HLS 162ES-26 ORIGINAL
2016 Second Extraordinary Session
HOUSE BILL NO. 34
BY REPRESENTATIVE JACKSON
TAX/CORP INCOME: Reduces the amount of certain corporate income tax exclusions and
deductions (Item #37)
1 AN ACT
2To amend and reenact R.S. 47:51, 158(C) and (D), 246(A), 287.71(B)(2) and (3),
3 287.73(C)(4), 287.86(A), 287.738(F) and (G), and 287.745(B) and R.S. 51:3092,
4 relative to corporate income tax provisions of Act No. 123 of the 2015 Regular
5 Session; to provide for corporate tax expenditures; to provide for corporate income
6 tax exclusions and deductions; to reduce the amount of certain corporate income tax
7 exclusions and deductions; to provide for applicability and an effective date; and to
8 provide for related matters.
9Be it enacted by the Legislature of Louisiana:
10 Section 1. R.S. 47:51, 158(C) and (D), 246(A), 287.71(B)(2) and (3),
11 287.73(C)(4), 287.86(A), 287.738(F) and (G), and 287.745(B) are hereby amended
12 and reenacted to read as follows:
13 §51. Exclusions from gross income; governmental subsidies
14 Seventy-two Fifty percent of funds accrued by a corporation engaged in
15 operating a public transportation system from any federal, state or municipal
16 governmental entity to subsidize the operation and maintenance of such a
17 transportation system shall not be included in gross income and shall be exempt from
18 taxation under this Chapter. All expenses of operating the transit system incurred
19 by the corporation shall be deductible in arriving at net income.
20 * * *
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1 §158. Basis for depletion
2 * * *
3 C. Percentage depletion for oil and gas wells. In the case of oil and gas wells
4 the allowance for depletion under R.S. 47:66 shall be fifteen and eight-tenths of one
5 eleven percent of the gross income from the property during the taxable year,
6 excluding from such gross income an amount equal to eighty fifty percent of any
7 rents or royalties paid or incurred by the taxpayer in respect of the property. Such
8 allowance shall not exceed thirty-six twenty-five percent of the net income of the
9 taxpayer, computed without allowance for depletion, from the property except that
10 in no case shall the depletion allowance under R.S. 47:66 be less than it would be if
11 computed without reference to this Subsection.
12 D. Percentage depletion for coal and metal mines and sulphur. The
13 allowance for depletion under R.S. 47:66 shall be, in the case of coal mines, three
14 and six-tenths of one two and one-half percent, in the case of metal mines, ten and
15 eight-tenths of one seven and one-half percent, and in the case of sulphur mines or
16 deposits, fifteen and eight-tenths of one eleven and one-half percent, of the gross
17 income from the property during the taxable year, excluding from such gross income
18 an amount equal to seventy-two fifty percent of any rents or royalties paid or
19 incurred by the taxpayer in respect of the property. Such allowance shall not exceed
20 thirty-six twenty-five percent of the net income of the taxpayer, computed without
21 allowance for depletion from the property. A taxpayer making his first return under
22 this Chapter or under Act 21 of 1934 in respect of a property, shall state whether he
23 elects to have the depletion allowance for such property for the taxable year for
24 which the return is made computed with or without regard to percentage depletion,
25 and the depletion allowance in respect of such property for such year and all
26 succeeding taxable years shall be computed according to the election thus made. If
27 the taxpayer fails to make such statement in the return, the depletion allowance for
28 such property for all taxable years shall be computed without reference to percentage
29 depletion. This Subsection shall not be construed as granting a new election to any
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1 taxpayer relative to any property with respect to which he has filed a return under
2 Act 21 of 1934.
3 * * *
4 §246. Corporations; deduction from net income from Louisiana sources
5 A. Subject to the limitations provided herein, there shall be deducted from
6 any net income from Louisiana sources determined under the provisions of R.S.
7 47:241 of a corporation for any year following the close of the first taxable year
8 which commenced on or after January 1, 1979, and prior to January 1, 2015, the
9 amount of net Louisiana loss incurred in a preceding year determined as provided in
10 Subsection B of this Section. For taxable years beginning on or after January 1,
11 2015, and before January 1, 2016, the amount of the deduction allowed shall be
12 seventy-two percent of the amount of net Louisiana loss incurred in a preceding year
13 determined as provided in Subsection B of this Section. For taxable years beginning
14 on or after January 1, 2016, and before July 1, 2018, the amount of the deduction
15 allowed shall be fifty percent of the amount of net Louisiana loss incurred in a
16 preceding year determined as provided in Subsection B of this Section.
