2005 North Carolina Code - General Statutes Article 3B - Business And Energy Tax Credits.

Article 3B.

Business And Energy Tax Credits.

§ 105‑129.15.� Definitions.

The following definitions apply in this Article:

(1)������ Business property. � Tangible personal property that is used by the taxpayer in connection with a business or for the production of income and is capitalized by the taxpayer for tax purposes under the Code. The term does not include, however, a luxury passenger automobile taxable under section 4001 of the Code or a watercraft used principally for entertainment and pleasure outings for which no admission is charged.

(2)������ Cost. � In the case of property owned by the taxpayer, cost is determined pursuant to regulations adopted under section 1012 of the Code, subject to the limitation on cost provided in section 179 of the Code. In the case of property the taxpayer leases from another, cost is value as determined pursuant to G.S. 105‑130.4(j)(2).

(3)������ Recodified as § 105‑129.15(5).

(4)������ Hydroelectric generator. � A machine that produces electricity by water power or by the friction of water or steam.

(4a)���� Repealed by Session Laws 2002‑87, s. 3, effective August 22, 2002.

(5)������ Purchase. � Defined in section 179 of the Code.

(6)������ (Effective for taxable years beginning before January 1, 2006) Renewable biomass resources. � Organic matter produced by terrestrial and aquatic plants and animals, such as standing vegetation, aquatic crops, forestry and agricultural residues, landfill wastes, and animal wastes.

(6)������ (Effective for taxable years beginning on or after January 1, 2006) Renewable biomass resources. � Organic matter produced by terrestrial and aquatic plants and animals, such as standing vegetation, aquatic crops, forestry and agricultural residues, spent pulping liquor, landfill wastes, and animal wastes.

(7)������ (Effective for taxable years beginning before January 1, 2006) Renewable energy property. � Any of the following machinery and equipment or real property:

a.�������� Biomass equipment that uses renewable biomass resources for biofuel production of ethanol, methanol, and biodiesel; anaerobic biogas production of methane utilizing agricultural and animal waste or garbage; or commercial thermal or electrical generation from renewable energy crops or wood waste materials. The term also includes related devices for converting, conditioning, and storing the liquid fuels, gas, and electricity produced with biomass equipment.

b.�������� Hydroelectric generators located at existing dams or in free‑flowing waterways, and related devices for water supply and control, and converting, conditioning, and storing the electricity generated.

c.�������� Solar energy equipment that uses solar radiation as a substitute for traditional energy for water heating, active space heating and cooling, passive heating, daylighting, generating electricity, distillation, desalination, detoxification, or the production of industrial or commercial process heat. The term also includes related devices necessary for collecting, storing, exchanging, conditioning, or converting solar energy to other useful forms of energy.

d.�������� Wind equipment required to capture and convert wind energy into electricity or mechanical power, and related devices for converting, conditioning, and storing the electricity produced.

(7)������ (Effective for taxable years beginning on or after January 1, 2006) Renewable energy property. � Any of the following machinery and equipment or real property:

a.�������� Biomass equipment that uses renewable biomass resources for biofuel production of ethanol, methanol, and biodiesel; anaerobic biogas production of methane utilizing agricultural and animal waste or garbage; or commercial thermal or electrical generation. The term also includes related devices for converting, conditioning, and storing the liquid fuels, gas, and electricity produced with biomass equipment.

b.�������� Hydroelectric generators located at existing dams or in free‑flowing waterways, and related devices for water supply and control, and converting, conditioning, and storing the electricity generated.

c.�������� Solar energy equipment that uses solar radiation as a substitute for traditional energy for water heating, active space heating and cooling, passive heating, daylighting, generating electricity, distillation, desalination, detoxification, or the production of industrial or commercial process heat. The term also includes related devices necessary for collecting, storing, exchanging, conditioning, or converting solar energy to other useful forms of energy.

d.�������� Wind equipment required to capture and convert wind energy into electricity or mechanical power, and related devices for converting, conditioning, and storing the electricity produced.

(8)������ (Effective for taxable years beginning on or after January 1, 2005) Renewable fuel. � Either of the following:

a.�������� Biodiesel, as defined in G.S. 105‑449.60.

b.�������� Ethanol either unmixed or in mixtures with gasoline that are seventy percent (70%) or more ethanol by volume. (1996, 2nd Ex. Sess., c. 13, s. 3.12; 1997‑277, s. 3; 1998‑55, s. 2; 1999‑342, s. 2; 1999‑360, s. 1; 2000‑173, s. 1(a); 2001‑431, s. 1; 2002‑87, s. 3; 2004‑153, s. 1; 2005‑413, s. 4.)

 

§§ 105‑129.15A, 105‑129.16: Repealed by Session Laws 2005‑413, ss. 6 and 7, effective September 20, 2005.

 

§ 105‑129.16A.� Credit for investing in renewable energy property.

