Enlarge image | 2022 Credit for Renewable Energy Investment and Production for Self-Consumption by Arizona Form International Operations Centers 351 For information or help, call one of the numbers listed: • Invest $1.25 billion in the IOC within 10 years after Phoenix (602) 255-3381 being certified by the Arizona Commerce Authority From area codes 520 and 928, toll-free (800) 352-4090 (ACA). Tax forms, instructions, and other tax information • The energy produced must be used for self- If you need tax forms, instructions, and other tax information, consumption go to the department’s website atwww.azdor.gov. • By the fifth year the facility is in operation, at least 51 Income Tax Procedures and Rulings percent of the energy produced must be used for self- These instructions may refer to the department’s income tax consumption in Arizona. procedures and rulings for more information. To view or NOTE: A taxpayer that is initially authorized as an print these, go to our website and select Reports & Legal International Operations Center after December 31, 2018 may Research from the main menu, then click on Legal Research not claim this tax credit. and select a Document Type and a Category from the drop This credit is available to corporate taxpayers, exempt down menus. organizations subject to unrelated business taxable income Publications (UBTI), and corporate partners in a partnership. The total of the To view or print the department’s publications, go to our credits may not exceed the amount that would have been website, select Reports & Legal Research from the main allowed for a sole owner of the business. menu, and click on Publications in the left hand column. If the current taxable year's credit exceeds the taxpayer’s tax liability for the taxable year, the taxpayer may carry forward the General Information unused credit to the next five consecutive taxable years. No This credit provides nonrefundable corporate income tax credits credit, other than carryovers generated properly, may be claimed for investment in new renewable energy facilities that produce for any taxable year beginning after December 31, 2025. energy for self-consumption using renewable energy resources if the power will be used primarily for an International Operations Credit Recapture Centers. The credit authorized is $5 million per year for five If an IOC taxpayer fails to make the $1.25 billion investment in years. The initial credit is claimed in the year the facility the center within the 10 years after certification, this credit is becomes operational. recaptured in inverse proportion to the total capital investment NOTE: For taxable years beginning from and after December made in the IOC by the $1.25 billion. The recapture must be 31, 2018, this credit is no longer available to individual made on the taxpayer's income tax return for the taxable year in which it is first known that the required investment would not be taxpayers. It is available only to corporate taxpayers. made within the required time or the taxable year in which the certification was revoked. Claiming this Credit To claim this credit, a taxpayer must apply to the Arizona Example: Department of Revenue (Department) for certification. The Ten years after its certification, an IOC taxpayer invested $900 department reviews and pre-approves the taxpayer for the credit million in its center and claimed $25 million for this credit on a first-come, first-served basis. The maximum amount of this ($5,000,000 per year for 5 years.) The IOC taxpayer will credit a taxpayer can receive is $5,000,000 per tax year. The determine its credit recapture by subtracting its total investment department may not authorize tax credits under A.R.S. § ($900 million) from the required investment ($1.25 billion) and 43-1164.05 that exceed, in the aggregate, a total of $10 million dividing that amount by the required investment. for any calendar year. IOC taxpayer invests $900 million in 10 years. The taxpayer must submit a request for final certification to the department within 30 days after the renewable energy facility for Required investment amount is $1.25 billion. which authorization was given becomes operational. See the program guidelines at www.azdor.gov under the “Tax Credits” Required Investment $1,250,000,000 Total Investment $ 900,000,000 section. Amount not invested $ 350,000,000 The taxpayer must qualify for this credit as an International Amount not invested $ 350,000,000 Operations Center (IOC). Required Investment $1,250,000,000 To qualify, a taxpayer must: Percentage not invested 28% • Invest at least $100 million in one or more renewable energy facilities in Arizona. Calculate Credit Recapture • The minimum investment of $100 million must be Total Credit Claimed $25,000,000 completed within a 3-year period beginning on the date Percentage (above) 28% the initial application is received by the department or Amount to Recapture $ 7,000,000 by December 31, 2018, whichever is earlier. The IOC taxpayer will report a credit recapture on its income tax return of $7 million. |
