period return under the Employment Expansion and Investment Incentive Act.
• Related ruling: Revenue Ruling 29-90-2 (New Location), issued in the same series, on the taxable-year period used when a company opens a new location.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr299001_short_period.pdf

Original ruling text

Revenue Ruling 29-90-I
Tnebraska

IS¡?3[jg",t'
TJNDER THE EMPLOYMENT EXPANSION ÀND INVESTÌ,IENT INCENTIVE ÀCT' TH;
FOR A SHORT
QUALIFIED EI4PLOYEE CAÍ,CULATION MUST BE MODIFIED
pgnrop RETI'RN. HOWEVER, THE QUÀLIFIED IIIVESTMENT CÀLCULÀTION IS
NOT I4ODIFIED FOR À SHORT PERIOD RETURN.

and
Advice has been requested regarding the employment the
under
returns
period
tax
short
for
calculations
investment
Employrnent Expansion and Investment, Incentive Act.
À Nebraska Employment and Investment, Credit Computation,
Form 3800Nr mêy be- titea for a short tax period when a nell
first moves
business is cieated or -when an existing business
when an
filed
be
cannot
period
return
short
À
into Nebraska.
business
or
changes
locat,ion
ne\r
a
creates
business
èiisting
form (".g., sole proprietor to corporation).
The qualified employee calculation must be modified for a
Êntries on the Nebraska Employment.and
short period return.
Investment Credit Computation, Form 3800N, shall be modified as
follows:
(a) Ernployment is entered in columû Ar Form 3800N, only if
the taxpayer had a preceding tax year'
D Ior aly
(b) Ernployment is entered in columns B throughduring
the
ended
and
began
both
ca-Ienãar quarter which
taxable Year.
(c) Enployment at the end of the tax year is entered in

column E.

that amount is
(d) The employment columns are totaled and
employment
which
for
columns
of
divided- by the nunber
\ras ProPerlY entered.

does not
The Nebraska qualified investment calculation
year-investof-the
beginning
A
changã- for short period returns.
entered on the
ment and an enä of the year investment must be
3800N. The
Form
computat-tot,
Employment and Investment credit,
to the
compared
be
then
investment must
end of the year
'the
for
investment
average
the
year investment and
beginning of
increase
investment
The
years.
eaõn of the threê preceding
investment
equals the amount by which the end of the year
average
the
or
investment
exceeds the beginnin! of the year preceding
years,
whichever
investment duriñg e.õn of the three
is greater.

Revenue Ruling 29-904

page 2

For example, x corporation incorporates June L, 1990, and x
has a short - t.T year from June L, 1990 through DecemÉer 31,
1990. The business dídn't exist, in a different
form
prior to t,he short tax year. x corporation has twobusiness
emproyees on
June 30, 1990, three emproyees on september 30, 1990; añd nine
employees on December 31, 1990. X Corporation had no investment
on June L' 1990, but added investment in the amounÈ of $3001000
by December 31, 1990. The Nebraska Employment and Investment
credit- computation, Form 3800N, should be completed in the
following manners

NEBRASKA EMPLOYMENT AND INVESTMENT CREDIT COMPUTATION
for Tax Years After 1

f*^.

d
Name as Shown on Retum

I

Social Security No. or Nebraska l.D. No.

t

Type of Retum
(1)
(2)

I ocation Address(es) Where

(3)

I Qualifying
Assembly, fabrication, manufacture, or processing of tangible
,.l,
\', ¡1
LJ

heck only one) (see instructions)

(6) I

ror l--"1 Storage, warahousing, dist¡ibution, transPortation, or sale of
t'' I rtangible personal proþerty
(3) I
reeo¡ns of livestock

;neÍn"füfiof

tr rarm¡ns or ranching

FClaim

(2)
(3)

original ta¡< credits

(4)

1120N

(s)

1

065N

any activity which
arters of a retailsr

es:-

2 Number of Nebraska business locations: (f )p Single location (2) n MuMple locations or related parties (see instructions)

(1)

¡ 1120-sN
! 1041N
(6) ¡ 112oNF

1040N

data processing, t€lecommunication' insurance, or

Administrativa managem
,'ì
r' l-"1
' LJ i¡çlujss items 1 through
(8) L_l nny comb¡nation ol activi

