Questions and Answers

Identifying Information:HPIP Qualified Business Facility Investment
Tax Type:Corporate Income Tax; Individual Income Tax; Privilege
Brief Description:Calculation of HPIP Qualified Business Facility Investment Tax Credits effective for all taxable years commencing prior to January 1, 2006.
Keywords:
Approval Date:07/12/2002



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Question: How is qualified business facility investment computed for the HPIP investment tax credit?

Answer: K.S.A. 2000 Supp. 79-32,160a(e) provides in part:

The calculation of the HPIP investment tax credit is tied directly to the definition of qualified business facility investment.

K.S.A. 2000 Supp. 79-32,154(e) provides the definition of qualified business facility investment as, The certification period is important for the HPIP program. All three of the following conditions must be met for expenditures to be eligible for the HPIP investment tax credit:
Only those expenditures for real and tangible personal property made during the certification period will qualify for the credit;
those expenditures must be capable of being used by the taxpayer or must be used by the taxpayer in the operation of the qualified business facility (no property classified or defined as construction in process); and
only that property identified on the capital investment project form submitted to the Kansas Department of Commerce and Housing (KDOCH) shall be eligible.

For an HPIP investment in a qualified business facility, a taxpayer shall identify and track the expenditures made through the high performance incentive program by facility.

The qualified business facility investment for HPIP purposes is computed based on a monthly average of the HPIP qualified investment made during the certified or re-certified months that fall within the taxpayer’s tax year. The investment or expenditures must meet the qualifications listed above. This property will also be present in the property factor for apportionment purposes. The qualified business facility investment shall be determined by dividing the sum of the total value of such HPIP property on the last business day of each full calendar month during the portion of the taxable year during which the qualified business facility was in operation and for which the taxpayer was HPIP certified (re-certified) by the number of full calendar months the facility is in operation and for which the taxpayer was HPIP certified (re-certified).

For investment in a qualified business facility, which facility existed and was operated by the taxpayer in the prior tax year for which HPIP related expenditures were made, a base amount of investment will be deducted from the current year’s HPIP investment average. The base shall consist of the average HPIP investment made by the taxpayer in the prior tax year at this qualified business facility. This property will also be present in the property factor for apportionment purposes. The qualified business facility investment for HPIP purposes shall be determined by dividing the sum of the total value of such HPIP property on the last business day of each full calendar month during the portion of the prior taxable year for which the taxpayer was HPIP certified (re-certified) by the number of full calendar months the taxpayer was HPIP certified (re-certified) during such prior taxable year. Only HPIP qualified business facility investment that is related to this facility will be in the base.

In a multi-phase project spanning more than one tax year, the Department does allow expenditures into the calculation of the HPIP investment tax credit for each separate section of a facility as that portion of the facility becomes operational by the taxpayer. Kansas does not require the entire project to be complete before claiming the HPIP investment credit as long as the investment consists of property used by the taxpayer in the operation of the business. However, if more than one HPIP investment tax credit is claimed by the taxpayer on a specific project, the taxpayer must reduce each credit claimed, by the minimum amount of investment of $50,000.

The following examples illustrate the computation of the qualified business facility investment for the HPIP investment tax credit.

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Part II Calc of HPIP Investment for Q&A-Example.pdf

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Date Composed: 07/15/2002 Date Modified: 11/28/2005