Enlarge image | Arizona Form 351 Line 9 Specific Instructions Enter the lesser of line 8 or $5,000,000. This is your current Complete the name and taxpayer identification number (TIN) year’s total tax credit. This amount cannot exceed $5 million. section at the top of the form. Indicate the period covered by NOTE: The maximum credit allowed per taxpayer per the taxable year. Include the completed form and all taxable year is $5 million. supporting documentation with the tax return. All returns, statements, and other documents filed with the Part 2 – Credit Recapture department require a TIN. The TIN for a corporation, an exempt organization with UBTI, an S Corporation, or a NOTE: If you are a partnership that passed the credit partnership is the taxpayer's employer identification number through to corporate partners, do not complete Part 2. You (EIN). Taxpayers that fail to include their TIN may be subject will report the recapture to the partners Form 351-P. to a penalty. Line 10 NOTE – To claim this credit: If you received a notice from the department that your credit • C Corporations, S Corporations claiming this credit at is subject to recapture, check the “Yes” box, and include a the corporate level, and exempt organizations with copy of the notice. If you did not, check the “No” box and UBTI, complete this credit form and Arizona Form 300 , skip to line 17. Nonrefundable Corporate Tax Credits and Recapture. Line 11 Include both completed forms with your tax return. Enter the facility code indicated on the certificate. • Partnerships, complete this credit form. Also, complete Line 12 Form 351-P for each corporate partner of the partnership. Provide each corporate partner a copy of Enter the taxable year(s) in which you took a credit or credit his or her completed Form 351-P. Include Form 351 carryover as an IOC. and one copy of each completed Form 351-P with your Line 13 tax return. Enter the credit amount previously authorized by the department. Part 1 – Qualification for and Current Line 14 Taxable Year’s Credit Enter the amount of credit carryover that remains unused. Line 1 Line 15 If you received any certificate(s) directly from the Subtract line 14 from line 13 and enter the amount. department, check the “Yes” box and include a copy of the Is line 15 less than zero? certificate. If you did not, check the “No” box and skip to line 4. If you subtract line 14 from line 13 and your result is less Line 2 than zero, you may be eligible to use a portion of your credit Enter the facility code for which you received the credit. carryforward. Line 3 To determine the amount of credit carryforward you can use, Enter the total amount of the credit authorized by the subtract line 13 from line 14. The difference is the amount of certificate. this credit you can carry forward. Line 4 EXAMPLE: If you received a Form 351-P, check the “Yes” box and On your Form 351, line 13 is $5,000,000 and line 14 is include a copy of the form. If you did not, check the “No” $4,000,000. If you subtract line 14 from line 13, the result is box and skip to Part 2. negative ($1,000,000). Line 5 As instructed above, line 13, $5,000,000, from line 14, $4,000,000. The difference is $1,000,000. Enter the facility code indicated on Form 351-P. This is the amount of this credit you can carry forward. Line 6 Enter the name and EIN of the company passing the credit Line 16 through to you. Enter the greater of line 15 or “0”. This is the amount of your Line 7 direct recapture. Enter your portion of the credit indicated on Form 351-P. If NOTE: If you are a corporate partner in multiple entities you receive this credit from more than one partnership, enter receiving this tax credit, total the amounts received from all the total of all credits passed through from partnerships. partnerships on Form(s) 351-P and enter the total. Include a NOTE: If you are a partner in multiple entities receiving this copy of each Form 351-P you received with your return. tax credit, total the amounts received from all partnerships Line 17 on Form(s) 351-P and enter the total. Include a copy of each If you received a notice of recapture on Form 351-P, check Form 351-P you received with your return. the “Yes” box and include a copy of the form. If you did not, Line 8 check the “No” box and skip to Part 3. Add lines 3 and 7 and enter the total. 2 |
Enlarge image | Arizona Form 351 Line 18 Line 26 Enter the name and EIN of the partnership who sent you the Enter the amount of the credit you previously claimed on an notice of recapture. earlier tax return. Line 19 Line 27 Enter the tax year(s) you claimed the credit. Subtract line 26 from line 25 and enter the difference. This is Line 20 your net available credit carryover. Enter the total amount of the credit subject to recapture Line 28 passed through to you on Form 351-P, Part 2, line 7. Enter the amount of this credit carryover that was Line 21 disqualified. Enter the amount of the credit carryover that remains unused. Line 29 Line 22 Subtract line 28 from line 27 and enter the difference. Subtract line 21 from line 20 and enter the difference. Line 30 Is line 22 less