TITLE 3: TAXATION
CHAPTER 4: CORPORATE
INCOME TAXES
PART 14: TAX
CREDITS
3.4.14.1 ISSUING AGENCY: Taxation and Revenue Department, Joseph M.
Montoya Building, 1100 South St. Francis Drive, P.O. Box 630, Santa Fe NM
87504-0630.
[1/15/1997; 3.4.14.1
NMAC - Rn, 3 NMAC 4.14.1, 12/14/2000]
3.4.14.2 SCOPE: This part applies to every domestic
corporation and to every foreign corporation employed or engaged in the
transaction of business in, into or from New Mexico or deriving any income from
any property or employment in New Mexico.
[1/15/1997; 3.4.14.2
NMAC - Rn, 3 NMAC 4.14.2, 12/14/2000]
3.4.14.3 STATUTORY AUTHORITY: Section 9-11-6.2 NMSA 1978.
[1/15/1997; 3.4.14.3
NMAC - Rn, 3 NMAC 4.14.3, 12/14/2000]
3.4.14.4 DURATION: Permanent.
[1/15/1997; 3.4.14.4
NMAC - Rn, 3 NMAC 4.14.4, 12/14/2000]
3.4.14.5 EFFECTIVE DATE: January 15, 1997, unless a later date is cited
at the end of a section, in which case the later date is the effective date.
[1/15/1997; 3.4.14.5
NMAC - Rn & A, 3 NMAC 4.14.5, 12/14/2000]
3.4.14.6 OBJECTIVE: The objective of this part is to interpret,
exemplify, implement and enforce the provisions of the Corporate Income and
Franchise Tax Act.
[1/15/1997; 3.4.14.6
NMAC - Rn, 3 NMAC 4.14.6, 12/14/2000]
3.4.14.7 DEFINITIONS: [RESERVED]
[1/15/1997; 3.4.14.7
NMAC - Rn, 3 NMAC 4.14.7, 12/14/2000]
3.4.14.8 CREDIT FOR PRESERVATION OF CULTURAL
PROPERTY:
A. Cultural
property credit defined. The
preservation of cultural property credit is a credit against a taxpayer's New
Mexico corporate income tax due for amounts expended in the restoration,
rehabilitation and preservation of cultural property owned by the taxpayer and
listed on the official New Mexico register of cultural properties; see Part
4.10.9 NMAC. A corporation that files a
New Mexico corporate income tax return may claim a credit against New Mexico
corporate income tax due in an amount equal to one-half of the cost of the
restoration, rehabilitation or preservation of the cultural property, not to
exceed a maximum of twenty-five thousand dollars ($25,000).
B. Filing
requirements.
(1) The
claim for the cultural property credit shall consist of a copy of the letter of
certification, a copy of Form B, part 2 from the cultural properties review
committee and a copy of the invoices or a statement from the contractor(s)
showing the cost incurred for the year of the claim.
(2) The
claim must be submitted with and attached to the New Mexico corporate income
tax return for the year or years in which the restoration, rehabilitation or
preservation is carried out.
C. Partnership
claim for cultural property credit.
(1) A
corporation which is a partner in a partnership or in a joint venture may claim
its pro rata share of the cultural property credit against its New Mexico
corporate income tax due. The total
aggregate credit for all partners shall not exceed an amount equal to the
lesser of one-half the cost of the restoration, rehabilitation or preservation
or twenty-five thousand dollars ($25,000) for a single restoration,
rehabilitation or preservation project for any cultural property.
(2) A
corporate partner shall claim the cultural property credit in the same manner
as specified in Subsection 3.4.14.8B NMAC and shall, in addition, provide a
schedule listing the names, addresses and social security numbers or federal
employer identification numbers of all partners in the partnership or joint
venture, the pro rata share of the credit of each partner and the New Mexico
tax identification number under which the partnership or joint venture is
filing CRS-1 forms.
