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Category: North Carolina

North Carolina Credits

Credits for Rehabilitating Historic Structures

 

Article 3D - Historic Rehabilitation Tax Credits

Qualified rehabilitation expenditures and rehabilitation expenses must have been incurred before January 1, 2015. The credit for rehabilitating a historic structure must be claimed in five equal installments beginning with the taxable year in which the property was placed in service.

 

An income-producing historic structure (Article 3D) – Generally, a taxpayer who is allowed a federal income tax credit under section 47 of the Internal Revenue Code for making rehabilitation expenditures for a certified historic structure located in North Carolina is allowed a credit equal to 20% of the expenditures that qualify for the federal credit (40% of expenditures if the facility at one time served as a State training school for juvenile offenders).

 

A nonincome-producing historic structure (Article 3D) – Generally, a taxpayer who is not allowed a federal income tax credit under section 47 of the Internal Revenue Code and who makes rehabilitation expenses for a State-certified historic structure located in North Carolina is allowed a credit equal to 30% of the rehabilitation expenses (40% of expenditures if the facility at one time served as a State training school for juvenile offenders). To qualify for the credit, the rehabilitation expenses must exceed $25,000 within a 24-month period. You must attach to the return a copy of the certification obtained from the State Historic Preservation Officer verifying that the historic structure has been rehabilitated in accordance with the Secretary of the Interior’s Standards for Rehabilitation. For additional information, see G.S. 105-129.36. Enter qualified rehabilitation expenses in the first year the credit is taken on Line 9a and the installment amount of the credit on Line 9b of Form D-400TC.

 

Important: Any unused portion of either credit may be carried forward for the succeeding five years. Complete Form D-400TC, Part 3, Line 15 to claim tax credits carried over from a previous tax year, if any.

 

 Article 3H - Mill Rehabilitation Tax Credit


To claim a tax credit for rehabilitating a historic mill facility, an application for an eligibility certification must have been submitted before January 1, 2015.  The taxpayer must provide a copy of the eligibility certification and the cost certification. The amount of credit depends on the location of the facility and whether it was renovated as income producing or nonincome producing property. The credit may be claimed in the year in which the eligible site is placed into service. When the eligible site is placed into service in two or more phases in different years, the amount of credit that may be claimed in a year is the amount based on the qualified rehabilitation expenditures associated with the phase placed into service during that year.

 

An income-producing historic structure (Article 3H) – For additional information, see G.S. 105-129.71. Enter qualified rehabilitation expenditures in the year the credit is taken on Line 10a and the credit amount on Line 10b of Form D-400TC.


A nonincome-producing historic structure (Article 3H) – For additional information, see G.S. 105-129.72. Enter rehabilitation expenses in the first year the credit is taken on Line 11a and the installment amount of the credit on Line 11b of Form D-400TC. This credit is claimed in five equal installments beginning with the taxable year in which the property is placed in service.


Important: Any unused portion of either tax credit may be carried forward for the succeeding nine years. Complete Form D-400TC, Part 3, Line 15 to claim tax credits carried over from a previous tax year, if any.

 

Article 3L - Historic Rehabilitation Tax Credits Investment Program


New! Form NC-Rehab


To claim this new tax credit, you must complete Form NC-Rehab and attach Form NC-Rehab to the front of Form D-400.


New for tax year 2016: The 2015 General Assembly enacted Article 3L to replace the historic rehabilitation tax credits generally available under Article 3D of Chapter 105 which expired for qualified rehabilitation expenditures and rehabilitation expenses incurred on or after January 1, 2015. Article 3L credits are very similar to the former Article 3D tax credits; however, Article 3L credits are capped and have a lower credit percentage.


Article 3L tax credits became effective January 1, 2016, and apply to qualified rehabilitation expenditures and rehabilitation expenses incurred on or after that date. Article 3L is set to expire for expenses incurred on or after January 1, 2020.


An income-producing historic structure (Article 3L) – Generally, a taxpayer who is allowed a federal income tax credit under Section 47 of the Internal Revenue Code for making rehabilitation expenditures for a certified historic structure located in North Carolina is allowed a credit equal to the sum of the following:


• 15% of expenses from $0 to $10 million
• 10% of expenses from $10 million to $20 million


The statute provides for enhanced incentives for historic structures located in development tier one or tier two areas, and for historic structures located in a targeted investment site. For additional information, see G.S. 105-129.105. Enter the amount from Line 17 of Form NC-Rehab, Part 4 on Line 12 of Form D-400TC.

 

A nonincome-producing historic structure (Article 3L) – Generally, a taxpayer who is not allowed a federal income tax credit under Section 47 of the Internal Revenue Code and who has rehabilitation expenses of at least $10,000 for a North Carolina certified historic structure located in North Carolina is allowed a credit equal to 15% of the rehabilitation expenses. For additional information, see G.S. 105-129.106. Enter the amount from Line 20 of Form NC Rehab, Part 4 on Line 13 of Form D-400TC.

