DNG-2: Downstream Natural Gas Manufacturing Investment Tax Credit Against Personal Income Tax (Revision 2020-07)
West Virginia · WV Tax Division · Used for tax years 2026
West Virginia Schedule DNG-2 calculates the Downstream Natural Gas Manufacturing Investment Tax Credit against personal income tax. It reports pass-through entity credit information, the shareholder’s ownership and income, and the amount of credit applied.
Who files this form
Schedule DNG-2 is used to claim the Downstream Natural Gas Manufacturing Investment Tax Credit against West Virginia personal income tax. It calculates the credit available to a shareholder from a pass-through entity.
The form includes filing-status choices for residents, nonresidents/part-year residents, and other filers. It does not state a general filing requirement.
What you'll need
Have these forms and details available to complete DNG-2:
- Form DNG-1: the project payroll factor, total credit available this year, and personal income tax offset factor.
- Form SPF-100: the pass-through entity’s West Virginia apportionment factor.
- Federal Form 1120S, Schedule K-1: the shareholder’s ownership percentage and ordinary income from the pass-through entity.
- Form IT-140 information, if applicable: West Virginia adjusted gross income. Other filers must calculate an equivalent West Virginia gross income.
- Identification and tax details: taxpayer and spouse names and Social Security numbers, tax-period dates, the entity’s name and FEIN, its tax-year ending date, West Virginia income tax, and any credit applied to corporate income tax.
These are sources for completing the form. The text does not say they must be attached.
Common mistakes
- Using the wrong number format: The form calls for six decimal places for the West Virginia apportionment factor, project payroll factor, shareholder ownership percentage, and qualified income fraction.
- Entering a qualified income fraction above 1.0: Section C, line 7 expressly limits the fraction to 1.0.
- Claiming more than the calculated limit: Section C, line 14 requires the lesser of the credit available to the shareholder or the tax subject to credit offset.
- Using the wrong income figure: IT-140 filers must use West Virginia adjusted gross income for credit purposes. Other filers must calculate an equivalent West Virginia gross income.
Questions people ask
How is the pass-through entity’s remaining credit calculated?
Subtract the credit applied to corporate income tax from the total credit available this year. Enter the result in Section B, line 8.
How is my share of the available credit calculated?
Multiply the entity’s remaining credit by your ownership percentage from federal Form 1120S, Schedule K-1.
Can I claim all of my available credit?
Section C, line 14 limits the amount applied to the lesser of your available credit or the tax subject to credit offset calculated on line 13.
What does the taxpayer’s signature certify?
The taxpayer declares, under penalty of perjury, that they have examined the return, accompanying schedules, and statements, and that these are true, correct, and complete to the best of their knowledge and belief.