[5/17/1988,
9/16/1988, 1/7/1992, 1/15/1997; 3.4.14.8 NMAC - Rn & A, 3 NMAC 4.14.8, 12/14/2000]
3.4.14.9 CORPORATE-SUPPORTED DAY CARE CREDIT
A. Dependent
defined. Dependent for purposes of Section 7-2A-14 NMSA 1978 is a child under
the age of twelve years who is a dependent as defined in Section 152 of the
Internal Revenue Code, as amended or renumbered, and also includes a child of
divorced or legally separated parents where the parents meet all the
requirements of Section 44A(f)5 of the Internal Revenue Code, as amended or
renumbered.
B. Allowable
credit; partial offset.
(1) Any
receipts of a corporation from an employee for the use of the child care
facility shall be considered as a reduction of the allowable expenses for
computing the child care credit.
(2) Example:
The Spruce corporation receives from
employees a nominal fee for use of the child care facility provided by the
corporation. The total expenses incurred by the corporation in this taxable
year were $12,000. The receipts from the employees amount to $600. Therefore,
the allowable tax credit to the corporation is $3,420 computed as follows:
Total expenses incurred $ 12,000
Less: Receipts from employees -
600
Net expenses paid $
11,400
At 30%, Allowable credit $ 3,420
[10/16/1984,
9/16/1988, 1/7/1992, 1/15/1997; 3.4.14.9 NMAC - Rn & A, 3 NMAC 4.14.9, 12/14/2000]
3.4.14.10 QUALIFIED BUSINESS FACILITY REHABILITATION
CREDIT
A. No qualified business facility
rehabilitation credit allowed for cultural or historic properties: No qualified business facility rehabilitation
credit will be allowed for any qualified business facility that is also:
(1) a
building listed on the official New Mexico register of cultural properties; see
Part 4.10.9 NMAC; or
(2) a
building listed on the national register or determined to be contributing to a
national register district.
B. No qualified business facility rehabilitation
credit allowed for costs qualifying for credit under Investment Credit Act: Any expenditure by an owner of a qualified
business facility that would qualify for the investment credit provided by the
Investment Credit Act may not also be used as the basis for claiming the credit
provided in Section 7-2A-15 NMSA 1978.
C. Costs qualifying for the credit. The
following costs may be included in determining the qualified building
rehabilitation credit:
(1) architectural
and engineering services related directly to the restoration, rehabilitation or
renovation project;
(2) inspection
reports, such as structural conditions or environmental inspections;
(3) building
permits and fees;
(4) abatement
programs, such as asbestos abatement or lead-based paint abatement;
(5) all
direct materials costs used in the project, including energy upgrading
materials such as insulation or interior storm windows;
(6) all
direct labor costs used in the project, except for salary paid to the owner for
the owner's own labor;
(7) all
direct materials and labor costs incurred for compliance with the Americans
With Disabilities Act;
(8) rental
of equipment necessary for project completion, such as tools and machinery;
(9) purchase
of tools where the life expectancy of the tool is not longer than the life of
the project, such as paint brushes and drop cloths;
(10) upgrade
of utilities to meet current codes, including plumbing, mechanical and
electrical;
(11) upgrade
of utilities connections, including water, gas, electricity and
telecommunications;
(12) exterior
lighting, security lighting, light fixtures, and alarm systems;
(13) repair
or replacement of existing bathroom plumbing fixtures;
(14) New
Mexico gross receipts and compensating taxes; and
(15) liability,
fire, and workers' compensation insurance premiums during the time of work on
the project.
D. Costs not qualifying for the credit: The following costs may not be included in
determining the qualified business facility rehabilitation credit:
(1) all
acquisition costs of the qualified business facility, such as surveys, appraisals,
loan fees, commissions, legal fees;
(2) architectural,
engineering and planning services related to expansion of or additions to a
building if the expansion or addition increases the usable square footage of
the building by more than ten percent;
(3) accounting
fees;
(4) office
supplies, bank fees and charges, film and similar expenditures;
(5) automotive
repairs, maintenance and gasoline;
(6) furnishings,
including furniture, floor coverings and carpeting, wall coverings, window coverings,
and linens;
(7) purchase
of tools where the life expectancy of the tool is longer than the life of the
project, such as ladders, drills, and saws;
(8) landscaping;
(9) bathroom
accessories;
(10) kitchen
appliances, cabinets, and accessories;
(11) meals
and food;
(12) membership
fees or dues;
(13) property
damaged at or stolen from a project site; and
(14) routine
maintenance including, but not limited to, cleaning, painting, minor repairs
and periodic upkeep except where these items are part of an initial overall
restoration, rehabilitation or renovation project.
