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Nebraska Advantage Rural Development Act – Livestock Modernization FAQs

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.

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What is the Livestock Modernization tax credit program?

The Livestock Modernization tax credit program provides a 10% refundable tax credit to applicants engaged in livestock production and modernize or expand livestock facilities in Nebraska.

Is this program a grant?

No, a Livestock Modernization applicant may earn a refundable tax credit. Tentative tax credits are reserved on an application based on estimated new net investment.

How is the credit calculated?

The credit is calculated on the increase in net new investment made during the application year or subsequent year compared to the base year.

What type of investment qualifies?

Investment in buildings, facilities, or equipment for livestock housing, confinement, feeding, production, and waste management count towards the calculation of the credit. Improvements to correct a waste management violation do not qualify.

Is there a minimum amount of investment in order to apply?

The minimum level of investment is $10,000.

Is there a maximum amount of credit for an application?

Yes, each application is limited to $500,000 in credits.

How long do I have to meet the level of investment?

The investment must be met in two tax years beginning with the tax year of application.

When do I need to apply?

The application is submitted in the year you plan to make the investment. The application estimates growth in the current year and following year. The application deadline is the earlier of November 1 or the date all credits available have been allocated for the year.

What happens if I apply after November 1?

The application is considered to be filed during the next calendar year.

What is the amount of credits available for each year?

$10 million is available each year.

Where can I find the amount of credits available for the current year?

Please visit the authorization table webpage for the current amount available.

If I already started construction on a new chicken facility and have not applied will I qualify?

The chicken facility can count as new investment if it is placed-in-serviced during the application year or following year. The full value of the building is counted as investment even if construction was started prior to application.

Do I need to sign-up for E-Verify if I am the only employee of my corporation and I do not plan to hire employees?

Yes, applicants with employees must be registered with E-Verify in order for the application to be approved.

I have two entities. One is the operations entity and the other owns the real estate. Who is the applicant?

The applicant is the operations entity. The entity actively engaged in the livestock operations is the applicant.

How are leases between related parties, such as between an operations entity and a real estate entity, treated?

Leases between related parties do not count as investment. The original cost paid by the real estate entity can count as investment if the asset was placed-in-service during the application year or following year.

Is there a penalty for estimating my expected investment too high on the application?

Yes, an applicant must meet 75% of the expected investment to earn any credits.

What happens if my actual investment is more than the expected investment?

The credit amount is limited to the amount listed in the agreement.

What does livestock production mean?

Livestock production means the active use, management, and operation of real and personal property for the commercial production of livestock, for the commercial breeding, training, showing, or racing of horses or for the use of horses in a recreational or tourism enterprise, and for the commercial production of dairy and eggs.

What type of livestock qualifies?

Cattle, horses, sheep, goats, hogs, dairy animals, chickens, turkeys, and other species of game birds and animals raised and produced subject to permit and regulation by the Game and Parks Commission, or the Department of Agriculture qualify.

What is the investment increase if I buy new pens one for $30,000, and retire the old pens which had an original cost of $12,000?

The new net investment is $18,000 ($30,000 addition minus the $12,000 retirement).

Does a combine qualify as investment if it is used to harvest corn and the corn is used to feed my livestock?

No, equipment used to grow or harvest row crops does not qualify.

Does breeding stock count as investment?

No, breeding stock does not qualify as investment.

Does a pickup truck used to haul feed count as investment?

No, licensable motor vehicles do not count as investment.

If I am obligated under my operating lease to pay rent of $100,000 for twelve years for a lease of a new confinement building, what is the investment valuation of my lease?

The investment in the year the lease begins will be $1,000,000 ($100,000 for ten years).  All leases are limited to ten years.

Does used equipment qualify?

Yes used equipment qualifies, but an acquisition of an existing business does not.

What locations are eligible?

Any location in Nebraska is eligible.

Can I have multiple applications?

Yes, multiple applications can be submitted for different locations. Another application for the same project location can be submitted after the two-year attainment period has ended. Please contact DOR for additional information about having multiple projects at the same location during the same attainment period.

When can I claim the credit?

The credit is claimed after the investment has been made, the property is available for use, and DOR has reviewed the investment documents. The credit is claimed on the income tax return for the year the minimum required investment is met.

If I do not owe any taxes, can I still use the credit?

Yes, the credit is a refundable at the applicant level. If the credit is distributed, the credit becomes nonrefundable and cannot be carried forward.

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