Use Form 68R to compute the increase in tax and reduction to credit carryover for the recapture of broadband equipment investment credit. You must recompute the credit if you earned it in an earlier year but disposed of the property before the end of the five-year recapture period. You must also recompute the credit on any property ceasing to qualify as investment tax credit (ITC) property. Property moved from Idaho within the first five years ceases to qualify as ITC property and is subject to recapture.
Recapture may be necessary when:
• An S corporation shareholder’s interest is reduced by a sale, redemption, or other disposition of the shareholder’s stock, or when the corporation issues more shares.
• A partner’s proportionate interest in the general profits of the partnership (or in a particular item of property) is reduced.
• A trust’s, estate’s, or beneficiary’s proportionate interest in the income of the trust or estate is reduced.
An entity that passes broadband equipment investment credit through to its owners must provide them with a Form ID K-1. The form must show in Part XI, Supplemental Information, the recapture amount and include details on the years the credit being recaptured was originally earned.
Any resulting tax from recapture of credits claimed in prior years must be added to the tax otherwise determined in the year of recapture. Recapture of credits not claimed in prior years reduces the amount of credit carryover available to the current year.