Tax credits for purchase of recycling equipment.

• Author: Moore, Philip E.

To encourage the development or expansion of recycling systems, effective Jan. 1, 1993-Jan. 1, 2004, Virginia allows individuals, corporations and partnerships or other legal business entities to take a 10% income tax credit for the purchase of machinery and equipment used in processing recyclable materials. The credit is equal to 10% of the equipment's original total capitalized cost, less capitalized interest. The total credit allowed cannot exceed 40% of the Virginia income tax liability in any tax year; however, the unused portion of the credit can be carried over for the next 10 years. The credit applies to corporations as well as partnerships and S corporations, in which case the credit shall be allocated to the individual partners or shareholders in proportion to their ownership or interest in the partnership or S corporation.

To qualify for this tax credit, an individual or corporation must receive certification from the Director of the Department of Environmental Quality (DEQ) on Form DEQ 50-11S that the machinery and equipment are integral to the recycling process. The machinery or equipment must be used primarily to recess recyclable material to meet a manufacturer's material input specifications or to incorporate recyclable material into a manufacturing process. Form DEQ 50-11S should include detailed information on machinery and equipment use, their locations, a statement that would qualify the purchase for the tax credit, the purchase price of the machinery and equipment and documentation of ownership. If the application is approved by the DEQ, the Director of the DEQ will sign Form DEQ 50-11S. To qualify for a state income tax credit, the applicant must attach the signed form (or other certification document prepared by the DEQ) along with documentary proof of the purchase price paid to its Virginia return, even if the purchaser carries the tax credit...