2006 Utah Code - 59-10-1014 — Renewable energy systems tax credit -- Definitions -- Limitations -- State tax credit in addition to allowable federal credits -- Certification -- Rulemaking authority -- Reimbursement of Uniform School Fund.

     59-10-1014.   Renewable energy systems tax credit -- Definitions -- Limitations -- State tax credit in addition to allowable federal credits -- Certification -- Rulemaking authority -- Reimbursement of Uniform School Fund.
     (1) As used in this part:
     (a) "Active solar system":
     (i) means a system of equipment capable of collecting and converting incident solar radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy by a separate apparatus to storage or to the point of use; and
     (ii) includes water heating, space heating or cooling, and electrical or mechanical energy generation.
     (b) "Biomass system" means any system of apparatus and equipment capable of converting organic plant, wood, or waste products into electrical and thermal energy and transferring these forms of energy by a separate apparatus to the point of use or storage.
     (c) "Business entity" means any entity under which business is conducted or transacted.
     (d) "Commercial energy system" means any active solar, passive solar, wind, hydroenergy, or biomass system used to supply energy to a commercial unit or as a commercial enterprise.
     (e) "Commercial enterprise" means a business entity whose purpose is to produce electrical, mechanical, or thermal energy for sale from a commercial energy system.
     (f) (i) "Commercial unit" means any building or structure which a business entity uses to transact its business, except as provided in Subsection (1)(f)(ii); and
     (ii) (A) in the case of an active solar system used for agricultural water pumping or a wind system, each individual energy generating device shall be a commercial unit; and
     (B) if an energy system is the building or structure which a business entity uses to transact its business, a commercial unit is the complete energy system itself.
     (g) "Hydroenergy system" means a system of apparatus and equipment capable of intercepting and converting kinetic water energy into electrical or mechanical energy and transferring this form of energy by separate apparatus to the point of use or storage.
     (h) "Passive solar system":
     (i) means a direct thermal system which utilizes the structure of a building and its operable components to provide for collection, storage, and distribution of heating or cooling during the appropriate times of the year by utilizing the climate resources available at the site; and
     (ii) includes those portions and components of a building that are expressly designed and required for the collection, storage, and distribution of solar energy.
     (i) "Residential energy system" means any active solar, passive solar, wind, or hydroenergy system used to supply energy to or for any residential unit.
     (j) "Residential unit" means any house, condominium, apartment, or similar dwelling unit which serves as a dwelling for a person, group of persons, or a family but does not include property subject to a fee under:
     (i) Section 59-2-404;
     (ii) Section 59-2-405;
     (iii) Section 59-2-405.1;
     (iv) Section 59-2-405.2; or
     (v) Section 59-2-405.3.

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     (k) "Utah Geological Survey" means the Utah Geological Survey established in Section 63-73-5.
     (l) "Wind system" means a system of apparatus and equipment capable of intercepting and converting wind energy into mechanical or electrical energy and transferring these forms of energy by a separate apparatus to the point of use or storage.
     (2) For taxable years beginning on or after January 1, 2001, but beginning on or before December 31, 2006, a claimant, estate, or trust may claim a nonrefundable tax credit as provided in this section if:
     (a) a claimant, estate, or trust that is not a business entity purchases and completes or participates in the financing of a residential energy system to supply all or part of the energy for the claimant's, estate's, or trust's residential unit in the state; or
     (b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to another claimant, estate, or trust that is not a business entity prior to making a claim for a tax credit under Subsection (6) or Section 59-7-614; and
     (ii) the claimant, estate, or trust that is a business entity assigns its right to the tax credit to the claimant, estate, or trust that is not a business entity as provided in Subsection (6)(c) or Subsection 59-7-614(2)(a)(iii).
     (3) (a) The tax credit described in Subsection (2) is equal to 25% of the costs of the energy system, including installation costs, against any income tax liability of the claimant, estate, or trust under this chapter for the taxable year in which the residential energy system is completed and placed in service.
     (b) The total amount of the tax credit under this section may not exceed $2,000 per residential unit.
     (c) The tax credit under this section is allowed for any residential energy system completed and placed in service on or after January 1, 2001, but on or before December 31, 2006.
     (4) (a) The tax credit provided for in this section shall be claimed in the return for the taxable year in which the energy system is completed and placed in service.
     (b) Additional residential energy systems or parts of residential energy systems may be similarly claimed in returns for subsequent taxable years as long as the total amount claimed does not exceed $2,000 per residential unit.
     (c) If the amount of the tax credit under this section exceeds the income tax liability of the claimant, estate, or trust claiming the tax credit under this section for that taxable year, then the amount not used may be carried over for a period which does not exceed the next four taxable years.
     (5) (a) A claimant, estate, or trust that is not a business entity that leases a residential energy system installed on a residential unit is eligible for the residential energy tax credits if that claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax credit.
     (b) Only the principal recovery portion of the lease payments, which is the cost incurred by the claimant, estate, or trust in acquiring the residential energy system excluding interest charges and maintenance expenses, is eligible for the tax credits.
     (c) A claimant, estate, or trust described in this Subsection (5) may use the tax credits for a period that does not exceed seven years from the initiation of the lease.
     (6) (a) A claimant, estate, or trust that is a business entity that purchases and completes or participates in the financing of a residential energy system to supply all or part of the energy

