GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

S	1 

SENATE BILL 1393

Short Title:  Modify Historic Rehabilitation Credit. 	(Public)

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Sponsors: Senators Horton; Albertson, Ballance, Ballantine, Carpenter, Carrington, Cochrane, Cooper, Dalton, Dannelly, East, Forrester, Foxx, Garwood, Gulley, Hartsell, Hoyle, Jenkins, Kerr, Kinnaird, Ledbetter, Lee, Lucas, Martin of Pitt, Martin of Guilford, Miller, Moore, Odom, Page, Perdue, Plyler, Purcell, Reeves, Shaw of Cumberland, Shaw of Guilford, Warren, Weinstein, and Winner.

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Referred to:  Finance.

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May 27, 1998

A BILL TO BE ENTITLED
AN ACT TO EXTEND THE HISTORIC REHABILITATION TAX CREDIT TO THE GROSS PREMIUMS TAX AND TO ALLOW THE TAX TO BE ALLOCATED BY A PASS-THROUGH ENTITY TO ITS OWNERS.
The General Assembly of North Carolina enacts:
Section 1.  Chapter 105 of the General Statutes is amended by adding a new Article to read:
"ARTICLE 3C.
"Historic Rehabilitation Tax Credits.
"§ 105-129.25.  Definitions.
The following definitions apply in this Article:
(1)	Certified historic structure. – A structure that is individually listed in the National Register of Historic Places or is certified by the State Historic Preservation Officer as contributing to the historic significance of a National Register Historic District or a locally designated historic district certified by the United States Department of the Interior.
(2)	Certified rehabilitation. – Repairs or alterations consistent with the Secretary of the Interior's Standards for Rehabilitation and certified as such by the State Historic Preservation Officer prior to the commencement of the work.
(3)	Pass-through entity. – An entity or business, including a limited partnership, a general partnership, a joint venture, a Subchapter S Corporation, or a limited liability company, all of which is treated as owned by individuals or other entities under the federal tax laws, in which the owners report their share of the income, losses, and credits from the entity or business on their income tax returns filed with this State.  For the purpose of this Division, an owner of a pass-through entity is an individual or entity who is treated as an owner under the federal tax laws.
(4)	Rehabilitation expenses. – Expenses incurred in the certified rehabilitation of a certified historic structure and added to the property's basis. The term does not include the cost of acquiring the property, the cost attributable to the enlargement of an existing building, the cost of sitework expenditures, or the cost of personal property.
(5)	State Historic Preservation Officer. – The Director of the Division of Archives and History or the Director's designee who acts to administer the historic preservation programs within the State."
Section 2.  G.S. 105-130.42 is recodified as G.S. 105-129.26 in Article 3C of Chapter 105 of the General Statutes.
Section 3.  G.S. 105-129.26 reads as rewritten:
"§ 105-129.26.  Credit for rehabilitating an historic structure.
(a)	Income-Producing Historic Structure. – A taxpayer who is allowed a federal income tax credit under section 47 of the Code for making qualifying rehabilitation expenditures for a certified historic structure located in this State is allowed a credit equal to twenty percent (20%) of the expenditures that qualify for the federal credit.  A pass-through entity that qualifies for the credit provided in this subsection may allocate the credit among any of its owners in its discretion.  Owners to whom a credit is allocated are allowed the credit as if they had qualified for the credit directly.  A pass-through entity and its owners shall include with their tax returns for every taxable year in which an allocated credit is claimed a copy of the allocation made by the pass-through entity.
(b)	Nonincome-Producing Historic Structure. – A taxpayer who is not allowed a federal income tax credit under section 47 of the Code and who makes rehabilitation expenses for a certified historic structure located in this State is allowed a credit equal to thirty percent (30%) of the rehabilitation expenses. To qualify for the credit, the taxpayer's rehabilitation expenses must exceed twenty-five thousand dollars within a 24-month period. To claim the credit allowed by this subsection, the taxpayer must attach to the return a copy of the certification obtained from the State Historic Preservation Officer verifying that the historic structure has been rehabilitated in accordance with this subsection. 
				(b1)	Tax Election. – The credits provided in this section are allowed against the income taxes levied in Article 4 of this Chapter and the gross premiums tax levied in Article 8B of this Chapter.  The taxpayer shall elect the tax against which a credit will be claimed when filing the return on which the first installment of the credit is claimed. This election is binding. Any carryforwards of the credit must be claimed against the same tax.
(c)	Credit Limitations. – The entire credit may not be taken for the taxable year in which the property is placed in service but must be taken in five equal installments beginning with the taxable year in which the property is placed in service. Any unused portion of the credit may be carried forward for the succeeding five years. The credit allowed under this section may not exceed the amount of tax imposed by this Division for the taxable year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer.
(d)	Rules. – The North Carolina Historical Commission, in consultation with the State Historic Preservation Officer, may adopt rules needed to administer the certification process required by this section."
Section 4. G.S. 105-151.23 is recodified as G.S. 105-129.26.  G.S. 105-129.26, as amended by this act, incorporates both G.S. 105-130.42 and G.S. 105-151.23.
Section 5.  This act is effective for taxable years beginning on or after January 1, 1998.