SCHEDULE BA-404 Instructions

 Tax Credits Earned, Applied, Expired, and Carried Forward
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                                   General Information
Schedule BA-404 must be completed and attached to an income tax return if any tax credits are earned, applied, 
 expired or carried forward. Generally, tax credits are limited to a percentage of the tax attributable 
 to the income generated by the entity authorized for the credit. For details, review the guidelines of 
                                                                                                                      INSTR  (Place at FIRST page)
 the credit program in which you are participating. The credits listed on Schedule BA-404 are the                     Instr. pages 
 only credits allowed in Vermont.

For any credit type being claimed, complete all applicable columns of Schedule BA-404. In most cases, Column D 
 (Amount Carried Forward to Future Years) should equal Column A (Amount Carried Forward from 
 Prior Years) plus Column B (Amount Earned Current Year) minus Column C (Amount Applied                               1 - 3
 Current Year). However, in cases where a credit expires without being used, the expired credit should 
 further reduce the value reported in Column D. Complete Line 11, Total for all Credits.

32 V.S.A. § 5862(d) is amended as of January 1, 2023 to read: (d) A taxable corporation that is part of an affiliated 
 group engaged in a unitary business shall be treated as a single taxpayer and shall file a group return 
 containing the combined net income of the affiliated group and such other informational returns as 
 the Commissioner shall require by rule. A unitary combined return shall include the income and 
 apportionment factors of any taxable corporation incorporated in the United States or formed under 
 the laws of any state, the District of Columbia, or any territory or possession of the United States and 
 in a unitary relationship with the taxpayer. The income, gain, or losses from members of a combined 
 group shall be combined to the extent allowed under the Internal Revenue Code for consolidated 
 filing as if the combined group was a consolidated filing group, provided that a state tax credit 
 shall not be combined and shall be limited to the member to which the credit is attributed. 

                        Credit Documentation
Research and Development Tax Credit (Line 1)
 Include a copy of federal Form 6765, Credit for Increasing Research Activities. If the federal 
 credit was earned based on expenditures both in and out of Vermont, provide a breakdown of the 
 expenditure amounts and a recomputed credit calculation based only on the expenditures that 
 occurred in Vermont. If you have received grants or assistance for financing the expenditures from 
 any other public or private source, the basis expenditure amount for the credit calculation must be 
 adjusted downward to account for the assistance. Your expenditures must be eligible for and receive 
 the federal tax credit to claim the Vermont tax credit. 

 Credit Amount: 27% of the amount of the federal tax credit allowed in the taxable year for eligible 
 research and development expenditures under 26 U.S.C. § 41(a) which are made within Vermont. 
 Any unused credit may be carried forward for up to 10 years.
Investment Tax Credit - Solar Energy - § 5822(d) (Line 9)

 Include a copy of the federal credit calculation Form 3468, Investment Credit, and Form 3800, General 
 Business Credit. This credit is not available to C Corporations. See Technical Bulletin TB-45, Solar 
 Energy Investment Tax Credit, on the Department’s website, for a full explanation. If the federal 
 credit was earned based on investments both in and out of Vermont, provide a breakdown of the 
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tax.vermont.gov                                                                         Rev. 10/23

 investment amounts and a recomputed credit calculation based only on investments that occurred in 
 Vermont. If you have received grants or assistance for financing the project from any other public or 
 private source, the basis investment amount for the credit calculation must be adjusted downward 
 to account for the assistance. Your project must be eligible for and receive the federal tax credit to 
 claim the Vermont tax credit.                                                                           Page 2

 Credit Amount: 24% of federal investment tax credit attributable to the Vermont-property portion 
 of the investment for the current year.  Any unused business solar energy investment tax credit under 
 this section may be carried forward for no more than five years following the first year in which the 
 credit is claimed. Any other investment tax credit is only available in the year it is earned.

 Note that the Investment Tax Credit, Line 9, is only available to Business Income Tax filers.  See 
 instructions below for claiming the credit by the business entity’s shareholders, partners, or members, 
 or by a business entity filing a composite return.
Investment Tax Credit - Other - § 5822(d) (Line 10)
 On Line 10, include the portion of Investment Tax Credit that is not related to the Solar Energy 
 Investment Tax Credit. Copies of the federal credit calculation Form 3468, Investment Credit, and 
 Form 3800, General Business Credit, should also be included.

 If the federal credit was earned based on investments both in and out of Vermont, provide a 
 breakdown of the investment amounts and a recomputed credit calculation based only on investments 
 that occurred in Vermont. If you have received grants or assistance for financing the project from 
 any other public or private source, the basis investment amount for the credit calculation must be 
 adjusted downward to account for the assistance. Your project must be eligible for and receive the 
 federal tax credit to claim the Vermont tax credit.  

 Credit Amount: 24% of federal investment tax credit attributable to the Vermont-property portion 
 of the investment for the current year. Any unused business solar energy investment tax credit under 
 this section may be carried forward for no more than five years following the first year in which the 
 credit is claimed. Any other investment tax credit is only available in the year it is earned.
All other credit types
 All other credit types must include a copy of the authorization document, a detailed description of 
 the activity that generated the credit, and a calculation schedule.

                      Applying Credits to Offset Tax
Form CO-411 - C-Corporation – Stand-Alone
 Enter the total amount of credits applied on Form CO-411, Corporate Income Tax Return, Line 14.
Form CO-411 - Unitary Businesses 
 If multiple entities within the unitary group are reporting credits, complete and attach a single 
 Schedule BA-404 with the return package.  Combine all credit amounts on Schedule BA-404 and 
 attach a statement that breaks down the totals by entity. 
Form BI-471 - Business Income Tax Return 

 For S-Corporations, Partnerships, and LLCs treated as pass-through entities for tax purposes, tax 
 credits are generally distributed to the owners of the entity in the same proportion that income or 
 loss is distributed and are not transferrable. 

                                                                    Form BA-404 Instructions
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  Report the allocation of credits earned in a given tax year using as many Schedules BA-406, Credit 
  Allocation Schedule as necessary. Generally, prepare one Schedule BA-406 for each shareholder, 
  partner, or member, and include as part of Form BI-471, Business Income Tax Return, return 
  package. If the entity is filing a composite return, prepare a single Schedule BA-406 that includes     Page 3
  the combined credit amounts for all shareholders, partners, or members included in the composite 
  filing. Review the instructions of that form for further details.

  Credits are applied on the Vermont income tax return of the individual or entity with the tax 
  liability. Credits are reported on Schedule IN-112, Vermont Income Adjustments and Credits, or 
  Schedule IN-119, Vermont Tax Adjustments and Nonrefundable Credits, of Form IN-111, Vermont             INSTR  (Place at LAST page)
  Individual Income Tax Return.                                                                           Instr. pages 
  If any or all of the entity income is taxed at the composite level, enter the amount of credits applied 
  on Schedule BI-473, Composite Schedule, Line 10. 

  For further details, refer to the statutes and program guidelines for the specific credit program in 
  which you are participating.                                                                            1 - 3

Form BI-476 - Business Income Tax Return for Resident Only 
  Same as for Form BI-471. 

                           Contacting the Department

 Mailing address: 
                                         Taxpayer Services:        (802) 828-5723
 Vermont Department of Taxes             Email Address:            tax.corporate@vermont.gov
 133 State Street                        Web site Address:         tax.vermont.gov
 Montpelier, VT  05633-1401              Forms:                    (802) 828-2515

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tax.vermont.gov                                                                   Rev. 10/23