PRINTER'S NO. 1354
No. 1206 Session of 1979
INTRODUCED BY POTT, MAY 3, 1979
REFERRED TO COMMITTEE ON FINANCE, MAY 3, 1979
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," removing tax preference items from the definition
11 of "taxable income."
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 * * *
23 (3) "Taxable income." 1. In case the entire business of the
1 corporation is transacted within this Commonwealth, for any
2 taxable year which begins on or after January 1, 1971, taxable
3 income for the calendar year or fiscal year as returned to and
4 ascertained by the Federal Government, or in the case of a
5 corporation participating in the filing of consolidated returns
6 to the Federal Government, the taxable income which would have
7 been returned to and ascertained by the Federal Government if
8 separate returns had been made to the Federal Government for the
9 current and prior taxable years, subject, however, to any
10 correction thereof, for fraud, evasion, or error as finally
11 ascertained by the Federal Government: Provided, That additional
12 deductions shall be allowed from taxable income on account of
13 any dividends received from any other corporation but only to
14 the extent that such dividends are included in taxable income as
15 returned to and ascertained by the Federal Government: Provided
16 further, That additional deductions shall be allowed from
17 taxable income in an amount equal to the amount of any reduction
18 in an employer's deduction for wages and salaries as required by
19 section 280C of the Internal Revenue Code as a result of the
20 employer taking a credit for "new jobs" pursuant to section 44B
21 of the Internal Revenue Code. [Provided further, That taxable
22 income will include the sum of the following tax preference
23 items as defined in section 57 of the Internal Revenue Code, as
24 amended, (i) excess investment interest; (ii) accelerated
25 depreciation on real property; (iii) accelerated depreciation on
26 personal property subject to a net lease; (iv) amortization of
27 certified pollution control facilities; (v) amortization of
28 railroad rolling stock; (vi) stock options; (vii) reserves for
29 losses on bad debts of financial institutions; (viii) and
30 capital gains but only to the extent that such preference items
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1 are not included in "taxable income" as returned to and
2 ascertained by the Federal Government.] No deduction shall be
3 allowed for net operating losses sustained by the corporation
4 during any other fiscal or calendar year. In the case of
5 regulated investment companies as defined by the Internal
6 Revenue Code of 1954, as amended, "taxable income" shall be
7 investment company taxable income as defined in the aforesaid
8 Internal Revenue Code of 1954, as amended. In arriving at
9 "taxable income" for Federal tax purposes for any taxable year
10 beginning on or after January 1, 1971, any corporate net income
11 tax due to the Commonwealth pursuant to the provisions of this
12 article shall not be allowed as a deduction and the amount of
13 corporate tax so due and excluded from Federal taxable income
14 under the Internal Revenue Code shall not be apportioned but
15 shall be subject to tax at the rate imposed under this article.
16 * * *
17 Section 2. This act shall take effect immediately and shall
18 apply to taxable income for the calendar or fiscal year of the
19 corporation beginning on or after January 1, 1980.
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