Does equipment relocated from another state into a Nebraska Advantage Act project count as qualified investment, even though it was used out of state first?

Plain-English summary

A business relocating to Nebraska often brings existing equipment with it rather than buying everything new. Does that moved-in equipment count as qualified investment under the Nebraska Advantage Act — or does the Act only reward brand-new purchases? This ruling settles it.

The holding: relocated property counts. Qualified property moved into Nebraska and placed in service in the state for the first time after the application date is considered investment in Nebraska — even if the same property was placed in service in another state before the application.

Why. The Act's stated purposes include encouraging investment, the creation of new jobs, and the relocation of businesses into Nebraska. State policy is expressly to revise the tax structure to encourage new businesses to relocate here (Neb. Rev. Stat. § 77-5702). The Department reasoned the benefit to the state is substantially the same whether the new jobs come with newly purchased property or with existing property moved into the state — and because the Act does not limit investment to new purchases, relocated property qualifies both for meeting the required investment level and for computing the investment credit.

How moved-in property is valued:

• Owned property — use the original cost of the property.
• Leased property — use the net annual lease amount multiplied by the number of years of the original lease term that remain at the time the property is moved into Nebraska.

What this means for you

Businesses relocating operations to Nebraska

Equipment you already own and move here isn't second-class for the Advantage Act. As long as it's first placed in service in Nebraska after your application date, its original cost counts toward your required investment and your investment credit — you don't have to re-buy assets to qualify.

Businesses leasing relocated equipment

Value leased moved-in property by the net annual lease amount times the remaining years of your original lease commitment as of the move date — not the full original lease term.

Timing caution

The property must be first placed in service in Nebraska after the date of the application. Equipment already running at your Nebraska site before you applied would not fit this ruling's "moved in after application" rule.

Common questions

Q: I'm moving used equipment from another state. Does it count as investment?
A: Yes, if it is placed in service in Nebraska for the first time after your Advantage Act application date. The Act does not limit investment to new purchases.

Q: Does it matter that the equipment was already used (placed in service) in the other state?
A: No. Property first placed in service in Nebraska after the application date qualifies, even though it was placed in service elsewhere before the application.

Q: How is the value of moved-in leased property figured?
A: By the net annual lease amount times the number of years of the original lease term remaining when the property is moved into Nebraska.

Citations and references

• Neb. Rev. Stat. § 77-5702 -- states the policy of Nebraska to revise its tax structure to encourage new businesses to relocate to the state.

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/revenue-rulings-issued-tax-commissioner
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/rulings/rr290508_equipment_moved.pdf

Original ruling text

Revenue Ruling 29-05-8
Economic Development Tax Incentives
December 20, 2005
Economic Development Tax Incentives -- Equipment Moved Into the State. QUALIFIED
PROPERTY MOVED INTO AND PLACED IN SERVICE FOR THE FIRST TIME IN NEBRASKA
AFTER THE DATE OF APPLICATION UNDER THE NEBRASKA ADVANTAGE ACT WILL
BE CONSIDERED INVESTMENT IN THIS STATE.
Advice has been requested as to whether property that meets all the criteria to be considered
investment except that it was placed in service in another state prior to the date of application
and was moved into Nebraska and first placed in service in Nebraska after the date of application
qualifies as investment under the Nebraska Advantage Act.
The taxpayer has applied for an agreement under the Nebraska Advantage Act for a project that
includes the relocation of equipment from another state into the project in Nebraska. All of the
equipment will be relocated into Nebraska after the date of the application.
The intent of the Act is to provide incentives for the investment in and creation of new jobs in
Nebraska, and one of the stated purposes of the Act is to encourage the relocation of businesses
into the state. The benefit to the state is substantially the same whether the new jobs are coupled
with the purchase of new property or the moving of existing property into the state.
Section 77-5702, R.S.Supp. 2005, provides in part that:
. . . It is the policy of this state to make revisions in Nebraska’s tax structure in order to
encourage new businesses to relocate to Nebraska, . . . .
The Act requires an investment in qualified property in Nebraska in order for the taxpayer to
receive the benefits allowable under the Act. Since the Act does not limit the investment to new
purchases, property that is placed in service in Nebraska for the first time after the date of the
application will qualify for the purpose of meeting the required level of investment and for the
computation of the credit on investment.
The property that is moved into the state will be valued in the following manner. For property
owned by the taxpayer, the original cost of the property will be used. For property leased by the
taxpayer, the value of the property shall be the net annual lease amount multiplied by the number
of years of the lease for which the taxpayer was originally bound that are remaining at the time the
property is moved into Nebraska.
APPROVED:

Mary Jane Egr
State Tax Commissioner
December 20, 2005

Nebraska Department of Revenue, PO Box 94818, Lincoln, Nebraska 68509-4818