PRINTER'S NO. 645
No. 567 Session of 1985
INTRODUCED BY TRELLO, LEVIN, DALEY, VAN HORNE, SEVENTY,
COLAFELLA, COHEN AND POTT, MARCH 20, 1985
REFERRED TO COMMITTEE ON FINANCE, MARCH 20, 1985
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 providing for computation of the capital
11 stock or franchise tax on regulated investment companies.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 602(f) of the act of March 4, 1971
15 (P.L.6, No.2), known as the Tax Reform Code of 1971, amended
16 December 23, 1983 (P.L.360, No.89) and December 23, 1983
17 (P.L.370, No.90), is amended to read:
18 Section 602. Imposition of Tax.--* * *
19 (f) [Notwithstanding any other provisions contained in this
20 section 602, relating to the computation of the capital stock
21 value of an entity subject to tax in this Commonwealth, every]
22 Every domestic corporation and every foreign corporation (i)
1 registered to do business in Pennsylvania [and (i)]; (ii) which
2 maintains an office in Pennsylvania [and (ii)]; (iii) which has
3 filed a timely election to be taxed as a regulated investment
4 company with the Federal Government[, and (iii)]; and (iv) which
5 duly qualifies to be taxed as a regulated investment company
6 under the provisions of the Internal Revenue Code of 1954 as
7 amended, shall be taxed as a regulated investment company and
8 shall be subject to the capital stock or franchise tax imposed
9 by section 602, in either case for the privilege of having an
10 office in Pennsylvania, which tax shall be [the greater of (i)
11 seventy-five dollars ($75) or (ii) the amount computed in the
12 following manner:
13 (1) The capital stock value shall be determined by adding
14 its net asset values as of the last day of each month during the
15 taxable period or year and dividing the total sum by the number
16 of months involved, for which purpose net asset value means the
17 actual market value of all assets owned by such corporation
18 without any exemptions or exclusions, less all liabilities,
19 debts and other obligations.
20 (2) The proportion of the capital stock value taxable in
21 this Commonwealth at the rate of ten mills, shall be determined
22 by applying to the capital stock value a fraction, the numerator
23 of which is the sum of the corporation's gross receipts from (i)
24 sales of its own shares to Pennsylvania investors and (ii) sales
25 of its portfolio securities where the orders for such sales are
26 placed with or credited to Pennsylvania offices of registered
27 securities dealers and the denominator of which fraction is the
28 corporation's total gross receipts from (i) sales of its own
29 shares and (ii) sales of its portfolio securities. Pennsylvania
30 investors shall mean individuals residing in Pennsylvania at the
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1 time of the sale or corporations or other entities having their
2 principal place of business located in Pennsylvania at such
3 time.
4 (3) Any regulated investment company shall have the right
5 annually, to elect to compute its capital stock or franchise tax
6 by applying the rate of tax of ten mills, upon each dollar to
7 ten per cent of the capital stock value, as defined in clause
8 (1) of this subsection, of such corporation. If exercised this
9 election shall be in lieu of any other apportionment or
10 allocation to which such corporation would otherwise be
11 entitled.] computed pursuant to the provisions of this
12 subsection in lieu of all other provisions of this section 602.
13 The tax shall be in an amount which is the sum of the amounts
14 determined pursuant to clauses (1) and (2):
15 (1) The amount determined pursuant to this clause shall be
16 seventy-five dollars ($75) times that number which is the result
17 of dividing the net asset value of the regulated investment
18 company by one million, rounded to the nearest multiple of
19 seventy-five dollars ($75). Net asset value shall be determined
20 by adding the monthly net asset values as of the last day of
21 each month during the taxable period and dividing the total sum
22 by the number of months involved. Each such monthly net asset
23 value shall be the actual market value of all assets owned
24 without any exemptions or exclusions, less all liabilities,
25 debts and other obligations.
26 (2) The amount determined pursuant to this clause shall be
27 the amount which is the result of multiplying the rate of
28 taxation applicable for purposes of the personal income tax
29 during the same taxable year times the apportioned undistributed
30 personal income tax income of the regulated investment company.
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1 For the purposes of this clause:
2 (A) Personal income tax income shall mean income to the
3 extent enumerated and classified in section 303.
4 (B) Undistributed personal income tax income shall mean all
5 personal income tax income other than personal income tax income
6 undistributed on account of the capital stock or foreign
7 franchise tax, less all personal income tax income distributed
8 to shareholders. At the election of the company, income
9 distributed within forty-five days after the close of a taxable
10 year shall be deemed distributed during that year. If a company
11 in a taxable year has both current income and income accumulated
12 from a prior year, distributions during the year shall be deemed
13 to have been made first from current income.
14 (C) Undistributed personal income tax income shall be
15 apportioned to Pennsylvania by a fraction the numerator of which
16 is all income distributed during the taxable period to
17 shareholders who are resident individuals, estates or trusts and
18 the denominator of which is all income distributed during the
19 taxable period. Resident trusts shall not include charitable,
20 pension or profit-sharing, or retirement trusts.
21 (D) Personal income tax income and other income of a company
22 shall each be deemed to be either distributed to shareholders or
23 undistributed in the proportion each category bears to all
24 income received by the company during the taxable year.
25 Section 2. This act applies retroactively to the calendar
26 year beginning January 1, 1985, and to all corporate fiscal
27 years beginning on or after that date.
28 Section 3. This act shall take effect immediately.
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