HRS § 235-110.7 — Capital goods excise tax credit


§235-110.7 Capital goods excise tax credit.
(a) There shall be allowed to each taxpayer subject to the tax imposed by this
chapter a capital goods excise tax credit, which shall be deductible from the taxpayer's
net income tax liability, if any, imposed by this chapter for the taxable year in
which the credit is properly claimed.
The amount of the tax credit shall be four per cent
of the cost of the eligible depreciable tangible personal property used by the taxpayer
in a trade or business and placed in service within Hawaii after December 31, 2009.
In the case of a partnership, S corporation, estate,
or trust, the tax credit allowable is for eligible depreciable tangible personal
property that is placed in service by the entity. The cost upon which the tax credit
is computed shall be determined at the entity level. Distribution and share of
credit shall be determined by rules.
In the case of eligible depreciable tangible personal
property for which a credit for sales or use taxes paid to another state is allowable
under section 238-3(i), the amount of the tax credit allowed under this section
shall not exceed the amount of use tax actually paid under chapter 238 relating
to the tangible personal property.
If a deduction is taken under section 179 (with
respect to election to expense certain depreciable business assets) of the Internal
Revenue Code of 1954, as amended, no tax credit shall be allowed for that portion
of the cost of property for which the deduction was taken.
(b) If the capital goods excise tax credit allowed
under subsection (a) exceeds the taxpayer's net income tax liability, the excess
of credit over liability shall be refunded to the taxpayer; provided that no refunds
or payment on account of the tax credit allowed by this section shall be made for
amounts less than $1.
All claims for tax credits under this section, including
any amended claims, must be filed on or before the end of the twelfth month following
the close of the taxable year for which the credits may be claimed. Failure to
comply with the foregoing provision shall constitute a waiver of the right to claim
the credit.
(c) Application for the capital goods excise tax
credit shall be upon forms provided by the department of taxation.
(d) Sections 47 (with respect to dispositions of
section 38 property and the recapture percentages) of the Internal Revenue Code
of 1954, as amended, as of December 31, 1984, and 280F as operative for this chapter
(with respect to limitation on investment tax credit and depreciation for luxury
automobiles; limitation where certain property used for personal purposes) of the
Internal Revenue Code of 1954, as amended, shall be operative for purposes of this
section.
(e) As used in this section, the definition of
section 38 property (with respect to investment in depreciable tangible personal
property) as defined by section 48(a)(1)(A), (a)(1)(B), (a)(3), (a)(4), (a)(7),
(a)(8), (a)(10)(A), (b), (c), (f), (l), (m), and (s) of the Internal Revenue Code
of 1954, as amended as of December 31, 1984, is operative for the purposes of this
section only.
(f) As used in this section:
"Cost" means the:
(1) Actual invoice price of the tangible personal property;
or
(2) Basis from which depreciation is taken under section
167 (with respect to depreciation) or from which a deduction may be taken under
section 168 (with respect to accelerated cost recovery system) of the Internal Revenue
Code of 1954, as amended,
whichever is less.
"Eligible depreciable tangible personal property"
is section 38 property as defined by the operative provisions of section 48 and
having a depreciable life under section 167 or for which a deduction may be taken
under section 168 of the Internal Revenue Code of 1954, as amended.
"Placed in service" means the earliest
of the following taxable years:
(1) The taxable year in which, under the:
(A) Taxpayer's depreciation practice, the period
for depreciation; or
(B) Accelerated cost recovery system, a claim
for recovery allowances,
with respect to the property begins; or
(2) The taxable year in which the property is placed in
a condition or state of readiness and availability for a specifically assigned function.
"Purchase" means an acquisition of property.
"Tangible personal property" means tangible
personal property that is placed in service within Hawaii after December 31, 1987,
and the purchase or importation of which resulted in a transaction that was subject
to the imposition and payment of tax at the rate of four per cent under chapter
237 or 238. "Tangible personal property" does not include tangible personal
property that is an integral part of a building or structure or tangible personal
property used in a foreign-trade zone, as defined under chapter 212.