Form Wv/mitc-1 - Credit For Manufacturing Investment (Page 4 of 7) in pdf

MANUFACTURING INVESTMENT TAX CREDIT

The purpose of the Manufacturing Investment Tax Credit is to encourage the establishment of new industry, the expansion of existing

industry, and the growth and revitalization of industrial facilities in West Virginia.

ELIGIBLE TAXPAYERS

Eligibility for the Manufacturing Investment Tax Credit is limited to taxpayers with manufacturing facilities within West Virginia. The

term, “Manufacturing,” means any business activity classified as having a sector identifier, consisting of the first two digits of the six-

digit North American Industry Classification System code number, of thirty-one, thirty-two, or thirty-three.

AMOUNT OF CREDIT

The tax credit shall be limited to 5% of the total qualified investment for industrial expansion or revitalization. The tax credit is applied

and prorated over 10 consecutive years at a rate of 1/2% for each year. The amount of credit applied in any given year cannot reduce

the taxpayer’s liability for Business Franchise Tax (W. Va. Code §§11-23-1 et seq .), Severance Tax ( W. Va. Code §§11-13A-1 et seq. )

and Corporation Net Income Tax (W. Va. §§11-24-1 et seq. ) by more than 60% (50% for tax years that began before January 1, 2009).

Any unused credit for a particular year is forfeited.

PROPERTY PURCHASED FOR MANUFACTURING INVESTMENT

Property purchased for manufacturing investment is defined as real property improvements to realty, and tangible personal property,

constructed or purchased on or after January 1, 2003, for use as a component part of a new, expanded, or revitalized industrial facility.

Only tangible personal property with respect to which depreciation or amortization, in lieu of depreciation, is allowable in determining

the federal income tax liability of the industrial taxpayer, that has a useful life, at the time the property is placed in service or use in West

Virginia of 4 years or more will qualify for credit. Useful life is actual economic useful life, the period over which the asset may

reasonably be expected to be actively useful in the Taxpayer’s business.

LEASING OF PROPERTY

Leased property used as a component part of a new or expanded, industrial facility is considered property purchased for manufacturing

investment if the property is newly acquired on or after January 1, 2003, the lease term is at least 10 years, and the rent to be paid over

the primary term of the lease is quantifiable. However, lease renewals, subleases or assignments do not qualify.

NELIGIBLE PROPERTY

Purchases of the following property will not qualify for the Manufacturing Investment Tax Credit:

Property placed into service prior to January 1, 2003;

Motor vehicles licensed by the Department of Motor Vehicles;

Airplanes;

Off-premise transportation equipment;

Property primarily used outside of West Virginia;

Property acquired incident to the purchase of the stock or assets of an industrial Taxpayer which was or had been

used by the seller in his industrial business in West Virginia, or property in which investment was previously the

basis of a tax credit taken under the business investment and jobs expansion tax credit (supercredit), industrial

expansion and revitalization tax credit, research and development tax credit, small business tax credit, corporate

headquarters relocation tax credit, economic opportunity tax credit, strategic research and development tax credit,

manufacturing investment credit or any other tax credit allowable under current or former provisions of Chapter 11

of the West Virginia Code.

Repair costs including materials used in the repair, unless for federal income tax purposes, the cost of the repair

must be capitalized and not expensed;

Property not directly attributable to the creation or expansion of a manufacturing facility.

Property acquired from certain persons or entities related to the credit claimant.

10.

Certain property having a carryover or referred federal tax basis, based on certain Internal Revenue Code provisions.

COST OF QUALIFIED INVESTMENT PROPERTY

Net cost of qualified property is the monetary consideration provided for acquisition of title or for lease or ownership of the subject

property. Net cost does not include the value of property given in trade or exchange for property purchased for manufacturing

investment.

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 10 years or longer, up to 20 years, cost is 100% of the rent to be paid over the

primary term of the lease, not to exceed 20 years. Lease renewals, options, and some subleases and assignments cannot be

considered. Leases for which the amount of rent to be paid over the primary term cannot be quantified will not qualify for purposes

of the credit.

In the case of self-constructed property, the cost of self-constructed property is the amount charged to the capital account for purposes

of depreciation.

Form Wv/mitc-1 - Credit For Manufacturing Investment Page 4

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