Nebraska Administrative Code
Topic - REVENUE, DEPARTMENT OF
Title 350 - Nebraska Department of Revenue, Property Assessment Division
Chapter 43 - Nebraska Advantage Act Exempt Personal Property Regulations
Section 350-43-002 - DEFINITIONS

Universal Citation: 350 NE Admin Rules and Regs ch 43 ยง 002

Current through September 17, 2024

002.01 Nebraska adjusted basis

Nebraska adjusted basis shall mean the adjusted basis of depreciable tangible personal property as determined under the Internal Revenue Code of 1986, as amended, as the code exists on the assessment date, increased by the total amount allowed under the code for depreciation or amortization or pursuant to an election to expense depreciable property under Section 179 of the Code, as amended. Generally, this is the original cost of the item of property and includes any cost incurred in purchasing and placing the item in service such as sales or excise taxes, freight charges, and installation and testing charges.

002.01A The Nebraska adjusted basis for depreciable tangible personal property leased by the taxpayer shall be the lessor's Nebraska Adjusted Basis in the property.

002.02 The exempt value of depreciable tangible personal property shall be the net book value of the property.

002.03 Net book value shall be the Nebraska adjusted basis of tangible personal property multiplied by the appropriate Nebraska depreciation factor.

002.04 The Nebraska depreciation factor is the percentage of the Nebraska adjusted basis that is exempt. The following table provides the depreciation factors, based on year acquired and recovery period:

002.04A In the table, the factor shown for year 1 shall be the percentage used for January 1 of the year following the year of acquisition of the property. The factor shown for year two shall be the percentage used January 1 of the second year following the year of acquisition of the property, etc. When tangible personal property becomes depreciable in a year other than the year it is acquired, it shall be subject to taxation on the first assessment date following the date it became depreciable. The net book depreciation factor for such property shall be based on the year acquired.

NEBRASKA DEPRECIATION FACTORS

Year Recovery Period (in years)
3 5 7 10 15 20
1 75.00 85.00 89.29 92.50 95.00 96.25
2 37.50 59.50 70.16 78.62 85.50 89.03
3 12.50 41.65 55.13 66.83 76.95 82.35
4 0.00 24.99 42.88 56.81 69.25 76.18
5 8.33 30.63 48.07 62.32 70.46
6 0.00 18.38 39.33 56.09 65.18
7 6.13 30.59 50.19 60.29
8 0.00 21.85 44.29 55.77
9 13.11 38.38 51.31
10 4.37 32.48 46.85
11 0.00 26.57 42.38
12 20.67 37.92
13 14.76 33.46
14 8.86 29.00
15 2.95 24.54
16 0.00 20.08
17 15.62
18 11.15
19 6.69
20 2.23
21 0.00

002.05 Recovery period is the period over which the Nebraska adjusted basis of tangible personal property will be depreciated for property tax purposes. The applicable recovery period shall be determined as follows:

002.05A Three-year property shall include property with a class life of four years or less;

002.05B Five-year property shall include property with a class life of more than four years and less than ten years;

002.05C Seven-year property shall include property with a class life of ten years or more but less than 16 years;

002.05D Ten-year property shall include property with a class life of 16 years or more but less than 20 years;

002.05E Fifteen-year property shall include property with a class life of 20 years or more but less than 25 years; and

002.05F Twenty-year property shall include property with a class life of 25 years or more.

002.06 Class life shall be based upon the anticipated useful life of a class of property and shall be determined by the Property Tax Administrator under the Internal Revenue Code, as the code exists on the assessment date. When necessary, the Property Tax Administrator will establish the appropriate class life for a class of property.

002.07 Purchase shall include taking by sale, discount, negotiation, or any other transaction for value creating an interest in property except liens. Purchase shall not include transfers for stock or other ownership interests upon creation, dissolution, or any other income tax-free reorganization of any corporation, partnership, trust, or other entity.

002.08 Date acquired shall be the date the owner acquired the property, except that for property transferred as a gift or devise or as part of a transaction which is not a purchase, the date acquired shall be the acquisition date of the previous owner.

002.09 Greater portion of the calendar year

Greater portion of the calendar year shall mean 50 percent or more of the tax year for which the property is assessed.

002.10 Omitted property

Omitted property shall mean all depreciable tangible personal property which has not been reported to the Tax Commissioner on the Claim for Personal Property Exemption, Form 5725X. Omitted property shall also mean depreciable tangible personal property which was not reported to the county assessor on the personal property return.

002.11 Failure to file

Failure to file shall mean that a taxpayer has failed to timely file a Claim for Personal Property Exemption, Form 5725X.

002.12 Qualified personal property

Qualified personal property shall mean:

002.12A Depreciable turbine powered aircraft purchased or leased after the application date, except when any such aircraft has been used during the tax year for which an exemption is sought for fundraising or the transportation of an elected official during the prior year of the tax year for which an exemption is sought.

002.12B Depreciable computer systems used for business information processing which require environmental controls of temperature and power and which are capable of simultaneously supporting more than one transaction and more than one user, such as the computers in a data center or consolidated processing activity center, plus certain depreciable peripheral components which require environmental controls of temperature and power connected to such computers.
002.12B(1)(a) Depreciable computer systems shall mean the hardware and software of a computer system made up of equipment that is interconnected, with the following characteristics:
002.12B(1)(a)(1) It is capable of executing many programs concurrently;

002.12B(1)(a)(2) It is capable of supporting more than one user;

002.12B(1)(a)(3) It off loads the input/output processing to peripheral channels;

002.12B(1)(a)(4) It has multiple ports into memory devices;

002.12B(1)(a)(5) It has subsystems of the system's peripherals that can handle the transaction overhead to free up the central processing unit to do data processing, such as computing balances in customer records, or adding and subtracting amounts from inventory;

002.12B(1)(a)(6) It has additional peripherals designed to detect and correct errors through continuous monitoring for failure; and

002.12B(1)(a)(7) It is highly scalable for expansion by adding processors to systems or by adding systems in clusters.

002.12C Depreciable computer peripheral components shall be limited to additional memory units, tape drives, disk drives, power supplies, cooling units, and communication controllers. These peripherals shall directly communicate with the central processing unit of the qualifying computer system and require environmental controls of temperature, and power.

002.12D Depreciable tangible personal property located in a single project and is involved directly in the manufacture or processing of agricultural products.

002.12E Depreciable tangible personal property used in a distribution facility that is used to store or move products, such as conveyors, forklifts, shelving, storage racks.

002.13 Agricultural products

Agricultural products shall mean those products that are grown or raised in an agricultural operation and the products that are further manufactured or processed from such products that are not yet ready for use by the final consumer.

002.14 Environmental controls of temperature and power

Environmental controls of temperature and power shall mean that the computer and peripheral components are located in a temperature controlled environment which is capable of being sustained within the manufacturer's specifications, independent from the ambient conditions of the surrounding work area. The power controls must be designed to maintain controlled levels of voltage within the limits prescribed by the manufacturer.

002.15 Application date

Application date shall mean the date the application was filed with the Tax Commissioner for the purpose of utilizing the tax incentives under the Nebraska Advantage Act.

002.16 Agreement date

Agreement date shall mean the date of the agreement between the taxpayer and the Tax Commissioner wherein the taxpayer is authorized to use the incentives contained in the Nebraska Advantage Act.

002.17 Form 5725X

Form 5725X shall mean a form prescribed by the Tax Commissioner, which is used to claim an exemption from property taxes for qualified depreciable tangible personal property defined in REG-43-002.12.

Disclaimer: These regulations may not be the most recent version. Nebraska may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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