Alaska Liquefied Natural Gas (LNG) Storage Facility Tax Credit Instructions (Forms 6323 & 6324)

Liquefied Natural Gas (LNG) Storage Facility Tax Credit Instructions (Forms 6323 & 6324)
Form 6323i
Instructions for Forms 6323 and 6324
Alaska LNG Storage Facility Tax Credit
Purpose of Form

Form 6323 or 6324 is required to claim an income tax credit for a
qualified LNG storage facility. This form is also used to give notice
to the Department of Revenue of any cessation of operations
required under AS 43.20.047(j), and to calculate the increase to
tax for the cessation.

GENERAL INSTRUCTIONS
Form 6323 must be attached to the corporate income tax return
(Form 6000, 6100, or 6150), or attached to the partnership
information return (Form 6900). Form 6324 is provided for a
partnership to claim a refund by filing the form separately, directly
with the DOR. Form 6324 is also used to separately report the
tax due upon cessation of operations, if the original claim for
refund was filed separately. See details below in “How to Claim
Credit” and “How to Report Increase to Tax for Early Cessation of
Operations.”
The credit is available for a new LNG facility that commences
commercial operation after December 31, 2010, and before
January 1, 2020. If the facility was in operation as an LNG facility
prior to January 1, 2011, then a credit is available for an expansion
of the facility based on certain requirements. The credit may
not exceed the lesser of $15,000,000 or 50 percent of the costs
incurred to establish or expand the facility. The facility must have
a LNG storage volume of not less than 25,000 gallons of LNG, or
for an existing facility, the expansion must increase capacity by
not less than 25,000 gallons. The facility must be regulated under
AS 42.05 as a utility. The law imposes certain other requirements
for the credit.

If You Need Help

If you have questions, need additional information or require other
assistance, call us at 907.269.6620 or email us at
[email protected].

How to Claim Credit

If the owner of the LNG facility is a corporation, or an LLC that is
treated as a corporation for tax purposes, then the credit must be
claimed on its Form 6000, 6100, or 6150, as applicable. The credit
is reported on Form 6323 and must be attached to the corporate
income tax return.
If the owner of the LNG facility is a partnership, or an LLC that is
treated as a partnership for tax purposes, then the credit may be
claimed in one of two ways. (For brevity, these instructions use
“partnership” to refer to either an entity organized as a partnership,
or an LLC that is treated as a partnership for tax purposes.
“Partner” is similarly used to refer to the partner, or LLC member,
as applicable.)
a)	 Claim by Partner. The credit may be allocated among
partners, according to the partnership agreement. In this
case, report the credit on Form 6323, and attach to Form
6900 Alaska Partnership Information Return. The credit
will then flow through to the applicable Form 6900 Schedule
K-1. The partnership must attach a copy of the Form 6323,

and required attachments (see below) to the Form 6900
Schedule K-1 provided to the partner. This will allow the
partner to claim the credit on its tax return.
b)	 Direct Claim. Alternatively, the partnership may itself
claim a refund of the credit, by filing Form 6324 directly
with the DOR. The claim may be filed at any time
after the facility commences commercial operations,
up to the date that is three years after the date that
commercial operations commenced. The Form 6324
must be signed and mailed to the following address:
TAX DIVISION
ALASKA DEPARTMENT OF REVENUE
PO BOX 110420
JUNEAU AK 99811-0420

Required Attachments For Credit

Along with Form 6323 or 6324, the claimant must attach the
following items to the return:
	Certification of the capacity of the LNG facility measured in
gallons, verified by a professional engineer licensed in the
state with relevant experience
	Schedule of costs incurred to establish the facility or to
expand the facility, with verification by an independent
certified public accountant licensed in the state.
If the claimant does not attach the required information, the
claim will be disallowed.

How to Report Increase to Tax for Early Cessation of
Operations
If the owner of the LNG storage facility is a corporation, or an
LLC that is treated as a corporation for tax purposes, then the
increase to tax under AS 43.20.047(h) must be reported on its
Form 6000, 6100, or 6150, as applicable. Form 6323 (Part II)
must be completed and attached to the corporate income tax
return.
If the owner of the LNG storage facility is a partnership, or an
LLC that is treated as a partnership for tax purposes, then the
reporting of the additional tax liability under AS 43.20.047(h)
will depend on how the credit was originally claimed.
a)	 Reported By Partner. If the original credit was allocated
to, and claimed by, partners, then the increase to tax
(recapture of credit) under AS 43.20.047(h) must be
allocated on the same basis as the original credit. The
increase to tax is reported on Form 6323 and attached to
Form 6900. A copy of the Form 6323 must be attached
to the applicable Form 6900 Schedule K-1. The partner
must then report the increase in tax on its tax return.
b)	 Direct Reporting. If the partnership originally claimed
the credit directly from the DOR, then the partnership
must report the increase in tax on Form 6324, and file

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the form, and pay the increase in tax to the DOR at the
above address. This report is due by April 15 of the
year following the year of the cessation of commercial
operations. The tax must be paid by April 15 of the year
following the calendar year in which operations ceased.
The tax due is subject to assessment of interest, if not
paid by the due date.

SPECIFIC INSTRUCTIONS
The instructions below pertain to both Forms 6323 and 6324,
unless otherwise stated.
Part I
Line 1: In column A, enter the name of each facility for which
a credit is claimed.
In column B, enter the location of each facility.
In column C, enter the date that each facility commenced
commercial operations. If the credit is being claimed for the
expansion of a facility, then enter the date that the expansion
was placed into service.

(b)
	
(c)
	

divide the difference by 10 (to calculate an
	
allowable percentage, based on years in service)
multiply this percentage by the credit reported in 	
column D

Line 4: If the facility owner is a corporation, or an LLC treated
as a corporation for tax purposes, then enter the amount from
line 4 on the Schedule E, line 5 of the Form 6000 or 6100, or
Schedule E line 6 on Form 6150.
If the facility owner is a partnership, and the original credit was
allocated to partners, then enter the amount from line 4 on
Form 6900, Schedule A, line 21. Attach Form 6323 to Form
6900. See instructions for Form 6900.
Form 6324, line 4: This is the amount of tax that is due from
the owner of the gas storage facility, for early cessation of
operations.
Signature (Form 6324 only): Form 6324 must be signed by
a general partner or LLC member manager.

In column D, enter the cost incurred to establish or expand
each facility.
In column E, multiply the amount in column D by 25%.
In column F, enter the lesser of the amount in column E or
$15,000,000 for each facility.
Line 2: If the facility owner is a corporation, or an LLC treated
as a corporation for tax purposes, then enter the amount from
line 2 on Form 6300, line 33. Attach the Form 6323 to the
corporation’s net income tax return (Form 6000, 6100, or
6150).
If the facility owner is a partnership, then enter the amount
from line 2 on Form 6900, Schedule A, line 17. Attach Form
6323 to Form 6900.
Form 6324, line 2: This is the amount of refund claimed by the
owner of the LNG storage facility.
Part II
Line 3: In columns A and B, enter the name and location of
each facility (or facility expansion) which ceased commercial
operations during the tax period, respectively.
In column C, enter the date that each facility ceased commercial
operations.
In column D, enter the amount of credit previously applied
against tax, or payment received, for each facility which ceased
commercial operations.
In column E, enter the number of years that each facility
engaged in commercial operations.
In column F, calculate the increase to tax for each facility by
the following steps:
(a) subtract the number of years reported in column E 	
from 10 years
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