Sec. 12-214. Imposition of tax. (a)(1) Every mutual savings bank, savings and
loan association and every company engaged in the business of carrying passengers for
hire over the highways of this state in common carrier motor vehicles doing business
in this state, and every other company carrying on, or having the right to carry on,
business in this state, including a dissolved corporation which continues to conduct
business, except those companies described in subdivision (2) of this subsection, shall
pay, annually, a tax or excise upon its franchise for the privilege of carrying on or doing
business, owning or leasing property within the state in a corporate capacity or as an
unincorporated association taxable as a corporation for federal income tax purposes or
maintaining an office within the state, such tax to be measured by the entire net income
as herein defined received by such corporation or association from business transacted
within the state during the income year and to be assessed for each income year commencing prior to January 1, 1995, at the rate of eleven and one-half per cent, for income
years commencing on or after January 1, 1995, and prior to January 1, 1996, at the rate
of eleven and one-quarter per cent, for income years commencing on or after January
1, 1996, and prior to January 1, 1997, at the rate of ten and three-fourths per cent, for
income years commencing on or after January 1, 1997, and prior to January 1, 1998, at
the rate of ten and one-half per cent, for income years commencing on or after January
1, 1998, and prior to January 1, 1999, at the rate of nine and one-half per cent, for income
years commencing on or after January 1, 1999, and prior to January 1, 2000, at the rate
of eight and one-half per cent, and for income years commencing on or after January
1, 2000, at the rate of seven and one-half per cent. The exemption of companies described
in subparagraphs (G) and (H) of subdivision (2) of this subsection shall not be allowed
with respect to any income year of any such company commencing on or after January
1, 1998, and any such company claiming such exemption for any income years commencing on or after January 1, 1985, but prior to January 1, 1998, shall be required to
file a corporation business tax return in accordance with section 12-222 for each such
income year.
(2) The following companies shall be exempt from the tax imposed under this chapter: (A) Insurance companies incorporated or organized under the laws of any other
state or foreign government and for income years commencing on or after January 1,
1999, domestic insurance companies; (B) companies exempt by the federal corporation
net income tax law, and any company which qualifies as a domestic international sales
corporation (DISC), as defined in Section 992 of the Internal Revenue Code and as to
which a valid election under subsection (b) of said Section 992 to be treated as a DISC
is effective, but excluding companies, other than any company which so qualifies as,
and so elects to be treated as, a DISC, which elect not to be subject to such tax under
any provision of said Internal Revenue Code other than said subsection (b) of Section
992; (C) companies subject to gross earnings taxes under chapter 210; (D) companies
all of whose properties in this state are operated by companies subject to gross earnings
taxes under chapter 210; (E) cooperative housing corporations, as defined for federal
income tax purposes; (F) any organization or association of two or more persons established and operated for the exclusive purpose of promoting the success or defeat of
any candidate for public office or of any political party or question or constitutional
amendment to be voted upon at any state or national election or for any other political
purpose; (G) any company which is not owned or controlled, directly or indirectly, by
any other company, the gross annual revenues of which in the most recently completed
year did not exceed one hundred million dollars and which engaged in the research,
design, manufacture, sale or installation of alternative energy systems or motor vehicles
powered in whole or in part by electricity, natural gas or solar energy including their parts
and components, provided at least seventy-five per cent of the gross annual revenues of
such company are derived from such research, design, manufacture, sale or installation;
(H) any company which engages in the research, design, manufacture or sale in Connecticut of aero-derived gas turbine systems in advanced industrial applications, which applications are developed after October 1, 1992, which are limited to simple-cycle systems,
humid air, steam or water injection, recuperation or intercooling technologies, including
their parts and components, to the extent that such company's net income is directly
attributable to such purposes; (I) any non-United States corporation, which shall be any
foreign corporation, as defined in Section 7701(a)(5) of the Internal Revenue Code,
whose sole activity in this state during the income year consists of the trading in stocks,
securities or commodities for such corporation's own account, as defined in Section
864(b)(2)(A)(ii) of said Internal Revenue Code; and (J) for income years commencing
on or after January 1, 2001, S corporations.
(3) (A) A company is carrying on or doing business in this state if it is a general
partner of a partnership that does business, owns or leases property or maintains an
office in this state. (B) A company is carrying on or doing business in this state if it is
a limited partner of a limited partnership, other than an investment partnership, that does
business, owns or leases property or maintains an office in this state. (C) A company
that is not otherwise carrying on or doing business in this state, either directly or by
virtue of being a partner in a partnership described in subparagraph (A) or (B) of this
subdivision is not carrying on or doing business in this state solely by virtue of being a
limited partner of one or more investment partnerships.
(b) (1) With respect to income years commencing on or after January 1, 1989, and
prior to January 1, 1992, any company subject to the tax imposed in accordance with
subsection (a) of this section shall pay, for each such income year, an additional tax in
an amount equal to twenty per cent of the tax calculated under said subsection (a) for
such income year, without reduction of the tax so calculated by the amount of any credit
against such tax. The additional amount of tax determined under this subsection for any
income year shall constitute a part of the tax imposed by the provisions of said subsection
(a) and shall become due and be paid, collected and enforced as provided in this chapter.
(2) With respect to income years commencing on or after January 1, 1992, and
prior to January 1, 1993, any company subject to the tax imposed in accordance with
subsection (a) of this section shall pay, for each such income year, an additional tax in
an amount equal to ten per cent of the tax calculated under said subsection (a) for such
income year, without reduction of the tax so calculated by the amount of any credit
against such tax. The additional amount of tax determined under this subsection for any
income year shall constitute a part of the tax imposed by the provisions of said subsection
(a) and shall become due and be paid, collected and enforced as provided in this chapter.
(3) With respect to income years commencing on or after January 1, 2003, and
prior to January 1, 2004, any company subject to the tax imposed in accordance with
subsection (a) of this section shall pay, for each such income year, an additional tax in
an amount equal to twenty per cent of the tax calculated under said subsection (a) or
section 91 of public act 03-1 of the June 30 special session*, for such income year,
without reduction of the tax so calculated by the amount of any credit against such tax.
The additional amount of tax determined under this subsection for any income year shall
constitute a part of the tax imposed by the provisions of said subsection (a) and shall
become due and be paid, collected and enforced as provided in this chapter.
(4) With respect to income years commencing on or after January 1, 2004, and
prior to January 1, 2005, any company subject to the tax imposed in accordance with
subsection (a) of this section shall pay, for each such income year, an additional tax in
an amount equal to twenty-five per cent of the tax calculated under said subsection (a)
or section 91 of public act 03-1 of the June 30 special session*, for such income year,
without reduction of the tax so calculated by the amount of any credit against such tax,
except that any company that pays the minimum tax of two hundred fifty dollars under
section 12-219 or 12-223c for such income year shall not be subject to the additional
tax imposed by this subdivision. The additional amount of tax determined under this
subdivision for any income year shall constitute a part of the tax imposed by the provisions of said subsection (a) and shall become due and be paid, collected and enforced
as provided in this chapter.
(1949 Rev., S. 1897; 1951, 1953, June, 1955, S. 1089d; 1957, P.A. 515, S. 1; 649, S. 1; 1959, P.A. 394, S. 1; 510; 1961,
P.A. 604, S. 2; February, 1965, P.A. 147; 461, S. 7; 1969, P.A. 674; June, 1969, P.A. 1, S. 13; 1971, P.A. 683, S. 1; June,
1971, P.A. 5, S. 111; 1972, P.A. 271, S. 1; 285, S. 6; P.A. 73-350, S. 6, 27; 73-442, S. 4; P.A. 75-101, S. 1, 2; 75-213, S.
1, 53; P.A. 77-476, S. 1, 3; 77-499, S. 1, 2; P.A. 80-406, S. 4, 5; 80-483, S. 54, 186; P.A. 81-472, S. 15, 159; June Sp. Sess.
P.A. 83-1, S. 1, 15; P.A. 85-431, S. 1, 2; 85-474, S. 1, 2; P.A. 88-222, S. 1, 2; P.A. 89-16, S. 1, 31; 89-211, S. 22; 89-251,
S. 20, 203; P.A. 90-28, S. 1; June Sp. Sess. P.A. 91-3, S. 99, 168; P.A. 92-152, S. 1; P.A. 93-74, S. 5, 67; 93-199, S. 4, 6;
P.A. 94-4, S. 1, 2; May 25 Sp. Sess. P.A. 94-1, S. 45, 130; P.A. 95-160, S. 32, 69; P.A. 96-139, S. 12, 13; 96-197, S. 3,
11; P.A. 98-110, S. 13, 27; 98-244, S. 6, 35; June Sp. Sess. P.A. 98-1, S. 106, 121; P.A. 03-2, S. 32; June 30 Sp. Sess. P.A.
03-1, S. 87.)
*Note: Section 91 of public act 03-1 of the June 30 special session was repealed by section 248 of public act 03-6 of
the June 30 special session.
History: 1959 acts changed technical language of statute, added exclusion in subsection (2) for companies which elect
not to be subject to such tax, applied 3 3/4 per cent rate to net income received in each year as opposed to only those years
between 1953 and 1958; 1961 act added reference to chapter 212a, changed tax rate to 5 per cent and changed technical
language of statute; 1965 acts added Subdiv. (5) excepting nonprofit cooperative ownership housing corporations when
residence is restricted to corporation members and corporation ownership is restricted to residents from payment of tax
and restricted five per cent tax rates to years beginning before January 1, 1966, and increased rates for years thereafter to
five and one-quarter per cent; 1969 acts specified stock and nonstock corporations in Subdiv. (5) and added Subdiv. (6)
excepting cooperative housing corporations where there is no taxable income to corporation from payment of tax, added
new Subdivs. (4) and (5) detailing companies formerly mentioned by chapter reference only in Subdiv. (3) and renumbering
remaining Subdivs. accordingly, specified companies "not subject to the tax imposed by this part" in Subdiv. (6), formerly
(4), changed tax rates in Subdiv. (7), formerly (5), to five and one-quarter per cent for years beginning after January 1,
1971, and, in the case of companies other than telephone companies, made five and one-fourth per cent rate applicable to
years before January 1, 1969, and set rate for period between that date and January 1, 1971, at eight per cent; 1971 acts
deleted proviso that minimum tax shall not be less than minimum tax under Sec. 12-219, substituted "additional" for
"minimum" re tax under Sec. 12-219, deleted Subdiv. (5), renumbering following Subdivs. accordingly, and changed
references to 1971 to 1973; 1972 acts included DISC companies in Subdiv. (2), changed tax rates in Subdiv. (7) to eight
per cent without exception and deleted provisions concerning tax on telephone companies; P.A. 73-350 rewrote Subdiv.
(1) to apply to insurance companies for years before January 1, 1973, and to insurance companies incorporated or organized
under laws of other state or foreign company on or after that date, deleted Subdiv. (4) renumbering subsequent Subdivs.
accordingly and added proviso that tax rate as of January 1, 1974, applicable to companies subject to tax under provisions
of section will be two per cent, effective May 9, 1973, and applicable to income years beginning on or after January 1,
1973; P.A. 73-442 included foreign municipal electric utilities under provisions of section and specifically excluded such
utilities in Subdiv. (2) of exception; P.A. 75-101 added new Subdiv. (7) exempting organizations promoting success or
defeat of political candidates, parties, questions, constitutional amendments etc. from payment of tax, effective May 12,
1975, and applicable to income years commencing on or after January 1, 1973; P.A. 75-213 changed eight per cent rate
to ten per cent for income years beginning on or after January 1, 1975; P.A. 77-476 deleted references to foreign municipal
electric utilities; P.A. 77-499 required payment for owning or leasing property in state in corporate capacity or as unincorporated association taxable for federal income tax purposes or for maintaining an office in state; P.A. 80-406 added Subdiv.
(8) exempting certain companies engaged in research, design, manufacture, sale or installation of alternative energy systems
from payment of tax until July 1, 1985; P.A. 80-483 deleted reference to building and loan associations; P.A. 81-472 made
technical changes; June Sp. Sess. P.A. 83-1 increased the rate of tax from ten per cent to eleven and one-half per cent,
effective July 1, 1983, and applicable to income years of corporations commencing on or after January 1, 1983; P.A. 85-431 added provision allowing for retroactive exemption to date of incorporation for certain nonprofit corporations; P.A.
85-474 provided that exemption under Subdiv. (8) for alternative energy system companies shall not be allowed with
respect to any income year commencing on or after January 1, 1988, instead of after July 1, 1985; P.A. 88-222 expanded
the corporate tax exemption of Subdiv. (8) to include any company which is not owned or controlled, directly or indirectly,
by any other company and extended the exemption until January 1, 1993, effective May 28, 1988, and applicable to income
years of corporations commencing on or after January 1, 1988; P.A. 89-16 added Subsec. (b) imposing an additional tax
as a percentage of the tax under Subsec. (a), effective March 23, 1989, and applicable to income years of corporations
commencing on or after January 1, 1989; P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A. 89-251 amended Subsec. (b) by increasing the additional tax imposed under Sec. 1 of P.A. 89-16 from fifteen to twenty per
cent of the tax calculated under Subsec. (a), effective July 1, 1989, and applicable to income years commencing on or after
January 1, 1989; P.A. 90-28 made technical changes in the list of corporations in Subsec. (a) not subject to tax; June Sp.
Sess. P.A. 91-3 amended Subsec. (b) to provide that the twenty per cent additional tax would be applicable with respect
to income years commencing prior to January 1, 1992, and to impose a ten per cent additional tax applicable with respect
to income years commencing on or after January 1, 1992, and prior to January 1, 1993, effective August 22, 1991, and
applicable to income years of corporations commencing on or after January 1, 1991; P.A. 92-152 amended Subsec. (a) by
adding a new Subdiv. (8) exempting corporation engaged in the research, design, manufacture or sale of aero-derived gas
turbine systems and extended the exemptions for Subdivs. (7) and (8) until January 1, 1998; P.A. 93-74 added provisions
reducing tax rates commencing on and after January 1, 1995, effective May 19, 1993, and applicable to taxable years
commencing on and after January 1, 1995; P.A. 93-199 expanded exemption in Subdiv. (7) to include companies engaged
in research, design, manufacture, sale or installation of motor vehicles powered by electricity, natural gas or solar energy,
effective July 1, 1993, and applicable to taxable years commencing on or after January 1, 1993; P.A. 94-4 in Subdiv. (5)
of Subsec. (a) eliminated provision requiring cooperative housing corporations to have no taxable income, effective April
7, 1994, and applicable for income years commencing on or after January 1, 1990; May Sp. Sess. P.A. 94-1 amended
Subsec. (a) to conform section with revisions made in Sec. 5 of P.A. 93-74, effective April 7, 1994; P.A. 95-160 amended
Subsec. (a) to decrease tax rate from eleven per cent to ten and three-fourths per cent for the income years commencing
on or after January 1, 1996, and prior to January 1, 1997, nine and one-half per cent for the income years commencing on
or after January 1, 1998, and prior to January 1, 1999, eight and one-half per cent for the income years commencing on or
after January 1, 1999, and prior to January 1, 2000, and seven and one-half per cent for income years commencing on or
after January 1, 2000, effective June 1, 1995; P.A. 96-139 amended effective date of P.A. 95-160 to clarify applicability
to income years commencing on or after January 1, 1996; P.A. 96-197 amended Subsec. (a) to reorganize provisions and
added Subdiv. (3) re general partners of a partnership and made other technical changes, effective June 3, 1996, and
applicable to income years commencing on or after January 1, 1996; P.A. 98-110 amended Subsec. (a)(2) to exempt
domestic insurance companies and make technical changes, effective May 19, 1998, and applicable to income years
commencing on or after January 1, 1999; P.A. 98-244 amended Subsec. (a)(2) to exempt S corporations from the minimum
tax under Sec. 12-219 for income years commencing on or after January 1, 2001, and to exempt foreign-sourced income
of non-United-States corporations from the corporation business tax, effective June 8, 1998, and applicable to income
years commencing on or after January 1, 1998; June Sp. Sess. P.A. 98-1 amended Subsec. (a)(2) to add commodities,
effective June 24, 1998; P.A. 03-2 amended Subsec. (b) to add Subdiv. (3) re surcharge for the 2003 income year, effective
February 28, 2003, and applicable to income years commencing on or after January 1, 2003; June 30 Sp. Sess. P.A. 03-1
amended Subsec. (b) to include in surcharge provided under Subdiv. (3) amounts calculated under Sec. 91 of P.A. 03-1
of the June 30 special session and to add Subdiv. (4) re surcharge for the 2004 income year, effective August 16, 2003,
and applicable to income years commencing on or after January 1, 2003.
See chapter 138c re tax credits for donations to Rental Housing Assistance Trust Fund.
See Sec. 12-247 re reduction of tax where business carried on for less than twelve months.
See Sec. 12-264 re tax on gross earnings of utility companies.
Cited. 127 C. 508; 129 C. 664; 130 C. 461. Constitutionality not passed upon until Connecticut court determines extent
of applicability of tax to corporation solely in interstate business. 323 U. S. 104. Is an excise upon franchise of corporation
for privilege of doing business in the state. 135 C. 37. Cited. 142 C. 483; 151 C. 688. Cited. 178 C. 243, 245, 247. Cited.
196 C. 1, 3. Cited. 202 C. 412, 415. Cited. Id., 583, 594. Cited. 203 C. 198-201. Cited. 220 C. 665, 666, 669, 676, 678-
681. Cited. 224 C. 426, 429, 432-434. Section is tax imposition statute; any ambiguity must be resolved in favor of taxpayer.
228 C. 137-139, 141, 143, 144.
Cited. 26 CS 277; Id., 373, 374. Cited. 40 CS 77, 81, 82, 85. Cited. 43 CS 314, 322. Cited. 44 CS 90, 100.
Subsec. (a):
Cited. 228 C. 139, 142. Cited. 232 C. 325, 330.
Secs. 12-214a and 12-215. Effective date of subsection (7) of section 12-214.
Certain gross rentals to be tax-exempt. Sections 12-214a and 12-215 are repealed.
(1955, S. 1090d; 1957, P.A. 515, S. 2; P.A. 75-101, S. 2; P.A. 82-472, S. 182, 183.)
Sec. 12-216. Payment of tax by out-of-state corporations. The tax imposed by
this part upon corporations or associations carrying on or doing business or having the
right to carry on or do business in this state, which corporations or associations are
organized and exist under and by virtue of the laws of some other state, territory or
country or are organized and exist without any specific statutory authority, shall be paid
by such corporations or associations for the benefit and protection of the government
and laws of this state, it being the purpose of this section to require the payment of a
tax by all corporations or associations carrying on or doing business in this state, but
not organized under the laws of this state, as an additional recompense for protection
of the activities in this state of such corporations or associations.
(1951, S. 1091d; P.A. 73-442, S. 5; P.A. 77-476, S. 2, 3.)
History: P.A. 73-442 defined "foreign municipal electric utility" and included such utilities in corporations organized
under the law of any other state or country; P.A. 77-476 deleted amendments enacted in 1973 act.
Sec. 12-217. Deductions from gross income. Net income of S corporations.
Regulations. (a)(1) In arriving at net income as defined in section 12-213, whether or
not the taxpayer is taxable under the federal corporation net income tax, there shall be
deducted from gross income, (A) all items deductible under the Internal Revenue Code
effective and in force on the last day of the income year except (i) any taxes imposed
under the provisions of this chapter which are paid or accrued in the income year and
in the income year commencing January 1, 1989, and thereafter, any taxes in any state
of the United States or any political subdivision of such state, or the District of Columbia,
imposed on or measured by the income or profits of a corporation which are paid or
accrued in the income year, and (ii) deductions for depreciation, which shall be allowed
as provided in subsection (b) of this section, and (B) additionally, in the case of a regulated investment company, the sum of (i) the exempt-interest dividends, as defined in
the Internal Revenue Code, and (ii) expenses, bond premium, and interest related to tax-exempt income that are disallowed as deductions under the Internal Revenue Code, and
(C) in the case of a taxpayer maintaining an international banking facility as defined in
the laws of the United States or the regulations of the Board of Governors of the Federal
Reserve System, as either may be amended from time to time, the gross income attributable to the international banking facility, provided, no expense or loss attributable to
the international banking facility shall be a deduction under any provision of this section,
and (D) additionally, in the case of all taxpayers, all dividends as defined in the Internal
Revenue Code effective and in force on the last day of the income year not otherwise
deducted from gross income, including dividends received from a DISC or former DISC
as defined in Section 992 of the Internal Revenue Code and dividends deemed to have
been distributed by a DISC or former DISC as provided in Section 995 of said Internal
Revenue Code, other than thirty per cent of dividends received from a domestic corporation in which the taxpayer owns less than twenty per cent of the total voting power and
value of the stock of such corporation, and (E) additionally, in the case of all taxpayers,
the value of any capital gain realized from the sale of any land, or interest in land, to
the state, any political subdivision of the state, or to any nonprofit land conservation
organization where such land is to be permanently preserved as protected open space
or to a water company, as defined in section 25-32a, where such land is to be permanently
preserved as protected open space or as Class I or Class II water company land.
(2) No deduction shall be allowed for (A) expenses related to dividends which are
allowable as a deduction or credit under the Internal Revenue Code and (B) federal taxes
on income or profits, losses of other calendar or fiscal years, retroactive to include all
calendar or fiscal years beginning after January 1, 1935, interest received from federal,
state and local government securities, if any such deductions are allowed by the federal
government.
(3) Notwithstanding any provision of this section to the contrary, no dividend received from a real estate investment trust shall be deductible under this section by the
recipient unless the dividend is: (A) Deductible under Section 243 of the Internal Revenue Code; or (B) received by a qualified dividend recipient from a qualified real estate
investment trust and, as of the last day of the period for which such dividend is paid,
persons, not including the qualified dividend recipient or any person that is either a
related person to, or an employee or director of, the qualified dividend recipient, have
outstanding cash capital contributions to the qualified real estate investment trust that,
in the aggregate, exceed five per cent of the fair market value of the aggregate real estate
assets, valued as of the last day of the period for which such dividend is paid, then held
by the qualified real estate investment trust. For purposes of this section, a "related
person" is as defined in subdivision (7) of subsection (a) of section 12-217m, "real estate
assets" is as defined in Section 856 of the Internal Revenue Code, a "qualified dividend
recipient" means a dividend recipient who has invested in a qualified real estate investment trust prior to April 1, 1997, and a "qualified real estate investment trust" means
an entity that both was incorporated and had contributed to it a minimum of five hundred
million dollars worth of real estate assets prior to April 1, 1997, and that elects to be a
real estate investment trust under Section 856 of the Internal Revenue Code prior to
April 1, 1998.
(4) Notwithstanding anything in this section to the contrary, (A) any excess of the
deductions provided in this section for any income year commencing on or after January
1, 1973, over the gross income for such year or the amount of such excess apportioned
to this state under the provisions of section 12-218, shall be an operating loss of such
income year and shall be deductible as an operating loss carry-over for operating losses
incurred prior to income years commencing January 1, 2000, in each of the five income
years following such loss year, and for operating losses incurred in income years commencing on or after January 1, 2000, in each of the twenty income years following such
loss year, provided the portion of such operating loss which may be deducted as an
operating loss carry-over in any income year following such loss year shall be limited
to the lesser of (i) any net income greater than zero of such income year following such
loss year, or in the case of a company entitled to apportion its net income under the
provisions of section 12-218, the amount of such net income which is apportioned to
this state pursuant thereto, or (ii) the excess, if any, of such operating loss over the total
of such net income for each of any prior income years following such loss year, such
net income of each of such prior income years following such loss year for such purposes
being computed without regard to any operating loss carry-over from such loss year
allowed by this subparagraph and being regarded as not less than zero, and provided,
further, the operating loss of any income year shall be deducted in any subsequent year,
to the extent available therefor, before the operating loss of any subsequent income year
is deducted, and (B) any net capital loss, as defined in the Internal Revenue Code effective and in force on the last day of the income year, for any income year commencing
on or after January 1, 1973, shall be allowed as a capital loss carry-over to reduce, but
not below zero, any net capital gain, as so defined, in each of the five following income
years, in order of sequence, to the extent not exhausted by the net capital gain of any
of the preceding of such five following income years, and (C) any net capital losses
allowed and carried forward from prior years to income years beginning on or after
January 1, 1973, for federal income tax purposes by companies entitled to a deduction
for dividends paid under the Internal Revenue Code other than companies subject to
the gross earnings taxes imposed under chapters 211 and 212, shall be allowed as a
capital loss carry-over.
(5) This section shall not apply to a life insurance company as defined in the Internal
Revenue Code effective and in force on the last day of the income year. For purposes of
this section, the unpaid loss reserve adjustment required for nonlife insurance companies
under the provisions of Section 832(b)(5) of the Internal Revenue Code of 1986, or any
subsequent corresponding internal revenue code of the United States, as from time to
time amended, shall be applied without making the adjustment in Subparagraph (B) of
said Section 832(b)(5).
(b) For purposes of determining net income under this section, the deduction allowed for depreciation shall be determined as provided under the Internal Revenue Code
of 1986, or any subsequent corresponding internal revenue code of the United States,
as from time to time amended, provided in making such determination, the provisions
of Section 168(k) of said code shall not apply.
(c) (1) Notwithstanding the provisions of subsections (a) and (b) of this section,
"net income", in the case of an S corporation, means the percentage of the nonseparately
computed income or loss, as defined in Section 1366(a)(2) of the Internal Revenue Code,
of such S corporation, without separate state adjustment pursuant to section 12-233 or
12-226a for the compensation of any officer or employee, to which shall be added (A)
any taxes imposed under the provisions of this chapter which are paid or accrued in the
income year and (B) any taxes in any state of the United States or any political subdivision of such state, or the District of Columbia, imposed on or measured by the income
or profits of a corporation which are paid or accrued in the income year as provided in
subdivision (2) of this subsection.
(2) For income years commencing prior to January 1, 1997, "net income" means
one hundred per cent of the amount computed under subdivision (1) of this subsection;
for income years commencing on or after January 1, 1997, and prior to January 1, 1998,
"net income" means ninety per cent of the amount computed under subdivision (1) of
this subsection; for income years commencing on or after January 1, 1998, and prior to
January 1, 1999, "net income" means seventy-five per cent of the amount computed
under subdivision (1) of this subsection; for income years commencing on or after January 1, 1999, and prior to January 1, 2000, "net income" means fifty-five per cent of the
amount computed under subdivision (1) of this subsection; for income years commencing on or after January 1, 2000, and prior to January 1, 2001, "net income" means thirty
per cent of the amount computed under subdivision (1) of this subsection; for income
years commencing on or after January 1, 2001, net income of S corporations as computed
under subdivision (1) of this subsection shall not be subject to the tax under this chapter.
Any S corporation subject to the tax on net income as provided in this section shall be
eligible for any credit against the tax otherwise available to taxpayers under this chapter
only to the extent and in the same percentage as net income of such S corporation is
subject to taxation under this chapter, except that any S corporation with an income year
commencing on or after January 1, 1999, but before December 31, 2000, shall be eligible
for the entire credit available under sections 8-395, 12-633, 12-634, 12-635 and 12-635a.
