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NC-478 Instructions, Web

year in which the taxpayer begins to use the property as a central

whose behalf the managing partner pays the tax. On Part 3, Line 4, include

administrative office. The maximum lifetime credit for investing in central

only the carryforwards for those nonresident partners on whose behalf

office or aircraft facility property is $500,000.

the partnership pays tax in both the prior year and the current year. Trusts

and estates complete Part 1 or Part 2 as one taxpayer, then allocate the

Individuals, S corporations claiming this credit against franchise tax, C

amount from Part 1, Line 4, or Part 2, Line 5 among the fiduciary and the

corporations, and insurance companies complete NC-478E and enter

beneficiaries. Complete Parts 3 and 4 by including only the amount that is

the amount from Part 3, Line 6 on Form NC-478, Line 5. S corporations

allocated to the fiduciary.

claiming the credit against income tax complete Parts 1 and 2 as one

taxpayer, then allocate the amount from Part 1, Line 13 among the

NC-478H - Low-Income Housing

shareholders. Complete Parts 3 and 4 by including the amounts allocated

The credit for low-income housing is taken in equal installments over the five

to those nonresident shareholders on whose behalf a composite return

years beginning in the first taxable year in which a federal income tax credit

is being filed. On Part 3, Line 5, include only the carryforwards for those

for low-income housing is claimed. Any reduction in the amount of the first

nonresident shareholders on whose behalf a composite return is filed in

installment as a result of the federal reduction required under IRC section

both the prior year and the current year. Partnerships complete Part 2

42(f)(2)(A) must be carried forward and must be taken as the 6th installment

as one taxpayer. Complete Part 1 on a partner-by-partner basis. (Note:

amount. (See Part 1, Lines 5-7 and Line 9).

The maximum credit of $500,000 applies to each partner.) For each line,

add the amounts calculated for each partner and enter the total on this

Hurricane-affected counties: The following counties were designated as counties

form. Complete Parts 3 and 4 by including the amounts allocated to those

affected by the 1999 hurricanes by the Federal Emergency Management Agency

nonresident partners on whose behalf the managing partner pays the

and qualify for the 75% credit: Beaufort, Bertie, Bladen, Brunswick, Carteret,

tax. On Part 3, Line 5, include only the carryforwards for those nonresident

Columbus, Craven, Dare, Duplin, Edgecombe, Green, Halifax, Hertford, Jones,

partners on whose behalf the partnership pays tax in both the prior year

Lenoir, Martin, Nash, New Hanover, Northampton, Onslow, Pasquotank, Pender,

and the current year. Trusts and estates complete Parts 1 and 2 as one

Pitt, Washington, Wayne, and Wilson counties.

taxpayer, then allocate the amount from Part 1, Line 13 among the fiduciary

Individuals, S corporations claiming this credit against franchise tax, and C

and the beneficiaries. Complete Parts 3 and 4 by including only the

corporations complete NC-478H and enter the amount from Part 2, Line 4 on

amount that is allocated to the fiduciary.

Form NC-478, Line 8. S corporations claiming the credit against income tax

NC-478F - Investing in Business Property

complete Part 1 as one taxpayer, then allocate the amounts from Lines 7, 8, and

9 among the shareholders. Complete Parts 2 and 3 by including the amounts

The credit for investing in business property is taken in five equal installments

allocated to those nonresident shareholders on whose behalf a composite

beginning in the tax year in which the property is placed in service. The maximum

return is being filed. On Part 2, Line 3, include only the carryforwards for

eligible credit for investing in business property in a taxable year is $4,500.

those nonresident shareholders on whose behalf a composite return is filed

in both the prior year and the current year. Partnerships complete Part 1 as

Individuals, S corporations claiming this credit against franchise tax , and C

one taxpayer, then allocate the amount from Part 1, Lines 7, 8, and 9 among the

corporations complete NC-478F and enter the amount from Part 2, Line 7 on Form

partners. Complete Parts 2 and 3 by including the amounts allocated to those

NC-478, Line 6. S corporations claiming the credit against income tax complete

nonresident partners on whose behalf the managing partner pays the tax.