17 * * *
18 §287.71. Modifications to federal gross income
19 * * *
20 B. There shall be subtracted from gross income determined under federal
21 law, unless already excluded therefrom, the following items:
22 * * *
23 (2) Seventy-two Fifty percent of the funds accrued by a corporation engaged
24 in operating a public transportation system from any federal, state, or municipal
25 governmental entity to subsidize the operation and maintenance of such a
26 transportation system.
27 (3) Seventy-two Fifty percent of the refunds of Louisiana corporation
28 income tax received during the taxable year.
29 * * *
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1 §287.73. Modifications to deductions from gross income allowed by federal law
2 * * *
3 C. Additions. The following items are declared allowable as deductions in
4 the computation of net income and shall be added to the deductions allowed under
5 federal law to the extent not already included therein:
6 * * *
7 (4) Expenses disallowed by I.R.C. Section 280(C). Seventy-two Fifty
8 percent of expenses which would otherwise be deductible under federal law, but for
9 the disallowance provisions of I.R.C. Section 280(C), relative to certain expenses for
10 which credits are allowable.
11 * * *
12 §287.86. Net operating loss deduction
13 A. Deduction from Louisiana net income. Except as otherwise provided, for
14 all claims for this deduction on any return filed on or after July 1, 2015, regardless
15 of the taxable year to which the return relates, there shall be allowed for the taxable
16 year a deduction reducing Louisiana net income in an amount equal to seventy-two
17 fifty percent of the net operating loss carryovers to such year, but the deduction shall
18 never exceed seventy-two fifty percent of Louisiana net income.
19 * * *
20 §287.738. Other inclusions and exclusions from gross income
21 * * *
22 F. Deduction for interest and dividends.
23 (1) There shall be allowed for each taxable year a deduction equal to
24 seventy-two fifty percent of the amount of dividends that would otherwise be
25 included in gross income.
26 (2) Effective for taxable years beginning after December 31, 2005, there
27 There shall be allowed for each taxable year a deduction equal to fifty percent of the
28 amount of interest that would otherwise be included in gross income; however, a
29 corporation may elect to pay tax on interest income from a corporation which is
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1 controlled by the former through ownership of fifty percent or more of the voting
2 stock of the latter and to use the provisions of R.S. 47:287.93(A)(2).
3 G. Deduction for hurricane recovery benefits. Seventy-two Fifty percent of
4 any gratuitous grant, loan, or other benefit directly or indirectly provided to a
5 taxpayer by a hurricane recovery entity as defined in R.S. 47:293 shall be allowed
6 as a deduction if such benefit was included in federal adjusted gross income.
7 * * *
8 §287.745. Deductions from gross income; depletion
9 * * *
10 B. In the case of oil and gas wells, the percentage depletion provided for in
11 Subsection A shall be fifteen and eight-tenths of one eleven percent of gross income
12 from the property during the taxable year, excluding from such gross income an
13 amount equal to seventy-two fifty percent of any rents or royalties paid or incurred
14 by the taxpayer in respect of the property. Such allowance shall not exceed thirty-six
15 twenty-five percent of the net income of the taxpayer, computed without allowance
16 for depletion, from the property. In determining net income from the property,
17 federal income taxes shall be considered an expense.
18 Section 2. R.S. 51:3092 is hereby amended and reenacted to read as follows:
19 §3092. Corporation income and franchise tax exemption
20 Notwithstanding any other provision of law to the contrary, any corporation
21 that is a LCDFI as provided for in this Chapter shall be exempt from the corporation
22 income tax and the corporation franchise tax levied pursuant to Title 47 of the
23 Louisiana Revised Statutes of 1950 for four three consecutive taxable periods. The
24 exemption from the corporation income tax shall commence with the taxable period
25 in which the capital company is certified by the commissioner. The exemption from
26 the corporation franchise tax shall commence with the taxable period next following
27 the taxable period in which certification as a LCDFI is obtained from the
28 commissioner.
