Senate Bill No. 578
(By Senator Tomblin, Mr. President, By Request)
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[Introduced February 21, 2000; referred to the Committee on
Finance.]
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A BILL to amend and reenact sections eight-a and eight-g, article
twenty-one, chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended; and to amend
article twenty-four of said chapter by adding thereto a new
section, designated section twenty-three-g, all relating to
the application of tax credits for qualified rehabilitation
buildings investment; and allowing for the distribution of the
credits to owners of the entities earning the credits.
Be it enacted by the Legislature of West Virginia:
That sections eight-a and eight-g, article twenty-one, chapter
eleven of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted; and that article twenty-four of said chapter, be amended by adding thereto a new
section, designated section twenty-three-g, all to read as follows:
PART I. GENERAL.
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-8a. Credit for qualified rehabilitated buildings
investment; application of credits.
(a) A credit against the tax imposed by the provisions of this
article shall be allowed as follows: Certified historic structures
is allowed for certified historic structures. The credit is equal
to ten percent of qualified rehabilitation expenditures as defined
in §47(c)(2), Title 26 of the United States code, as amended. This
credit is available for both residential and nonresidential
buildings located in this state, that are reviewed by the West
Virginia division of culture and history and designated by the
national park service, United States department of the interior as
"certified historic structures," and further defined as a
"qualified rehabilitated building," as defined under §47(c)(1),
Title 26 of the United States code, as amended.
(b) Effective for taxable years beginning on and after the
first day of January, two thousand, credits granted to an electing
small business corporation (S corporation), limited partnership, general partnership, limited liability company or multiple owners
of property shall be passed through to the shareholders, partners,
members or owners, either pro rata or pursuant to an agreement
among the shareholders, partners, members or owners documenting an
alternative distribution method. Taxpayers eligible for the
credits may transfer, sell or assign the credits.
§11-21-8g. Credit for qualified rehabilitated residential
buildings investment.
(a) A credit against the tax imposed by the provisions of this
article is allowed for residential certified historic structures.
The credit is equal to twenty percent of eligible rehabilitation
expenses in the rehabilitation of a certified historic structure.
The credit is available for residential certified historic
structures located in this state that are reviewed by the West
Virginia division of culture and history and designated by the
national park service, United States department of the interior as
"certified historic structures" as defined in 26 U.S.C. §47.
(b)(1) "Certified historic structure" means any building
located in this state that is listed individually in the national
register of historic places or located in a registered historic
district, reviewed by the West Virginia division of culture and history and certified by the national park service as being of
historic significance to the district.
(2) "Certified rehabilitation" means any rehabilitation of a
certified historic structure that is reviewed by the West Virginia
division of culture and history, and certified by the national park
service as being consistent with the historic character of the
property and, where applicable, the district in which it is
located.
(3) "Eligible rehabilitation expenses" means expenses incurred
in the material rehabilitation of a certified historic structure
and added to the property's basis for income tax purposes.
(4) "Historic district" means any district that is listed in
the national register of historic places or designated under a
state or local statute which has been certified as containing
criteria which will substantially achieve the purpose of preserving
and rehabilitating buildings of significance to the district and
which is certified as substantially meeting all of the requirements
for listing of districts in the national register of historic
places.
(5) "Historic preservation application" means application
forms published by the national park service, United States department of the interior, Parts 1, 2 and 3, Form No. 1-168, or
its successor.
(6) "Material rehabilitation" means improvements or
reconstruction consistent with the "secretary of the interior's
standards for rehabilitation," the actual cost of which amounts to
at least twenty percent of the assessed value of a certified
historic structure for ad valorem real estate tax purposes for the
year before such rehabilitation expenses were incurred, exclusive
of the assessed value of the land.
(7) "Residential certified historic structure" means any
certified historic structure that is:
(A) Classified as Class II property for levy purposes pursuant
to section five, article eight, chapter eleven of this code for the
year in which the rehabilitation expenses are incurred; or
(B) Not classified as Class II property for levy purposes for
the year in which the rehabilitation expenses are incurred but will
satisfy the requirements for classification as Class II for real
property assessment purposes pursuant to section five, article
eight, chapter eleven of this code as of the first day of July of
the year following the year in which the rehabilitation expenses
are incurred.
(8) "Secretary of the interior standards" means standards and
guidelines adopted and published by the national park service,
United States department of the interior, for rehabilitation of
historic properties.
(9) "State historic preservation office" means the state
official designated by the governor pursuant to provisions in the
national historic preservation act of 1966, as amended and further
defined in section six, article one, chapter twenty-nine of this
code.
(c)(1) Application and processing procedures for provisions of
this section shall be the same or substantially similar as any
required under provisions of 36 C.F.R., Part 67, and to the extent
applicable, 26 C.F.R., Part 1. Obtaining historic preservation
certification by proper application automatically qualifies the
applicant to be considered for tax credits under this section.
(2) The state historic preservation officer's role in the
application procedure shall be identical, or substantially similar,
to that in 36 C.F.R., Part 67 and 26 C.F.R., Part 1, to the extent
applicable.
(d) All standards including the secretary of the interior
standards and provisions in 36 C.F.R., Part 67 and 26 C.F.R, Part 1 that apply to tax credits available from the United States
government apply to this section, except that the property eligible
for the tax credit under this article may not be income producing
property or property for which depreciation is allowed under 26
U.S.C. §168.
(e) If the amount of the credit for qualified rehabilitated
residential buildings investment exceeds the taxpayer's tax
liability for the taxable year to which the credit applies, the
amount that exceeds the tax liability for the taxable year may be
carried over for credits against the income taxes of the taxpayer
in each of the ensuing five tax years or until the full credit is
used, whichever occurs first. In no event may the amount of the
credit taken in a taxable year exceed the tax liability due for the
taxable year.
(f) The tax commissioner shall require disclosure of
information regarding credits granted pursuant to this section in
accordance with the provisions of section five-s, article ten of
this chapter. The commissioner of the West Virginia division of
culture and history may establish by rule the requirements to
implement the credit for qualified rehabilitated residential
buildings investment, including reasonable fees to defray the necessary expenses of administration of the credit.
(g) The credit authorized by this section shall be available
for tax years beginning after the thirty-first day of December, one
thousand nine hundred ninety-nine.
(h) Effective for taxable years beginning on and after the
first day of January, two thousand, credits granted to an electing
small business corporation (S corporation), limited partnership,
general partnership, limited liability company or multiple owners
of property shall be passed through to the shareholders, partners,
members or owners, either pro rata or pursuant to an agreement
among the shareholders, partners, members or owners documenting an
alternative distribution method. Taxpayers eligible for the
credits may transfer, sell or assign the credits.
ARTICLE 24. CORPORATION NET INCOME TAX.
§11-24-23g. Application of credits.
Effective for taxable years beginning on and after the first
day of January, two thousand, the credits granted, pursuant to
section twenty-three-a of this article, to an electing small
business corporation (S corporation), limited partnership, general
partnership, limited liability company or multiple owners of
property shall be passed through to the shareholders, partners, members or owners, either pro rata or pursuant to an agreement
among the shareholders, partners, members or owners documenting an
alternative distribution method. Taxpayers eligible for the
credits may transfer, sell or assign the credits.
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(NOTE: The purpose of this bill is to allow the tax credits
for qualified rehabilitation buildings investment and qualified
rehabilitation of historic residential buildings investment to be
passed through to the shareholders, partners, members or owners of
the entity making the investment.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§11-24-23g is new; therefore, strike-throughs and underscoring
have been omitted.)