Credit for Investment in a Biodiesel Facility
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (Department) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of the Department and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.
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Taxpayers investing in a biodiesel facility after January 1, 2008 and before January 1, 2015 may receive a nonrefundable income tax credit, provided all of the following conditions are met:
- The biodiesel facility is located in Nebraska.
- At least 51% of the ownership of the facility must be held by Nebraska resident individuals or Nebraska entities.
- The entire investment in the biodiesel facility must be at risk and in the form of a purchase of an ownership interest or the right to receive payment of dividends from the biodiesel facility.
- The biodiesel facility must maintain its business operations in Nebraska for at least three years.
- The facility must produce B100 biodiesel at a rate of:
a. At least 70% of its rated capacity for at least one continuous week during the first taxable year the credit is taken.
b. At least 70% of its rated capacity over a six-month period during the next two taxable years the credit is taken.
- All processing takes place at the biodiesel facility in which the investment was made and which is located in Nebraska.
- The facility provides the Department of Revenue with written documentation that the facility has received the requisite operating authorities from the Nebraska Department of Environmental Quality and the United States Department of Justice, Bureau of Alcohol, Tobacco, Firearms, and Explosives.
- The facility annually provides the Department of Revenue with an analysis of the B100 prepared by an independent laboratory. Prior to taking a sample, the facility shall notify this Department which may observe the sampling procedures.
- The entire amount of the investment must be expended by the biodiesel facility for plant, equipment, research and development, marketing and sales activity, or working capital.
The credit is equal to thirty percent of the amount invested by the taxpayer in the biodiesel facility and each taxpayer is limited to an aggregate maximum credit of $250,000. For pass-through entities such as partnerships, S corporations, and limited liability companies that invest in a biodiesel facility, the $250,000 credit limit is determined at the entity level. Pass- through entities that invest in a biodiesel facility may distribute the credit calculated at the entity level to their partners, shareholders, or members in proportion to their ownership interest in the pass-through entity.
A taxpayer's use of the biodiesel facility credit is limited in each tax year as follows:
- The credit must be taken over at least four taxable years.
- No more than 10% of the credit may be taken in each of the first two taxable years the biodiesel facility produces B100.
- No more than 50% of the credit may be taken in the third taxable year the biodiesel facility produces B100.
- The credit taken in any taxable year cannot exceed 50% of the taxpayer's tax liability.
- Any amount of credit not allowed due to the limitations in numbers 1 through 4 above may be carried forward for up to fifteen taxable years after the investment was made.
The taxpayer's investment in the facility must be maintained for at least three years to avoid recapture of any tax credit taken.
Please contact Tom Milburn in the Policy Division at 402-471-5814 if you have any additional questions regarding this credit.
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