5733.31 Credit for purchasing new manufacturing machinery or equipment - 18 month lookback.

(A) As used in this section:

(1) "Component member" has the same meaning as in section 1563(b) of the Internal Revenue Code.

(2) "Controlled group" has the same meaning as in section 179(d)(7) of the Internal Revenue Code.

(3) "Cost" has the same meaning as in section 179(d)(3) of the Internal Revenue Code.

(4) "Eighteen-month period" means the eighteen-month period that begins January 1, 1995, and ends June 30, 1996.

(5) "Manufacturer" has the same meaning as in section 5711.16 of the Revised Code.

(6) "Manufacturing machinery or equipment" has the same meaning as "engines and machinery, and tools and implements, of every kind used, or designed to be used, in refining and manufacturing" in section 5711.16 of the Revised Code.

(7) "New manufacturing machinery or equipment" means manufacturing machinery or equipment, the original use of which commences with the taxpayer or with a partnership of which the taxpayer is a partner.

(8) "Purchase" has the same meaning as in section 179(d)(2) of the Internal Revenue Code.

(B) A nonrefundable credit is allowed against the tax imposed by section 5733.06 of the Revised Code for a taxpayer that purchases new manufacturing machinery or equipment that the taxpayer locates in this state and uses as a manufacturer. The credit also is allowed for a taxpayer that is a direct or indirect partner in a partnership that purchases new manufacturing machinery or equipment that the partnership locates in this state and uses as a manufacturer. In either event, the credit is available only if both of the following conditions are met:

(1) The purchases are made during the eighteen-month period;

(2) In the case of such new manufacturing machinery or equipment purchased by the taxpayer, the cumulative cost of the new machinery or equipment, when added to the cumulative cost of any other such manufacturing machinery or equipment purchased by other component members of a controlled group of corporations of which the taxpayer is a component member, equals or exceeds twenty per cent of the aggregate cost of all tangible personal property located in the United States and owned by the taxpayer or other component members of a controlled group of corporations of which the taxpayer is a component member, at the close of the taxpayer's most recent taxable year ending before the eighteen-month period. In the case of such new manufacturing machinery or equipment purchased by a partnership of which the taxpayer is a direct or indirect partner, the cumulative cost of such property equals or exceeds twenty per cent of the aggregate cost of all tangible personal property located in the United States and owned by the partnership at the close of its most recent federal taxable year ending before the eighteen-month period, and the taxpayer's distributive share of such cumulative cost, when added to the cumulative cost of any other such new manufacturing machinery or equipment purchased by the taxpayer or other component members of a controlled group of corporations of which the taxpayer is a component member, equals or exceeds twenty per cent of the aggregate cost of all tangible personal property located in the United States and owned by the taxpayer or other component members of a controlled group of corporations of which the taxpayer is a component member, at the close of the taxpayer's most recent taxable year ending before the eighteen-month period.

(C) The amount of the credit equals twenty per cent of the cost of the new manufacturing machinery and equipment located and used in this state by the manufacturer. However, the aggregate credit allowed to any taxpayer, or if the taxpayer is a component member of a controlled group of corporations, to the controlled group, shall not exceed five hundred thousand dollars. If the manufacturing machinery and equipment is purchased by a partnership, the five-hundred-thousand-dollar limit applies both to the partnership and to the taxpayer or controlled group. The taxpayer shall be allowed its distributive share of any credit available through the partnership, and such share shall be aggregated with any other credit available to the taxpayer or controlled group under this section before applying the five-hundred-thousand-dollar limit to the taxpayer or controlled group. The taxpayer may allocate the amount of credit, as so limited, among any of its taxable years that end after the purchase is made and include any portion of the eighteen-month period. The taxpayer shall claim the credit in the order required under section 5733.98 of the Revised Code. Any credit amount in excess of the tax due under this chapter after allowing for any other credits that precede the credit under this section in that order may be carried forward for three taxable years after the last taxable year that includes any portion of the eighteen-month period, but the amount of the excess credit allowed in any such year shall be deducted from the balance carried forward to the next year.

(D) Nothing in this section shall be construed to limit or disallow pass-through treatment of a partnership's income, deductions, credits, or other amounts necessary to compute the tax imposed by section 5733.06 of the Revised Code and the credits allowed by this chapter.

Cite as R.C. § 5733.31

History. Effective Date: 06-30-1997