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H.B. 286

             1     

CORPORATE FRANCHISE AND INCOME TAX

             2     
AND INDIVIDUAL INCOME TAX CREDITS -

             3     
HISTORIC BUILDING REHABILITATION

             4     
2001 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Sponsor: Chad E. Bennion

             7      This act amends the Individual Income Tax Act and Corporate Franchise and Income Taxes
             8      to expand the corporate franchise and income tax and individual income tax historic
             9      building rehabilitation credits to include credits for commercial certified historic buildings
             10      and commercial qualified historic buildings. The act deletes a requirement that a taxpayer
             11      reside in the state to be eligible for a tax credit. This act provides definitions and makes
             12      technical changes. The act has retrospective operation for taxable years beginning on or
             13      after January 1, 2001.
             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 building rehabilitation 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 [Section 59-7-104 , as a credit against the tax due,] taxation under this
             66      chapter may claim the following nonrefundable credits against the taxes imposed by this chapter
             67      as provided in this section:
             68          (i) for taxable years beginning on or after January 1, 1993, an amount equal to 20% of the
             69      total amount of the taxpayer's qualified rehabilitation expenditures[, costing more than] if the
             70      taxpayer expends more than $10,000[, incurred] in connection with [any] a residential certified
             71      historic building[. When qualifying expenditures of more than $10,000 are incurred, the credit
             72      allowed by this section shall apply to the full amount of expenditures.];
             73          (ii) except as provided in Subsection (2)(b), for taxable years beginning on or after January
             74      1, 2001, an amount equal to 20% of the total amount of the taxpayer's qualified rehabilitation
             75      expenditures if the taxpayer expends more than $10,000 in connection with a:
             76          (A) commercial certified historic building; or
             77          (B) commercial qualified historic building; or
             78          (iii) a combination of the credits described in Subsections (2)(a)(i) and (ii).
             79          (b) (i) Notwithstanding Subsection (2)(a)(ii), the maximum amount of credit that may be
             80      claimed or carried forward during a six-year period is $100,000 for all of the qualified
             81      rehabilitation expenditures incurred in connection with:
             82          (A) each commercial certified historic building; or
             83          (B) each commercial qualified historic building.
             84          (ii) A six-year period described in Subsection (2)(b)(i):
             85          (A) begins on the first day of the first taxable year for which a taxpayer may claim a credit
             86      under Subsection (2)(a)(ii); and
             87          (B) ends six years after the date described in Subsection (2)(b)(ii)(A).
             88          [(b)] (c) All rehabilitation work to which [the] a credit under this section may be applied
             89      shall be approved by the State Historic Preservation Office prior to completion of the rehabilitation


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


             121           59-10-108.5. Historic building rehabilitation credit.
             122          (1) As used in this section:
             123          (a) "Certified historic building" means a building or structure that:
             124          (i) (A) is listed on the National Register of Historic Places; or
             125          (B) is listed on the National Register of Historic Places within a three-year period after a
             126      taxpayer claims a credit under this section; or
             127          (ii) is located in a National Register Historic District; and
             128          (iii) the Division of State History has designated as being of significance to the National
             129      Register Historic District.
             130          (b) "Commercial certified historic building" means a commercial unit that is a certified
             131      historic building.
             132          (c) "Commercial qualified historic building" means a commercial unit that is a qualified
             133      historic building.
             134          (d) "Commercial unit" means a building or structure that is primarily used for the purpose
             135      of conducting business.
             136          (e) "Qualified historic building" means a building that is determined by the Division of
             137      State History to meet the age and integrity requirements established by the National Register of
             138      Historic Places.
             139          (f) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
             140      the rehabilitation and restoration of the physical elements of a building, including:
             141          (A) the historic decorative elements of the building;
             142          (B) the upgrading of the structural, mechanical, electrical, or plumbing systems of the
             143      building to applicable codes; or
             144          (C) notwithstanding Subsection (1)(f)(ii)(E), an expenditure described in Subsection
             145      (1)(f)(ii)(E)(II) or (III) if the outbuilding or secondary structure is a:
             146          (I) certified historic building; or
             147          (II) qualified historic building.
             148          (ii) "Qualified rehabilitation expenditures" does not include:
             149          (A) an expenditure related to the taxpayer's personal labor;
             150          (B) an expenditure related to the cost of acquiring the property;
             151          (C) an expenditure attributable to the enlargement of an existing building;


