42.4.2604 CREDIT FOR INVESTMENTS IN DEPRECIABLE EQUIPMENT OR MACHINERY TO COLLECT, PROCESS, OR MANUFACTURE A PRODUCT FROM RECLAIMED MATERIAL, OR PROCESS SOILS CONTAMINATED BY HAZARDOUS WASTES
(1) The credit is subject to the limitations outlined in 15-32-602 , MCA, and is available only for the acquisition of machinery and/or equipment that is depreciable, as defined in Section 167 of the IRC. The machinery and/or equipment must be used in Montana primarily for the collection or processing of reclaimable material, or in the manufacture of finished products from reclaimed material.
(2) The basis for the credit is generally the cost of the property before consideration of trade-in equipment. An exception to this is that the basis shall be reduced by any trade-in which has had this credit previously taken on it. This includes the purchase price, transportation cost (if paid by the purchaser) , and the installation cost before depreciation or other reductions. This credit does not increase or decrease the basis for tax purposes. Leased equipment is restricted to capital leases, and the credit is calculated on the amount capitalized for balance sheet purposes under generally accepted accounting principles.
(3) Recycling machinery and/or equipment must be located and operating in Montana on the last day of the taxable year for which the credit is claimed. The machinery or equipment must be used to:
(e) convert; or
(f) treat solid waste into a product that can be used in place of a raw material for productive use or treat soil that has been contaminated by hazardous wastes.
(4) Examples may include, but are not limited to:
(g) conveyor systems;
(h) cranes with grapple hooks or magnets;
(j) end loaders;
(k) exhaust fans;
(l) fork lifts;
(o) magnetic separators;
(p) pallet jacks;
(w) two-wheel carts; and
(x) vacuum systems.
(5) This does not include transportation equipment, unless it is specialized to the point that it can only be used to collect and process reclaimable material or treat soil that has been contaminated by hazardous wastes.
(6) In the instance of the specialized mobile equipment that does qualify and is used both within and outside of Montana, the credit must be prorated using the following calculation:
D x C x E = Credit allowed
C = credit % in 15-32-602 , MCA
D = days used in Montana
E = cost of equipment
T = total days used
(7) Absent a specific agreement to the contrary, the owners of a small business corporation, partnership, or sole proprietorship must prorate the credit in the same proportion as their ownership in the business.
(8) Only a taxpayer that owns an interest, either directly or through a pass-through entity such as a partnership or S corporation, and is operating the equipment as the primary user on the last business day of the year, may claim the credit.
(9) The credit is limited to the amount of the taxpayer's income or corporation tax liability. Any excess credit is not refundable, nor can it be carried back or forward to other tax years.
(10) The department may disallow a credit resulting from a sale or lease when the overriding purpose of the transaction is not to collect or process reclaimable material, or manufacture a product from reclaimed material.
History: Sec. 15-32-611, MCA; IMP, Sec. 15-32-601, 15-32-602, 15-32-603, 15-32-604, 15-32-609, and 15-32-610, MCA; NEW, 1992 MAR p. 2196, Eff. 9/25/92; AMD, 1995 MAR p. 2850, Eff. 12/22/95; AMD and TRANS, from ARM 42.15.508, 2004 MAR p. 2601, Eff. 8/20/04.