Current through Reg. 50, No. 187; September 24, 2024
(1) Definitions. For purposes of this rule,
the following terms mean:
(a) "Credit" means
the credit for qualified railroad reconstruction or replacement expenditures
authorized under Section
220.1915, F.S.
(b) "Qualified expenditures" means gross
expenditures made in Florida by a qualifying railroad during the taxable year
in which the credit is claimed, provided such expenditures were made for track
that was owned or leased by a qualifying railroad, and were:
1. For the maintenance, reconstruction, or
replacement of railroad infrastructure, including track, roadbed, bridges,
industrial leads and sidings, or track-related structures which were owned or
leased by the qualifying railroad; or
2. For new construction by the qualifying
railroad of industrial leads, switches, spurs and sidings, and extensions of
existing sidings located in Florida.
(c) "Qualifying railroad" means any Class II
or Class III railroad operating in Florida on the last day of the taxable year
for which the credit is claimed, pursuant to the classifications in effect for
that year as set by the United States Surface Transportation Board or its
successor.
(2) Available
Credits for Qualifying Railroads. For taxable years beginning on or after
January 1, 2023, a credit equal to 50 percent of a qualifying railroad's
qualified expenditures incurred in Florida during a taxable year is available
against the Florida corporate income tax imposed by Chapter 220, F.S. However,
the amount of the credit may not exceed $3, 500 multiplied by the number of
miles of railroad track owned or leased in Florida by the qualifying railroad
as of the end of the taxable year in which the qualified expenditures were
incurred.
(a) The amount taken as a credit
must be added to taxable income prior to computing the tax imposed by Ch. 220,
F.S.
(b) For purposes of computing
the credit limitation, double track is treated as multiple lines of railroad
track. One mile of single track is equal to one mile, but one mile of double
track is equal to two miles.
(c)
The credit is allowed only once for each mile of railroad track in Florida in
each taxable year. No two qualifying railroads may claim the same mile of
railroad track in a taxable year.
(3) Application Process. To apply for
available program credits, a qualifying railroad must submit a Florida Credit
for Qualified Railroad Reconstruction or Replacement Expenditures Application
for Credit (Form F-11915, incorporated by reference in Rule
12C-1.051, F.A.C.) to the
Department each taxable year, along with documentation demonstrating that the
qualifying railroad's qualified expenditures meet the criteria to receive
credits.
(a) If the qualifying railroad earned
a federal credit under 26
U.S.C. 45G during the taxable year, the
supporting documentation must include federal Form 8900 (Qualified Railroad
Track Maintenance Credit) or its equivalent.
(b) If the qualifying railroad is a taxpayer
under Chapter 220, F.S., it must submit Form F-11915 when it files its Florida
Corporate Income/Franchise Tax Return (Form F-1120, incorporated by reference
in Rule 12C-1.051, F.A.C.).
(c) If the qualifying railroad is not a
taxpayer under Chapter 220, F.S., it must submit Form F-11915 to the Department
no later than May 1 of the calendar year following the year in which the
qualified expenditures were made. If the May 1 due date falls on a Saturday,
Sunday, or legal holiday, Form F-11915 will be considered timely if the form is
postmarked or electronically submitted on the next succeeding day that is not a
Saturday, Sunday, or legal holiday. The May 1 due date may not otherwise be
extended.
1. Example: Qualifying railroad X is
not a taxpayer under Chapter 220, F.S. Qualifying railroad X operates on a
calendar year basis. X has qualified expenditures during calendar year 2023. X
must apply for a credit by submitting Form F-11915 with the Department no later
than May 1, 2024.
2. Example:
Qualifying railroad Y is not a taxpayer under Chapter 220, F.S. Qualifying
railroad Y operates on a fiscal year basis, with a January 31 year end. Y has
qualified expenditures during the fiscal year beginning February 1, 2023, and
ending January 31, 2024. Y must apply for a credit by submitting Form F-11915
with the Department no later than May 1, 2025.
(d) If the qualifying railroad is a
disregarded entity for federal tax purposes, Form F-11915 must be submitted in
the name of the owner of the disregarded entity.
(4) Determination of Carryforward or Transfer
of Unused Credits. When a credit is not fully used during a taxable year,
either because the qualifying railroad that earned the credit has insufficient
tax liability or because the qualifying railroad is not a taxpayer under
Chapter 220, F.S., the credit may be carried forward or may be transferred in
accordance with subsection (5). The carryforward or transferred credit may be
used in any of the 5 subsequent taxable years in which the credit was earned,
when the tax imposed by Chapter 220, F.S., for that taxable year exceeds the
credit for which the qualifying railroad or transferee is eligible in that
taxable year, after applying the other credits and unused carryovers in the
order provided by Section
220.02(8), F.S.
