2014 Ri Investment Tax Credit (Page 2 of 2) in pdf

Instructions for Form RI-3468

1. For taxable years beginning on or after July 1, 1974, Section 31 of Chapter 44 of the Rhode Island General Law allows an

investment tax credit of two percent (2%) of the cost or other basis used for federal income tax purposes on certain property.

Provided, however, the amount of the credit shall be four percent (4%) of the cost or other basis for federal income tax pur-

poses of tangible personal property and other tangible property, including buildings and other structural components of build-

ings that are acquired, constructed, reconstructed or erected after December 31, 1993. For taxable years ending on or after

1/1/1998, the credit is (10%) for certain tangible personal property and other tangible property, excluding buildings and struc-

tural components of buildings, motor vehicles and furniture, which are acquired after 1/1/1998. To qualify for such credit the

items must (a) be depreciable pursuant to Sec. 179 (d) thereof, (b) have a useful life of 4 years or more, (c) have a situs in

this state, and (d) be principally used by the taxpayer in the production of goods by manufacturing, processing or assembling.

2. The items listed in this schedule should be in such form as will present an accurate statement. Complete details substantiat-

ing the amounts shown must be made available on request.

3. At the election of the taxpayer, an investment tax credit may be allowed on otherwise qualifying property in lieu of elective

deductions on facilities qualifying as: (a) Air and water pollution control facilities and (b) Research and Development facilities.

4. If the property is disposed of or ceases to be in qualified use during the INITIAL taxable year, the credit allowed is 2%, 4% or

10% of the cost or other basis of the property multiplied by a fraction the numerator of which is the months of qualified use

during the year of purchase and the denominator of which is the total months of useful life (submit rider for such items).

5. Credit may not be claimed on property leased to or from others, unless such lease is treated for federal income purposes as

an installment purchase rather than a lease.

6. The total credit may not reduce the tax for any year to less than $500.00 starting with years beginning 1/1/2004 and thereafter.

Unused investment tax credit amounts may be carried forward for seven years.

7. If property is disposed of or ceases to be in qualified use other than the initial taxable year, the difference between the credit

taken and the credit allowed for actual use must be added back in the year of disposition on the appropriate line of tax on

Form RI-1120C and not on Form RI-3468. A taxpayer may not reduce the amount of tax liability created by a recapture of

investment tax credit by investment tax credits allowed for the year in which the asset is disposed of, nor can it be reduced by

any carryover of investment tax credit to that year. The recapture is the tax credit taken on property ceasing to qualify multi-

plied by a fraction the numerator of which is the useful life of property in months less the qualified use in months and the

denominator is the useful life of the property in months.

For example, qualified property is purchased by a calendar year taxpayer on 1/1/1975 for $100,000.00 and has a useful life of

10 years (120 months) for federal depreciation purposes. The credit taken for 1975 is 2% of $100,000.00 or $2,000.00. If it is

disposed of or traded in on 12/31/1980 after being used for 6 years (72 months), $800.00 of the credit originally taken must be

added back for 1980, since the asset was disposed of while it still had 4 years (48 months) of useful life remaining at 40%.

$2,000.00 X 120-72 = $800.00

120

(Submit rider for such items)

A recapture of a portion of the investment tax credit is required where property on which a credit has been allowed is disposed

of or ceased to be in qualified use except: (a) where property was in qualified use for its entire useful life, or (b) where proper-

ty was in qualified use for more than twelve consecutive years.

10% Investment Tax Credit - If you qualify for the 10% investment tax credit, you must submit a copy of your 10% ITC

Certification from the Department of Labor and Training.

Credit Carryover Schedule - If you have unused credit from prior years, you must attach a schedule detailing the type of invest-

ment tax credit (4% or 10%), the amount of credit generated, the year the credit was generated, the amount of credit used, and

the year the credit was used.

2014 Ri Investment Tax Credit Page 2