Fillable Form Rycl - Recycle Credit/deduction

Form RCYL Instructions

Definitions

partnership for Montana tax purposes unless the partners have

an agreement providing for a different allocation. If you are a

Collect is the collection and delivery of reclaimed materials to a

shareholder, your share of the credit is based on the pro rata

recycling or reclaimable materials processing facility.

share of the corporation’s cost of investing in the equipment.

Machinery or equipment is property having a depreciable life

For example, if your business is an S corporation with four

of more than one year. The machinery or equipment collects or

shareholders with equal ownership interest, each shareholder

processes reclaimable material or is used in the manufacturing of

would be entitled to 25% of the total credit.

a product from reclaimed material.

Only a taxpayer that owns an interest either directly or through a

Reclaimable material is material that has useful physical or

pass-through entity, such as a partnership or S corporation, and is

chemical properties after serving a specific purpose and that is

operating the equipment as the primary user on the last business

normally disposed of as solid waste by a consumer, processor or

day of the year, may claim the credit.

manufacturer. Material may not be considered reclaimed by the

If the credit exceeds my tax liability, can I carry

consumer, processor or manufacturer that generated the material.

any excess credit to another tax year?

Recycled material is a substance that is produced from

reclaimed material. Reclaimed material collected, processed or

No. The credit is limited to the amount of the taxpayer’s individual

used to manufacture a product may not be an industrial waste

or corporation tax liability. Any excess credit is not refundable, nor

generated by the person claiming the tax credit.

can it be carried back or forward to other tax years.

Parts I, II and III - Recycling Credit Instructions

Are there other limitations concerning the recycle

credit?

This credit is available to qualifying C corporations, S corporations,

partnerships and individuals.

The Department of Revenue may disallow a credit resulting from

What costs do I use to calculate my recycling

a sale or lease when the overriding purpose of the transaction is

not to collect or process reclaimable material or manufacture a

credit?

product from reclaimed material.

Use the costs of the investment that you have made in the

The credit may not be claimed for an investment in property used

qualifying equipment that you used to calculate your depreciation

to produce energy from reclaimed material.

deduction for federal income tax purposes.

What information do I have to include with my tax

The tax credit is available only for machinery and equipment

return when I claim this credit?

that is depreciable (defined in IRS Code Section 167). The

machinery and equipment must be used in Montana, primarily

Individuals and C corporations filing paper returns must include

for the collection or processing of reclaimable material or in the

a completed Form RCYL. S corporations and partnerships filing

manufacturing of finished products from reclaimed material or to

paper information returns must, in addition to including the

treat soils contaminated by hazardous wastes.

completed Form RCYL, include a separate statement identifying

each owner and their proportionate share.

The basis for the credit is generally the cost of the property before

consideration of trade-in equipment. An exception would be that

In addition, if you are claiming a credit in Part II or Part III, you will

the basis has to be reduced by any trade-in upon which this credit

also need to provide a copy of the sales receipt, any pamphlets

has previously been taken. The basis includes the purchase price,

on the equipment purchased, and any other information regarding

transportation cost (if paid by the purchaser) and the installation

what the equipment is and how the equipment is used in the

cost before depreciation or other reductions. This credit does not

collection, processing or manufacturing of a reclaimed material.

increase or decrease the basis for tax purposes.

Part IV - Recycling Deduction Instructions

Recycling machinery and equipment must be located and

operating in Montana on the last day of the taxable year for

A taxpayer may deduct an additional amount equal to 10% of the

which the credit is claimed. The machinery or equipment must be

taxpayer’s expenditures for the purchase of recycled material that

used to collect, process, separate, modify, convert or treat solid

was otherwise deductible by the taxpayer as a business-related

waste into a product that can be used in place of a raw material

expense in Montana. The products have to contain recycled

for productive use or to treat soils contaminated by hazardous

material at a level consistent with industry standards or, when

wastes. This does not include transportation equipment unless it

the standards exist, with standards established by the federal

is specialized to the point that it can only be used to collect and

Environmental Protection Agency.

process reclaimable material.

Include a statement from the manufacturer or supplier stating the

How do I claim my credit when I am a partner or

amount of recycled material contained in the material or product

shareholder in a partnership or an S corporation

purchased.

that invested in the depreciable property used for

Administrative Rules of Montana: 42.4.2601 through 42.4.2605

recycling?

Questions? Please call us toll free at (866) 859-2254 (in Helena,

444-6900).

Your partnership or S corporation will report the credit on its

informational tax return and provide you with your share of the

credit on Montana Schedule K-1.

If you are a partner, your share of the credit is based on the

same proportion you use to report your income or loss from the

Form Rycl - Recycle Credit/deduction - 2012 Page 3

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