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S.B. 31

             1     

COMMERCIAL HISTORIC BUILDING REHABILITATION -

             2     
CORPORATE FRANCHISE AND INCOME TAX AND

             3     
INDIVIDUAL INCOME TAX CREDITS

             4     
2000 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Sponsor: Beverly Ann Evans

             7      AN ACT RELATING TO REVENUE AND TAXATION; PROVIDING DEFINITIONS;
             8      EXPANDING THE CORPORATE FRANCHISE AND INCOME TAX AND INDIVIDUAL
             9      INCOME TAX HISTORIC PRESERVATION CREDITS TO INCLUDE CREDITS FOR
             10      COMMERCIAL CERTIFIED HISTORIC BUILDINGS AND COMMERCIAL QUALIFIED
             11      HISTORIC BUILDINGS; DELETING THE RESIDENCY REQUIREMENT FOR THE
             12      INDIVIDUAL INCOME TAX CREDIT; MAKING TECHNICAL CHANGES; AND
             13      PROVIDING FOR RETROSPECTIVE OPERATION.
             14      This act affects sections of Utah Code Annotated 1953 as follows:
             15      AMENDS:
             16          59-7-609, as enacted by Chapter 42, Laws of Utah 1995
             17          59-10-108.5, as last amended by Chapter 25, Laws of Utah 1995
             18      Be it enacted by the Legislature of the state of Utah:
             19          Section 1. Section 59-7-609 is amended to read:
             20           59-7-609. Historic preservation credit.
             21          (1) As used in this section:
             22          (a) "Certified historic building" means a building or structure that:
             23          (i) (A) is listed on the National Register of Historic Places; or
             24          (B) is listed on the National Register of Historic Places within a three-year period after a
             25      taxpayer claims a credit under this section; or
             26          (ii) is located in a National Register Historic District; and
             27          (iii) the Division of State History has designated as being of significance to the National


             28      Register Historic District.
             29          (b) "Commercial certified historic building" means a commercial unit that is a certified
             30      historic building.
             31          (c) "Commercial qualified historic building" means a commercial unit that is a qualified
             32      historic building.
             33          (d) "Commercial unit" means a building or structure that is primarily used for the purpose
             34      of conducting business.
             35          (e) "Qualified historic building" means a building that is determined by the Division of
             36      State History to meet the age and integrity requirements established by the National Register of
             37      Historic Places.
             38          (f) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
             39      the rehabilitation and restoration of the physical elements of a building, including:
             40          (A) the historic decorative elements of the building;
             41          (B) the upgrading of the structural, mechanical, electrical, or plumbing systems of the
             42      building to applicable codes; or
             43          (C) notwithstanding Subsection (1)(f)(ii)(E), an expenditure described in Subsection
             44      (1)(f)(ii)(E)(II) or (III) if the outbuilding or secondary structure is a:
             45          (I) certified historic building; or
             46          (II) qualified historic building.
             47          (ii) "Qualified rehabilitation expenditures" does not include:
             48          (A) an expenditure related to the taxpayer's personal labor;
             49          (B) an expenditure related to the cost of acquiring the property;
             50          (C) an expenditure attributable to the enlargement of an existing building;
             51          (D) if the rehabilitation work is not approved as provided in Subsection (2)(c), an
             52      expenditure related to rehabilitation work on a:
             53          (I) certified historic building; or
             54          (II) qualified historic building;
             55          (E) except as provided in Subsection (1)(f)(i)(C), an expenditure attributable to:
             56          (I) landscaping or other site features;
             57          (II) an outbuilding;
             58          (III) a secondary structure; or


