0001| HOUSE BILL 124 | 0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, | 0003| 1996 | 0004| INTRODUCED BY | 0005| G. X. MCSHERRY | 0006| | 0007| | 0008| | 0009| | 0010| | 0011| AN ACT | 0012| RELATING TO TAXATION; PROVIDING A TAX CREDIT FOR AGRICULTURAL | 0013| WATER CONSERVATION EXPENSES AGAINST PERSONAL AND CORPORATE | 0014| INCOME TAX LIABILITY. | 0015| | 0016| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0017| Section 1. A new section of the Income Tax Act is enacted | 0018| to read: | 0019| "[NEW MATERIAL] INDIVIDUAL TAX CREDIT--AGRICULTURAL WATER | 0020| CONSERVATION EXPENSES.-- | 0021| A. To encourage the conservation of water in | 0022| agricultural activities, any taxpayer who files an individual | 0023| New Mexico income tax return and who is not the dependent of | 0024| another individual may claim a credit against his income tax | 0025| liability equal to seventy-five percent of his incurred | 0001| expenses, not to exceed a maximum credit of fifty thousand | 0002| dollars ($50,000), for purchasing and installing equipment for | 0003| an agricultural water conservation system in the year in which | 0004| the expenses are incurred. | 0005| B. To qualify for the credit pursuant to this | 0006| section: | 0007| (1) the agricultural water conservation system | 0008| equipment must be primarily designed to substantially conserve | 0009| water on land in this state that is owned by the taxpayer and | 0010| used by the taxpayer or the taxpayer's tenant to: | 0011| (a) produce crops, fruits or other | 0012| agricultural products; | 0013| (b) raise, harvest or grow trees; or | 0014| (c) sustain livestock; | 0015| (2) the expense must be incurred after January | 0016| 1, 1997 and must be consistent with an effective water | 0017| conservation plan that the taxpayer has filed with the United | 0018| States department of agriculture natural resources conservation | 0019| service; and | 0020| (3) the land on which the water conservation | 0021| system equipment is located must be located in this state and be | 0022| entirely in an area identified, in the taxable year or in any | 0023| preceding taxable year, as an area of extreme drought severity | 0024| on the Palmer drought severity index published by the national | 0025| oceanic and atmospheric administration. | 0001| C. Co-owners of the land on which the water | 0002| conservation system equipment is installed, including partners | 0003| in a partnership and shareholders of an S corporation, as | 0004| defined in Section 1361 of the Internal Revenue Code of 1986, as | 0005| amended, may each claim only the pro rata share of the credit | 0006| allowed under this section based on the ownership interest. The | 0007| total of the credits allowed all such owners may not exceed the | 0008| amount that would have been allowed a sole owner of the land. | 0009| D. A husband and wife who file separate returns for | 0010| a taxable year in which they could have filed a joint return may | 0011| each claim only one-half of the credit that would have been | 0012| allowed on a joint return. | 0013| E. If the allowable tax credit in the year the | 0014| credit becomes claimable exceeds the taxes otherwise due under | 0015| the Income Tax Act on the taxpayer's income, or if there are no | 0016| income taxes due from the taxpayer, the taxpayer may carry | 0017| forward the amount of the credit not used in that year to offset | 0018| taxes under the Income Tax Act for not more than five | 0019| consecutive taxable years' income tax liability. This credit | 0020| may only be deducted from the taxpayer's income tax liability. | 0021| F. This credit may not be claimed if any deduction | 0022| for such expenses is claimed under the Internal Revenue Code. | 0023| G. The soil and water conservation bureau of the | 0024| forestry division of the energy, minerals and natural resources | 0025| department shall promulgate rules and regulations to implement | 0001| this section and establish guidelines to determine whether water | 0002| conservation system equipment qualifies for the credit available | 0003| under this section." | 0004| Section 2. A new section of the Corporate Income and | 0005| Franchise Tax Act is enacted to read: | 0006| "[NEW MATERIAL] CORPORATE TAX CREDIT--AGRICULTURAL WATER | 0007| CONSERVATION EXPENSES.