Form N-324 - Ethanol Facility Tax Credit General Instructions (Page 2 of 2) in pdf

FORM N-324

PAGE 2

(REV. 2003)

(8) If nameplate capacity is over 7,000,000, but not over 8,000,000, the

If the credit exceeds the taxpayer’s income tax liability, the excess of

investment tax credit is the lesser of thirty per cent or $2,100,000;

credit over liability shall be refunded to the taxpayer; provided that no re-

funds or payments on account of the tax credit allowed by this section shall

(9) If nameplate capacity is over 8,000,000, but not over 9,000,000, the

be made for amounts less than $1. All claims for a credit under this section

investment tax credit is the lesser of thirty per cent or $2,400,000;

must be properly filed on or before the end of the twelfth month following the

(10) If nameplate capacity is over 9,000,000, but not over 10,000,000, the

close of the taxable year for which the credit may be claimed. Failure to com-

investment tax credit is the lesser of thirty per cent or $2,700,000;

ply with the foregoing provision shall constitute a waiver of the right to claim

(11) If nameplate capacity is over 10,000,000, but not over 11,000,000,

the credit.

the investment tax credit is the lesser of thirty per cent or $3,000,000;

If a qualifying ethanol facility or an interest therein is acquired by a tax-

(12) If nameplate capacity is over 11,000,000, but not over 12,000,000,

payer prior to the expiration of the credit period, the credit allowable for any

the investment tax credit is the lesser of thirty per cent or $3,300,000;

period after such acquisition shall be equal to the maximum annual credit al-

lowable and credit period that would have been allowable to the prior owner

(13) If nameplate capacity is over 12,000,000, but not over 13,000,000,

had the owner not disposed of the interest. If an interest is disposed of dur-

the investment tax credit is the lesser of thirty per cent or $3,600,000;

ing any year for which the credit is allowable, the credit shall be allowable

(14) If nameplate capacity is over 13,000,000, but not over 14,000,000,

between the parties on the basis of the number of days during the year the

the investment tax credit is the lesser of thirty per cent or $3,900,000;

interest was held by each owner. In no case shall the credit be allowed after

(15) If nameplate capacity is over 14,000,000, but not over 15,000,000,

the expiration of the credit period.

the investment tax credit is the lesser of thirty per cent or $4,200,000;

Once the total nameplate capacities of ethanol production facilities built

and

within the State reaches or exceeds a level of forty million gallons per year,

(16) If nameplate capacity is over 15,000,000, the investment tax credit is

no new ethanol investments or ethanol production facilities shall be allowed

to begin claiming credits. If a new facility’s production capacity would cause

the lesser of thirty per cent or $4,500,000.

the statewide ethanol production capacity to exceed forty million gallons per

Definitions

year, only the portion of the investment corresponding to ethanol production

“Credit period” means a maximum period of eight years for facilities with

that does not exceed the statewide forty million gallon per year level shall be

a total investment of less than $50,000,000, and, a maximum period of ten

eligible for the credit.

years for facilities with a total investment equal to or greater than

If a qualifying facility fails to achieve an average annual production of at

$50,000,000, beginning from the first taxable year in which the credit is prop-

least seventy-five per cent of its nameplate capacity for two consecutive

erly claimed.

years, the stated capacity of that facility may be revised by the director of

“Investment” means a nonrefundable expenditure directly related to the

taxation to reflect actual production for the purposes of determining state-

construction of any qualifying ethanol production facility, exclusive of land

wide production capacity and allowable investment credits for that facility.

costs. For purposes of the tax credit, investment includes any investment for

INFORMATION REPORTING REQUIREMENTS FOR THE

which the taxpayer is at risk, as that term is used in section 465 of the Inter-

ETHANOL PRODUCER

nal Revenue Code (with respect to deductions limited to amount at risk).

Prior to construction of any new ethanol production facility, the pro-

“Maximum annual credit allowable” means the total credit claimed

ducer shall provide written notice of the producer’s intention to begin

against the taxpayer’s net income tax liability for any taxable year; provided

construction of a qualifying ethanol production facility. The information

that the qualifying ethanol facility operated in such taxable year at a level of

shall be provided to the Department of Taxation and the Department

production of at least seventy-five per cent of its nameplate capacity on an

of Business, Economic Development, and Tourism on forms provided

annualized basis.

by the Department of Business, Economic Development, and

“Nameplate capacity” means the qualifying ethanol facility’s production

Tourism, and shall include information on the facility owner, facility lo-

design capacity, in gallons of ethanol per year, based on an assumed oper-

cation, facility production capacity, anticipated production start date,

ating year of three hundred fifty days.

and the facility owner’s contact information. This information shall be

“Net income tax liability” means net income tax liability reduced by all

available for public inspection and dissemination.

other credits allowed under this chapter.

A qualifying ethanol producer shall provide written notice to the

“Qualifying ethanol production” means ethanol produced from renewable,

Director of Taxation and the Director of Business, Economic

organic feedstocks, or waste materials, including municipal solid waste. All

Development, and Tourism within thirty days of the initial qualifying

qualifying production shall be fermented, distilled, and dehydrated at the fa-

production. The notice shall include the production start date and ex-

cility.

pected qualifying production for the next twenty-four months. This in-

formation shall be available for public inspection and dissemination.

“Qualifying ethanol production facility” means a facility located in Hawaii

Attach a copy of this notice to Form N-324 for the first year the credit

which produces motor fuel grade ethanol meeting the minimum specifica-

is claimed.

tions by the American Society of Testing and Materials standard D-4806, as

amended.

Each calendar year during the credit period, each qualifying producer

shall provide information to the Director of Business, Economic

The tax credit allowable over the credit period is capped at 100 percent

Development, and Tourism on the number of gallons of ethanol pro-

of the qualifying investment. For example, Company X invests $7.1 million

duced and sold during the previous calendar year, how much was

in a qualifying ethanol facility with an annual nameplate capacity of 7.2 mil-

sold in Hawaii versus overseas, feedstocks used for ethanol produc-

lion gallons. The total tax credit allowable each year is the lesser of 30 per-

tion, the number of employees of the facility, and the projected num-

cent of the investment (0.30 X $7,100,000 = $2,130,000) or the nameplate

ber of gallons of ethanol production for the succeeding year.

capacity dollar amount ($2,100,000) until the $7.1 million investment is re-

covered. Company X may claim a $2.1 million tax credit each year for three

years and a $800,000 tax credit in the fourth year.

FORM N-324

Form N-324 - Ethanol Facility Tax Credit General Instructions Page 2

Related Articles

Related forms

Related Categories