Nitrogen Fertilizer Plant Credit

INCOME TAXPAYER-Effective for all taxable years commencing after Dec. 31, 2005 and before Jan. 1, 2011.

An income taxpayer that makes a qualified investment in a new integrated coal or coke gasification nitrogen fertilizer plant or in the expansion of an existing integrated coal or coke gasification nitrogen fertilizer plant shall be allowed a tax credit.

Qualifications

Before making a qualified investment, a taxpayer shall apply to the Secretary of Commerce to enter into an agreement for this tax credit.  After receipt of the application the Secretary of Commerce may enter into an agreement with the applicant for a credit if it is determined that the taxpayer’s proposed investment satisfies the requirements.

Credit Amount

The credit is 10 percent of the taxpayer’s qualified investment on the first $250 million invested, and 5 percent of the taxpayer’s qualified investment that exceeds $250 million. The credit will be taken in ten equal, annual installments, beginning with the year in which the taxpayer places into service the new integrated coal or coke gasification nitrogen fertilizer plant or the expansion of an existing integrated coal or coke gasification nitrogen fertilizer plant.

Limitation of Credit

If the amount of the credit exceeds the taxpayer’s tax liability in any one taxable year, the remaining portion of the credit may be carried forward until the total amount of the credit is used, except that no such tax credit shall be carried over for deduction after the 14th taxable year after the taxable year in which the first annual installment is allowed.

Procedures to Claim the Credit

You may download Schedule K-78 to claim the nitrogen fertilizer plant credit.  This schedule must be completed and submitted with the income tax return.  You may also call the Department of Revenue voice mail system at 785-296-4937 to request Schedule K-78.  You will be asked to give your name, address, phone number and form(s) you desire.  Please allow two weeks for delivery of your forms.


Qualified Investment

Qualified investment means expenditures made in construction of a new integrated coal or coke gasification nitrogen fertilizer plant or expansion of an existing integrated coal or coke gasification nitrogen fertilizer plant, for real and tangible personal property incorporated in an used as part of the plant.

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Integrated Coal or Coke Gasification Nitrogen Fertilizer Plant

Integrated coal or coke gasification nitrogen fertilizer plant means a facility which: (1) Is located in Kansas, (2) converts coal or petroleum coke into synthesis gas and (3) uses the synthesis gas to produce nitrogen fertilizer.  A new integrated coal or coke gasification nitrogen fertilizer plant means a coal or coke gasification nitrogen fertilizer plant, construction of which begins after Dec. 31, 2005.

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Expansion of an Existing Coal or Coke Gasification Nitrogen Fertilizer Plant

Expansion of an existing coal or coke gasification nitrogen fertilizer plant means expansion which begins after Dec. 31, 2005, of the capacity of an existing coal or coke gasification nitrogen fertilizer plant by at least 20 percent of the capacity.

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