Sec. 5-10.5. Computing the economic development zone investment tax credit

Tax Law, § 210(12-B)(a), (f)

(a) The amount of economic development zone investment tax credit which a taxpayer is allowed is 10 percent of the cost or other basis for Federal income tax purposes of qualified property, as defined in section 5-10.2 of this Subpart, acquired, constructed, reconstructed or erected.

(b) When the acquisition, construction, reconstruction or erection of qualified property is commenced on or after the date the economic development zone was designated as such pursuant to article 18-B of the General Municipal Law and prior to the expiration of such designation, and is continued or completed subsequently, the credit allowed shall be equal to the amount obtained by multiplying that portion of the cost or other basis of the qualified property attributable to the period of such designation by 10 percent. The portion of the cost or other basis of the qualified property attributable to the period of designation is the cost or other basis of such property multiplied by a fraction, the numerator of which is expenditures paid or incurred during such period of designation for the acquisition, construction, reconstruction or erection of qualified property, and the denominator of which is the total of all expenditures paid or incurred for such acquisition, construction, reconstruction or erection. An investment tax credit may be allowed pursuant to Subpart 5-2 of this Part based on the portion of the cost or other basis of qualified property attributable to expenditures paid or incurred subsequent to such period of designation.

(c) If the property which qualifies for the economic development zone investment tax credit is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the economic development zone investment tax credit is to be taken, an economic development zone investment tax credit is allowed for the period of time the property was in qualified use during such taxable year.

(1) For qualified property which is depreciable pursuant to section 167 of the Internal Revenue Code, but is not subject to the provisions of section 168 of such code, the amount of economic development zone investment tax credit which will be allowed is that portion of the economic development zone investment tax credit which would have been allowed, multiplied by the ratio of (i) the total number of months in qualified use of the property to (ii) the total number of months of useful life of the property as used for Federal depreciation purposes.

(2) For qualified property which is three-year property as defined in section 168(e) of the Internal Revenue Code except with respect to qualified property described in paragraph (4) of this subdivision, the amount of the economic development zone investment tax credit which will be allowed is that portion of the economic development zone investment tax credit which would have been allowed, multiplied by the ratio of (i) the total number of months of qualified use of the property to (ii) 36.

(3) For qualified property which is subject to the provisions of section 168 of such code other than three-year property as defined in section 168(e) of such code, except with respect to qualified property described in paragraph (4) of this subdivision, the amount of the economic development zone investment tax credit which will be allowed is that portion of the economic development zone investment tax credit which would have been allowed, multiplied by the ratio of (i) the total number of months the property was in qualified use to (ii) 60.

(4) For any property to which section 168 of the Internal Revenue Code applies, which is a building or a structural component of a building, the amount of the economic development zone investment tax credit which will be allowed is that portion of the economic development zone investment tax credit which would have been allowed, multiplied by the ratio of (i) the total number of months the property was in qualified use to (ii) the total number of months over which the taxpayer chose to deduct the property under the Internal Revenue Code.

(5) For purposes of this Subpart, disposal or cessation of qualified use shall not be deemed to have occurred solely by reason of the termination or expiration of an economic development zone's designation as such.

(d) In the case of property which is disposed of or ceases to be in qualified use after the end of the taxable year in which the economic development zone investment tax credit was claimed, see section 5-10.8 of this Subpart.