than zero? Add lines 29(a) through (c) and enter the total. This is your If you subtract line 21 from line 20 and the difference is less total available credit carryover. than zero, you may be eligible to use a portion of your credit Part 4 – Total Available Credit carryforward. To determine the amount of credit carryforward you can use, Line 31 subtract line 20 from line 21. The difference is the amount of Enter the amount from Part 1, line 9. this credit you can carry forward. C Corporations, S Corporations that elected to claim the EXAMPLE: credit at the corporate level, and exempt organizations with UBTI: On your Form 351, line 21 is $5,000,000 and line 20 is • $4,000,000. If you subtract line 21 from line 20, the Enter the amount from line 9. This is your total current year’s credit. It is the sum of the current year’s credit difference is negative ($1,000,000). that you established and also the pass-through credit you As instructed above, you then subtract line 20, $5,000,000, received in the current year. from line 21, $4,000,000. The result is $1,000,000. • Also, enter this amount on Form 300, Part 1, line 15, This is the amount of credit you can carry forward. column (a). Line 23 Line 32 Enter the greater of line 22 or “0”. This is the amount of the Enter the amount from Part 3, line 30. credit recapture passed through to you from a partnership. C Corporations, S Corporations that elected to claim the Line 24 credit at the corporate level, and exempt organizations with Add lines 16 and 23 and enter the total. UBTI: • This is your total recapture amount. Enter the amount from Part 3, line 30. This is your total C Corporations, S Corporations that elected to claim this available credit carryover for renewable energy credit at the corporate level, and exempt organizations with investment and production for international operations UBTI, enter this amount on Form 300, Part 2, line 22. centers. • Also, enter this amount on Form 300, Part 1, line 15, column (b). Part 3 – Available Credit Carryover Line 33 Use Part 3 to figure your total available credit carryover from Add lines 31 and 32. Enter the total. prior taxable years. Columns (a) through (c) represent the tax C Corporations, S Corporations that elected to claim the years for which you claimed this credit. Complete lines 25 credit at the corporate level, and exempt organizations with through 29, columns (a) through (c), if you claimed the credit UBTI: on a prior year’s return and the credit exceeded your tax • Add line 31 and line 32, enter the total. This is the total liability. available credit that may be applied to the current year's NOTE: This credit has a five year carryforward. You have tax liability. • five years in which to apply this credit to your Arizona taxes. Also, enter this amount on Form 300, Part 1, line 15, column (c). Line 25 Enter the amount of the credit originally computed for the first year you claimed the credit. 3 |
Enlarge image | Arizona Form 351 • Multiply column (b) by column (c) enter the result in Part 5 – Corporate Partner’s Portion of column (d) for each corporate partner Credit The amounts indicated in column (d) are the respective corporate partner’s portion of this credit. PASSING THIS CREDIT THROUGH TO Enter the amount(s) from column (d) in each respective CORPORATE PARTNERS OF A PARTNERSHIP corporate partner’s Form 351-P, line 3(c). Partnerships must pass this credit through to its corporate Total: partners. Partnerships claiming this credit that have Add the amounts in column (d) and enter the total. This individual partners lose the individual partner’s combined amount will equal the credit amount on the certificate you ownership percentage of the credit. received from the Department. A partnership must complete its own Form 351, Parts 1 To complete the pass through of this credit, the partnership through 4 (as necessary) to pass this credit through to its must complete Form 351-P for each corporate partner, and: partners. •• Provide each corporate partner with their respective copy NOTE: If you have more than 10 corporate partners, create of Form 351-P, a similar worksheet to pass through the credit amount. •• Include a copy of each completed Form 351-P with its Include that amount with your return. tax return, and To pass this credit amount through to your corporate • Keep a copy of each completed Form 351-P for its partners - enter the Tax Year(s) on the notice you received records. from the Department or from Forms 351-P you received. The corporate partner will then complete its own Form 351 to • Enter each corporate partner’s name in column (a) • Enter the corporate partner’s corresponding ownership Using the table below, complete lines 1 – 10 as follows: claim this credit. percentage of the partnership in column (b) • Enter the total credit amount from the certificate or Form 351 you received in each line of the worksheet in column (c). NOTE: Each corporate partner is entitled to only a pro rata share of the credit based on the corporate partner’s ownership interest in the partnership. The total of the credit allowed to all partners may not exceed the amount that would have been allowed for a sole owner. Use this worksheet to figure the amount of the credit to be passed through to each partner. Tax Year (a) (b) (c) (d) Corporate Partner Ownership % Credit Amount Corporate Partner’s Portion 1 2 3 4 5 6 7 8 9 10 Total $ 4 |
