HB 229: "An Act amending and extending the exploration and development incentive tax credit under the Alaska Net Income Tax Act for operators and working interest owners directly engaged in the exploration for and development of gas for delivery and sale from a lease or property in the state; providing for an effective date by amending the effective date for sec. 2, ch. 61, SLA 2003; and providing for an effective date."
00 HOUSE BILL NO. 229 01 "An Act amending and extending the exploration and development incentive tax credit 02 under the Alaska Net Income Tax Act for operators and working interest owners 03 directly engaged in the exploration for and development of gas for delivery and sale 04 from a lease or property in the state; providing for an effective date by amending the 05 effective date for sec. 2, ch. 61, SLA 2003; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 43.20.043(a) is amended to read: 08 (a) Subject to the terms and conditions of this section, and in addition to any 09 other credit authorized to the taxpayer by this chapter, a taxpayer that is an operator or 10 working interest owner directly engaging in the exploration for and development of 11 gas may apply as a credit against the state tax liability that may be imposed on the 12 taxpayer under this chapter, 13 (1) for a tax year beginning after December 31, 2002, and before
01 January 1, 2011, 02 (A) [(1)] 10 percent of the taxpayer's qualified capital 03 investment; and 04 (B) [(2)] 10 percent of the annual cost incurred by the taxpayer 05 for qualified services in the state during each tax year for which a credit is 06 allowable for a qualified capital investment under (A) of this paragraph; and 07 (2) for a tax year beginning after December 31, 2010, 08 (A) 25 percent of the taxpayer's qualified capital 09 investment; and 10 (B) 25 percent of the annual cost incurred by the taxpayer 11 for qualified services in the state during each tax year for which a credit is 12 allowable for a qualified capital investment under (A) of this paragraph 13 [(1) OF THIS SUBSECTION]. 14 * Sec. 2. AS 43.20.043(b) is amended to read: 15 (b) Expenditures qualifying for the taxpayer's qualified investment credit 16 under (a)(1)(A) or (a)(2)(A) [(a)(1)] of this section must be 17 (1) cash expenditures or binding payment agreements entered into after 18 (A) June 30, 2003, and before July 1, 2011, if the claim of 19 the credit is made under (a)(1)(A) of this section; or 20 (B) June 30, 2011, if the claim of the credit is made under 21 (a)(2)(A) of this section; and 22 (2) made for assets first placed in service in the state in or before the 23 tax year in which the credit is claimed through the date the reserves produce gas for 24 sale and delivery; for purposes of this paragraph, "placed in service in the state" means 25 that the first use of the qualified investment is in this state; if the property on which the 26 claim of the credit is based has been used elsewhere in the tax year of acquisition and 27 is brought to this state during that year or a subsequent year, the property does not 28 qualify for the investment credit. 29 * Sec. 3. AS 43.20.043(c) is amended to read: 30 (c) The credit each [PER] tax year allowed by (a) of this section may not 31 exceed [50 PERCENT OF] the taxpayer's total tax liability under this chapter, but
01 shall be calculated before the application of any other credits allowed under this 02 chapter. An unused portion of the credit for the tax year 03 (1) may be carried forward into one or more of the following tax years, 04 except that the unused credit from one tax year may not be carried forward for more 05 than five following tax years; 06 (2) shall be applied to the taxpayer's tax liability under this chapter 07 during the following tax year before allowance of a credit allowed by (a) of this 08 section for that following tax year. 09 * Sec. 4. AS 43.20.043(f) is amended to read: 10 (f) A taxpayer is not entitled to a credit under this section for expenditures that 11 are made or incurred for the qualified capital investment or for qualified services made 12 for exploration and development of gas that occur in the area of Alaska lying north of 13 68 degrees North latitude or that are made or incurred to transport gas from reserves 14 located in the area of Alaska lying north of 68 degrees North latitude or for the 15 delivery of Alaska North Slope natural gas to tidewater below 68 degrees North 16 latitude. 17 * Sec. 5. AS 43.20.043(i)(1) is amended to read: 18 (1) "qualified capital investment" means a cash expenditure or binding 19 payment agreement, as described in (b)(1) of this section, for real property or tangible 20 personal property used in this state in the exploration and development of gas reserves 21 in a gas reservoir for which there has not been commercial production [IF THE 22 RESERVES PRODUCE GAS FOR SALE AND DELIVERY]; in this paragraph, 23 "property" includes 24 (A) property used in the operation or maintenance of facilities 25 for exploration or development of gas; 26 (B) property that is placed in use under a capitalized lease or an 27 operating lease; and 28 (C) the following property used for the exploration and 29 development of gas: 30 (i) machinery, appliances, supplies, and equipment; 31 (ii) drilling rigs, wells, gathering lines and transmission
01 lines, pumping stations, compressor stations, power plants, topping 02 plants, and processing units; 03 (iii) roads, docks and other port facilities, and helicopter 04 pads; 05 (iv) maintenance equipment and facilities, and 06 maintenance camps and other related facilities; and 07 (v) communications facilities owned by a person whose 08 principal business in the state is the exploration for or development of 09 gas and whose operation of the communications facilities directly 10 relates to the conduct of that business; 11 * Sec. 6. The uncodified law of the State of Alaska enacted by sec. 3, ch. 61, SLA 2003, is 12 amended to read: 13 Sec. 3. CLAIM OF GAS EXPLORATION AND DEVELOPMENT TAX 14 CREDIT CONTINUED. A taxpayer who, on the effective date of repeal of 15 AS 43.20.043 by sec. 2, ch. 61, SLA 2003, as amended by sec. 7 of this 2009 Act, 16 claims the balance of any unused portion of the gas exploration and development tax 17 credit as a carry-forward under AS 43.20.043(c), may, notwithstanding the repeal of 18 that subsection, continue to claim the balance of the credit until the claim of the credit 19 is exhausted or until the tax year ending December 31, 2024 , whichever occurs 20 earlier. The provisions of AS 43.20.043 as they read on the day immediately preceding 21 the effective date of the repeal of that section apply to the claim of the credit if carried 22 forward under this section. 23 * Sec. 7. The uncodified law of the State of Alaska enacted by sec. 5, ch. 61, SLA 2003, is 24 amended to read: 25 Sec. 5. Section 2, ch. 61, SLA 2003, [OF THIS ACT] takes effect January 1, 26 2020 . 27 * Sec. 8. This Act takes effect immediately under AS 01.10.070(c).