REPORT TITLE:
Tax credit


DESCRIPTION:
Provides to each taxpayer or the association of apartment owners
of a hotel-condo as defined in section 486K-1, an income tax
credit for improvement costs of qualified facilities within a
hotel or resort-zoned district.  (HB136 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        136
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "235-    Improvement tax credit.  (a)  There shall be
 
 5 allowed to each taxpayer or the association of apartment owners
 
 6 of a hotel-condo as defined in section 486K-1, subject to the
 
 7 taxes imposed by this chapter and chapter 237D, an income tax
 
 8 credit which shall be deductible from the taxpayer's or
 
 9 association of apartment owners' net income tax liability, if
 
10 any, imposed by this chapter for the taxable year in which the
 
11 credit is properly claimed.
 
12      The amount of the credit shall be four per cent of the
 
13 improvement costs incurred during the taxable year for each
 
14 qualified facility located in Hawaii, and shall not include the
 
15 improvement costs for which another credit was claimed under this
 
16 chapter for the taxable year.  The total amount of the credit
 
17 shall not be limited by the transient accommodations tax paid by
 
18 the taxpayer in the preceding taxable year that is attributable
 
19 to the qualified facility.
 

 
Page 2                                                     136
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      In the case of a partnership, S corporation, estate, trust,
 
 2 or the association of apartment owners of a hotel-condo as
 
 3 defined in section 486K-1, the tax credit allowable is for
 
 4 improvement costs incurred by the entity for the taxable year.
 
 5 The cost upon which the tax credit is computed shall be
 
 6 determined at the entity level.  Distribution and share of credit
 
 7 shall be determined pursuant to section 235-110.7(a).
 
 8      If a deduction is taken under section 179 (with respect to
 
 9 election to expense depreciable business assets) of the Internal
 
10 Revenue Code of 1986, as amended, no tax credit shall be allowed
 
11 for that portion of the improvement cost for which the deduction
 
12 is taken.
 
13      The basis of eligible property for depreciation or ACRS
 
14 purposes for state income taxes shall be reduced by the amount of
 
15 credit allowable and claimed.
 
16      (b)  As used in this section:
 
17      "Improvement cost" means any costs involved in building
 
18 capital facilities, including the development of land, the design
 
19 and construction of new facilities, and the renovation or making
 
20 of additions to existing facilities.
 
21      "Qualified facility" means a hotel or hotel-condo as defined
 
22 in section 486K-1, residential unit, or any other building
 
23 located within a hotel or resort-zoned district.
 

 
Page 3                                                     136
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (c)  The credit allowed under this section shall be claimed
 
 2 against the net income tax liability for the taxable year.  For
 
 3 the purpose of this tax credit, "net income tax liability" means
 
 4 net income tax liability reduced by all other credits allowed
 
 5 under this chapter.
 
 6      (d)  A tax credit under this section which exceeds the
 
 7 taxpayer's income tax liability may be used as a credit against
 
 8 the taxpayer's income tax liability in subsequent years until
 
 9 exhausted.  All claims for a tax credit under this section shall
 
10 be filed on or before the end of the twelfth month following the
 
11 close of the taxable year for which the credit may be claimed.
 
12 Failure to comply with the foregoing provision shall constitute a
 
13 waiver of the right to claim the credit.
 
14      (e)  The director of taxation shall prepare such forms as
 
15 may be necessary to claim a credit under this section.  The
 
16 director may also require the taxpayer to furnish information to
 
17 ascertain the validity of the claim for credit made under this
 
18 section and may adopt rules necessary to effectuate the purposes
 
19 of this section pursuant to chapter 91.
 
20      (f)  The tax credit allowed under this section shall be
 
21 available for taxable years beginning after December 31, 1998,
 
22 and shall not be available for taxable years beginning after
 
23 December 31, 2003."
 

 
Page 4                                                     136
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 3.  New statutory material is underscored.
 
 2      SECTION 4.  This Act, upon its approval, shall apply to
 
 3 taxable years beginning after December 31, 1998, and shall be
 
 4 repealed on December 31, 2004.