4 Reason for filing (check only one):

T
E

Conducling research, development, or testing for scientific,
,.r
t-t ¡-1
LJ ¿g¡içullrJral, animâl husbandry, or industrial purposes

personal property

(a)

3800N

19

and

19

FORM

3 Total sales which are
reta¡l (perc€nt):

-%
E Clalm c¡edit for additional emplo¡rsss hired in cunent year
investnent
years
and
levels
claimed
for
two
after
credits
Report
€mployment
!
year.'

tax'creditsmusl increase bolh employmênt and inveslment levels by the required amounls ¡n the
NEBRASKA OUALIF¡ED EMPLOYEE CALCULATION
(A)

Preceding

Tar Year

Year
End

NO..OF R'LL-TIME EMPLOYEES IN NEBRASKA
(E)
(D)
(c)
(B)

FIrst
Ouarter

Second
Ouarter

Thlrd
Ouarter

I

5 Employed during current year ..................
6 First preced¡ng year ...........

AVEBAGE
Dlvlda Total of Columns

Fourth
Ouarter

A,B,C,D,andEby5

b .ôc

5

C

6

7

7 SeconC preceding year......
I Third preceding year............

I

o

9 Enter highest of lines 6, 7, or I's averages
1O TOTAL increased Nebraska employment eligible for tax cred¡t (line 5 minus line 9; round

result down to lower whole number) ...........
r1 Totaltentative em
credit amount line 10 multi

10

ed

11

$t

00

o

ôò0

NEBRASKA OUALIFIED ¡NVESTMENT CALCULATION
TOTAL NEBRASKA OUALIFIED INVESTMENT

Tar Year

(B) End of Y€ar

(A) Beglnnlng of Year

Þl-

$ 3ôôoæ -

$
urrent year ........
13 First preceding year ...........
14 Second preceding year............
15 Third preceding year............
16 Enter the current end of year investment amount (line 12, Column B)
17 Enter the hlghest of lines 12(A), 13(C), 1a(C), or 15(C)
18 Total Nebraska qualified investment (line 16 minus line 17). lf less than $75,000, enter zero...
19 Total calculated investment cred¡ts (line 18 divided by $75,000; round result down to lower whole number)
20 Total tentative investment cred¡t amount (line 19 multiPlied by $1 ,000) .
21 Total employment and ¡nvestment incentive cred¡ts (line 11 plus line 20)
22 Amount of Nebraska sales and use tax rafunds claimed to date
A on reverse
your
credit amount
23
24 Total Nebraska employment and investment credits canied fonrard from earlier year(s) (List
25 Total available cred¡t amounts (total of l¡nes 21 ,23, and 24; minus line 22)
12

(C) AVERAGE

(olvld€ Total ol Columns

years:-)

AandBby2)

-

12 $
13

14
15

-

16 $

17
18
19

20
21

$

?6.
$ tln

4

22

a

24
25 $

26
26 Nebraska income tax liability...
27
27 Credit for tax paid to another state
28
28 Credit for elderly or handicapped
29
29 Form CDN credit
30
care
exPenses
30 Credit for chíld and dependent
30)
(total
through
of lines 27
31 Total nonrefundable credits
32
32 Nebraska income tax liability after nonrefundable credits (line 26 minus line 31)
33
50 percent of line 32 (multiply line 32 by .50)
34
is
less)
Credit used to reduce income tax liability (line 25 or line 33, whichever
35
35 Form 775N credit (from line 15, Form 775N and line 48, Part C on reverse side)....'.......
36 Totat Form 3800N credit (total of lines 34 and 35). Enter here and on Form 1040N, 1 120N, or 1041N ............ 36
37 Amount of credits distributed to partners, shareholders, and beneficiaries on line 43, Part B on reverso side.. 37

38 Total Nebr. e

ment

sion and investment

it to be carried forward

ine 25

lines 34 &

38
&4t6ð

.00

'

I

a

Revenue Ruling 29-90-L

Page 4.

ÀPPROVED:

fu(

ß,l,

ç"L"
John M. Boehm

State Tax Commissioner
December 25, 1990

I