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State of Rhode Island Division of Taxation
Form RI-3468
Investment Tax Credit
Investment Tax Credit
R.I. Gen. Laws § 44-31
INSTRUCTIONS
1. For taxable years beginning on or after July 1, 1974, Section 31 of Chapter 44 of the Rhode Island General Law allows an invest-
ment tax credit of two percent (2%) of the cost or other basis used for federal income tax purposes on certain property. Provided,
however, the amount of the credit shall be four percent (4%) of the cost or other basis for federal income tax purposes of tangible
personal property and other tangible property, including buildings and other structural components of buildings that are acquired,
constructed, reconstructed or erected after December 31, 1993. For taxable years ending on or after 1/1/1998, the credit is (10%)
for certain tangible personal property and other tangible property, excluding buildings and structural components of buildings, motor
vehicles and furniture, which are acquired after 1/1/1998. To qualify for such credit the items must (a) be depreciable pursuant to
Sec. 179 (d) thereof, (b) have a useful life of 4 years or more, (c) have a situs in this state, and (d) be principally used by the tax-
payer in the production of goods by manufacturing, processing or assembling.
2. The items listed in this schedule should be in such form as will present an accurate statement. Complete details substantiating the
amounts shown must be made available on request.
3. At the election of the taxpayer, an investment tax credit may be allowed on otherwise qualifying property in lieu of elective deductions
on facilities qualifying as: (a) Air and water pollution control facilities and (b) Research and Development facilities.
4. If the property is disposed of or ceases to be in qualified use during the INITIAL taxable year, the credit allowed is 2%, 4% or 10% of
the cost or other basis of the property multiplied by a fraction the numerator of which is the months of qualified use during the year of
purchase and the denominator of which is the total months of useful life (submit rider for such items).
5. Credit may not be claimed on property leased to or from others, unless such lease is treated for federal income purposes as an in-
stallment purchase rather than a lease.
6. For tax years 1/1/2004 through 12/31/2015, the total credit may not reduce the tax for any year to less than $500.00. For tax year be-
ginning 1/1/2016 through 12/31/2016, the total credit may not reduce the tax year to less than $450.00. Effective for tax year begin-
ning 1/1/2017, the total credit may not reduce the tax to less than $400.00. Unused investment tax credit amounts may be carried
forward for seven years.
7. If property is disposed of or ceases to be in qualified use other than the initial taxable year, the difference between the credit taken
and the credit allowed for actual use must be added back in the year of disposition on the appropriate line of tax on Form RI-1120C
and not on Form RI-3468. A taxpayer may not reduce the amount of tax liability created by a recapture of investment tax credit by
investment tax credits allowed for the year in which the asset is disposed of, nor can it be reduced by any carryover of investment
tax credit to that year. The recapture is the tax credit taken on property ceasing to qualify multiplied by a fraction the numerator of
which is the useful life of property in months less the qualified use in months and the denominator is the useful life of the property in
months.
For example, qualified property is purchased by a calendar year taxpayer on 1/1/1975 for $100,000.00 and has a useful life of 10
years (120 months) for federal depreciation purposes. The credit taken for 1975 is 2% of $100,000.00 or $2,000.00. If it is disposed
of or traded in on 12/31/1980 after being used for 6 years (72 months), $800.00 of the credit originally taken must be added back for
1980, since the asset was disposed of while it still had 4 years (48 months) of useful life remaining at 40%.
$2,000.00 X 120-72 = $800.00
120
(Submit rider for such items)
A recapture of a portion of the investment tax credit is required where property on which a credit has been allowed is disposed of or
ceased to be in qualified use except: (a) where property was in qualified use for its entire useful life, or (b) where property was in
qualified use for more than twelve consecutive years.
10% Investment Tax Credit - If you qualify for the 10% investment tax credit, you must submit a copy of your 10% ITC Certification
from the Department of Labor and Training.
Credit Carryover Schedule - If you have unused credit from prior years, you must attach a schedule detailing the type of investment
tax credit (4% or 10%), the amount of credit generated, the year the credit was generated, the amount of credit used, and the year the
credit was used.
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