Rea Magnet Wire Company, Inc.

00-30

The Taxpayer is engaged in the business of manufacturing. In 1998 the Taxpayer constructed a manufacturing facility in New Mexico, due in part to the tax credits available under New Mexico’s Investment Credit Act. In 1999 the Taxpayer filed an application for the investment credit.  The application was approved in part and denied in part.  The Taxpayer protested the partial denial, which was based on the Department’s determination that property depreciated as 25-year property for federal income tax purposes constituted real property and did not meet the definition of “equipment” set out in Section 7-9A-3(B) NMSA 1978. Held: Based on Department regulations in effect during the period at issue, air conditioning units and electrical equipment installed in the plant qualified as equipment eligible for the investment credit. No credit was available for the cost of constructing a raised roof or for other structural modifications required to house certain manufacturing equipment because construction costs do not qualify for the investment credit. Protest granted in part and denied in part.