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Tax update: Many economic development grants are now taxable income

February 22, 2018View for printing

The tax law signed at the end of last year introduced a provision that will significantly affect many economic development offices and related nonprofits across the country: "contributions to capital" will now typically be included in a corporate taxpayer's gross income.

Previously, grants, free land and certain types of tax credits from governmental units or civic groups to support capital expenses were tax-free awards for the beneficiary. Since the signing of the bill, many of these awards are now taxable. The exact circumstances under which previous awards were exempt and new awards are not are complicated: Bloomberg provides a detailed analysis of the law and its implications, pending further guidance from the IRS. ... a-212414005
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