REPORT TITLE:
Construction/renovation credit


DESCRIPTION:
Establishes an income tax credit for the construction and
renovation of qualified facilities within a hotel/resort-zoned
district.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.136        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "§235-    Improvement tax credit.  (a)  There shall be
 
 5 allowed to each taxpayer subject to the taxes imposed by this
 
 6 chapter and chapter 237D an income tax credit which shall be
 
 7 deductible from the taxpayer's net income tax liability, if any,
 
 8 imposed by this chapter for the taxable year in which the credit
 
 9 is properly claimed.
 
10      The amount of the credit shall be four per cent of the
 
11 improvement costs incurred during the taxable year for each
 
12 qualified facility located in Hawaii, and shall not include the
 
13 improvement costs for which another credit was claimed under this
 
14 chapter for the taxable year.  The total amount of the credit
 
15 shall not be limited by the transient accommodations tax paid by
 
16 the taxpayer in the preceding taxable year that is attributable
 
17 to the qualified facility.
 
18      In the case of a partnership, S corporation, estate, or
 
19 trust, the tax credit allowable is for improvement costs incurred
 

 
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 1 by the entity for the taxable year.  The cost upon which the tax
 
 2 credit is computed shall be determined at the entity level.
 
 3 Distribution and share of credit shall be determined pursuant to
 
 4 section 235-110.7(a).
 
 5      If a deduction is taken under section 179 (with respect to
 
 6 election to expense depreciable business assets) of the Internal
 
 7 Revenue Code of 1986, as amended, no tax credit shall be allowed
 
 8 for that portion of the improvement cost for which the deduction
 
 9 is taken.
 
10      The basis of eligible property for depreciation or ACRS
 
11 purposes for state income taxes shall be reduced by the amount of
 
12 credit allowable and claimed.
 
13      (b)  As used in this section:
 
14      "Qualified facility" means a hotel/hotel-condo as defined in
 
15 section 486K-1, residential unit, or any other building located
 
16 within a hotel/resort-zoned district.
 
17      "Improvement cost" means any costs involved in building
 
18 capital facilities, including the acquisition and development of
 
19 land, the design and construction of new facilities, and the
 
20 renovation or making of additions to existing facilities.
 
21      (c)  The credit allowed under this section shall be claimed
 
22 against the net income tax liability for the taxable year.  For
 
23 the purpose of this tax credit, "net income tax liability" means
 

 
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 1 net income tax liability reduced by all other credits allowed
 
 2 under this chapter.
 
 3      (d)  A tax credit under this section which exceeds the
 
 4 taxpayer's income tax liability may be used as a credit against
 
 5 the taxpayer's income tax liability in subsequent years until
 
 6 exhausted.  All claims for a tax credit under this section must
 
 7 be filed on or before the end of the twelfth month following the
 
 8 close of the taxable year for which the credit may be claimed.
 
 9 Failure to comply with the foregoing provision shall constitute a
 
10 waiver of the right to claim the credit.
 
11      (e)  The director of taxation shall prepare such forms as
 
12 may be necessary to claim a credit under this section.  The
 
13 director may also require the taxpayer to furnish information to
 
14 ascertain the validity of the claim for credit made under this
 
15 section and may adopt rules necessary to effectuate the purposes
 
16 of this section pursuant to chapter 91.
 
17      (f)  The tax credit allowed under this section shall be
 
18 available for taxable years beginning after December 31, 1999,
 
19 and shall not be available for taxable years beginning after
 
20 December 31, 2003."
 
21      SECTION 3.  New statutory material is underscored.
 

 
 
 
 
 
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 1      SECTION 4.  This Act shall take effect upon its approval and
 
 2 shall be repealed on December 31, 2004.
 
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