0001| HOUSE BILL 159 | 0002| 43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998 | 0003| INTRODUCED BY | 0004| G. X. McSHERRY | 0005| | 0006| | 0007| | 0008| FOR THE WATER, UTILITIES AND NATURAL RESOURCES COMMITTEE | 0009| | 0010| AN ACT | 0011| RELATING TO TAXATION; PROVIDING A TAX CREDIT FOR AGRICULTURAL | 0012| WATER CONSERVATION EXPENSES AGAINST PERSONAL AND CORPORATE | 0013| INCOME TAX LIABILITY. | 0014| | 0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0016| Section 1. A new section of the Income Tax Act is | 0017| enacted to read: | 0018| "[NEW MATERIAL] INDIVIDUAL TAX CREDIT--AGRICULTURAL | 0019| WATER CONSERVATION EXPENSES.-- | 0020| A. To encourage the conservation of water in | 0021| agricultural activities, a taxpayer who files an individual | 0022| New Mexico income tax return and who is not the dependent of | 0023| another individual may claim a credit against his income tax | 0024| liability equal to seventy-five percent of his incurred | 0025| expenses, not to exceed a maximum credit of fifty thousand | - 1 - 0001| dollars ($50,000), for purchasing and installing equipment for | 0002| an agricultural water conservation system in the year in which | 0003| the expenses are incurred. | 0004| B. To qualify for the credit pursuant to this | 0005| section: | 0006| (1) the agricultural water conservation | 0007| system equipment must be primarily designed to substantially | 0008| conserve water on land in this state that is owned by the | 0009| taxpayer and used by the taxpayer or the taxpayer's tenant to: | 0010| (a) produce crops, fruits or other | 0011| agricultural products; | 0012| (b) raise, harvest or grow trees; or | 0013| (c) sustain livestock; | 0014| (2) the expenses must be incurred after | 0015| January 1, 1999 and must be consistent with an effective water | 0016| conservation plan that the taxpayer has filed with the United | 0017| States department of agriculture's natural resources | 0018| conservation service; and | 0019| (3) the land on which the agricultural water | 0020| conservation system equipment is located must be located in | 0021| this state and be entirely in an area identified, in the | 0022| taxable year or a preceding taxable year, as an area of | 0023| extreme drought severity on the Palmer drought severity index | 0024| published by the national oceanic and atmospheric | 0025| administration. | - 2 - 0001| C. Co-owners of the land on which the agricultural | 0002| water conservation system equipment is installed, including | 0003| partners in a partnership and shareholders of an S corporation | 0004| as defined in Section 1361 of the Internal Revenue Code, each | 0005| may claim only the pro rata share of the credit allowed under | 0006| this section based on the ownership interest. The total of | 0007| the credits allowed all the owners may not exceed the amount | 0008| that would have been allowed a sole owner of the land. | 0009| D. A husband and wife who file separate returns | 0010| for a taxable year in which they could have filed a joint | 0011| return each may claim only one-half of the credit that would | 0012| have been allowed on a joint return. | 0013| E. If the allowable tax credit in the year the | 0014| credit is claimable exceeds the taxes otherwise due pursuant | 0015| to the Income Tax Act on the taxpayer's income or if there are | 0016| no income taxes due from the taxpayer, the taxpayer may carry | 0017| forward the amount of the credit not used in that year to | 0018| offset taxes pursuant to the Income Tax Act for not more than | 0019| five consecutive taxable years' income tax liability. This | 0020| credit may only be deducted from the taxpayer's income tax | 0021| liability. | 0022| F. The credit may not be claimed if a deduction | 0023| for the expenses is claimed pursuant to the Internal Revenue | 0024| Code. | 0025| G. The department of agriculture shall promulgate | - 3 - 0001| rules to implement this section and establish guidelines to | 0002| determine whether agricultural water conservation system | 0003| equipment qualifies for the credit available pursuant to this | 0004| section." | 0005| Section 2. A new section of the Corporate Income and | 0006| Franchise Tax Act is enacted to read: | 0007| "[NEW MATERIAL] CORPORATE TAX CREDIT--AGRICULTURAL | 0008| WATER CONSERVATION EXPENSES.-- | 0009| A. To encourage the conservation of water in | 0010| agricultural activities, a taxpayer that files a New Mexico | 0011| corporate income tax return may claim a credit against its | 0012| corporate income tax liability equal to seventy-five percent | 0013| of its incurred expenses, not to exceed a maximum credit of | 0014| fifty thousand dollars ($50,000), for purchasing and | 0015| installing equipment for an agricultural water conservation | 0016| system. | 0017| B. To qualify for the credit pursuant to this | 0018| section: | 0019| (1) the agricultural water conservation | 0020| system equipment must be primarily designed to substantially | 0021| conserve water on land that is owned by the taxpayer and used | 0022| by the taxpayer or the taxpayer's tenant to: | 0023| (a) produce crops, fruits or other | 0024| agricultural products; | 0025| (b) raise, harvest or grow trees; or | - 4 - 0001| (c) sustain livestock; | 0002| (2) the expenses must be incurred after | 0003| January 1, 1999 and must be consistent with an effective water | 0004| conservation plan that the taxpayer has filed with the United | 0005| States department of agriculture's natural resources | 0006| conservation service; and | 0007| (3) the land on which the agricultural water | 0008| conservation system equipment is located must be located in | 0009| this state and be entirely in an area that has been | 0010| identified, in the taxable year or a preceding taxable year, | 0011| as an area of extreme drought severity on the Palmer drought | 0012| severity index published by the national oceanic and | 0013| atmospheric administration. | 0014| C. Co-owners of the land on which the | 0015| agricultural water conservation system equipment is installed, | 0016| including corporate partners in a partnership, each may claim | 0017| only the pro rata share of the credit allowed pursuant to this | 0018| section based on the ownership interest. The total of the | 0019| credits allowed all the owners may not exceed the amount that | 0020| would have been allowed a sole owner of the land. | 0021| D. If the allowable tax credit in the year the | 0022| credit is claimable exceeds the taxes otherwise due pursuant | 0023| to the Corporate Income and Franchise Tax Act on the | 0024| taxpayer's corporate income or if there are not taxes due | 0025| pursuant to the Corporate Income and Franchise Tax Act, the | - 5 - 0001| taxpayer may carry forward the amount of the credit not used | 0002| to offset taxes pursuant to the Corporate Income and Franchise | 0003| Tax Act for not more than five consecutive taxable years' | 0004| corporate income tax liability. | 0005| E. The credit may not be claimed if an allowance | 0006| for state tax purposes is taken by the taxpayer for a | 0007| deduction for the expenses allowed by the Internal Revenue | 0008| Code. | 0009| F. The department of agriculture shall promulgate | 0010| rules to implement this section and establish guidelines to | 0011| determine whether agricultural water conservation system | 0012| equipment qualifies for the credit available pursuant to this | 0013| section." | 0014| Section 3. APPLICABILITY.--The provisions of this act | 0015| apply to taxable years beginning on and after January 1, 1999. | 0016| - - |