Provides a one-time nonrefundable tax credit to victims of the Manoa flood of October 2004. (SD1)

A BILL FOR AN ACT

SECTION 1. (a) There shall be allowed to each taxpayer who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who files a net income tax return for a taxable year, a one-time nonrefundable Manoa flood victim tax credit that shall be deductible from the taxpayer's net income tax liability imposed by chapter 235.

(b) The amount of the nonrefundable tax credit shall be equal to ten per cent of the losses incurred by the taxpayer for repairs, insurance, rental, or other expenses or costs related to damage caused to the taxpayer's real or personal property by the heavy rain and flood in late October of 2004 in Manoa, Oahu; provided that the nonrefundable tax credit shall be ten per cent of the total loss or $10,000 per taxpayer, whichever is greater; and provided further that no refund or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.

(c) To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

(d) If the tax credit under this section exceeds the taxpayer's net income tax liability, any excess of the tax credit may be used as a credit against the taxpayer's income tax liability in subsequent taxable years until exhausted.

(e) In the case of a partnership, S corporation, estate, trust, or association of apartment owners, the tax credit allowable is for expenses incurred and paid for by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

(f) If a deduction is taken under section 179 (with respect to election to expense certain depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the expenses for which the deduction is taken.

The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.

(g) No taxpayer that claims the tax credit under this section shall claim any other credit for the same losses or other expenses or costs.

(h) Every claim, including amended claims, for the tax credit under this section shall be filed on or before December 31, 2007. Failure to meet the filing requirements of this subsection shall constitute a waiver of the right to claim the tax credit.

(i) The director of taxation shall prepare any forms as may be necessary to claim a tax credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91 to effectuate the purposes of this section.

SECTION 2. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2003, and ending before January 1, 2007.