44th legislature - STATE OF NEW MEXICO - second session, 2000

RELATING TO TAXATION; PROVIDING A PERSONAL INCOME TAX AND CORPORATE INCOME TAX CREDIT FOR AGRICULTURAL WATER CONSERVATION EXPENSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] TAX CREDIT--AGRICULTURAL WATER CONSERVATION EXPENSES.--

A. A taxpayer may claim a credit against his income tax for up to one thousand dollars ($1,000) for improvements in irrigation systems or water management methods if the taxpayer:

(1) holds a water right in New Mexico;

(2) files an individual New Mexico income tax return; and

(3) is not the dependent of another individual.

B. Expenses that qualify for the credit pursuant

to this section are improvements:

(1) in irrigation systems or water management methods approved and verified by the local soil and water conservation district;

(2) on land in this state that is owned by the taxpayer and used by the taxpayer or the taxpayer's tenant to grow agricultural products;

(3) incurred after January 1, 2001;

(4) consistent with a water conservation plan filed with the local soil and water conservation district; and

(5) on land entirely in a described area. C. Co-owners of the land on which the improvements in irrigation systems or water management methods occur, including partners in a partnership, shareholders of an S corporation as defined in Section 1361 of the Internal Revenue Code of 1986 and limited liability corporations, may each claim only the pro rata share of the credit allowed pursuant to this section based on the ownership interest.

D. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed on a joint return.

E. If the allowable tax credit exceeds the taxes otherwise due pursuant to the Income Tax Act on the taxpayer's income for a taxable year, or if there are no income taxes due from the taxpayer, the taxpayer may carry forward the amount of the credit not used in that year to offset taxes pursuant to the Income Tax Act for not more than five consecutive taxable years' income tax liability. This credit may only be deducted from the taxpayer's income tax liability.

F. The soil and water conservation commission shall adopt rules to implement this section and establish guidelines for approved improvements in irrigation systems or water management methods."

Section 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] TAX CREDIT--AGRICULTURAL WATER CONSERVATION EXPENSES.--

A. A taxpayer who files a New Mexico corporate income tax return may claim a credit against his corporate income tax liability, not to exceed a maximum credit of one thousand dollars ($1,000), for improvements in irrigation systems or water management methods if the taxpayer holds a water right in New Mexico.

B. Expenses that qualify for the credit pursuant to this section are improvements:

(1) in irrigation systems or water management methods approved by the local soil and water conservation district;

(2) on land in this state that is owned by the taxpayer and used by the taxpayer or the taxpayer's tenant to grow agricultural products;

(3) incurred after January 1, 2001;

(4) consistent with a water conservation plan filed with the local soil and water conservation district; and

(5) on land entirely in a described area.

C. Co-owners of the land on which the improvements in irrigation systems or water management methods occur, including corporate partners in a partnership, may each claim only the pro rata share of the credit allowed pursuant to this section based on the ownership interest.

D. If the allowable tax credit exceeds the taxes otherwise due pursuant to the Corporate Income and Franchise Tax Act on the taxpayer's corporate income, or if there are not taxes due pursuant to the Corporate Income and Franchise Tax Act, the taxpayer may carry forward the amount of the credit not used to offset taxes pursuant to the Corporate Income and Franchise Tax Act for not more than five consecutive taxable years' income tax liability. This credit may only be deducted from the taxpayer's corporate income tax liability.

E. The soil and water conservation commission shall adopt rules to implement this section and establish guidelines for approved improvements in irrigation systems or water management methods."

Section 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2001.

Section 4. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2001.