             152          (D) if the rehabilitation work is not approved as provided in Subsection (2)(c), an
             153      expenditure related to rehabilitation work on a:
             154          (I) certified historic building; or
             155          (II) qualified historic building; or
             156          (E) except as provided in Subsection (1)(f)(i)(C), an expenditure attributable to:
             157          (I) landscaping or other site features;
             158          (II) an outbuilding;
             159          (III) a secondary structure; or
             160          (IV) an expenditure similar to those described in Subsections (1)(f)(ii)(E)(I) through (III).
             161          (g) "Residential" means a building that is:
             162          (i) primarily used for residential purposes; and
             163          (ii) (A) occupied by the owner of the building; or
             164          (B) income producing.
             165          [(1)] (2) (a) [For tax years beginning January 1, 1993, and thereafter, there is allowed to
             166      resident individuals, as a credit against the income tax due] A taxpayer subject to taxation under
             167      this chapter may claim the following nonrefundable credits against the taxes imposed by this
             168      chapter as provided in this section:
             169          (i) for taxable years beginning on or after January 1, 1993, an amount equal to 20% of the
             170      total amount of the taxpayer's qualified rehabilitation expenditures[, costing more than] if a
             171      taxpayer expends more than $10,000[, incurred] in connection with [any] a residential certified
             172      historic building[. When qualifying expenditures of more than $10,000 are incurred, the credit
             173      allowed by this section shall apply to the full amount of expenditures.];
             174          (ii) except as provided in Subsection (2)(b), for taxable years beginning on or after January
             175      1, 2001, an amount equal to 20% of the total amount of the taxpayer's qualified rehabilitation
             176      expenditures if the taxpayer expends more than $10,000 in connection with a:
             177          (A) commercial certified historic building; or
             178          (B) commercial qualified historic building; or
             179          (iii) a combination of the credits described in Subsections (2)(a)(i) and (ii).
             180          (b) (i) Notwithstanding Subsection (2)(a)(ii), the maximum amount of credit that may be
             181      claimed or carried forward during a six-year period is $100,000 for all of the qualified
             182      rehabilitation expenditures incurred in connection with:


             183          (A) each commercial certified historic building; or
             184          (B) each commercial qualified historic building.
             185          (ii) A six-year period described in Subsection (2)(b)(i):
             186          (A) begins on the first day of the first taxable year for which a taxpayer may claim a credit
             187      under Subsection (2)(a)(ii); and
             188          (B) ends six years after the date described in Subsection (2)(b)(ii)(A).
             189          [(b)] (c) All rehabilitation work to which [the] a credit under this section may be applied
             190      shall be approved by the State Historic Preservation Office prior to completion of the
             191      rehabilitation project as meeting the Secretary of the Interior's Standards for Rehabilitation so that
             192      the [office can] State Historic Preservation Office may provide corrective comments to the
             193      taxpayer in order to preserve the historical qualities of the building.
             194          [(c) Any] (d) If the amount of a tax credit [remaining] a taxpayer claims under this section
             195      exceeds the taxpayer's tax liability for a taxable year, the taxpayer may [be carried] carry forward
             196      [to each of the] the amount of the credit that exceeds the liability for a period that does not exceed
             197      five taxable years following the day on which the taxpayer incurred the qualified rehabilitation
             198      expenditures.
             199          [(d) The] (e) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking
             200      Act, the commission, in consultation with the Division of State History, shall promulgate rules to
             201      implement this section.
             202          [(2) As used in this section:]
             203          [(a) "Certified historic building" means a building that is listed on the National Register
             204      of Historic Places within three years of taking the credit under this section or that is located in a
             205      National Register Historic District and the building has been designated by the Division of State
             206      History as being of significance to the district.]
             207          [(b) (i) "Qualified rehabilitation expenditures" means any amount properly chargeable to
             208      the rehabilitation and restoration of the physical elements of the building, including the historic
             209      decorative elements, and the upgrading of the structural, mechanical, electrical, and plumbing
             210      systems to applicable codes.]
             211          [(ii) "Qualified rehabilitation expenditures" does not include expenditures related to:]
             212          [(A) the taxpayer's personal labor;]
             213          [(B) cost of acquisition of the property;]


             214          [(C) any expenditure attributable to the enlargement of an existing building;]
             215          [(D) rehabilitation of a certified historic building without the approval required in
             216      Subsection (1)(b); or]
             217          [(E) any expenditure attributable to landscaping and other site features, outbuildings,
             218      garages, and related features.]
             219          [(c) "Residential" means a building used for residential use, either owner occupied or
             220      income producing.]
             221          Section 3. Retrospective operation.
             222          This act has retrospective operation for taxable years beginning on or after January 1, 2001.




Legislative Review Note
    as of 2-1-01 10:20 AM


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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