§235-110.8  Low-income housing tax credit. 
(a)  Section 42 (with respect to low-income housing credit) of the Internal
Revenue Code shall be operative for the purposes of this chapter as provided in
this section.



(b)  Each taxpayer subject to the tax imposed
by this chapter, who has filed [a] net income tax return for a taxable year may
claim a low-income housing tax credit against the taxpayer's net income tax
liability.  The amount of the credit shall be deductible from the taxpayer's
net income tax liability, if any, imposed by this chapter for the taxable year
in which the credit is properly claimed on a timely basis.  A credit under this
section may be claimed whether or not the taxpayer claims a federal low-income
housing tax credit pursuant to section 42 of the Internal Revenue Code.



(c)  The low-income housing tax credit shall be
fifty per cent of the applicable percentage of the qualified basis of each
building located in Hawaii.  The applicable percentage shall be calculated as
provided in section 42(b) of the Internal Revenue Code.



(d)  For the purposes of this section, the
determination of:



(1)  Qualified basis and qualified low-income building
shall be made under section 42(c);



(2)  Eligible basis shall be made under section 42(d);



(3)  Qualified low-income housing project shall be
made under section 42(g);



(4)  Recapture of credit shall be made under section
42(j), except that the tax for the taxable year shall be increased under
section 42(j)(1) only with respect to credits that were used to reduce state
income taxes;



(5)  Application of at-risk rules shall be made under
section 42(k);



of the Internal Revenue Code.



(e)  As provided in section 42(e),
rehabilitation expenditures shall be treated as separate new building and their
treatment under this section shall be the same as in section 42(e).  The
definitions and special rules relating to credit period in section 42(f) and
the definitions and special rules in section 42(i) shall be operative for the
purposes of this section.



(f)  The state housing credit ceiling under
section 42(h) shall be zero for the calendar year immediately following the
expiration of the federal low-income housing tax credit program and for any
calendar year thereafter, except for the carryover of any credit ceiling amount
for certain projects in progress which, at the time of the federal expiration,
meet the requirements of section 42.



(g)  The credit allowed under this section
shall be claimed against net income tax liability for the taxable year.  For
the purpose of deducting this tax credit, net income tax liability means net
income tax liability reduced by all other credits allowed the taxpayer under
this chapter.



A tax credit under this section which exceeds
the taxpayer's income tax liability may be used as a credit against the
taxpayer's income tax liability in subsequent years until exhausted.  All
claims for a tax credit under this section must be filed on or before the end
of the twelfth month following the close of the taxable year for which the
credit may be claimed.  Failure to properly and timely claim the credit shall
constitute a waiver of the right to claim the credit.  A taxpayer may claim a
credit under this section only if the building or project is a qualified
low-income housing building or a qualified low-income housing project under
section 42 of the Internal Revenue Code.



Section 469 (with respect to passive activity
losses and credits limited) of the Internal Revenue Code shall be applied in
claiming the credit under this section.



(h)  The director of taxation may adopt any
rules under chapter 91 and forms necessary to carry out this section. [L 1988,
c 216, §1; am L 1989, c 13, §6; am L 2000, c 148, §3; am L 2005, c 196, §8]