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 13 Engrossed 2018 Second Extraordinary Session Jackson
Abstract: Extends the sunset date for various reductions in corporate income tax exclusions and
deductions from June 30, 2018 to June 30, 2023.
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 extends the sunset date of the 2015 reductions from June 30, 2018 to June 30, 2023
for the following:
(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
through June 30, 2023. (R.S. 47:51)
(2)Deduction of net operating loss of a corporation; 72% deduction is retained through June 30,
2023. (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 through June 30,
2023. (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 through June 30, 2023. (R.S. 47:287.73)
(5)Deduction of net operating loss incurred in La.; 72% deduction is retained through June 30,
2023. (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 through June 30, 2023. (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 through June 30, 2023. (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 changes
present law by extending the sunset date on the present law rates through June 20, 2023. (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 changes present law by extending the sunset date
on the present law rates through June 20, 2023. (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 changes present law by extending the sunset date on the present law rates through June 20, 2023.
(R.S. 47:287.745(B))
Proposed law relative to the increase in depletion rates shall be applicable to taxable periods
beginning on and after Jan. 1, 2018.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 47:158(C) and (D), 287.73(C)(4), and 287.745(B) and ยง6 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. Delete provisions making the reduction in the amount of the tax credit permanent.
2. Continue effectiveness of the reduction in the amount of certain corporate income tax
deductions and exclusions through June 30, 2023.