HB 309: "An Act bearing the short title of the 'Corporate Tax Loophole Elimination Act'; establishing an individual income tax for the taxation of certain S corporation income; relating to exemptions from the tax on corporations; repealing tax credits applied against the tax on individuals; and providing for an effective date."
00 HOUSE BILL NO. 309 01 "An Act bearing the short title of the 'Corporate Tax Loophole Elimination Act'; 02 establishing an individual income tax for the taxation of certain S corporation income; 03 relating to exemptions from the tax on corporations; repealing tax credits applied 04 against the tax on individuals; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 07 to read: 08 SHORT TITLE. This Act may be known as the Corporate Tax Loophole Elimination 09 Act. 10 * Sec. 2. AS 43.20.012(a) is amended to read: 11 (a) The tax imposed by this chapter does not 12 [(1)] apply to a public corporation, as defined in AS 45.77.020 [AN 13 INDIVIDUAL; 14 (2) APPLY TO A FIDUCIARY;
01 (3) FOR A TAX YEAR BEGINNING AFTER DECEMBER 31, 2012, 02 APPLY TO AN ALASKA CORPORATION THAT IS A QUALIFIED SMALL 03 BUSINESS AND THAT MEETS THE ACTIVE BUSINESS REQUIREMENT IN 26 04 U.S.C. 1202(e) AS THAT SUBSECTION READ ON JANUARY 1, 2012; OR 05 (4) FOR A TAX YEAR BEGINNING AFTER JUNE 30, 2007, 06 APPLY TO THE INCOME RECEIVED BY A REGIONAL ASSOCIATION 07 QUALIFIED UNDER AS 16.10.380 OR NONPROFIT CORPORATION HOLDING 08 A HATCHERY PERMIT UNDER AS 16.10.400 FROM THE SALE OF SALMON 09 OR SALMON EGGS UNDER AS 16.10.450 OR FROM A COST RECOVERY 10 FISHERY UNDER AS 16.10.455]. 11 * Sec. 3. AS 43.20 is amended by adding a new section to read: 12 Sec. 43.20.019. Tax on S corporation income. (a) Except as provided in (b) 13 of this section, if an S corporation has taxable net income over $200,000, a 14 shareholder of that S corporation shall pay a tax of six percent on the corporation's net 15 income attributable to the shareholder. The net income attributable to the shareholder 16 is the shareholder's pro rata share of the S corporation's taxable net income, as 17 calculated for federal individual income tax purposes, less the shareholder's pro rata 18 share of a credit usable by a corporation under this chapter. 19 (b) The tax under (a) of this section is imposed in addition to an individual 20 income tax, if an individual income tax is imposed under state law. However, if the 21 individual income tax imposed under state law and the tax under (a) of this section 22 result in the income described in (a) of this section being taxed at a rate greater than 23 9.4 percent, the tax in (a) of this section shall be reduced so that the combined total of 24 the individual income tax and the tax under (a) of this section does not exceed 9.4 25 percent. Nothing in this section shall reduce 26 (1) an individual income tax rate imposed under another provision of 27 law; or 28 (2) the tax imposed under (a) of this section to less than zero. 29 (c) In this section, "S corporation" means a corporation or other entity that has 30 elected to file federal returns under 26 U.S.C. 1361 - 1379 (Internal Revenue Code). 31 * Sec. 4. AS 43.05.085; AS 43.20.012(b), 43.20.012(c), 43.20.012(d), and 43.20.013 are
01 repealed. 02 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to 03 read: 04 APPLICABILITY. AS 43.20.019, added by sec. 3 of this Act, applies to a shareholder 05 of an S corporation with a taxable income over $200,000 filing a return for a taxable year 06 commencing after the effective date of this Act. In this section, "S corporation" has the 07 meaning given in AS 43.20.019. 08 * Sec. 6. This Act takes effect December 31, 2016.