K.S.A. 79-32,207 provides for an income tax credit for taxpayers who make expenditures during the tax year to plug an abandoned oil or gas well on their land in accordance with the rules and regulations of the Kansas Corporation Commission (KCC). The credit is 50% of expenditures made during the tax year. If the credit exceeds the tax liability for the taxable year the expenditures are made, any unused credit may be carried forward until used. The total amount of credits taken by all taxpayers (including any carry over) may not exceed $250,000 in any fiscal year.
For tax year 2013, and all tax years thereafter, new credits shall be available to only corporations that are subject to the Kansas corporate income tax (i.e., C corporations). New credits are not available to individuals, partnerships, S corporations, limited liability companies, and other pass-through entities.
Carry Forward of Unused Credits: If this credit was earned prior to tax year 2013 and a carry forward credit remains available to a taxpayer, that taxpayer may continue to claim that credit. However, that carry forward credit shall be subject to limitations and requirements in place at the time the credit was earned.
An abandoned oil or gas well is any well: 1) that the KCC (Kansas Corporation Commission) has the authority to plug, replug, or repair because such well is polluting or is likely to pollute any usable water strata or supply, or causing the loss of usable water; 2) on which drilling began prior to January 1, 1970; and 3) that is located on land owned by the taxpayer claiming this credit. F
iscal Year Credit Limitation. Qualifying taxpayers will receive the credit on a “first come, first serve” basis. The credit will be denied after the statutory fiscal year credit limit of $250,000 has been reached. However, the amount of credit denied for this reason may be entered on line 10 of the subsequent year’s Schedule K-39.