§ 105-129.37. Tax credited; credit limitations. - North Carolina Statutes

§ 105‑129.37.  Taxcredited; credit limitations.

(a)        Tax Credited. – Thecredits provided in this Article are allowed against the income taxes levied inArticle 4 of this Chapter.

(b)        Credit Limitations.– The entire credit may not be taken for the taxable year in which the propertyis placed in service but must be taken in five equal installments beginningwith the taxable year in which the property is placed in service. Any unusedportion of the credit may be carried forward for the succeeding five years. Acredit allowed under this Article may not exceed the amount of the tax againstwhich it is claimed for the taxable year reduced by the sum of all creditsallowed, except payments of tax made by or on behalf of the taxpayer.

(c)        Forfeiture forDisposition. – A taxpayer who is required under section 50 of the Code torecapture all or part of the federal credit for rehabilitating an income‑producinghistoric structure located in this State forfeits the corresponding part of theState credit allowed under G.S. 105‑129.35 with respect to that historicstructure. If the credit was allocated among the owners of a pass‑throughentity, the forfeiture applies to the owners in the same proportion that thecredit was allocated.

(d)        Forfeiture forChange in Ownership. – If an owner of a pass‑through entity that hasqualified for the credit allowed under G.S. 105‑129.35 disposes of all ora portion of the owner's interest in the pass‑through entity within fiveyears from the date the rehabilitated historic structure is placed in serviceand the owner's interest in the pass‑through entity is reduced to lessthan two‑thirds of the owner's interest in the pass‑through entityat the time the historic structure was placed in service, the owner forfeits aportion of the credit. The amount forfeited is determined by multiplying theamount of credit by the percentage reduction in ownership and then multiplyingthat product by the forfeiture percentage. The forfeiture percentage equals therecapture percentage found in the table in section 50(a)(1)(B) of the Code. Theremaining allowable credit is allocated equally among the five years in whichthe credit is claimed.

(e)        Exceptions toForfeiture. – Forfeiture as provided in subsection (d) of this section is notrequired if the change in ownership is the result of any of the following:

(1)        The death of theowner.

(2)        A merger,consolidation, or similar transaction requiring approval by the shareholders,partners, or members of the taxpayer under applicable State law, to the extentthe taxpayer does not receive cash or tangible property in the merger,consolidation, or other similar transaction.

(f)         Liability FromForfeiture. – A taxpayer or an owner of a pass‑through entity thatforfeits a credit under this section is liable for all past taxes avoided as aresult of the credit plus interest at the rate established under G.S. 105‑241.21,computed from the date the taxes would have been due if the credit had not beenallowed. The past taxes and interest are due 30 days after the date the creditis forfeited. A taxpayer or owner of a pass‑through entity that fails topay the taxes and interest by the due date is subject to the penalties providedin G.S. 105‑236. (1993, c. 527, ss. 1, 2; 1997‑139, ss. 1, 2; 1998‑98, ss.36, 69; 1999‑389, ss. 4, 5, 6; 2007‑491, s. 44(1)a.)