PRINTER'S NO. 3776
No. 2839 Session of 1980
INTRODUCED BY COWELL, JULY 7, 1980
REFERRED TO COMMITTEE ON FINANCE, JULY 7, 1980
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," providing an additional deduction for certain
11 foreign taxes.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Subclause 1 of clause (3) of section 401, act of
15 March 4, 1971 (P.L.6, No.2), known as the "Tax Reform Code of
16 1971," amended November 26, 1978 (P.L.1287, No.306), is amended
17 to read:
18 Section 401. Definitions.--The following words, terms, and
19 phrases, when used in this article, shall have the meaning
20 ascribed to them in this section, except where the context
21 clearly indicates a different meaning:
22 * * *
1 (3) "Taxable income." 1. In case the entire business of the
2 corporation is transacted within this Commonwealth, for any
3 taxable year which begins on or after January 1, 1971, taxable
4 income for the calendar year or fiscal year as returned to and
5 ascertained by the Federal Government, or in the case of a
6 corporation participating in the filing of consolidated returns
7 to the Federal Government, the taxable income which would have
8 been returned to and ascertained by the Federal Government if
9 separate returns had been made to the Federal Government for the
10 current and prior taxable years, subject, however, to any
11 correction thereof, for fraud, evasion, or error as finally
12 ascertained by the Federal Government: Provided, That additional
13 deductions shall be allowed from taxable income on account of
14 any dividends received from any other corporation but only to
15 the extent that such dividends are included in taxable income as
16 returned to and ascertained by the Federal Government: Provided
17 further, That additional deductions shall be allowed from
18 taxable income in an amount equal to the amount of any reduction
19 in an employer's deduction for wages and salaries as required by
20 section 280C of the Internal Revenue Code as a result of the
21 employer taking a credit for "new jobs" pursuant to section 44B
22 of the Internal Revenue Code: Provided further, That an
23 additional deduction shall be allowed from taxable income in an
24 amount equal to the amount of any deduction permitted by section
25 164(a)(3) of the Internal Revenue Code when the corporation
26 takes the credit permitted by section 901(a) of the Internal
27 Revenue Code as limited by section 901(b)(1) of the Internal
28 Revenue Code: Provided further, That taxable income will include
29 the sum of the following tax preference items as defined in
30 section 57 of the Internal Revenue Code, as amended, (i) excess
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1 investment interest; (ii) accelerated depreciation on real
2 property; (iii) accelerated depreciation on personal property
3 subject to a net lease; (iv) amortization of certified pollution
4 control facilities; (v) amortization of railroad rolling stock;
5 (vi) stock options; (vii) reserves for losses on bad debts of
6 financial institutions; (viii) and capital gains but only to the
7 extent that such preference items are not included in "taxable
8 income" as returned to and ascertained by the Federal
9 Government. No deduction shall be allowed for net operating
10 losses sustained by the corporation during any other fiscal or
11 calendar year. In the case of regulated investment companies as
12 defined by the Internal Revenue Code of 1954, as amended,
13 "taxable income" shall be investment company taxable income as
14 defined in the aforesaid Internal Revenue Code of 1954, as
15 amended. In arriving at "taxable income" for Federal tax
16 purposes for any taxable year beginning on or after January 1,
17 1971, any corporate net income tax due to the Commonwealth
18 pursuant to the provisions of this article shall not be allowed
19 as a deduction and the amount of corporate tax so due and
20 excluded from Federal taxable income under the Internal Revenue
21 Code shall not be apportioned but shall be subject to tax at the
22 rate imposed under this article.
23 * * *
24 Section 2. This act shall take effect immediately and shall
25 be applicable to the tax year beginning on or after January 1,
26 1981.
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