(d) The commissioner may adopt regulations in accordance with chapter 54, relating
to mergers or consolidations of corporations providing for the deduction, by the surviving or new corporation provided for in the plan of consolidation, of operating losses
that were incurred by a merging or consolidating corporation, respectively, before the
merger or consolidation, respectively. Such regulations may follow the provisions of
the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue
code of the United States, as from time to time amended, or the regulations thereunder.
(1949 Rev., S. 1898; 1949, S. 1093d; 1957, P.A. 560, S. 8; 1961, P.A. 428, S. 2; 1963, P.A. 651, S. 1; 1971, P.A. 461;
June, 1971, P.A. 8, S. 28; 1972, P.A. 285, S. 12; P.A. 73-350, S. 8, 27; P.A. 77-16, S. 1, 2; 77-550, S. 1, 2; P.A. 80-483,
S. 55, 186; P.A. 81-66, S. 1, 5; 81-245, S. 2, 4; 81-411, S. 1, 42; Nov. Sp. Sess. P.A. 81-7, S. 1, 3; P.A. 85-159, S. 1, 19;
85-469, S. 4, 6; P.A. 89-211, S. 23; 89-251, S. 22, 203; June Sp. Sess. P.A. 91-3, S. 100, 168; P.A. 93-74, S. 6, 67; 93-332, S. 9, 12, 42; 93-435, S. 64, 95; P.A. 96-175, S. 1, 5; 96-197, S. 4, 11; P.A. 97-119, S. 1, 2; 97-283, S. 1, 2; P.A. 99-83, S. 1, 2; 99-173, S. 39, 65; 99-235, S. 5, 7; P.A. 00-170, S. 24, 42; May 9 Sp. Sess. P.A. 02-1, S. 56.)
History: 1961 act added subdivision (2); 1963 act extended exception in subdivision (2) to all taxpayers for year 1963
and thereafter; 1971 acts added provisions applicable to taxpayers whose income reported in consolidated return and
changed two and one-half per cent rate to sixty per cent for banking institutions beginning in 1971 income year, deleting
obsolete reference to January 1, 1962; 1972 act deleted mutual banks and trust companies in Subdiv. (2), included building
and loan associations and increased sixty per cent interest by ten per cent each year beginning in 1973 until 100 per cent
level reached; P.A. 73-350 changed five per cent rate for other taxpayers to ninety per cent in 1973 and 100 per cent thereafter,
added provisions re operating losses and net capital losses, added phrase re taxpayers who file as part of consolidated return
with federal government but not with the state and added provision clarifying applicability of provisions to life insurance
companies; P.A. 77-16 added provisions specially applicable to regulated investment companies, effective March 29, 1977,
and applicable to income years commencing on and after January 1, 1977; P.A. 77-550 added provisions calling for
consideration of excess of deductions allocated and apportioned to state under Sec. 12-218 as operating loss; P.A. 80-483
made technical changes; P.A. 81-66 eliminated Connecticut corporation business tax paid in the income year as a deduction
from gross income in determining taxable income under said tax, effective May 4, 1981, and applicable to income years
commencing on or after January 1, 1981; P.A. 81-245 added a deduction for the gross income attributable to an international
banking facility, provided no expense or loss attributable to such facility shall be a deduction, effective upon adoption by
the Board of Governors of the Federal Reserve System of amendments to Regulations D and Q pertaining to international
banking facilities (adopted June 9, 1981, with an effective date of December 3, 1981); P.A. 81-411 allowed dividends
received to be deducted from gross income and provided that net income be apportioned only, eliminating references to
allocation, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980; Nov. Sp.
Sess. P.A. 81-7 amended section to permit deductions for depreciation, adding Subpara. (2) of Subdiv. (1) in previously
existing provisions designated as Subsec. (a) and Subsec. (b) detailing such deductions, effective January 27, 1982, and
applicable to corporations' income years commencing on or after January 1, 1981; P.A. 85-159 provided for a depreciation
deduction for income years commencing in 1985 of eighty-eight per cent of the amount of the deduction allowed for federal
income tax purposes; P.A. 85-469 revised effective date of P.A. 85-159 but without affecting this section; P.A. 89-211
clarified reference to the Internal Revenue Code of 1986; P.A. 89-251 amended Subsec. (a) by adding to the list of items
deductible from gross income in determining net income under the federal income tax which may not be so deducted for
purposes of the Connecticut tax on net income of corporations, the following: Taxes in any state or political subdivision
thereof imposed on or measured by the income or profits of a corporation, effective July 1, 1989, and applicable to income
years commencing on or after January 1, 1989; June Sp. Sess. P.A. 91-3 amended Subsec. (b) to provide for the nondeductibility of thirty per cent of dividends received from a domestic corporation in which the taxpayer owns less than twenty
per cent of the total voting power and value of the stock of such corporation and added Subsec. (c) concerning net income
of S corporations, effective August 22, 1991, and applicable to income years of corporations commencing on or after
January 1, 1991; P.A. 93-74 specified that with respect to nonlife insurance companies the unpaid loss reserve adjustment
shall not be made, effective May 19, 1993, and applicable to taxable years commencing on or after January 1, 1993; P.A.
93-332 made technical change in language added in Sec. 6 of P.A. 93-74 to specify that with respect to nonlife insurance
companies the unpaid loss reserve adjustment shall not be made and amended Subsec. (c) to prohibit any separate state
adjustment to the net income of an S corporation with respect to the compensation of any officer or employee, effective
June 25, 1993, and applicable to taxable years on or after January 1, 1993; P.A. 93-435 made a technical change in Subsec.
(a), effective June 28, 1993; P.A. 96-175 amended Subsec. (c) by adding Subdiv. (2) re phase-out of net income, effective
May 31, 1996, and applicable to income years commencing on or after January 1, 1997; P.A. 96-197 added Subsec. (d) to
permit commissioner to adopt regulations relating to mergers and consolidations, effective June 3, 1996, and applicable
to income years commencing on or after January 1, 1996; P.A. 97-119 amended Subsec. (a) by adding new Subdiv. (3) re
real estate investment trusts and made technical and renumbering changes, effective June 6, 1997, and applicable to income
years commencing on or after January 1, 1997; P.A. 97-283 amended Subsec. (c) to make any S corporation subject to tax
on net income eligible for credits against tax in the same percentage as net income subject to tax under chapter, effective
June 26, 1997, and applicable to income years commencing on or after January 1, 1997; P.A. 99-83 amended Subsec. (c)
to add exception for S corporations with income year commencing on or after January 1, 1999, but prior to December 31,
2000, effective June 3, 1999, and applicable to income years commencing on or after January 1, 1999; P.A. 99-173 amended
Subsec. (a) to extend the net operating loss carry forward provision from five to twenty years applicable to losses incurred
on or after January 1, 2000, and provide a deduction for gains realized from sale of open space land, effective June 23,
1999, and applicable to income years commencing on or after January 1, 1999; P.A. 99-235 amended Subsec. (a)(1)(E)
to replace "watershed" with "water company", effective June 29, 1999; P.A. 00-170 amended Subsec. (c) to allow S
corporations to be eligible for credits under section 8-395 for income years commencing on and after January 1, 1999, but
before December 31, 2000, effective May 26, 2000, and applicable to income years commencing on or after January 1,
2000; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (b) to delete former Subdivs. (1) and (2) and provide for a depreciation
deduction to be determined as provided under the Internal Revenue Code, except that Section 168(k) of said code shall
not apply, effective July 1, 2002, and applicable to property placed in service after September 10, 2001, in income years
ending after said date.
Statute should be construed so as to avoid double taxation. 122 C. 553. Under former exception, rent received from
subtenants may not be deducted from gross rent to determine rent paid. 127 C. 507. Taxes paid by lessee under terms of lease
on property leased held within former exception and not deductible; payment made for "other services" under agreement by
which corporation rented machines could not be treated as rent. 129 C. 663-669. "Items deductible under federal corporation
net income tax law" do not include "credits" of sums taxable under federal law; federal excise profits net income not
deductible in determining income subject to state business tax. 130 C. 460. Cited. 135 C. 57. Incorporation of federal law
by reference into state law is not a delegation of legislative power. 142 C. 483. Cited. 178 C. 243, 245; 179 C. 363, 365,
366. Cited. 196 C. 1, 4, 7-9. Implications of a taxpayer's federal election on his privilege to claim deductions under state
statutes discussed. 199 C. 346, 349-353. Cited. 203 C. 198, 205. "... does not authorize surviving corporation to deduct
operating loss carry-overs of the merged or consolidated corporations ...". 203 C. 455-458, 460-465. Cited. 213 C. 220,
226, 228, 230-232. Cited. Id., 442, 444. Cited. 220 C. 665, 675, 677, 678. Cited. 235 C. 865, 873, 879.
Cited. 2 CA 660-662.
Cited. 40 CS 77, 78, 80, 83. Cited. 43 CS 260, 264-268, 277. Cited. 44 CS 90, 100. Cited. Id., 377. Surviving corporation
may deduct an operating loss carry over of a merged or consolidated corporation if "continuity of business test" is met.
45 CS 202.
Subsec. (a):
Cited. 199 C. 346, 350, 352, 353. Subdiv. (D)(1) cited. 213 C. 220, 222, 225-227, 230, 232. Where election made to
take federal tax credit, wages at issue in case are no longer "items deductible under federal corporation net income tax"
for purposes of this section. Id., 442, 444, 445. Subdiv. (A) cited. 235 C. 865-872, 874, 875, 880. Subdiv. (D)(1) cited.
Id., 865, 873; 236 C. 156, 157, 162, 164, 166, 167, 174, 176. Subdiv. (A) cited. Id., 156, 160, 161, 164, 167. Subdiv. (D)
cited. Id., 156, 162.
Secs. 12-217a and 12-217b. Deduction for investment in depreciable property.
Tax credit for expenditures for water pollution abatement facilities. Sections 12-217a and 12-217b are repealed.
(1963, P.A. 4; February, 1965, P.A. 8, S. 1; 1967, P.A. 57, S. 29; 1969, P.A. 291, S. 2; P.A. 82-472, S. 182, 183.)
Secs. 12-217c and 12-217d. Tax credit for expenditures for: Air pollution
abatement facilities; industrial waste treatment facilities. Sections 12-217c and 12-217d are repealed, effective July 8, 1997, and applicable to income years commencing
on or after January 1, 1998.
(1967, P.A. 754, S. 21; 1969, P.A. 291, S. 1; 758, S. 15; 1971, P.A. 872, S. 32, 145; P.A. 97-295, S. 24, 25; P.A. 98-262, S. 14, 22.)
Sec. 12-217e. Tax credits for certain manufacturing and service facilities as
provided under sections 32-9p and 32-9r. (a) There shall be allowed as a credit against
the tax imposed by this chapter an amount equal to twenty-five per cent of that portion
of such tax which is allocable to any manufacturing facility, provided, for any such
facility which is located in an enterprise zone designated pursuant to section 32-70
or in a municipality with an entertainment district designated under section 32-76 or
established under section 2 of public act 93-311* and which became eligible as a manufacturing facility after the designation of such zone and for which not less than one
hundred fifty full-time employees or thirty per cent of the full-time employment positions directly attributable to the manufacturing facility were, during the last quarter of
the income year of the taxpayer, held by employees of the taxpayer who at the time of
employment were (1) residents of such zone, or (2) residents of such municipality and
eligible for training under the Federal Comprehensive Employment Training Act or any
other training program that may replace the Comprehensive Employment Training Act,
a credit of fifty per cent shall be allowed. A position is directly attributable to the manufacturing facility if: (A) The work is performed or the base of operations is at the facility;
(B) the position did not exist prior to the construction, renovation, expansion or acquisition of the facility; and (C) but for the construction, renovation, expansion or acquisition
of the facility, the position would not have existed, provided nothing in this section
shall preclude a position from being considered directly attributable to a manufacturing
facility if such position formerly existed in an eligible manufacturing facility in the same
municipality under section 32-9p.
(b) There shall be allowed as a credit against the tax imposed by this chapter an
amount equal to the following percentage of that portion of such tax which is allocable
to any service facility: (1) Fifteen per cent, if there are three hundred or more but not
more than five hundred ninety-nine new employees working at such facility; (2) twenty
per cent if there are six hundred or more but not more than eight hundred ninety-nine new
employees working at such facility; (3) twenty-five per cent, if there are nine hundred or
more but not more than one thousand one hundred ninety-nine new employees working
at such facility; (4) thirty per cent if there are one thousand two hundred or more but
not more than one thousand four hundred ninety-nine new employees working at such
facility; (5) forty per cent, if there are one thousand five hundred or more but not more
than one thousand nine hundred ninety-nine new employees working at such facility;
or (6) fifty per cent if there are two thousand or more new employees working at such
facility. As used in this subsection: (A) "New employee" means a person hired by a
taxpayer to fill a position for a new job or a person shifted from an existing location of
the taxpayer outside this state to a service facility in this state, provided (i) in no case
shall the total number of new employees allowed for purposes of this credit exceed the
total increase in the taxpayer's employment in this state, which increase shall be the
difference between (I) the number of employees employed by the taxpayer in this state
at the time of application to the Commissioner of Revenue Services for such credit plus
the number of new employees who would be eligible for inclusion under the credit
allowed under this subsection without regard to this calculation, and (II) the highest
number of employees employed by the taxpayer in this state in the year preceding the
taxpayer's application to the Commissioner of Revenue Services for such credit, and
(ii) a person shall be deemed to be a "new employee" only if such person's duties in
connection with the operation of the facility are on a regular, full-time or equivalent or
full-time and permanent basis; and (B) "new job" means a job that did not exist in the
business of a taxpayer in this state prior to the taxpayer's application to the Commissioner
of Revenue Services for such credit and that is filled by a new employee, but does not
include a job created when an employee is shifted from an existing location of the
taxpayer in this state to a service facility.
(c) The portion of such tax which is allocable to such a manufacturing facility or
service facility shall be determined by multiplying such tax by a fraction computed as
the simple arithmetical mean of the following fractions: First, a fraction the numerator
of which is the average monthly net book value in the income year of the manufacturing
facility or service facility and machinery and equipment acquired for and installed in
the manufacturing facility or service facility, without deduction on account of any encumbrance thereon, or if rented to the taxpayer, the value of the manufacturing facility
or service facility and machinery and equipment acquired for and installed in the manufacturing facility or service facility, computed by multiplying the gross rents payable
by the taxpayer for the manufacturing facility or service facility and such machinery
and equipment during the income year or period by eight, and the denominator of which
is the sum of the average monthly net book value of all real property and machinery
and equipment held and owned by the taxpayer in the state, without deduction on account
of any encumbrance thereon and the value of all real property and machinery and equipment rented to the taxpayer in the state, computed by multiplying the gross rents payable
during the income year by eight; and second, a fraction the numerator of which is all
wages, salaries and other compensation paid during the income year to employees of
the taxpayer whose positions are directly attributable to the manufacturing facility or
service facility and the denominator of which is the wages, salaries and other compensation paid during the income year to all employees of the taxpayer in the state. An employee's position is directly so attributable if (1) the employee's service is performed or his
base of operations is at the manufacturing facility or service facility, (2) the position
did not exist prior to the construction, renovation, expansion or acquisition of the manufacturing facility or service facility, and (3) but for the construction, renovation, expansion or acquisition of the manufacturing facility or service facility the position would
not have existed. For the purposes of this subsection, "gross rents" means gross rents
as defined in section 12-218.
(d) The credit allowed by this section may be claimed only by the initial occupant
or occupants of the manufacturing facility or service facility. The owner of the manufacturing facility or service facility may not claim the credit unless the owner is also an
occupant. The credit may first be claimed on the tax return for the taxpayer's income
year which begins during the calendar year next succeeding the calendar year in which
the taxpayer was issued an eligibility certificate, and may be claimed in each of the
following nine income years. If within such period, however, any facility for which an
eligibility certificate has been issued ceases to qualify as a manufacturing facility or
service facility or any occupant of a manufacturing facility or service facility ceases to
be an occupant, the entitlement to the credit allowed by this section shall terminate in
the income year in which the qualification or occupancy ceases, and there shall not be
a pro rata application of the credit to such income year.
(e) Any subsequent occupant or occupants of a manufacturing facility or service
facility for which an eligibility certificate has been issued may claim the credit allowed
by this section in accordance with subsection (c) of this section but only after obtaining
a new eligibility certificate with respect to the manufacturing facility or service facility
being occupied in the manner provided in section 32-9r.
(f) Any taxpayer claiming the credit allowed by this section shall submit to the
Commissioner of Revenue Services a copy of the applicable eligibility certificate with
his tax return in each income year for which a deduction is claimed.
(P.A. 78-303, S. 85, 136; 78-357, S. 7, 16; P.A. 81-445, S. 4, 11; P.A. 82-435, S. 3, 8; P.A. 83-381, S. 2; 83-587, S. 26,
96; P.A. 90-270, S. 23, 38; P.A. 93-311, S. 6, 8; P.A. 94-247, S. 5, 8; P.A. 96-239, S. 12, 17; P.A. 97-295, S. 14, 25; P.A.
98-262, S. 14, 22; P.A. 00-174, S. 22, 83.)
*Note: Section 2 of public act 93-311 is special in nature and therefore has not been codified but remains in full force
and effect according to its terms.
History: P.A. 78-303 allowed substitution of commissioner of revenue services for tax commissioner in accordance
with provisions of P.A. 77-614; P.A. 81-445 included provisions allowing double credit for certain facilities in enterprise
zones in Subsec. (a), effective July 1, 1982; P.A. 82-435 amended Subsec. (a) to provide that the thirty per cent determination
for employees of facilities in enterprise zones will be made for the last quarter rather than the last day of the year and to
provide that CETA eligible residents of the municipality, along with residents of the zone, will count toward the thirty per
cent; P.A. 83-381 amended Subsec. (a) concerning the determination of eligibility for credit for facilities in enterprise zones;
P.A. 83-587 made technical changes in Subsec. (b); P.A. 90-270 amended Subsec. (a) by making businesses employing more
than one hundred fifty full-time employees eligible for the tax credit; P.A. 93-311 amended Subsec. (a) to extend eligibility
for the tax credit to manufacturing facilities located in entertainment districts, effective July 1, 1993; P.A. 94-247 made
facilities located in an entertainment district established pursuant to Sec. 2 of public act 93-311 eligible for the credit,
effective June 9, 1994; P.A. 96-239 inserted new Subsec. (b) authorizing tax credit against certain percentages of the tax
imposed by Ch. 208 which is allocable to a service facility, relettered former Subsecs. (b) to (e), inclusive, as Subsecs. (c)
to (f), inclusive, respectively, and amended relettered Subsecs. (c), (d) and (e) by adding references to "service facility",
effective July 1, 1996; P.A. 97-295 amended Subsec. (d) to reword provision re when credit may first be claimed, effective
July 8, 1997, and applicable to tax returns filed for income years of corporations commencing on or after January 1, 1997;
P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-174 amended Subsec. (a) to
add a provision allowing a position to be attributable to a manufacturing facility if it formerly existed in an eligible facility
in the same municipality, effective May 26, 2000.
See Sec. 32-9p for definitions of "manufacturing facility" and "service facility".
Sec. 12-217f. Tax credit for employers participating in certain state-approved
programs combining high school study and part-time employment. Section 12-217f
is repealed, effective July 8, 1997, and applicable to income years commencing on or
after January 1, 1998.
(P.A. 79-474, S. 1, 2; P.A. 97-295, S. 15, 24, 25; P.A. 98-262, S. 14, 22.)
Sec. 12-217g. Tax credits for apprenticeship training in manufacturing, construction and plastics-related trades. (a) There shall be allowed a credit for any taxpayer against the tax imposed under this chapter for any income year with respect to
each apprenticeship in the manufacturing trades commenced by such taxpayer in such
year under a qualified apprenticeship training program as described in this section, certified in accordance with regulations adopted by the Labor Commissioner and registered
with the Connecticut State Apprenticeship Council established under section 31-22n,
in an amount equal to four dollars per hour multiplied by the total number of hours
worked during the income year by apprentices in the first half of a two-year term of
apprenticeship and the first three-quarters of a four-year term of apprenticeship, provided the amount of credit allowed for any income year with respect to each such apprenticeship may not exceed four thousand eight hundred dollars or fifty per cent of actual
wages paid in such income year to an apprentice in the first half of a two-year term
of apprenticeship or in the first three-quarters of a four-year term of apprenticeship,
whichever is less.
(b) There shall be allowed a credit for any taxpayer against the tax imposed under
this chapter for any income year with respect to each apprenticeship in plastics and
plastics-related trades commenced by such taxpayer in such year under a qualified apprenticeship training program as described in this section, certified in accordance with
regulations adopted by the Labor Commissioner and registered with the Connecticut
State Apprenticeship Council established under section 31-22n, which apprenticeship
exceeds the average number of such apprenticeships begun by such taxpayer during the
five income years immediately preceding the income year with respect to which such
credit is allowed, in an amount equal to four dollars per hour multiplied by the total
number of hours worked during the income year by apprentices in the first half of a two-year term of apprenticeship and the first three-quarters of a four-year term of apprenticeship, provided the amount of credit allowed for any income year with respect to each
such apprenticeship may not exceed four thousand eight hundred dollars or fifty per
cent of actual wages paid in such income year to an apprentice in the first half of a
two-year term of apprenticeship or in the first three-quarters of a four-year term of
apprenticeship, whichever is less.
(c) There shall be allowed a credit for any taxpayer against the tax imposed under
this chapter for any income year with respect to wages paid to apprentices in the construction trades by such taxpayer in such year that the apprentice and taxpayer participate in
a qualified four-year apprenticeship training program, as described in this section, which
(1) is jointly administered by labor and management trustees, (2) is administered pursuant to 29 USC Section 186(c), (3) is certified in accordance with regulations adopted by
the Labor Commissioner and (4) is registered with the Connecticut State Apprenticeship
Council established under section 31-22n. The tax credit shall be in an amount equal to
two dollars per hour multiplied by the total number of hours worked during the income
year by apprentices, provided the amount of credit allowed for any income year with
respect to each such apprentice may not exceed one thousand dollars or fifty per cent
of actual wages paid in such income year for such apprenticeship, whichever is less.
(d) For purposes of this section, a qualified apprenticeship training program shall
require at least four thousand but not more than eight thousand hours of apprenticeship
training for certification of such apprenticeship by the Connecticut State Apprenticeship
Council. The amount of credit allowed any taxpayer under this section for any income
year may not exceed the amount of tax due from such taxpayer under this chapter with
respect to such income year.
(P.A. 79-475, S. 1, 2; May Sp. Sess. P.A. 94-4, S. 16, 85; P.A. 95-160, S. 64, 69; 95-284, S. 1, 2; P.A. 97-295, S. 16,
25; P.A. 98-262, S. 14, 22.)
History: P.A. 79-475 effective June 12, 1979, and applicable to income years ending on or after January 1, 1979; May
Sp. Sess. P.A. 94-4 increased the credit amount from two dollars and fifty cents per hour to four dollars, increased the time
period established for the program and increased the maximum total amount of the credit from three thousand dollars to
four thousand eight hundred dollars, effective June 9, 1994, and applicable to taxable years commencing on or after January
1, 1994; P.A. 95-160, revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 95-284
designated existing provisions as Subsecs. (a) and (c) and added Subsec. (b) re tax credits for apprenticeships in plastics
and plastics-related trades, effective July 1, 1995, and applicable to income years of corporations commencing on or after
January 1, 1995; P.A. 97-295 amended Subsec. (a) to change machine tool and metal trades to manufacturing trades and
deleted provision re average number of apprenticeships in five preceding income years, revised method of calculating
amount of credit in Subsecs. (a) and (b), added new Subsec. (c) re construction trades and redesignated existing Subsec.
(c) as Subsec. (d), effective July 8, 1997, and applicable to tax returns filed for income years of corporations commencing
on or after January 1, 1997; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section.
Sec. 12-217h. Tax credit for expenditures to establish day care facilities for
children of employees. Section 12-217h is repealed effective January 1, 1990, and
applicable to income years of corporations commencing on or after that date.
(P.A. 81-100, S. 1, 2; P.A. 82-469, S. 9, 11; P.A. 83-453, S. 1, 4; P.A. 88-289, S. 1, 4; P.A. 89-364, S. 6, 7.)
Sec. 12-217i. Tax credits for investments in vehicles powered by clean alternative fuels or electricity, for construction of or improvements to alternative fuel
filling stations and for converting motor vehicles to utilize alternative fuels. (a)
There shall be allowed a credit for any taxpayer against the tax imposed by this chapter,
chapter 209, 210, 211 or 212 in any income year or calendar quarter, as the case may
be, commencing prior to January 1, 2008, in an amount equal to ten per cent of the
amount of expenditures paid or incurred during such income year or such quarter, as
the case may be, for the incremental cost of purchasing a vehicle which is exclusively
powered by a clean alternative fuel.
(b) There shall be allowed a credit for any taxpayer against the tax imposed by this
chapter in any income year commencing on or after January 1, 1994, and prior to January
1, 2008, in an amount equal to fifty per cent of the amount of expenditures, other than
those described in subsection (a) of this section, paid or incurred during such income
year directly for (1) the construction of any filling station or improvements to any existing filling station in order to provide compressed natural gas, liquefied petroleum
gas or liquefied natural gas; (2) the purchase and installation of conversion equipment
incorporated into or used in converting vehicles powered by any other fuel to either
exclusive use of clean alternative fuel or dual use of such other fuel and a clean alternative
fuel, including, but not limited to, storage cylinders, cylinder brackets, regulated mixers,
fill valves, pressure regulators, solenoid valves, fuel gauges, electronic ignitions and
alternative fuel delivery lines, if such converted vehicles, after conversion, meet generally accepted standards, including, but not limited to, the standards set by the American
Gas Association, the National Fire Protection Association, the American National Standards Institute, the American Society of Testing Materials or the American Society of
Mechanical Engineers; or (3) the purchase and installation of equipment incorporated
into or used in a compressed natural gas, liquefied petroleum gas or liquefied natural
gas filling or electric recharging station for vehicles powered by a clean alternative fuel,
including, but not limited to, compressors, storage cylinders, associated framing, tubing
and fittings, valves and fuel poles and fuel delivery lines.
(c) If the amount of any credit provided in this section exceeds the amount of tax
otherwise payable in the income year or calendar quarter, as the case may be, in which
such expenditure was paid or incurred, the balance of any such credit remaining may
be taken in any of the three succeeding income years or twelve succeeding calendar
quarters, respectively. Any taxpayer allowed such a tax credit against the tax imposed
under this chapter, chapter 209, 210, 211 or 212 shall not be allowed such credit under
more than one of said chapters. As used in this section "clean alternative fuel" shall
mean compressed natural gas, liquefied petroleum gas, liquefied natural gas or electricity when used as a motor vehicle fuel and "incremental cost" shall mean the difference
between the purchase price of a vehicle which is exclusively powered by a clean alternative fuel and the manufacturer's suggested retail price of a comparably equipped vehicle
which is not so powered.
