State Tax Credits News Briefs - February 2015

Sunday, February 1, 2015

On Dec. 16, 2014, the Massachusetts Department of Revenue released Directive 14-4, “Massachusetts Income Tax and Corporate Excise Deductions Where Federal Law Allows a Credit in Lieu of Deduction.” The directive answers the question of whether a taxpayer filing in Massachusetts may take a business expense deduction that would have been allowed federally had the taxpayer not instead taken a federal credit. Directive 14-4 states that unless specifically permitted by Massachusetts statute, a taxpayer may take a business expense deduction in Massachusetts only if the deduction is actually taken at the federal level. In addition, if a taxpayer takes a federal credit in lieu of a federal deduction, the amount that would otherwise have been allowed as a federal deduction is no longer allowable and may not be deducted as a business expense for Massachusetts taxation purposes. The directive is available at www.mass.gov.

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The Nebraska Department of Revenue and the Nebraska State Preservation Office (NeSHPO) on Dec. 1, 2014, released L.B. 191 Information Guide, which provides updated guidance concerning the Nebraska state historic tax credit (HTC). The information guide is intended to provide an overview of major provisions of the Nebraska Job Creation and Mainstreet Revitalization Act of 2014. The state HTC provides a 20 percent tax credit for eligible expenditures made to rehabilitate, restore or preserve historic buildings, with a maximum of $1 million in credits for a project and a dollar-for-dollar reduction in state tax liability. To qualify, a historic property must be listed individually in the National Register of Historic Places, or is in the process of nomination/listing; located within a district listed in the National Register of Historic Places or part of a pending district nomination/listing; listed individually under a certified local preservation ordinance or is pending designation; or located within a historic district designated under a certified local preservation ordinance or located within a district that is pending designation. L.B. 191 Information Guide is available at www.nebraskahistory.org.

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The Iowa Economic Development Authority (EDA) adopted new Iowa Administration Code 261 Chapter 48 regulations Dec. 26, 2014. The regulations establish and administer the Workforce Housing Tax Incentives Program, which provides a tax credit of up to 10 percent of a qualifying new investment in certain housing developments. The regulations include definitions, application and agreement requirements, tax incentive amounts and procedures for application submittal and review process for the program. The regulations became effective Jan. 28.

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The California Housing Partnership Corporation (CHPC) and Sarah Letters, executive director of Community Corporation of Santa Monica (CCSM), announced Dec. 19, 2014, that CCSM has begun energy retrofits on five properties. The retrofit is made possible through On-Bill Repayment (OBR), a financing system in which the owner of a property can pay for an energy retrofit out of the savings generated on the utility bill. This is to help nonprofit, low-income rental properties improve their energy efficiency without costly refinancing. When completed in 2015, the retrofit is projected to reduce utility consumption by an average of more than 20 percent across all five developments. The properties will repay CCSM over 10 years. There are 170 affordable rental homes benefiting from the retrofit.

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On Jan. 5, the board of alderman in Shelton, Conn., announced its approval to install solar panels at four schools through a power purchase agreement (PPA). The schools, Long Hill, Perry Hill, Elizabeth Shelton and Sunnyside, will save a combined $1.43 million through a 20-year period. Installer Solar City agreed to put in and maintain the panels at no cost to the city in return for the city agreeing to buy all the generated electricity for 20 years through the PPA. The projects are funded through federal and state tax credits and outside investors. The state tax credits are part of a mandated program to promote renewable energy by the main utility companies.

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On Dec. 9, 2014, Rhode Island’s Division of Taxation awarded NeighborWorks Blackstone River Valley (NWBRV) more than $1 million in HTCs for the revitalization of the former Island Machine Company mill in Woonsocket. Revitalization costs will total $6.2 million. The 50,000-square-foot mill will be converted into live-work spaces for artists, with office space on the ground floor. Groundbreaking is expected to being in summer.

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