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
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
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
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
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
16 * Sec. 5. The uncodified law of the State of Alaska is amended by adding a new section to
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.