E. “Single project” defined.
(1) Except
as otherwise provided in this subsection, credit for restoring, rehabilitating
or renovating a qualified business facility may be claimed only once for a
building, although the actual period of time during which that restoration,
rehabilitation or renovation occurs may be as long as three consecutive,
calendar years.
(2) If
a qualified business facility has been restored, rehabilitated, or renovated
and has been put into service by a person in the manufacturing, distribution or
service industry immediately following the restoration, rehabilitation or
renovation, the person claims and is granted a credit under either Section 7-2-18.4
NMSA 1978 or Section 7-2A-15 NMSA 1978
and the qualified business facility is subsequently taken out of service by
that person and remains vacant for twenty-four consecutive calendar months, a
credit may be claimed for additional costs of restoration, rehabilitation or
renovation for that building, provided all other requirements of Section
7-2A-15 NMSA 1978 are met.
F. Prior approval required to qualify for
credit:
(1) No
qualified business facility rehabilitation credit will be allowed unless the taxpayer
has submitted a plan and specifications for the restoration, rehabilitation or
renovation of a qualified business facility to the New Mexico enterprise zone
program officer of the economic development department and received approval
from the New Mexico enterprise zone program officer for the plan and
specifications prior to commencement of the restoration, rehabilitation or
renovation.
(2) In
addition, the taxpayer must receive certification from the New Mexico
enterprise zone program officer after completing the restoration,
rehabilitation or renovation that it conformed to the plan and specifications.
G. Filing requirements:
(1) The
claim for the qualified business facility rehabilitation credit shall consist
of the certification from the New Mexico enterprise zone program officer and a
completed claim form provided by the department.
(2) The
certification and claim form must be submitted with and attached to the New
Mexico corporation income and franchise tax return (CIT-1) or the New Mexico
income and franchise tax return for “S” corporations (CIT-2) for the year or
years in which the restoration, rehabilitation or renovation is carried out.
(3) The
credit may be claimed only against the New Mexico corporate income tax due, and
not against New Mexico franchise tax due.
H. Record retention requirements.
(1) The
original contracts, invoices, bills, statements and other documents showing the
costs incurred for the year or years in which a qualified business facility
rehabilitation credit is claimed must be retained for three calendar years
following the close of the calendar year in which the credit is claimed.
(2) Copies
of the original contracts, invoices, bills, statements and other documents must
be provided to the department on written request or during the course of an
audit.
I. Claim for qualified business facility
rehabilitation credit deriving from partnership, joint venture or limited
liability company:
(1) A
corporation that is a partner in a partnership or joint venture or who is a
shareholder in a limited liability company that is not required to file and pay
income taxes as a corporation under the Internal Revenue Code may claim a
credit against the corporation's New Mexico corporate income tax due in an
amount equal to the corporation's pro rata share of the qualified business
facility rehabilitation credit of the partnership, joint venture or limited
liability company. The total aggregate
credit for all partners or shareholders shall not exceed an amount equal to one
half the cost of restoration, rehabilitation or renovation or fifty thousand
dollars ($50,000), whichever is less, for a single restoration, rehabilitation
or renovation project for any qualified business facility.
(2) A
corporation claiming the qualified business facility rehabilitation credit
derived from a partnership, joint venture or limited liability company shall
claim the credit in the same manner as specified in Subsections F and G of
Section 3.4.14.10 NMAC but shall also provide a schedule listing the names,
addresses and social security numbers or federal employer identification
numbers of all partners in the partnership or joint venture or the shareholders
in the limited liability company, the pro rata share of the credit of each
partner or shareholder and the federal employer identification number and New
Mexico CRS identification number, if any, of the partnership, joint venture or
limited liability company.