(a)������ Credit. � If a taxpayer that has constructed, purchased, or leased renewable energy property places it in service in this State during the taxable year, the taxpayer is allowed a credit equal to thirty‑five percent (35%) of the cost of the property. In the case of renewable energy property that serves a single‑family dwelling, the credit must be taken for the taxable year in which the property is placed in service. For all other renewable energy property, the entire credit may not be taken for the taxable year in which the property is placed in service but must be taken in five equal installments beginning with the taxable year in which the property is placed in service.

(b)������ Expiration. � If, in one of the years in which the installment of a credit accrues, the renewable energy property with respect to which the credit was claimed is disposed of, taken out of service, or moved out of State, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17. No credit is allowed under this section to the extent the cost of the renewable energy property was provided by public funds.

(c)������ (Effective for taxable years beginning before January 1, 2006) Ceilings. � The credit allowed by this section may not exceed the applicable ceilings provided in this subsection.

(1)������ Nonresidential Property. � A ceiling of two hundred fifty thousand dollars ($250,000) per installation applies to renewable energy property placed in service for any purpose other than residential.

(2)������ Residential Property. � The following ceilings apply to renewable energy property placed in service for residential purposes:

a.�������� One thousand four hundred dollars ($1,400) per dwelling unit for solar energy equipment for domestic water heating.

b.�������� Three thousand five hundred dollars ($3,500) per dwelling unit for solar energy equipment for active space heating, combined active space and domestic hot water systems, and passive space heating.

c.�������� Ten thousand five hundred dollars ($10,500) per installation for any other renewable energy property for residential purposes.

(c)������ (Effective for taxable years beginning on or after January 1, 2006) Ceilings. � The credit allowed by this section may not exceed the applicable ceilings provided in this subsection.

(1)������ Nonresidential Property. � A ceiling of two million five hundred thousand dollars ($2,500,000) per installation applies to renewable energy property placed in service for any purpose other than residential.

(2)������ Residential Property. � The following ceilings apply to renewable energy property placed in service for residential purposes:

a.�������� One thousand four hundred dollars ($1,400) per dwelling unit for solar energy equipment for domestic water heating, including pool heating.

b.�������� Three thousand five hundred dollars ($3,500) per dwelling unit for solar energy equipment for active space heating, combined active space and domestic hot water systems, and passive space heating.

c.�������� Ten thousand five hundred dollars ($10,500) per installation for any other renewable energy property for residential purposes.

(d)������ (Effective for taxable years beginning on or after January 1, 2006) No Double Credit. � A taxpayer that claims any other credit allowed under this Chapter with respect to renewable energy property may not take the credit allowed in this section with respect to the same property. A taxpayer may not take the credit allowed in this section for renewable energy property the taxpayer leases from another unless the taxpayer obtains the lessor's written certification that the lessor will not claim a credit under this Chapter with respect to the property.

(e)������ Sunset. � This section is repealed effective for renewable energy property placed into service on or after January 1, 2011. (1999‑342, s. 2; 2005‑413, s. 5.)

 

§ 105‑129.16B: Recodified as G.S. 105‑129.41 by Session Laws 2002‑87, s. 2, as amended by Session Laws 2003‑416, s. 1, effective August 22, 2002, and applicable to credits for buildings for which a federal tax credit is first claimed for a taxable year beginning on or after January 1, 2002.

 

§ 105‑129.16C.� (Repealed for taxable years beginning on or after January 1, 2006) Credit for investing in dry‑cleaning equipment that does not use a hazardous substance.

(a)������ Credit. � If a taxpayer that has purchased or leased qualified dry‑cleaning equipment, places it in service in this State for commercial purposes during the taxable year, the taxpayer is allowed a credit equal to twenty percent (20%) of the cost of the equipment. To support the credit allowed by this section, the taxpayer must file with the tax return for the taxable year in which the credit is claimed a certification by the Department of Environment and Natural Resources that the equipment purchased or leased by the taxpayer is qualified dry‑cleaning equipment.

(b)������ Restrictions. � No credit is allowed under this section to the extent the cost of the equipment was paid with public funds. A taxpayer that claims any other credit allowed under this Chapter with respect to qualified dry‑cleaning equipment may not take the credit allowed in this section with respect to the same equipment.

(c)������ Definitions. � The following definitions apply only in this section:

(1)������ Hazardous solvent. � A solvent, any portion of which consists of a chlorine‑based solvent, a hydrocarbon‑based solvent, a hazardous substance as defined in G.S. 130A‑310(2), or any substance determined by the Administrator of the Environmental Protection Agency or the Director of the National Institute of Occupational Safety and Health to possess carcinogenic potential to humans.

(2)������ Qualified dry‑cleaning equipment. � Equipment that is designed and used primarily to dry‑clean clothing and other fabric and does not use any hazardous solvent or any other substance that the Department of Environment and Natural Resources determines to pose a threat to human health or the environment.

