2015 -- H 5239

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LC000539

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO TAXATION -- BUSINESS CORPORATION TAX

     

     Introduced By: Representative Arthur J. Corvese

     Date Introduced: January 29, 2015

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-11-2 of the General Laws in Chapter 44-11 entitled "Business

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Corporation Tax" is hereby amended to read as follows:

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     44-11-2. Imposition of tax. -- (a) Each corporation shall annually pay to the state a tax

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equal to nine percent (9%) of net income, as defined in § 44-11-11, qualified in § 44-11-12, and

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apportioned to this state as provided in §§ 44-11-13 -- 44-11-15, for the taxable year. For tax

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years beginning on or after January 1, 2015, each corporation shall annually pay to the state a tax

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equal to seven percent (7.0%) of net income, as defined in § 44-11-13 - 44-11-15, for the taxable

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year.

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      (b) A corporation shall pay the amount of any tax as computed in accordance with

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subsection (a) of this section after deducting from "net income," as used in this section, fifty

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percent (50%) of the excess of capital gains over capital losses realized during the taxable year, if

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for the taxable year:

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      (1) The corporation is engaged in buying, selling, dealing in, or holding securities on its

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own behalf and not as a broker, underwriter, or distributor;

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      (2) Its gross receipts derived from these activities during the taxable year amounted to at

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least ninety percent (90%) of its total gross receipts derived from all of its activities during the

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year. "Gross receipts" means all receipts, whether in the form of money, credits, or other valuable

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consideration, received during the taxable year in connection with the conduct of the taxpayer's

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activities.

 

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      (c) A corporation shall not pay the amount of the tax computed on the basis of its net

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income under subsection (a) of this section, but shall annually pay to the state a tax equal to ten

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cents ($.10) for each one hundred dollars ($100) of gross income for the taxable year or a tax of

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one hundred dollars ($100), whichever tax shall be the greater, if for the taxable year the

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corporation is either a "personal holding company" registered under the federal Investment

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Company Act of 1940, 15 U.S.C. § 80a-1 et seq., "regulated investment company", or a "real

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estate investment trust" as defined in the federal income tax law applicable to the taxable year.

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"Gross income" means gross income as defined in the federal income tax law applicable to the

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taxable year, plus:

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      (1) Any interest not included in the federal gross income; minus

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      (2) Interest on obligations of the United States or its possessions, and other interest

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exempt from taxation by this state; and minus

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      (3) Fifty percent (50%) of the excess of capital gains over capital losses realized during

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the taxable year.

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      (d) (1) A small business corporation having an election in effect under subchapter S, 26

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U.S.C. § 1361 et seq., shall not be subject to the Rhode Island income tax on corporations, except

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that the corporation shall be subject to the provisions of subsection (a), to the extent of the income

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that is subjected to federal tax under subchapter S. Effective for tax years beginning on or after

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January 1, 2015, a small business corporation having an election in effect under subchapter S, 26

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U.S.C. § 1261 et seq., shall be subject to the minimum tax under § 44-11-2(e).

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      (2) The shareholders of the corporation who are residents of Rhode Island shall include

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in their income their proportionate share of the corporation's federal taxable income.

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      (3) [Deleted by P.L. 2004, ch. 595. art. 29, § 1.]

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      (4) [Deleted by P.L. 2004, ch. 595, art. 29, § 1.]

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      (e) Minimum tax. - The tax imposed upon any corporation under this section, including a

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small business corporation having an election in effect under subchapter S, 26 U.S.C. § 1361 et

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seq., shall not be less than five hundred dollars ($500).

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     However, any corporation that has been out of business for more than twelve (12)

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consecutive months shall not be liable for the minimum corporate tax, for any tax year in which

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the business was not in business for the entire tax year. This provision will not relieve such

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corporation from liability for payment of the appropriate corporate income tax for any tax year in

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which the corporation was in business for any portion of the tax year.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- BUSINESS CORPORATION TAX

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     This act would exclude corporations from the minimum corporation tax if the corporation

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has been out of business for more than twelve (12) consecutive months or any tax year in which

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the business was not in business for the entire tax year. This provision would not relieve such

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corporation from liability for payment of the appropriate corporate income tax for any tax year in

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which the corporation was in business for any portion of the tax year.

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     This act would take effect upon passage.

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