Tax News

CCH (cch.taxgroup.com) reports:

Beginning with the 2008 taxable year, a new credit against North Carolina personal income tax and corporate franchise and income taxes is available to taxpayers who make donations to an exempt nonprofit organization for the purpose of providing funds for the organization to construct, purchase, or lease renewable energy property. The credit may only be claimed if the nonprofit organization actually uses the donation for its intended purpose and must be claimed in the year in which the property is placed in service.
The amount of the credit is equal to the taxpayer's share of the renewable energy investment credit the nonprofit organization could claim if the nonprofit organization were subject to tax. The taxpayer's share of the credit is calculated by dividing the taxpayer's donation by the cost of the renewable energy property placed in service during the taxable year and then multiplying this percentage by the amount of the credit the nonprofit organization could claim if it were subject to tax. The nonprofit organization must prorate each taxpayer's share of the credit if the donations made for the renewable energy property exceed the property's cost.
A taxpayer who claims the renewable energy property donation credit may not also claim a charitable contribution credit for the donation. Consequently, taxpayers must make an addition to federal taxable income for the amount of the donation for which the credit was claimed.
A nonprofit organization is required to keep a record of all donations that qualify for the credit. In the year the renewable energy property is placed in service the nonprofit organization must provide a statement to each donor describing the property that was placed in service, the property's cost, the amount of the renewable energy property investment credit the nonprofit organization could claim if it were subject to tax, and the taxpayer's share of the credit.
Although the credit is allowed against either personal income tax, corporate income tax or corporate franchise tax, the taxpayer must make a binding election as to which tax against which the credit and any credit carryovers will be claimed. The election is made when the taxpayer files the return on which the first installment of a credit is claimed. Unused credit may be carried over for five years.
The renewable energy property donation credit is a new Article 3B credit. All Article 3B credits, including carryovers, may not exceed 50% of the tax against which they are claimed for the taxable year, reduced by the sum of all other credits allowed against that tax, except tax payments made by or on behalf of the taxpayer. The other Article 3B credits include: the credit for investing in renewable energy; the credit for constructing renewable fuel facilities; the small business health insurance credit; the biodiesel producer credit, and the work opportunity credit.