PRINTER'S NO. 1294
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
985
Session of
2021
INTRODUCED BY AUMENT, YAW, MARTIN, ROBINSON, J. WARD, SCAVELLO,
BAKER, HUTCHINSON, BROOKS, MENSCH, PITTMAN, STEFANO,
PHILLIPS-HILL AND BARTOLOTTA, DECEMBER 29, 2021
REFERRED TO FINANCE, DECEMBER 29, 2021
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in personal income tax, further providing for
classes of income.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 303 of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, is amended by
adding a subsection to read:
Section 303. Classes of Income.--* * *
(a.11) The following shall apply to income:
(1) There shall be allowed as a deduction from income for a
taxable year an amount equal to the net operating loss.
(2) For a net operating loss arising in a taxable year
beginning after December 31, 2017, and before January 1, 2021,
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
the loss shall be:
(i) A net operating loss carryback to each of the five
taxable years preceding the taxable year of such loss.
(ii) An unused amount shall be carried forward to each
succeeding taxable year.
(3) Subject to paragraph (2):
(i) The entire amount of the net operating loss for a
taxable year shall be carried to the earliest of the taxable
years to which a loss may be carried.
(ii) The portion of the loss that is carried to each of the
other taxable years shall be the excess, if any, of the amount
of the loss over the sum of the taxable income for each of the
prior taxable years to which the loss may be carried.
(4) The amount deductible on account of losses from sales or
exchanges of capital assets shall not exceed the amount
includable on account of gains from sales or exchanges of
capital assets.
(5) The deductions allowable under this subsection which are
not attributable to a taxpayer's trade or business shall be
allowed only to the extent of the amount of the income not
derived from such trade or business. For purposes of this
paragraph a gain or loss from the sale or other disposition of
property, used in the trade or business, of a character which is
subject to the allowance for depreciation provided under section
167 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. ยง 167), or real property used in the trade or business,
shall be treated as attributable to the trade or business.
(6) For the purposes of this subsection:
(i) The term "net gain" means the sum of the gain for a year
from each class of compensation, net profits, gains, dividends,
20210SB0985PN1294 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
interest or income enumerated under this section.
(ii) The term "net loss" means the sum of the loss for a
year from each class of compensation, net profits, gains,
dividends, interest or income enumerated under this section.
(iii) The term "net operating loss" means the excess of the
sum of the net loss over the sum of the net gain for a year.
(iv) The term "net operating loss carryback" means a net
operating loss that applies to a prior year's tax return.
(v) The term "taxable income" means a taxpayer's net income
minus the net operating loss deduction for the taxable year.
* * *
Section 2. This act shall take effect in 60 days.
20210SB0985PN1294 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12