(P.A. 91-179, S. 1, 5; P.A. 92-188, S. 1, 4; P.A. 93-199, S. 2, 6; P.A. 95-15, S 1, 3; P.A. 96-183, S. 1, 4; P.A. 97-295,
S. 23, 25; P.A. 98-262, S. 14, 22; P.A. 99-173, S. 41, 65; May 9 Sp. Sess. P.A. 02-4, S. 11; P.A. 04-231, S. 5.)
History: P.A. 91-179 effective October 1, 1991, and applicable to income years commencing on or after January 1,
1991; P.A. 92-188 amended section to authorize tax credits for investments in vehicles powered by electricity, effective
July 1, 1992, and applicable to income years of corporations commencing on or after January 1, 1992; P.A. 93-199 extended
credit to any income year commencing prior to January 1, 1998, and added reference to electric recharging stations in
Subdiv. (1), effective July 1, 1993, and applicable to taxable years commencing on or after January 1, 1993; P.A. 95-15
incorporated tax credits for expenditures for construction of or improvements to alternative fuel filling stations, formerly
authorized under Sec. 12-217g and for expenditures for converting motor vehicles to utilize alternative fuels formerly
authorized under Sec. 12-217r and made technical changes, effective April 13, 1995, and applicable to income years or
calendar quarters commencing on or after January 1, 1994; P.A. 96-183 amended Subsec. (b) by adding liquefied petroleum
gas and liquefied natural gas to Subdiv. (3) effective May 31, 1996, and applicable to income years commencing on or
after January 1, 1996; P.A. 97-295 amended Subsec. (a) to extend date from January 1, 1998, to January 1, 2000, and
amended Subsec. (b) to extend date from January 1, 1999, to January 1, 2000, effective July 8, 1997; P.A. 98-262 revised
effective date of P.A. 97-295, but without affecting this section; P.A. 99-173 amended Subsecs. (a) and (b) to extend the
sunset from January 1, 2000, to January 1, 2002, effective June 23, 1999; May 9 Sp. Sess. P.A. 02-4 amended Subsecs.
(a) and (b) to extend the credit until January 1, 2004, effective July 1, 2002, and applicable to income years commencing
on or after January 1, 2002; P.A. 04-231 amended Subsecs. (a) and (b) to extend the sunset dates for the credits from
January 1, 2004 to January 1, 2008, effective July 1, 2004, and applicable to income years commencing on or after January
1, 2004.
Sec. 12-217j. Tax credit for research and experimental expenditures. (a) There
shall be allowed as a credit against the tax imposed on any corporation under this chapter,
with respect to income years of such corporation commencing on or after January 1,
1994, an amount equal to twenty per cent of the amount spent by such corporation
directly on research and experimental expenditures, as defined in Section 174 of the
Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code
of the United States, as from time to time amended, which are conducted in this state
and which exceeds the amount spent by such corporation during the preceding income
year of such corporation for such expenditures.
(b) (1) With respect to any income year commencing on or after January 1, 2000,
a credit or any portion of a credit that is allowed under this section but that is not used
by a taxpayer because the amount of the credit exceeds the tax due and owing by the
taxpayer shall be carried forward to each of the successive income years until such
credit, or applicable portion of the credit, is fully taken. In no case shall a credit, or any
portion of a credit, that is not used by a taxpayer be carried forward for a period of more
than fifteen years.
(2) (A) With respect to any income year commencing on or after January 1, 1997,
and prior to January 1, 2000, a credit or any portion of a credit that is allowed under
this section but that is not used by a biotechnology company because the amount of the
credit exceeds the tax due and owing by the taxpayer shall be carried forward to each
of the successive income years until such credit, or applicable portion of the credit, is
fully taken. In no case shall a credit, or any portion of a credit, that is not used by a
biotechnology company be carried forward for a period of more than fifteen years.
(B) For purposes of this subsection, "biotechnology company" means a company
engaged in the business of applying technologies, such as recombinant DNA techniques,
biochemistry, molecular and cellular biology, genetics and genetic engineering, biological cell fusion techniques, and new bioprocesses, using living organisms, or parts of
organisms, to produce or modify products, to improve plants or animals, to develop
microorganisms for specific uses, to identify targets for small molecule pharmaceutical
development, or to transform biological systems into useful processes and products.
(P.A. 92-193, S. 3, 8; P.A. 93-403, S. 1, 3; P.A. 96-252, S. 7, 8; P.A. 98-110, S. 22, 27; P.A. 03-225, S. 2.)
History: P.A. 92-193 effective July 1, 1992, and applicable to taxable years of corporations commencing on or after
January 1, 1993 (Revisor's note: In codifying public act 92-193 the words "an amount" were inserted editorially by the
Revisors in Subdiv. (1) after the words "January 1, 1994," for consistency with Subdiv. (2)); P.A. 93-403 added requirement
that research and experimental expenditures be conducted in the state, effective June 29, 1993, and applicable to taxable
years commencing on and after January 1, 1993; P.A. 96-252 authorized tax credits which are not used by biotechnology
companies to be carried forward and defined "biotechnology company", effective July 1, 1996, and applicable to income
years of corporations commencing on or after January 1, 1997; P.A. 98-110 expanded credit to all taxpayers, effective
May 19, 1998, and applicable to income years commencing on or after January 1, 2000; P.A. 03-225 divided existing
provisions into Subsecs. (a) and (b), amended Subsec. (a) to delete obsolete references and make technical changes, and
amended Subsec. (b) to add provisions re credit for biotechnology companies after January 1, 1997, and make technical
changes, effective July 9, 2003.
Sec. 12-217k. Tax credit for employee training. Section 12-217k is repealed,
effective July 8, 1997, and applicable to income years commencing on or after January
1, 1998.
(P.A. 92-193, S. 4, 8; P.A. 93-74, S. 7, 67; P.A. 97-295, S. 24, 25; P.A. 98-262, S. 14, 22.)
Sec. 12-217l. Tax credit for expenditures for grants to institutions of higher
education for research and development related to technological advancements.
There shall be allowed as a credit against the tax imposed on any corporation under this
chapter, with respect to any taxable year of such corporation commencing on or after
January 1, 1994, an amount equal to twenty-five per cent of the amount spent by such
corporation for any grant or combination of grants by such corporation to any institution
of higher education in Connecticut for purposes of research and development related
to advancements in technology which exceeds the average amount spent by such corporation during the three immediately preceding taxable years of such corporation for such
grants.
(P.A. 92-193, S. 5, 8.)
History: P.A. 92-193 effective July 1, 1992, and applicable to taxable years of corporations commencing on or after
January 1, 1994.
Sec. 12-217m. Tax credit for taxpayers occupying new facilities and creating
new jobs. Section 12-217m is repealed, effective July 8, 1997, and applicable to income
years commencing on or after January 1, 1998.
(P.A. 92-250, S. 1, 2; P.A. 95-79, S. 27, 189; 95-250, S. 1; P.A. 96-211, S. 1, 5, 6; P.A. 97-295, S. 17, 24, 25; P.A. 98-262, S. 14, 22.)
Sec. 12-217n. Rolling tax credit for research and development expenses. (a)
There shall be allowed as a credit against the tax imposed by this chapter the amount
determined under subsection (c) of this section in respect of the research and development expenses paid or incurred during any income year, subject to the limitations of
this section.
(b) For purposes of this section:
(1) "Research and development expenses" means research or experimental expenditures deductible under Section 174 of the Internal Revenue Code of 1986, as in effect
on May 28, 1993, determined without regard to Section 280C(c) thereof or any elections
made by a taxpayer to amortize such expenses on its federal income tax return that were
otherwise deductible, and basic research payments as defined under Section 41 of said
Internal Revenue Code to the extent not deducted under said Section 174, provided: (A)
Such expenditures and payments are paid or incurred for such research and experimentation and basic research conducted in this state; and (B) such expenditures and payments
are not funded, within the meaning of Section 41(d)(4)(H) of said Internal Revenue
Code, by any grant, contract, or otherwise by a person or governmental entity other than
the taxpayer unless such other person is included in a combined return with the person
paying or incurring such expenses;
(2) "Combined return" shall mean a combined corporation business tax return under
section 12-223a;
(3) "Commissioner" means the Commissioner of Economic and Community Development;
(4) "Qualified small business" means a company that (A) has gross income for the
previous income year that does not exceed one hundred million dollars, and (B) has not,
in the determination of the commissioner, met the gross income test through transactions
with a related person, as defined in section 12-217w.
(c) (1) The amount allowed as a credit in any income year shall be the tentative
credit calculated under subdivision (2) of this subsection, modified as provided in subsection (e) or (f) of this section, if applicable, except that in the case of a qualified small
business the tentative credit allowed for research and development expenses shall be
equal to six per cent of such expenses or in the case of any business employing over
two thousand five hundred people in the state of Connecticut with annual revenues in
excess of three billion dollars and headquartered in an enterprise zone the tentative credit
allowed for research and development expenses shall be equal to the greater of (A) the
tentative credit calculated under subdivision (2), modified as provided in subsection (e)
or (f) of this section, if applicable, or (B) three and one-half per cent of such expense.
(2) Where the research and development expenses paid or incurred in the income
year equal: (A) Fifty million dollars or less, the tentative credit allowed shall be an
amount equal to one per cent of such expenses; (B) more than fifty million dollars but
not more than one hundred million dollars, the tentative credit allowed shall be equal
to five hundred thousand dollars plus two per cent of the excess of such expenses over
fifty million dollars; (C) more than one hundred million dollars but not more than two
hundred million dollars, the tentative credit allowed shall be equal to one million five
hundred thousand dollars plus four per cent of the excess of such expenses over one
hundred million dollars; and (D) more than two hundred million dollars, the tentative
credit allowed shall be equal to five million five hundred thousand dollars plus six per
cent of the excess of such expenses over two hundred million dollars.
(d) (1) The credit provided for by this section shall be allowed for any income year
commencing on or after January 1, 1993, provided any credits allowed for income years
commencing on or after January 1, 1993, and prior to January 1, 1995, may not be taken
until income years commencing on or after January 1, 1995, and, for the purposes of
subdivision (2) of this subsection, shall be treated as if the credit for each such income
year first became allowable in the first income year commencing on or after January
1, 1995.
(2) No more than one-third of the amount of the credit allowable for any income
year may be included in the calculation of the amount of the credit that may be taken
in that income year.
(3) The total amount of the credit under subdivision (1) of this subsection that may
be taken for any income year may not exceed the greater of (A) fifty per cent of the
taxpayer's tax liability or in the case of a combined return, fifty per cent of the combined
tax liability, for such income year, determined without regard to any credits allowed
under this section, and (B) the lesser of (i) two hundred per cent of the credit otherwise
allowed under subsection (c) of this section for such income year, and (ii) ninety per
cent of the taxpayer's tax liability or in the case of a combined return, ninety per cent
of the combined liability for such income year, determined without regard to any credits
allowed under this section.
(4) Credits that are allowed under this section but that exceed the amount permitted
to be taken in an income year by reason of subdivision (1), (2) or (3) of this subsection,
shall be carried forward to each of the successive income years until such credits, or
applicable portion thereof, are fully taken. No credit permitted under this section shall
be taken in any income year until the full amount of all allowable credits carried forward
to such year from any prior income year, commencing with the earliest such prior year,
that otherwise may be taken under subdivision (2) of this subsection in that income year,
have been fully taken.
(e) In addition to the wage base test set forth in subsection (f) of this section, any
aerospace company or in the case of a combined return, any combined group including
an aerospace company, shall be subject to this subsection for any income year commencing on or after January 1, 1993, and prior to January 1, 1996. For purposes of this
subsection, an aerospace company is any taxpayer, whether or not included in a combined return, engaged principally in the aerospace industry whose research and development expenses during each of the income years beginning on or after January 1, 1990,
1991 and 1992, respectively, exceeded two hundred million dollars. No aerospace company, or in the case of a combined return, a combined group including an aerospace
company, shall be allowed any credit under this section for any income year to which
this subsection applies in which the aggregate transfers by an aerospace company, if
any, of historical economic base functions outside of this state, other than to a location
outside the United States, since January 1, 1993, through the end of such income year,
have materially reduced the historical economic base functions in this state. For purposes
of this subsection, the historical economic base functions shall be those economic base
functions conducted by an aerospace company, which need not be all economic base
functions of the aerospace company, in this state on January 1, 1993, whose continuance
in this state, as determined by the commissioner in his discretion, will further the policies
set forth in section 32-221. Such historical economic base functions shall be set forth
in a binding memorandum of understanding between the commissioner and an aerospace
company that may be entered into at any time prior to the expiration of the first income
year to which this subsection applies, with sufficient specificity to allow the commissioner and the aerospace company to determine in all income years subject to this subsection whether there has been such a reduction in said historical economic base functions.
As a prerequisite to the allowance of any credit otherwise allowable under this section
for any income year to which this subsection applies, each aerospace company shall
obtain a certificate of eligibility issued by the commissioner to the aerospace company
for such income year. The aerospace company shall within sixty days of the close of
each income year to which this subsection applies certify to the commissioner that there
has been no such aggregate material reduction in the historical economic base functions
in this state for the income year just completed that otherwise has not been offset as
provided below. Within sixty days thereafter, the commissioner shall review the certification and, if the commissioner determines that there has been no such net aggregate
material reduction in the historical economic base functions in this state, the commissioner shall issue a certificate of eligibility for said income year. The following shall
not constitute a material reduction in the historical economic base functions in this state:
(1) A reduction of not more than two per cent of the historical economic base functions;
(2) transfer of an historical economic base function to a person in this state; (3) transfer
of a historical economic base function outside of the United States; or (4) reductions in
historical economic base functions attributable to reductions in volume, productivity
improvements or the discontinuance of operations due to obsolescence or the like. Any
transfers that may otherwise be counted in determining if a material reduction occurred
may be offset to the extent economic base functions listed in, or comparable to those
listed in, the memorandum of understanding are increased in this state, transferred into
this state, or established in this state. Any such increase, transfer or establishment made
during an income year, or subsequent to such income year but prior to the filing of the
return for such income year, shall be effective for such income year and all income years
thereafter. The commissioner may issue or reissue a certificate of eligibility for the
applicable income year following any such offset. The aerospace company, or in the
case of a combined return including an aerospace company, the combined group, shall
include its certificate of eligibility and memorandum of understanding with its corporation business tax return for any applicable income year. Information provided under
this subsection and subsection (f) of this section shall be treated as provided in subsection
(k) of section 32-11a.
(f) The tentative credit allowable to the taxpayer, or in the case of a combined return,
the combined group, that pays or incurs research and development expenses in excess
of two hundred million dollars for the income year shall be reduced for any income year
in which the workforce reductions, if any, exceed the percentages set forth below. For
purposes of this subsection, workforce reductions shall be reductions of the historical
Connecticut wage base of the taxpayer, or in the case of a combined return, the combined
group, as a result of the transfer outside of this state, other than to a location outside the
United States, of work done by employees of the taxpayer, or in the case of a combined
return, the combined group. Such reduction in the tentative credit shall be as follows:
(1) If the historical Connecticut wage base for the income year is so reduced by not
more than two per cent, the tentative credit allowable for the income year shall not be
reduced; (2) if the historical Connecticut wage base for the income year is so reduced
by more than two per cent but not more than three per cent, the tentative credit allowable
for the income year shall be reduced by ten per cent; (3) if the historical Connecticut
wage base for the income year is so reduced by more than three per cent but not more
than four per cent, the tentative credit allowable for the income year shall be reduced
by twenty per cent; (4) if the historical Connecticut wage base for the income year is
so reduced by more than four per cent but not more than five per cent, the tentative
credit allowable for the income year shall be reduced by forty per cent; (5) if the historical
Connecticut wage base for the income year is so reduced by more than five per cent but
not more than six per cent, the tentative credit allowable for the income year shall be
reduced by seventy per cent; and (6) if the historical Connecticut wage base for the
income year is so reduced by more than six per cent, no credit for the income year shall
be allowed. The Connecticut wage base for any income year shall be the total wages
assigned to Connecticut for such income year under section 12-218 excluding wages
paid to the ten most highly-compensated executives of the taxpayer, or in the case of a
combined return, the combined group, and any compensation that does not subject the
recipient thereof to federal income tax thereon in said income year. The historical Connecticut wage base shall be the Connecticut wage base for the third full income year
immediately preceding the current income year; provided the historical Connecticut
wage base for the first three income years commencing on or after January 1, 1993,
shall be the Connecticut wage base for May 1993, converted to an annual basis. The
following shall not constitute a workforce reduction for any income year: (A) A reduction of wages attributable to the transfer of work done by a taxpayer, or in the case of
a combined return, by the combined group, in this state to a party in this state; (B) a
reduction of wages attributable to the transfer of work done by a taxpayer, or in the case
of a combined return, by the combined group, outside the United States; or (C) a reduction in wages attributable to reductions in volume, productivity improvements or the
discontinuance of operations due to obsolescence or the like. Solely for purposes of
determining whether the allowable credit is to be reduced under this subsection for any
income year, the Connecticut wages attributable to any new jobs or jobs moved into
this state by the taxpayer, or in the case of a combined return, the combined group,
during such income year or subsequent to such income year but prior to the filing of the
return for such income year shall be an offset to any workforce reduction of a taxpayer,
or in the case of a combined return, the combined group, for said income year. A new
job shall be a job that did not exist in the business of a taxpayer, or in the case of a
combined return, a member of the combined group, in this state at the end of the income
year just completed. Notwithstanding subsection (g) of this section, a taxpayer may
elect for any income year to separately compute its allowable tentative credit under this
subsection for any one or more business units that had gross revenues for such income
year in excess of one hundred million dollars. Any taxpayer subject to this subsection
shall within sixty days of the close of each income year certify to the commissioner
whether or not there has been any workforce reduction for the income year just completed, the amount thereof, and any offsets thereto as provided above. Within sixty days
thereafter, the commissioner shall review the certification and, if the commissioner
determines that there has been no more than a six per cent workforce reduction, net of
any such offsets, the commissioner shall issue a certificate of eligibility stating the
amount of net workforce reduction so determined for said income year, if any. The
commissioner shall not issue a certificate of eligibility for any income year in which
the commissioner determines that there has been more than a six per cent net workforce
reduction. The taxpayer, or in the case of a combined return, the combined group, shall
file such a certificate of eligibility with any return on which a credit subject to this
subsection is claimed.
(g) Where one or more taxpayers properly included in a combined return pays or
incurs research and development expenses, all allowances and limitations under this
section shall be made on an aggregate basis for all taxpayers included in such combined
return, provided, the credit attributable to a qualified small business may be taken only
against the combined tax liability attributable to such qualified small business. The
amount of the combined tax for all corporations properly included in a combined corporation business tax return that is attributable to a qualified small business shall be in the
same ratio to such combined tax that the net income apportioned to this state of the
qualified small business bears to the net income, in the aggregate of all corporations
included in such combined return. Solely for the purposes of computing such ratio, any
net loss apportioned to this state by a corporation included in such combined return shall
be disregarded.
(h) Any taxpayer, or in the case of a combined return, any combined group of taxpayers, that claims a credit under section 12-217j for any income year shall reduce the
amount of research and development expenses that otherwise may be taken into account
in computing the allowable credit under subsection (c) of this section for such income
year by the amount of excess research and experimental expenditures, as computed
under said section 12-217j, for which the credit thereunder is given. Any taxpayer, or
in the case of a combined return, any combined group of taxpayers, that claims a credit
under section 12-217l for any income year shall reduce the amount of research and
development expenses that otherwise may be taken into account in computing the allowable credit under subsection (c) of this section for such income year by the amount of
excess grants to institutions of higher education in Connecticut, as computed under said
section 12-217l, for which the credit thereunder is given.
(i) The commissioner may adopt regulations, in accordance with the provisions of
chapter 54, to carry out the purposes of this section.
(P.A. 93-433, S. 1, 26; P.A. 95-250, S. 1; P.A. 96-211, S. 1, 5, 6; P.A. 98-110, S. 23, 27; June Sp. Sess. P.A. 98-1, S.
85, 121; P.A. 99-173, S. 40, 65; June Sp. Sess. P.A. 99-1, S. 28, 51.)
History: P.A. 93-433 effective July 1, 1993; P.A. 95-250 and P.A. 96-211 replaced Commissioner and Department of
Economic Development with Commissioner and Department of Economic and Community Development; P.A. 98-110
expanded credit to qualified small businesses and defined the term, effective May 19, 1998, and applicable to income years
commencing on or after January 1, 2000; June Sp. Secs. P.A. 98-1 amended Subsec. (b)(4) to change reference to Sec. 12-217m to Sec. 12-217w, effective June 24, 1998; P.A. 99-173 amended Subsec. (c)(1) to increase the credit for companies
who employ over two thousand five hundred people in the state, have in excess of three billion dollars in revenue and are
located in an enterprise zone, effective June 23, 1999, and applicable to income years commencing on or after January 1,
1999; June Sp. Sess. P.A. 99-1 amended Subsec. (c) (1) to change tentative credit for research and development expenses
for businesses employing over two thousand five hundred people with annual revenues in excess of three billion dollars
and headquartered in an enterprise zone from three and one-half per cent of such expense to the greater of (A) the tentative
credit calculated under Subdiv. (2), modified as provided in Subsec. (e) or (f), if applicable, or (B) three and one-half per
cent of such expense, effective July 1, 1999.
Sec. 12-217o. Tax credit for machinery and equipment expenditures. There
shall be allowed as a credit against the tax imposed on any corporation under this chapter
with respect to any taxable year of such corporation commencing on or after January
1, 1997, (1) that has more than two hundred fifty full-time, permanent employees but
not more than eight hundred full-time, permanent employees whose wages, salaries or
other compensation is paid in this state, as the phrase is used in subsection (c) of section
12-218, an amount equal to five per cent of the amount spent by the corporation on
machinery and equipment acquired for and installed in a facility in this state, which
amount exceeds the amount spent by such corporation during the preceding income year
of the corporation for such expenditures or (2) that has not more than two hundred fifty
full-time, permanent employees whose wages, salaries or other compensation is paid
in this state, as the phrase is used in subsection (c) of section 12-218, an amount equal
to ten per cent of the amount spent by the corporation on machinery and equipment
acquired for and installed in a facility in this state, which amount exceeds the amount
spent by such corporation during the preceding income year of the corporation for such
expenditures. In addition, any amount spent (1) by a corporation whose income year,
for federal income tax purposes, commences on the first day of January, February,
March, April or May, (2) on machinery and equipment acquired for and installed in a
facility in this state, (3) during that portion of its income year in 1995 that expired on
May 31, 1995, shall be deemed to have been spent during its income year commencing
in 1997 and shall be added to any amount actually spent on machinery and equipment
acquired for and installed in a facility in this state during its income year commencing
in 1997, provided the credit percentage to which such corporation shall be entitled for its
income year commencing in 1997 shall be based on the number of full-time, permanent
employees during its income year commencing in 1997.
(P.A. 93-382, S. 42, 69; P.A. 94-3, S. 1, 2; May Sp. Sess. P.A. 94-4, S. 69, 85; P.A. 95-160, S. 33, 64, 69; P.A. 96-139,
S. 12, 13; 96-144, S. 4, 5; P.A. 99-121, S. 3, 28.)
History: P.A. 93-382 effective July 1, 1993, and applicable to taxable years of corporations commencing on or after
July 1, 1995; P.A. 94-3 amended section to require machinery and equipment to be acquired for and installed in a facility
in this state, effective April 7, 1994, and applicable to income years commencing on or after January 1, 1995; May Sp.
Sess. P.A. 94-4 in Subdiv. (1) increased the maximum number of full time employees from five hundred to eight hundred,
effective June 9, 1994; P.A. 95-160 added that credit is allowed with respect to any taxable year commencing on or after
January 1, 1997, effective June 1, 1995, and applicable to income years commencing on or after January 1, 1995 (Revisor's
note: P.A. 95-160 also revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section); P.A. 96-139
changed effective date of P.A. 95-160 but without affecting this section; P.A. 96-144 provided for a credit during the 1997
income year for companies that bought and installed machinery during the portion of their 1995 income year expiring on
May 31, 1995, effective May 29, 1996; P.A. 99-121 allowed the credit to only apply for employees based in Connecticut,
effective June 3, 1999, and applicable to income years commencing on or after January 1, 1999.
Sec. 12-217p. Tax credits for taxpayer providing housing for low and moderate income employees. (a) As used in this section, "business firm" means any business
entity authorized to do business in this state and subject to the corporation business tax
imposed under this chapter, or any company subject to a tax imposed under chapter 207,
any air carrier subject to the air carriers tax imposed under chapter 209, or any railroad
company subject to the railroad companies tax imposed under chapter 210, or any regulated telecommunications service, express, telegraph, cable or community antenna television company subject to the regulated telecommunications service, express, telegraph,
cable and community antenna television companies tax imposed under chapter 211, or
any utility company subject to the utility companies tax imposed under chapter 212.
(b) There shall be allowed as a credit against the tax imposed by this chapter or
chapter 207, 209, 210, 211 or 212 in any income year an amount equal to the amount
paid during such income year by a business firm into a revolving loan fund established
to provide loans for housing located in the state for low and moderate income employees
of the business firm or any subsidiary thereof. Loans from any such fund shall be spent
in this state and used for (1) the cost of housing that is to be a principal residence and
falls within one hundred fifty per cent of the price guidelines established for programs
administered by the Connecticut Housing Finance Authority, including costs for down
payments, mortgage interest rate buy-downs, closing costs and other costs determined
to be eligible under written procedures adopted by the Connecticut Housing Finance
Authority under subsection (c) of this section and (2) payments for security deposits
and advance payments for rental housing.
(c) The Connecticut Housing Finance Authority shall adopt written procedures in
accordance with the provisions of section 1-121 for establishment and operation of
employer revolving loan funds eligible for the credit provided in this section. Such
procedures shall include provisions for employee eligibility and shall specify expenses
for which loans may be made and provide the documentation and procedures necessary
for a business firm to qualify for the tax credit.
(d) Any business firm claiming the credit allowed by this section shall submit documentation to the Commissioner of Revenue Services that the revolving loan fund complies with written procedures for revolving loan funds established by the Connecticut
Housing Finance Authority under subsection (c) of this section.
(e) Nothing in this section shall be construed to prevent two or more business firms
from participating jointly in one or more programs under the provisions of this section.
Such joint programs shall be submitted, and acted upon, as a single program by the
business firms involved.
(f) Any business firm which desires to apply for the credit allowed by this section
shall submit the documentation required under subsection (d) of this section to the authority on or before November first of each year. The authority shall randomly select
from among all qualified business firms, those firms allowed said credit. The credit shall
be claimed on the tax return for the income year during which the selected business firm
made payment into the revolving loan fund. The sum of all tax credit granted pursuant
to the provisions of this section shall not exceed one hundred thousand dollars annually
per business firm. In no event shall the total amount of all tax credits allowed to all
business firms pursuant to the provisions of this section exceed one million dollars in
any one fiscal year.
(g) No tax credit shall be granted to any bank, bank and trust company, insurance
company, trust company, national bank, savings association, or building and loan association or any other business entity for activities that are a part of its normal course of
business.
