CSHB 229(RES): "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 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 CS FOR HOUSE BILL NO. 229(RES) 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 from a lease or property 04 in the state; providing for an effective date by amending the effective date for sec. 2, ch. 05 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, 2010, 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 for any gas reserve of the 07 taxpayer or for each year that qualified costs are incurred for a gas 08 reserve for which the taxpayer previously elected to claim a credit under 09 (A) of this paragraph; and 10 (2) for a tax year beginning after December 31, 2009, 11 (A) 25 percent of the taxpayer's qualified capital 12 investment; and 13 (B) 25 percent of the annual cost incurred by the taxpayer 14 for qualified services in the state during each tax year for which a credit is 15 allowable for a qualified capital investment for any gas reserve of the 16 taxpayer or for each year that qualified costs are incurred for a gas 17 reserve for which the taxpayer previously elected to claim a credit under 18 (A) of this paragraph [UNDER (1) OF THIS SUBSECTION]. 19 * Sec. 2. AS 43.20.043(b) is amended to read: 20 (b) Expenditures qualifying for the taxpayer's qualified investment credit 21 under (a)(1)(A) or (a)(2)(A) [(a)(1)] of this section must be 22 (1) cash expenditures or binding payment agreements entered into after 23 (A) June 30, 2003, and before January 1, 2010, if the claim 24 of the credit is made under (a)(1)(A) of this section; or 25 (B) December 31, 2009, if the claim of the credit is made 26 under (a)(2)(A) of this section; and 27 (2) made for assets first placed in service in the state in or before the 28 tax year in which the credit is claimed through the date the 29 (A) wells [RESERVES] produce gas for sale and delivery; for 30 purposes of this subparagraph [PARAGRAPH], "placed in service in the 31 state" means that the first use of the qualified investment is in this state; if the
01 property on which the claim of the credit is based has been used elsewhere in 02 the tax year of acquisition and is brought to this state during that year or a 03 subsequent year, the property does not qualify for the investment credit; or 04 (B) a gas well is determined not to be capable of production 05 in commercial quantities. 06 * Sec. 3. AS 43.20.043(c) is amended to read: 07 (c) The credit each [PER] tax year allowed by (a) of this section may not 08 exceed [50 PERCENT OF] the taxpayer's total tax liability under this chapter, but 09 shall be calculated before the application of any other credits allowed under this 10 chapter. An unused portion of the credit for the tax year 11 (1) may be carried forward into one or more of the following tax years, 12 except that the unused credit from one tax year may not be carried forward for more 13 than five following tax years; 14 (2) shall be applied to the taxpayer's tax liability under this chapter 15 during the following tax year before allowance of a credit allowed by (a) of this 16 section for that following tax year. 17 * Sec. 4. AS 43.20.043(e) is amended to read: 18 (e) A taxpayer entitled to a credit under this section 19 (1) may not convey, assign, or transfer the credit to another taxpayer or 20 business entity unless the conveyance, assignment, or transfer of the credit is part of 21 the conveyance, assignment, or transfer of the taxpayer's business; 22 (2) forfeits the credit to which the taxpayer is entitled during the tax 23 year and any carryover of it under (c) of this section, but does not forfeit the portion of 24 the credit that accrued in a previous taxable year that may be carried over under (c) of 25 this section, if the taxpayer 26 (A) disposes of the qualified capital investment; 27 (B) takes the qualified investment out of service; or 28 (C) transfers the qualified investment out of this state; 29 (3) may not include in any rate base for a regulated facility 30 submitted to a regulatory agency charged with determining an appropriate tariff 31 the cost of any qualified capital investment or qualified service that has been
01 offset by receipt of a credit under this chapter. 02 * Sec. 5. AS 43.20.043(i)(1) is amended to read: 03 (1) "qualified capital investment" means a cash expenditure or binding 04 payment agreement, as described in (b)(1) of this section, for real property or tangible 05 personal property used in this state in the exploration and development of any gas 06 reserve regardless of whether there has been commercial production in the area 07 or whether the exploration and development activity results in the production of 08 gas or a well not capable of production in commercial quantities [RESERVES IN 09 A GAS RESERVOIR FOR WHICH THERE HAS NOT BEEN COMMERCIAL 10 PRODUCTION IF THE RESERVES PRODUCE GAS FOR SALE AND 11 DELIVERY]; in this paragraph, "property" includes 12 (A) property used in the operation or maintenance of facilities 13 for exploration or development of gas; 14 (B) property that is placed in use under a capitalized lease or an 15 operating lease; and 16 (C) the following property used for the exploration and 17 development of gas: 18 (i) machinery, appliances, supplies, and equipment; 19 (ii) drilling rigs, wells, gathering lines and transmission 20 lines, pumping stations, compressor stations, power plants designed 21 for field operations, gas processing plants, and gas treatment 22 plants, but not including liquefied natural gas or manufacturing 23 plants [, TOPPING PLANTS, AND PROCESSING UNITS]; 24 (iii) roads, docks and other port facilities, and helicopter 25 pads; 26 (iv) maintenance equipment and facilities, and 27 maintenance camps and other related facilities; and 28 (v) communications facilities owned by a person whose 29 principal business in the state is the exploration for or development of 30 gas and whose operation of the communications facilities directly 31 relates to the conduct of that business;
01 * Sec. 6. AS 43.20.043 is amended by adding a new subsection to read: 02 (j) A taxpayer shall claim the credit authorized in (a) of this section on a 03 timely filed tax return for the year in which the qualified capital investment is made, 04 on a timely filed amended tax return, or on a timely filed tax return for the year 05 immediately following the year in which the qualified capital investment is made. The 06 election to apply the credit authorized in (a) of this section may not be an irrevocable 07 election. 08 * Sec. 7. The uncodified law of the State of Alaska enacted by sec. 3, ch. 61, SLA 2003, is 09 amended to read: 10 Sec. 3. CLAIM OF GAS EXPLORATION AND DEVELOPMENT TAX 11 CREDIT CONTINUED. A taxpayer who, on the effective date of repeal of 12 AS 43.20.043 by secs. 2 and 5, ch. 61, SLA 2003, as amended by sec. 8 [SEC. 2] of 13 this 2010 Act, claims the balance of any unused portion of the gas exploration and 14 development tax credit as a carry-forward under AS 43.20.043(c), may, 15 notwithstanding the repeal of that subsection, continue to claim the balance of the 16 credit until the claim of the credit is exhausted or until the tax year ending 17 December 31, 2024 , whichever occurs earlier. The provisions of AS 43.20.043 18 as they read on the day immediately preceding the effective date of the repeal of that 19 section apply to the claim of the credit if carried forward under this section. 20 * Sec. 8. Section 5, ch. 61, SLA 2003, is amended to read: 21 Sec. 5. Section 2, ch. 61, SLA 2003, [OF THIS ACT] takes effect January 1, 22 2020 . 23 * Sec. 9. This Act takes effect immediately under AS 01.10.070(c).