PDF document

- 1 -

                          Schedule WV/AG-1
            WEST VIRGINIA ENVIRONMENTAL AGRICULTURAL EQUIPMENT TAX CREDIT
                                   INFORMATION AND INSTRUCTIONS

These instructions, the general information provided, and the credit form are not a substitute for tax laws and regulations. They are 
intended to help you claim this tax credit. Specific situations requiring interpretation of the law and regulations should be addressed to the 
West Virginia State Tax Department.
It is important that West Virginia  support  the development  of 
agricultural  business in this State.  At the same time, it is also         AGRICULTURAL EQUIPMENT AND STRUCTURES 
important to promote environmentally  sound practices within the            THAT QUALIFY FOR THIS CREDIT INCLUDE:
agricultural industry. To do this, the State of West Virginia wants to 
support the agricultural industry by helping them to recoup the costs       • advanced technology pesticide and fertilizer ap-
of purchasing and installing agricultural equipment and structures            plication equipment
for agricultural operations within this state which serve to protect        • conservation tillage equipment
the environment.  This is done  by providing  the Environmental             • dead poultry composting facilities
Agricultural Equipment Tax Credit.                                          • mortality incinerator
                                                                            • nutrient management systems
For taxable years beginning  on or after July 1, 1997, eligible 
taxpayers purchasing and installing qualified agricultural equipment        • streambank and shoreline protection systems
can claim the Environmental Agricultural Equipment Tax Credit. For          • stream channel stabilization systems
calendar year taxpayers, this credit will be available for purchases        • stream crossing or access plans
beginning in tax year 1998. For fiscal year taxpayers, this credit will     • waste management systems
be available for purchases made during any taxable year beginning           • waste storage facilities
on or after July 1, 1997.                                                   • waste treatment lagoons
               ELIGIBLE TAXPAYERS
                                                                            CONSERVATION TILLAGE EQUIPMENT
Eligible  taxpayers are those taxpayers  purchasing  and  installing          Planters or drills commonly  known as a “no-till”  planter  or 
qualified agricultural equipment for use in agricultural operations           drill designed to minimize disturbance of the soil in planting 
in this state.                                                                crops, including such planters or drills which may be attached 
Agricultural operations means only the commercial production of               to equipment already owned by the taxpayer.
food,  fiber,  or  woodland  products  (but  not  timbering  activity)  by  DEAD POULTRY COMPOSTING FACILITY
means  of cultivation,  tillage  of soil  or by the conduct  of animal,       A structure consisting of a roof, an impervious weight bearing 