(h) Any tax credit not used in the period during which the investment was made
may be carried forward or backward for the five immediately succeeding or preceding
income years until the full credit has been allowed. For income years commencing on
or after January 1, 1998, if the Connecticut Housing Finance Authority determines that
sixty per cent or more of a revolving loan fund has not been loaned as provided in this
section by a business firm on or before the date that is three years after the date that a
revolving loan fund is established pursuant to this section by such business firm, the
authority shall notify such firm and the commissioner that the authority has determined
that sixty per cent or more of the fund has not been loaned as provided in this section,
and such firm shall be required to recapture the credits previously granted under this
section, to the extent provided for in written procedures of the authority adopted under
section 1-121, on the first tax return required to be filed on or after the date of such
notice for a tax imposed by this chapter or chapter 207, 209, 210, 210a or 212. If any
amount of such recaptured credit has not been paid to the commissioner on or before
the due date of such return, such amount shall bear interest at the rate of one per cent
per month or fraction thereof from such due date to the date of payment.
(P.A. 93-74, S. 50, 67; P.A. 94-175, S. 18, 32; May Sp. Sess. P.A. 94-4, S. 80, 85; P.A. 95-160, S. 64, 69; P.A. 97-295,
S. 18, 25; P.A. 98-262, S. 2, 14, 22.)
History: P.A. 93-74 effective May 19, 1993, and applicable to taxable years commencing on and after January 1, 1994;
P.A. 94-175 made a technical change in the statutory reference in Subsecs. (b), (d) and (f), effective June 2, 1994; May
Sp. Sess. P.A. 94-4 and P.A. 95-160 revised effective date of P.A. 94-175 but without affecting this section; P.A. 97-295
amended Subsec. (f) to reword provision re when credit may be claimed, amended Subsec. (h) to add new requirement for
income years commencing on or after January 1, 1998, re recapture of credits and made technical and conforming changes,
effective July 8, 1997, and applicable to tax returns filed for income years of corporations commencing on or after January
1, 1997; P.A. 98-262 amended Subsec. (h) to delete provision re accrual of interest from extended due date, effective June
8, 1998, and applicable to income years commencing on or after January 1, 1998, and revised effective date of P.A. 97-295, but without affecting this section.
Secs. 12-217q and 12-217r. Tax credit for expenditures for: Construction of
or improvements to alternative fuel filling stations; converting motor vehicles to
utilize alternative fuels. Sections 12-217q and 12-217r are repealed, effective April
13, 1995, and applicable to income years or calendar quarters commencing on or after
January 1, 1994.
(P.A. 94-170, S. 1, 2, 5; P.A. 95-15, S. 2, 3.)
Sec. 12-217s. Tax credit for expenditures related to traffic reduction programs. There shall be allowed as a credit against the tax imposed on any corporation
under this chapter which participates in the traffic reduction program established under
section 13b-38p and conducted in this state, except corporations employing fewer than
one hundred employees, with respect to any taxable year of such corporation commencing on or after January 1, 1997, an amount equal to fifty per cent of the amount spent
in this state by such corporation, on or after January 1, 1995, for the direct costs of
traffic reduction programs and services related thereto conducted in this state by such
corporation in response to the provisions of sections 13b-38o, 13b-38p, 13b-38t, 13b-38v and 13b-38x, not to exceed two hundred fifty dollars annually per employee employed in this state and participating in alternative means of commuting pursuant to
traffic reduction programs conducted in this state. The total amount of credits available
under the provisions of this section shall not exceed one million five hundred thousand
dollars. The Department of Transportation shall adopt regulations in accordance with
the provisions of chapter 54 which shall include, but not be limited to, establishing
procedures for a corporation to obtain and qualify for the tax credit.
(May Sp. Sess. P.A. 94-4, S. 45, 85; P.A. 95-160, S. 34, 64, 69; 95-325, S. 14, 16; P.A. 96-139, S. 12, 13; 96-223, S.
6, 8; P.A. 00-174, S. 23, 83.)
History: May Sp. Sess. P.A. 94-4, S. 45, effective June 9, 1994, and applicable to income years commencing on or after
January 1, 1995; P.A. 95-160 changed on or after January 1, 1995, to January 1, 1997, re taxable years when credit is
allowed, effective June 1, 1995, applicable to income years commencing on or after January 1, 1995 (Revisor's note: P.A.
95-160 also revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section); P.A. 95-325 allowed as
a credit such amount spent by a corporation "on or after January 1, 1995", effective July 13, 1995; P.A. 96-139 changed
effective date of P.A. 95-160 but without affecting this section; P.A. 96-223 specified that credit be applicable to any
corporation which participates in the traffic reduction program under Sec. 13b-38p, substituted "traffic reduction" for
"transportation management" programs and made technical changes, effective July 1, 1996; P.A. 00-174 specified that
section applies to programs conducted in this state for employees employed in this state, effective May 26, 2000, and
applicable to income years commencing on or after January 1, 2000.
Sec. 12-217t. Tax credit for personal property taxes paid on electronic data
processing equipment. (a) There shall be allowed as a credit against the tax imposed
by chapter 207, this chapter, chapter 208a, 209, 210, 211, or 212 or against the tax
imposed pursuant to section 12-202a in an amount determined under the provisions of
subsection (b) of this section with respect to the personal property taxes paid during any
income year, on electronic data processing equipment. For the purposes of this section
"electronic data processing equipment" means computers, printers, peripheral computer
equipment, bundled software and any computer-based equipment acting as a computer
as defined under Section 168 of the Internal Revenue Code of 1986, or any subsequent
corresponding internal revenue code of the United States, as from time to time amended,
and any other such equipment reported as a Code 20 on the Personal Property Declaration
as prescribed by the Secretary of the Office of Policy and Management pursuant to
section 12-27.
(b) The amount allowed as a credit in any income year shall be the full amount of
the tax on such electronic data processing equipment paid pursuant to section 12-71 or
12-80a, and as defined under Section 168 of the Internal Revenue Code of 1986, or any
subsequent corresponding internal revenue code of the United States, as from time to
time amended, provided no credit shall be allowed for the payment of any interest or
penalty on the tax.
(c) The credit provided for by this section shall be allowed for any taxes owed on
the grand list of October 1, 1994, and each grand list annually thereafter or included in
the list prescribed under section 12-80a for such grand list. Such credits shall first be
used by the taxpayer against the corporation business tax under this chapter, if any, and
then may be used against any tax paid by the taxpayer under the provisions of chapter
207, 208a, 209, 210, 211 or 212 or the tax imposed upon a health care center under
section 12-202a. The amount of credits allowable under this section in any tax year
against the taxes imposed by chapter 207, 208, 208a, 209, 210, 211 or 212 or against
the tax imposed on health care centers, under the provisions of section 12-202a, shall
be allowable only after all other credits allowable against such taxes for such tax year
have been applied.
(d) In the case of leased electronic data processing equipment, the lessee, not the
lessor, shall be entitled to claim the credit allowed pursuant to this section if the lease
by its terms or operation imposes on the lessee the cost of the personal property taxes
on such equipment, provided the lessor and lessee may elect, in writing, that the lessor
may claim the credit provided by this section. Such election shall be attached to the tax
return filed by the lessor on which such credit is claimed.
(e) In the case of taxpayers filing a combined return pursuant to section 12-223a,
the credit provided by this section shall be allowed on a combined basis, such that the
amount of personal property taxes paid by such taxpayers with respect to such equipment
may be claimed as a tax credit against the combined tax liability of such taxpayers as
determined under this chapter. Credits available to taxpayers which are subject to tax
under this chapter but not subject to tax under chapter 207, 208a, 209, 210, 211 or 212
or the tax imposed on health care centers under the provisions of section 12-202a shall
be used prior to credits of companies included in such combined return which are also
subject to tax under said chapter 207, 208a, 209, 210, 211 or 212 or the tax imposed
upon health centers pursuant to the provisions of section 12-202a.
(f) If the amount of credit allowable under this section exceeds the sum of (1) the
corporation business tax, if any, and (2) any taxes imposed by chapter 207, 208a, 209,
210, 211 or 212 paid by the taxpayer, after all other credits allowable against such taxes
have first been applied, then any balance of the credit allowable under this section
remaining may be taken in any of the five succeeding income years.
(May Sp. Sess. P.A. 94-4, S. 47, 85; P.A. 95-160, S. 35, 64, 69; P.A. 96-139, S. 12, 13; 96-144, S. 1, 5.)
History: May Sp. Sess. P.A. 94-4, S. 47, effective June 9, 1994, and applicable to property on the grand list as of October
1, 1994; P.A. 95-160 amended Subsec. (a) to allow credit against the tax imposed by chapters 207, 209, 210, 211 or 212
or section 12-202a in income years commencing on or after January 1, 1997, instead of January 1, 1995, and Subsec. (c)
to make conforming technical changes, effective June 1, 1995, and applicable to income years commencing on or after
January 1, 1995 (Revisor's note: P.A. 95-160 also revised effective date of May Sp. Sess. P.A. 94-4 but without affecting
this section); P.A. 96-139 changed effective date of P.A. 95-160 but without affecting this section; P.A. 96-144 advanced
the effective date of credit against chapters 207, 209, 210, 211, 212 and section 12-202a from income years commencing
on or after January 1, 1997, to income years commencing on or after January 1, 1995, and added new Subsec. (f) to provide
a five-year carry forward of any unused credit, effective May 29, 1996.
Sec. 12-217u. Tax credit for financial institutions constructing new facilities
and creating new jobs. (a) For purposes of this section:
(1) "Commissioner" means the Commissioner of Economic and Community Development;
(2) "Company" means any corporation, partnership, trust, association, unincorporated organization or similar organization;
(3) "Compensation is paid within this state" if (A) the individual's service is performed entirely within the state; or (B) the individual's service is performed both within
and without the state, but the service performed without the state is incidental to the
individual's service within the state;
(4) "Control" with respect to a corporation means ownership of stock possessing
at least fifty per cent of the total combined voting power of all classes of stock entitled
to vote. "Control" with respect to a partnership, association or similar unincorporated
organization means ownership of at least fifty per cent of the capital or profits interest
in such partnership or association. "Control" with respect to a trust, means ownership
of at least fifty per cent of the beneficial interest in the principal or income of such trust.
Ownership shall be determined as provided in Section 267(c) of the Internal Revenue
Code of 1986, as in effect on October 14, 1994, other than paragraph (3) of such section;
(5) "Financial institution" means any bank, holding company or out-of-state bank,
as those terms are defined in section 36a-2, or out-of-state holding company, as that
term is defined in section 36a-410, which directly or indirectly establishes an office in
Connecticut and is subject to the supervision of or regulation by the Banking Commissioner pursuant to title 36a or by one or more federal banking agencies pursuant to
applicable federal law. "Financial institution" also means any establishment described
in major group 61 or 62 in the Standard Industrial Classification Manual, United States
Office of Management and Budget, 1987 edition, or in Subsector 522 or 523 in the North
American Industrial Classification System, United States Manual, United States Office
of Management and Budget, 1997 edition, as engaged primarily in the extending of
credit in the form of loans or the underwriting, purchase, sale or brokerage of securities
and other financial contracts on their own account or for the account of others, and
exchanges, exchange clearinghouses and other services allied with the exchange of
securities and commodities or a holding company controlling any such establishment;
(6) "Related person" means a corporation, limited liability company, partnership,
trust, association, unincorporated organization or similar organization that is controlled
by the financial institution;
(7) "Tax" means the corporation business tax imposed by this chapter.
(b) There shall be allowed a credit against the tax imposed on a financial institution
not to exceed fifty per cent of the amount of such tax, provided the aggregate amount
of the credit that may be taken under this subsection shall in no event exceed one hundred
twenty million dollars over the period for which it is allowed and provided further the
total amount of credit allowed in any qualified income year shall not exceed the aggregate
amount as determined in accordance with the employment requirements for such year
under subsection (c) of this section, reduced by the amount of credit previously allowed,
but in no event shall the amount be below zero. The credit shall be allowed in the initial
qualified year and in each of the nine consecutive income years thereafter which is a
subsequent qualified year.
(c) For purposes of this section, (1) the initial qualified year is the income year with
respect to which the financial institution first meets all of the following criteria: (A) It
has constructed a new facility in Connecticut of at least nine hundred thousand gross
square feet for the purpose of carrying on, directly or indirectly, the business of the
financial institution; (B) it has obtained a temporary or permanent certificate of occupancy for such facility; (C) it has employed, during the income year for which the credit
is claimed, an average of at least (i) one thousand two hundred qualified employees to
claim a thirty per cent tax credit, which shall not exceed seventy-two million dollars in
the aggregate over the period of initial and subsequent qualified years for which the
credit under subsection (b) is allowed, (ii) one thousand six hundred qualified employees
to claim a forty per cent tax credit, which shall not exceed ninety-six million dollars in
the aggregate over the period of initial and subsequent qualified years for which the
credit under subsection (b) is allowed, and (iii) two thousand qualified employees to
claim a fifty per cent tax credit, which shall not exceed one hundred twenty million
dollars in the aggregate over the period of initial and subsequent qualified years for
which the credit under subsection (b) is allowed; and (D) it has been issued an initial
certificate of eligibility by the commissioner under subsection (g) of this section; and
(2) a subsequent qualified year is an income year, following an initial qualified year,
with respect to which the financial institution employs an average of at least (A) one
thousand two hundred qualified employees to claim a thirty per cent tax credit, which
shall not exceed seventy-two million dollars in the aggregate over the period of initial
and subsequent qualified years for which the credit under subsection (b) is allowed, (B)
one thousand six hundred qualified employees to claim a forty per cent tax credit, which
shall not exceed ninety-six million dollars in the aggregate over the period of initial and
subsequent qualified years for which the credit under subsection (b) is allowed, and (C)
two thousand qualified employees to claim a fifty per cent tax credit, which shall not
exceed one hundred twenty million dollars in the aggregate over the period of initial
and subsequent qualified years for which the credit under subsection (b) is allowed, and
has been issued an annual certificate of eligibility by the commissioner under subsection
(g) of this section.
(d) For purposes of this section, (1) a qualified employee is an individual whose
compensation is paid within this state and (A) is employed directly by the financial
institution or a related person and who works an average of at least thirty-five hours per
week for at least eight consecutive weeks for such financial institution or related person,
(B) is an independent contractor of the financial institution or of a related person and
who works an average of at least thirty-five hours per week for at least eight consecutive
weeks for such financial institution or related person, or (C) is an employee or principal
of a company other than the financial institution or a related person if (i) such individual
works an average of at least thirty-five hours per week for at least eight consecutive
weeks providing services to the financial institution or a related person, and (ii) such
company derives not less than eighty per cent of its gross revenues from the financial
institution, one or more related persons or a combination thereof. A qualified employee
shall not include any individual who would have satisfied the criteria of a qualified
employee prior to the date that a proposal by the financial institution to create new
positions in this state was approved by the commissioner; and (2) notwithstanding the
provisions of subdivision (1) of this subsection, an individual is not a qualified employee
if (A) the prior employer of such individual was a company other than the financial
institution or a related person, (B) compensation was paid in this state to such individual
by such employer, (C) the individual was employed for an average of at least thirty-five hours per week and had been employed by such employer for at least eight consecutive weeks, and (D) either (i) the individual is employed directly by the financial institution or a related person in which the prior employer had an ownership interest equal to
ten per cent or more of the voting rights of the financial institution or related person at
the time such individual became employed by the financial institution or related person,
unless the position previously held by such individual with the prior employer has been
filled by the prior employer; (ii) the individual is employed directly by the financial
institution or a related person which had an ownership interest equal to ten per cent or
more of the voting rights of the prior employer at the time such individual became
employed by the financial institution or related person, unless the position previously
held by such individual with the prior employer has been filled by the prior employer;
or (iii) the prior employer of such individual was a company which was acquired directly
or indirectly by, or merged or consolidated with, the financial institution or a related
person and the individual was employed by that company at the date of such acquisition,
merger or consolidation.
(e) For each income year in which the credit is claimed, the average number of
qualified employees shall be the sum of (1) the average of the number of qualified
employees reported in the quarterly Federal Insurance Contributions Act tax returns of
the financial institution or a related person; (2) the average of the number of qualified
employees who are included in the quarterly reports described in subsection (g) of this
section; and (3) the average of the number of qualified employees reported in the quarterly Federal Insurance Contributions Act tax returns of the company as described in
subparagraph (C) of subdivision (1) of subsection (d) of this section. If the number of
qualified employees in any income year fails to equal or exceed the number necessary
to qualify under subsection (b) or (f) of this section, as the case may be, the financial
institution may compute an average which includes the first quarter of the next succeeding income year with the four quarters of the subject income year and, if such new
average equals or exceeds the criteria set forth in subsection (c) or (f) of this section,
as the case may be, such financial institution shall be deemed to have met the employment
criteria necessary to qualify under subsection (b) or (f) of this section, as the case may
be. If two otherwise unrelated financial institutions have a related person in common,
the employees of such related person may be considered in determining the average
number of employees for only one of the financial institutions.
(f) (1) There shall be allowed a credit against the tax imposed on a financial institution for an additional five-year period if the financial institution (A) employs an average
of at least three thousand qualified employees in the tenth income year after the initial
qualified year and during each subsequent income year for which the credit is claimed;
and (B) has been issued a certificate by the commissioner under subsection (g) of this
section. The credit allowed under this subsection may be claimed each year for five
consecutive income years beginning with the tenth income year after the initial qualified year.
(2) The amount of the credit allowed by this subsection shall equal twenty-five per
cent of the tax imposed on a financial institution provided the aggregate amount of the
credit that may be taken under this subsection and subsection (b) of this section may
not exceed one hundred forty-five million dollars.
(g) Upon application from a financial institution, the commissioner shall issue an
initial certificate of eligibility for the credit allowed under subsection (b) of this section
after it has been established that the applicant satisfies the new facility construction,
certificate of occupancy and relevant employment requirements of this section and, after
consultation with the Commissioner of Revenue Services and the Banking Commissioner, that the applicant is a financial institution. If the commissioner determines that
all appropriate requirements are met, the commissioner shall issue an annual certificate
of eligibility for the credit allowed under subsection (b) or (f) of this section for each
income year for which an application for a credit under either of said subsections is made.
The commissioner shall require the financial institution to submit quarterly reports of
the number of individuals to whom the financial institution or a related person made
payments of six hundred dollars or more which must be reported as provided by Section
6041 of the Internal Revenue Code of 1986, or any subsequent corresponding internal
revenue code of the United States, as from time to time amended, for each income year
for which the credit is claimed and to submit such other information as may be necessary
to determine whether all appropriate requirements have been met and that the applicant
continues to be a financial institution. Such reports shall also include the number of
individuals who are principals and who qualify as qualified employees under subparagraph (C) of subdivision (1) of subsection (d) of this section.
(h) The sale, merger, acquisition, bankruptcy or other reorganization by or of a
financial institution may not create new eligibility for the credit allowed under subsection (b) or (f) of this section in a succeeding company. Any successor to the financial
institution which is a financial institution may qualify under subsection (b) or (f) of this
section if either the original financial institution or such successor satisfies the new
facility construction and certificate of occupancy requirements and such successor qualifies under subsection (b) or (f) of this section on an annual basis, provided the total
credits available to the successor financial institution, when added to all credits taken
by the original financial institution, shall not exceed the applicable limits under subsection (b) or (f) of this section, or both, as the case may be.
(i) The commissioner may accept and approve proposals to create new positions as
described in subsection (d) of this section. The commissioner shall prescribe the form
of such proposals.
(j) Any taxpayer claiming a credit allowed under this section shall submit to the
Commissioner of Revenue Services a copy of the certificate of eligibility with its tax
return for each income year for which the credit is claimed.
(k) No taxpayer claiming the credit under this section is eligible for the credit allowed under section 12-217w.
(l) (1) In the case of a financial institution included in a combined return under
section 12-223a, a credit allowed under subsection (b) or (f) of this section may be taken
against the tax of the combined group. (2) The credit allowed to a financial institution
under subsection (b) or (f) of this section may be taken by any corporation which is
eligible to elect to file a combined return with a group with which the financial institution
is eligible to file a combined return, provided the aggregate credit taken by all such
corporations in any income year shall not exceed the aggregate credit for which such
group would have been eligible if it had filed a combined return.
(m) The credits allowed under this section shall be claimed prior to any other credits
allowed against the corporation business tax.
(n) (1) No taxpayer which has received financial assistance from the state under
section 32-236 may claim the credit under subsection (b) of this section. The total amount
of credit allowed under subsection (f) of this section to such a taxpayer shall not exceed,
in the aggregate, twenty-five million dollars.
(2) Notwithstanding the provisions of subsection (c) of this section, for purposes
of any credit allowed under subsection (f) of this section to a taxpayer which has received
financial assistance under section 32-236, the initial qualified year shall be the income
year in which the Commissioner of Economic and Community Development executes
an agreement with such financial institution to provide financial assistance pursuant to
section 32-236.
(3) For purposes of determining the number and specification of qualified employees under subsection (d) of this section, and the number and specification of new employees under section 12-217e, with respect to any taxpayer which has received financial
assistance under section 32-236, the dates, numbers and specifications shall be the dates,
numbers and specifications provided in an agreement executed by the Commissioner
of Economic and Community Development with such financial institution to provide
financial assistance pursuant to section 32-236. In no event shall the definition of qualified employee be more favorable to the employer than the definition provided in this
section.
(Oct. Sp. Sess. P.A. 94-1, S. 17, 21; P.A. 95-79, S. 28, 189; 95-129, S. 4, 5; 95-250, S. 1; P.A. 96-211, S. 1, 5, 6; P.A.
97-295, S. 5, 25; P.A. 98-262, S. 14, 22; P.A. 00-170, S. 26, 42; 00-174, S. 24, 83; P.A. 03-84, S. 13, 14.)
History: Oct. Sp. Sess. P.A. 94-1, S. 17 effective January 1, 1995, and applicable to income years of corporations
commencing on or after said date; P.A. 95-79 amended Subsec. (a) to redefine "related person" to include a limited liability
company, effective May 31, 1995; P.A. 95-129 amended Subsec. (b) by adding proviso re the ceiling and floor of the total
credit allowed in any qualified income year, and amended Subsec. (c) by changing the minimum average number of
employees from two thousand to the levels specified in Subdiv. (1)(C)(i), (ii) and (iii) in the initial qualified year and
specified in Subsec. (c)(2)(A), (B) and (C) in a subsequent qualified year, effective May 25, 1995; P.A. 95-250 and
P.A. 96-211 replaced Commissioner and Department of Economic Development with Commissioner and Department of
Economic and Community Development; P.A. 97-295 amended Subsec. (k) to change reference from Sec. 12-217m to
12-217w, effective July 8, 1997, and applicable to income years commencing on or after January 1, 1998; P.A. 98-262
revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-170 added Subsec. (n) re a restriction on
credits under this section for recipients of assistance under Sec. 32-236, effective May 26, 2000; P.A. 00-174 amended
Subsec. (a)(5) to add references to the North American Industrial Classification System in the definition of "financial
institution", effective May 26, 2000; P.A. 03-84 changed "Commissioner of Banking" to "Banking Commissioner" in
Subsecs. (a)(5) and (g) and made a technical change in Subsec. (g), effective June 3, 2003.
Sec. 12-217v. Tax credit for qualifying corporations in enterprise zones. (a)
As used in this section, "qualifying corporation" means a corporation which is created
on or after January 1, 1997, in an enterprise zone and which either (1) has at least three
hundred seventy-five employees, at least forty per cent of whom (A) are residents of
the enterprise zone or the municipality in which the enterprise zone is located and (B)
qualify under the Job Training Partnership Act or (2) has less than three hundred seventy-five employees, at least one hundred fifty employees of whom (A) are residents of the
enterprise zone or the municipality in which the enterprise zone is located and (B) qualify
under the Job Training Partnership Act.
(b) There shall be allowed as a credit against the tax imposed on any corporation
under this chapter which is created on or after January 1, 1997, in an enterprise zone,
in an amount equal to (1) one hundred per cent of the tax liability of the corporation
under said chapter with respect to the first three taxable years of the corporation and (2)
fifty per cent of the tax liability of the corporation under this chapter with respect to the
next seven taxable years of the corporation.
(P.A. 96-239, S. 3, 17.)
History: P.A. 96-239 effective July 1, 1996.
Sec. 12-217w. Tax credit for investment in fixed capital. (a) For purposes of this
section, "fixed capital" means tangible personal property which (1) has a class life, in
years, of more than four years, as described in Section 168(e) of the Internal Revenue
Code of 1986, or any subsequent corresponding internal revenue code of the United
States, as from time to time amended, (2) is acquired by purchase from a person other
than a related person, (3) is not acquired to be leased, and is not leased, to another person
or persons during the twelve full months following its acquisition, and (4) will be held
and used in this state by a corporation in the ordinary course of the corporation's trade
or business in this state for not less than five full years following its acquisition. "Fixed
capital" does not include inventory, land, buildings or structures, or mobile transportation property. With respect to a corporation claiming a credit under this section, a "related
person" means a corporation, partnership, association or trust controlled by such corporation; an individual, corporation, partnership, association or trust that is in control of
such corporation; a corporation, partnership, association or trust controlled by an individual, corporation, partnership, association or trust that is in control of such corporation;
or a member of the same controlled group as such corporation. For purposes of this
section, "control", with respect to a corporation, means ownership, directly or indirectly,
of stock possessing fifty per cent or more of the total combined voting power of all
classes of the stock of such corporation entitled to vote; with respect to a trust, means
ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in
the principal or income of such trust. The ownership of stock in a corporation, of a
capital or profits interest in a partnership or association or of a beneficial interest in a
trust shall be determined in accordance with the rules for constructive ownership of stock
provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent
corresponding internal revenue code of the United States, as from time to time amended,
other than Paragraph (3) of such section.
(b) There shall be allowed a credit for any corporation against the tax imposed under
this chapter in an amount paid or incurred by such corporation for any new fixed capital
investment during the income year in which such fixed capital is acquired as follows:
For any income year commencing on or after January 1, 1998, and prior to January 1,
1999, equal to three per cent of such amount paid or incurred by the corporation during
such income year; for any income year commencing on or after January 1, 1999, and
prior to January 1, 2000, equal to four per cent of such amount paid or incurred by the
corporation during such income year; and for any income year commencing on or after
January 1, 2000, equal to five per cent of such amount paid or incurred by the corporation
during such income year.
(c) The amount of such credit allowed to any corporation under this section shall
not exceed the amount of tax due from such corporation under this chapter with respect
to such income year.
(d) No corporation claiming the credit under this section with respect to the acquisition of fixed capital, as defined in subsection (a) of this section, may claim a credit
against any tax under any other provision of the general statutes with respect to the same
acquisition.
(e) Any tax credit not used in the income year during which the acquisition was
made may be carried forward for the five immediately succeeding income years until
the full credit has been allowed.
(f) If the fixed capital on account of which a corporation has claimed the credit
allowed by this section is not held and used in this state in the ordinary course of the
corporation's trade or business in this state for three full years following its acquisition
as provided in subsection (a) of this section, the corporation shall recapture one hundred
per cent of the amount of the credit allowed under this section on its corporation business
tax return required to be filed for the income year immediately succeeding the income
year during which such three-year period expires. If the fixed capital on account of
which a corporation has claimed the credit allowed by this section is not held and used
in this state in the ordinary course of the corporation's trade or business in this state for
five full years following its acquisition as provided in subsection (a) of this section, the
corporation shall recapture fifty per cent of the amount of the credit allowed under this
section on its corporation business tax return required to be filed for the income year
immediately succeeding the income year during which such five-year period expires.
