1. Local Stimulus – Enterprise Zone Tax Credits Presented by: Blake Christian, CPA, MBT Holthouse Carlin & Van Trigt LLP, CPAs March 31, 2009

2. 2 Overview – 42 California Enterprise Zones California Enterprise Zone Program up to $13,000/year/employee (42 regions) – see appendix Up to 50% reduction in salary expense Federal Tax Credit Programs – Empowerment, Renewal Communities ($1,500 to $8,500 per employee) Indian Tribal Lands, Rural Renewal Counties, etc. Equipment Credits – 4% to 10% (up to 9.75% in CA) Loan Benefits – NID for Lenders – Better Financing Work Opportunity Tax Credit (WOTC) - $2,400 - $4,800 credit Welfare-To-Work Tax Credit (WtW) - $8,500 credit Q&A

3. 3 Enterprise Zone Tax Credits Who Qualifies? Any business that operates or invests in a trade or business located within the geographic boundaries of one of the 42 designated Enterprise Zones (EZ) in California (5 year programs) Tax benefits are for California purposes

4. 4 CA Enterprise Zone Incentives Hiring Tax Credit – up to $37,500 hiring credits over 5 years for each qualified employee Sales & Use Tax Credit – (LA County) 8¼% + 1% (4/1/09) Business Expense Deduction up to $40,000 More liberal net operating loss carry forward Lenders that make loans to Zone businesses may receive a net interest deduction Employee-level credit - $525/year for employees working in an EZ

5. 5 Hiring Credit – Qualified Employees 13+ Different Qualifying Criteria Some examples of the 13 criteria are:  Live in certain regions (Targeted Employment Areas) designated by the State  Military Veterans - that were discharged in last 48 months, receive food stamps, or are in VA rehabilitation programs  Employees recently laid-off or downsized

6. 6 Credit Example

7. 7 Sales or Use Tax Credit “Qualified” EZ Equipment – POS Equipment, Computers, Scanners, Printers, Security Equipment, Food Prep & Storage Equipment C-Corporations may claim credit for sales/use tax paid or incurred on the purchase of the first $ 20 million of qualified machinery and equipment ($1 million for individuals, partnerships, S-Corps, and LLC’s) Qualified property must be purchased or leased (capital) and used exclusively within EZ boundaries

8. 8 Empowerment Zone Hiring Credit ($3,000/yr) Renewal Community Hiring Credit ($1,500/yr) Native American Hiring Credits ($4,000/yr) GO Zones ($2,400/yr) Non-Location Based Credits – WOTC/ WtW ($2,400 to $8,500/yr) Summary of Federal Zone Benefits

9. 9 Contact and Other Information Blake Christian, CPA, MBT – HCVT, LLP (562) 216-1800 / blakec@hcvt.comblakec@hcvt.com www.hcvt.com www.blakechristian.typepad.com Other Materials and Resources FTB Form 3805Z IRS Form 8850 & 5884 www.longbeach.gov www.ftb.ca.gov www.caez.gov www.irs.gov

10. Q&A

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15. 15 City of Los Angeles Federal Empowerment Zone

16. 16 Federal Zones Nationwide