Form Wv/aif-1 - Aerospace Industrial Facility Investments Credit (Page 2 of 3) in pdf

NET COST

Net Cost is the net monetary consideration provided for acquisition of title and/or ownership to the subject property. Net

cost shall not include the value of any property given in trade or exchange for such new property purchased for aerospace

facility expansion or revitalization. If property is damaged or destroyed by fire, flood, storm or other casualty, or is stolen,

then the cost of replacement property does not include any insurance proceeds received in compensation for the loss. In the

case of leased property acquired for a period of ten years or longer, net cost shall be the rent reserved for the primary term

of the lease, not to exceed 20 years. Lease renewals, subleases or assignments shall not be considered. In the case of self-

constructed property, the cost thereof is the amount of property charged to the capital account for purposes of depreciation.

PROPERTY PURCHASED FOR MULTIPLE BUSINESS USES

If property is purchased for multiple business use, the use of the property in both the qualified activity and the nonqualified

activity must be thoroughly supported and explained by separate documents submitted with the application. This includes

property used as a component part of a new, expanded, or ongoing aerospace industrial facility of an industrial taxpayer,

together with some other business not qualifying (for example, retail selling.) The amount of credit arising from that

property must be based on cost allocated to the qualified activity.

If useful life is:

The applicable percentage is:

4 years or more but less than 6 years

33 1/3%

6 years or more but less than 8 years

66 2/3%

8 years or more

100%

ELIGIBLE INVESTMENT

To determine the amount of eligible investment for the aerospace industrial facility credit, the net cost of each property

purchased is multiplied by the applicable percentage shown below according to the useful life of the property.

Example:If a taxpayer purchases for $25,000 after July 1, 1998, a machine for use in a new, expanded, or ongoing portion

of its aerospace industrial facility, which has a useful life of 6 years, the eligible investment is equal to $16,666.66. The

eligible investment is calculated by multiplying the cost of the equipment, $25,000, times the applicable percentage according

to the useful life, 66 2/3%, to arrive at $16,666.66. The credit is equal to 15% of the eligible investment or $2,500. This credit

must be claimed over a period of 10 years at a rate of 10% ($250.00).

CREDIT RECAPTURE

Credit attributable to property that ceases to be used in this State prior to the end of its categorized useful life must be

recalculated for all tax years according to actual useful life.

Example: Company A invests $10 million in equipment with a designated useful life of 8 years in 1999. The credit for

Company A is calculated to equal $1,500,000 or $150,000 per year for 10 years. However, Company A moves this equip-

ment to New York in 2004, and therefore the equipment’s actual useful life in West Virginia is reduced to only 5 years. The

corresponding credit is reduced according to the above formula from $1,500,000 to $500,000 or $50,000 per year for 10

years. A reconciliation statement for the 1999 through 2004 period reflecting an overutilization of credit must then be

submitted with payment of any additional tax, interest and penalties owed.

COMPUTATION OF AEROSPACE INDUSTRIAL FACILITY INVESTMENTS CREDIT

Computation of Eligible Investment:

Column 1. Enter the net costs of the property in Column (1) on the appropriate line determined by the life of the

property.

Column 3. Multiply the net costs in Column (1) by the applicable percentages in Column (2). Enter the results in Col-

umn 3.

Line 4.

Add the figures in Column (3) and enter on Line 4. This is the taxpayer’s eligible investment.

Computation of Potential Current Annual Credit:

Line 5.

To determine the taxpayer’s total potential current annual credit, which can be taken over a period of ten

years, multiply the total eligible investment (Line 4) by 15%. Enter the result on Line 5.

Form Wv/aif-1 - Aerospace Industrial Facility Investments Credit Page 2

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