W. Va. Code R. § 110-23-17

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 110-23-17 - Credits Against Tax

17.1. On and after the first day of July, 1988, a credit shall be allowed against the tax imposed by Section '11-23-1 et seq. of the West Virginia Code equal to the amount of franchise tax liability due under the said Section '11-23-1 et seq. of the West Virginia Code, (determined before application of credits) multiplied by a fraction, the numerator of which is the gross income of the business subject to tax under Article thirteen-a of Chapter eleven of the West Virginia Code and the denominator of which is the total amount of gross receipts derived from or attributable to all of the taxpayer's activity in West Virginia.

17.1.1. Expiration of credit. -- The credit authorized in Section '11-23-17(a) of the West Virginia Code and Section 17.1 of these regulations shall expire and not be authorized or allowed for any taxable month beginning on or after March 1, 1989. For taxable years beginning before March 1, 1989 and ending after March 1, 1989, the annual credit heretofore allowed by Section '11-23-17(a) of the West Virginia Code and Section 17.1 of these regulations shall be prorated by the number of months in the taxable year, and only that portion of the credit attributable to months ending prior to March 1, 1989, shall be allowable.

17.2. On and after the first day of July, 1988, a credit shall be allowed against the business franchise tax imposed by Section '11-23-1 et seq. of the West Virginia Code equal to the amount of franchise tax liability due under the said Section '11-23-1 et seq. of the West Virginia Code, (determined before application of credits) multiplied by a fraction, the numerator of which is the gross income of the business subject to tax under Article thirteen thirteen-a of Chapter eleven of the West Virginia Code and the denominator of which is the total amount of gross receipts derived from or attributable to all of the taxpayer's activity in West Virginia.

17.3. Rules.

17.3.1. Gross receipts derived from or attributable to all of the taxpayer's activity in West Virginia. -- For purposes of this Section, the term "gross receipts derived from or attributable to all of the taxpayer's activity in West Virginia" shall be the amount received in money, credits, property or other consideration from sales of property in this State (including a lease or license to use property in this State) or services rendered within this State, without deduction on account of the cost of property sold or amounts paid for any expenses. Gross receipts shall include the fair market value of natural resource products upon which the tax imposed by Article thirteen-a of Chapter eleven of the West Virginia Code was paid; and the amount of the receipts or value of public services taxed under Section two and two-d or two-m, Article thirteen of Chapter eleven of the West Virginia Code.

17.4. Parent corporations. -- A parent corporation taxpayer which files a separate return under the Business Franchise Tax Act shall be allowed a credit against such taxpayer's liability for the tax under the said Business Franchise Tax Act for the amount of net taxes that would have been paid without regard to the adjustment required by Section '11-23-3(b)(2)(E) of the West Virginia Code (formerly Section '11-23-3(b)(2)(D) of the West Virginia Code) or the credit allowed by Section '11-23-17(a) of the West Virginia Code for the taxable year by a subsidiary corporation or partnership: Provided, that the amount of credit allowed shall not exceed the amount of tax that would have been paid, without regard to such adjustment or credit, under the Business Franchise Tax Act by the subsidiary or partnership, multiplied by the percentage of the parent's ownership of the subsidiary corporation or partnership. In the case of corporations, this percentage shall be equal to the percentage of stock of all classes owned by the parent. In no case shall any credit allowable by Section '11-23-17 of the West Virginia Code, which is not used on an annual return, be carried forward or back but instead such credit shall be forfeited.

17.4.1. Subsidiary Credit Available for Corporate Partners. -- A corporate partner owning an interest in a partnership, and which corporate partner files a separate return under the Business Franchise Tax Act shall be allowed a credit against such corporate partner taxpayer's liability for the tax under the said Business Franchise Tax Act for the amount of net taxes which would have been paid without regard to the adjustment required by W. Va. Code '11-23- 3(b)(2)(E) (formerly W. Va. Code '11-23-3(b)(2)(D)) or the credit allowed by W. Va. Code '11-23-17(a) for the taxable year by the subsidiary partnership: Provided, That the amount of credit allowed shall not exceed the amount of tax that would have been paid without such regard to such adjustment or credit, under the Business Franchise Tax Act by the subsidiary partnership, multiplied by the percentage of the corporate partner's ownership of the subsidiary partnership. In the case of the corporate partner, this percentage shall be equal to the percentage of the capital accounts of the subsidiary partnership owned by the corporate partner. In no case shall any credit allowable by W. Va. Code '11-23- 17, which is not used on the annual return, be carried forward or back but instead such credit shall be forfeited.

