0001|                            HOUSE BILL 591
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0002|     43rd legislature - STATE OF NEW MEXICO - first session, 1997
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0003|                            INTRODUCED BY
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0004|                             GARY K. KING
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0005|     
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0006|                                   
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0007|     
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0008|                                   
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0009|     
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0010|                                AN ACT
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0011|     RELATING TO TAXATION; PROVIDING A TAX CREDIT FOR AGRICULTURAL
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0012|     WATER CONSERVATION EXPENSES AGAINST PERSONAL AND CORPORATE
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0013|     INCOME TAX LIABILITY.
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0014|     
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0015|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0016|          Section 1.  A new section of the Income Tax Act is enacted
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0017|     to read:
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0018|          "[<u>NEW MATERIAL</u>]  INDIVIDUAL TAX CREDIT--AGRICULTURAL
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0019|     WATER CONSERVATION EXPENSES.--
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0020|               A.  To encourage the conservation of water in
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0021|     agricultural activities, any taxpayer who files an individual
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0022|     New Mexico income tax return and who is not the dependent of
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0023|     another individual may claim a credit against his income tax
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0024|     liability equal to seventy-five percent of his incurred
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0025|     expenses, not to exceed a maximum credit of fifty thousand
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0001|     dollars ($50,000), for purchasing and installing equipment for
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0002|     an agricultural water conservation system in the year in which
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0003|     the expenses are incurred.
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0004|               B.  To qualify for the credit pursuant to this
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0005|     section:
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0006|                    (1)  the agricultural water conservation system
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0007|     equipment must be primarily designed to substantially conserve
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0008|     water on land in this state that is owned by the taxpayer and
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0009|     used by the taxpayer or the taxpayer's tenant to:
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0010|                         (a)  produce crops, fruits or other
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0011|     agricultural products;
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0012|                         (b)  raise, harvest or grow trees; or
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0013|                         (c)  sustain livestock;
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0014|                    (2)  the expense must be incurred after January
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0015|     1, 1998 and must be consistent with an effective water
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0016|     conservation plan that the taxpayer has filed with the United
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0017|     States department of agriculture natural resources conservation
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0018|     service; and
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0019|                    (3)  the land on which the water conservation
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0020|     system equipment is located must be located in this state and
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0021|     be entirely in an area identified, in the taxable year or in
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0022|     any  preceding taxable year, as an area of extreme drought
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0023|     severity on the Palmer drought severity index published by the
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0024|     national oceanic and atmospheric administration.
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0025|               C.  Co-owners of the land on which the water
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0001|     conservation system equipment is installed, including partners
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0002|     in a partnership and shareholders of an S corporation, as
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0003|     defined in Section 1361 of the Internal Revenue Code, may each
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0004|     claim only the pro rata share of the credit allowed under this
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0005|     section based on the ownership interest.  The total of the
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0006|     credits allowed all such owners may not exceed the amount that
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0007|     would have been allowed a sole owner of the land.
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0008|               D.  A husband and wife who file separate returns for
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0009|     a taxable year in which they could have filed a joint return
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0010|     may each claim only one-half of the credit that would have been
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0011|     allowed on a joint return.
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0012|               E.  If the allowable tax credit in the year the
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0013|     credit becomes claimable exceeds the taxes otherwise due under
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0014|     the Income Tax Act on the taxpayer's income, or if there are no
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0015|     income taxes due from the taxpayer, the taxpayer may carry
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0016|     forward the amount of the credit not used in that year to
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0017|     offset taxes under the Income Tax Act for not more than five
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0018|     consecutive taxable years' income tax liability.  This credit
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0019|     may only be deducted from the taxpayer's income tax liability.
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0020|               F.  This credit may not be claimed if any deduction
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0021|     for such expenses is claimed under the Internal Revenue Code.
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0022|               G.  The soil and water conservation bureau of the
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0023|     forestry division of the energy, minerals and natural resources
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0024|     department shall promulgate rules and regulations to implement
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0025|     this section and establish guidelines to determine whether
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0001|     water conservation system equipment qualifies for the credit
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0002|     available under this section."
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0003|          Section 2.  A new section of the Corporate Income and
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0004|     Franchise Tax Act is enacted to read:
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0005|          "[<u>NEW MATERIAL</u>]  CORPORATE TAX CREDIT--AGRICULTURAL
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0006|     WATER CONSERVATION EXPENSES.--
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0007|               A.  To encourage the conservation of water in
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0008|     agricultural activities, any taxpayer who files a New Mexico
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0009|     corporate income tax return may claim a credit against its
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0010|     corporate income tax liability equal to seventy-five percent of
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0011|     its incurred expenses, not to exceed a maximum credit of fifty
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0012|     thousand dollars ($50,000), for purchasing and installing
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0013|     equipment for an agricultural water conservation system.
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0014|               B.  To qualify for the credit pursuant to this
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0015|     section:
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0016|                    (1)  the agricultural water conservation system
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0017|     equipment must be primarily designed to substantially conserve
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0018|     water on land that is owned by the taxpayer and used by the
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0019|     taxpayer or the taxpayer's tenant to:
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0020|                         (a)  produce crops, fruits or other
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0021|     agricultural products;
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0022|                         (b)  raise, harvest or grow trees; or
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0023|                         (c)  sustain livestock;
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0024|                    (2)  the expense must be incurred after January
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0025|     1, 1998 and must be consistent with an effective water
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0001|     conservation plan that the taxpayer has filed with the United
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0002|     States department of agriculture natural resources conservation
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0003|     service; and
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0004|                    (3)  the land on which the water conservation
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0005|     system equipment is located must be located in this state and
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0006|     be entirely in an area that has been identified, in the taxable
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0007|     year or in any preceding taxable year, as an area of extreme
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0008|     drought severity on the Palmer drought severity index published
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0009|     by the national oceanic and atmospheric administration.
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0010|               C.  Co-owners of the land on which the water
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0011|     conservation system equipment is installed, including corporate
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0012|     partners in a partnership, may each claim only the pro rata
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0013|     share of the credit allowed under this section based on the
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0014|     ownership interest.  The total of the credits allowed all such
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0015|     owners may not exceed the amount that would have been allowed a
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0016|     sole owner of the land.
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0017|               D.  If the allowable tax credit in the year the
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0018|     credit becomes claimable exceeds the taxes otherwise due under
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0019|     the Corporate Income and Franchise Tax Act on the taxpayer's
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0020|     corporate income, or if there are not taxes due under the
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0021|     Corporate Income and Franchise Tax Act, the taxpayer may carry
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0022|     forward the amount of the credit not used to offset taxes under
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0023|     the Corporate Income and Franchise Tax Act for not more than
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0024|     five consecutive taxable years' corporate income tax liability.
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0025|               E.  The credit may not be claimed if any allowance
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0001|     for state tax purposes is taken by the taxpayer for a deduction
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0002|     for such expenses allowed by the Internal Revenue Code.
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0003|               F.  The soil and water conservation bureau of the
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0004|     forestry division of the energy, minerals and natural resources
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0005|     department shall promulgate rules and regulations to implement
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0006|     this section and establish guidelines to determine whether
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0007|     water conservation system equipment qualifies for the credit
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0008|     available under this section."  
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0009|          Section 3.  APPLICABILITY.--The provisions of this act
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0010|     apply to taxable years beginning on and after January 1, 1998.
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0011|          Section 4.  EFFECTIVE DATE.--The effective date of the
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0012|     provisions of this act is July 1, 1998.
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0013|                                 -  -
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