-- | 0008| A. To encourage the conservation of water in | 0009| agricultural activities, any taxpayer who files a New Mexico | 0010| corporate income tax return may claim a credit against its | 0011| corporate income tax liability equal to seventy-five percent of | 0012| its incurred expenses, not to exceed a maximum credit of fifty | 0013| thousand dollars ($50,000), for purchasing and installing | 0014| equipment for an agricultural water conservation system. | 0015| B. To qualify for the credit pursuant to this | 0016| section: | 0017| (1) the agricultural water conservation system | 0018| equipment must be primarily designed to substantially conserve | 0019| water on land that is owned by the taxpayer and used by the | 0020| taxpayer or the taxpayer's tenant to: | 0021| (a) produce crops, fruits or other | 0022| agricultural products; | 0023| (b) raise, harvest or grow trees; or | 0024| (c) sustain livestock; | 0025| (2) the expense must be incurred after January | 0001| 1, 1997 and must be consistent with an effective water | 0002| conservation plan that the taxpayer has filed with the United | 0003| States department of agriculture natural resources conservation | 0004| service; and | 0005| (3) the land on which the water conservation | 0006| system equipment is located must be located in this state and be | 0007| entirely in an area that has been identified, in the taxable | 0008| year or in any preceding taxable year, as an area of extreme | 0009| drought severity on the Palmer drought severity index published | 0010| by the national oceanic and atmospheric administration. | 0011| C. Co-owners of the land on which the water | 0012| conservation system equipment is installed, including corporate | 0013| partners in a partnership, may each claim only the pro rata | 0014| share of the credit allowed under this section based on the | 0015| ownership interest. The total of the credits allowed all such | 0016| owners may not exceed the amount that would have been allowed a | 0017| sole owner of the land. | 0018| D. If the allowable tax credit in the year the | 0019| credit becomes claimable exceeds the taxes otherwise due under | 0020| the Corporate Income and Franchise Tax Act on the taxpayer's | 0021| corporate income, or if there are not taxes due under the | 0022| Corporate Income and Franchise Tax Act, the taxpayer may carry | 0023| forward the amount of the credit not used to offset taxes under | 0024| the Corporate Income and Franchise Tax Act for not more than | 0025| five consecutive taxable years' corporate income tax liability. | 0001| E. The credit may not be claimed if any allowance | 0002| for state tax purposes is taken by the taxpayer for a deduction | 0003| for such expenses allowed by the Internal Revenue Code. | 0004| F. The soil and water conservation bureau of the | 0005| forestry division of the energy, minerals and natural resources | 0006| department shall promulgate rules and regulations to implement | 0007| this section and establish guidelines to determine whether water | 0008| conservation system equipment qualifies for the credit available | 0009| under this section." | 0010| Section 3. APPLICABILITY.--The provisions of this act | 0011| apply to taxable years beginning on and after January 1, 1997. | 0012| Section 4. EFFECTIVE DATE.--The effective date of the | 0013| provisions of this act is July 1, 1997. | 0014| - - | 0015| State of New Mexico | 0016| House of Representatives | 0017| | 0018| FORTY-SECOND LEGISLATURE | 0019| SECOND SESSION, 1996 | 0020| | 0021| | 0022| January 23, 1996 | 0023| | 0024| | 0025| Mr. Speaker: | 0001| | 0002| Your AGRICULTURE AND WATER RESOURCES COMMITTEE, | 0003| to whom has been referred | 0004| | 0005| HOUSE BILL 124 | 0006| | 0007| has had it under consideration and reports same with | 0008| recommendation that it DO PASS, and thence referred to the | 0009| TAXATION AND REVENUE COMMITTEE. | 0010| | 0011| Respectfully submitted, | 0012| | 0013| | 0014| | 0015| | 0016| G. X. McSherry, Chairman | 0017| | 0018| | 0019| Adopted Not Adopted | 0020| | 0021| (Chief Clerk) (Chief Clerk) | 0022| | 0023| Date | 0024| | 0025| The roll call vote was 7 For 0 Against | 0001| Yes: 7 | 0002| Excused: Grau, Wright | 0003| Absent: None | 0004| | 0005| | 0006| | 0007| H0124AG1 |