SB 133: "An Act relating to a small business development tax credit under the Alaska Net Income Tax Act; and providing for an effective date."
00SENATE BILL NO. 133 01 "An Act relating to a small business development tax credit under the Alaska 02 Net Income Tax Act; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. PURPOSE. (a) The legislature finds that affiliated corporations with a 05 common corporate ownership, as well as large non-affiliated corporations, possess advantages 06 not available to small business corporations that do not share a common corporate ownership 07 with other corporations. These advantages include economies of scale and management, as 08 well as easier access to investment capital and favorable interest rates. Therefore, affiliated 09 corporations and large corporations have a competitive advantage over these small business 10 corporations with respect to making investments. 11 (b) In order to allow small businesses to compete more effectively and to induce 12 incremental investment from the small business sector that will have a multiplier effect on the 13 economy, producing more jobs and stimulating other businesses, a limited tax credit under the 14 Alaska Net Income Tax Act for investments in new property by eligible small business
01 corporations is desirable. 02 * Sec. 2. AS 43.20 is amended by adding a new section to article 1 to read: 03 Sec. 43.20.047. Small business development tax credit. (a) A taxpayer with 04 a monthly average of fewer than 50 employees that is not a member of an affiliated 05 group of two or more corporations as defined in AS 43.20.073(g)(2) may claim a small 06 business development tax credit of 10 percent of the first $100,000 of qualified 07 investment in new property first placed into service exclusively in the state in a tax 08 year beginning after December 31, 1996, but beginning before January 1, 2000. 09 (b) The tax credit allowed under this section 10 (1) may not exceed 50 percent of the taxpayer's tax liability under this 11 chapter; and 12 (2) shall be taken before all other credits allowed under this title. 13 (c) An unused tax credit under this section may be carried forward and applied 14 first against the tax liability for the following two tax years. 15 (d) If before the close of three years after the last day of the tax year for 16 which a credit was claimed, a taxpayer disposes of or removes from the state the 17 property for which the taxpayer had claimed a credit under this section, the taxpayer's 18 tax liability in the tax year of the disposal or removal of the property is increased by 19 a percentage of the credit claimed as follows: 20 (1) 100 percent, if the property is disposed of or removed 21 (A) in the same tax year for which the credit is claimed; or 22 (B) within the first six months of the following tax year; 23 (2) 75 percent if the property is disposed of or removed within six 24 months after the close of the period described in (1)(B) of this subsection; 25 (3) 50 percent if the property is disposed of or removed within 26 12 months after the close of the period described in (2) of this subsection; 27 (4) 25 percent if the property is disposed of or removed within 28 12 months after the close of the period described in (3) of this subsection. 29 (e) For purposes of (d) of this section, property is not considered disposed of 30 or removed by reason of a change in the form of business of the taxpayer, if the 31 property is retained in the business of the taxpayer.
01 (f) A credit shall be allowed under this section regardless of whether the 02 taxpayer has made an election to expense the qualified investment in the property for 03 federal income tax purposes. Nothing in this subsection affects the tax basis of the 04 property under this chapter. Except as otherwise provided in this chapter, the tax basis 05 of the property under this chapter shall follow the federal tax basis of the property. 06 (g) Qualified investment upon which a credit is claimed under this section may 07 not be considered for any other tax credit under this title. 08 (h) For the purposes of (a) of this section, a taxpayer's monthly average 09 number of employees is determined based on the taxpayer's employment statistics as 10 reported to the Department of Labor under AS 23.20 and regulations adopted under 11 that chapter 12 (1) for the calendar year preceding the year in which the credit under 13 this section is initially claimed; or 14 (2) for the first quarter of the calendar year in which the credit under 15 this section is initially claimed if the taxpayer did not report employment statistics for 16 the calendar year described in (1) of this subsection. 17 (i) A taxpayer may not claim the tax credit allowed under this section if the 18 taxpayer is in arrears in the payment of contributions under AS 23.20 or a tax under 19 this title. For purposes of this subsection, a taxpayer is not in arrears if the 20 contribution or tax is under administrative or judicial appeal. 21 (j) In this section, 22 (1) "employee" means an individual in employment as described in 23 AS 23.20.525 and 23.20.526; 24 (2) "exclusively in the state" means all use of the property is in the 25 state; 26 (3) "first placed into service" means the moment when property is first 27 used for its intended purpose; 28 (4) "new property" means property whose original use commences with 29 the taxpayer and does not include property first used by any other person; 30 (5) "qualified investment" means an investment cost in depreciable 31 tangible personal property for exclusive business use having a useful life of three years
01 or more but does not include an investment cost in motor vehicles, aircraft, watercraft, 02 leased property, or property to be permanently attached or incorporated into real 03 property; 04 (6) "tax liability" means the liability for taxes under this chapter 05 calculated before credits allowed under this chapter are taken; 06 (7) "useful life" means the useful life of the personal property that is 07 or would be applicable for the purposes of depreciation. 08 * Sec. 3. AS 43.20.047 is repealed. 09 * Sec. 4. Sections 1 and 2 of this Act are retroactive to January 1, 1997. 10 * Sec. 5. Sections 1, 2, and 4 of this Act take effect immediately under AS 01.10.070(c). 11 * Sec. 6. Section 3 of this Act takes effect December 1, 2002.