The provisions of this subsection shall not apply if the property that is the subject of the
credit under this section is replaced. If any amount of credit required to be recaptured
has not been paid to the commissioner on or before the first day of the fourth month
next succeeding the end of the income year immediately succeeding the income year
during which the three-year or five-year period, as the case may be, expires, such amount
shall bear interest at the rate of one per cent per month or fraction thereof from such
date to the date of payment.
(P.A. 97-295, S. 1, 25; P.A. 98-262, S. 10, 14, 22.)
History: P.A. 97-295, Sec. 1 effective July 8, 1997, and applicable to income years commencing on or after January 1,
1998; P.A. 98-262 amended Subsec. (f) to delete provision re accrual of interest from extended due date and clarified the
text regarding recapture, effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998,
and revised effective date of P.A. 97-295, but without affecting this section.
Sec. 12-217x. Tax credit for human capital investment. (a) For purposes of this
section, "human capital investment" means the amount paid or incurred by a corporation
on (1) job training which occurs in this state for persons who are employed in this state;
(2) work education programs in this state including, but not limited to, programs in
public high schools and work education-diversified occupations programs in this state;
(3) worker training and education for persons who are employed in this state provided
by institutions of higher education in this state; (4) donations or capital contributions
to institutions of higher education in this state for improvements or advancements of
technology, including physical plant improvements; (5) planning, site preparation, construction, renovation or acquisition of facilities in this state for the purpose of establishing a day care facility in this state to be used primarily by the children of employees
who are employed in this state; (6) subsidies to employees who are employed in this state
for child care to be provided in this state; and (7) contributions made to the Individual
Development Account Reserve Fund, as defined in section 31-51ww.
(b) There shall be allowed a credit for any corporation against the tax imposed under
this chapter in an amount spent by such corporation, as a human capital investment as
follows: For any income year commencing on or after January 1, 1998, and prior to
January 1, 1999, equal to three per cent of such amount paid or incurred by the corporation during such income year; for any income year commencing on or after January 1,
1999, and prior to January 1, 2000, equal to four per cent of such amount paid or incurred
by the corporation during such income year; and for any income year commencing on
or after January 1, 2000, equal to five per cent of such amount paid or incurred by the
corporation during such income year.
(c) The amount of credit allowed to any corporation under this section shall not
exceed the amount of tax due from such corporation under this chapter with respect to
such income year.
(d) No corporation claiming the credit under this section with respect to a human
capital investment as defined in subsection (a) of this section shall claim a credit against
any tax under any other provision of the general statutes against any tax with respect to
the same investment.
(e) Any tax credit not used in the income year during which the investment was
made may be carried forward for the five immediately succeeding income years until
the full credit has been allowed.
(P.A. 97-295, S. 2, 25; P.A. 98-262, S. 14, 22; P.A. 00-192, S. 11, 102.)
History: P.A. 97-295, Sec. 2 effective July 8, 1997, and applicable to income years commencing on or after January 1,
1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section; P.A. 00-192 amended Subsec.
(a) to add Subdiv. (7) re contributions to the Individual Development Account Reserve Fund, effective January 1, 2001,
and applicable to income years commencing on or after that date.
Sec. 12-217y. Tax credit for employing persons who are receiving benefits
from the temporary family assistance program. (a) As used in this section:
(1) "Business firm" means any business entity authorized to do business in this state
and subject to the corporation business tax imposed under this chapter;
(2) "Qualifying employee" means during fiscal year 2000 or with respect to the
business firm's income year commencing in 2000 or thereafter, any employee who is
employed not less than thirty hours per week by the same business firm and who, at the
time of being hired by such business firm, is and has been receiving benefits from
the temporary family assistance program for more than nine months and meets other
requirements that the Labor Commissioner may establish in regulations adopted in accordance with chapter 54. For purposes of this subdivision, the number of hours per week
an employee participates in a job training program approved by the Labor Commissioner
shall be included in calculating the number of hours such employee is employed.
(b) Any business firm which desires to hire a qualifying employee in any income
year commencing on or after January 1, 1997, may apply to the Labor Commissioner
for an allocation of a tax credit in an amount equal to one hundred twenty-five dollars
for each full month that such employee is employed by such firm. The application for
a tax credit under this subsection shall set forth information that said commissioner
deems necessary in regulations adopted in accordance with chapter 54.
(c) Applications shall be submitted annually, before such expenditures are made,
to the Labor Commissioner on or after July first but not later than December thirty-first.
The commissioner shall approve or disapprove each application within sixty days of its
submission to the commissioner based on (1) the compliance of such application with
the provisions of this section, (2) regulations adopted pursuant to this section, and (3)
the amount of tax credits remaining in the annual allotment provided in this section for
the year involved. The commissioner shall approve applications in the order in which
they are received in the commissioner's office between July first and December thirty-first of each year. If the commissioner approves the application of the business firm and
if the limit for tax credit for that year has not yet been allocated, the commissioner shall
allocate and commit an amount of tax credits to such business firm. Any business firm
receiving such an allocation shall, within thirty days of the end of its income year, submit
a report on the number of full months that qualifying employees were employed by such
firm during such year.
(d) The credit shall be claimed on the tax return for the income year during which
qualifying employees were employed for full months by the business firm. Any tax
credit not used in the period during which the expenditure was made may be carried
forward for the five immediately succeeding income years until the full credit has been
allowed.
(e) In no event shall the total amount of all tax credits allowed to all business firms
pursuant to the provisions of this section exceed one million dollars in any one fiscal year.
(f) No credit under subsection (c) of this section shall be allowed, with respect to
wages paid to any qualifying employee, to any business firm that has previously been
granted a tax credit under this section with respect to wages paid to the same employee.
(P.A. 97-295, S. 7, 25; P.A. 98-262, S. 14, 22; P.A. 99-203, S. 1, 3; P.A. 00-174, S. 25, 83.)
History: P.A. 97-295, Sec. 7 effective July 8, 1997; P.A. 98-262 revised effective date of P.A. 97-295, but without
affecting this section; P.A. 99-203 amended Subsec. (a) by adding Subdiv. indicators, by increasing from fifteen to twenty-five the minimum number of hours per week a qualified employee must work during fiscal year 1999, by increasing from
twenty-five to thirty the minimum number of hours per week a qualified employee must work during and after fiscal year
2000, and by including the hours spent in an approved job training program in calculating the number of hours an employee
is employed, and amended Subsecs. (a), (b) and (c) by transferring administration of the tax credit program from the
Department of Social Services to the Labor Department, effective July 1, 1999, and applicable to income years commencing
on or after January 1, 1999; P.A. 00-174 amended Subsec. (a)(2) to delete former Subpara. (A) and make technical and
conforming changes, effective May 26, 2000, and applicable to income years commencing on or after January 1, 2000.
Sec. 12-217z. Corporation Business Tax Credit Review Committee. (a) There
is established a Corporation Business Tax Credit Review Committee which shall be
comprised of: (1) The chairpersons and ranking members of the joint standing committee
of the General Assembly having cognizance of matters relating to finance, revenue and
bonding, or their designees; (2) one member appointed by each of the following: The
Governor, the president pro tempore of the Senate, the speaker of the House of Representatives, the majority leader of the Senate, the majority leader of the House of Representatives, the minority leader of the House of Representatives and the minority leader of the
Senate; and (3) the Commissioners of Revenue Services and Economic and Community
Development, or their designees.
(b) The committee shall study and evaluate all the existing credits against the corporation business tax. The study shall include, but is not limited to, consideration of the
following with respect to each credit: (1) Has the credit provided a benefit to the state
in terms of measurable economic development, new investments in the state, new jobs
or retention of existing jobs, or measurable benefits for the workforce in the state; (2)
is there sufficient justification to continue the credit as it currently exists or is it obsolete;
(3) could the credit be more efficiently administered as part of a broad-based credit; and
(4) does the credit add unnecessary complexity in the application, administration and
approval process for the credit. The committee shall also engage in an analysis of the
history, rationale and estimated revenue loss as a result of each tax credit and shall
recommend revisions necessary to change the tax by eliminating or changing any redundant, obsolete or unnecessary tax credit or any credit that is not providing a measurable
benefit sufficient to justify any revenue loss to the state.
(c) The committee shall report its findings and recommendations to the joint standing committee of the General Assembly having cognizance of matters relating to finance,
revenue and bonding no later than January 30, 2002, and every five years thereafter, in
accordance with section 11-4a.
(P.A. 97-295, S. 4, 25; P.A. 98-262, S. 14, 22.)
History: P.A. 97-295, Sec. 4 effective July 8, 1997, and applicable to income years commencing on or after January 1,
1998; P.A. 98-262 revised effective date of P.A. 97-295, but without affecting this section.
Sec. 12-217aa. Order of credits. (a) Except as otherwise provided in section 12-217t, whenever a company is eligible to claim more than one corporation business tax
credit, the credits shall be claimed for the income year in the following order: (1) Any
credit that may be carried backward to a preceding income year or years shall first be
claimed (A) with any credit carry-back that will expire first being claimed before any
credit carry-back that will expire later or will not expire at all, and (B) if the credit carry-backs will expire at the same time, in the order in which the company may receive the
maximum benefit; (2) any credit that may not be carried backward to a preceding income
year or years and that may not be carried forward to a succeeding income year or years
shall next be claimed, in the order in which the company may receive the maximum
benefit; and (3) any credit that may be carried forward to a succeeding income year or
years shall next be claimed (A) with any credit carry-forward that will expire first being
claimed before any credit carry-forward that will expire later or will not expire at all,
and (B) if the credit carry-forwards will expire at the same time, in the order in which
the company may receive the maximum benefit.
(b) In no event shall any credit be claimed more than once.
(P.A. 98-244, S. 10, 35; 98-261, S. 4, 6.)
History: P.A. 98-244 effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998;
P.A. 98-261 amended Subsec. (a) to add exception for Sec. 12-217t, effective June 8, 1998, and applicable to income years
commencing on or after January 1, 1998.
Sec. 12-217bb. Tax credit for electric suppliers hiring displaced workers. (a)
On and after July 1, 1998, there shall be allowed a credit against the tax imposed under
this chapter on any electric supplier in the state other than a generation entity or affiliate
of an electric company in an amount as provided in subsection (b) of this section with
respect to each displaced worker hired by such electric supplier.
(b) The amount of the credit shall be one thousand five hundred dollars with respect
to each displaced worker and shall be allowed in the income year in which such displaced
worker first completes six full months of full-time employment with the taxpayer.
(c) The amount of credit allowed any taxpayer under this section for any income
year shall not exceed the amount of tax due from such taxpayer under this chapter with
respect to such income year. The credit allowed under this section shall be taken only
once with respect to any displaced worker.
(d) For the purposes of this section (1) "displaced worker" means any Connecticut
employee, other than an officer or a director, of an electric company, as defined in
section 16-1, or a generation entity or affiliate who has been terminated as a direct result
of restructuring of the electric industry, and (2) "electric supplier" means a facility that
provides electric generation services, as defined in said section 16-1.
(P.A. 98-28, S. 47, 117.)
History: P.A. 98-28 effective April 29, 1998, and applicable to income years commencing on or after January 1, 1999.
Sec. 12-217cc. Tax credit for certain small businesses obtaining financing
from federal Small Business Administration. (a) As used in this section, "small business" means any business entity qualifying as a small business under 13 CFR Part 121
which has gross receipts of not more than five million dollars for the income year in
which the credit is first allowed.
(b) There shall be allowed as a credit against the tax imposed by this chapter in any
income year an amount equal to the amount paid during such income year by a small
business to the federal Small Business Administration as a guaranty fee to obtain guaranteed financing from the federal Small Business Administration, provided the credit shall
not reduce the tax in any income year below any minimum tax required under this
chapter.
(c) If the amount of the credit allowable under this section exceeds the sum of any
taxes paid by the small business after all other credits have first been applied, any such
excess amount of the credit allowable under this section may be taken in any of the four
succeeding income years.
(P.A. 99-173, S. 42, 65.)
History: P.A. 99-173 effective June 23, 1999, and applicable to income years commencing on or after January 1, 1999.
Sec. 12-217dd. Tax credit for donation of open space. (a) For purposes of this
section, "donation of open space land" means the value of any land or interest in land
conveyed without financial consideration, or the value of any discount of the sale price
in any sale of land or interest in land, to the state, a political subdivision of the state, a
water company, as defined in section 25-32a, or to any nonprofit land conservation
organization where such land is to be permanently preserved as protected open space
or used as a public water supply source.
(b) There shall be allowed a credit for all taxpayers against the tax imposed under
section 12-217, in an amount equal to fifty per cent of any donation of open space land
or as a public water supply source. For purposes of calculating the credit under this
section, the amount of donation shall be based on the use value of the donated open
space land and the amount received for such land. For purposes of this subsection, "use
value" means the fair market value of land at its highest and best use, as determined by
a certified real estate appraiser.
(c) A credit that is allowed under this section, with respect to any taxable year
commencing on or after January 1, 2000, but is not used by a taxpayer may be carried
forward to each of the successive income years until such credit is fully taken. In no
case shall a credit that is not used be carried forward for a period of more than fifteen
years.
(P.A. 99-173, S. 47, 65; P.A. 00-203, S. 6, 8, 11; P.A. 04-200, S. 2.)
History: P.A. 99-173 effective June 23, 1999, and applicable to income years commencing on or after January 1, 1999;
P.A. 00-203 amended Subsec. (b) by defining use value, effective June 7, 2000, and applicable to all open space land
donations made on or after income year commencing January 1, 1999, and added Subsec. (c) re tax credit carry forward,
effective July 1, 2000; P.A. 04-200 amended Subsec. (a) to add interest in land to definition, to add a water company to
the type of recipients permitted, and to add use as a public water supply source as a type of use permitted, amended Subsec.
(b) to add "or as a public water supply source" and "and the amount received for such land", and amended Subsec. (c) to
replace "ten" with "fifteen", effective June 3, 2004.
Sec. 12-217ee. Refund of unused credits under sections 12-217j and 12-217n.
(a) Any taxpayer that (1) is a qualified small business, (2) qualifies for a credit under
section 12-217j or section 12-217n, and (3) cannot take such credit in the taxable year
in which the credit could otherwise be taken as a result of having no tax liability under
this chapter may elect to carry such credit forward under this chapter or may apply to
the commissioner as provided in subsection (b) of this section to exchange such credit
with the state for a credit refund equal to sixty-five per cent of the value of the credit.
Any amount of credit refunded under this section shall be refunded to the taxpayer under
the provisions of this chapter, except that such credit refund shall not be subject to the
provisions of section 12-227. Payment of the capital base tax under section 12-219 for
an income year commencing on or after January 1, 2002, in which year the taxpayer
reports no net income, as defined in section 12-213, or payment of the minimum tax of
two hundred fifty dollars under section 12-219 or 12-223c for any income year, shall
not be considered a tax liability for purposes of this section.
(b) An application for refund of such credit amount shall be made to the Commissioner of Revenue Services, at the same time such taxpayer files its return for the income
year on or before the original due date or, if applicable, the extended due date of such
year's return, on such forms and containing such information as prescribed by said
commissioner. No application for refund of such credit amount may be made after the
due date or extended due date, as the case may be, of such return.
(c) If the commissioner determines that the taxpayer qualifies for a credit refund
under this section, the commissioner shall notify, no later than one hundred twenty days
from receipt of the application for such credit refund, the State Comptroller of the name
of the eligible taxpayer, and the State Comptroller shall draw an order on the State
Treasurer. The amount of the credit refund shall be limited as follows: (1) In the case
of an application for such credit refund filed by the taxpayer for income years beginning
during 2000 or 2001 where such credit refund has not been paid as of July 1, 2002, the
taxpayer shall be entitled to receive no more than one million dollars during the state's
fiscal year in which the initial refund is paid, with any remaining unpaid balance to be
paid in two equal installments during the state's next two succeeding fiscal years; and
(2) in the case of an application for such credit refund filed by the taxpayer for the income
years beginning during 2002 or thereafter, the taxpayer shall be entitled to receive no
more than one million five hundred thousand dollars for any one such income year.
(d) The Commissioner of Revenue Services may disallow the credit refund of any
credit otherwise allowable for a taxable year under this section if the company claiming
the exchange has any amount of taxes due and unpaid to the state including interest,
penalties, fees and other charges related thereto for which a period in excess of thirty
days has elapsed following the date on which such taxes were due and which are not
the subject of a timely filed administrative appeal to the commissioner or of a timely
filed appeal pending before any court of competent jurisdiction. Before any such disallowance, the commissioner shall send written notice to the company, stating that it may
pay the amount of such delinquent tax or enter into an agreement with the commissioner
for the payment thereof, by the date set forth in said notice, provided, such date shall
not be less than thirty days after the date of such notice. Failure on the part of the company
to pay the amount of the delinquent tax or enter into an agreement to pay the amount
thereof by said date shall result in a disallowance of the credit refund being claimed.
(e) For purposes of this section "qualified small business" means a company that
(1) has gross income for the previous income year that does not exceed seventy million
dollars, and (2) has not, in the determination of the commissioner, met the gross income
test through transactions with a related person, as defined in section 12-217w.
(P.A. 99-173, S. 38, 65; June Sp. Sess. P.A. 01-6, S. 11, 85; May 9 Sp. Sess. P.A. 02-1, S. 60; May 9 Sp. Sess. P.A.
02-4, S. 19; P.A. 03-120, S. 1; June 30 Sp. Sess. P.A. 03-1, S. 89; P.A. 04-235, S. 1.)
History: P.A. 99-173 effective June 23, 1999, and applicable to taxable years commencing on or after January 1, 2000;
June Sp. Sess. P.A. 01-6 amended Subsec. (a) to add reference to the application for a credit refund under Subsec. (b), to
change "cash payment" to "credit refund", and to provide that amounts refunded under this section are not subject to Sec.
12-227, and amended Subsecs. (b) and (c) to change "payment" and "exchange" to "credit refund", effective July 1, 2001;
May 9 Sp. Sess. P.A. 02-1 amended Subsec. (b) to provide for the application for refund on or before the due date of the
return, or extended due date of the return, redesignated a portion of existing Subsec. (b) as new Subsec. (c) and added
provisions therein re limit on the amount of credit refund and redesignated existing Subsecs. (c) and (d) as Subsecs. (d)
and (e), effective July 1, 2002; May 9 Sp. Sess. P.A. 02-4 amended Subsec. (a) to provide that payment of the minimum
tax shall not be considered a tax liability for purposes of section, effective August 15, 2002, and applicable to income years
commencing on or after January 1, 2002; P.A. 03-120 amended Subsec. (a) to add provision re effect of tax liability for
payment of tax under Sec. 12-219 for the income year commencing January 1, 2002, and make conforming changes,
effective June 18, 2003, and applicable to income years commencing on or after January 1, 2002; June 30 Sp. Sess. P.A.
03-1 amended Subsec. (a) to allow participation in program for certain capital base taxpayers through the 2004 income
year, effective August 16, 2003, and applicable to income years commencing on or after January 1, 2002; P.A. 04-235
amended Subsec. (a) to eliminate January 1, 2005, end date for consideration of income years under the exchange program,
effective June 8, 2004, and applicable to income years commencing on or after January 1, 2002.
Sec. 12-217ff. Tax credit for donation of land for educational use. (a) For purposes of this section, "donation of land for educational use" means the value of any land
or interest in land conveyed without financial consideration, or the value of any discount
of the sale price in any sale of land or interest in land, to any municipality or political
subdivision of the state for educational use, as defined in section 16-43b.
(b) There shall be allowed a credit for all taxpayers against the tax imposed under
section 12-217, in an amount equal to fifty per cent of any donation of land for educational use. For purposes of calculating the credit under this section the amount of donation shall be based on the difference between the use value of the donated land and the
amount received for such land. For the purposes of this subsection, "use value" means
a fair market value of land at its highest and best use, as determined by a certified real
estate appraiser.
(c) A credit that is allowed under this section, with respect to any taxable year
commencing on or after January 1, 2004, but is not used by a taxpayer may be carried
forward to each of the successive income years until such credit is fully taken. In no
case shall a credit that is not used be carried forward for a period of more than fifteen
years.
(P.A. 04-200, S. 4.)
History: P.A. 04-200 effective June 3, 2003.
Secs. 12-217gg to 12-217yy. Reserved for future use.
Sec. 12-217zz. Limit on credits under this chapter. Notwithstanding any other
provision of law, the amount of tax credit or credits otherwise allowable against the tax
imposed under this chapter for any income year shall not exceed seventy per cent of the
amount of tax due from such taxpayer under this chapter with respect to such income
year of the taxpayer prior to the application of such credit or credits.
(May 9 Sp. Sess. P.A. 02-1, S. 59.)
History: May 9 Sp. Sess. P.A. 02-1 effective July 1, 2002, and applicable to income years commencing on or after
January 1, 2002.
Sec. 12-218. Apportionment of net income. (a) Any taxpayer which is taxable
both within and without this state shall apportion its net income as provided in this
section. For purposes of apportionment of income under this section, a taxpayer is taxable in another state if in such state such taxpayer conducts business and is subject to
a net income tax, a franchise tax for the privilege of doing business, or a corporate stock
tax, or if such state has jurisdiction to subject such taxpayer to such a tax, regardless of
whether such state does, in fact, impose such a tax.
(b) The net income of the taxpayer, when derived from business other than the
manufacture, sale or use of tangible personal or real property, shall be apportioned within
and without the state by means of an apportionment fraction, the numerator of which
shall represent the gross receipts from business carried on within Connecticut and the
denominator shall represent the gross receipts from business carried on everywhere,
except that any gross receipts attributable to an international banking facility, as defined
in section 12-217, shall not be included in the numerator or the denominator. Gross
receipts as used in this subsection shall have the same meaning as used in subdivision
(3) of subsection (c) of this section.
(c) Except as otherwise provided in subsection (k) or (l) of this section, the net
income of the taxpayer when derived from the manufacture, sale or use of tangible
personal or real property, shall be apportioned within and without the state by means
of an apportionment fraction, to be computed as the sum of the property factor, the
payroll factor and twice the receipts factor, divided by four. (1) The first of these fractions, the property factor, shall represent that part of the average monthly net book value
of the total tangible property held and owned by the taxpayer during the income year
which is held within the state, without deduction on account of any encumbrance thereon,
and the value of tangible property rented to the taxpayer computed by multiplying the
gross rents payable during the income year or period by eight. For the purpose of this
section, gross rents shall be the actual sum of money or other consideration payable,
directly or indirectly, by the taxpayer or for its benefit for the use or possession of the
property, excluding royalties, but including interest, taxes, insurance, repairs or any
other amount required to be paid by the terms of a lease or other arrangement and a
proportionate part of the cost of any improvement to the real property made by or on
behalf of the taxpayer which reverts to the owner or lessor upon termination of a lease
or other arrangement, based on the unexpired term of the lease commencing with the
date the improvement is completed, provided, where a building is erected on leased land
by or on behalf of the taxpayer, the value of the land is determined by multiplying the
gross rent by eight, and the value of the building is determined in the same manner as
if owned by the taxpayer. (2) The second fraction, the payroll factor, shall represent the
part of the total wages, salaries and other compensation to employees paid by the taxpayer during the income year which was paid in this state, excluding any such wages,
salaries or other compensation attributable to the production of gross income of an
international banking facility as defined in section 12-217. Compensation is paid in this
state if (A) the individual's service is performed entirely within the state; or (B) the
individual's service is performed both within and without the state, but the service performed without the state is incidental to the individual's service within the state; or (C)
some of the service is performed in the state and (i) the base of operations or, if there
is no base of operations, the place from which the service is directed or controlled is in
the state, or (ii) the base of operations or the place from which the service is directed
or controlled is not in any state in which some part of the service is performed, but the
individual's residence is in this state. (3) The third fraction, the receipts factor, shall
represent the part of the taxpayer's gross receipts from sales or other sources during the
income year, computed according to the method of accounting used in the computation
of its entire net income, which is assignable to the state, and excluding any gross receipts
attributable to an international banking facility as defined in section 12-217, but including receipts from sales of tangible property if the property is delivered or shipped to a
purchaser within this state, other than a company which qualifies as a Domestic International Sales Corporation (DISC) as defined in Section 992 of the Internal Revenue Code
of 1986, or any subsequent corresponding internal revenue code of the United States,
as from time to time amended, and as to which a valid election under Subsection (b) of
said Section 992 to be treated as a DISC is effective, regardless of the f.o.b. point or
other conditions of the sale, receipts from services performed within the state, rentals
and royalties from properties situated within the state, royalties from the use of patents
or copyrights within the state, interest managed or controlled within the state, net gains
from the sale or other disposition of intangible assets managed or controlled within the
state, net gains from the sale or other disposition of tangible assets situated within the
state and all other receipts earned within the state.
(d) Any motor bus company which is taxable both within and without this state
shall apportion its net income derived from carrying of passengers for hire by means of
an apportionment fraction, the numerator of which shall represent the total number of
miles operated within this state and the denominator of which shall represent the total
number of miles operated everywhere, but income derived by motor bus companies
from sources other than the carrying of passengers for hire shall be apportioned as herein
otherwise provided.
(e) Any motor carrier which transports property for hire and which is taxable both
within and without this state shall apportion its net income derived from carrying of
property for hire by means of an apportionment fraction, the numerator of which shall
represent the total number of miles operated within this state and the denominator of
which shall represent the total number of miles operated everywhere, but income derived
by motor carriers from sources other than the carrying of property for hire shall be
apportioned as herein otherwise provided.
(f) (1) Each taxpayer that provides management, distribution or administrative services, as defined in this subsection, to or on behalf of a regulated investment company,
as defined in Section 851 of the Internal Revenue Code shall apportion its net income
derived, directly or indirectly, from providing management, distribution or administrative services to or on behalf of a regulated investment company, including net income
received directly or indirectly from trustees, and sponsors or participants of employee
benefit plans which have accounts in a regulated investment company, in the manner
provided in this subsection. Income derived by such taxpayer from sources other than
the providing of management, distribution or administrative services to or on behalf of
a regulated investment company shall be apportioned as provided in this chapter.
(2) The numerator of the apportionment fraction shall consist of the sum of the
Connecticut receipts, as described in subdivision (3) of this subsection. The denominator
of the apportionment fraction shall consist of the total receipts from the sale of management, distribution or administrative services to or on behalf of all the regulated investment companies. For purposes of this subsection, "receipts" means receipts computed
according to the method of accounting used by the taxpayer in the computation of net
income.
(3) For purposes of this subsection, Connecticut receipts shall be determined by
multiplying receipts from the rendering of management, distribution or administrative
services to or on behalf of each separate regulated investment company by a fraction
(A) the numerator of which shall be the average of (i) the number of shares on the
first day of such regulated investment company's taxable year, for federal income tax
purposes, which ends within or at the same time as the taxable year of the taxpayer, that
are owned by shareholders of such regulated investment company then domiciled in
this state and (ii) the number of shares on the last day of such regulated investment
company's taxable year, for federal income tax purposes, which ends within or at the
same time as the taxable year of the taxpayer, that are owned by shareholders of such
regulated investment company then domiciled in this state; and (B) the denominator of
which shall be the average of the number of shares that are owned by shareholders of
such regulated investment company on such dates.
