GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1993

S	1 

SENATE BILL 716

Short Title:  Modify Cogenerating Power Tax Credit.	(Public)
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Sponsors: Senator Kerr.
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Referred to:  Public Utilities.
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April 7, 1993

A BILL TO BE ENTITLED
AN ACT TO PROVIDE THAT A PARTNERSHIP MAY QUALIFY FOR THE CORPORATE INCOME TAX CREDIT FOR CONSTRUCTION OF A COGENERATING POWER PLANT, TO PROVIDE AN ALTERNATIVE METHOD TO CALCULATE THE CREDIT, 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. 105-130.25 reads as rewritten:
"§ 105-130.25. Credit against corporate income tax for construction of cogenerating power plants.
(a)	Credit. – A corporation or a partnership, other than a public utility as defined in G.S. 62-3(23), that constructs a cogenerating power plant in North Carolina is allowed as a credit against the tax imposed by this Division an amount equal to ten percent (10%) of the costs paid during the taxable year to purchase and install the electrical or mechanical power generation equipment of that plant.  To be eligible for the credit allowed by this section, the corporation or partnership must own or control the power plant at the time of construction.  The credit allowed by this section may not exceed the amount of tax imposed by this Division for the year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer.
For purposes of this section, a cogenerating power plant is a power plant that sequentially produces electrical or mechanical power and useful thermal energy from the same primary energy source. The credit allowed by this section does not apply to construction of a cogenerating power plant whose combustion equipment uses residual oil, middle distillate oil, gasoline, natural gas  or liquid propane gas (LPG)	as a primary fuel.
(b)	Alternative Method. – A taxpayer eligible for the credit allowed by this section may elect to treat the costs paid during an earlier year as if they were paid during the year the plant becomes operational.  If a taxpayer makes this election, however, the credit may not exceed one-half the amount of tax imposed by this Division for the year reduced by the sum of all credits allowed, except payments of tax by or on behalf of the taxpayer, but any unused portion of the credit may be carried forward for the next 15 taxable years.  An election made under this subsection is irrevocable and is binding on any partners to whom the credit is passed through."
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 on the otherwise allowable amount of the credit, expressed as a specific maximum dollar amount or a specific percentage of tax imposed for the taxable year.
(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.