             59          (IV) an expenditure similar to those described in Subsections (1)(f)(ii)(E)(I) through (III).
             60          (g) "Residential" means a building that is:
             61          (i) primarily used for residential purposes; and
             62          (ii) (A) occupied by the owner of the building; or
             63          (B) income producing.
             64          [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed to
             65      a] A taxpayer subject to taxation under Section 59-7-104 [, as a credit against the tax due,] may
             66      claim the following nonrefundable credits as provided in this section:
             67          (i) for taxable years beginning on or after January 1, 1993, an amount equal to 20% of the
             68      total amount of the taxpayer's qualified rehabilitation expenditures[, costing more than] if the
             69      taxpayer expends more than $10,000[, incurred] in connection with [any] a residential certified
             70      historic building[. When qualifying expenditures of more than $10,000 are incurred, the credit
             71      allowed by this section shall apply to the full amount of expenditures.];
             72          (ii) except as provided in Subsection (2)(b), for taxable years beginning on or after January
             73      1, 2000, an amount equal to 20% of the total amount of the taxpayer's qualified rehabilitation
             74      expenditures if the taxpayer expends more than $10,000 in connection with a:
             75          (A) commercial certified historic building; or
             76          (B) commercial qualified historic building; or
             77          (iii) a combination of the credits described in Subsections (2)(a)(i) and (ii).
             78          (b) (i) Notwithstanding Subsection (2)(a)(ii), the maximum amount of credit that may be
             79      claimed or carried forward during a six-year period is $100,000 for all of the qualified
             80      rehabilitation expenditures incurred in connection with:
             81          (A) each commercial certified historic building; or
             82          (B) each commercial qualified historic building.
             83          (ii) A six-year period described in Subsection (2)(b)(i):
             84          (A) begins on the first day of the first taxable year for which a taxpayer may claim a credit
             85      under Subsection (2)(a)(ii); and
             86          (B) ends six years after the date described in Subsection (2)(b)(ii)(A).
             87          [(b)] (c) All rehabilitation work to which [the] a credit under this section may be applied
             88      shall be approved by the State Historic Preservation Office prior to completion of the rehabilitation
             89      project as meeting the Secretary of the Interior's Standards for Rehabilitation so that the [office


             90      can] State Historic Preservation Office may provide corrective comments to the taxpayer in order
             91      to preserve the historical qualities of the building.
             92          [(c) Any] (d) If the amount of a tax credit [remaining] a taxpayer claims under this section
             93      exceeds the taxpayer's tax liability for a taxable year, the taxpayer may [be carried] carry forward
             94      [to each of the] the amount of the credit that exceeds the liability for a period that does not exceed
             95      five [taxable] years following the day on which the taxpayer incurred the qualified rehabilitation
             96      expenditures.
             97          [(d) The] (e) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking
             98      Act, the commission, in consultation with the Division of State History, shall promulgate rules to
             99      implement this section.
             100          [(2) As used in this section:]
             101          [(a) "Certified historic building" means a building that is listed on the National Register
             102      of Historic Places within three years of taking the credit under this section or that is located in a
             103      National Register Historic District and the building has been designated by the Division of State
             104      History as being of significance to the district.]
             105          [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
             106      the rehabilitation and restoration of the physical elements of the building, including the historic
             107      decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing
             108      systems to applicable codes.]
             109          [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
             110          [(A) the taxpayer's personal labor;]
             111          [(B) cost of acquisition of the property;]
             112          [(C) any expenditure attributable to the enlargement of an existing building;]
             113          [(D) rehabilitation of a certified historic building without the approval required in
             114      Subsection (1)(b); or]
             115          [(E) any expenditure attributable to landscaping and other site features, outbuildings,
             116      garages, and related features.]
             117          [(c) "Residential" means a building used for residential use, either owner occupied or
             118      income producing.]
             119          Section 2. Section 59-10-108.5 is amended to read:
             120           59-10-108.5. Historic preservation credit.


             121          (1) As used in this section:
             122          (a) "Certified historic building" means a building or structure that:
             123          (i) (A) is listed on the National Register of Historic Places; or
             124          (B) is listed on the National Register of Historic Places within a three-year period after a
             125      taxpayer claims a credit under this section; or
             126          (ii) is located in a National Register Historic District; and
             127          (iii) the Division of State History has designated as being of significance to the National
             128      Register Historic District.
             129          (b) "Commercial certified historic building" means a commercial unit that is a certified
             130      historic building.
             131          (c) "Commercial qualified historic building" means a commercial unit that is a qualified
             132      historic building.
             133          (d) "Commercial unit" means a building or structure that is primarily used for the purpose
             134      of conducting business.
             135          (e) "Qualified historic building" means a building that is determined by the Division of
             136      State History to meet the age and integrity requirements established by the National Register of
             137      Historic Places.
             138          (f) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
             139      the rehabilitation and restoration of the physical elements of a building, including:
             140          (A) the historic decorative elements of the building;
             141          (B) the upgrading of the structural, mechanical, electrical, or plumbing systems of the
             142      building to applicable codes; or
             143          (C) notwithstanding Subsection (1)(f)(ii)(E), an expenditure described in Subsection
             144      (1)(f)(ii)(E)(II) or (III) if the outbuilding or secondary structure is a:
             145          (I) certified historic building; or
             146          (II) qualified historic building.
             147          (ii) "Qualified rehabilitation expenditures" does not include:
             148          (A) an expenditure related to the taxpayer's personal labor;
             149          (B) an expenditure related to the cost of acquiring the property;
             150          (C) an expenditure attributable to the enlargement of an existing building;
             151          (D) if the rehabilitation work is not approved as provided in Subsection (2)(c), an