(4) (A) For purposes of this subsection, "management services" includes, but is
not limited to, the rendering of investment advice directly or indirectly to a regulated
investment company, making determinations as to when sales and purchases of securities are to be made on behalf of the regulated investment company, or the selling or
purchasing of securities constituting assets of a regulated investment company, and
related activities, but only where such activity or activities are performed (i) pursuant
to a contract with the regulated investment company entered into pursuant to 15 USC
80a-15(a), as from time to time amended, (ii) for a person that has entered into such
contract with the regulated investment company, or (iii) for a person that is affiliated
with a person that has entered into such contract with a regulated investment company.
(B) For purposes of this subsection, "distribution services" includes, but is not limited to, the services of advertising, servicing, marketing or selling shares of a regulated
investment company, but, in the case of advertising, servicing or marketing shares, only
where such service is performed by a person that is, or, in the case of a closed end
company, was, either engaged in the service of selling such shares or affiliated with a
person that is engaged in the service of selling such shares. In the case of an open end
company, such service of selling shares shall be performed pursuant to a contract entered
into pursuant to 15 USC 80a-15(b), as from time to time amended.
(C) For purposes of this subsection, "administrative services" includes, but is not
limited to, clerical, fund or shareholder accounting, participant record keeping, transfer
agency, bookkeeping, data processing, custodial, internal auditing, legal and tax services
performed for a regulated investment company but only if the provider of such service
or services during the income year in which such service or services are provided also
provides, or is affiliated with a person that provides, management or distribution services
to such regulated investment company.
(D) For purposes of this subsection, a person is "affiliated" with another person if
each person is a member of the same affiliated group, as defined under Section 1504 of
the Internal Revenue Code without regard to subsection (b) of said section.
(E) For purposes of this subsection, the domicile of a shareholder shall be presumed
to be such shareholder's mailing address as shown in the records of the regulated investment company except that for purposes of this subsection, if the shareholder of record
is an insurance company which holds the shares of the regulated investment company
as depositor for the benefit of a separate account, then the taxpayer may elect to treat
as the shareholders the contract owners or policyholders of the contracts or policies
supported by such separate account. An election made under this subparagraph shall
apply to all shareholders that are insurance companies and shall be irrevocable for,
and applicable for, five successive income years. In any year that such an election is
applicable, it shall be presumed that the domicile of a shareholder is the mailing address
of the contract owner or policyholder as shown in the records of the insurance company.
(g) (1) Each taxpayer that provides securities brokerage services, as defined in this
subsection, shall apportion its net income derived, directly or indirectly, from rendering
securities brokerage services in the manner provided in this subsection. Income derived
by such taxpayer from sources other than the rendering of securities brokerage services
shall be apportioned as provided in this chapter.
(2) The numerator of the apportionment fraction shall consist of the brokerage commissions and total margin interest paid on behalf of brokerage accounts owned by the
taxpayer's customers who are domiciled in this state during such taxpayer's income
year, computed according to the method of accounting used in the computation of net
income. The denominator of the apportionment fraction shall consist of brokerage commissions and total margin interest paid on behalf of brokerage accounts owned by all
of the taxpayer's customers, wherever domiciled, during such taxpayer's income year,
computed according to the method of accounting used in the computation of net income.
(3) For purposes of this subsection:
(A) "Security brokerage services" means services and activities including all aspects of the purchasing and selling of securities rendered by a broker, as defined in 15
USC 78c(a)(4) and registered under the provisions of 15 USC 78a to 78kk, inclusive,
as from time to time amended, to effectuate transactions in securities for the account of
others, and a dealer, as defined in 15 USC 78c(a)(5) and registered under the provisions
of 15 USC 78a to 78kk, inclusive, as from time to time amended, to buy and sell securities, through a broker or otherwise. Security brokerage services shall not include services
rendered by any person buying or selling securities for such person's own account, either
individually or in some fiduciary capacity, but not as part of a regular business carried
on by such person.
(B) "Securities" means security, as defined in 15 USC 78c(a)(10), as from time to
time amended.
(C) "Brokerage commission" means all compensation received for effecting purchases and sales for the account or on order of others, whether in a principal or agency
transaction, and whether charged explicitly or implicitly as a fee, commission, spread,
markup or otherwise.
(4) For purposes of this subsection, the domicile of a customer shall be presumed
to be such customer's mailing address as shown in the records of the taxpayer.
(h) (1) Any company that is (A) a limited partner in a partnership, other than an
investment partnership, that does business, owns or leases property or maintains an
office within this state and (B) not otherwise carrying on or doing business in this state
shall pay the tax imposed under section 12-214 solely on its distributive share as a partner
of the income or loss of such partnership to the extent such income or loss is derived
from or connected with sources within this state, except that, if the commissioner determines that the company and the partnership are, in substance, parts of a unitary business
engaged in a single business enterprise, the company shall be taxed in accordance with
the provisions of subdivision (3) of this subsection and not in accordance with the provisions of this subdivision, provided, in lieu of the payment of tax based solely on its
distributive share, such company may elect for any particular income year, on or before
the due date or, if applicable the extended due date, of its corporation business tax return
for such income year, to apportion its net income within and without the state under the
provisions of this chapter.
(2) Any company that is (A) a limited partner (i) in an investment partnership or
(ii) in a limited partnership, other than an investment partnership, that does business,
owns or leases property or maintains an office within this state and (B) otherwise carrying
on or doing business in this state shall apportion its net income, including its distributive
share as a partner of such partnership income or loss, within and without the state under
the provisions of this chapter, except that the numerator and the denominator of its
payroll factor, property factor, and receipts factor shall include its proportionate part,
as a partner, of the numerator and the denominator of such partnership's payroll factor,
property factor and receipts factor, respectively. For purposes of this section, such partnership shall compute its apportionment fraction and the numerator and the denominator
of its payroll factor, property factor and receipts factor, as if it were a company taxable
both within and without this state.
(3) Any company that is a general partner in a partnership that does business, owns
or leases property or maintains an office within this state shall, whether or not it is
otherwise carrying on or doing business in this state, apportion its net income, including
its distributive share as a partner of such partnership income or loss, within and without
the state under the provisions of this chapter, except that the numerator and the denominator of its payroll factor, property factor and receipts factor shall include its proportionate part, as a partner, of the numerator and the denominator of such partnership's payroll
factor, property factor and receipts factor, respectively. For purposes of this section,
such partnership shall compute its apportionment fraction and the numerator and the
denominator of its payroll factor, property factor and receipts factor, as if it were a
company taxable both within and without this state.
(i) The provisions of this section shall not apply to insurance companies.
(j) (1) Any financial service company as defined in section 12-218b, that has net
income derived from credit card activities, as defined in this subsection, shall apportion
its net income derived from credit card activities in the manner provided in this subsection. Income derived by such taxpayer from sources other than credit card activities
shall be apportioned as provided in this chapter.
(2) The numerator of the apportionment fraction shall consist of the Connecticut
receipts, as described in subdivision (3) of this subsection. The denominator of the
apportionment fraction shall consist of (A) the total amount of interest and fees or penalties in the nature of interest from credit card receivables, (B) receipts from fees charged
to card holders, including, but not limited to, annual fees, irrespective of the billing
address of the card holder, (C) net gains from the sale of credit card receivables, irrespective of the billing address of the card holder, and (D) all credit card issuer's reimbursement fees, irrespective of the billing address of the card holder.
(3) For purposes of this subsection, "Connecticut receipts" shall be determined by
adding (A) interest and fees or penalties in the nature of interest from credit card receivables and receipts from fees charged to card holders, including, but not limited to, annual
fees, where the billing address of the card holder is in this state and (B) the product of
(i) the sum of net gains from the sale of credit card receivables and all credit card issuer's
reimbursement fees multiplied by (ii) a fraction, the numerator of which shall be interest
and fees or penalties in the nature of interest from credit card receivables and receipts
from fees charged to card holders, including, but not limited to, annual fees, where the
billing address of the card holder is in this state, and the denominator of which shall be
the total amount of interest and fees or penalties in the nature of interest from credit
card receivables and receipts from fees charged to card holders, including, but not limited
to, annual fees, irrespective of the billing address of the card holder.
(4) For purposes of this subsection:
(A) "Credit card" means a credit, travel, or entertainment card;
(B) "Receipts" means receipts computed according to the method of accounting
used by the taxpayer in the computation of net income;
(C) "Credit card issuer's reimbursement fee" means the fee that a taxpayer receives
from a merchant's bank because one of the persons to whom the taxpayer or a related
person, as defined in section 12-218b, has issued a credit card has charged merchandise
or services to the credit card;
(D) "Net income derived from credit card activities" means (i) interest and fees or
penalties in the nature of interest from credit card receivables and receipts from fees
charged to card holders, including, but not limited to, annual fees, net gains from the
sale of credit card receivables, credit card issuer's reimbursement fees, and credit card
receivables servicing fees received in connection with credit cards issued by the taxpayer
or a related person, as defined in section 12-218b, less (ii) expenses related to such
income, to the extent deductible under this chapter;
(E) "Billing address" shall be presumed to be the location indicated in the books
and records of the taxpayer as the address where any notice, statement or bill relating
to a card holder is to be mailed, as of the date of such mailing; and
(F) "Credit card activities" means those activities involving the underwriting and
approval of credit card relationships or other business activities generally associated
with the conduct of business by an issuer of credit cards from which it derives income.
(5) The Commissioner of Revenue Services may adopt regulations, in accordance
with chapter 54, to permit a financial service company that is an owner of a financial
asset securitization investment trust, as defined in Section 860H(a) of the Internal Revenue Code, to elect to apportion its share of the net income from credit card activities
carried on by such trust, and to provide rules for apportioning such share of net income
that are consistent with this subsection.
(k) (1) For income years commencing on or after January 1, 2001, the net income
of a taxpayer which is primarily engaged in activities that, in accordance with the North
American Industrial Classification System, United States Manual, United States Office
of Management and Budget, 1997 edition, would be included in Sector 31, 32 or 33,
shall be apportioned within and without the state by means of the apportionment fraction
described in subdivision (2) of this subsection provided, in the income year commencing
on January 1, 2001, each such taxpayer shall not take such apportionment fraction into
account for purposes of installment payments on estimated tax under section 12-242d
for calendar quarters ending prior to July 1, 2001, but shall make such payments in
accordance with the apportionment fraction applicable to the income year commencing
January 1, 2000.
(2) The numerator of the apportionment fraction shall consist of the taxpayer's gross
receipts, as described in subdivision (3) of subsection (c) of this section, which are
assignable to the state, as provided in subdivision (3) of subsection (c) of this section.
The denominator of the apportionment fraction shall consist of the taxpayer's total gross
receipts, as described in subdivision (3) of subsection (c) of this section, whether or not
assignable to the state.
(3) Any taxpayer which is described in subdivision (1) of this subsection and seventy-five per cent or more of whose total gross receipts, as described in subdivision (3)
of subsection (c) of this section, during the income year are from the sale of tangible
personal property directly, or in the case of a subcontractor, indirectly, to the United
States government may elect, on or before the due date or, if applicable, the extended
due date, of its corporation business tax return for the income year, to apportion its net
income within and without the state by means of the apportionment fraction described
in subsection (c) of this section. The election, if made by the taxpayer, shall be irrevocable for, and applicable for, five successive income years.
(l) (1) For income years commencing on or after October 1, 2001, any broadcaster
which is taxable both within and without this state shall apportion its net income derived
from the broadcast of video or audio programming, whether through the public airwaves,
by cable, by direct or indirect satellite transmission or by any other means of communication, through an over-the-air television or radio network, through a television or radio
station or through a cable network or cable television system and, if such broadcaster
is a cable network, all net income derived from activities related to or arising out of
the foregoing, including, but not limited to, broadcasting, entertainment, publishing,
whether electronically or in print, electronic commerce and licensing of intellectual
property created in the pursuit of such activities, by means of the apportionment fraction
described in subdivision (3) of this subsection, and any eligible production entity which
is taxable both within and without this state shall apportion its net income derived from
video or audio programming production services by means of the apportionment fraction
described in subdivision (4) of this subsection.
(2) For purposes of this subsection:
(A) "Video or audio programming" means any and all performances, events or
productions, including without limitation news, sporting events, plays, stories and other
entertainment, literary, commercial, educational or artistic works, telecast or otherwise
made available for video or audio exhibition through live transmission or through the
use of video tape, disc or any other type of format or medium;
(B) A "subscriber" to a cable television system is an individual residence or other
outlet which is the ultimate recipient of the transmission;
(C) "Telecast" or "broadcast" means the transmission of video or audio programming by an electronic or other signal conducted by radiowaves or microwaves, by wires,
lines, coaxial cables, wave guides or fiber optics, by satellite transmissions directly or
indirectly to viewers or listeners or by any other means of communication;
(D) "Eligible production entity" means a corporation which provides video or audio
programming production services and which is affiliated, within the meaning of Sections
1501 to 1504 of the Internal Revenue Code and the regulations promulgated thereunder,
with a broadcaster;
(E) "Release" or "in release" means the placing of video or audio programming
into service. A video or audio program is placed into service when it is first broadcast
to the primary audience for which the program was created. For example, video programming is placed in service when it is first publicly telecast for entertainment, educational,
commercial, artistic or other purpose. Each episode of a television or radio series is
placed in service when it is first broadcast; and
(F) "Broadcaster" means a corporation that is engaged in the business of broadcasting video or audio programming, whether through the public airwaves, by cable, by
direct or indirect satellite transmission or by any other means of communication, through
an over-the-air television or radio network, through a television or radio station or
through a cable network or cable television system, and that is primarily engaged in
activities that, in accordance with the North American Industry Classification System,
United States Manual, 1997 edition, are included in industry group 5131 or 5132.
(3) (A) Except as provided in subparagraph (B) of this subdivision with respect to
the determination of the apportionment fraction for net income derived from the activities referred to in subdivision (1) of subsection (l) of this section, the numerator of the
apportionment fraction for a broadcaster shall consist of the broadcaster's gross receipts,
as described in subdivision (3) of subsection (c) of this section, which are assignable to
the state, as provided in subdivision (3) of subsection (c) of this section. Except as
provided in subparagraph (C) of this subdivision with respect to the determination of
the apportionment fraction for the net income derived from the activities referred to in
subdivision (1) of subsection (l) of this section, the denominator of the apportionment
fraction for a broadcaster shall consist of the broadcaster's total gross receipts, as described in subdivision (3) of subsection (c) of this section, whether or not assignable to
the state.
(B) The numerator of the apportionment fraction for a broadcaster shall include the
gross receipts of the taxpayer from sources within this state determined as follows:
(i) Gross receipts, including without limitation, advertising revenue, affiliate fees
and subscriber fees, received by a broadcaster from video or audio programming in
release to or by a broadcaster for telecast which is attributed to this state.
(ii) Gross receipts, including without limitation, advertising revenue, received by
an over-the-air television or radio network or a television or radio station from video
or audio programming in release to or by such network or station for telecast shall be
attributed to this state in the same ratio that the audience for such over-the-air network
or station located in this state bears to the total audience for such over-the-air network
or station inside and outside of the United States. For purposes of this subparagraph,
the audience shall be determined either by reference to the books and records of the
taxpayer or by reference to the applicable year's published rating statistics, provided
the method used by the taxpayer is consistently used from year to year for such purpose
and fairly represents the taxpayer's activity in the state.
(iii) Gross receipts including, without limitation, advertising revenue, affiliate fees
and subscriber fees, received by a cable network or a cable television system from video
or audio programming in release to or by such cable network or cable television system
for telecast and other receipts that are derived from the activities referred to in subdivision (1) of this subsection shall be attributed to this state in the same ratio that the number
of subscribers for such cable network or cable television system located in this state
bears to the total of such subscribers of such cable network or cable television system
inside and outside of the United States. For purpose of this subparagraph, the number
of subscribers of a cable network shall be measured by reference to the number of
subscribers of cable television systems that are affiliated with such network and that
receive video or audio programming of such network. For purposes of this subparagraph,
the number of subscribers of a cable television system shall be determined either by
reference to the books and records of the taxpayer or by reference to the applicable
year's published rating statistics located in published surveys, provided the method
used by the taxpayer is consistently used from year to year for such purpose and fairly
represents the taxpayer's activities in the state.
(C) The denominator of the apportionment fraction of a broadcaster shall include
gross receipts of the broadcaster that are derived from the activities referred to in subdivision (1) of subsection (l) of this section, whether or not assignable to the state.
(4) (A) Except as provided in subparagraph (B) of this subdivision, with respect
to the determination of the apportionment fraction for net income derived from video
or audio programming production services, the numerator of the apportionment fraction
for an eligible production entity shall consist of the eligible production entity's gross
receipts, as described in subdivision (3) of subsection (c) of this section, which are
assignable to the state, as provided in subdivision (3) of subsection (c) of this section.
Except as provided in subparagraph (C) of this subdivision, with respect to the determination of the apportionment fraction for net income derived from video or audio programming production services, the denominator of the apportionment fraction for an
eligible production entity shall consist of the eligible production entity's total gross
receipts, as described in subdivision (3) of subsection (c) of this section, whether or not
assignable to the state.
(B) The numerator of the apportionment fraction for an eligible production entity
shall include gross receipts of the entity that are derived from video or audio programming production services relating to events which occur within this state.
(C) The denominator of the apportionment fraction for an eligible production entity
shall include gross receipts of the entity that are derived from video or audio programming production services relating to events which occur within or without this state.
(1949 Rev., S. 1899; 1951, 1953, S. 1094d; 1957, P.A. 515, S. 3; 1959, P.A. 147, S. 1; 1961, P.A. 381; 1967, P.A. 586,
S. 1; 1969, P.A. 266, S. 1; June, 1969, P.A. 1, S. 14; 1972, P.A. 271, S. 2; P.A. 73-350, S. 9, 27; P.A. 75-501, S. 1, 3; P.A.
77-539, S. 1, 3; P.A. 81-245, S. 3, 4; 81-411, S. 2, 42; P.A. 89-211, S. 24; P.A. 93-403, S. 2, 3; P.A. 96-111, S. 1, 2; 96-197, S. 5, 11; 96-265, S. 4, 5; P.A. 97-243, S. 10, 67; June 18 Sp. Sess. P.A. 97-4, S. 1, 11; June 18 Sp. Sess. P.A. 97-11,
S. 63, 65; P.A. 98-110, S. 14-18, 27; P.A. 99-121, S. 4, 28; P.A. 00-170, S. 25, 42; P.A. 02-103, S. 44, 45.)
History: 1959 act changed technical language, changed proviso in subdivision (1) re allocation of dividends and interest
to state so that allocation dependent on whether and to what extent business is carried on in state, and changed subdivision
(2) to apply to goods situated in state at time of, rather than prior to, sale, etc.; 1961 act deleted reference to royalties in
subdivision (1), added list of specific inclusions in determining the third fraction, and changed technical language; 1967
act amended Subdiv. (3)(b) to substitute "tangible" for "real" property, and to include in third fraction receipts from sales
of tangible property if property delivered or shipped to in-state purchaser regardless of f.o.b. point or other conditions of
sale rather than if transactions chiefly negotiated and executed in-state; 1969 acts substituted apportionment for allocation
in Subdiv. (3) and changed second fraction to consist of wages, etc. "paid in this state" and specified what "paid in
this state" means, replacing previous provision re second fraction and in Subdiv. (2) specified applicability to telephone
companies taxable under Sec. 12-214 "for income years beginning on and after January 1, 1971"; 1972 act added provisions
re allocation of dividends from DISC or former DISC; P.A. 73-350 deleted provisions re telephone companies in Subdiv.
(2) and specifically excluded insurance companies from provisions of section, effective May 9, 1973, and applicable to
income years beginning on or after January 1, 1973; P.A. 75-501 replaced former provisions setting out general applicability
re maintenance of office without the state with new provisions re taxpayers taxable in another state, effective July 3, 1975,
and applicable to income years ending on or after that date; P.A. 77-539 included in general applicability provision taxpayers
conducting business and taxable in another state; P.A. 81-245 amended Subdiv. (3)(a) to exclude from the numerator and
the denominator any gross receipts attributable to an international banking facility and amended Subdiv. (3)(b) to exclude
from the second apportionment fraction wages, salaries or other compensation attributable to the production of gross income
of an international banking facility and to exclude from the third apportionment fraction any gross receipts attributable to
an international banking facility, effective upon adoption by the Board of Governors of the Federal Reserve System of
amendments to Regulations D and Q pertaining to international banking facilities (adopted June 9, 1981, with an effective
date of December 3, 1981); P.A. 81-411 eliminated the procedure for allocation of net income and modified the apportionment formula by increasing the effect of receipts from sales, effective June 18, 1981, and applicable to income years
commencing on or after December 28, 1980; P.A. 89-211 clarified reference to the Internal Revenue Code of 1986; P.A.
93-403 divided existing section into Subsecs. and incorporated definition of gross receipts with respect to corporations
applying the multiple factor apportionment to corporations using the single factor fraction, effective June 29, 1993, and
applicable to taxable years commencing on and after January 1, 1993; P.A. 96-111 inserted new provisions re regulated
investment companies and securities brokerage services as Subsecs. (f) and (g), respectively, effective May 24, 1996, and
applicable to income years commencing on or after January 1, 1996; P.A. 96-197 added new provisions re companies that
are limited partners in a partnership as Subsec. (h) (enacted as Subsec. (e)), effective June 3, 1996, and applicable to income
years commencing on or after January 1, 1996; P.A. 96-265 inserted new provisions re apportionment of net income of
motor carriers which transport property for hire as Subsec. (e), effective June 10, 1996, and applicable to income years
commencing on or after January 1, 1996 (Revisor's note: Subsec. indicators assigned to new provisions were changed
editorially by the Revisors to maintain an orderly progression of section concepts and previously existing Subsec. (e) was
designated as Subsec. (i) to retain its logical position at the end of the section); P.A. 97-243 amended Subdiv. (1) of Subsec.
(g) to change reference from "subsection" to "section", effective June 24, 1997, and applicable to income years commencing
on or after January 1, 1997; June 18 Sp. Sess. P.A. 97-4 added new Subsec. (j) re apportionment of income derived from
credit card activities, effective June 30, 1997, and applicable to income years commencing on or after January 1, 1997;
June 18 Sp. Sess. P.A. 97-11 changed effective date of June 18 Sp. Sess. P.A. 97-4 but without affecting this section; P.A.
98-110 amended Subsec. (f) to remove election option, effective May 19, 1998 and applicable to income years commencing
on or after January 1, 2001, and to make technical changes, effective May 19, 1998 and applicable to income years
commencing on or after January 1, 1999, and prior to January 1, 2001, amended Subsec. (g) to remove election option,
effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999, and amended Subsec.
(j) to make section applicable to financial service companies with net income derived from credit card activities and to
remove the election option and to make technical changes, effective May 19, 1998, and applicable to income years commencing on or after January 1, 2002; P.A. 99-121 amended Subsec. (h) to revise apportionment provisions for investment
partnerships and financial services industry, effective June 3, 1999, and applicable to income years commencing on or
after January 1, 1999; P.A. 00-170 added Subsec. (k) re apportionment of income by certain manufacturing businesses,
applicable to income years commencing on or after January 1, 2001, added Subsec. (l) re apportionment of income by
certain broadcasting businesses, applicable to income years commencing on or after October 1, 2001, and made a conforming change in Subsec. (c), effective May 26, 2000; P.A. 02-103 made technical changes in Subsecs. (k)(3) and (l)(3)(B)(iii);
(Revisor's note: In 2003 a reference in Subsec. (j)(4)(D) to "chapter 208" was changed editorially by the Revisors to "this
chapter").
See Sec. 12-244 re allocation of tax on air carriers.
Dividends received by Connecticut corporation on stock of wholly-owned Canadian corporations carrying on business
solely in Canada should be allocated without the state. 122 C. 547. The words "held and owned" include goods of corporation
in warehouses and in transit. 132 C. 158, 163. General Assembly has power to impose a tax on a corporation doing business
both within and without the state. 135 C. 37. Cited. 179 C. 363, 364, 366, 371. Cited. 196 C. 1, 3, 6. Cited. 202 C. 412,
414-416, 418-423, 425, 426, 428. Cited. Id., 583, 589, 591, 592, 594, 597. Cited. 203 C. 455, 457, 464. Cited. 215 C. 134,
140, 141. Cited. 220 C. 665, 667, 677. Cited. 224 C. 426, 427, 430-433, 435, 436, 439. Section is tax imposition section;
any ambiguity must be resolved in favor of taxpayer. 228 C. 137, 139, 141-144. Cited. 232 C. 325, 329-331, 334. Cited.
240 C. 422.
Cited. 17 CA 82-87.
Cited. 41 CS 271-276, 278. Cited. 42 CS 356-358, 363, 369-371. Cited. 43 CS 314, 320, 322, 323, 332-334.
Former Subdiv. (a):
Cited. 202 C. 412, 415, 417-421, 423-426.
Cited. 15 CS 205; 26 CS 373, 375.
Former Subdiv. (b):
Subpara. (2) cited. 179 C. 363, 365; 196 C. 1, 3-6. Subpara. (3) cited. 196 C. 1, 4. Determined net income derived from
use of tangible property. Id., 583, 589, 593, 594. Subpara. (3) cited. 215 C. 134, 137, 140; Id., 134, 140. Storage contracts
fall within the definition of rental arrangements contained in the section; rental payments, "tangible property" and bailments
discussed; treatment of payments for use of warehouse storage space as rental payments discussed. 232 C. 325, 326, 329,
331-335.
Subpara. (1) cited. 17 CA 82, 84, 86, 87. Subpara. (2) cited. Id., 82, 84, 85, 87-89, 91, 92. Subpara. (3) cited. Id., 82,
84, 88, 91.
Cited. 43 CS 314, 333.
Former Subdiv. (c):
Cited. 202 C. 412, 415.
Subsec. (b):
Where taxpayer could not have acquired information necessary to its business without use of tangible personal property,
the three-factor analysis of subsection applies. 73 CA 757.
Sec. 12-218a. Apportionment of tax on insurance company. (a) Except as provided in subsection (b) of this section, any tax imposed on domestic insurance companies
by section 12-214 shall be imposed on the base specified for such tax apportioned to
this state by multiplying the base by a fraction, the numerator of which shall represent
the company's gross direct premiums, as defined in section 12-201, received during the
income year for insurance on property or risks located or resident in this state, and the
denominator of which shall represent its total gross direct premiums received during
the income year from all sources.
(b) If more than fifty per cent of the total gross premiums received during the income
year by an insurance company taxable under this chapter consists of reinsurance premiums, any tax imposed by section 12-214 shall be imposed on the specified base apportioned to this state by multiplying such base by a fraction, the numerator of which shall
represent the sum of (1) gross direct premiums, as defined in section 12-201, received
during the income year for insurance on property or risks located or resident in this
state, plus (2) gross reinsurance premiums received during the income year in respect
of property or risks located or resident in this state, and the denominator of which shall
represent the sum of (A) total gross direct premiums received during the income year
from all sources, plus (B) total gross reinsurance premiums received during the income
year from all sources. For purposes of this subsection reinsurance premiums received
in respect of property or risks located or resident in this state, whether or not otherwise
determinable, may, at the election of the company, be determined either on the basis of
the proportion which reinsurance premiums received from domestic insurance companies bear to reinsurance premiums received from all sources or, alternatively, on the
basis of the proportion which the aggregate amount of gross direct premiums received
for insurance on property or risks located or resident in this state by all the companies
which ceded reinsurance to the taxpayer in the income year bears to the aggregate amount
of gross direct premiums received by said companies from all sources.