Part 1 as one taxpayer, then allocate the amount from Line 5 among the

On Part 2, Line 3, include only the carryforwards for those nonresident partners

shareholders. Complete Parts 2 and 3 by including the amounts allocated to

on whose behalf the partnership pays tax in both the prior year and the current

those nonresident shareholders on whose behalf a composite return is being

year. Trusts and estates complete Part 1 as one taxpayer, then allocate the

filed. On Part 2, Line 6, include only the carryforwards for those nonresident

amount from Part 1, Lines 7, 8, and 9 among the fiduciary and the beneficiaries.

shareholders on whose behalf a composite return is filed in both the prior

Complete Parts 2 and 3 by including only the amount that is allocated to the fiduciary.

year and the current year. Partnerships complete Part 1 on a partner-by-

partner basis. (Note: The maximum credit of $4,500 applies to each partner.)

Allocation of credit by a pass-through entity: A pass-through entity may allocate

For each line, add the amounts calculated for each partner and enter the total on

the credit among any of its owners in its discretion as long as the amount of

this form. Complete Parts 2 and 3 by including the amounts allocated to those

credit allocated to an owner does not exceed the owner’s adjusted basis in the

nonresident partners on whose behalf the managing partner pays the tax. On

pass-through entity at the end of the taxable year in which the federal credit is

Part 2, Line 6, include only the carryforwards for those nonresident partners

first claimed. A pass-through entity and its owners must include with their tax

on whose behalf the partnership pays tax in both the prior year and the

returns for every taxable year in which an allocated credit is claimed a statement

current year. Trusts and estates complete Part 1 as one taxpayer, then

of the allocation made by the pass-through entity and the allocation that

allocate the amount from Part 1, Line 5 among the fiduciary and the

would have been required under the general method of allocating credits

beneficiaries. Complete Parts 2 and 3 by including only the amount that is

based on percentage ownership.

allocated to the fiduciary.

Forfeiture for change in ownership: An owner of a pass-through entity that has

NC-478G - Investing in Renewable Energy Property

qualified for the tax credit for low-income housing forfeits a portion of the credit

if the owner disposes of more than one-third of its interest in the pass-through

The credit for investing in renewable energy property is claimed in the tax year

entity within five years from the date the federal credit is first claimed. Forfeiture

the renewable energy property is constructed, purchased, or leased and placed

is not required if the change in ownership result from either the death of the

in service if the property serves a single-family dwelling. If the property does

owner, or a merger, consolidation, or similar transaction requiring approval

not serve a single-family dwelling, the credit is taken in five equal installments

of the pass-through entity’s owners, to the extent that the pass-through

beginning in the year the property is placed in service.

entity does not receive cash or tangible property in the merger, consolidation,

Individuals, S corporations claiming this credit against franchise tax, and C

or other similar transaction. For detailed information on how to determine the

corporations complete NC-478G and enter the amount from Part 3, Line 5 on

amount of credit forfeited, please refer to the Franchise Tax and Corporate

Form NC-478, Line 7. S corporations claiming the credit against income tax

Income Tax Rules and Bulletins.

complete Part 1 or Part 2 as one taxpayer, then allocate the amount from Part 1,

Allocation of Credits by Pass-through Entities

Line 4, or Part 2, Line 5 among the shareholders. Complete Parts 3 and 4 by

including the amounts allocated to those nonresident shareholders on whose

behalf a composite return is being filed. On Part 3, Line 4, include only the

A pass-through entity must take extra steps in calculating and allocating the

carryforwards for those nonresident shareholders on whose behalf a composite

tax credits among its shareholders, partners, or beneficiaries. Page 4 of these

return is filed in both the prior year and the current year. Partnerships complete

instructions and our website, , contain examples.

Part 1 on a partner-by-partner basis. (Note: The maximum credit, Part 1, Line 3,

and Part 2, Line 3, applies to each partner.) For each line, add the amounts

S corporations - If the credit is being claimed against franchise tax, no allocation

calculated for each partner and enter the total on this form. Complete Parts 3

is required. Complete the applicable tax credit form and enter the amount eligible

and 4 by including the amounts allocated to those nonresident partners on

to be taken in the current year on Form NC-478. If the credit is being taken against

Instructions For Form Nc-478 Series - Summary Of Tax Credit Limited To 50% Of Tax - North Carolina Department Of Revenue Page 3

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