17.4.2. Subsidiary Credit Available For Partnerships Owning Interest in Another Partnership. -- A partnership which owns an interest in another partnership and which parent partnership files a separate return under the Business Franchise Tax Act shall be allowed a credit against such parent partnership's liability for the tax under the said Business Franchise Tax Act for the amount of net taxes which would have been paid without regard to the adjustment required by W. Va. Code '11-23-3(b)(2)(E) (formerly W. Va. Code '11-23-3(b)(2)(D)) or the credit allowed by W. Va. Code '11-23-17(a) for the taxable year by a subsidiary partnership; Provided, That the amount of credit allowed shall not exceed the amount of tax that would have been paid, without regard to such adjustment or credit, under the Business Franchise Tax Act by the subsidiary partnership, multiplied by the percentage of the parent partnership's ownership of the subsidiary partnership. This percentage shall be equal to the percentage of the partners' capital accounts owned by the parent partnership. In no case shall any credit allowable by W. Va. Code '11-23-17, which is not used on an annual return, be carried forward or back but instead such credit shall be forfeited.

17.4.3. For purposes of these regulations, the term "parent partnership" means a partnership Wwich owns an interest in another partnership and the term "subsidiary partnership" means that partnership in which such an interest is owned by a partnership or a corporate partner. For definition of the term "corporate partner", see section 3.19.2 of these regulations.

17.5. Bank shares tax credit. -- A credit is allowed against the business franchise tax liability for property taxes paid to a county, district or town in West Virginia on shares of stock in a banking institution, national banking association, or industrial loan company imposed under Section '11-3-14 of the West Virginia Code. Property taxes imposed under Section '11-3-14(a) of the West Virginia Code and paid to a county, district or town in West Virginia on the capital of a building and loan association or federal savings and loan associations also qualify for the credit.

17.5.1. The amount of the credit is the lesser of the net amount of ad valorem property taxes payable for the time period for which the business franchise tax return is filed, or the business franchise tax liability remaining after application of the subsidiary credit set forth under Section 17.4 of these regulations and the business and occupation tax credit set forth under Section 17.2 of these regulations.

17.5.1.1. The "net amount" of property taxes is the property tax liability minus any discount earned. The net amount of property taxes shall not include any interest or penalties imposed.

17.5.2. To determine the dollar amount of property taxes available for credit consideration, a dollar amount attributable to each month must be established. The sum of the dollar amounts attributable to the months after June 30, 1987, which occur within the filing period, is the amount of ad valorem property taxes available for the credit.

17.5.2.1. Example: A taxpayer, filing a West Virginia business franchise tax return for the taxable year ending December 31, 1987, will have available for credit consideration only fifty percent (50%) of the 1987 property taxes. This amount represents the dollar amount of the property taxes attributable to the months of July through December, 1987.

17.5.3. A fiscal year taxpayer will use only the dollar amounts attributable to the months within the filing period that begin on or after July 1, 1987.

17.5.3.1. Example: A taxpayer whose fiscal year ends September 30, 1987, will have available for credit consideration the dollar amounts attributable to the months of July, August and September, 1987.

17.6. Order in which credits are taken. -- The credits set forth in Section 110-23-17 shall be taken in the following order:

17.6.1. First, the credit set forth in Section 17.4 of these regulations, if any.

17.6.2. Second, the credit set forth in Section 17.1 or 17.2 of these regulations, if any.

17.6.3. Third, the credit set forth in Section 17.5 of these regulations, if any.

W. Va. Code R. § 110-23-17