(P.A. 73-350, S. 10, 27.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973.
Sec. 12-218b. Apportionment of net income of financial service companies. (a)
For purposes of this section:
(1) "Administrative services" includes, but is not limited to, clerical, fund or investment or account holder accounting, participant record keeping, transfer agency, bookkeeping, data processing, custodial, internal auditing, legal and tax services performed
for an investment entity, pension fund or retirement account but only if the provider of
such service or services during the income year in which such service or services are
provided also provides, or is a related person of a person that provides, management or
distribution services to such an investment entity, pension fund or retirement account.
(2) "Billing address" means the location indicated in the books and records of the
taxpayer or, as applicable, the investment entity, pension fund or retirement fund on the
first day of the taxable year or on such later date in the taxable year when the relationship
with the customer or, in the case of an investment entity, pension fund or retirement
account, investor or participant began as the address where any notice, statement or bill
relating to a customer's, investor's or participant's account is mailed.
(3) "Borrower located in this state" means (A) a borrower that is engaged in a trade
or business which maintains its commercial domicile in this state, or (B) a borrower
that is not engaged in a trade or business whose billing address is in this state.
(4) "Commercial domicile" means the headquarters of the trade or business, that
is, the place from which the trade or business is principally managed and directed.
(5) "Distribution services" means the services of advertising, servicing, marketing
or selling interests in an investment entity, pension fund or retirement account, but, in
the case of advertising, servicing or marketing interests, only where such service is
performed by a person that is, or, in the case of a closed-end company, was, either
engaged in the service of selling such interests or a related person of a person that is
engaged in the service of selling such interests.
(6) "Financial service company" means:
(A) Any corporation or other business entity registered under the laws of any state
as a bank holding company or registered under the federal Bank Holding Company Act
of 1956, as amended, or registered as a savings and loan holding company under the
federal National Housing Act, as amended;
(B) A national bank organized and existing as a national bank association pursuant
to the provisions of the National Bank Act, 12 USC Section 21 et seq.;
(C) A savings association or federal savings bank, as defined in the Federal Deposit
Insurance Act, 12 USC 1813(b)(1);
(D) Any bank, banking association, trust company, savings and loan association or
thrift institution incorporated or organized under the laws of any state, or any other
corporation or other business entity, the deposits or accounts of which are insured under
the Federal Deposit Insurance Act or by the Federal Deposit Insurance Corporation;
(E) Any corporation organized under the provisions of 12 USC 611 to 631;
(F) Any foreign bank that has an agency or branch, as defined in 12 USC 3101;
(G) A credit union organized under the laws of any state the loan assets of which
exceed fifty million dollars as of the first day of its income year;
(H) A production credit association organized under the federal Farm Credit Act
of 1933, all of whose stock held by the Federal Production Credit Corporation has been
retired;
(I) Any company whose voting stock is more than fifty per cent owned, directly
or indirectly, by any person described in subparagraphs (A) to (H), inclusive, of this
subdivision or by an insurance company, other than an insurance company or a company
that has more than fifty per cent of its gross income from one or more of the following
sources other than from sales to a related person: Manufacturing, construction, mining,
transportation and public utilities, retail or wholesale trade, other than the retail or wholesale delivery of the services described in subparagraph (J) of this subdivision, or agriculture, forestry and fishing;
(J) (i) Any company, other than an insurance company or a real estate broker, which
derives fifty per cent or more of its gross income from one or more of the following
sources or activities: Loans; letters of credit and acceptance of drafts; underwriting,
purchase, placement, sale or brokerage of securities, commodities contracts or other
financial instruments or contracts on its own account or for the account of others; exchanges, exchange clearinghouses and other services allied with the exchange of securities or commodities contracts; investment advisory or management services; investment
banking services, corporate trust and escrow services; securities information processing;
securities and financial rating agency services; transfer agent, clearing agent, securities
custodial and depository services; securities exchange or quotation services; any of the
services described in subsection (f) of section 12-218; any of the services described in
subsection (g) of section 12-218; management, distribution or administrative services
to or on behalf of an investment entity; management, distribution or administrative
services to or on behalf of pension funds or retirement accounts; leasing or acting as an
agent, broker or adviser in connection with leasing real and personal property that is
the functional equivalent of an extension of credit and that transfers substantially all of
the benefits and risks incident to the ownership of property, including any direct financing lease or leverage lease that meets the criteria of Financial Accounting Standards
Board Statement No. 13, "Accounting for Leases" or any other lease that is accounted
for as a financing by a lessor under generally accepted accounting principles; activities
of a Morris plan company; credit card activities; third party insurance administration
services, claim administration services, claim adjusting services, premium billing and
collection services, or employee benefit plan administration services; insurance underwriting or policy issuance services; actuarial services; trust company services; financial
planning services; insurance brokerage services; or risk management services;
(ii) Any company which derives fifty per cent or more of its gross income from an
activity in which a person described in subparagraphs (B) to (H), inclusive, of this
subdivision is authorized to transact;
(iii) Whether a company is classified as a financial service company for any income
year by virtue of this subparagraph shall be determined based upon the sources of such
taxpayer's gross income, other than gross income from nonrecurring, extraordinary
transactions, for such income year, except that any taxpayer classified as a financial
service company solely by virtue of this subparagraph for any income year shall continue
to be classified as a financial service company until the second consecutive year the
taxpayer would not otherwise qualify as a financial service company;
(K) (i) Any person described in subparagraph (J) of this subdivision may submit
a petition in writing to the commissioner for permission to apportion its income without
regard to the provisions of this section not later than sixty days prior to the due date of
the return to which the petition applies, determined with regard to any extension of time
for filing such return, and said commissioner shall grant or deny such permission before
said due date. The commissioner shall grant such permission only in the event that the
petitioner has proved, by clear and convincing evidence, that the income-producing
activity of the petitioner is not in substantial competition with a financial service company without regard to subparagraph (I) of this subdivision;
(ii) Any person may submit a petition in writing to the commissioner for permission
to apportion its income in accordance with the provisions of this section not later than
sixty days prior to the due date of the return to which the petition applies, determined
with regard to any extension of time for filing such return, and said commissioner shall
grant or deny such permission before said due date. The commissioner shall grant such
permission only in the event that the petitioner has proved, by clear and convincing
evidence, that the income-producing activity is substantially similar to the income-producing activities of a financial service company without regard to subparagraph (I) of
this subdivision.
(7) "Gross rents" means the actual sum of money or other consideration payable
for the use or possession of property, including, but not be limited to, (A) any amount
payable for the use or possession of real property or tangible property whether designated
as a fixed sum of money or as a percentage of receipts, profits, or otherwise, (B) any
amount payable as additional rent or in lieu of rent, such as interest, taxes, insurance,
repairs or any other amount required to be paid by the terms of a lease or other arrangement, and (C) a proportionate part of the cost of any improvement to real property made
by or on behalf of the taxpayer which reverts to the owner or lessor upon termination
of a lease or other arrangement. The amount to be included in gross rents is the amount
of amortization or depreciation allowed in computing the taxable income base for the
income year, provided where a building is erected on leased land by or on behalf of the
taxpayer, the value of the land is determined by multiplying the gross rent by eight and
the value of the building is determined in the same manner as if owned by the taxpayer.
"Gross rents" shall not include reasonable amounts payable as separate charges for
water and electric service furnished by the lessor, reasonable amounts payable as service
charges for janitorial services furnished by the lessor, reasonable amounts payable to
storage, provided such amounts are payable for space not designated and not under the
control of the taxpayer, and that portion of any rental payment which is applicable to
the space subleased from the taxpayer and not used by it.
(8) "Insurance company" means any corporation, limited liability company, association, partnership or combination of persons doing any kind or form of insurance business other than a fraternal benefit society, including a receiver, trustee or other fiduciary
of any insurance company when the context reasonably permits.
(9) "Investment entity" means (A) an investment partnership, a real estate investment trust, as defined in Section 856 of the Internal Revenue Code, a real estate mortgage
investment conduit, as defined in Section 860D of the Internal Revenue Code, a financial
asset securitization investment trust, as defined in Section 860L of the Internal Revenue
Code, or a similar investment entity which is exempt from, or is not subject to, federal
income tax, or (B) a separate account of an insurance company.
(10) "Loan" means any extension of credit resulting from direct negotiations between the taxpayer and its customer, or the purchase or receipt, in whole or in part, of
such extension of credit from another. Loans include participations, syndications, and
leases treated as loans for federal income tax purposes. Loans shall not include: (A)
Futures or forward contracts; (B) options; (C) notional principal contracts such as swaps;
(D) credit card receivables, including purchased credit card relationships; (E) non-interest-bearing balances due from depository institutions; (F) cash items in the process of
collection; (G) federal funds sold; (H) securities purchased under agreements to resell;
(I) assets held in a trading account; (J) securities; (K) interests in a real estate mortgage
investment conduit, as defined in Section 860D of the Internal Revenue Code or other
mortgage-backed or asset-backed security; and (L) other similar items.
(11) "Loan secured by real property" means that fifty per cent or more of the aggregate value of the collateral used to secure a loan or other obligation, when valued at fair
market value as of the time the original loan or obligation was incurred, was real property.
(12) "Management services", when performed on behalf of an investment entity,
pension fund or retirement account, means the rendering of investment advice directly
or indirectly to an investment entity, pension fund or retirement account, making determinations as to when sales and purchases of property are to be made on behalf of the
investment entity, pension fund or retirement account, or the selling or purchasing of
property constituting assets of an investment entity, pension fund or retirement account
and related activities, but only where such activity or activities are performed (A) pursuant to a contract with the investment entity, pension fund or retirement account, (B) for
a person that has entered into such contract with the investment entity, pension fund or
retirement account, or (C) for a person that is a related person of a person that has entered
into such contract with an investment entity, pension fund or retirement account.
(13) "Participation" means an extension of credit in which an undivided ownership
interest is held on a pro rata basis in a single loan or pool of loans and related collateral. In
a loan participation, the credit originator initially makes the loan and then subsequently
resells all or a portion of it to other lenders. The participation may or may not be known
to the borrower.
(14) "Pension fund or retirement fund" means any fund, trust, plan, account, annuity
or contract referred to in subsection (a) of section 52-321a, or other fund, trust, plan,
account, annuity or contract established pursuant to the Internal Revenue Code or any
other federal or state statute, including, but not limited to, funds held in an insurance
company general or separate account, which is designed to provide pension or retirement
benefits.
(15) "Principal base of operations", with respect to transportation property, means
the place of more or less permanent nature from which said property is regularly directed
or controlled.
(16) "Real property owned" and "tangible personal property owned" means real
and tangible personal property, respectively, (A) on which the taxpayer may claim depreciation for federal income tax purposes, or (B) property to which the taxpayer holds
legal title and on which no other person may claim depreciation for federal income tax
purposes or could claim depreciation if subject to federal income tax. Real and tangible
personal property does not include coin, currency or property acquired in lieu of or
pursuant to a foreclosure.
(17) "Regular place of business" means an office at which the taxpayer carries on
its business in a regular and systematic manner and which is continuously maintained,
occupied and used by employees of the taxpayer.
(18) "Related person" means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation,
limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust
controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled
group as the taxpayer. For purposes of this subdivision, "control", with respect to a
corporation, means ownership, directly or indirectly, of stock possessing fifty per cent
or more of the total combined voting power of all classes of the stock of such corporation
entitled to vote. "Control", with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of
such trust. The ownership of stock in a corporation, of a capital or profits interest in a
partnership or association or of a beneficial interest in a trust shall be determined in
accordance with the rules for constructive ownership of stock provided in Section 267(c)
of the Internal Revenue Code other than paragraph (3) of said section.
(19) "State" means a state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States or any foreign
country.
(20) "Syndication" means an extension of credit in which two or more persons fund
and each person is at risk only up to a specified percentage of the total extension of
credit or up to a specified dollar amount.
(21) "Transportation property" means vehicles and vessels capable of moving under
their own power, such as aircraft, trains, water vessels and motor vehicles, as well as
any equipment or containers attached to such property, such as rolling stock, barges,
trailers or the like.
(b) (1) Except as otherwise specifically provided, a financial service company
whose business activity is taxable within this state, whether or not it is taxable outside
this state, shall apportion its net income from business carried on within this state in
accordance with this section. The net income of a financial service company shall be
apportioned to this state by multiplying such income by the receipts factor. The receipts
factor for a financial service company is a fraction, the numerator of which is the receipts
of the taxpayer in this state during the income year and the denominator of which is the
receipts of the taxpayer within and without this state during the income year. The method
of calculating receipts for purposes of the denominator is the same as the method used
in determining receipts for purposes of the numerator.
(2) Any receipts attributable to an international banking facility, as defined in section 12-217, shall not be included in the numerator or denominator of the receipts factor.
In lieu of such exclusion of receipts attributable to an international banking facility, the
taxpayer, pursuant to the provisions of subdivision (3) of this subsection, may, on or
before the due date or, if applicable, the extended due date, of its corporation business
tax return, make an election on its corporation business tax return, to exclude receipts
attributable to an international banking facility from the numerator of its receipts factor
and to include such receipts in the denominator of its receipts factor.
(3) If the taxpayer makes the election under subdivision (2) of this subsection, the
taxpayer may not, in arriving at its net income, deduct the gross income attributable to the
international banking facility from its gross income, but expenses or losses attributable to
the international banking facility, to the extent deductible under the Internal Revenue
Code, may be deducted from its gross income. The election, if made by the taxpayer,
shall be irrevocable for, and applicable for, five successive income years.
(c) The numerator of the receipts factor includes receipts from the lease or rental
of real property owned by the taxpayer if the property is located within this state and
receipts from the sublease of real property if the property is located within this state.
(d) (1) Except as described in subdivision (2) of this subsection, the numerator of
the receipts factor includes receipts from the lease or rental of tangible personal property
owned by the taxpayer if the property is located within this state when it is first placed
in service by the lessee.
(2) Receipts from the lease or rental of transportation property owned by the taxpayer are included in the numerator of the receipts factor to the extent that the property
is used in this state. The extent an aircraft will be deemed to be used in this state and
the amount of receipts that is to be included in the numerator of this state's receipts
factor is determined by multiplying all the receipts from the lease or rental of the aircraft
by a fraction, the numerator of which is the number of landings of the aircraft in this
state and the denominator of which is the total number of landings of the aircraft. If the
extent of the use of any transportation property within this state cannot be determined,
the property shall be deemed to be used wholly in the state in which the property has
its principal base of operations. A motor vehicle shall be deemed to be used wholly in
the state in which it is registered.
(e) (1) The numerator of the receipts factor includes interest and fees or penalties
in the nature of interest from loans secured by real property if the property is located
within this state. If the property is located both within this state and one or more other
states, the receipts described in this subsection are included in the numerator of the
receipts factor if more than fifty per cent of the fair market value of the real property is
located within this state. If more than fifty per cent of the fair market value of the real
property is not located within any one state, the receipts described in this subsection
shall be included in the numerator of the receipts factor if the borrower is located in
this state.
(2) The determination of whether the real property securing a loan is located within
this state shall be made as of the time the original agreement was made and all subsequent
substitutions of collateral shall be disregarded.
(f) The numerator of the receipts factor includes interest and fees or penalties in the
nature of interest from loans not secured by real property if the borrower is located in
this state.
(g) (1) The numerator of the receipts factor includes net gains from the sale of
loans. Net gains from the sale of loans includes income recorded under the coupon
stripping rules of Section 1286 of the Internal Revenue Code.
(2) The amount of net gains, but not less than zero, from the sale of loans secured
by real property included in the numerator is determined by multiplying such net gains
by a fraction the numerator of which is the amount included in the numerator of the
receipts factor pursuant to subsection (e) of this section and the denominator of which
is the total amount of interest and fees or penalties in the nature of interest from loans
secured by real property.
(3) The amount of net gains, but not less than zero, from the sale of loans not secured
by real property included in the numerator is determined by multiplying such net gains
by a fraction the numerator of which is the amount included in the numerator of the
receipts factor pursuant to subsection (f) of this section and the denominator of which
is the total amount of interest and fees or penalties in the nature of interest from loans
not secured by real property.
(h) (1) The numerator of the receipts factor includes loan servicing fees derived
from loans secured by real property multiplied by a fraction the numerator of which is
the amount included in the numerator of the receipts factor pursuant to subsection (e)
of this section and the denominator of which is the total amount of interest and fees or
penalties in the nature of interest from loans secured by real property.
(2) The numerator of the receipts factor includes loan servicing fees derived from
loans not secured by real property multiplied by a fraction the numerator of which is
the amount included in the numerator of the receipts factor pursuant to subsection (f)
of this section and the denominator of which is the total amount of interest and fees or
penalties in the nature of interest from loans not secured by real property.
(3) In circumstances in which the taxpayer receives loan servicing fees for servicing
either the secured or the unsecured loans of another, the numerator of the receipts factor
shall include such fees if the borrower is located in this state.
(i) (1) Interest, dividends, net gains, but not less than zero, and other income from
investment assets and activities and from trading assets and activities shall be included
in the receipts factor. Investment assets and activities and trading assets and activities
include, but are not limited to, investment securities, trading account assets, federal
funds, securities purchased and sold under agreements to resell or repurchase, options,
futures contracts, forward contracts, notional principal contracts such as swaps, equities,
and foreign currency transactions. With respect to the investment and trading assets and
activities described in subparagraphs (A) and (B) of this subdivision, the receipts factor
shall include the amounts described in said subparagraphs (A) and (B).
(A) The receipts factor shall include the amount by which interest from federal
funds sold and securities purchased under resale agreements exceeds interest expense
on federal funds purchased and securities sold under repurchase agreements.
(B) The receipts factor shall include the amount by which interest, dividends, gains
and other income from trading assets and activities, including, but not limited to, assets
and activities in the matched book, in the arbitrage book, and foreign currency transactions, exceed amounts paid in lieu of interest, amounts paid in lieu of dividends and
losses from such assets and activities.
(2) The numerator of the receipts factor includes interest, dividends, net gains, but
not less than zero, and other income from investment assets and activities and from
trading assets and activities described in subdivision (1) of this subsection that are attributable to this state.
(A) The amount of interest, dividends, net gains, but not less than zero, and other
income from investment assets and activities in the investment account to be attributed
to this state and included in the numerator is determined by multiplying all such income
from such assets and activities by a fraction, the numerator of which is the average value
of such assets which are properly assigned to a regular place of business of the taxpayer
within this state and the denominator of which is the average value of all such assets.
(B) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements
attributable to this state and included in the numerator is determined by multiplying the
amount described in subparagraph (A) of subdivision (1) of this subsection from such
funds and such securities by a fraction, the numerator of which is the average value of
federal funds sold and securities purchased under agreements to resell which are properly
assigned to a regular place of business of the taxpayer within this state and the denominator of which is the average value of all such funds and such securities.
(C) The amount of interest, dividends, gains and other income from trading assets
and activities, including, but not limited to, assets and activities in the matched book,
in the arbitrage book and foreign currency transactions, but excluding amounts described
in subparagraph (A) or (B) of this subdivision, attributable to this state and included in
the numerator is determined by multiplying the amount described in subparagraph (B)
of subdivision (1) of this subsection by a fraction, the numerator of which is the average
value of such trading assets which are properly assigned to a regular place of business
of the taxpayer within this state and the denominator of which is the average value of
all such assets.
(D) For purposes of this subdivision, the average value of property owned by the
taxpayer is computed on an annual basis by adding the value of the property on the first
day of the income year and the value on the last day of the income year and dividing
the sum by two. If averaging on this basis does not properly reflect average value, the
commissioner may require averaging on a more frequent basis. The taxpayer may elect
to average on a more frequent basis. When averaging on a more frequent basis is required
by the commissioner or is elected by the taxpayer, the same method of valuation must
be used consistently by the taxpayer with respect to property within and without this
state and on all subsequent returns unless the taxpayer receives prior permission from the
commissioner or the commissioner requires a different method of determining average
value.
(3) In lieu of using the method set forth in subdivision (2) of this subsection, the
taxpayer may elect, or the commissioner may require in order to fairly represent the
business activity of the taxpayer in this state, the use of the method set forth in this
subdivision.
(A) The amount of interest, dividends, net gains, but not less than zero, and other
income from investment assets and activities in the investment account to be attributed
to this state and included in the numerator is determined by multiplying all such income
from such assets and activities by a fraction, the numerator of which is the gross income
from such assets and activities which are properly assigned to a regular place of business
of the taxpayer within this state and the denominator of which is the gross income from
all such assets and activities.
(B) The amount of interest from federal funds sold and purchased and from securities purchased under resale agreements and securities sold under repurchase agreements
attributable to this state and included in the numerator is determined by multiplying the
amount described in subparagraph (A) of subdivision (1) of this subsection from such
funds and such securities by a fraction, the numerator of which is the gross income from
such funds and such securities which are properly assigned to a regular place of business
of the taxpayer within this state and the denominator of which is the gross income from
all such funds and securities.
(C) The amount of interest, dividends, gains and other income from trading assets
and activities, including, but not limited to, assets and activities in the matched book,
in the arbitrage book and foreign currency transactions, but excluding amounts described
in subparagraph (A) or (B) of this subdivision, attributable to this state and included in
the numerator is determined by multiplying the amount described in subparagraph (B)
of subdivision (1) of this subsection by a fraction, the numerator of which is the gross
income from such trading assets and activities which are properly assigned to a regular
place of business of the taxpayer within this state and the denominator of which is the
gross income from all such assets and activities.
(4) If the taxpayer elects or is required by the commissioner to use the method set
forth in subdivision (3) of this subsection, it shall use this method on all subsequent
returns unless the taxpayer receives prior permission from the commissioner to use, or
the commissioner requires a different method.
(5) The taxpayer shall have the burden of proving that an investment asset or activity
or trading asset or activity was properly assigned to a regular place of business outside
of this state by demonstrating that the day-to-day decisions regarding the asset or activity
occurred at a regular place of business outside this state. Where the day-to-day decisions
regarding an investment asset or activity or trading asset or activity occur at more than
one regular place of business and one such regular place of business is in this state and
one such regular place of business is outside this state, such asset or activity shall be
considered to be located at the regular place of business of the taxpayer where the investment or trading policies or guidelines with respect to the asset or activity are established.
Unless the taxpayer demonstrates to the contrary, such policies and guidelines shall be
presumed to be established at the commercial domicile of the taxpayer.
(j) (1) The numerator of the receipts factor includes receipts received for management, distribution and administrative services performed on behalf of an investment
entity in an amount equal to the product of such receipts for the income year multiplied
by a fraction (A) the numerator of which shall be the average of (i) the fair market value
of the interests in the investment entity issued and outstanding on the first day of such
investment entity's taxable year for federal income tax purposes, which ends within or
at the same time as the income year of the financial service company, that are owned
by investors in such investment entity if the billing address of such investors is in this
state, and (ii) the fair market value of the interests in the investment entity issued and
outstanding on the last day of such investment entity's taxable year for federal income
tax purposes, which ends within or at the same time as the income year of the financial
service company, that are owned by investors in such investment entity if the billing
address of such investors is in this state; and (B) the denominator of which shall be the
average of the fair market value of the interests in the investment entity issued and
outstanding that are owned by investors in such investment entity on such dates.
(2) The numerator of the receipts factor includes receipts received for management,
distribution and administrative services performed on behalf of a pension fund or retirement account in an amount equal to the product of such receipts for the income year
multiplied by a fraction (A) the numerator of which shall be the average of (i) the number
of participants with an interest in the pension fund or retirement account on the first day
of the pension fund or retirement account taxable year, for federal income tax purposes,
which ends within or at the same time as the income year of the financial service company, whose billing address is in this state, and (ii) the number of participants with an
interest in the pension fund or retirement account on the last day of the pension fund or
retirement account taxable year, for federal income tax purposes, which ends within or
at the same time as the income year of the financial service company, whose billing
address is in this state; and (B) the denominator of which shall be the total number of
participants with an interest in the pension fund or retirement account on such dates. In
lieu of using the billing addresses of the participants with an interest in the pension fund
or retirement account as provided in this subdivision, the taxpayer may elect to determine
receipts in the manner provided for in this subsection based upon the average of the
fair market value of funds under management in each income year allocated to the
commercial domicile of the sponsor of the pension fund or retirement account and,
where there is no sponsor for a particular pension fund or retirement account, the billing
address of the participant. The election, if made by the taxpayer, shall be irrevocable
for, and applicable for, five successive income years and shall be applicable to all receipts
from the rendering of management, distribution or administrative services performed
for any pension fund or retirement account.
(3) In the case of a separate account of an insurance company, to the extent that
both subdivisions (1) and (2) of this subsection may be applicable, then subdivision (2)
shall apply.
(k) This section shall not apply to net income from services or activities described
in subsection (f), (g) or (j) of section 12-218 which income shall be apportioned in
accordance with said subsection (f), (g) or (j), whether or not the taxpayer is taxable
outside this state, or, for income years commencing prior to January 1, 2002, in the case
of net income from activities described in said subsection (j) that is earned by a taxpayer
that is either not eligible to make the election described in said subsection (j) or does
not make the election described in said subsection (j) which income shall be apportioned
in accordance with subsection (b) of said section 12-218.
(l) For all other receipts not otherwise sourced by this subsection, the numerator of
the receipts factor includes all other receipts if the billing address of the customer is in this
state; otherwise the numerator will include all other receipts pursuant to the provisions of
section 12-218.
(P.A. 98-110, S. 11, 27; P.A. 99-121, S. 5, 28; June Sp. Sess. P.A. 01-6, S. 24, 85.)
History: P.A. 98-110 effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999;
P.A. 99-121 amended Sudiv. (12) of Subsec. (a) to limit "management services" to when performed on behalf of an
investment entity, pension fund or retirement account, effective June 3, 1999, and applicable to income years commencing
on or after January 1, 1999; June Sp. Sess. P.A. 01-6 amended Subsec. (a)(6)(K) to add provisions re the submission and
grant or denial of written petition for permission to apportion net income, effective July 1, 2001, and applicable to income
years commencing on or after January 1, 2001, with respect to petitions filed on or after October 1, 2001.
Sec. 12-218c. Restrictions on the deductibility of certain intangible expenses
and interest expenses with a related member. (a) As used in this section:
(1) "Affiliated group" has the same meaning as in Section 1504 of the Internal
Revenue Code.
(2) "Intangible expenses and costs" includes (A) expenses, losses and costs for,
related to, or in connection directly or indirectly with the direct or indirect acquisition,
use, maintenance or management, ownership, sale, exchange, or any other disposition
of intangible property to the extent such amounts are allowed as deductions or costs in
determining taxable income before operating loss deduction and special deductions for
the taxable year under the Internal Revenue Code; (B) losses related to or incurred in
connection directly or indirectly with factoring transactions or discounting transactions;
(C) royalty, patent, technical and copyright fees; (D) licensing fees; and (E) other similar
expenses and costs.
(3) "Intangible property" means patents, patent applications, trade names, trademarks, service marks, copyrights and similar types of intangible assets.
