Hawaii ~ Corporate, Personal Income Taxes: Capital Infrastructure Tax Credit Revised

A bill that became law without the governor’s signature revises the provisions allowing a credit against Hawaii corporate income tax, financial institutions franchise tax, or personal income tax for a portion of the capital infrastructure costs paid or incurred by a qualified infrastructure tenant displaced and relocated by the state pursuant to the Kapalama container terminal project. Specifically, the bill does the following:

— includes capital expenditures for structures, machinery, equipment, or capital assets in the definition of “capital infrastructure costs” if they are paid or incurred in connection with the displaced tenant’s move of a trade or business to new location within Honolulu harbor;

— excludes amounts received from the state from the definition of “capital infrastructure costs”;

— provides that excess credit may be carried forward until exhausted, subject to certain limitations;

— specifies that a qualified infrastructure tenant, together with all of its special purpose entities, including all partners and members of the tenant and its special purpose entities, must not claim any credit in any one taxable year that exceeds $2,500,000;

— clarifies that distribution and share of the credit for a partnership may be determined notwithstanding IRC §706, as well as notwithstanding IRC §704;

— requires the recapture of the credit if the tenant fails to relocate from the former Kapalama military reservation site to another location, pursuant to a lease with the Department of Transportation, within 90 days after the execution of the lease; and

— requires a taxpayer claiming the credit to timely submit certain information to the Department of Taxation, and subjects the taxpayer to monetary penalties for failure to provide the information.

Act. 213 (H.B. 591), Laws 2017, effective July 12, 2017

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