Haw. Code R. § 18-235-110.7-09
Example 1. In 1988, a taxpayer pays the entire purchase price for eligible property which is to be delivered in 1989. The taxpayer takes possession of the property in 1989. The property shall be considered to have been purchased and placed in service in 1988.
Example 2. In 1988, a taxpayer pays one-half of the entire purchase price for eligible property which is to be delivered in 1989. The taxpayer pays the remaining purchase price and takes possession of the property in 1989. The property shall be considered to have been purchased and placed in service in 1988.
Example 3. In 1988, a taxpayer takes possession of and uses eligible property for which the taxpayer makes no payment in 1988, but for which the taxpayer will make full payment in 1989. The taxpayer does in fact pay the entire purchase price for the property in 1989. The property shall be considered to have been purchased and placed in service in 1988.
Example 4. In 1988, a taxpayer enters into an installment sales contract to purchase eligible property and takes possession of the property. The property shall be considered to have been purchased and placed in service in 1988.
Example 5. In 1988, a taxpayer enters into an installment sales contract to purchase eligible property. The taxpayer takes possession of the property in 1989. The property shall be considered to have been purchased and placed in service in 1988.
Example 6. In 1987, a taxpayer pays the entire purchase price for eligible property which is to be delivered in 1988. The taxpayer takes possession of the property in 1988. The property shall be considered to have been purchased and placed in service in 1987 and thereby is not eligible for the credit.
Example 7. In 1987, a taxpayer takes possession of and uses eligible property for which the taxpayer makes no payment in 1987, but for which the taxpayer will make full payment in 1988.
The taxpayer does in fact pay the entire purchase price for the property in 1988. The property shall be considered to have been purchased and placed in service in 1987 and thereby is not eligible for the credit.
Example 1. Taxpayer A is in the business of selling tractors. In 1987, A purchases tractors and holds them as inventory. In 1988, A sells tractors to Taxpayers B and C, both of whom use the tractors in their businesses which are located in Hawaii. B is in the business of landscaping and C is in the business of roofing. Assume that the tractors qualify as eligible property in the hands of B and C (i.e., new section 38 property). The sales to B and C are subject to the imposition and payment of tax at the rate of four percent under chapter 237, HRS. A and B are not related parties. A and C are related parties (i.e., C is a wholly owned subsidiary of A). In this case, assuming that B files a timely claim for the credit on the tractor purchase, B is eligible to receive a credit-B purchases eligible property; the purchase of the eligible property results in a transaction which is subject to the imposition and payment of tax at the rate of four percent under chapter 237, HRS; and the eligible property is purchased and placed in service within Hawaii after December 31, 1987. C, on the other hand, is not eligible to receive a credit for the tractor-while C's purchase of eligible property results in the imposition and payment of tax at the rate of four percent under chapter 237, HRS, the tractor is not considered to be purchased and placed in service since the tractor was owned during 1987 by a related person (i.e., A).
Example 2. Taxpayer A is in the business of selling flowers. In 1987, A purchases tractors for use in the flower business. A does not hold the tractors as inventory since A is not in the business of selling tractors. In 1988, A sells the tractors to Taxpayer B and C. B is in the business of landscaping and C is in the business of roofing. Assume that the tractors qualify as eligible property in the hands of B and C (i.e., used section 38 property). The sales to B and C are not subject to the imposition and payment of tax at the rate of four percent under chapter 237, HRS, because the transactions constitute "casual sales" within the meaning of section 237-1, HRS, which are exempt from general excise taxation. In this case, neither B nor C is eligible to receive a credit for the purchase of the tractors because the tractor sales were not subject to the imposition and payment of tax at the rate of four percent under chapter 237, HRS.
Haw. Code R. § 18-235-110.7-09