Title 44
Taxation

Chapter 11
Business Corporation Tax

§ 44-11-11.1. Amortization of air or water pollution prevention or hazardous solid waste control facilities.

(a)(1) General rule. Every taxpayer, at his or her election, is entitled to a deduction with respect to the amortization of the adjusted basis, for determining gain, of any treatment facility, as defined in subsection (d) of this section, based on a period of sixty (60) months. The amortization deduction shall be an amount, with respect to each month of the period within the taxable year, equal to the adjusted basis of the facility at the end of the month divided by the number of months, including the month for which the deduction is computed, remaining in the period. The adjusted basis at the end of the month shall be computed without regard to the amortization deduction for the month.

(2) The amortization deduction with respect to any month shall be in lieu of the depreciation deduction with respect to the facility for the month provided for under § 44-11-11. The sixty (60) month period shall begin as to any prevention or treatment facility, at the election of the taxpayer, with the month following the month in which the facility was completed, or with the succeeding taxable year.

(b) Election of amortization. The election of the taxpayer under subsection (a) of this section to take the amortization deduction and to begin the sixty (60) month period with the month following the month in which the facility was completed shall be made only by a statement to that effect in the return for the taxable year in which the facility was completed. The election of the taxpayer under subsection (a) of this section to take the amortization deduction and to begin the period with the taxable year succeeding the year shall be made only by a statement to that effect in the return for the succeeding taxable year.

(c) Termination of amortization deduction. A taxpayer which has elected under subsection (b) of this section to take the amortization deduction provided in subsection (a) of this section may, at any time after making the election, discontinue the amortization deduction with respect to the remainder of the amortization period, the discontinuance to begin as of the beginning of any month specified by the taxpayer in a notice, in writing, filed with the tax administrator before the beginning of the month. The depreciation deduction provided for under § 44-11-11 shall be allowed, beginning with the first month as to which the amortization deduction does not apply, and the taxpayer shall not be entitled to any further amortization deduction with respect to the treatment facility.

(d) Treatment facility. For purposes of this section, “treatment facility” means any land, facility, device, building, machinery, or equipment, the construction, reconstruction, erection, installation, or acquisition of which: (1) is in furtherance of or in compliance with federal or state requirements or standards for the control of water or air pollution or contamination; (2) has been made by the taxpayer primarily to control the pollution or chapter 25 of title 23, respectively; and (3) has been certified as approved in an order contamination of the water or the air of the state as defined in chapter 12 of title 46 and entered by the director of environmental management. This provision applies only to water and air pollution control properties and facilities that are installed for the treatment of waste waters and air contaminants resulting from industrial processing. It applies only to water or air pollution control properties and facilities placed in operation for the first time after April 13, 1970.

(e) Prevention facility. For purposes of this section, “prevention facility” means any land, facility, device, building, machinery, or equipment, the construction, reconstruction, erection, installation, or acquisition of which: (1) is in furtherance of or in compliance with federal or state requirements or standards for the prevention of water or air pollution or contamination; (2) has been made by the taxpayer primarily to prevent the pollution or contamination of the water or the air of the state as defined in chapter 12 of title 46 and chapter 25 of title 23, respectively; and (3) has been certified as approved by the director of environmental management. This provision applies only to water and air pollution prevention properties and facilities that are installed for the prevention of wastewaters, air contaminants, and hazardous solid wastes resulting from industrial processing. The prevention facility amortization deduction shall be available prospectively on July 13, 2000.

(f) Certificate of compliance. Any taxpayer who has adopted a “treatment facility” as defined in subsection (d) of this section shall be entitled to the deduction afforded in subsection (a) of this section; provided, that in no event shall an amortization deduction be allowed in respect to any “treatment facility” for any taxable year unless an attested copy of the order of approval of the facility entered by the director of environmental management and a written statement of the department certifying that the installation of the facility has been completed and that it is in proper operation are provided to the tax administrator at the time of filing of the taxpayer’s return.

(g) Deduction from apportioned net income. The deduction taken under subsection (a) of this section on any treatment facility shall, in the case of a taxpayer whose income is subject to apportionment under the provisions of § 44-11-14, be deducted from the portion of its entire net income allocated to this state; provided, that its entire net income is computed without any deduction for depreciation or amortization of any facility.

(h) Amortization not to exceed cost. The total of all deductions for depreciation and amortization of any treatment facility allowed pursuant to the provisions of this and the succeeding section shall not exceed its cost.

(i) Amortization in excess of depreciation. Gain from the sale or exchange of any treatment facility which has been sold or exchanged by a taxpayer which has been constructed, reconstructed, erected, installed, or acquired the facility as provided under subsection (f) of this section and has taken the deduction provided by subsection (a) of this section, to the extent that the adjusted basis of the facility is less than its adjusted basis determined by the method provided for under § 44-11-11, shall be considered additional net income. In the case of a taxpayer whose net income is subject to apportionment under the provisions of § 44-11-14, the additional net income shall be specifically allocated to this state and is not subject to apportionment.