Hawaii-2010-HB253-Amended

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Hotel renovation tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a hotel renovation tax credit, that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the tax credit is properly claimed.

The amount of the tax credit shall be per cent of the renovation costs incurred during the taxable year for each qualified hotel facility located in the state and shall not include the renovation costs for which another tax credit was claimed under this chapter for the taxable year.

In the case of a partnership, S corporation, estate, trust, association of owners of a qualified hotel facility, time share owners association, or any developer of a time share project, the tax credit allowable is for renovation costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

If a deduction is taken under Section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the renovation cost for which the deduction is taken.

The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be claimed in subsequent tax years; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1. All claims for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) The director of taxation may:

(1) Prepare any forms that may be necessary to claim a credit under this section;

(2) Require the taxpayer to furnish information to ascertain the validity of the claim for credit under this section; and

(3) Adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(e) To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

(f) As used in this section:

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

"Qualified hotel facility" means a hotel, hotel-condominium, or condominium-hotel as defined in section 486K-1 with a daily occupancy rate of no more than per cent and an annual occupancy rate of no more than per cent for the year the tax credit is claimed.

"Renovation cost" means any costs incurred for plans, design, construction, and equipment related to renovations to a qualified hotel facility.

(g) No taxpayer that claims a credit under this section shall claim a credit under chapter 235D."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2112, and shall apply to taxable years beginning after December 31, 2008.

HOUSE OF REPRESENTATIVES	H.B. NO.	253
TWENTY-FIFTH LEGISLATURE, 2009		H.D. 1
STATE OF HAWAII