livestock, dairy, apiary, equine or poultry husbandry, aquaculture            foundation, such  as  concrete and rot  resistant building 
activity, horticulture activity, or any other plant or animal production      materials such as pressure treated lumber or similar material, 
activity and  all  farm practices  related,  usual  or incidental  to the     and which is used to biologically treat poultry carcasses by 
operations.                                                                   composting.
Commercial production consists of annual sales by the producer of           MORTALITY INCINERATOR
at least $1,000 of agricultural product. However, the requirement             A structure certified by the Office of Air Quality which is used 
of annual sales of at least $1,000 of agricultural products need not          for the purpose of burning animal carcasses.
be satisfied in order for the activity to be commercial production 
of  an  agricultural  product  in  the  first  12  months  after:  (1)  the NUTRIENT MANAGEMENT SYSTEM
occurrence of a catastrophe (such as fire, drought, or flood), other          An established  procedure  for managing  the amount, form, 
than mere mechanical breakdowns, which substantially destroyed                placement, and timing of applications of plant nutrients.
the agricultural product being produced or the means for harvesting 
that  product,  or  (2)  the  commercial  producer  of  an  agricultural    STREAMBANK AND SHORELINE PROTECTION SYSTEM
product has first commenced the production activity.                          The consistent use of vegetation or structures to stabilize 
                                                                              and protect banks of streams, lakes, estuaries, or excavated 
DEFINITIONS OF QUALIFIED AGRICULTURAL                                         channels for one or more of the following purposes:
EQUIPMENT AND STRUCTURES                                                      (1) To prevent the loss of land or damage to utilities, roads, 
ADVANCED TECHNOLOGY PESTICIDE  AND FERTILIZER                                     buildings, or other facilities adjacent to the banks
APPLICATION EQUIPMENT                                                         (2) To maintain the capacity of the channel
Machinery  certified  by  the  West  Virginia  Division  of                   (3) To control channel meander that would adversely affect 
Environmental  Protection as providing  precise pesticide                         downstream facilities
and fertilizer application.  This includes, but  is not  limited              (4) To reduce sediment loads causing downstream 
to  sprayers  for  pesticides  and  liquid  fertilizers,  pneumatic               damages and pollution
fertilizer applicators,  monitors, computer regulators and                    (5) To improve the stream for recreation or as a habitat for 
heights  adjustable  booms  for  sprayers  and  liquid  fertilizer                fish and wildlife
applicators, manure applicators, and tramline adapters.
WEST VIRGINIA STATE TAX DEPARTMENT
WV/AG-1 Instructions — Rev. 9/15                                                                                          Page 1 of 4

