Questions and Answers

Identifying Information:HPIP Qualified Business Facility Investment (2)
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 after December 31, 2005.
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Approval Date:11/28/2005



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

Answer: K.S.A. 79-32,160a(e) as amended 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. 79-32,154(e) as amended, defines qualified business facility investment as, The certification period is important for the HPIP program. All three of the following requirements must be met for expenditures to be eligible for the HPIP investment tax credit:
Only investment made during the certification period will qualify for the credit;
the property 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 pre-identified on the capital investment project form submitted to the Kansas Department of Commerce, before the business has committed to that investment, 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. In addition to the requirements listed above, the investment must be included in the taxpayer’s property factor for income apportionment purposes. The qualified business facility investment is determined by dividing the total 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 by the number of full calendar months the qualified business facility is in operation during the taxable year.

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

In a multi-phase project spanning more than one tax year, qualified business facility investment shall include investment for each phase of the project as that portion of the qualified business facility becomes operational during the tax year. It is not required that the entire project be completed before the HPIP credit may be claimed, provided the investment for which the credit is claimed is used by the taxpayer in the operation of the business. If more than one HPIP credit is claimed on a specific project, each credit is subject to the requirement that the qualified business facility investment must exceed $50,000.

The following example illustrates the computation of the qualified business facility investment for the HPIP investment tax credit.

Double click on the attachment below to launch Microsoft Excel and view the document.


HPIP Computation.xlsxHPIP Computation.xlsx



Date Composed: 11/23/2005 Date Modified: 04/07/2006