Text: SSB00359 Text: SSB00361 Text: SSB00300 - SSB00399 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.61, subsection 2, Code 1995, is 1 2 amended by adding the following new paragraph: 1 3 NEW PARAGRAPH. f. A deduction shall not be allowed for 1 4 that portion of the taxpayer's expenses computed under this 1 5 paragraph which is allocable to an investment in an investment 1 6 subsidiary. The portion of the taxpayer's expenses which is 1 7 allocable to an investment in an investment subsidiary is an 1 8 amount which bears the same ratio to the taxpayer's expenses 1 9 as the taxpayer's average adjusted basis, as computed pursuant 1 10 to section 1016 of the Internal Revenue Code, of investment in 1 11 that investment subsidiary bears to the average adjusted basis 1 12 for all assets of the taxpayer. The portion of the taxpayer's 1 13 expenses that is computed and disallowed under this paragraph 1 14 shall be added. 1 15 Sec. 2. Section 422.61, Code 1995, is amended by adding 1 16 the following new subsection: 1 17 NEW SUBSECTION. 1A. "Investment subsidiary" means an 1 18 entity that is owned, capitalized, and utilized by a financial 1 19 institution with one of its purposes being to make, hold, and 1 20 manage, for and on behalf of the financial institution, 1 21 investments in securities which the financial institution 1 22 would be permitted by applicable law to make for its own 1 23 account. 1 24 Sec. 3. This Act, being deemed of immediate importance, 1 25 takes effect upon enactment and applies retroactively to 1 26 January 1, 1995, for tax years beginning on or after that 1 27 date. 1 28 EXPLANATION 1 29 The bill amends the franchise tax to disallow the expenses 1 30 related to investments in investment subsidiaries of financial 1 31 institutions. To counteract the loss of franchise tax revenue 1 32 caused by financial institutions setting up subsidiaries and 1 33 transferring interest-producing assets to them, the bill 1 34 disallows the deduction of a pro rata portion of all expenses. 1 35 The expenses are disallowed in the ratio of the investment in 2 1 investment subsidiaries to total assets. 2 2 The bill is retroactive to January 1, 1995, for tax years 2 3 beginning on or after that date. 2 4 LSB 2628SC 76 2 5 mg/cf/24
Text: SSB00359 Text: SSB00361 Text: SSB00300 - SSB00399 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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