W. Va. Code R. § 110-21F-6

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

Section 110-21F-6 - Determining the qualified investment

6.1. In order to be eligible for the coal severance tax rebate, a qualified investment must be made that results in increased production of coal and increased workforce.

6.2. The capital investment must be in new machinery or new equipment, repairs or refurbishment of machinery or equipment that his capitalized for federal income tax purposes, or infrastructure improvements to real property. A qualified investment must be in tangible personal property and can only be made in one of the following, although multiple qualified investments can be made at the same mine. This list is inclusive.

6.2.1. New machinery used directly in the production of coal that is depreciable, or amortizable, for federal income tax purposes and has a useful life for federal income tax purposes of five or more years when it is placed in service or use in this state; or

6.2.2. Refurbished or rebuilt machinery or equipment used directly in the production of coal that is depreciable, or amortizable, for federal income tax purposes and has a useful life for federal income tax purposes of five or more years when it is placed in service or use in this state; or

6.2.3. Improvements to real property used directly in the production of coal that is depreciable, or amortizable, for federal income tax purposes and has a useful life for federal income tax purposes of five or more years when it is placed in service or use in this state.

6.2.4. Repair or refurbishment costs to tangible personal property directly used in the production of coal that are incurred on or after July 1, 2019, which are capitalized for federal income tax purposes.

6.3 The capital investment must be directly used in the production of coal.

6.3.1 The qualified investment must be a capital asset within the meaning of I.R.C. §1221.

6.3.2 The property must have a useful life for federal income tax purposes of five or more years when it is placed into service in this state.

6.3.3 Depreciation, or amortization in lieu of depreciation, must be allowable for federal income tax purposes with respect to the tangible personal property for the taxable year in which the property is placed in service or use by the taxpayer.

6.3.4. The first use of the qualified investment property by anyone in this state must be by the taxpayer when making the qualified investment that results in taxpayer's increased coal production and increased workforce.

6.4. The following are not qualified investments. This list is merely illustrative and does not include every investment that is not eligible for the coal severance tax rebate.

6.4.1. Real property, including land, mineral rights, a coal mine, or an expansion of the geographical boundaries of a pre-existing mine.

6.4.2. Used property.

6.4.3. Intangible personal property.

6.4.4. Machinery and equipment owned or leased by the taxpayer for which an economic, industrial, or other type of credit was taken or is claimed under any article of chapter 11 of the W. Va. Code.

6.4.5. Repair costs, including the cost of materials used in the repair, do not qualify as qualified investments unless for federal income tax purposes they are required to be capitalized and not expensed.

6.4.6. Motor vehicles licensed by the West Virginia Division of Motor Vehicles or any other state authority with jurisdiction to license on-road vehicles.

6.4.7. Airplanes or helicopters.

6.4.8. Off-premise transportation equipment.

6.4.9. Machinery or equipment that is acquired incidental to the purchase of the stock or assets of the seller.

6.5. The qualifying investment must be directly used by the taxpayer or its successor in accordance with section heading 9 of this rule in the production of coal as defined in W. Va. Code § 11-13EE-2(b)(13) in this state for at least five years after it is placed in service or use in this state. When the property is used for less than five years, a recapture tax may apply. See W. Va. Code § 11-13EE-11 and section heading 13 of this rule.

6.6. For purposes of this rebate, "leased" property is treated like "purchased" property provided the primary term of the lease is for at least five years and the lessee may take depreciation, or amortization in lieu thereof, for federal income tax purposes and the first use of the leased property by anyone is the current lessee.

W. Va. Code R. § 110-21F-6