§ 105-129.71. (See note for repeal) Credit for income-producing rehabilitated mill property. - North Carolina Statutes

§ 105‑129.71.  (See notefor repeal) Credit for income‑producing rehabilitated mill property.

(a)        (Effective fortaxable years beginning before January 1, 2008) Credit. – A taxpayer who isallowed a credit under section 47 of the Code for making qualified rehabilitationexpenditures with respect to an eligible site is allowed a credit equal to apercentage of the expenditures that qualify for the federal credit. The creditmay be claimed in the year in which the eligible site is placed into service.When the eligible site is placed into service in two or more phases indifferent years, the amount of credit that may be claimed in a year is theamount based on the qualified rehabilitation expenditures associated with thephase placed into service during that year. In order to be eligible for acredit allowed by this Article, the taxpayer must provide to the Secretary acopy of the eligibility certification and the cost certification. The amount ofthe credit is as follows:

(1)        For an eligible sitelocated in a development tier one or two area, determined as of the date ofcertification, the amount of the credit is equal to forty percent (40%) of thequalified rehabilitation expenditures.

(2)        For an eligible sitelocated in a development tier three area, determined as of the date ofcertification, the amount of the credit is equal to thirty percent (30%) of thequalified rehabilitation expenditures.

(a)        (Effective fortaxable years beginning on or after January 1, 2008) Credit. – A taxpayerwho is allowed a credit under section 47 of the Code for making qualifiedrehabilitation expenditures of at least three million dollars ($3,000,000) withrespect to a certified rehabilitation of an eligible site is allowed a creditequal to a percentage of the expenditures that qualify for the federal credit.The credit may be claimed in the year in which the eligible site is placed intoservice. When the eligible site is placed into service in two or more phases indifferent years, the amount of credit that may be claimed in a year is theamount based on the qualified rehabilitation expenditures associated with thephase placed into service during that year. In order to be eligible for acredit allowed by this Article, the taxpayer must provide to the Secretary acopy of the eligibility certification and the cost certification. The amount ofthe credit is as follows:

(1)        For an eligible sitelocated in a development tier one or two area, determined as of the date of theeligibility certification, the amount of the credit is equal to forty percent(40%) of the qualified rehabilitation expenditures.

(2)        For an eligible sitelocated in a development tier three area, determined as of the date of theeligibility certification, the amount of the credit is equal to thirty percent(30%) of the qualified rehabilitation expenditures.

(b)        Allocation. – Notwithstandingthe provisions of G.S. 105‑131.8 and G.S. 105‑269.15, a pass‑throughentity that qualifies for the credit provided in this section may allocate thecredit among any of its owners in its discretion as long as an owner's adjustedbasis in the pass‑through entity, as determined under the Code, at theend of the taxable year in which the eligible site is placed in service, is atleast forty percent (40%) of the amount of credit allocated to that owner.Owners to whom a credit is allocated are allowed the credit as if they hadqualified for the credit directly. A pass‑through entity and its ownersmust include with their tax returns for every taxable year in which anallocated credit is claimed a statement of the allocation made by the pass‑throughentity and the allocation that would have been required under G.S. 105‑131.8or G.S. 105‑269.15.

(c)        Forfeiture forChange in Ownership. – If an owner of a pass‑through entity that hasqualified for the credit allowed under this section disposes of all or aportion of the owner's interest in the pass‑through entity within fiveyears from the date the eligible site is placed in service and the owner'sinterest in the pass‑through entity is reduced to less than two‑thirdsof the owner's interest in the pass‑through entity at the time theeligible site was placed in service, the owner forfeits a portion of thecredit. The amount forfeited is determined by multiplying the amount of creditby the percentage reduction in ownership and then multiplying that product bythe forfeiture percentage. The forfeiture percentage equals the recapturepercentage found in the table in section 50(a)(1)(B) of the Code.

(d)        Exceptions toForfeiture. – Forfeiture as provided in subsection (c) 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.

(e)        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.  (2006‑40, s. 1; 2006‑252, s. 2.23; 2006‑259, s.47.5; 2007‑491, s. 44(1)a; 2008‑107, s. 28.4(b).)