(a) If the qualifying railroad is a taxpayer
under Chapter 220, F.S., the Department will notify the qualifying railroad by
letter within 30 days after the receipt of a completed Florida Credit for
Qualified Railroad Reconstruction or Replacement Expenditures Application for
Credit (Form F-11915), indicating the amount of credit that may be carried
forward or transferred.
(b) If the
qualifying railroad is not a taxpayer under Chapter 220, F.S., the Department
will notify the qualifying railroad by letter within 30 days after the receipt
of completed Form F-11915, indicating the amount of credit that may be
transferred.
(c)
1. Amounts that exceed the limitation of $3,
500 multiplied by the number of miles of railroad track owned or leased in
Florida by the qualifying railroad as of the end of the taxable year in which
the qualified expenditures were incurred, as provided in subsection (2), may
not be carried forward to a subsequent taxable year or transferred.
2. Example: Qualifying railroad Corporation A
is a taxpayer under Chapter 220, F.S., that incurs $20, 000 of qualified
expenditures during its taxable year. Corporation A owns 2 miles of railroad
track within Florida as of the end of its taxable year.
Corporation A's credit is equal to 50 percent of the $20, 000
qualified expenditures incurred in the taxable year but may not exceed $3, 500
multiplied by the number of miles owned or leased in Florida at the end of its
taxable year.
Credit computation: 50% x $20, 000 = $10, 000 but may not
exceed $7, 000 ($3, 500 x 2 miles of railroad track). Therefore, Corporation A
receives a $7, 000 credit for qualified railroad reconstruction or replacement
expenditures.
The amount of computed credit exceeding the limitation amount
($3, 000 = $10, 000 - $7, 000) cannot be used, carried forward, or
transferred.
When it files its Florida Corporate Income/Franchise Tax
Return (Form F-1120), Corporation A has $5, 000 tax due after application of
all credits required to be claimed prior to application of the credit for
qualified railroad reconstruction or replacement expenditures. Assuming the
Department does not have to make any adjustments to Corporation A's Form
F-1120, the Department will issue a letter to Corporation A indicating that the
amount of credit available to carry forward or transfer is $2, 000 ($7, 000 -
$5, 000).
(5) Transfer of credit. For taxable years
beginning on or after January 1, 2023, an unused credit may be transferred. The
transfer of a credit does not affect the time limit for taking the credit, and
the credit is subject to the same limitations imposed on the transferor in
accordance with subsection (4).
(a) Credits
may be transferred to a taxpayer subject to the tax under Chapter 220, F.S.,
and that either transports property using the rail facilities of the qualifying
railroad, or furnishes railroad-related property or services to any railroad
operating in Florida, or is a railroad, as those terms are defined in
26 C.F.R. s.
1.45G-1(b) (March 18, 2018),
and herein incorporated by reference (
http://www.flrules.org/Gateway/reference.asp?No=Ref-16071).
A copy of this regulation is available from the Department at
https://floridarevenue.com/taxes/taxesfees/Pages/corp_tax_incent.aspx.
(b) The transferor is required to notify the
Department of a credit transfer by submitting a Florida Credit for Qualified
Railroad Reconstruction or Replacement Expenditures Notice of Intent to
Transfer a Credit (Form F-11915T, incorporated by reference in Rule
12C-1.051, F.A.C.) to the
Department within 30 days after the transfer. A separate notice must be
submitted for each taxpayer receiving a transfer of credit.
(c) The Department will provide a letter to
the transferor and transferee acknowledging the transfer of credit. The
transferee must attach the letter to its Florida Corporate Income/Franchise Tax
Return (Form F-1120) on which the credit is taken.
(6) Every taxpayer claiming a credit must
retain documentation that substantiates and supports the credit until tax
imposed by Chapter 220, F.S., may no longer be determined and assessed under
Section 95.091(3) or Section
220.23, F.S. Documentation to
substantiate and support the credit includes copies of: the completed credit
application submitted to the Department; documentation related to any federal
credit earned under 26
U.S.C. 45G; documentation related to any
qualified expenditures incurred by the qualifying railroad, and the transfer
letter issued by the Department reflecting the credit amount
transferred.
Rulemaking Authority
213.06(1),
220.1915(7) FS.
Law Implemented 220.02(8),
220.1915
FS.
New 12-3-23.