             152      expenditure related to rehabilitation work on a:
             153          (I) certified historic building; or
             154          (II) qualified historic building; or
             155          (E) except as provided in Subsection (1)(f)(i)(C), an expenditure attributable to:
             156          (I) landscaping or other site features;
             157          (II) an outbuilding;
             158          (III) a secondary structure; or
             159          (IV) an expenditure similar to those described in Subsections (1)(f)(ii)(E)(I) through (III).
             160          (g) "Residential" means a building that is:
             161          (i) primarily used for residential purposes; and
             162          (ii) (A) occupied by the owner of the building; or
             163          (B) income producing.
             164          [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed to
             165      resident individuals, as a credit against the income tax due] A taxpayer may claim the following
             166      nonrefundable credits as provided in this section:
             167          (i) for taxable years beginning on or after January 1, 1993, an amount equal to 20% of the
             168      total amount of the taxpayer's qualified rehabilitation expenditures[, costing more than] if a
             169      taxpayer expends more than $10,000[, incurred] in connection with [any] a residential certified
             170      historic building[. When qualifying expenditures of more than $10,000 are incurred, the credit
             171      allowed by this section shall apply to the full amount of expenditures.];
             172          (ii) except as provided in Subsection (2)(b), for taxable years beginning on or after January
             173      1, 2000, an amount equal to 20% of the total amount of the taxpayer's qualified rehabilitation
             174      expenditures if the taxpayer expends more than $10,000 in connection with a:
             175          (A) commercial certified historic building; or
             176          (B) commercial qualified historic building; or
             177          (iii) a combination of the credits described in Subsections (2)(a)(i) and (ii).
             178          (b) (i) Notwithstanding Subsection (2)(a)(ii), the maximum amount of credit that may be
             179      claimed or carried forward during a six-year period is $100,000 for all of the qualified
             180      rehabilitation expenditures incurred in connection with:
             181          (A) each commercial certified historic building; or
             182          (B) each commercial qualified historic building.


             183          (ii) A six-year period described in Subsection (2)(b)(i):
             184          (A) begins on the first day of the first taxable year for which a taxpayer may claim a credit
             185      under Subsection (2)(a)(ii); and
             186          (B) ends six years after the date described in Subsection (2)(b)(ii)(A).
             187          [(b)] (c) All rehabilitation work to which [the] a credit under this section may be applied
             188      shall be approved by the State Historic Preservation Office prior to completion of the
             189      rehabilitation project as meeting the Secretary of the Interior's Standards for Rehabilitation so that
             190      the [office can] State Historic Preservation Office may provide corrective comments to the
             191      taxpayer in order to preserve the historical qualities of the building.
             192          [(c) Any] (d) If the amount of a tax credit [remaining] a taxpayer claims under this section
             193      exceeds the taxpayer's tax liability for a taxable year, the taxpayer may [be carried] carry forward
             194      [to each of the] the amount of the credit that exceeds the liability for a period that does not exceed
             195      five [taxable] years following the day on which the taxpayer incurred the qualified rehabilitation
             196      expenditures.
             197          [(d) The] (e) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking
             198      Act, the commission, in consultation with the Division of State History, shall promulgate rules to
             199      implement this section.
             200          [(2) As used in this section:]
             201          [(a) "Certified historic building" means a building that is listed on the National Register
             202      of Historic Places within three years of taking the credit under this section or that is located in a
             203      National Register Historic District and the building has been designated by the Division of State
             204      History as being of significance to the district.]
             205          [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
             206      the rehabilitation and restoration of the physical elements of the building, including the historic
             207      decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing
             208      systems to applicable codes.]
             209          [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
             210          [(A) the taxpayer's personal labor;]
             211          [(B) cost of acquisition of the property;]
             212          [(C) any expenditure attributable to the enlargement of an existing building;]
             213          [(D) rehabilitation of a certified historic building without the approval required in


             214      Subsection (1)(b); or]
             215          [(E) any expenditure attributable to landscaping and other site features, outbuildings,
             216      garages, and related features.]
             217          [(c) "Residential" means a building used for residential use, either owner occupied or
             218      income producing.]
             219          Section 3. Retrospective operation.
             220          This act has retrospective operation for taxable years beginning on or after January 1, 2000.




Legislative Review Note
    as of 1-11-00 3:51 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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