- 2 -

Enlarge image

STREAM CHANNEL STABILIZATION SYSTEM                                                    CLAIMING THE TAX CREDIT
    An established structure for the stabilization of the channel 
    of a stream.                                                            Once  the  investment  in  qualified  agricultural  equipment  has 
                                                                            been  made,  the  equipment  placed  into  service,  and  the  proper 
STREAM CROSSING OR ACCESS PLAN                                              certifications  obtained,  complete  Form  WV/AG-1,  West  Virginia 
    The maintenance of a stabilized area to provide for crossing            Environmental  Agricultural  Equipment  Tax  Credit,  to  claim  this 
    of a stream by livestock and farm machinery, or to provide              credit.
    access to the stream for livestock water.
                                                                            Corporations can claim against that portion of the corporation net 
WASTE MANAGEMENT SYSTEM                                                     income tax liability that is attributable to agricultural operations in 
    A planned  system in which all necessary components are                 this state.
    installed for managing liquid and solid waste, including runoff 
    from concentrated waste areas at an agricultural operation, in          Individuals can claim the credit against that portion of their personal 
    a manner that does not degrade air, soil, or water resources.           income tax liability that is attributable to agricultural operations in 
                                                                            this state.
WASTE STORAGE FACILITY
    A waste impoundment made by constructing an embankment                  Pass-through  entities, such as partnerships,  S corporations  and 
    and/or excavating a pit or dugout, or by fabricating a facility         limited liability companies taxable as partnerships will pass the 
    for the storage of waste from livestock or poultry.                     credit through to  the partners, S  corporation shareholders, or 
                                                                            members based upon their percentage of ownership in the pass-
WASTE TREATMENT LAGOON                                                      through entity. Subsequent, the partner, shareholder, or member            
    An impoundment made by excavation or earthfill for biological           can claim the credit against that portion of their personal income 
    treatment of animal or other agricultural waste that is located         tax liability that is attributable to agricultural activity in this state.
    on or at agricultural operations in this state.
                                                                                        AMOUNT OF CREDIT
    PROOF OF ENTITLEMENT TO CREDIT                                          The credit is equal to 25% of the price of all certified expenditures 
In order to use this credit, the taxpayer must submit with the tax          for  qualified  agricultural  equipment  during  the  taxable  year. 
credit schedule, adequate proof of entitlement to the credit for each       Expenditures for land do not qualify.
and every item for which credit is claimed. Adequate proof consists 
of:                                                                         The amount of credit claimed  in any one  given  year may not 
                                                                            exceed  $2,500.00  of  the  total  amount  of  the  taxpayer’s  liability 
Proof of purchase and installation which  must be legible,                  under either the corporation net income tax, personal income tax, 
complete  and  sufficiently  specific  to  clearly  identify  the  item  as or personal income tax attributable to the flow through of income 
qualified  agricultural  equipment  and  actually  purchased  and           from an S corporation, partnership, or limited liability company that 
installed by the taxpayer, and                                              is attributable to agricultural operations in this state.
Written  certification  by  the  Commissioner  of  Agriculture  that        If the amount of the credit exceeds the tax liability attributable to 
each  item  purchased  is  in  fact  qualified  agricultural  equipment.    agricultural activity for the taxable year, the excess amount may 
For advanced  technology  pesticide and fertilizer application              be carried over and applied as a credit in each of the next five (5) 
equipment, the certification is not obtained from the Commissioner          taxable years unless used sooner. When carrying forward the credit 
of Agriculture,  instead  the  written  certification  must  be  obtained   the amount carried forward must be claimed first before claiming 
in writing  from the West Virginia  Department  of Environmental            any new credit from purchases during the current taxable year.
Protection. For mortality incinerators, the certification is obtained 
from the Office of Air Quality.                                             Credit  for  any  purchase  of  qualified  agricultural  equipment  may 
                                                                            be used by only one business entity, is limited to the tax liability 
Contact the Commissioner of Agriculture at:                                 attributable to agricultural operations in this state, cannot exceed 
Department of Agriculture                                                   the actual amount paid by the taxpayer, and is not available for 
Administrative Services                                                     purchases for resale or for any other purpose other than for use in 
1900 Kanawha Boulevard, East State                                          the taxpayer’s own agricultural operation.
Charleston, WV 25305
304-558-3550
                                                                                   FOR ADDITIONAL INFORMATION ABOUT THIS CREDIT 
Contact the Office of Air Quality at:                                                             CONTACT:
Office of Air Quality                                                                   WEST VIRGINIA STATE TAX DEPARTMENT
601 57th Street, SE                                                                     TAXPAYER SERVICES DIVISION
Charleston, WV 25304                                                                              P.O. BOX 3784
304-926-0475                                                                            CHARLESTON, WV 25337-3784
                                                                                                  (304) 558-3333
Contact the Department of Environmental Protection at:                                            1-800-982-8297
West Virginia Department of Environmental Protection                               TDD FOR THE HEARING IMPAIRED: 1-800-282-9733
601 57th Street SE
Charleston, WV 25304
304-926-0440

