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HB 36: "An Act bearing the short title of the 'Corporate Tax Loophole Elimination Act'; establishing a tax on the income attributable to a shareholder, member, or owner of a qualified entity; relating to exemptions from the tax on corporations; repealing tax credits applied against the tax on certain individuals; and providing for an effective date."

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.