Massachusetts General Laws chapter 63, § 38H, adopted in 1976, allows a corporation to deduct "expenditures paid or incurred during the taxable year with respect to the installation of any solar or wind powered climatic control unit and any solar or wind powered water heating unit, or any other type of unit or system powered thereby." Without this provision, such costs would have to be capitalized and depreciated. To qualify for the deduction, the equipment must be located in Massachusetts and used exclusively in the trade or business of the corporation. The statute provides that equipment must meet certain technical standards that are required to be set by a now-defunct state agency � the Bureau of Building Construction.
In the past, a corporation was required to submit technical documentation regarding the equipment to the Bureau of Building Construction for certification of the deduction. The Bureau of Building Construction was abolished in 1980 and was absorbed by the Division of Capital Planning and Operations ("DCPO"), which was subsequently renamed the Division of Capital Asset Management & Maintenance ("DCAMM"). There is now no certification process in place and no current published guidance in effect.
DOR has received few inquiries regarding the deduction. One of the reasons for this may be that there are other tax benefits available to corporations with respect to alternative energy equipment that are generally more favorable, such as expensing under Internal Revenue Code §§ 179, 179D and depreciation under Code §§ 167, 168. Further, as noted, no state agency is currently responsible for issuing certification standards, guidelines or regulations defining eligible equipment or corporations seeking to take the § 38H deduction.
Origin: M.G.L. c. 63, § 38H
Corporate Excise Tax
Accelerated Deductions from Gross Income
2.312
Expensing of Alternative Energy Units
Massachusetts General Laws chapter 63, § 38H, adopted in 1976, allows a corporation to deduct "expenditures paid or incurred during the taxable year with respect to the installation of any solar or wind powered climatic control unit and any solar or wind powered water heating unit, or any other type of unit or system powered thereby." Without this provision, such costs would have to be capitalized and depreciated. To qualify for the deduction, the equipment must be located in Massachusetts and used exclusively in the trade or business of the corporation. The statute provides that equipment must meet certain technical standards that are required to be set by a now-defunct state agency � the Bureau of Building Construction. <BR><BR>In the past, a corporation was required to submit technical documentation regarding the equipment to the Bureau of Building Construction for certification of the deduction. The Bureau of Building Construction was abolished in 1980 and was absorbed by the Division of Capital Planning and Operations ("DCPO"), which was subsequently renamed the Division of Capital Asset Management & Maintenance ("DCAMM"). There is now no certification process in place and no current published guidance in effect. <BR><BR>DOR has received few inquiries regarding the deduction. One of the reasons for this may be that there are other tax benefits available to corporations with respect to alternative energy equipment that are generally more favorable, such as expensing under Internal Revenue Code §§ 179, 179D and depreciation under Code §§ 167, 168. Further, as noted, no state agency is currently responsible for issuing certification standards, guidelines or regulations defining eligible equipment or corporations seeking to take the § 38H deduction.
<a href="https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter63/Section38h" target="_blank">M.G.L. c. 63, § 38H</a>
Not Active
Not Active
Not Active
Not Active
Not Active
