00 HOUSE BILL NO. 36 01 "An Act bearing the short title of the 'Corporate Tax Loophole Elimination Act'; 02 establishing a tax on the income attributable to a shareholder, member, or owner of a 03 qualified entity; relating to exemptions from the tax on corporations; repealing tax 04 credits applied against the tax on certain individuals; and providing for an effective 05 date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07  * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 08 to read: 09 SHORT TITLE. This Act may be known as the Corporate Tax Loophole Elimination 10 Act.  11  * Sec. 2. AS 43.20.012(a) is amended to read: 12 (a) The tax imposed by this chapter does not 13 [(1)] apply to a public corporation, as defined in AS 45.77.020 [AN 01 INDIVIDUAL; 02 (2) APPLY TO A FIDUCIARY; 03 (3) FOR A TAX YEAR BEGINNING AFTER DECEMBER 31, 2012, 04 APPLY TO AN ALASKA CORPORATION THAT IS A QUALIFIED SMALL 05 BUSINESS AND THAT MEETS THE ACTIVE BUSINESS REQUIREMENT IN 26 06 U.S.C. 1202(e) AS THAT SUBSECTION READ ON JANUARY 1, 2012; OR 07 (4) FOR A TAX YEAR BEGINNING AFTER JUNE 30, 2007, 08 APPLY TO THE INCOME RECEIVED BY A REGIONAL ASSOCIATION 09 QUALIFIED UNDER AS 16.10.380 OR NONPROFIT CORPORATION HOLDING 10 A HATCHERY PERMIT UNDER AS 16.10.400 FROM THE SALE OF SALMON 11 OR SALMON EGGS UNDER AS 16.10.450 OR FROM A COST RECOVERY 12 FISHERY UNDER AS 16.10.455]. 13  * Sec. 3. AS 43.20 is amended by adding a new section to read: 14 Sec. 43.20.019. Tax on income of a qualified entity. (a) Except as provided 15 in (c) of this section, a shareholder, member, or owner of a qualified entity shall pay a 16 tax on the qualified entity's net income attributable to the shareholder, member, or 17 owner, as follows: 18 If the taxable income is Then the tax is: 19 Less than $200,000 zero 20 $200,000 but less than $500,000 5 percent of the taxable income over 21 $200,000 22 $500,000 but less than $1,000,000 $15,000 plus 7.5 percent of the taxable 23 income over $500,000 24 $1,000,000 or more $52,500 plus 9.4 percent of the taxable 25 income over $1,000,000. 26 (b) The net income attributable to the shareholder, member, or owner is the 27 shareholder's, member's, or owner's pro rata share of the qualified entity's taxable net 28 income, as calculated for federal individual income tax purposes, less the 29 shareholder's, member's, or owner's pro rata share of a credit usable by a qualified 30 entity under this chapter. 31 (c) If a tax is imposed on the income of an individual under another section of 01 state law, the individual is eligible to receive a credit against that tax in the amount of 02 tax paid under this section on income that is also subject to tax under the other section 03 of state law. A credit earned under this section may not reduce an individual's tax 04 liability under the other section of state law to below zero. 05 (d) The net income attributable to a shareholder, member, or owner of the 06 following entities is exempt from the tax imposed under this section: 07 (1) a nonprofit corporation qualifying for exemption from taxation 08 under 26 U.S.C. 501(c)(3) or (4); and 09 (2) a corporation established under 43 U.S.C. 1601 et seq. (Alaska 10 Native Claims Settlement Act). 11 (e) In this section, "qualified entity" means a sole proprietorship, partnership, 12 limited liability company, or entity that has elected to file federal returns under 26 13 U.S.C. 1361 - 1379 (Internal Revenue Code). 14  * Sec. 4. AS 43.05.085; AS 43.20.012(b), 43.20.012(c), 43.20.012(d), and 43.20.013 are 15 repealed. 16  * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 APPLICABILITY. AS 43.20.019, added by sec. 3 of this Act, applies to a 19 shareholder, member, or owner of a qualified entity filing a return for a taxable year 20 commencing after the effective date of this Act. In this section, "qualified entity" has the 21 meaning given in AS 43.20.019. 22  * Sec. 6. This Act takes effect December 31, 2017.