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1 Section 3. R.S. 47:51, 158(C) and (D), 246(A), 287.71(B)(2) and (3), 287.73(C)(4),
2287.86(A), 287.738(F) and (G), and 287.745(B) are hereby amended and reenacted to read
3as follows:
4 §51. Exclusions from gross income; governmental subsidies
5 Fifty percent of funds Funds accrued by a corporation engaged in operating
6 a public transportation system from any federal, state or municipal governmental
7 entity to subsidize the operation and maintenance of such a transportation system
8 shall not be included in gross income and shall be exempt from taxation under this
9 Chapter. All expenses of operating the transit system incurred by the corporation
10 shall be deductible in arriving at net income.
11 * * *
12 §158. Basis for depletion
13 * * *
14 C. Percentage depletion for oil and gas wells. In the case of oil and gas wells
15 the allowance for depletion under R.S. 47:66 shall be eleven twenty-two percent of
16 the gross income from the property during the taxable year, excluding from such
17 gross income an amount equal to fifty percent of any rents or royalties paid or
18 incurred by the taxpayer in respect of the property. Such allowance shall not exceed
19 twenty-five fifty percent of the net income of the taxpayer, computed without
20 allowance for depletion, from the property except that in no case shall the depletion
21 allowance under R.S. 47:66 be less than it would be if computed without reference
22 to this Subsection.
23 D. Percentage depletion for coal and metal mines and sulphur. The
24 allowance for depletion under R.S. 47:66 shall be, in the case of coal mines, two and
25 one-half five percent, in the case of metal mines, seven and one-half fifteen percent,
26 and in the case of sulphur mines or deposits, eleven and one-half twenty-three
27 percent, of the gross income from the property during the taxable year, excluding
28 from such gross income an amount equal to fifty percent of any rents or royalties
29 paid or incurred by the taxpayer in respect of the property. Such allowance shall not
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1 exceed twenty-five fifty percent of the net income of the taxpayer, computed without
2 allowance for depletion from the property. A taxpayer making his first return under
3 this Chapter or under Act 21 of 1934 in respect of a property, shall state whether he
4 elects to have the depletion allowance for such property for the taxable year for
5 which the return is made computed with or without regard to percentage depletion,
6 and the depletion allowance in respect of such property for such year and all
7 succeeding taxable years shall be computed according to the election thus made. If
8 the taxpayer fails to make such statement in the return, the depletion allowance for
9 such property for all taxable years shall be computed without reference to percentage
10 depletion. This Subsection shall not be construed as granting a new election to any
11 taxpayer relative to any property with respect to which he has filed a return under
12 Act 21 of 1934.
13 * * *
14 §246. Corporations; deduction from net income from Louisiana sources
15 A. Subject to the limitations provided herein, there shall be deducted from
16 any net income from Louisiana sources determined under the provisions of R.S.
17 47:241 of a corporation for any year following the close of the first taxable year
18 which commenced on or after January 1, 1979, and prior to January 1, 2015, the
19 amount of net Louisiana loss incurred in a preceding year determined as provided in
20 Subsection B of this Section. For taxable years beginning on or after January 1,
21 2015, and before January 1, 2016, the amount of the deduction allowed shall be
22 seventy-two percent of the amount of net Louisiana loss incurred in a preceding year
23 determined as provided in Subsection B of this Section. For taxable years beginning
24 on or after January 1, 2016 the amount of the deduction allowed shall be fifty percent
25 of the amount of net Louisiana loss incurred in a preceding year determined as
26 provided in Subsection B of this Section.
27 * * *
28 §287.71. Modifications to federal gross income
29 * * *
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1 B. There shall be subtracted from gross income determined under federal
2 law, unless already excluded therefrom, the following items:
3 * * *
4 (2) Fifty percent of the funds Funds accrued by a corporation engaged in
5 operating a public transportation system from any federal, state, or municipal
6 governmental entity to subsidize the operation and maintenance of such a
7 transportation system.
8 (3) Fifty percent of the refunds Refunds of Louisiana corporation income tax
9 received during the taxable year.
10 * * *
11 §287.73. Modifications to deductions from gross income allowed by federal law
12 * * *
13 C. Additions. The following items are declared allowable as deductions in
14 the computation of net income and shall be added to the deductions allowed under
15 federal law to the extent not already included therein:
16 * * *
17 (4) Expenses disallowed by I.R.C. Section 280(C). Fifty percent of expenses
18 Expenses which would otherwise be deductible under federal law, but for the
19 disallowance provisions of I.R.C. Section 280(C), relative to certain expenses for
20 which credits are allowable.
