PRINTER'S NO. 2146
No. 1490 Session of 2002
INTRODUCED BY CORMAN, CONTI, ERICKSON, COSTA, GERLACH, KUKOVICH, ORIE, MUSTO, LEMMOND, RHOADES, SCHWARTZ, SCARNATI, WAUGH, WOZNIAK AND BOSCOLA, JUNE 25, 2002
REFERRED TO FINANCE, JUNE 25, 2002
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," further defining "taxable income" for purposes of 11 corporate net income tax. 12 The General Assembly of the Commonwealth of Pennsylvania 13 hereby enacts as follows: 14 Section 1. Section 401(3)4(c) of the act of March 4, 1971 15 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended May 16 12, 1999 (P.L.26, No.4), is amended to read: 17 Section 401. Definitions.--The following words, terms, and 18 phrases, when used in this article, shall have the meaning 19 ascribed to them in this section, except where the context 20 clearly indicates a different meaning: 21 * * * 22 (3) "Taxable income." * * *
1 4. * * * 2 (c) (1) [The] Except as provided in subparagraph 3, the net 3 loss deduction shall be the lesser of two million dollars 4 ($2,000,000) or the amount of the net loss or losses which may 5 be carried over to the taxable year or taxable income as 6 determined under subclause 1 or, if applicable, subclause 2. In 7 no event shall the net loss deduction include more than five 8 hundred thousand dollars ($500,000), in the aggregate, of net 9 losses from taxable years 1988 through 1994. 10 (2) A net loss for a taxable year may only be carried over 11 pursuant to the following schedule: 12 Taxable Year Carryover 13 1981 1 taxable year 14 1982 2 taxable years 15 1983-1987 3 taxable years 16 1988 2 taxable years plus 17 1 taxable year 18 starting with the 19 1995 taxable year 20 1989 1 taxable year plus 21 2 taxable years 22 starting with the 23 1995 taxable year 24 1990-1993 3 taxable years 25 starting with the 26 1995 taxable year 27 1994 1 taxable year 28 [1995 and thereafter 10 taxable years] 29 1995-1997 10 taxable years 30 1998 and thereafter 20 taxable years 20020S1490B2146 - 2 -
1 The earliest net loss shall be carried over to the earliest 2 taxable year to which it may be carried under this schedule. The 3 total net loss deduction allowed in any taxable year shall not 4 exceed two million dollars ($2,000,000). 5 (3) The two million dollar ($2,000,000) limit on the net 6 operating loss deduction in a taxable year under paragraphs (1) 7 and (2) shall not apply to the deduction of start-up period 8 losses. For the purposes of this paragraph, start-up period 9 losses are the sum of the net loss or losses incurred in the 10 corporation's first taxable year plus its nine succeeding 11 taxable years. A reorganization, as the term is defined under 12 section 303(a)(3)(iv)(B) of this act, shall be disregarded for 13 the purposes of applying this paragraph. 14 * * * 15 Section 2. This act shall apply to net operating loss 16 deductions for taxable years beginning after December 31, 2002. 17 Section 3. This act shall take effect immediately. F5L72SFL/20020S1490B2146 - 3 -