WEST VIRGINIA STATE TAX DEPARTMENT
WV/AG-1 Instructions — Rev. 9/15                                                                                      Page 2 of 4

- 3 -

Enlarge image

INSTRUCTIONS FOR COMPLETING FORM WV/AG-1
Corporations claiming the Environmental Agricultural Equipment have no tax attributable to the agricultural operation in
Tax Credit must complete Part 1, Part 2, and Part 5 of Form WV/ West Virginia for the current taxable year and cannot
AG-1 to properly claim the credit. claim the credit for the current year.
Sole Proprietors must complete Part 1, Part 3, and Part 5 to Line 9 If you are eligible to claim other tax credits, you must
properly claim the credit. apply them to your tax liability before applying the
Environmental Agricultural Equipment Tax Credit.
Shareholders, partners, and members of pass-through entities
must work together with the pass-through entity to claim this credit. Line 16 Transfer this figure to the appropriate line item on
The pass-through entity must provide the information necessary to Summary Schedule TC that is attached to your
complete this form and claim the credit. The pass-through entity corporate net income tax return.
must complete or provide the information needed to complete
Part 1. The shareholders, partners, and members of pass-through Line 18 For Column 1, enter the same amount as entered on
entities then complete Part 4 and Part 5 based upon their individual Line 2 for each year. For Column 2, take the amount
and separate information. from line 12 and apply it down the column in the order
listed, offsetting the amount(s) shown in Column 1. If
the amount from line 12 is fully used against the 5th
PART 1 – ELIGIBLE PURCHASES
preceding year, stop. If not, proceed to the next year.
Enter the date during the current taxable year that each structure Continue in this manner for each of the other years if an
or item of qualified agricultural equipment was placed into use or amount remains. Complete Column 3, by subtracting
service. the Column 2 amount from the Column 1 amount
for each year. These are the amounts that you have
For each item, briefly describe the type of qualified agricultural available to carry forward to the next taxable year. Any
equipment or structure that has been put into use or service. excess amount from the 5th preceding year is forfeited.
Enter the total purchase price of all certified expenditures for the
qualified agricultural equipment or structure. Only expenditures PART 3 – SOLE PROPRIETORS
made during the current taxable year qualify for the credit. Line 2 When claiming the credit, any unused (excess) credit
from any of the preceding five years must be claimed
Attach to the form the appropriate proof of purchase and written before using any credit generated from purchases
certification for each item qualifying for the credit. Forms without made during the current taxable year. Document your
the appropriate documentation will result in the denial of the tax excess credit carried forward from previous years by
credit. entering the date that the credit was first established in
the column titled “Year of Purchase” and by entering the
PART 2 – CORPORATIONS amount of credit carried forward from last year in the
Line 2 When claiming the credit, any unused (excess) credit appropriate column. For example, the amount entered
from any of the preceding five years must be claimed for the 1st preceding year is the same as the amount
before using any credit generated from purchases entered on line 17 of the form filed last year. Further,
made during the current taxable year. Document your the amount to be entered for the 2nd preceding year
excess credit carried forward from previous years by would be the same amount entered on line 18, column
entering the date that the credit was first established in 3, under 1st preceding year on the form filed last year,
the column titled “Year of Purchase” and by entering the and so on.
amount of credit carried forward from last year in the
appropriate column. For example, the amount entered Line 5 Only that portion of your personal income tax attributable
for the 1st preceding year is the same as the amount to agricultural operations in West Virginia can be offset
entered on line 17 of the form filed last year. Further, by the credit. Enter the amount of your federal adjusted
the amount to be entered for the 2nd preceding year gross income (AGI) that is derived from agricultural
would be the same amount entered on line 18, column operations in West Virginia. If the result of your
3, under 1st preceding year on the form filed last year, agricultural operations in West Virginia for the current
and so on. taxable year is a net operating loss, you are not eligible
to claim the credit for the current taxable year.
Line 5 Only that portion of your net income tax attributable to
agricultural operations in West Virginia can be offset by Line 7 Divide line 5 by line 6 and enter the result as a decimal
the credit. Enter the amount of gross income derived carried to four places. This amount cannot be more than
from agricultural operations in West Virginia. If the 1.0. If the result of this division is a negative figure, you
result of your agricultural operations in West Virginia for have no tax attributable to the agricultural operation in
the current taxable year is a net operating loss, you are West Virginia for the current taxable year and cannot
not eligible to claim the credit for the current taxable claim the credit for the current year.
year. Line 9 If you are eligible to claim other tax credits, you must
Line 7 Divide line 5 by line 6 and enter the result as a decimal apply them to your tax liability before applying the
carried to four places. The amount cannot be more than Environmental Agricultural Equipment Tax Credit.
1.0. If the result of this division is a negative figure, you This is true for all other credits except the Capital

