PRINTER'S NO. 465
No. 419 Session of 2007
INTRODUCED BY CORMAN, GORDNER, ARMSTRONG, SCARNATI, WONDERLING,
RHOADES, KITCHEN, GREENLEAF, COSTA, ERICKSON, D. WHITE,
STACK, RAFFERTY, ROBBINS, WAUGH, PUNT, C. WILLIAMS, LOGAN,
PIPPY, WOZNIAK, FOLMER, EARLL, FONTANA, BRUBAKER, BAKER,
EICHELBERGER, VANCE, REGOLA AND KASUNIC, MARCH 13, 2007
REFERRED TO FINANCE, MARCH 13, 2007
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
16 July 12, 2006 (P.L.1137, No.116), 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 * * *
1 (3) "Taxable income." * * *
2 4. * * *
3 (c) (1) [The] Except as provided for in paragraph (c)(3),
4 the net loss deduction shall be the lesser of:
5 (A) (I) For taxable years beginning before January 1, 2007,
6 two million dollars ($2,000,000);
7 (II) For taxable years beginning after December 31, 2006,
8 the greater of twelve and one-half per cent of taxable income as
9 determined under subclause 1 or, if applicable, subclause 2 or
10 three million dollars ($3,000,000); or
11 (B) The amount of the net loss or losses which may be
12 carried over to the taxable year or taxable income as determined
13 under subclause 1 or, if applicable, subclause 2.
14 (1.1) In no event shall the net loss deduction include more
15 than five hundred thousand dollars ($500,000), in the aggregate,
16 of net losses from taxable years 1988 through 1994.
17 (2) (A) A net loss for a taxable year may only be carried
18 over pursuant to the following schedule:
19 Taxable Year Carryover
20 1981 1 taxable year
21 1982 2 taxable years
22 1983-1987 3 taxable years
23 1988 2 taxable years plus
24 1 taxable year
25 starting with the
26 1995 taxable year
27 1989 1 taxable year plus
28 2 taxable years
29 starting with the
30 1995 taxable year
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1 1990-1993 3 taxable years
2 starting with the
3 1995 taxable year
4 1994 1 taxable year
5 1995-1997 10 taxable years
6 1998 and thereafter 20 taxable years
7 (B) The earliest net loss shall be carried over to the
8 earliest taxable year to which it may be carried under this
9 schedule. [The] Except as provided for in paragraph (c)(3), the
10 total net loss deduction allowed in any taxable year shall not
11 exceed:
12 (I) Two million dollars ($2,000,000) for taxable years
13 beginning before January 1, 2007.
14 (II) The greater of twelve and one-half per cent of the
15 taxable income as determined under subclause 1 or, if
16 applicable, subclause 2 or three million dollars ($3,000,000)
17 for taxable years beginning after December 31, 2006.
18 (3) Any limit on the net operating loss deduction in a
19 taxable year under subclauses (1) and (2) shall not apply to the
20 deduction of start-up period losses. For the purposes of this
21 subclause, start-up period losses are the sum of the net loss or
22 losses incurred in the corporation's first taxable year plus its
23 nine succeeding taxable years. A reorganization, as the term is
24 defined under section 303(a)(3)(iv)(B), shall be disregarded for
25 the purposes of applying this subclause.
26 Section 2. This act shall apply to net operating loss
27 deductions for taxable years beginning after December 31, 2007.
28 Section 3. This act shall take effect immediately.
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