21 * * *
22 §287.86. Net operating loss deduction
23 A. Deduction from Louisiana net income. Except as otherwise provided, for
24 all claims for this deduction on any return filed on or after July 1, 2015, regardless
25 of the taxable year to which the return relates, there shall be allowed for the taxable
26 year a deduction reducing Louisiana net income in an amount equal to fifty seventy-
27 two percent of the net operating loss carryovers to such year, but the deduction shall
28 never exceed fifty seventy-two percent of Louisiana net income.
29 * * *
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1 §287.738. Other inclusions and exclusions from gross income
2 * * *
3 F. Deduction for interest and dividends.
4 (1) There shall be allowed for each taxable year a deduction equal to fifty
5 percent of the amount of dividends that would otherwise be included in gross
6 income.
7 (2) There shall be allowed for each taxable year a deduction equal to fifty
8 percent of the amount of interest that would otherwise be included in gross income;
9 however, a corporation may elect to pay tax on interest income from a corporation
10 which is controlled by the former through ownership of fifty percent or more of the
11 voting stock of the latter and to use the provisions of R.S. 47:287.93(A)(2).
12 G. Deduction for hurricane recovery benefits. Fifty percent of any Any
13 gratuitous grant, loan, or other benefit directly or indirectly provided to a taxpayer
14 by a hurricane recovery entity as defined in R.S. 47:293 shall be allowed as a
15 deduction if such benefit was included in federal adjusted gross income.
16 * * *
17 §287.745. Deductions from gross income; depletion
18 * * *
19 B. In the case of oil and gas wells, the percentage depletion provided for in
20 Subsection A shall be eleven twenty-two percent of gross income from the property
21 during the taxable year, excluding from such gross income an amount equal to fifty
22 percent of any rents or royalties paid or incurred by the taxpayer in respect of the
23 property. Such allowance shall not exceed twenty-five fifty percent of the net
24 income of the taxpayer, computed without allowance for depletion, from the
25 property. In determining net income from the property, federal income taxes shall
26 be considered an expense.
27 Section 4. R.S. 51:3092 is hereby amended and reenacted to read as follows:
28 §3092. Corporation income and franchise tax exemption
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1 Notwithstanding any other provision of law to the contrary, any corporation
2 that is a LCDFI as provided for in this Chapter shall be exempt from the corporation
3 income tax and the corporation franchise tax levied pursuant to Title 47 of the
4 Louisiana Revised Statutes of 1950 for three five consecutive taxable periods. The
5 exemption from the corporation income tax shall commence with the taxable period
6 in which the capital company is certified by the commissioner. The exemption from
7 the corporation franchise tax shall commence with the taxable period next following
8 the taxable period in which certification as a LCDFI is obtained from the
9 commissioner.
10 Section 5. The provisions of Sections 1 and 2 of this Act shall apply to any return
11filed for any taxable year beginning on or after January 1, 2016, and before January 1, 2019.
12The provisions of Sections 3 and 4 of this Act shall apply to any return filed for any taxable
13year beginning on or after January 1, 2019.
14 Section 6. Notwithstanding any contrary provision of Section 6 of Act No. 123 of
15the 2015 Regular Session of the Legislature, the provisions of Sections 1 and 2 of Act No.
16123 of the 2015 Regular Session of the Legislature shall cease to be effective on the effective
17date of Sections 1 and 2 of this Act and Sections 3 and 4 of Act No. 123 of the 2015 Regular
18Session of the Legislature shall not become effective.
19 Section 7.A. Sections 1, 2, 5, 6, and this Section of this Act shall become effective
20upon signature of this Act by the governor or, if not signed by the governor, upon expiration
21of the time for bills to become law without signature by the governor, as provided by Article
22III, Section 18 of the Constitution of Louisiana. If this Act is vetoed by the governor and
23subsequently approved by the legislature, Sections 1, 2, 5, 6, and this Section of this Act
24shall become effective on the day following such approval.
