Conn. Gen. Stat. § 12-217vv: Tax credit for farm investment property.

(a) As used in this section:

(1) “Eligible farmer” means a taxpayer in this state whose federal gross income from farming for the income or taxable year is at least two-thirds of excess federal gross income;

(2) “Excess federal gross income” means the amount of federal gross income from all sources for the income or taxable year in excess of thirty thousand dollars;

(3) “Agricultural production” has the same meaning as provided in subdivision (63) of section 12-412;

(4) “Farm investment property” means machinery and equipment that are acquired by purchase by an eligible farmer on or after January 1, 2026, and buildings and structural components of buildings that are acquired, constructed, reconstructed or erected by an eligible farmer and placed in service on or after January 1, 2026, and (A) are situated in this state, (B) have a class life of more than four years, as described in Section 168(e) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, (C) are acquired by an eligible farmer from a person other than a related person, (D) are not acquired to be leased, and are not leased, to another person or persons during the twelve full months following their acquisition or placement in service, and (E) will be held and used in this state by the eligible farmer in the ordinary course of agricultural production for not less than five full years following the date of acquisition of such machinery and equipment or the date of placement in service of such buildings;

(5) “Related person” means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer; and

(6) “Control” means (A) with respect to a corporation, ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote, or (B) with respect to a trust, ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership (i) of stock in a corporation, (ii) of a capital or profits interest in a partnership or association, or (iii) of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, other than paragraph (3) of said section.

(b) A taxpayer, in determining income eligibility for purposes of this section, may use for any income or taxable year the average of the taxpayer's federal gross income from farming for such income or taxable year and the two consecutive income or taxable years immediately preceding.

(c) (1) There shall be allowed a credit against the tax imposed under this chapter or chapter 229, other than the liability imposed by section 12-707, of twenty per cent of the amount paid or incurred during an income or a taxable year for farm investment property by a taxpayer that is an eligible farmer.

(2) If the taxpayer is an S corporation or an entity treated as a partnership for federal income tax purposes, the credit may be claimed by the taxpayer's shareholders or partners. If the taxpayer is a single member limited liability company that is disregarded as an entity separate from its owner, the credit may be claimed by such limited liability company's owner, provided such owner is subject to the tax imposed under this chapter or chapter 229.

(3) If the amount of the credit allowed pursuant to this section exceeds the taxpayer's liability for the tax imposed under this chapter or chapter 229, the Commissioner of Revenue Services shall treat such excess as an overpayment and, except as provided in section 12-739 or 12-742, shall refund the amount of such excess, without interest, to such taxpayer.

(4) No taxpayer claiming the credit under this section with respect to the acquisition of farm investment property may claim a credit against any tax under any other provision of the general statutes with respect to the same acquisition.

(d) If the farm investment property for which a taxpayer has claimed the credit allowed under this section is not held and used in this state in the ordinary course of agricultural production in this state for three full years following its acquisition, the taxpayer shall recapture one hundred per cent of the amount of the credit allowed under this section on its tax return required to be filed for the income or taxable year immediately succeeding the income or taxable year during which such three-year period expires. If the farm investment property for which a taxpayer has claimed the credit allowed under this section is not held and used in this state in the ordinary course of agricultural production in this state for five full years following its acquisition, the taxpayer shall recapture fifty per cent of the amount of the credit allowed under this section on its tax return required to be filed for the income or taxable year immediately succeeding the income or taxable year during which such five-year period expires. The provisions of this subsection shall not apply if the property that is the subject of the credit under this section is replaced, provided such replacement property shall not be eligible for the credit under this section. If any amount of credit required to be recaptured has not been paid to the commissioner on or before the first day of the fourth month next succeeding the end of the income year immediately succeeding the income year during which the three-year or five-year period, as the case may be, expires, such amount shall bear interest at the rate of one per cent per month or fraction thereof from such date to the date of payment.