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Ftb Notice 2003-10 Repeal Of The Manufacturers' Investment Credit Form - California Franchise Tax Board

STATE OF CALIFORNIA

STEVE WESTLY

Chair

FRANCHISE TAX BOARD - Legal Branch

PO Box 1720

CAROLE MIGDEN

Rancho Cordova CA 95741-1720

Member

(916) 845-3309 Fax (916) 845-3648

DONNA ARDUIN

Member

December 8, 2003

FTB NOTICE 2003- 10

SUBJECT: REPEAL OF THE MANUFACTURERS' INVESTMENT CREDIT (MIC)

The California Legislative Counsel issued a written opinion dated June 17, 2003, that

the MIC statute has been repealed by its own terms and ceases to be operative as of

January 1, 2004, due to a reduction in manufacturing sector jobs. The department has

received questions from taxpayers concerning the proper treatment of costs paid or

incurred during the operative dates of the MIC statute for property that will be placed in

service on or after the repeal date of the MIC statute.

Qualified costs for the MIC are limited to those costs paid or incurred during the

operative dates of the MIC statute with respect to qualified property that is placed in

service during the operative dates of the MIC statute. Thus, all costs paid or incurred

during the operative dates of the MIC statute for qualified property that is placed in

service prior to January 1, 2004, will be qualified costs for purposes of the MIC.

Conversely, for property that is placed in service on January 1, 2004, or thereafter, none

of those costs will be qualified costs for purposes of the MIC because a taxpayer is not

eligible to claim the MIC until the property is placed in service in this state.

The MIC regulations provide the definition of the term "placed in service" for purposes of

the MIC and should be consulted by taxpayers with issues in this area. (Cal. Code

Regs., tit. 18, §§ 17053.49-2, sub. (i), & 23649-2, sub. (i).)

The principal author of this notice is Geoffrey S. Way of the Franchise Tax Board, Legal

Department. For further information regarding this notice, contact Mr. Way at the

Franchise Tax Board, Legal Department, P. O. Box 1720, Rancho Cordova, CA 95741-

1720.

Ftb Notice 2003-10 Repeal Of The Manufacturers' Investment Credit Form - California Franchise Tax Board