Income tax credit; agriculture

Establishes a credit against income tax liability for taxpayers
who install agricultural water storage facilities.

THE SENATE                              S.B. NO.           2008
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 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-    Agricultural water storage credit.  (a)  Each
 5 farmer or rancher taxpayer, who files a state schedule F income
 6 tax return for a taxable year, and who is not claimed or is not
 7 otherwise eligible to be claimed as a dependent by another
 8 taxpayer for Hawaii state income tax purposes, may claim an
 9 agricultural water storage credit against the farmer or rancher
10 taxpayer's income tax liability for the taxable year for which
11 the income tax return is being filed.  The credit may be claimed
12 only in the taxable year following the year in which an
13 agricultural water storage facility was placed in service;
14 provided that the taxpayer has financially contributed in the
15 qualified water storage investment.
16      (b)  The amount of the allowable credit shall be ten per
17 cent of the investment paid by the taxpayer; provided that the
18 tax credit shall not exceed $10,000 per year.  The credit may be
19 carried forward up to a maximum of ten years; provided that the

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 1 water storage facility remains in service and continues to be
 2 used by the taxpayer.  The amount of the credit that may be used
 3 in any tax year shall not exceed fifty per cent of the taxpayer's
 4 income tax liability as determined without regard to any other
 5 credits.
 6      (c)  The credit granted under this section shall be subject
 7 to the following conditions and limitations:
 8      (1)  To qualify as a basis for the credit, the new or
 9           expanded water storage facility shall not be placed in
10           service before January 1, 2000;
11      (2)  In the initial year in which the taxpayer claims the
12           credit granted in this section, the taxpayer shall
13           include a description of the project and information
14           that demonstrates that the facility constructed with
15           the qualified water storage investment had a minimum
16           capacity of forty thousand gallons; and
17      (3)  Claiming the credit granted in this section shall have
18           no effect on the taxpayer's ability to claim
19           depreciation for tax purposes on assets acquired by the
20           taxpayer, nor shall the credit have any effect on the
21           taxpayer's basis in those assets for the purpose of
22           depreciation.

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 1      (d)  The director of taxation shall prepare forms as may be
 2 necessary to claim a credit under this section.  The director may
 3 also require the taxpayer to furnish reasonable information in
 4 order that the director may ascertain the validity of the claim
 5 for credit made under this section.  The director may adopt rules
 6 necessary to effectuate the purposes of this section pursuant to
 7 chapter 91.
 8      (e)  All claims for tax credits under this section,
 9 including any amended claims, shall be filed on or before the end
10 of the twelfth month following the close of the taxable year for
11 which the credits may be claimed.  Failure to comply with the
12 foregoing provision shall constitute a waiver of the right to
13 claim the credit.
14      (f)  For purposes of this section:
15      "Qualified water storage investment" means all spending by a
16 farmer or rancher taxpayer for use in this State for the
17 construction of a new water storage facility, or for the
18 expansion of an existing water storage facility that has been
19 certified pursuant to rules adopted by the department of
20 agriculture as necessary for drought mitigation purposes.
21      "Water storage facility" means any facility used for water
22 storage such as water tanks and water reservoirs necessary to
23 claim a credit under this section."

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                                     S.B. NO.           2008

 1      SECTION 2.  New statutory material is underscored.
 2      SECTION 3.  This Act, upon its approval, shall apply to
 3 taxable years beginning after December 31, 1999.
 5                         INTRODUCED BY:___________________________