| (a) Effective date. The provisions of this section
apply to franchise tax reports originally due on or after January
1, 2015, except as otherwise noted.
(b) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Audited cost report--A report that itemizes the
eligible costs and expenses incurred by the entity in the certified
rehabilitation of the certified historic structure and that is issued
by a certified public accountant who holds a certificate issued under
Occupations Code, Chapter 901 (Accountants) or is an out-of-state
practitioner with substantially equivalent qualifications as provided
by Occupations Code, §901.462 (Practice by Out-of-State Practitioner
with Substantially Equivalent Qualifications).
(2) Certificate of eligibility--The certification issued
by the commission in accordance with Tax Code, §171.904 (Certification
of Eligibility), confirming that the property to which the eligible
costs and expenses relate is a certified historic structure and that
the rehabilitation qualifies as a certified rehabilitation; and specifying
the date the historic structure was first placed in service after
the rehabilitation.
(3) Certified historic structure--A property in this
state that is:
(A) listed individually in the National Register of
Historic Places;
(B) designated as a Recorded Texas Historic Landmark
under Government Code, §442.006 (State Historical Marker Program),
or as a state archeological landmark under Natural Resources Code,
Chapter 191 (Antiquities Code); or
(C) certified by the commission as contributing to
the historic significance of:
(i) a historic district listed in the National Register
of Historic Places; or
(ii) a local district certified by the United States
Department of the Interior in accordance with 36 Code of Federal Regulations, §67.9
(Certification of State or Local Historic District).
(4) Certified rehabilitation--The rehabilitation of
a certified historic structure that the commission has certified as
meeting the United States Secretary of the Interior's Standards for
Rehabilitation as defined in 36 Code of Federal Regulations, §67.7
(Standards of Rehabilitation).
(5) Commission--The Texas Historical Commission.
(6) Eligible costs and expenses--Except as provided
in subparagraphs (A) and (B) of this paragraph, qualified rehabilitation
expenditures, as defined by Internal Revenue Code, §47(c)(2)
(Rehabilitation Credit), incurred by the entity establishing the credit.
(A) Nonprofit corporation exempt from federal income
tax. Effective for reports due on or after January 1, 2016, the provisions
of Internal Revenue Code, §47(c)(2)(B)(i) (Straight-line depreciation
must be used) and (v) (Tax-exempt use property) do not apply to costs
and expenses incurred by an entity exempted under Tax Code, §171.063
(Exemptions-Nonprofit Corporation Exempt from Federal Income Tax)
if the other provisions of Internal Revenue Code, Section §47(c)(2)
are satisfied.
(B) Institution of higher education or university system.
Effective for costs and expenses incurred on or after June 14, 2017,
and before January 1, 2022, the provisions of Internal Revenue Code, §47(c)(2)(B)(i)
and (v) do not apply to costs and expenses incurred by an institution
of higher education or university system as defined by Education Code, §61.003
(Definitions), if the other provisions of Internal Revenue Code, §47(c)(2)
are satisfied.
(7) Placed-in-service date--The date specified on the
certificate of eligibility issued by the commission. See also 13 TAC §13.1.
(8) Year--A calendar year.
(c) Qualifications for credit. An entity may qualify
for a credit for eligible costs and expenses incurred by the entity
in the rehabilitation of a certified historic structure provided in
this section if:
(1) the rehabilitated certified historic structure
is placed in service on or after September 1, 2013;
(2) the entity has an ownership interest in the certified
historic structure in the year during which the structure is placed
in service after the rehabilitation;
(3) the total amount of eligible costs and expenses
incurred by the entity exceeds $5,000; and
(4) the entity received a Certificate of Eligibility
from the commission.
(d) Establishing the credit.
(1) Required documentation. The entity that incurred
the eligible costs and expenses in the certified rehabilitation of
a certified historic structure must submit the following documentation
to the comptroller to establish the credit:
(A) a Texas Franchise Tax Historic Structure Credit
Registration, or any successor to the form promulgated by the comptroller,
which includes an attestation of the total eligible costs and expenses
incurred by the entity on the rehabilitation of the certified historic
structure;
(B) a Certificate of Eligibility issued by the commission.
The certificate must confirm:
(i) the property to which the eligible costs and expenses
relate is a certified historic structure;
(ii) the rehabilitation qualifies as a certified rehabilitation;
and
(iii) the date the certified historic structure was
first placed in service after the rehabilitation; and
(C) an audited cost report.
(2) Submission of documentation. The documentation
required in paragraph (1) of this subsection may be submitted to the
comptroller:
(A) on or with the franchise tax report for the period
for which the tax credit is claimed; or
(B) upon receipt of the Certificate of Eligibility
issued by the commission.
(3) The burden of establishing eligibility for the
credit is on the entity incurring the eligible costs and expenses.
(4) The comptroller will rely on the audited cost report.
It is the responsibility of the certified public accountant hired
by the entity establishing the credit to make a determination on whether
items qualify as eligible costs and expenses.
(5) The credit must be established within the statute
of limitations based on the due date of the first report on which
the credit may be claimed under subsection (f)(1) of this section.
(6) Texas Franchise Tax Historic Structure Credit Certificate.
Upon receipt of the required documentation, the comptroller will issue
to the entity that incurred the eligible costs and expenses a Texas
Franchise Tax Historic Structure Credit Certificate indicating the
entity as the owner of the credit and the amount of credit available
to that entity.
(e) Amount of credit.
(1) The total amount of the credit that may be claimed
with respect to the certified rehabilitation of a single certified
historic structure may not exceed 25% of the total eligible costs
and expenses incurred in the certified rehabilitation of the certified
historic structure. For purposes of approving the credit, the comptroller
will rely on the audited cost report provided by the entity establishing
the credit.
(2) The total credit claimed for a report, including
the amount of any carryforward under subsection (g) of this section,
may not exceed the amount of franchise tax due for the report after
any other applicable tax credits.
(3) Eligible costs and expenses may only be counted
once in determining the amount of the credit available, and more than
one entity may not establish a credit for the same eligible costs
and expenses.
(f) Claiming the credit.
(1) The first report on which the credit may be claimed
is the report based on the accounting period during which the rehabilitated
structure is placed in service. Rehabilitated historic structures
placed in service between September 1, 2013, and December 31, 2013,
are considered to be placed in service January 1, 2014, for purposes
of this paragraph only. For example, a 2015 report with an accounting
year of January 1 through December 31, 2014, may claim a credit for
historic structures placed in service within the 2014 accounting year.
(2) An entity shall file with every report on which
the credit is claimed the Texas Franchise Tax Historic Structure Credit
Certificate issued to the entity by the comptroller, or any successor
to the form promulgated by the comptroller.
(3) The reporting entity for a combined group may claim
the credit for each member entity that has established a credit under
this section.
(4) The burden of establishing the value of the credit
is on the entity claiming the credit.
(g) Carryforward.
Cont'd... |
