Current through Register Vol. XLI, No. 38, September 20, 2024
6.1. In order to be eligible for the coal
severance tax rebate, a qualified investment must be made that results in
increased production of coal and increased workforce.
6.2. The capital investment must be in new
machinery or new equipment, repairs or refurbishment of machinery or equipment
that his capitalized for federal income tax purposes, or infrastructure
improvements to real property. A qualified investment must be in tangible
personal property and can only be made in one of the following, although
multiple qualified investments can be made at the same mine. This list is
inclusive.
6.2.1. New machinery used directly
in the production of coal that is depreciable, or amortizable, for federal
income tax purposes and has a useful life for federal income tax purposes of
five or more years when it is placed in service or use in this state;
or
6.2.2. Refurbished or rebuilt
machinery or equipment used directly in the production of coal that is
depreciable, or amortizable, for federal income tax purposes and has a useful
life for federal income tax purposes of five or more years when it is placed in
service or use in this state; or
6.2.3. Improvements to real property used
directly in the production of coal that is depreciable, or amortizable, for
federal income tax purposes and has a useful life for federal income tax
purposes of five or more years when it is placed in service or use in this
state.
6.2.4. Repair or
refurbishment costs to tangible personal property directly used in the
production of coal that are incurred on or after July 1, 2019, which are
capitalized for federal income tax purposes.
6.3 The capital investment must be directly
used in the production of coal.
6.3.1 The
qualified investment must be a capital asset within the meaning of I.R.C.
§1221.
6.3.2 The property must
have a useful life for federal income tax purposes of five or more years when
it is placed into service in this state.
6.3.3 Depreciation, or amortization in lieu
of depreciation, must be allowable for federal income tax purposes with respect
to the tangible personal property for the taxable year in which the property is
placed in service or use by the taxpayer.
6.3.4. The first use of the qualified
investment property by anyone in this state must be by the taxpayer when making
the qualified investment that results in taxpayer's increased coal production
and increased workforce.
6.4. The following are not qualified
investments. This list is merely illustrative and does not include every
investment that is not eligible for the coal severance tax rebate.
6.4.1. Real property, including land, mineral
rights, a coal mine, or an expansion of the geographical boundaries of a
pre-existing mine.
6.4.2. Used
property.
6.4.3. Intangible
personal property.
6.4.4. Machinery
and equipment owned or leased by the taxpayer for which an economic,
industrial, or other type of credit was taken or is claimed under any article
of chapter 11 of the W. Va. Code.
6.4.5. Repair costs, including the cost of
materials used in the repair, do not qualify as qualified investments unless
for federal income tax purposes they are required to be capitalized and not
expensed.
6.4.6. Motor vehicles
licensed by the West Virginia Division of Motor Vehicles or any other state
authority with jurisdiction to license on-road vehicles.
6.4.7. Airplanes or helicopters.
6.4.8. Off-premise transportation
equipment.
6.4.9. Machinery or
equipment that is acquired incidental to the purchase of the stock or assets of
the seller.
6.5. The
qualifying investment must be directly used by the taxpayer or its successor in
accordance with section heading 9 of this rule in the production of coal as
defined in W. Va. Code §
11-13EE-2(b)(13)
in this state for at least five years after it is placed in service or use in
this state. When the property is used for less than five years, a recapture tax
may apply. See W. Va. Code §
11-13EE-11
and section heading 13 of this rule.
6.6. For purposes of this rebate, "leased"
property is treated like "purchased" property provided the primary term of the
lease is for at least five years and the lessee may take depreciation, or
amortization in lieu thereof, for federal income tax purposes and the first use
of the leased property by anyone is the current lessee.
