2015 -- S 0103

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO TAXATION - BUSINESS CORPORATION TAX AND FRANCHISE TAX

     Introduced By: Senators Raptakis, Felag, Cote, Ottiano, and McCaffrey

     Date Introduced: January 22, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-11-2 of the General Laws in Chapter 44-11 entitled "Business

Corporation Tax" is hereby amended to read as follows:

     44-11-2. Imposition of tax. -- (a) Each corporation shall annually pay to the state a tax

equal to nine percent (9%) of net income, as defined in § 44-11-11, qualified in § 44-11-12, and

apportioned to this state as provided in §§ 44-11-13 -- 44-11-15, for the taxable year. For tax

years beginning on or after January 1, 2015, each corporation shall annually pay to the state a tax

equal to seven percent (7.0%) of net income, as defined in § 44-11-13 - 44-11-15, for the taxable

year.

      (b) A corporation shall pay the amount of any tax as computed in accordance with

subsection (a) of this section after deducting from "net income," as used in this section, fifty

percent (50%) of the excess of capital gains over capital losses realized during the taxable year, if

for the taxable year:

      (1) The corporation is engaged in buying, selling, dealing in, or holding securities on its

own behalf and not as a broker, underwriter, or distributor;

      (2) Its gross receipts derived from these activities during the taxable year amounted to at

least ninety percent (90%) of its total gross receipts derived from all of its activities during the

year. "Gross receipts" means all receipts, whether in the form of money, credits, or other valuable

consideration, received during the taxable year in connection with the conduct of the taxpayer's

activities.

      (c) A corporation shall not pay the amount of the tax computed on the basis of its net

income under subsection (a) of this section, but shall annually pay to the state a tax equal to ten

cents ($.10) for each one hundred dollars ($100) of gross income for the taxable year or a tax of

one hundred dollars ($100), whichever tax shall be the greater, if for the taxable year the

corporation is either a "personal holding company" registered under the federal Investment

Company Act of 1940, 15 U.S.C. § 80a-1 et seq., "regulated investment company", or a "real

estate investment trust" as defined in the federal income tax law applicable to the taxable year.

"Gross income" means gross income as defined in the federal income tax law applicable to the

taxable year, plus:

      (1) Any interest not included in the federal gross income; minus

      (2) Interest on obligations of the United States or its possessions, and other interest

exempt from taxation by this state; and minus

      (3) Fifty percent (50%) of the excess of capital gains over capital losses realized during

the taxable year.

      (d) (1) A small business corporation having an election in effect under subchapter S, 26

U.S.C. § 1361 et seq., shall not be subject to the Rhode Island income tax on corporations, except

that the corporation shall be subject to the provisions of subsection (a), to the extent of the income

that is subjected to federal tax under subchapter S. Effective for tax years beginning on or after

January 1, 2015, a small business corporation having an election in effect under subchapter S, 26

U.S.C. § 1261 et seq., shall be subject to the minimum tax under § 44-11-2(e).

      (2) The shareholders of the corporation who are residents of Rhode Island shall include

in their income their proportionate share of the corporation's federal taxable income.

      (3) [Deleted by P.L. 2004, ch. 595. art. 29, § 1.]

      (4) [Deleted by P.L. 2004, ch. 595, art. 29, § 1.]

      (e) Minimum tax. - The tax imposed upon any corporation under this section, including a

small business corporation having an election in effect under subchapter S, 26 U.S.C. § 1361 et

seq., shall not be less than five hundred dollars ($500).

     (f) If a corporation's annual gross receipts, as defined in § 44-11-2 (b), amount to less

than the five hundred dollars ($500) minimum tax paid, the difference shall be refunded to the

corporation, provided the amount refunded shall never be greater than the five hundred dollars

($500) minimum tax paid.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - BUSINESS CORPORATION TAX AND FRANCHISE TAX

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     This act would refund a portion of the minimum tax paid to corporations whose gross

receipts are less than five hundred dollars ($500), but never more than five hundred dollars ($500)

minimum tax paid.

     This act would take effect upon passage.

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