 

 

 

 

 

Credit for Children

You may claim a child tax credit of up to $125 on your State return for each dependent child for whom you are entitled to claim a child tax credit on your federal return if your federal adjusted gross income (Form 1040, Line 37; or Form 1040A, Line 21) is less than the following amount shown for your filing status: Married filing jointly/qualifying widow(er) - $100,000; Head of household - $80,000; Single or Married filing separately - $50,000.

The credit for children can be claimed only for a child who was under 17 years of age on the last day of the year. A nonresident or part-year resident is allowed the tax credit in the proportion that federal taxable income (as adjusted) is taxable to North Carolina.

 

 

Credit for Tax Paid to Another State or Country

When income is taxed by North Carolina for a period during which you were a legal resident of North Carolina and the same income is also taxed by another state or country because it was earned in or derived from sources within that state or country, a tax credit may be claimed, but not on the basis of a withholding statement alone.

Note: Nonresidents are not entitled to this tax credit.

TaxSlayer will automatically calculate this credit for your Resident North Carolina return when you add your Nonresident return to your account. If you have a Part-Year North Carolina return, you will be required to enter the information asked of you within your account.

 

 

Business Incentive and Energy Tax Credits (Limited to 50% of Tax Liability)

The following tax credits are available as incentives to new and expanding businesses or for investing in renewable energy property or low-income housing. If you believe you are entitled to one or more of the tax credits, contact the Department for Form NC-478 series or you may download the forms from our website at www.dornc.com. Form NC-478 series is used to calculate and report tax credits that are limited to 50% of your tax less the sum of all other tax credits that you claim. Complete the form and attach it to the front of your
income tax return.  If you are entitled to one of the following tax credits, enter the amount of the credit on Form D-400TC, Line 19.

 

• Credit for investing in machinery and equipment *
• Credit for creating jobs *
• Credit for business property *
• Credit for real property *
• Credit for research and development *
• Credit for interactive digital media *
• Credit for investing in central office or aircraft facility property *
• Credit for technology commercialization *
• Credit for renewable fuel facility *
• Credit for investing in low-income housing *
• Credit for use of North Carolina ports *
• Credit for investing in renewable energy property ***
• Credit for work opportunity *
• Credit for constructing a railroad intermodal facility
• Credit for biodiesel producers *
• Credit for donating funds to a nonprofit organization
to enable the nonprofit to acquire renewable energy property. **
• Credit for renewable energy property facility *

 

* These credits have expired and are only available for future installments and unused carryforwards.


** These credits have expired and are only available for future installments and unused carryforwards unless the taxpayer is eligible for the delayed sunset. To be eligible for the delayed sunset, the taxpayer had to have (i) on or before January 1, 2016 incurred at least the minimum percentage of the cost of the project and completed at least the minimum percentage of the physical construction of the project as set forth in G.S. 105-129.16A(f) and (ii) on or before October 1, 2015 filed Form NC-478EX with the Department of Revenue and paid the application fee. For taxpayers eligible for the delayed sunset, the tax credit is repealed effective for renewable energy property placed in service on or after January 1, 2017.


*** For more information, see Guidelines for Determining the Tax Credit for Investing in Renewable Energy Property, at www.dornc.com/taxes/corporate/renewable_energy_credits.pdf.


Sunset for Tax Credits - Effect on Future Installments and Carryforwards

 

In the past few years, several tax credits have been repealed. Taxpayers that qualified for these tax credits may continue to take any remaining installments and carryforwards of the tax credits after the sunset or repeal date if the taxpayer continues to meet the statutory eligibility requirements for each particular tax credit.
For example, the Article 3J credit for creating jobs was repealed for business activities that occurred on or after January 1, 2014. In tax year 2013, a taxpayer, who met all eligibility requirements set out in N.C. Gen. Stat. § 105-129.83 and satisfied the threshold requirement for job creation, created jobs in this State. The taxpayer claimed the jobs credit by filing Form NC-478J (the applicable NC-478 series
form) and by paying the fee of $500.00 with the 2013 tax return on April 15, 2014. The taxpayer claimed the first installment of the 2013 jobs credit on its 2014 tax return and the second installment on its 2015 return. Any unused portion of the first or second installment if applicable may be carried forward for the succeeding five years. The taxpayer is allowed to continue to take remaining installments as long as the taxpayer continues to meet the requirements of N.C. Gen. Stat. § 105-129.83 and N.C. Gen. Stat. § 105-129.87. If the taxpayer
fails to maintain eligibility requirements, remaining installments are forfeited and only the carryforward amount of a previously accrued installment may be taken, subject to the carryforward provisions of N.C. Gen. State § 105-129.84.