3.2.
Amount of credit. -- The amount of credit allowable is 100 percent of the
amount of federal excise tax paid in a tax year under section 4181, Title 26 of
the Internal Revenue Code, which is attributable to and the consequence of the
taxpayer's qualified investment.
3.2.1.
Threshold for the credit. -- No credit shall be allowed under W. Va. Code
§
11-13KK-1,
et seq., or this rule unless the taxpayer has invested at
least $2 million in property purchased or leased for business expansion during
the tax year for which the credit is claimed.
3.2.2. It is the intent of W. Va. Code §
11-13KK-1,
et seq., that a qualified taxpayer makes and continuously
maintains a minimum capital investment in a qualified munitions manufacturing
facility of no less than $2 million. The sole purpose of the capital investment
portion of W. Va. Code §
11-13KK-1,
et seq., is to determine whether the $2 million threshold
requirement is met in every operational year based on a rolling 10 year time
span for creation and extinguishment for measurement of capital investment.
3.2.2.a. If the $2 million capital investment
threshold is met or exceeded in any given tax year, then the taxpayer is
authorized to apply the annual dollar for dollar W. Va. Code §
11-13KK-1,
et seq. tax credit against corporation net income tax or
personal income tax, as applicable, in the amount of federal excise tax paid
pursuant to
26 U.S.C.
4181.
3.2.2.b. If the $2 million threshold has not
been met, then the taxpayer may not apply the annual tax credit in the amount
of the federal excise tax paid each year.
3.2.2.c. Under §11-13KK-5, the statute
contemplates placement of potential qualified investment in service or use in
each taxable year. Therefore, the $2 million threshold is an ongoing
determination, with each year contributing a new layer of capital investment
over a 10 year time span.
Year 1 investment is counted from year 1 to year 10
Year 2 investment is counted from year 2 to year 11
Year 3 investment is counted from year 3 to year 12
etc.
A taxpayer cannot gain entitlement to the credit until at
least $2 million of accumulated qualified investment is in place.
3.2.2.c.1. EXAMPLE: If the taxpayer meets the
$2 million threshold in year 1, then the taxpayer can apply the credit
beginning in year 1. If the qualified investment is made in phases such that
the $2 million threshold qualified investment is not in place until a later
year, the taxpayer may begin taking the tax credit in the year when the $2
million threshold is met, based on the qualified investment made in the current
year, combined with investments placed in service or use in the prior 10 years
(under the 10 year rolling measurement system), provided that all other
requirements of W. Va. Code §
11-13KK-1,
et seq., are met, including the filing for of an application
for credit.
3.2.2.c.2. The tax
credit set forth in W. Va. Code §
11-13KK-1,
et seq., uses a 10 year rolling measurement of qualified
investment to determine that at least $2 million of capital is continuously in
place in the facility.
3.2.2.d. If the $2 million threshold is
reached or exceeded, then the taxpayer is authorized to take the annual W. Va.
Code §
11-13KK-1,
et seq., tax credit, the amount of which is an annual dollar
for dollar offset of West Virginia income taxes, in the amount of federal
excise tax paid in each taxable year on manufacture of certain firearms and
ammunition, pursuant to
26 U.S.C. §
4181.
3.2.3. Nothing in this subsection shall
prevent the taxpayer from making a subsequent $2 million investment and
claiming an additional credit during a subsequent tax year.
