Mississippi Administrative Code › Title 35 - Department of Revenue › Part 3 - Income and Franchise › Subpart 05 - Business Deductions General › Chapter 09 - Reforestation Tax Credit › Section 35-3-05-09-103 - Verification and Certification

Current through June 25, 2024
1. The RTC is based
				  on eligible expenditures made during each taxable year (as limited in the
				  statute) for seedlings, seed/acorns, seeding, planting by hand or machine, site
				  preparation, and post-planting site preparation on all eligible acres. When an
				  approved reforestation practice, as defined in the statute, is completed in the
				  taxable year, the RTC may be computed and claimed with respect to all of the
				  eligible costs of the completed practice. Verification by a qualified forester
				  that the reforestation practice(s) were completed and that the reforestation
				  prescription or plan was followed is required in order to claim the
				  reforestation tax credit. A determination must be made on a year by year basis
				  to determine if the costs incurred during that year are eligible expenditures
				  for approved reforestation practices for eligible tree species on eligible
				  lands. The fact that expenditures made under a prescription or plan during one
				  year do not qualify (for example: some cost share assistance was received and
				  the taxpayer's adjusted gross income exceeded the federal earned income credit
				  level) does not mean that expenditures made under the same prescription or plan
				  in the subsequent or prior year would not qualify for the credit (for example:
				  some cost share assistance was received in the subsequent year, but, in that
				  year, the taxpayer's adjusted gross income was less than the federal earned
				  income credit level). In the event that RTC is earned with respect to a
				  practice completed during a taxable year, and the overall prescription or plan
				  is, for any reason, not subsequently completed in its entirety, any RTC
				  previously earned must be recaptured in full.
2. When a pass-through entity (generally, a
				  partnership or S Corporation) is the eligible owner and makes expenditures
				  qualifying for the RTC, the credit is passed through to the investors who may
				  utilize the credit to offset all or a portion of their income tax liability.
				  The Schedule K-1 issued by the pass-through entity to the investor should
				  indicate the investor's allocated RTC. Also, a copy of the pass-through
				  entity's RTC form containing the certification of a qualified forester as
				  required by the statute, should be furnished to the investor to substantiate
				  his claim for the credit on his income tax return. A copy of the RTC form
				  provided by the pass-through entity should be attached to the investor's RTC
				  form prepared and filed with the investor's income tax return. Regulation 803
				  provides that an income tax credit allowed to an S corporation may be passed on
				  to the shareholders but may only be used to offset and reduce tax on income of
				  the S corporation allocated to the shareholders. Similar restrictions are
				  implied with respect to income tax credits allowed to partnerships and other
				  pass-through entities which are passed on to their investors. Notwithstanding
				  this statement in Regulation 803 and the similar implied restrictions relating
				  to partnerships and other pass-through entities, the reforestation tax credit
				  received from pass-through entities may, subject to the limitations stated in
				  Section
				  27-7-22.15,
				  be used by investors to offset all or a portion of their income tax
				  liability.