GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

H	1 

HOUSE BILL 391

Short Title:  Expand Farm Machinery Tax Credit.	(Public)
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Sponsors: Representative Edwards.
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Referred to:  Finance.
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March 4, 1993

A BILL TO BE ENTITLED
AN ACT TO PROVIDE THAT A PARTNERSHIP MAY QUALIFY FOR THE INCOME TAX CREDIT FOR PROPERTY TAXES PAID ON FARM MACHINERY AND TO CLARIFY THAT A PARTNERSHIP MAY PASS AN INCOME TAX CREDIT THROUGH TO ITS PARTNERS.
The General Assembly of North Carolina enacts:
Section 1.  G.S. 105-151.21 reads as rewritten:
"§ 105-151.21.  Credit for property taxes paid on farm machinery.
(a)	Credit. –A person engaged in the business of farming is allowed a credit against the tax imposed by this Division equal to the amount of property taxes the person paid at par during the taxable year on farm machinery and on attachments and repair parts for farm machinery.  In addition, an individual shareholder of an S Corporation engaged in the business of farming is allowed a credit against the tax imposed by this Division equal to the shareholder's pro rata share of the amount of property taxes the S Corporation paid at par during the taxable year on farm machinery and on attachments and repair parts for farm machinery.  The total credit allowed under this section may not exceed one thousand dollars ($1,000) for the taxable year and may not exceed the amount of tax imposed by this Division for the taxable year reduced by the sum of all credits allowed under this Division, except payments of tax made by or on behalf of the taxpayer.  To claim the credit, the taxpayer shall attach to the return a copy of the tax receipt for the property taxes for which credit is claimed.  The receipt must indicate that the taxes have been paid and the amount and date of the payment.
(b)	Definitions. – The following definitions apply in this section:
(1)	Farm machinery. – Machinery subject to State sales tax at the rate of one percent (1%) under G.S. 105-164.4(a)(1d)a.
(2)	Property taxes. – The principal amount of taxes levied and assessed by a taxing unit under Subchapter II of this Chapter.  The term does not include costs, penalties, interest, or other charges that may be added to the principal amount.
(3)	Taxing unit. – Defined in G.S. 105-273.
(c)	Adjustment. – If a taxing unit gives a taxpayer a credit or refund for any of the property taxes for which the taxpayer claimed a credit under this section, the taxpayer shall notify the Secretary within 90 days.  The Secretary shall then recompute the credit allowed under this section and make any resulting adjustment of income tax for the taxable year for which the credit was claimed."
Sec. 2.  Article 9 of Chapter 105 of the General Statutes is amended by adding at the end a new section to read:
"§ 105-269.15. Income tax credits of partnerships.
(a)	Pass-through of Credit. – A partnership may pass through to each of its partners the partner's distributive share of an income tax credit for which the partnership qualifies.  All limitations on an income tax credit apply to the partnership, except the following:
(1)	The limitation that the credit may not exceed the amount of income tax imposed on the taxpayer.
(2)	A cap, expressed as a specific maximum dollar amount, on the otherwise allowable amount of the credit.
(b)	Allowance of Credit to Partner. – A partner's distributive share of an income tax credit passed through by a partnership is allowed to the partner only to the extent the partner would have qualified for the credit if the partner stood in the position of the partnership.  All limitations on an income tax credit apply to each partner to the extent of the partner's distributive share of the credit, except that a corporate partner's distributive share of an individual income tax credit is allowed as a corporation income tax credit to the extent the corporate partner could have qualified for a corporation income tax credit if it stood in the position of the partnership.  All limitations on an income tax credit apply to the sum of the credit passed through to the partner plus the credit for which the partner qualifies directly.
(c)	Determination of Distributive Share. – A partner's distributive share of an income tax credit shall be determined in accordance with sections 702 and 704 of the Code."
Sec. 3.  This act is effective for taxable years beginning on or after January 1, 1992.