§ 105-129.88. (See notes) Credit for investing in business property. - North Carolina Statutes

§ 105‑129.88.  (Seenotes) Credit for investing in business property.

(a)        General Credit. – Ataxpayer that meets the eligibility requirements set out in G.S. 105‑129.83and that has purchased or leased business property and placed it in service inthis State during the taxable year and that has satisfied the thresholdrequirements of subsection (c) of this section is allowed a credit equal to theapplicable percentage of the excess of the eligible investment amount over theapplicable threshold. If the taxpayer places business property in service in anurban progress zone or an agrarian growth zone, the applicable percentage isthe one for a development tier one area. Business property is eligible if it isnot leased to another party. The credit may not be taken for the taxable yearin which the business property is placed in service but shall be taken in equalinstallments over the four years following the taxable year in which it isplaced in service. The applicable percentage is as follows:

AreaDevelopment Tier                ApplicablePercentage

TierOne                                                        7%

TierTwo                                                        5%

TierThree                                                      3.5%

(b)        Eligible InvestmentAmount. – The eligible investment amount is the lesser of (i) the cost of theeligible business property and (ii) the amount by which the cost of all of thetaxpayer's eligible business property that is in service in this State on thelast day of the taxable year exceeds the cost of all of the taxpayer's eligiblebusiness property that was in service in this State on the last day of the baseyear. The base year is that year, of the three immediately preceding taxableyears, in which the taxpayer had the most eligible business property in servicein this State.

(c)        Threshold. – Theapplicable threshold is the appropriate amount set out in the following tablebased on the development tier where the eligible business property is placed inservice during the taxable year. If the taxpayer places business property inservice in an urban progress zone or an agrarian growth zone, the applicablethreshold is the one for a development tier one area. Business property placedin service in an urban progress zone or an agrarian growth zone is notaggregated with business property placed in service at any other eligibleestablishments regardless of county. If the taxpayer places eligible businessproperty in service at more than one establishment in a county during thetaxable year, the threshold applies to the aggregate amount of eligiblebusiness property placed in service during the taxable year at allestablishments in the county. If the taxpayer places eligible business propertyin service at establishments in different counties, the threshold appliesseparately to the aggregate amount of eligible business property placed inservice in each county. If the taxpayer places eligible business property inservice at an establishment over the course of a two‑year period, theapplicable threshold for the second taxable year is reduced by the eligibleinvestment amount for the previous taxable year.

AreaDevelopment Tier                          Threshold

TierOne                                       $              -0-

TierTwo                                          1,000,000

TierThree                                        2,000,000

(d)        Expiration. – Asused in this subsection, the term "disposed of" means disposed of,taken out of service, or moved out of State. If, in one of the four years inwhich the installment of a credit accrues, the business property with respectto which the credit was claimed is disposed of, the credit expires, and thetaxpayer may not take any remaining installment of the credit for that businessproperty unless the cost of that business property is offset in the sametaxable year by the taxpayer's new investment in eligible business propertyplaced in service in the same county, as provided in this subsection. If,during the taxable year, the taxpayer disposed of the business property forwhich installments remain, there has been a net reduction in the cost of allthe taxpayer's eligible business property that are in service in the samecounty as the business property that was disposed of, and the amount of thisreduction is greater than twenty percent (20%) of the cost of the businessproperty that was disposed of, then the credit for the business property thatwas disposed of expires. If the amount of the net reduction is equal to twentypercent (20%) or less of the cost of the business property that was disposedof, or if there is no net reduction, then the credit does not expire. Indetermining the amount of any net reduction during the taxable year, the costof business property the taxpayer placed in service during the taxable year andfor which the taxpayer claims a credit under Article 3A or Article 3B of thisChapter may not be included in the cost of all the taxpayer's eligible businessproperty that is in service. If in a single taxable year business property withrespect to two or more credits in the same county are disposed of, the netreduction in the cost of all the taxpayer's eligible business property that isin service in the same county is compared to the total cost of all the businessproperty for which credits expired in order to determine whether the remaininginstallments of the credits are forfeited.

The expiration of a creditdoes not prevent the taxpayer from taking the portion of an installment thataccrued in a previous year and was carried forward to the extent permittedunder G.S. 105‑129.84.

(e)        TransferredProperty. – If, in one of the four years in which the installment of a creditaccrues, the business property with respect to which the credit was claimed ismoved to a county in a higher‑numbered development tier or out of anurban progress zone or an agrarian growth zone, the remaining installments ofthe credit are allowed only to the extent they would have been allowed if thebusiness property had been placed in service initially in the area to which itwas moved. If, in one of the four years in which the installment of a creditaccrues, the business property with respect to which a credit was claimed ismoved to a county in a lower‑numbered development tier or an urbanprogress zone or an agrarian growth zone, the remaining installments of thecredit shall be calculated as if the business property had been placed inservice initially in the area to which it was moved.

(f)         Wage Standard. – Forthe purposes of this section, a taxpayer satisfies the wage standardrequirement of G.S. 105‑129.83 only if the taxpayer satisfies therequirement with respect to all of the jobs at the establishment, consideredcollectively, with respect to which a credit is claimed.

(g)        No Double Credit. –A taxpayer may not claim a credit under this section with respect to businessproperty for which the taxpayer claims a credit under G.S. 105‑129.9 orG.S. 105‑129.9A. (2006‑252, s. 1.1; 2007‑527, ss. 7, 8.)