Hawaii Administrative Rules
Title 18 - DEPARTMENT OF TAXATION
Chapter 235 - INCOME TAX LAW
Subchapter 6 - RETURNS AND PAYMENTS; ADMINISTRATION
Section 18-235-110.7-05 - New section 38 property
Current through August, 2024
For calendar year 1988 (and fiscal year taxpayer acquisitions occurring during the period beginning January 1, 1988, to December 31, 1988), and for calendar years beginning after December 31, 1988 (and fiscal year taxpayer acquisitions occurring after December 31, 1988). Property qualifies as new section 38 property if one of the following conditions is met:
(1) Section 38 property, the original use of which commences with the taxpayer after December 31, 1987, and commences after the date the taxpayer acquires it.
Example 1. A taxpayer purchases a reconditioned or rebuilt machine. In this case, the property would not qualify as new section 38 property because the taxpayer would not be treated as the first user of the property; however, the property may qualify as used section 38 property (as discussed in section 18-235-110.7-06) .
Example 2. A florist purchases antique bread racks to serve as display cases for the plants in the shop. The florist will not be treated as the original user of the racks. The fact that the racks serve a new purpose does not change their used property status.
(2) Section 38 property which is:
Taxpayer A ("A") buys property from a manufacturer, takes delivery of the property, and places it in service before A has its financing in place. Shortly thereafter, A sells it (or assigns the purchase order) to Taxpayer B, who then leases it to A.
(3) Section 38 property, the construction, reconstruction, or erection of which is placed in service by the taxpayer after December 31, 1987, but only with respect to that portion of the basis as is discussed in section 18-235-110.7-11(c).
