Three years after Santa Clarita’s enterprise zone went into effect, the business community is pushing to have it expanded to cover more of the valley.

California’s 42 enterprise zones are intended to boost business in disadvantaged areas by providing tax breaks for businesses that hire workers who meet certain criteria, from laid-off workers to veterans, and for specific projects such as business expansions.  Here is the link to the full article.

Craig Johnson’s article in this weekend’s Long Beach Press Telegram highlights the importance of the Enterprise Zone in a recessed economy.  He cites Cal Worthington Ford as the classic example of what can happen without the EZ as a tool to retain California businesses.  Here’s the link to the article.

Walters, typically very hostile towards Enterprise Zones, issued a short article this morning in which he urges a review of what he considers “all tax loopholes.”  The article notes that LA City Mayor Antonio  Villaraigosa recently took a shot at Senate President Pro Tem Steinberg for authoring SB 974 which seeks to shift EZ funds to a new high school training program.  The article also notes that Gov. Schwarzenegger recently issued his support for expanded EZs.  In conclusion, Walters merely seeks a wholesale review of all tax “loopholes” rather than the usually vociferous and targeted cry to eliminate specifically the Enterprise Zone program.  This could be seen as recognition that the EZs have strong support from upper levels of government and more importantly, that being able to tout the EZ program has immediate and positive tangible and intangible effects on the business climate and job creation.

The State of California create the Enterprise Zone initiative in order to assist cities attract businesses, and one of the cities that have championed this opportunity was the City of Palmdale who received designation from the State for the Antelope Valley Enterprise Zone in February 1997.  They encourage businesses both small and large to take advantage of a number of tax incentives through the Antelope Valley Enterprise Zone. Any company located within the boundaries of the 61-square-mile Enterprise Zone may reduce its state business income tax through five tax incentives.

This particular area is experiencing tremendous growth due to its proximity to Los Angeles combined with the low cost of living.  And with the following five tax incentives, this particular enterprise zone is sure to see continued economic growth for years to come:

Hiring Tax Credit:
Firms may earn up to $31,574 in state tax credits for each qualified employee hired over a five-year period.

Sales & Use Tax Credit:
Corporations may earn sales tax credits on purchases of up to $20 million per year on qualified machinery or machinery parts used in the Zone. Partnerships and individuals may annually claim a credit on the first $1 million of qualifying purchases.

Business Expense Deduction:
You may deduct up to $20,000 of the cost of qualifying business equipment, furniture and fixtures or other depreciable personal property.

Net Operating Loss Carryover:
Up to 100 percent of Net Operating Loss may be carried forward for 15 years.

Interest Deduction for Lenders:
Lenders to Zone businesses may deduct direct expenses incurred in making the loan from the interest income. This may mean more favorable rates or terms for the borrower.

So if you have a business or you’re a tax professional who has clients that run their companies in the Antelope Valley Enterprise Zone, contact us and let us help you take advantage of the tax credits available.