J. Total claimable in a year may exceed
$50,000:
(1) No
corporation may claim nor may the department allow a credit in excess of
$50,000 for any single project. A corporation, however, may be involved in
several different approved projects. If
the corporation's share of allowable credits from the several projects exceeds
$50,000, the corporation may claim and the department may allow an aggregate
credit amount which exceeds $50,000.
(2) Example:
A corporation owns a qualified business facility and is also a partner in a
partnership and a shareholder in a limited liability company, both of which
also own qualified business facilities. All
three undertake restoration, renovation or rehabilitation projects on their
respective buildings within the same year. The corporation earns credits of $40,000 from
the corporation's own building, and $20,000 and $12,000 shares from the other
two. The corporation may claim a credit
equal to the sum of the corporation's share from the three projects, or
$72,000. If, however, the $72,000
exceeded the corporation's income tax liability before application of this
credit, then the excess would have to be carried into succeeding taxable years.
K. Priority in claiming: A corporation that has both an amount of
carryover credit from a prior taxable year and a new credit amount derived from
a qualifying restoration, rehabilitation or renovation project in the taxable
year for which the return is being filed shall first apply the amount of
carryover credit against the corporation's income tax liability. If the amount of the liability exceeds the
amount of the carryover credit, then the current year credit may be applied
against the liability.
[2/9/1995 1/15/1997;
3.4.14.10 NMAC - Rn & A, 3 NMAC 4.14.10, 12/14/2000]
3.4.14.11 TAX CREDITS; APPLICATION TO
UNITARY GROUPS: With respect to taxable years beginning on or
after January 1, 2020, when any corporation properly files as part of a
worldwide, water’s edge or consolidated return, if that corporation has
qualified for and continues to hold an unused amount of New Mexico tax credit
that it could properly take against its tax liability in a particular taxable
year, then that unused amount of tax credit may be applied against the tax
liability of the unitary group in accordance with the law applicable to that
credit. Any other limitations on the credit apply in the same manner to the
unitary group as they would apply to the corporation that holds the credit.
[3.4.14.11 NMAC - N,
03/23/2021]
HISTORY OF 3.4.14 NMAC:
Pre-NMAC
History: The material in this part was
derived from that previously files with the State Records Center:
R.D.-C.I.T.
Regulations 14:1, 14:2, Regulations Pertaining to Corporate Supported Child
Care; Credits Allowed Corporation Income Tax Act Section 7-24A-14 NMSA 1978,
filed 10/16/1984.
R.D.-C.I.T.
Regulation 8.6:1, 8.6:2, 8.6:3, Regulations Pertaining to the Corporate Income
Tax Act Section 7-2A-8.6 NMSA 1978, filed 5/17/1985.
R.D.-C.I.T.
Regulations 8:1/8:2, Regulation Pertaining to Separate Accounting Defined
Corporation Income Tax Act Section 7-2A-8 NMSA 1978, filed 5/12/1986.
R.D.-C.I.T. Regulation
5.1:1/2, Regulation Pertaining to Corporation Income Tax Act Section 7-2A-5.1
NMSA 1978, filed 11/18/1986.
R.D.-C.I.T.
Regulation 9.1:1, Regulation Pertaining to Corporation Income Tax Act Section
7-2A-9.1 NMSA 1978, filed 11/18/1986.
C.I.T. Regulation
9:2, Regulation Pertaining to Reporting Methods for the Corporation Income Tax
Act Section 7-2A-9 NMSA 1978, filed 6/2/1987.
TRD Rule 2A-88,
Regulations Pertaining to the Corporate Income and Franchise Tax Act (Sections
7-2A-1 to 7-2A-13), filed 9/16/1988.
TRD Rule CIT-91,
Regulations Pertaining to the Corporate Income and Franchise Tax Act 7-2A-1 to
7-2A-14 NMSA 1978, filed 1/7/1992.
History of Repealed Material: [RESERVED]
NMAC History:
3 NMAC 4.14, Tax
Credits, filed 12/31/1996.
3.4.14 NMAC, Tax
Credits, filed 12/1/2000.