Melissa A. Vighi is an associate of the Firm and primarily practices in real estate and business law. She counsels clients on matters including entity formation and organization, business closing and succession planning, buy-sell agreements, asset purchase agreements, and employment and independent contractor agreements.

The State of Missouri has, within the last few years, created a number of tax credit incentives to spur and target economic development.

The Missouri State Historic Tax Credit entitles taxpayers to a tax credit against state income taxes equal to 25 percent of the total cost and expense of rehabilitation of property used for residential or business purposes if such cost and expense are greater than 50 percent of the total basis in the property and the rehabilitation meets standards of the United States Department of the Interior as determined by the Department of Natural Resources' ("DNR") state historic preservation officer.

In order to qualify for this tax credit, property must be a certified historic structure which is Missouri property listed individually on the National Register of Historic Places ("National Register"), or a Missouri structure in a certified historic district which is certified by DNR as contributing to the historic significance of a certified historic district listed on the National Register, or by the Department of the Interior as a local district.

The Department of Economic Development ("DED"), in consultation with the DNR, establishes the amount of the eligible rehabilitation cost and expense and determines compliance with the applicable standards. Until the full credit is used, amounts in excess of state tax liability may be carried back for the three preceding years and carried forward for the succeeding 10 years.

In 1999, tax incentives for distressed communities were established in the form of tax credits to aid in investment for a Missouri municipality within a metropolitan statistical area ("MSA") which has a median household income of under 70 percent of the median household income, or a United States Census Block Group or contiguous group of block groups which has a population of at least 2,500 and which has a median household income of under 70 percent of the median household income; and municipalities not in an MSA, with a median household income of 70 percent of the median household income for the non-metropolitan areas in Missouri or a Census Block Group or contiguous group of block groups which has a population of at least 2,500 which has a median household income of 70 percent of the median household income.

A business is eligible for a state income tax credit equal to 40 percent (maximum of $125,000 for each of the three years claimed) if it: a) relocates or establishes operations in a distressed community; b) has more than 75 percent of employees located at the distressed community business; c) has fewer than 100 employees for whom payroll taxes are paid; and d) is a manufacturing, biomedical, medical devices, scientific research, animal research, computer software design or development, computer programming, telecommunications or a professional firm.

Employees are also eligible for tax credits equaling 1 1/2 percent of their gross salary paid at the business earned for each of the three years the employer receives the tax credit.

In the alternative, a business in a distressed community may receive an income tax credit equaling 40 percent of the funds used for computer equipment and its maintenance, medical laboratories and equipment, research laboratory equipment, manufacturing equipment, fiber optic equipment, high speed telecommunications, wiring and software development expense up to $75,000 for each of the three years claimed.

A business previously established in a distressed community with 100 or fewer employees and which spends funds on such equipment can receive a 25 percent tax credit up to $75,000 if such funds exceed the average of the prior two years for such equipment.

On August 28, 1999, the Missouri New Enterprise Creation Act ("Act") became effective. Under the Act, the DED is authorized to grant up to $20,000,000 in tax credits for this program, however, no more than $5,000,000 may be granted in any one year.

A taxpayer can receive an income tax credit equaling 100 percent of the qualified contribution made to one to four qualified funds established under the Act developed pursuant to the Missouri seed capital and commercialization strategy to give incentive for displaced workers to establish new high technology businesses.

By contract, qualified fund distribution payments are made to qualified economic development organizations (a Chapter 355 corporation that as of January 1, 1991 had obtained a contract with the DED to operate an innovation center to promote, assist and coordinate the research and development of new services, products or processes in Missouri) which use such payments solely for reinvestment in qualified funds in order to provide ongoing seed capital, startup capital and follow-up capital for Missouri businesses.

Under the Act, seed capital is capital provided to a qualified business for research, development and pre-commercialization activities to prove a concept for a new product, process or service, and for activities related thereto. Startup capital is capital provided to a qualified business for use in pre-production product development, service development or initial marketing thereof. Follow-up capital is capital provided to a qualified business in which a qualified fund has previously invested seed capital or startup capital.