Enlarge image | Arizona Form 351 RECAPTURE OF THIS CREDIT PASSED Example: THROUGH TO CORPORATE PARTNERS OF A Partnership claimed this credit for five years, 1 through 5. Each year, Partnership claimed the maximum amount, $5M. PARTNERSHIP The total credit claimed was $25M. If you passed this credit through to your corporate partners in a previous tax year and then received a notice from the During the time Partnership claimed this credit, it had 5 Arizona Department of Revenue that your credit is subject to corporate Partners: recapture during this year, you must pass the amount(s) • Corporate Partner A owned 20% of Partnership for each subject to recapture through to your corporate partners that year, 1 through 5 received the credit. • Corporate Partner B owned 20% of Partnership for each year 1 through 5 This credit was passed through to your corporate partners • Corporate Partner C owned 20% of Partnership for based on their ownership percentage (per year). The years 1 through 3; in year 4, Partner C sold its recapture amount is based on a percentage of the total credit ownership percentage of Partnership to Corporate passed through to all partners. You will receive a notice of Partner D recapture from the Department indicating the percentage of • Corporate Partner D owned 20% of Partnership for this credit that is subject to recapture. You must notify your years 1 through 3; for years 4 and 5, Corporate Partner shareholders of their portion of this amount. D owned 40% of Partnership To notify your corporate partners of their respective • Corporate Partner E owned 20% of Partnership for each amount(s) of this credit that is subject to recapture from them: year 1 through 5. A. Determine the amount of credit passed through to each partner for all years of the credit During year 7, Partnership received a notice from the B. Multiply the amount in A (above) by the recapture Department indicating 40%, or $10Million of its credit is percentage (provided by Arizona Department of subject to recapture. Revenue) C. Complete Part 2 of Form 351-P for each partner Using the 351-P Forms it completed for years 1 through 5, informing him/her of the amount of this credit subject to Partnership determined it passed through the following recapture. amounts of credits to each of its partners for these years: Corporate Partner Total Credit Passed Through Corporate Partner A $ 5,000,000 Corporate Partner B $ 5,000,000 Corporate Partner C $ 3,000,000 Corporate Partner D $ 7,000,000 Corporate Partner E $ 5,000,000 Total Credit $25,000,000 Multiplying each partner’s amount of credit “passed through” by the recapture percentage, 40%, Partnership determined the credit amount(s) subject to recapture for each partner is: Partner: Credit Amount Recapture % Subject to Recapture Corporate Partner A $ 5,000,000 40% $ 2,000,000 Corporate Partner B $ 5,000,000 40% $ 2,000,000 Corporate Partner C $ 3,000,000 40% $ 1,200,000 Corporate Partner D $ 7,000,000 40% $ 2,800,000 Corporate Partner E $ 5,000,000 40% $ 2,000,000 Total Credit $25,000,000 40% $10,000,000 Partnership completed Form 351-P for each corporate partner above informing it of the amount of this credit that is subject to recapture. 5 |
Enlarge image | Arizona Form 351 To distribute the recapture amount to the corporate Form 351-P, Distribution to Corporate partners of the partnership (complete lines 4 through 7): Partners of a Partnership Line 4 a) Enter the partnership name Indicate the taxable year for which this credit is being passed b) Enter the partnership EIN through to your corporate partners. Line 5 Complete Form 351-P for each corporate partner. a) Enter the corporate partner’s name NOTE: b) Enter the corporate partner’s TIN Partnerships use Form 351-P to notify each corporate Line 6 partner of their share of: a) Enter the facility code for which this credit was • The credit to be claimed, or originally approved • The credit subject to recapture. b) Enter the tax year(s) for which this credit was originally approved To distribute the credit to the corporate partners of the Line 7 partnership (complete lines 1 through 3c): Enter the corporate partner’s portion of the credit subject to Line 1 recapture from the worksheet in the instructions. a) Enter the partnership name b) Enter the partnership’s EIN This is the corporate partner’s portion of the credit c) Enter the facility code for which this credit was subject to recapture. received. Line 2 a) Enter the corporate partner’s name b) Enter the corporate partner’s TIN Line 3a, 3b, and 3c a) Enter the amount of this credit for which the partnership was approved from Part 1, line 9. b) Enter the corporate partner’s ownership percentage c) Multiply line 3(a) by line 3(b) and enter the result. This is the corporate partner’s portion of this credit. 6 |