Form Rcyl - Recycle Credit/deduction - Montana Department Of Revenue - 2014 Page 3
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Form RCYL Instructions
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Definitions
The basis for the credit is generally the cost of the property before
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any reduction you might have received from the seller by trading
Collect refers to the collection and delivery of reclaimed materials
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in old equipment. If, however, you received a previous credit
to a recycling or reclaimable materials processing facility.
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on the equipment you traded in, the basis for the credit would
Machinery or equipment refers to property used in the collection
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be the cost of the property after factoring in the reduction you
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or processing of reclaimable material or in the manufacturing of a
received on the trade-in. The basis includes the purchase price,
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product from reclaimed material. This property has a depreciable
transportation cost (if paid by the purchaser) and the installation
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life of more than one year.
cost before depreciation or other reductions. This credit does not
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increase or decrease the basis for tax purposes.
Reclaimable material refers to material that still has useful
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physical or chemical properties after serving its original purpose
Recycling machinery and equipment must be located and
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and that a consumer, processor or manufacturer would normally
operating in Montana on the last day of the taxable year for
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treat as solid waste and dispose of.
which the credit is claimed. The machinery must be used to
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Recycled material refers to a substance that is produced from
collect, process, separate, modify or treat solid waste so that it
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can be converted into a product that can be used in place of a
reclaimed material. The person who generated the reclaimed
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raw material or be used to treat soils contaminated by hazardous
material that was collected, processed or used to manufacture a
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wastes. This does not include transportation equipment unless it
product may not claim the tax credit.
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is specialized to the point that it can only be used to collect and
How do I claim my credit when I am a partner or
process reclaimable material.
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shareholder in a partnership or an S corporation
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If the credit exceeds my tax liability, can I carry
that invested in the depreciable property used for
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any excess credit to another tax year?
recycling?
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No. The credit is limited to the amount of the taxpayer’s individual
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Your partnership or S corporation will report the credit on its
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or corporate income tax liability. Any excess credit is not
informational tax return and provide you with your portion of the
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refundable and cannot be carried back or forward to other tax
credit on Montana Schedule K-1.
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years.
If you are a partner, your portion of the credit is based on the
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Are there other limitations concerning the recycle
same proportion you use to report your income or loss from the
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credit?
partnership for Montana tax purposes unless the partners have
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an agreement providing for a different allocation. If you are a
The Department of Revenue may disallow a credit resulting from
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shareholder, your portion of the credit is based on the pro rata
a sale or lease when the overriding purpose of the transaction is
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share of the corporation’s cost of investing in the equipment.
not to collect or process reclaimable material or manufacture a
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product from reclaimed material.
For example, if your business is an S corporation with four
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shareholders with equal ownership interest, each shareholder
The credit may not be claimed for an investment in property used
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would be entitled to 25% of the total credit.
to produce energy from reclaimed material.
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Only a taxpayer that owns an interest either directly or through a
What information do I have to include with my tax
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pass-through entity, such as a partnership or S corporation, and is
return when I claim this credit?
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operating the equipment as the primary user on the last business
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Individuals and C corporations filing paper returns must include
day of the year, may claim the credit.
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a completed Form RCYL. S corporations and partnerships filing
Part I. Partners in a Partnership or Shareholders
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paper information returns must include, in addition to a completed
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of an S Corporation
Form RCYL, a separate statement identifying each owner and
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their portion of the credit.
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If you complete Part I, do not complete Parts II, III or IV unless
In addition, if you are claiming a credit in Part III or Part IV, you will
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you have additional credit amounts that you did not receive as
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also need to provide a copy of the sales receipt, any pamphlets
a distribution from a partnership or S corporation. If you are
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on the equipment purchased, and any other information regarding
a partner or shareholder in more than one partnership or S
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what the equipment is and how it is used in collecting, processing
corporation, you will need to complete a separate Form RCYL for
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or manufacturing reclaimed material.
each entity you are receiving a credit from.
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Part V. Recycling Deduction Instructions
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Parts II, III and IV. Qualifications and Credit
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Computation
You may deduct an additional amount equal to 10% of your
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expenditures for the purchase of recycled material that you could
This credit is available to qualifying C corporations, S corporations,
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otherwise deduct as a business-related expense in Montana. The
partnerships and individuals.
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products have to contain recycled material at a level consistent
What costs do I use to calculate my recycling
with industry standards or with standards established by the
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credit?
federal Environmental Protection Agency (if those standards
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exist).
Use the costs of the investment that you have made in the
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qualifying equipment that you used to calculate your depreciation
Include a statement from the manufacturer or supplier stating the
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deduction for federal income tax purposes.
amount of recycled material contained in the material or product
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purchased.
The tax credit is available only for machinery and equipment that
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is depreciable (defined in IRS Code Section 167). The machinery
Administrative Rules of Montana: 42.4.2601 through 42.4.2605
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and equipment must be used in Montana, primarily for collecting
Questions? Please call us toll free at (866) 859-2254 (in Helena,
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or processing reclaimable material for manufacturing finished
444-6900).
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products from reclaimed material or for treating soils contaminated
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by hazardous wastes.
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