Idaho Admin. Code r. 35.01.01.719 - IDAHO INVESTMENT TAX CREDIT: PROPERTY TAX EXEMPTION IN LIEU OF
Section 63-3029B, Idaho Code
01.
In General . Beginning with
calendar year 2003, a qualifying taxpayer may elect a two (2) year property tax
exemption on personal property placed in service during the year. Property
placed in service prior to January 1, 2003, does not qualify for the exemption.
The personal property must be qualified investment as defined in Section
63-3029B, Idaho Code, and Rules
710 through
716 of these rules. If the property
tax exemption is elected on an item of personal property, the taxpayer may not
earn the investment tax credit on that item. The election is irrevocable.
(4-6-23)
02.
Terms . As
used in this rule: (4-6-23)
a. Qualifying
Taxpayer. A taxpayer must meet both of the following requirements to qualify
for the property tax exemption on personal property. (4-6-23)
i. The taxpayer's rate of charge or rate of
return must not be regulated or limited by federal or state law. For example,
if a corporation's rate of return is set by the Public Utilities Commission,
that corporation is to not be eligible to claim the property tax exemption on
any personal property it may place in service. The corporation may claim
investment tax credit on the property if the property is qualified investment
under Section
63-3029B, Idaho Code. Each
corporation included in a unitary group is to determine whether its rate of
charge or rate of return is regulated or limited by federal or state law based
solely on its own activities. (4-6-23)
ii. The taxpayer must have had negative Idaho
taxable income in the second preceding taxable year.
(4-6-23)
b. Second
Preceding Taxable Year. The term second preceding taxable year means the second
preceding taxable year from the taxable year in which the property is placed in
service. (4-6-23)
03.
Negative Idaho Taxable Income in Second Preceding Taxable Year.
(4-6-23)
a. Net Operating Loss Carryovers and
Carrybacks. Negative Idaho taxable income in the second preceding taxable year
is to be determined prior to the application of any Idaho net operating loss
carryforwards or carrybacks. (4-6-23)
b. Taxable year, for purposes of this
calculation, includes a short taxable year as defined by the Internal Revenue
Code. (4-6-23)
c. Unitary
Taxpayers. Each corporation included in a unitary combined group is to use its
Idaho taxable income, as determined pursuant to Section
63-3027, Idaho Code, to determine
whether it had negative Idaho taxable income in the second preceding taxable
year. See Rule 365 of these
rules for more information on how unitary corporations determine their Idaho
taxable income. (4-6-23)
d.
Pass-Through Entities. A taxpayer who is a partnership or an S corporation does
not qualify for the property tax exemption unless the total of its net business
income apportioned to Idaho and its nonbusiness income or loss allocated to
Idaho is negative for the second preceding taxable year. (4-6-23)
e. Return Not Filed. If a taxpayer has not
filed an Idaho income tax return for the second preceding taxable year so that
the loss can be verified, the taxpayer is not entitled to the exemption.
(4-6-23)
04.
Used
Property Limitation. (4-6-23)
a. In
General. The cost of used property that a taxpayer may take into account for
any taxable year in computing qualified investment does not exceed one hundred
fifty thousand dollars ($150,000). This includes the cost of property the
taxpayer placed in service during the taxable year and also his share of the
cost of property placed in service during the taxable year by a partnership, S
corporation, estate or trust. Because property must be qualified investment to
qualify for the property tax exemption, the taxpayer is limited to one hundred
fifty thousand dollars ($150,000) for purposes of determining the property tax
exemption. (4-6-23)
b. Selection of
Items of Used Property. If the cost of the taxpayer's used property eligible
for the investment tax credit exceeds the used property limitation, the
taxpayer must select the particular items of used property the cost of which is
to be taken into account in computing qualified investment. When the taxpayer
selects a particular item, the entire cost or the taxpayer's share of cost of
the particular item must be taken into account unless the one hundred fifty
thousand dollar ($150,000) limitation is exceeded. (4-6-23)
c. Electing Property Tax Exemption on
Selected Used Property Items. Once the taxpayer has selected the particular
items of used property, the cost of which is to be taken into account in
computing qualified investment, the taxpayer is to determine whether he may
elect the property tax exemption on the items selected. If an item qualifies as
personal property and the taxpayer had a negative Idaho taxable income in the
second preceding taxable year, the taxpayer may elect to claim the property tax
exemption on the item in lieu of earning the investment tax credit.
(4-6-23)
05.
Examples. Available at Income Tax Rules Examples.
(4-6-23)
Notes
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