§235-110.7  Capital goods excise tax credit. (a)  There shall be allowed to each taxpayer subject to the tax imposed by thischapter a capital goods excise tax credit which shall be deductible from thetaxpayer's net income tax liability, if any, imposed by this chapter for thetaxable year in which the credit is properly claimed.

The amount of the tax credit shall bedetermined by the application of the following rates against the cost of theeligible depreciable tangible personal property used by the taxpayer in a tradeor business and placed in service within Hawaii after December 31, 1987.  Forcalendar years beginning after:

(1)  December 31, 1987, the applicable rate shall bethree per cent;

(2)  December 31, 1988, the applicable rate shall befour per cent;

(3)  December 31, 2008, the applicable rate shall bezero per cent; and

(4)  December 31, 2009, and thereafter, the applicablerate shall be four per cent.

For taxpayers with fiscal taxable years, theapplicable rate shall be the rate for the calendar year in which the eligibledepreciable tangible personal property used in the trade or business is placedin service within Hawaii.

In the case of a partnership, S corporation,estate, or trust, the tax credit allowable is for eligible depreciable tangiblepersonal property which is placed in service by the entity.  The cost uponwhich the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rules.

In the case of eligible depreciable tangiblepersonal property for which a credit for sales or use taxes paid to anotherstate is allowable under section 238-3(i), the amount of the tax credit allowedunder this section shall not exceed the amount of use tax actually paid underchapter 238 relating to such tangible personal property.

If a deduction is taken under section 179 (withrespect to election to expense certain depreciable business assets) of theInternal Revenue Code of 1954, as amended, no tax credit shall be allowed forthat portion of the cost of property for which the deduction was taken.

(b)  If the capital goods excise tax creditallowed under subsection (a) exceeds the taxpayer's net income tax liability,the excess of credit over liability shall be refunded to the taxpayer; providedthat no refunds or payment on account of the tax credit allowed by this sectionshall be made for amounts less than $1.

All claims for tax credits under this section,including any amended claims, must be filed on or before the end of the twelfthmonth following the close of the taxable year for which the credits may beclaimed.  Failure to comply with the foregoing provision shall constitute awaiver of the right to claim the credit.

(c)  Application for the capital goods excisetax credit shall be upon forms provided by the department of taxation.

(d)  Sections 47 (with respect to dispositionsof section 38 property and the recapture percentages) of the Internal RevenueCode of 1954, as amended, as of December 31, 1984, and 280F as operative forthis chapter (with respect to limitation on investment tax credit anddepreciation for luxury automobiles; limitation where certain property used forpersonal purposes) of the Internal Revenue Code of 1954, as amended, shall beoperative for purposes of this section.

(e)  As used in this section, the definition ofsection 38 property (with respect to investment in depreciable tangiblepersonal property) as defined by section 48(a)(1)(A), (a)(1)(B), (a)(3),(a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l), (m), and (s) of theInternal Revenue Code of 1954, as amended as of December 31, 1984, is operativefor the purposes of this section only.

As used in this section:

"Cost" means (1) the actual invoiceprice of the tangible personal property, or (2) the basis from whichdepreciation is taken under section 167 (with respect to depreciation) or fromwhich a deduction may be taken under section 168 (with respect to acceleratedcost recovery system) of the Internal Revenue Code of 1954, as amended, whicheveris less.

"Eligible depreciable tangible personalproperty" is section 38 property as defined by the operative provisions ofsection 48 and having a depreciable life under section 167 or for which adeduction may be taken under section 168 of the federal Internal Revenue Codeof 1954, as amended.

"Placed in service" means theearliest of the following taxable years:

(1)  The taxable year in which, under the:

(A)  Taxpayer's depreciation practice, theperiod for depreciation; or

(B)  Accelerated cost recovery system, a claimfor recovery allowances; with respect to such property begins; or

(2)  The taxable year in which the property is placedin a condition or state of readiness and availability for a specificallyassigned function.

"Purchase" means an acquisition ofproperty.

"Tangible personal property" meanstangible personal property which is placed in service within Hawaii afterDecember 31, 1987, and the purchase or importation of which resulted in atransaction which was subject to the imposition and payment of tax at the rateof four per cent under chapter 237 or 238.  "Tangible personalproperty" does not include tangible personal property which is an integralpart of a building or structure or tangible personal property used in a foreigntrade zone, as defined under chapter 212. [L 1987, c 239, §1(2); am L 1988, c141, §21; am L 1989, c 7, §1; am L 1990, c 184, §§7, 8; am L 1992, c 235, §6;am L 2007, c 9, §12; am L 2009, c 178, §3]

 

Note

 

  The 2009 amendment applies to investments made, renovationcosts incurred, or eligible depreciable tangible property placed in service onor after May 1, 2009.  L 2009, c 178, §10.

 

Case Notes

 

  Where taxpayer failed to file a timely claim for the credit"on or before the end of the twelfth month following the close of thetaxable year for which the credits may be claimed" as required under thissection, taxpayer waived its right to a capital goods excise tax creditrefund.  97 H. 270 (App.), 36 P.3d 814.