Instructions For Arizona Form 305 - Environmental Technology Facility Credit

Arizona Form

2014 Environmental Technology Facility Credit

305

You may claim a credit with respect to new qualifying

Obtain additional information or assistance by calling one of

construction within ten years after the start of the facility's

the numbers listed below:

initial construction. You qualify for the credit if you own or

Phoenix

(602) 255-3381

lease the facility or any component of the facility for a term

From area codes 520 and 928, toll-free

(800) 352-4090

of five or more years, but a credit is not allowed for any

Obtain tax rulings, tax procedures, tax forms and instructions,

amount spent more than ten years after the start of the

and other tax information by accessing the department's

facility's initial construction.

website at

You can only take the credit for items that are depreciable or

amortizable assets. You have to subtract your credit from

General Instructions

your basis in those assets. You can still take depreciation or

amortization of your Arizona basis in the assets.

Arizona Revised Statutes (A.R.S.) §§ 43-1080 and 43-1169

provide a nonrefundable tax credit for expenses incurred in

If the allowable tax credit exceeds 75% of the taxes otherwise

constructing

qualified

environmental

technology

due on the claimant's income, or if there are no taxes due, the

amount of the credit not used to offset taxes may be carried

manufacturing, producing or processing facility as described

in A.R.S. § 41-1514.02. The amount of the credit is equal to

forward for not more than fifteen taxable years as a credit

10% of the amount spent during the taxable year to construct

against subsequent years' income tax liabilities.

the facility, including land acquisition, improvements,

Co-owners of a business, including partners in a partnership

building improvements, machinery and equipment. The

and shareholders of an S corporation, may each claim only

credit cannot exceed 75% of the Arizona income tax liability

the pro rata share of the credit allowed based on the

for the taxable year as determined without applying the

ownership interest. The total of the credits allowed all such

credit.

owners may not exceed the amount that would have been

The former Arizona Department of Commerce identified and

allowed for a sole owner of the business.

certified new facilities of qualified environmental technology

The credit is available to an exempt organization that is

manufacturers, producers and processors for purposes of the

subject to corporate income tax on unrelated business taxable

credit. The certification program ran through June 30, 1996.

income (UBTI). The credit must result from the activities that

However, the certification may be assigned or transferred to

generate UBTI.

one or more successor taxpayers, manufacturers, producers or

Credit Recapture

processors that have acquired and continue to operate a

facility that was used to meet the qualifying conditions listed

If either of the following circumstances occurs with

below and that continues to be used predominantly for those

respect

qualified

environmental

technology

purposes.

manufacturing, producing or processing facility, the tax

To qualify under A.R.S. § 41-1514.02, an environmental

imposed for the taxable year shall be increased by the full

technology manufacturer, producer, or processor must locate

amount of all credits previously allowed with respect to

or make an additional capital investment in a facility in this

that facility:

state that:



The taxpayer abandons construction before the facility is



Is used predominantly to do any of the following:

placed in service.

a. sort, store, prepare, convert, fabricate, manufacture,



Before the facility is placed in service, the taxpayer

or otherwise process finished products consisting of

changes plans so that the facility no longer qualifies as

at least 90% recycled materials.

an environmental technology manufacturing, producing

or processing facility under A.R.S. § 41-1514.02.

b. prepare, fabricate, manufacture, or otherwise process

finished products that are powered exclusively with

If a qualified environmental technology facility ceases to

solar or other specific renewable energy.

operate as an environmental manufacturing, producing or

processing facility at some time during the first five years

c. prepare, fabricate, manufacture, or otherwise process raw

it has been in operation, you have to recapture part of the

material or intermediate product exclusively through a

credit.

hydro-metallurgical process where at least 85% of the

process solution used to produce the finished product

Any credit recapture will affect any carryover you may have

is recycled on site for additional production.

on that credit. If you have to recapture 100% of the credit,

you will have no credit carryover. If you have to recapture a

d. fabricate or manufacture finished paper products that

portion of the credit, you have to recapture the same portion

consist of at least 80% recycled material.

of the carryover. How to figure the recapture of a portion of



Costs, or is expected to cost, an aggregate of at least 20

your credit is discussed in the specific instructions that

million dollars of new capital investment in this state

follow.

within

five

years

after

construction

begins

commencement of installation of improvements.

Instructions For Arizona Form 305 - Environmental Technology Facility Credit - 2014

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