§ 105-129.72. (See note for repeal) Credit for nonincome-producing rehabilitated mill property. - North Carolina Statutes

§ 105‑129.72.  (See notefor repeal) Credit for nonincome‑producing rehabilitated mill property.

(a)        (Effective fortaxable years beginning before January 1, 2008) Credit. – A taxpayer who isnot allowed a federal income tax credit under section 47 of the Code and whomakes rehabilitation expenses  with respect to an eligible site is allowed acredit equal to a percentage of the rehabilitation expenses. The entire creditmay not be taken for the taxable year in which the property is placed inservice, but must be taken in five equal installments beginning with thetaxable year in which the property is placed in service. When the eligible siteis placed into service in two or more phases in different years, the amount ofcredit that may be claimed in a year is the amount based on the rehabilitationexpenses associated with the phase placed into service during that year. Inorder to be eligible for a credit allowed by this Article, the taxpayer mustprovide to the Secretary a copy of the eligibility certification and the costcertification. For an eligible site located in a development tier one or twoarea, determined as of the date of certification, the amount of the credit isequal to forty percent (40%) of the rehabilitation expenses. No credit isallowed for a site located in a development tier three area.

(a)        (Effective fortaxable years beginning on or after January 1, 2008) Credit. – A taxpayerwho is not allowed a federal income tax credit under section 47 of the Code andwho makes rehabilitation expenses of at least three million dollars($3,000,000) with respect to a certified rehabilitation of an eligible site isallowed a credit equal to a percentage of the rehabilitation expenses. Theentire credit may not be taken for the taxable year in which the property isplaced in service, but must be taken in five equal installments beginning withthe taxable year in which the property is placed in service. When the eligiblesite is placed into service in two or more phases in different years, theamount of credit that may be claimed in a year is the amount based on therehabilitation expenses associated with the phase placed into service duringthat year. In order to be eligible for a credit allowed by this Article, thetaxpayer must provide to the Secretary a copy of the eligibility certificationand the cost certification. For an eligible site located in a development tierone or two area, determined as of the date of the eligibility certification,the amount of the credit is equal to forty percent (40%) of the rehabilitationexpenses. No credit is allowed for a site located in a development tier threearea.

(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 at leastforty percent (40%) of the amount of credit allocated to that owner. Owners towhom a credit is allocated are allowed the credit as if they had qualified forthe credit directly. A pass‑through entity and its owners must includewith their tax returns for every taxable year in which an allocated credit isclaimed a statement of the allocation made by the pass‑through entity andthe allocation that would have been required under G.S. 105‑131.8 or 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. The remainingallocable credit is allocated equally among the five years in which the creditis claimed.

(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. 2.24; 2007‑491, s.44(1)a; 2008‑107, s. 28.4(c).)