Current through Register Vol. 63, No. 9, September 1, 2024
(1) The amount of pollution control facility
tax credit that may be carried forward to a succeeding tax year is the sum of
credits that exceed the tax liability, after other credits, for all prior tax
years that are within the carryover period.
Example
1 : A corporate excise taxpayer built a pollution control facility
in 1995 at a certified cost of $80,000. The certified percentage allocable to
pollution control is 50 percent and the facility has a useful life of eight
years. The maximum credit allowed in one tax year is calculated as follows: The
$80,000 certified cost is multiplied by the 50 percent allocable to pollution
control, yielding $40,000 as the total amount of credit to be claimed over the
eight year life of the facility. The $40,000 divided by eight equals $5,000,
the maximum yearly credit. See ORS
315.304(2). The
taxpayer claimed the maximum credit on tax returns for 1995 and 1996. On the
taxpayer's 1997 return, the taxpayer is subject to a corporate excise tax of
$1,000 that is offset by $1,000 of the pollution control facility tax credit,
leaving $4,000 of credit to be carried forward.
(2) If a credit carried forward from a prior
year and a current year's credit are available, the taxpayer must use the
credit from a previous year first and then the current year's credit.
(3) If a credit carried forward from a prior
year and a current year's credit are available, the two credits may be combined
and taken up to the amount of tax liability for the year.
Example 2 : The taxpayer described in the
prior example computes a tax of $8,000 for 1998. The taxpayer will offset that
tax with $8,000 of credit ($4,000 carried over from 1997 plus $4,000 of the
current year's $5,000 credit), leaving $1,000 of the 1998 credit to be carried
forward.
(4) When a
facility is sold, the amount of unused credit carried forward from tax years
before the sale is retained by the seller to offset tax in future years.
Example 3 : Calendar year taxpayer A sold a
facility to taxpayer B on January 1, 2001. A's allowable pollution control
facility credit for 2000 was $500, but A had a net loss and no tax liability to
offset. The unused 2000 credit will be carried forward by A to offset A's
future taxes.
(5) A
taxpayer that has unexpired credits at the beginning of tax year 2001 may carry
those credits forward for up to three additional tax years, but only if the
facility is in use and operation during the tax year to which the credit is
carried.
Example 4 : Calendar year
corporation taxpayer B received certification for a pollution control facility
with a 10 year asset life and was first eligible to claim the credit in tax
year 1996. B reported losses for tax years 1996 through 2000 and was not able
to claim the allowable credits for those years. The credit allowed for 1996 was
carried forward to 1997, 1998, and 1999 and expired. The credit allowed for
1997 was carried forward to 1998, 1999, and 2000 and expired. The credits
allowed for tax years 1998 through 2005 were unexpired at the beginning of B's
2001 tax year and are eligible to be carried forward for up to six
years.
Example 5 : Taxpayer B from
Example 4 reports a loss in tax year 2002 and closes the pollution control
facility on December 31, 2002. B's unused credits from 1998 and 1999 may not be
carried forward to 2003 because the facility was not in use and operation
during the tax year to which the credit is carried and the three year period
for carryover expired in 2001 and 2002 respectively. The credits for tax years
2000, 2001, and 2002 are eligible to be carried forward for up to three years.
No credits may be computed for tax years 2003, 2004, and 2005, but the unused
credits carried forward from 2000, 2001, and 2002 may be claimed in the three
later years.
Example 6 :
Corporation taxpayer C's pollution control facility is certified on January 1,
2001. C is able to offset only half of its allowable credit against tax on its
2001 return. The balance of the 2001 credit may only be carried forward for up
to three years. C did not have unexpired credits at the beginning of its tax
year beginning in 2001.
Stat. Auth.: ORS
305.100
Stats. Implemented: ORS
315.304