WEST VIRGINIA STATE TAX DEPARTMENT
WV/AG-1 Instructions — Rev. 9/15 Page 3 of 4

- 4 -

Enlarge image

Company Credit. The Capital Company Credit would be from and provided by the pass-through entity. Pass-
calculated after applying all other credits, including the through entities making qualified investments resulting
Environmental Agricultural Equipment Tax Credit. in this credit must provide this information to their
shareholders, partners, and members.
Line 16 Transfer this figure to the appropriate line item on your
personal income tax return. Line 8 Enter the total income of the pass-through entity. This
information must be obtained from and provided by
Line 18 For Column 1, enter the same amount as entered on the pass-through entity. Pass-through entities making
Line 2 for each year. For Column 2, take the amount qualified investments resulting in this credit must
from line 12 and apply it down the column in order provide this information to their shareholders, partners,
listed, offsetting the amount(s) shown in Column 1. If and members.
the amount from line 12 is fully used against the 5th
preceding year, stop. If not, proceed to the next year. Line 11 You must further reduce your distributive share resulting
Continue in this manner for each of the other years if an from the West Virginia agricultural operations of the
amount remains. Complete Column 3, by subtracting pass-through entity creating this credit by determining
the Column 2 amount from the Column 1 amount how much of it is actually reported on your federal
for each year. These are the amounts that you have income tax return. If the amount of the distributive
available to carry forward to the next taxable year. Any share from the pass-through entity actually reported on
excess amount from the 5th preceding year is forfeited. your federal income tax return is zero or less, you are
not eligible to claim the credit for the current taxable
PART 4 – PARTNERS, SHAREHOLDERS, AND year. Enter the amount of your distributive share from
the pass-through entity that is actually reported on your
MEMBERS OF PASS-THROUGH ENTITIES federal income tax return.
NOTE: The amount entered in Part 1 should be for the entire
pass-through entity. The pass-through entity must disclose this Line 15 Divide line 14 by line 15 and enter the result as a
information to their partners, shareholders, or members as the case decimal carried to four places. This amount cannot be
may be and provide them with copies of the written certification of more than 1.0. If the result of this division is a negative
qualification and proof of purchase and installation. figure, you have no tax attributable to the agricultural
operation in West Virginia for the current taxable year
Line 3 The amount entered on line 1 represented the credit and cannot claim the credit for the current year.
available at the pass-through entities level. The
calculation on lines 2 and 3 allocate the credit to the Line 17 This is the amount of your income tax liability that is
shareholder, partner, or member. attributable to the pass-through entity’s agricultural
operations in West Virginia.
Line 4 When claiming the credit, any unused (excess) credit
from any of the preceding five years must be claimed Line 18 If you are eligible to claim other tax credits, you must
before using any credit generated from purchases apply them to your tax liability before applying the
made during the current taxable year. Document your Environmental Agricultural Equipment Tax Credit.
excess credit carried forward from previous years by
entering the date that the credit was first established in Line 25 Transfer this figure to the appropriate line item on your
the column titled “Year of Purchase” and by entering the personal income tax return.
amount of credit carried forward from last year in the
appropriate column. For example, the amount entered Line 27 For Column 1, enter the same amount as entered on
for the 1st preceding year is the same as the amount Line 2 for each year. For Column 2, take the amount
entered on line 17 of the form filed last year. Further, from line 21 and apply it down the column in the order
the amount to be entered for the 2nd preceding year listed, offsetting the amount(s) shown in Column 1. If
would be the same amount entered on line 18, column the amount from line 21 is fully used against the 5th
3, under 1st preceding year on the form filed last year, preceding year, stop. If not, proceed to the next year.
and so on. Continue in this manner for each of the other years if an
amount remains. Complete Column 3 by subtracting the
Line 6 Enter your distributive share from the pass-through Column 2 amount from the Column 1 amount for each
entity creating the credit. Only that portion of your year. These are the amounts that you have available
distributive share from the pass-through entity to carry forward to the next taxable year. Any excess
attributable to the agricultural operations of the pass- amount from the 5th preceding year is forfeited.
through entity in West Virginia can be used as a basis
for calculating the credit. If your distributive share from PART 5 – CERTIFICATION/SIGNATURE
the pass-through entity for the current taxable year is The credit schedule must be certified by the taxpayer. Any person
a net operating loss, you are not eligible to claim the authorized by the taxpayer to make and file tax returns may sign
credit for the current taxable year. this form. The signer should carefully read the certification and
review the form and attachments for correctness, completion, and
Line 7 Enter the total West Virginia agricultural income of the
veracity. An unsigned credit schedule will result in the denial of the
pass-through entity. This information must be obtained
credit.

WEST VIRGINIA STATE TAX DEPARTMENT
WV/AG-1 Instructions — Rev. 9/15 Page 4 of 4

PDF file checksum: 898803224

(Plugin #1/9.12/13.0)