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 22 Engrossed 2018 First Extraordinary Session Shadoin
Abstract: Repeals the sunset for various reductions in corporate income tax exclusions and
deductions thereby making the reductions permanent.
Previous Act of the legislature (Act No. 123 of 2015 R.S.) temporarily reduced certain allowable
exclusions and deductions from corporate income tax. Present law provides that those exclusions
and deductions return to their former rates effective July 1, 2018.
Proposed law removes provision for return to the former rates, thereby making the following 2015
reductions permanent:
(1)Exclusion of funds received by a corporation from a governmental entity to subsidize the
operation and maintenance of a public transportation system; 72% exclusion is retained
rather than return to 100%. (R.S. 47:51)
(2)Deduction of net operating loss of a corporation; 72% deduction is retained rather than return
to 100%. (R.S. 47:246)
(3)Exclusion of funds received from a governmental entity to subsidize the operation and
maintenance of a public transportation system; 72% deduction is retained rather than return
to 100%. (R.S. 47:287.71)
(4)Deduction of various corporate expenses that are not allowed as deductions by I.R.C. Section
280C; 72% deduction is retained rather than return to 100%.
(R.S. 47:287.73)
(5)Deduction of net operating loss incurred in La.; 72% deduction is retained rather than return
to 100%. (R.S. 47:287.86)
(6)Deduction of an amount equal to interest and dividend income included on the federal
income tax return; 72% deduction is retained rather than return to 100%. (R.S. 47:287.738)
(7)Exemption from corporation income and franchise taxes for certain La. Community
Development Institutions; a four-year exemption is retained rather than return to five years.
(R.S. 51:3092)
Present law provides that the allowance for depletion for oil and gas wells is 15.8% of the gross income from the property during the taxable year. Proposed law changes that rate from 15.8% to
16%. Present law, effective now, provides that 80% of rents or royalties paid by the taxpayer are
excluded from income in calculating the depletion and that this allowance shall not exceed 36% of
the net income of the taxpayer. Present law, effective July 1, 2018, provides that: the depletion
allowance is 22%; 100% of rents or royalties paid by the taxpayer are excluded from income; and
this allowance shall not exceed 50% of the net income of the taxpayer. Proposed law repeals present
law that would become effective July 1, 2018, thereby retaining present law as currently effective.
(R.S. 47:158(C))
Proposed law, relative to the allowance for depletion for certain mines, changes the rate for coal
mines from 3.6% to 4%; for metal mines from 10.8% to 11%; and for sulphur mines from 15.8% to
16%. Present law, effective now, provides that 72% of rents or royalties paid by the taxpayer are
excluded from income in calculating the depletion and that this allowance shall not exceed 36% of
the net income of the taxpayer. Present law, effective July 1, 2018, provides that: the depletion
allowances are 5% for coal mines, 15% for metal mines, and 23% for sulphur mines; 100% of rents
or royalties paid by the taxpayer are excluded from income; and this allowance shall not exceed 50%
of the net income of the taxpayer. Proposed law repeals present law that would become effective
July 1, 2018, thereby retaining present law as currently effective. (R.S. 47:158(D))
Present law provides that the deduction from gross income tax for depletion for oil and gas wells is
15.8% of the gross income from the property during the taxable year. Proposed law changes that rate
from 15.8% to 16%. Present law, effective now, provides that 72% of rents or royalties paid by the
taxpayer are excluded from income in calculating the depletion and that this allowance shall not
exceed 36% of the net income of the taxpayer. Present law, effective July 1, 2018, provides that:
the depletion deduction is 22%; 100% of rents or royalties paid by the taxpayer are excluded from
income; and that this allowance shall not exceed 50% of the net income of the taxpayer. Proposed
law repeals present law that would become effective July 1, 2018, thereby retaining present law as
currently effective. (R.S. 47:287.745(B))
Effective July 1, 2018, but only if the Acts which originated as House Bill Nos. 2, 3, 12, 23, and 29
of this 2018 First E. S. are enacted, if HCR No. 2 of this 2018 First E.S. is adopted, and the proposed
amendment of Article VII of the Constitution of Louisiana contained in the Act which originated as
HB No. 15 of this 2018 First E.S. is adopted by the legislature.
(Amends R.S. 47:158(C) and (D), 287.73(C)(4), and 287.745(B) and §6 of Act No. 123 of 2015
R.S.; Repeals §§3 and 4 of Act No. 123 of 2015 R.S.)
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the original
bill:
1. Make a technical change to a reference to federal law.
2. Change the effective date of proposed law from governor's signature to effectiveness based on enactment of HB Nos. 2, 3, 12, 23, and 29, adoption of HCR No. 2, and the
proposed amendment of Article VII of the Constitution contained in the Act which
originated as HB No. 15 is adopted, all from the 2018 First E.S.