1. (a) To qualify for a tax credit under the Delta Geotourism Incentive Act of 2007, Acts 2007, No. 518, a person or entity shall invest a minimum of twenty-five thousand dollars ($25,000) to construct, expand, or remodel a qualified geotourism-supporting business.

2. (b)

   1. (1) A person or entity is eligible to receive an income tax or annual premium tax credit under the act equal to twenty-five percent (25%) of the amount of a qualified investment for the year that the investment is made provided that the geotourism-supporting business is currently operating as a business.
   2. (2) Any income tax credit resulting from a qualified investment made during a year prior to the year the geotourism-supporting business begins operation may be carried forward and used to offset income tax or annual premium tax liability to the State of Arkansas in accordance with subsection (j) of this section.
3. (c) For any tax year, the maximum amount of investment to be considered in determining the tax credit under the act is one hundred thousand dollars ($100,000).

4. (d)

   1. (1)

      1. (A) In order to claim a credit, at the end of each tax year the approved geotourism-supporting business shall submit to the Department of Finance and Administration on prescribed forms the amount invested by the approved geotourism-supporting business.
      2. (B)

5. (i) The amount invested must be substantiated by adequate documentary proof.

   1. (ii) Examples of adequate proof include but are not limited to:
6. (a) (a) Invoices;

7. (b) (b) Contracts;

   1. (c) (c) Receipts;

      1. (d) (d) Cancelled checks;
8. (e) (e) Bank statements;
9. (f) (f) Loan documents; and

10. (g) (g) Other documents generated in the ordinary course of business.

    1. (C) The Department of Finance and Administration:

       1. (i) Shall verify that the investment is a qualified investment pursuant to the act; and

          1. (ii) Upon verification, shall issue the taxpayer an income tax credit memorandum based on the investment.
       2. (D) In addition to reviewing the documentary proof submitted by the taxpayer, the Department of Finance and Administration may exercise its duly authorized audit procedures in order to verify whether an investment is a qualified investment.
    2. (2) Upon approval of a sale, assignment, or transfer of a geotourism credit as described in 26 CAR § 71-104, the Department of Finance and Administration shall issue a new income tax or premium tax memorandum detailing the new holder and remaining amount of the credit available.
11. (e) Separate tax credit memorandums will be issued for each tax year in which the holder has made a qualified investment.

12. (f)

    1. (1)

       1. (A) In order for the holder to claim the geotourism tax credit, the income tax credit or premium tax credit memorandum must be attached to the income tax return or annual premium tax return in which the credit is first claimed.
       2. (B) The amount of credit that may be used by a taxpayer for any taxable year shall not exceed twenty-five thousand dollars ($25,000).
    2. (2) The Department of Finance and Administration shall provide the State Insurance Department with a copy of any premium tax credit memorandum issued pursuant to subsection (d) of this section.
13. (g) If the business is a Subchapter S corporation, the pass-through provisions of Arkansas Code § 26-51-409, as in effect for the taxable year the credit is earned, shall be applicable.

14. (h)

    1. (1) A partner's or member's distributive share of the credit shall be determined by the partnership or limited liability company agreement unless the agreement does not:

       1. (A) Have substantial economic effect; or
       2. (B) Provide for the allocation of credits.

    2. (2) If the agreement does not have substantial economic effect or does not provide for the allocation of the credit, the credit shall be allocated according to the partner's or member's interest in the partnership, pursuant to I.R.C. § 704(b), as in effect on January 1, 1995.

       1. (i)

    3. (1)

       1. (A) The tax credit provided under the act may be claimed for investments made in geotourism-supporting businesses that are approved into the program during taxable years beginning January 1, 2009, and continuing through tax year 2016, at which time the act expires.

       2. (B)

          1. (i) So long as a geotourism-supporting business is qualified and approved into the program by the Department of Parks, Heritage, and Tourism prior to December 31, 2016, an investment in the business may be made after December 31, 2016, and the person making the investment may be eligible for the tax credit if all other eligibility requirements for claiming the tax credit are met.
          2. (ii) The investment itself does not have to be made prior to December 31, 2016.
    4. (2) Tax credits approved prior to January 1, 2009, that have not been used or expired may be assigned, transferred, or sold in whole or in part pursuant to the provisions of 26 CAR § 71-104.
15. (j) If the geotourism-supporting business is currently operating as a business, an unused income tax credit under the act may be carried forward on an income tax or annual premium tax return for five (5) years after the year in which the tax credit was first earned or until exhausted, whichever event occurs first.

Codification Notes: I.R.C. § 704(b) is codified at 26 U.S.C. § 704(b).