NE 29-87-8 Tax Incentives 1987-11-09

If a company moves used equipment from another state into its Nebraska LB 775 project, does that equipment count as a qualifying investment in Nebraska?

Short answer: Yes. Under Revenue Ruling 29-87-8, qualified property placed in service in Nebraska for the first time after filing an application under the Employment and Investment Growth Act (LB 775) is an investment in this state -- even if the property was originally placed in service in another state and then moved into Nebraska. Because a stated purpose of the Act is to encourage businesses to relocate to Nebraska, and the Act does not limit qualifying investment to new purchases, relocated equipment counts toward the required investment level and the investment credit. The moved property is valued as follows: property owned by the taxpayer is valued at its original cost (as defined in Revenue Ruling 29-87-1, Original Cost); property leased by the taxpayer is valued at the net annual lease amount multiplied by the number of years of the lease the taxpayer was originally bound to that remain when the property is moved into Nebraska.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

Nebraska's Employment and Investment Growth Act (LB 775) gave tax benefits to companies that hit certain investment and employment levels after signing an agreement with the state. A common question was whether used equipment relocated from another state could count toward the required Nebraska investment. An earlier ruling, 29-87-2 (Time of Investment), said property has to be placed into service after the date of the application to qualify. This ruling applies that principle to equipment that was first used in another state and then moved to Nebraska.

The core holding: qualified property placed in service in Nebraska for the first time after filing an application under the Employment and Investment Growth Act will be an investment in this state -- regardless of whether it had already been placed in service somewhere else first.

The Department reasoned from the Act's purpose. 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," and one stated purpose of the Act is to encourage the relocation of businesses into the state. The benefit to Nebraska "is substantially the same whether the new jobs are coupled with the purchase of new property or the moving of other property into the state." Because the Act does not limit qualifying investment to new purchases, property placed in service in Nebraska for the first time after the application date qualifies both for meeting the required investment level and for computing the investment credit.

How the moved property is valued:

Owned property -- valued at its original cost, as defined in Revenue Ruling 29-87-1 (Original Cost).
Leased property -- valued at the net annual lease amount multiplied by the number of years of the lease the taxpayer was originally bound to that remain at the time the property is moved into Nebraska.

What this means for you

A company relocating a facility (and its equipment) to Nebraska under LB 775

Your used machinery isn't disqualified just because it ran in another state first. As long as it is placed in service in Nebraska for the first time after your application date, it counts toward your required investment and your investment credit.

Timing is the pivot

The controlling date is your application date. Equipment placed into service in Nebraska before you file does not qualify under this reasoning; equipment brought online in Nebraska after you file does. Track the in-service-in-Nebraska date for each asset.

Getting the numbers right

Value owned equipment at original cost (see Revenue Ruling 29-87-1), and value leased equipment at the net annual lease amount times the remaining originally-committed lease years at the move-in point. Keep documentation supporting both.

Common questions

Q: Does used equipment moved from another state count as a Nebraska investment?
A: Yes, if it is placed in service in Nebraska for the first time after you file your Employment and Investment Growth Act application. The Act does not limit qualifying investment to new purchases.

Q: Why does relocated equipment qualify at all?
A: A stated purpose of the Act is to encourage businesses to relocate to Nebraska, and the benefit to the state is substantially the same whether new jobs come with new purchases or with property moved into the state.

Q: How is the moved equipment valued?
A: Owned property at its original cost (per Revenue Ruling 29-87-1); leased property at the net annual lease amount multiplied by the remaining years of the originally-committed lease when it is moved into Nebraska.

Q: Can I rely on this ruling today?
A: It reflects the Department's interpretation of the Employment and Investment Growth Act and is "binding on the Nebraska Department of Revenue until amended," but the incentive program has since evolved. Confirm current law and consult a Nebraska tax professional.

Citations and references

Nebraska Revenue Ruling 29-87-8, "Economic Development Tax Incentives -- Equipment Moved Into the State" (Nebraska Department of Revenue, issued November 9, 1987; approved by State Tax Commissioner Donald S. Leuenberger).
Neb. Rev. Stat. § 77-4102(2) (policy to encourage relocation), as quoted in the ruling.
Related rulings referenced in the text: Revenue Ruling 29-87-2 (Time of Investment) and Revenue Ruling 29-87-1 (Original Cost).

Source

Original ruling text

Revenue Ruling 29-87:8

Economic Devel o ment Tax lncentives - E Ut ment moved into
the State.
QUALI
D
o RTY P CED N SERVI
IN
N BRA
OR
FIRST TIME AFTER FILING AN APPLICATION UNDER THE EivlpLOytvlENT
AN D INVÊSTN/IENT GROWTH ACT WILL BE AN INVESTMENT
IN THIS
STATE.

Advice has been requested as to the effect of Revenue Ruling Zg-g7-2,
entitled Economic Development Tax lncentives - Time of lnvestrnent, on
property that is originally placed into service in another state
and
then is moved into Nebraska. .
taxpayen has applied for an agreement under the Employment and
fht
lnvestment G rowth Act (Act) .
.The taxpayer is cu rrently operating a
ma.nufacturing facility in another
state. The project'includes
relocation of equipment from the other state into the projectthe
in
Nebraska. Most -of the equipment that will be relocated was originally
placed into service in the other state before
filing of the
application, and some of the eguipment that rvill bethe
relocated
been
placed into service after the date of the apprication. Ailhas
of
the
equipment will be relocated into Nebraska after the date,of the
application
.

Section 77-4102(2), R.S.Supp., 1997, provides in part that:

It is the policy of this state to make

revtstons

Nebraska's tax structure in order to encou rage new
businesses to relocate to Nebraska,
Section 77-1103(6), R.S.Supp., lgg7, provides in part that:

lnvestment shail mean the varue
quarif ied
property incorporated into or used at of
the proìect.
For qualifieC property owneC by the taxpayer, the
value shall be the original cost of the
p
rope rty ,

Section 77-4104(3), R, S. Supp. , .lgB7, provides in part that:

once reasonabry satisfiec that the prans of the
applicant constitute a project in a quarified
business within this státe, that the prans wiil
result in either (a) the invesiment in qualiíied
pnoperty of at least th ree million dollars and the
hiring of at least thirty new emproyees or (b) the
investment in quarified property of at least'tweniy
million dollars,
the Tax Commissioner shail

approve the application.

The Act requtres an rnvestment in qualified
in Nebraska in
order fon the taxpayer to receive the benefitsproperty
allowable unCer the Act.

Revenue Ruling 29-87-8

Page 2

Revenue Ruling 29-87-2, Economic Development Tax lncentives - Time of
lnvestment states that the property has to be placed into service 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 Neb.raska, 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 other
property into the state.
Since the Act does not limit the investment to new purchares, property
that is placed ín 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 inv"rtment.

The property that is moved into the state will be valued in the
following mannen. For property owned by the taxpayer, the original
cost of the property, as cjefined ir Revenue Ruiing z.g-ai¡. l , Economic
Develop'ment Tax lncentives - original Cost, 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 propenty was moved into Nebraska.
ED

na ld S. Leuenberger

State Tax Commissioner

a,*

November /' , 1987

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