required for a residential unit owned or used by the claimant, estate, or trust that is a business entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this Subsection (6).
     (b) (i) For taxable years beginning on or after January 1, 2001, but beginning on or before December 31, 2006, a claimant, estate, or trust that is a business entity is entitled to a tax credit equal to 25% of the costs of a residential energy system installed with respect to each residential unit it owns or uses, including installation costs, against any tax due under this chapter for the taxable year in which the energy system is completed and placed in service.
     (ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000 per residential unit.
     (iii) The tax credit under this Subsection (6) is allowed for any residential energy system completed and placed in service on or after January 1, 2001, but on or before December 31, 2006.
     (c) If a claimant, estate, or trust that is a business entity sells a residential unit to a claimant, estate, or trust that is not a business entity prior to making a claim for the tax credit under this Subsection (6), the claimant, estate, or trust that is a business entity may:
     (i) assign its right to this tax credit to the claimant, estate, or trust that is not a business entity; and
     (ii) if the claimant, estate, or trust that is a business entity assigns its right to the tax credit to a claimant, estate, or trust that is not a business entity under Subsection (6)(c)(i), the claimant, estate, or trust that is not a business entity may claim the tax credit as if that claimant, estate, or trust that is not a business entity had completed or participated in the costs of the residential energy system under this section.
     (7) (a) A claimant, estate, or trust that is a business entity that purchases or participates in the financing of a commercial energy system is entitled to a nonrefundable tax credit as provided in this Subsection (7) if:
     (i) the commercial energy system supplies all or part of the energy required by commercial units owned or used by the claimant, estate, or trust that is a business entity; or
     (ii) the claimant, estate, or trust that is a business entity sells all or part of the energy produced by the commercial energy system as a commercial enterprise.
     (b) (i) A claimant, estate, or trust that is a business entity is entitled to a tax credit equal to 10% of the costs of any commercial energy system installed, including installation costs, against any tax due under this chapter for the taxable year in which the commercial energy system is completed and placed in service.
     (ii) The total amount of the tax credit under this Subsection (7) may not exceed $50,000 per commercial unit.
     (iii) The tax credit under this Subsection (7) is allowed for any commercial energy system completed and placed in service on or after January 1, 2001, but on or before December 31, 2006.
     (c) A claimant, estate, or trust that is a business entity that leases a commercial energy system installed on a commercial unit is eligible for the tax credit under this Subsection (7) if the claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax credit.
     (d) Only the principal recovery portion of the lease payments, which is the cost incurred by a claimant, estate, or trust that is not a business entity in acquiring a commercial energy system, excluding interest charges and maintenance expenses, is eligible for the tax credit under

this Subsection (7).
     (e) A claimant, estate, or trust that is a business entity that leases a commercial energy system is eligible to use the tax credit under this Subsection (7) for a period that does not exceed seven years from the initiation of the lease.
     (8) (a) A tax credit under this section may be claimed for the taxable year in which the energy system is completed and placed in service.
     (b) Additional energy systems or parts of energy systems may be claimed for subsequent years.
     (c) If the amount of a tax credit under this section exceeds the tax liability of the claimant, estate, or trust claiming the tax credit under this section for a taxable year, the amount of the tax credit exceeding the tax liability may be carried over for a period which does not exceed the next four taxable years.
     (9) The tax credits provided for under this section are in addition to any tax credits provided under the laws or rules and regulations of the United States.
     (10) (a) The Utah Geological Survey may set standards for residential and commercial energy systems that cover the safety, reliability, efficiency, leasing, and technical feasibility of the systems to ensure that the systems eligible for the tax credit use the state's renewable and nonrenewable energy resources in an appropriate and economic manner.
     (b) A tax credit may not be taken under this section until the Utah Geological Survey has certified that the energy system has been completely installed and is a viable system for saving or production of energy from renewable resources.
     (11) The Utah Geological Survey and the commission are authorized to promulgate rules in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, which are necessary to implement this section.
     (12) The Uniform School Fund shall be reimbursed by transfers from the General Fund for any tax credits taken under this section.

Renumbered and Amended by Chapter 223, 2006 General Session