| 13 | 25 | | |
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| 14 | 26 | | Be it enacted by the Senate and House of Representatives in General Assembly convened: |
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| 15 | 27 | | |
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| 16 | 28 | | Section 1. (NEW) (Effective July 1, 2014) (a) For purposes of this section: |
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| 17 | 29 | | |
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| 18 | 30 | | (1) "Capital gains" or "gains from the sale or exchange of capital assets" means (A) net gain as determined for federal income tax purposes, after due allowance for losses and holding periods, from (i) sales or exchanges of capital assets or assets treated as capital assets, other than notes, bonds or other obligations of the state or any of the political subdivisions thereof, or its or their respective agencies or instrumentalities, or (ii) transactions or events taxable to the taxpayer as such sales or exchanges, and being the net amount includable in the taxpayer's adjusted gross income, with respect to all such sales, exchanges, transactions or events, under the provisions of the internal revenue code in effect for the taxable year, exclusive of any gain or loss from the holding or trading of any dealer equity options, as defined in Section 1256 of the Internal Revenue Code, and exclusive of any gain or loss of a nonresident taxpayer other than from the sale or exchange of real property located in the state, provided such property is a capital asset or an asset treated as a capital asset or such sale or exchange is a transaction or event taxable as a sale or exchange of a capital asset, and (B) net gains from sales or exchanges of certain property, as determined in accordance with Internal Revenue Service Form 4797, exclusive of any such net gain includable under subparagraph (A) of this subdivision; |
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| 19 | 31 | | |
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| 20 | 32 | | (2) "Dividends" means those dividends taxable for federal income tax purposes without regard to the dividend exclusion, but exclusive of exempt dividends; |
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| 21 | 33 | | |
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| 22 | 34 | | (3) "Exempt dividend" means any dividend or part thereof, other than a capital gain dividend, paid by a regulated investment company where at least fifty per cent of the value of such company's total assets consists of obligations with respect to which taxation by this state is prohibited by federal law, and such regulated investment company designates such dividend or part thereof as an exempt dividend in a written notice mailed to its shareholders not later than sixty days after the close of its taxable year; |
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| 23 | 35 | | |
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| 24 | 36 | | (4) "Internal Revenue Code" or "code" means the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time; |
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| 25 | 37 | | |
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| 26 | 38 | | (5) "Interest income" means (A) any interest income taxable for federal income tax purposes, exclusive of any such income with respect to which taxation by any state is prohibited by federal law, less any amounts forfeited to a bank, savings bank, savings and loan association, credit union or other depository institution, wherever located, as a penalty for premature withdrawal of funds from a time savings account, certificate of deposit or similar class of deposit, and (B) any interest income from obligations issued by or on behalf of any state, political subdivision thereof, or public instrumentality, state or local authority, district, or similar public entity, exclusive of such income from obligations issued by or on behalf of the state, any political subdivision thereof, or public instrumentality, state or local authority, district, or similar public entity created under the laws of the state; |
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| 27 | 39 | | |
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| 28 | 40 | | (6) "Resident" means an individual: (A) Who is domiciled in this state, provided, if the individual maintains no permanent place of abode in this state, maintains a permanent place of abode elsewhere and spends in the aggregate not more than thirty days of the taxable year in this state, the individual shall be deemed not a resident; or (B) who is not domiciled in this state but maintains a permanent place of abode in this state and is in this state for an aggregate of more than one hundred eighty-three days of the taxable year, unless the individual, not being domiciled in this state, is in the armed forces of the United States; |
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| 29 | 41 | | |
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| 30 | 42 | | (7) "Taxpayer" means (A) a married couple, both of whom are residents in this state, whether or not they file for the taxable year a single federal income tax return jointly, and (B) every other individual who is a resident in this state, who has earnings received, credited or accrued in any taxable year from gains from the sale or exchange of capital assets, or from dividends or interest income subject to tax under the provisions of the Internal Revenue Code, and any married couple when either spouse or both spouses are not residents in this state and who file for the taxable year a single federal income tax return jointly, and every other individual who is not a resident in this state, who has earnings received, credited or accrued in any taxable year from gains from the sale or exchange of real property located in the state, provided such property is a capital asset or an asset treated as a capital asset or such sale or exchange is a transaction or event taxable as a sale or exchange of a capital asset. |
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| 31 | 43 | | |
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| 32 | | - | (b) Not later than July 1, 2015, the Department of Revenue Services shall calculate the amount of personal income tax paid to this state on that portion of Connecticut adjusted gross income equal to the capital gains, dividend and interest income includable in gross income for federal tax purposes. The amount of Connecticut income tax attributable to a taxpayer's capital gains, dividend and interest income shall be based upon the ratio of such capital gains, dividend and interest income to such taxpayer's total Connecticut adjusted gross income. The department shall calculate the total amount of personal income tax paid on said portion of Connecticut adjusted gross income and collected during the calendar year ending December 31, 2015, and during the calendar year ending December 31, 2016. |
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| 44 | + | (b) Not later than July 1, 2015, the Department of Revenue Services shall calculate the amount of personal income tax paid to this state on that portion of Connecticut adjusted gross income equal to the capital gains, dividend and interest income includable in gross income for federal tax purposes. The amount of Connecticut income tax attributable to a taxpayer's capital gains, dividend and interest income shall be based upon the ratio of such capital gains, dividend and interest income to such taxpayer's total Connecticut adjusted gross income. The department shall calculate the total amount of personal income tax paid on said portion of Connecticut adjusted gross income and collected during the calendar year ending December 31, 2015, and during the calendar year ending December 31, 2016. The average of the amount collected during the two calendar years shall represent the base amount. |
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| 45 | + | |
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| 46 | + | (c) On and after July 1, 2017, the Commissioner of Revenue Services shall segregate the amount of Connecticut income tax applicable to the total capital gains, dividend and interest income that is in excess of the base amount determined in accordance with subsection (b) of this section. In each succeeding fiscal year, the amount segregated shall be the amount that exceeds the amount segregated the previous fiscal year. |
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| 47 | + | |
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| 48 | + | (d) Amounts segregated in accordance with subsection (c) of this section shall be used as follows: (1) Fifty per cent of such amounts shall be deposited in the Budget Reserve Fund; (2) twenty-five per cent shall be used to make payments on outstanding debt in excess of the payments currently due; and (3) twenty-five per cent of such amounts shall be used to make payments into the state employees retirement system and the teachers' retirement system in excess of the annual required contributions. |
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