(d)������ Sunset. � This section is repealed for taxable years beginning on or after January 1, 2006. (2000‑160, s. 1; 2005‑413, s. 8.)

 

§ 105‑129.16D.� Credit for constructing renewable fuel facilities.

(a)������ Dispensing Credit. � A taxpayer that constructs and installs and places in service in this State a qualified commercial facility for dispensing renewable fuel is allowed a credit equal to fifteen percent (15%) of the cost to the taxpayer of constructing and installing the part of the dispensing facility, including pumps, storage tanks, and related equipment, that is directly and exclusively used for dispensing or storing renewable fuel. A facility is qualified if the equipment used to store or dispense renewable fuel is labeled for this purpose and clearly identified as associated with renewable fuel.

The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the portion of the facility directly and exclusively used for dispensing or storing renewable fuel is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17.

(b)������ Production Credit. � A taxpayer that constructs and places in service in this State a commercial facility for processing renewable fuel is allowed a credit equal to twenty‑five percent (25%) of the cost to the taxpayer of constructing and equipping the facility. The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17.

(c)������ No Double Credit. � A taxpayer that claims any other credit allowed under this Chapter with respect to the costs of constructing and installing a facility may not take the credit allowed in this section with respect to the same costs.

(d)������ Sunset. � This section is repealed effective for facilities placed in service on or after January 1, 2008. (2004‑153, s. 2.)

 

§ 105‑129.17.� (See Editor's note for repeal) Tax election; cap.

(a)������ Tax Election. � The credits allowed in this Article are allowed against the franchise tax levied in Article 3 of this Chapter or the income taxes levied in Article 4 of this Chapter. The taxpayer must elect the tax against which a credit will be claimed when filing the return on which the first installment of the credit is claimed. This election is binding. Any carryforwards of a credit must be claimed against the same tax.

(b)������ Cap. � The credits allowed in this Article may not exceed fifty percent (50%) of the tax against which they are claimed for the taxable year, reduced by the sum of all other credits allowed against that tax, except tax payments made by or on behalf of the taxpayer. This limitation applies to the cumulative amount of credit, including carryforwards, claimed by the taxpayer under this Article against each tax for the taxable year. Any unused portion of the credits may be carried forward for the succeeding five years. (1996, 2nd Ex. Sess., c. 13, s. 3.12; 1997‑277, s. 3; 1999‑342, s. 2; 1999‑360, ss. 1, 13; 2000‑140, ss. 63(a), 88; 2001‑431, s. 3; 2002‑87, s. 5.)

 

§ 105‑129.18. (See Editor's note for repeal) Substantiation.

To claim a credit allowed by this Article, the taxpayer must provide any information required by the Secretary of Revenue. Every taxpayer claiming a credit under this Article must maintain and make available for inspection by the Secretary of Revenue any records the Secretary considers necessary to determine and verify the amount of the credit to which the taxpayer is entitled. The burden of proving eligibility for a credit and the amount of the credit rests upon the taxpayer, and no credit may be allowed to a taxpayer that fails to maintain adequate records or to make them available for inspection. (1996, 2nd Ex. Sess., c. 13, s. 3.12; 1997‑277, s. 3; 1999‑342, s. 2; 1999‑360, ss. 1, 14; 2000‑140, ss. 63(b), 88.)

 

§ 105‑129.19.� (Effective until January 1, 2007) Reports.

The Department of Revenue must report to the Revenue Laws Study Committee and to the Fiscal Research Division of the General Assembly by May 1 of each year the following information for the 12‑month period ending the preceding April 1:

(1)������ The number of taxpayers that claimed the credits allowed in this Article.

(2)������ The cost of business property and renewable energy property with respect to which credits were claimed.

(2a)���� Repealed by Session Laws 2002‑87, s. 6, effective August 22, 2002.

(3)������ The total cost to the General Fund of the credits claimed. (1996, 2nd Ex. Sess., c. 13, s. 3.12; 1997‑277, s. 3; 1999‑342, s. 2; 1999‑360, ss. 1, 15; 2000‑140, ss. 63(c), 88; 2001‑414, s. 10; 2002‑87, s. 6.)

 

§ 105‑129.19.� (Effective January 1, 2007) Reports.

The Department of Revenue must publish by May 1 of each year the following information for the 12‑month period ending the preceding December 31:

(1)������ The number of taxpayers that took the credits allowed in this Article.

(2)������ The cost of business property and renewable energy property with respect to which credits were taken.

(2a)���� Repealed by Session Laws 2002‑87, s. 6, effective August 22, 2002.

(3)������ The total cost to the General Fund of the credits taken. (2005‑429, s. 2.3.)

 

§§ 105‑129.20 through 105‑129.24.� Reserved for future codification purposes.