25 B. Sections 3 and 4 of this Act shall become effective on July 1, 2018.
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HB NO. 34
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 34 Original 2016 Second Extraordinary Session Jackson
Abstract: Reduces the amount of certain corporate income tax deductions and exclusions
through July 1, 2018.
Present law (R.S. 47:51) excludes from corporation gross income any funds received by a
corporation from a governmental entity to subsidize the operation and maintenance of a
public transportation system.
Present law provides an exclusion for 72% of the funds received.
Proposed law reduces the exclusion from 72% of the funds received to 50% of the funds
received by a corporation.
Proposed law, effective July 1, 2018, provides for an exclusion of 100% of the funds
received.
Present law (R.S. 47:158 and R.S. 47:287.745) provides an additional deduction in
determining net income for oil and gas depletion.
Present law provides a deduction equal to 15.8% of gross income from the property,
excluding 72% of any rents or royalties paid or incurred by the taxpayer due to the property.
The deduction is further limited to 36% of the net income from the property calculated
without the deduction for depletion.
Proposed law reduces the deduction from 15.8% of the gross income from the property
during the taxable year, excluding 72% of any rents or royalties, to 11% of the gross income
from the property during the taxable year, excluding 50% of rents or royalties. Further
reduces allowable deduction from an amount not to exceed 36% of the net income of the
taxpayer to an amount not to exceed 25% of the net income.
Proposed law, effective July 1, 2018, provides for a deduction of 22% of the gross income
from the property during the taxable year, excluding 100% of any rents or royalties. Further
limits the allowable deduction to an amount not to exceed 50% of the net income of the
taxpayer.
Present law (R.S. 47:246) provides a deduction for net operating loss of a corporation.
Present law provides that the amount of the deduction is equal to 72% of the amount of the
net operating loss.
Proposed law reduces the amount of the deduction from 72% of the amount of the net
operating loss to 50% of the net operating loss.
Proposed law, effective July 1, 2018, provides for a deduction of 100% of the net operating
loss.
Present law (R.S. 47:287.71) excludes from corporate gross income funds received from a
governmental entity to subsidize the operation and maintenance of a public transportation
system and the refunds of Louisiana corporation income tax received during the taxable year.
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HB NO. 34
Present law provides an exclusion for 72% of the funds and refunds received.
Proposed law reduces the exclusion from 72% of the funds and refunds received to 50% of
the funds received by a corporation.
Proposed law, effective July 1, 2018, provides for an exclusion of 100% of the funds
received by a corporation.
Present law (R.S. 47:287.73) provides for a deduction from corporate income tax expenses
disallowed under I.R.C. Section 280C. Further requires a taxpayer who elects to claim
certain credits that are based on an expense to reduce the federal deduction for the expense
by the dollar amount of the credit claimed.
Present law provides a deduction for 72% of the disallowed expenses.
Proposed law reduces the amount of the deduction from 72% of the disallowed expenses to
50% of the disallowed expenses.
Proposed law, effective July 1, 2018, provides for a deduction of 100% of the disallowed
expenses.
Present law (R.S. 47:287.86) provides a deduction from corporate income for the amount of
the net operating loss incurred in La.
Present law provides a deduction for 72% of the net operating loss.
Proposed law reduces the amount of the deduction from 72% of the amount of the net
operating loss to 50% of the net operating loss.
Proposed law, effective July 1, 2018, provides for a deduction of 72% of the net operating
loss.
Present law (R.S. 47:287.738) authorizes a deduction from gross income of an amount equal
to interest and dividend income included on the federal income tax return.
Present law provides for a deduction of 72% of the amount of interest and dividend income.
Proposed law reduces the amount of the deduction from 72% to 50%.
Proposed law, effective July 1, 2018, provides for a deduction of 100% of the amount of
interest and dividend income.
Present law (R.S. 51:3092) exempts from corporation income and franchise taxes certain La.
Community Development Financial Institutions.
Present law provides an exemption for four consecutive taxable periods, commencing with
the taxable period in which the capital company is certified by the commissioner.
Proposed law reduces the exemption from four consecutive taxable periods to three
consecutive taxable periods.
Proposed law, effective July 1, 2018, provides for an exemption for five consecutive taxable
periods.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:51, 158(C) and (D), 246(A), 287.71(B)(2) and (3), 287.73(C)(4),
287.86(A), 287.738(F) and (G), and 287.745(B), and R.S. 51:3092)
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