46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO TAXATION; PROVIDING FOR AN INCOME TAX CREDIT FOR QUALIFIED SMALL BUSINESSES OR FARMS; ENACTING SECTIONS OF THE NMSA 1978.

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] QUALIFIED SMALL BUSINESS OR FARM--INCOME TAX CREDIT.--

A. A taxpayer who files an individual New Mexico income tax return, who is not a dependent of another individual and who is the primary obligor on a federally guaranteed loan may claim a credit in an amount equal to the guaranty fee paid by the taxpayer on the federally guaranteed loan, not to exceed five thousand dollars ($5,000).

B. A taxpayer may claim the credit provided in this section for the taxable year in which the guaranty fee on a federally guaranteed loan was paid. The credit may only be deducted from the taxpayer's income tax liability. Any portion of the maximum tax credit provided by this section that remains unused at the end of the taxpayer's taxable year may be carried forward for four consecutive taxable years; provided that the total tax credits claimed under this section shall not exceed the lower of the amount of the guaranty fee paid on the federally guaranteed loan or five thousand dollars ($5,000).

C. 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 provided in this section that would have been allowed on a joint return.

D. As used in this section:

(1) "federally guaranteed loan" means a loan obtained by a small business or farm and guaranteed by the federal small business administration, the United States department of agriculture's farm service agency or rural development program or the federally chartered enchantment land certified development corporation; and

(2) "small business or farm" means a corporation, partnership, sole proprietorship, farm business or other business in the state that qualifies for a federally guaranteed loan."

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

"[NEW MATERIAL] QUALIFIED SMALL BUSINESS OR FARM-- CORPORATE INCOME TAX CREDIT.--

A. A taxpayer that files a New Mexico corporate income tax return may claim a credit in an amount equal to the guaranty fee paid by the taxpayer on a federally guaranteed loan, not to exceed five thousand dollars ($5,000). The credit may be claimed by:

(1) the primary obligor on the federally guaranteed loan; or

(2) a banking association or credit union that is the lender on the federally guaranteed loan; provided that the lender did not in any way recover the guaranty fee from the borrower.

B. The credit provided in this section may be claimed for the taxable year in which the guaranty fee on a federally guaranteed loan was paid. The credit may only be deducted from the taxpayer's corporate income tax liability. Any portion of the maximum tax credit provided by this section that remains unused at the end of the taxpayer's taxable year may be carried forward for four consecutive taxable years; provided that the total tax credits claimed under this section shall not exceed the lower of the amount of the guaranty fee paid on the federally guaranteed loan or five thousand dollars ($5,000).

C. As used in this section:

(1) "federally guaranteed loan" means a loan obtained by a small business or farm and guaranteed by the federal small business administration, the United States department of agriculture's farm service agency or rural development program or the federally chartered enchantment land certified development corporation; and

(2) "small business or farm" means a corporation, partnership, sole proprietorship, farm business or other business in the state that qualifies for a federally guaranteed loan."

Section 3. APPLICABILITY.--The provisions of this act apply to tax years beginning on or after January 1, 2003.