(4) "Interest expenses and costs" means amounts directly or indirectly allowed as
deductions under Section 163 of the Internal Revenue Code for purposes of determining
taxable income under the Internal Revenue Code to the extent such expenses and costs
are directly or indirectly for, related to, or in connection with the direct or indirect
acquisition, maintenance, management, ownership, sale, exchange or disposition of intangible property.
(5) "Related member" means a person that, with respect to the taxpayer during all
or any portion of the taxable year, is a related entity, as defined in this subsection, a
component member as defined in Section 1563(b) of the Internal Revenue Code, or is
a person to or from whom there is attribution of stock ownership in accordance with
Section 1563(e) of the Internal Revenue Code.
(6) "Related entity" means (A) a stockholder who is an individual, or a member of
the stockholder's family enumerated in Section 318 of the Internal Revenue Code, if
the stockholder and the members of the stockholder's family own, directly, indirectly,
beneficially or constructively, in the aggregate, at least fifty per cent of the value of the
taxpayer's outstanding stock; (B) a stockholder, or a stockholder's partnership, limited
liability company, estate, trust or corporation, if the stockholder and the stockholder's
partnerships, limited liability companies, estates, trusts and corporations own directly,
indirectly, beneficially or constructively, in the aggregate, at least fifty per cent of the
value of the taxpayer's outstanding stock; or (C) a corporation, or a party related to the
corporation in a manner that would require an attribution of stock from the corporation
to the party or from the party to the corporation under the attribution rules of Section
318 of the Internal Revenue Code, if the taxpayer owns, directly, indirectly, beneficially
or constructively, at least fifty per cent of the value of the corporation's outstanding
stock. The attribution rules on Section 318 of the Internal Revenue Code shall apply for
purposes of determining whether the ownership requirements of this subdivision have
been met.
(b) For purposes of computing its net income under section 12-217 a corporation
shall add back otherwise deductible interest expenses and costs and intangible expenses
and costs directly or indirectly paid, accrued or incurred to, or in connection directly or
indirectly with one or more direct or indirect transactions with, one or more related
members.
(c) (1) The adjustments required in subsection (b) of this section shall not apply if
the corporation establishes by clear and convincing evidence that the adjustments are
unreasonable, or the corporation and the Commissioner of Revenue Services agree in
writing to the application or use of an alternative method of apportionment under section
12-221a. Nothing in this subdivision shall be construed to limit or negate the commissioner's authority to otherwise enter into agreements and compromises otherwise allowed by law.
(2) The adjustments required in subsection (b) of this section shall not apply to
such portion of interest expenses and costs and intangible expenses and costs that the
corporation can establish by the preponderance of the evidence meets both of the following: (A) The related member during the same income year directly or indirectly paid,
accrued or incurred such portion to a person who is not a related member, and (B) the
transaction giving rise to the interest expenses and costs or the intangible expenses and
costs between the corporation and the related member did not have as a principal purpose
the avoidance of any portion of the tax due under this chapter.
(3) The adjustments required in subsection (b) of this section shall apply except to
the extent that increased tax, if any, attributable to such adjustments would have been
avoided if both the corporation and the related member had been eligible to make and
had timely made the election to file a combined return under subsection (a) of section
12-223a.
(d) Nothing in this section shall require a corporation to add to its net income more
than once any amount of interest expenses and costs or intangible expenses and costs
that the corporation pays, accrues or incurs to a related member described in subsection
(b) of this section.
(e) Nothing in this section shall be construed to limit or negate the commissioner's
authority to make adjustments under section 12-221a or 12-226a.
(P.A. 98-110, S. 20, 27.)
History: P.A. 98-110 effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999;
(Revisor's note: In 2003 a reference in Subsec. (c)(2) to "chapter 208" was changed editorially by the Revisors to "this
chapter").
Sec. 12-218d. Restriction on the deductibility of interest expenses or costs related to certain transactions with related members. (a) As used in this section:
(1) "Affiliated group" has the same meaning as in Section 1504 of the Internal
Revenue Code.
(2) "Interest expenses and costs" means amounts directly or indirectly allowed as
deductions under Section 163 of the Internal Revenue Code.
(3) "Related member" means a person that, with respect to the taxpayer during all
or any portion of the taxable year, is: (A) A related entity, as defined in this subsection,
(B) a component member, as defined in Section 1563(b) of the Internal Revenue Code,
(C) a person to or from whom there is attribution of stock ownership in accordance with
Section 1563(e) of the Internal Revenue Code, other than a statutory business trust of
which each beneficiary is not a related entity to the taxpayer, or (D) a person that,
notwithstanding its form of organization, bears the same relationship to the taxpayer as
a person described in subparagraphs (A) to (C), inclusive, of this subdivision.
(4) "Related entity" means (A) a stockholder who is an individual, or a member of
the stockholder's family enumerated in Section 318 of the Internal Revenue Code, if
the stockholder and the members of the stockholder's family own, directly, indirectly,
beneficially or constructively, in the aggregate, at least fifty per cent of the value of the
taxpayer's outstanding stock; (B) a stockholder, or a stockholder's partnership, limited
liability company, estate, trust or corporation, if the stockholder and the stockholder's
partnerships, limited liability companies, estates, trusts and corporations own directly,
indirectly, beneficially or constructively, in the aggregate, at least fifty per cent of the
value of the taxpayer's outstanding stock; or (C) a corporation, or a party related to the
corporation in a manner that would require an attribution of stock from the corporation
to the party or from the party to the corporation under the attribution rules of the Internal
Revenue Code, if the taxpayer owns, directly, indirectly, beneficially or constructively,
at least fifty per cent of the value of the corporation's outstanding stock. The attribution
rules of the Internal Revenue Code shall apply for purposes of determining whether the
ownership requirements of this subdivision have been met.
(b) For purposes of computing its net income under section 12-217, a corporation
shall add back otherwise deductible interest expenses and costs directly or indirectly
paid, accrued or incurred to, or in connection directly or indirectly with one or more
direct or indirect transactions with, one or more related members.
(c) The adjustments required in subsection (b) of this section shall not apply to an
otherwise deductible interest expense or cost if the corporation establishes by clear and
convincing evidence, as determined by the commissioner, that: (1) A principal purpose
of the transaction giving rise to the payment of interest was not to avoid payment of
taxes due under this chapter; (2) the interest is paid pursuant to a contract that reflects
an arm's length rate of interest and terms; and (3) either (A) (i) the related member was
subject to tax on its net income in this state or another state or possession of the United
States or a foreign nation; (ii) a measure of said tax included the interest received from
the corporation; and (iii) the rate of tax applied to the interest received by the related
member is no less than the statutory rate of tax applied to the corporation under section
12-214, without regard to subsection (b) of section 12-214, minus three percentage
points, or (B) the related member is a company subject to tax under chapter 207 or
comparable tax under the laws of another state.
(d) The adjustments required in subsection (b) of this section shall not apply if (1)
the corporation establishes by clear and convincing evidence, as determined by the
commissioner, that the adjustments are unreasonable, (2) the corporation and the commissioner agree in writing to the application or use an alternative method of determining
the combined measure of the tax, provided that the Commissioner of Revenue Services
shall consider approval of such petition only in the event that the petitioners have clearly
established to the satisfaction of said commissioner that there are substantial intercorporate business transactions among such included corporations and that the proposed alternative method of determining the combined measure of the tax accurately reflects the
activity, business, income or capital of the taxpayers within the state, or (3) the corporation elects, on forms authorized for such purpose by the commissioner, to calculate its
tax on a unitary basis including all members of the unitary group provided that there
are substantial intercorporate business transactions among such included corporations.
Such election to file on a unitary basis shall be irrevocable for and applicable for five
successive income years. Nothing in this subdivision shall be construed to limit or negate
the commissioner's authority to otherwise enter into agreements and compromises
otherwise allowed by law.
(e) The adjustments required in subsection (b) of this section shall not apply if
interest is paid to a related member located in a country with which the United States
has a comprehensive income tax treaty.
(f) (1) Gross income, as defined in section 12-213, shall not include any amount
received or accrued from a related member that is added back to the preapportionment
income of such related member pursuant to subsection (b) of this section.
(2) The receipts factor determined under section 12-218 or 12-218b shall not include
any amount received or accrued from a related member that is added back to the preapportionment income of such related member pursuant to subsection (b) of this section.
(g) Nothing in this section shall require a corporation to add to its net income more
than once any amount of interest expenses and costs that the corporation pays, accrues
or incurs to a related member described in subsection (b) of this section.
(h) Nothing in this section shall be construed to limit or negate the commissioner's
authority to make adjustments under section 12-221a or 12-226a.
(June 30 Sp. Sess. P.A. 03-6, S. 78.)
History: June 30 Sp. Sess. P.A. 03-6 effective August 20, 2003, and applicable to income years commencing on or after
January 1, 2003.
Sec. 12-219. Additional tax in the amount by which alternative computations
exceed tax under section 12-214. Minimum tax. (a)(1) Each company subject to the
provisions of this part shall pay for the privilege of carrying on or doing business within
the state, the larger of the tax, if any, imposed by section 12-214 and the tax calculated
under this subsection. The tax calculated under this section shall be a tax of three and
one-tenth mills per dollar for each income year of the amount derived (A) by adding (i)
the average value of the issued and outstanding capital stock, including treasury stock
at par or face value, fractional shares, scrip certificates convertible into shares of stock
and amounts received on subscriptions to capital stock, computed on the balances at the
beginning and end of the taxable year or period, the average value of surplus and undivided profit computed on the balances at the beginning and end of the taxable year or
period, and (ii) the average value of all surplus reserves computed on the balances at
the beginning and end of the taxable year or period, (B) by subtracting from the sum so
calculated (i) the average value of any deficit carried on the balance sheet computed on
the balances at the beginning and end of the taxable year or period, and (ii) the average
value of any holdings of stock of private corporations including treasury stock shown
on the balance sheet computed on the balances at the beginning and end of the taxable
year or period, and (C) by apportioning the remainder so derived between this and other
states under the provisions of section 12-219a, provided in no event shall the tax so
calculated exceed one million dollars or be less than two hundred fifty dollars.
(2) For purposes of this subsection, in the case of a new domestic company, the
balances at the beginning of its first fiscal year or period shall be the balances immediately after its organization or immediately after it commences business operations,
whichever is earlier; and in the case of a foreign company, the balances at the beginning
of its first fiscal year or period in which it becomes liable for the filing of a return in
this state shall be the balances as established at the beginning of the fiscal year or period
for tax purposes. In the case of a domestic company dissolving or limiting its existence,
the balances at the end of the fiscal year or period shall be the balances immediately
prior to the final distribution of all its assets; and in the case of a foreign company filing
a certificate of withdrawal, the balances at the end of the fiscal year or period shall be
the balances immediately prior to the withdrawal of all of its assets. When a taxpayer
has carried on or had the right to carry on business within the state for eleven months
or less of the income year, the tax calculated under this subsection shall be reduced in
proportion to the fractional part of the year during which business was carried on by
such taxpayer. The tax calculated under this subsection shall, in no case, be less than
two hundred fifty dollars for each income year. The taxpayer shall report the items set
forth in this subsection at the amounts at which such items appear upon its books; provided, when, in the opinion of the Commissioner of Revenue Services, the books of the
taxpayer do not disclose a reasonable valuation of such items, the commissioner may
require any additional information which may be necessary for a reasonable determination of the tax calculated under this subsection and shall, on the basis of the best information available, calculate such tax and notify the taxpayer thereof.
(3) No tax credit allowed against the tax imposed by this chapter shall reduce a
company's tax calculated under this subsection to an amount less than two hundred fifty
dollars.
(b) (1) With respect to income years commencing on or after January 1, 1989, and
prior to January 1, 1992, the additional tax imposed on any company and calculated in
accordance with subsection (a) of this section shall, for each such income year, except
when the tax so calculated is equal to two hundred fifty dollars, be increased by adding
thereto an amount equal to twenty per cent of the additional tax so calculated for such
income year, without reduction of the additional tax so calculated by the amount of any
credit against such tax. The increased amount of tax payable by any company under
this section, as determined in accordance with this subsection, shall become due and be
paid, collected and enforced as provided in this chapter.
(2) With respect to income years commencing on or after January 1, 1992, and
prior to January 1, 1993, the additional tax imposed on any company and calculated in
accordance with subsection (a) of this section shall, for each such income year, except
when the tax so calculated is equal to two hundred fifty dollars, be increased by adding
thereto an amount equal to ten per cent of the additional tax so calculated for such income
year, without reduction of the tax so calculated by the amount of any credit against
such tax. The increased amount of tax payable by any company under this section, as
determined in accordance with this subsection, shall become due and be paid, collected
and enforced as provided in this chapter.
(3) With respect to income years commencing on or after January 1, 2003, and
prior to January 1, 2004, the additional tax imposed on any company and calculated in
accordance with subsection (a) of this section or section 91 of public act 03-1 of the
June 30 special session*, shall, for each such income year, be increased by adding thereto
an amount equal to twenty per cent of the additional tax so calculated for such income
year, without reduction of the tax so calculated by the amount of any credit against
such tax. The increased amount of tax payable by any company under this section, as
determined in accordance with this subsection, shall become due and be paid, collected
and enforced as provided in this chapter.
(4) With respect to income years commencing on or after January 1, 2004, and
prior to January 1, 2005, the additional tax imposed on any company and calculated in
accordance with subsection (a) of this section or section 91 of public act 03-1 of the
June 30 special session*, shall, for each such income year, be increased by adding thereto
an amount equal to twenty-five per cent of the additional tax so calculated for such
income year, without reduction of the tax so calculated by the amount of any credit
against such tax, except that any company that pays the minimum tax of two hundred
fifty dollars under this section or section 12-223c for such income year shall not be
subject to such additional tax. The increased amount of tax payable by any company
under this subdivision, as determined in accordance with this subsection, shall become
due and be paid, collected and enforced as provided in this chapter.
(c) The tax imposed by this section shall be assessed and collected and be first
applicable at the time or times herein provided for the tax measured by net income. This
section shall not apply to insurance companies, real estate investment trusts, regulated
investment companies, interlocal risk management agencies formed pursuant to chapter
113a or, except as otherwise provided by subsection (d) of this section, financial service
companies, as defined in section 12-218b.
(d) Each financial service company, as defined in section 12-218b, shall pay for the
privilege of carrying on or doing business within the state, the larger of the tax, if any,
imposed by section 12-214 and the tax calculated under this subsection. For each such
financial service company, the tax calculated under this subsection shall be two hundred
fifty dollars for each income year. No tax credit allowed against the tax imposed by this
chapter shall reduce a financial service company's tax calculated under this subsection
to an amount less than two hundred fifty dollars.
(1949 Rev., S. 1900; 1951, 1953, June, 1955, S. 1096d; 1957, P.A. 560, S. 2; 649, S. 2; 1959, P.A. 394, S. 2; 1961,
P.A. 428, S. 3; 604, S. 3; 1963, P.A. 141; February, 1965, P.A. 461, S. 8; June, 1969, P.A. 1, S. 15; 1971, P.A. 683, S. 2;
June, 1971, P.A. 5, S. 112; 1972, P.A. 126, S. 1; 285, S. 7; P.A. 73-350, S. 11, 27; P.A. 75-213, S. 2, 53; P.A. 77-614, S.
139, 610; P.A. 78-121, S. 106, 113; P. A. 80-483, S. 56, 186; P.A. 81-66, S. 2, 5; 81-255, S. 22, 37; 81-411, S. 8, 42; Nov.
Sp. Sess. P.A. 81-4, S. 30, 32; P.A. 82-325, S. 3, 7; P.A. 84-546, S. 32, 33, 173; P.A. 85-159, S. 2, 19; 85-469, S. 4, 6;
P.A. 86-124, S. 1, 2; 86-132; 86-403, S. 131, 132; P.A. 89-16, S. 2, 31; 89-251, S. 21, 203; P.A. 90-174, S. 1, 3; June Sp.
Sess. P.A. 91-3, S. 101, 168; P.A. 93-74, S. 8, 59, 67; May Sp. Sess. P.A. 94-4, S. 7, 85; P.A. 95-160, S. 64, 69; P.A. 96-197, S. 6, 11; P.A. 98-110, S. 19, 27; May 9 Sp. Sess. P.A. 02-1, S. 57; P.A. 03-2, S. 34; June 30 Sp. Sess. P.A. 03-1, S. 88.)
*Note: Section 91 of public act 03-1 of the June 30 special session was repealed by section 248 of public act 03-6 of
the June 30 special session.
History: 1959 act applied tax to each income year, added reference to deferred and unrealized profits in subdivision
(B)(a)(3) and to treasury stock in subdivision (B)(b)(2); 1961 acts raised alternative tax rate from 1.9 mills to 2.5 mills,
added exception to minimum tax for banking and financial corporations, and changed technical language; 1963 act added
exception for small business investment companies; 1965 act set deadline for two and one-half mill rate to years beginning
before January 1, 1966, and raised mill rate to two and five-eighths thereafter, set same deadline for twenty-five dollar
minimum tax, raised to thirty dollars thereafter and set same deadline for two per cent tax re banking institutions, raised
to two and one-tenth per cent thereafter; 1969 act for two years, January 1, 1969, to January 1, 1971, changed rates above
to four mills, forty-five dollars and three and two-tenths per cent respectively; 1971 acts divided section into subsections
and made basis for payments, the difference between tax imposed in Sec. 12-214 and tax calculated under Subdivs. (A)
and (B) and changed ending dates for temporary increases in rates from 1971 to 1973; 1972 acts included maximum tax
for income years beginning on or after January 1, 1972, for "any company, except companies subject to the gross earnings
taxes under chapters 211 and 212, which, in arriving at net income ... is entitled to a deduction under section 12-217 for
dividends as defined in the federal corporation income tax law" and made temporary increased tax rates the permanent
rates; P.A. 73-350 made provisions applicable to years beginning on or after January 1, 1973, increased mill rate from four
to four and one-quarter mills and specifically excluded regulated investment companies and real estate investment trusts,
deleted par or face value of indebtedness and deferred and unrealized profits from calculation of taxable amount and set
maximum and minimum charges of one hundred thousand dollars and fifty dollars, respectively, and changed provisions
formerly applicable to companies, "except companies subject to the gross earnings taxes under chapters 211 and 212"
applicable to regulated investment companies or real estate investment trusts, set forth process for deriving amount subject
to tax and established fifty dollar minimum tax for such companies, increased figures in Subsec. (2)(B) from forty-five to
fifty dollars, changed rate for computation of interest and dividends from two per cent to one-eighth of one per cent and
excluded insurance companies from provisions of section; P.A. 75-213 changed mill rate for companies other than regulated
investment companies and real estate investment trusts from one-quarter mill to thirty-one one-hundredths mill and for
regulated investment companies and real estate investment trusts from four-tenths to five-tenths mill, effective July 1,
1975, and applicable to income years commencing on or after January 1, 1975; P.A. 77-614 substituted commissioner of
revenue services for tax commissioner, effective January 1, 1979; P.A. 78-121 deleted reference to private banks in Subsec.
(1)(A); P.A. 80-483 deleted reference to building and loan associations in Subsec. (1)(A) and (2)(B); P.A. 81-66 raised
mill rate in (1)(A) from .31 mill to 3.1 mills per dollar and increased minimum tax from fifty to one hundred dollars,
effective May 4, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 81-255 added the
alternative computation of tax under Subdiv. (B) and increased the minimum tax to two hundred fifty dollars, effective
July 1, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 81-411 added consideration
of a loss for the income year in the alternative tax base under Subdiv. (B), and deleted provisions allowing deductions for
contributions to retirement plan in determining salaries and other compensation, effective June 18, 1981, and applicable
to income years commencing on or after January 1, 1981; Nov. Sp. Sess. P.A. 81-4 deleted Subdiv. (B) in Subsec. (1) re
alternative tax (if higher than that in Subdiv. (a)) consisting of fifty per cent of corporation's net income or loss plus salaries
and other compensation paid to elected or appointed corporation officers or to shareholders owning more than one per
cent of stock at rate of five per cent, amending section accordingly, effective January 27, 1982, and applicable to income
years commencing on or after January 1, 1983; P.A. 82-325 changed effective date of Nov. Sp. Sess. P.A. 81-4, but without
affecting this section; P.A. 84-546 made technical change, substituting "scrip" for "script" in Subsec. (1); P.A. 85-159
reduced minimum tax to one hundred dollars for income years of corporations commencing on or after January 1, 1985;
P.A. 85-469 revised effective date of P.A. 85-159 but without affecting this section; P.A. 86-124 revised section to conform
to the style of the general statutes and amended Subpara. (C) of Subdiv. (1) of Subsec. (a) to increase the maximum tax
from one hundred thousand dollars to five hundred thousand dollars, effective May 8, 1986, and applicable to income
years of corporations commencing on or after January 1, 1986; P.A. 86-132 deleted provision limiting the types of regulated
investment companies or real estate investment trusts to which the provisions concerning those types of companies and
trusts applied; P.A. 86-403 changed effective date of P.A. 86-132 from October 1, 1986, to May 23, 1986 and applicable
to income years of corporations commencing on or after January 1, 1986; P.A. 89-16 increased the minimum tax from one
hundred to two hundred fifty dollars in Subsecs. (a) and (b), and amended Subsec. (c) to impose an additional tax as a
percentage of the tax calculated under Subsec. (a) or Subsec. (b), effective March 23, 1989, and applicable to income years
of corporations commencing on or after January 1, 1989; P.A. 89-251 increased the tax imposed under Subsec. (c), as
amended by P.A. 89-16, as a percentage of the additional tax calculated under Subsec. (a) or Subsec. (b) from fifteen to
twenty per cent of the additional tax, effective July 1, 1989, and applicable to income years commencing on or after January
1, 1989; P.A. 90-174 amended Subdiv. (2) of Subsec. (a) to provide for a maximum tax under said subdivision of fifty
thousand dollars, effective July 1, 1990, and applicable to income years of corporations commencing on or after January
1, 1991; June Sp. Sess. P.A. 91-3 amended (1) Subpara. (C) of Subdiv. (1) of Subsec. (a) to increase the maximum tax
from five hundred thousand dollars to one million dollars and (2) Subsec. (c) to provide that the twenty per cent additional
tax would be applicable with respect to income years commencing prior to January 1, 1992, and to impose a ten per cent
additional tax applicable with respect to income years commencing on or after January 1, 1992, and prior to January 1,
1993, effective August 22, 1991, and applicable to income years of corporations commencing on or after January 1, 1991;
P.A. 93-74 deleted Subdiv. (2) in Subsec. (a) with respect to regulated investment company or real estate investment trusts,
renumbering Subdiv. (3) accordingly and amended Subsec. (d) to exclude real estate investment trusts and regulated
investment trusts from provisions of section, effective May 19, 1993, and applicable to taxable years commencing on and
after January 1, 1993; May Sp. Sess. P.A. 94-4 in Subsec. (d) exempted interlocal risk management agencies formed
pursuant to chapter 113a, effective June 9, 1994, and applicable to income years commencing on or after January 1, 1980;
P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 96-197 amended
Subsecs. (a) and (b) to clarify that out-of-state businesses carrying on or doing business in the state are subject to the tax
on the capital base and made technical changes, effective June 3, 1996, and applicable to income years commencing on
or after January 1, 1996; P.A. 98-110 deleted Subsec. (b) re certain banks, trusts, investment and financing entities, relettered
existing Subsecs., excluded financial service companies and made technical changes, effective May 19, 1998, and applicable
to income years commencing on or after January 1, 1999; May 9 Sp. Sess. P.A. 02-1 amended Subsec. (a) by adding
Subdiv. (3) re the effect of tax credits on the minimum tax, amended Subsec. (c) by adding "except as otherwise provided
by subsection (d) of this section" and added Subsec. (d) re a minimum tax for financial services companies, effective July
1, 2002, and applicable to income years commencing on or after January 1, 2002; P.A. 03-2 amended Subsec. (b) to add
Subdiv. (3) re a surcharge for the 2003 income year, effective February 28, 2003, and applicable to income years commencing on or after January 1, 2003; June 30 Sp. Sess. P.A. 03-1 amended Subsec. (b) to include in surcharge provided under
Subdiv. (3) amounts calculated under Sec. 91 of P.A. 03-1 of the June 30 special session and to add Subdiv. (4) re surcharge
for the 2004 income year, effective August 16, 2003, and applicable to income years commencing on or after January 1, 2003.
Under former statute, indebtedness did not include indebtedness on which company not personally liable. 122 C. 143.
Cited. 122 C. 550; 135 C. 57. Cited. 178 C. 240, 241. Cited. 195 C. 284, 287, 289. Cited. 203 C. 198, 200, 202, 204-207.
Cited. 220 C. 665, 673.
Cited. 2 CA 660-662.
Cited 40 CS 77, 81, 86, 88.
Subsec. (1):
Cited. 220 C. 665, 671. Subdiv. (A) cited. Id., 665, 671-673, 676, 680. Subdiv. (B) cited. Id., 665, 673-676, 678-682.
Subdiv. (B)(i) cited. Id., 665, 669, 676-679, 681. Subdiv. (B)(ii) cited. Id., 665, 675.
Subdiv. (A)(b) cited. 2 CA 660-662. Subdiv. (A)(c) cited. 2 CA 660, 662. Subdiv. (A) cited. 203 C. 198, 199, 201,
202, 205-209, 211, 212. Subdiv. (B) (ii) cited. Id., 198, 199, 201, 203, 204, 206, 208-212.
Cited. 40 CS 77, 80. Subdiv. (A)(b) cited. Id., 77, 78, 80.
Sec. 12-219a. Apportionment of tax base in and out of state. Insurance companies excepted. (a) If a taxpayer is taxable both within and without the state, a tax shall
be imposed on the base as provided in section 12-219, apportioned on the following
basis: (1) The average monthly value of all investments other than stock of private
corporations, and all cash, credits and other intangible assets of the taxpayer shall be
divided between (A) those having a tax situs within the state and (B) those having a tax
situs without the state; (2) the average monthly net book value of the tangible property
held and owned by the taxpayer during the income year shall be divided between (A)
that held within the state and (B) that held without the state; the numerator of the allocation fraction shall consist of the sum of subparagraph (A) of subdivision (1) of this
subsection and subparagraph (A) of subdivision (2) of this subsection, and the denominator shall consist of the sum of subdivisions (1) and (2) of this subsection; which allocation
fraction shall be multiplied by the amount of the unallocated tax base as computed under
the terms of said section 12-219 to obtain the tax base for such taxpayer. For the purposes
of this section, the intangible assets of a company having its principal place of business
within the state shall be deemed to have a tax situs within the state unless it can be
clearly established that some or all of such assets are held in connection with business
conducted during the income year without the state, and a similar rule shall apply to
intangible assets of a company having its principal place of business without the state.
Such assets shall be reported by the taxpayer at the valuations at which they appear upon
its books, provided the Commissioner of Revenue Services shall exercise the powers
with respect to such valuations granted him under the terms of said section 12-219. For
the purpose of apportionment of the base as provided in said section 12-219, a taxpayer
is taxable in another state if in such state such taxpayer conducts business and is subject
to a net income tax, a franchise tax measured by net income, a franchise tax for the
privilege of doing business or a corporate stock tax, or if such state has jurisdiction to
subject such taxpayer to such a tax, regardless of whether such state does, in fact, impose
such a tax.
(b) (1) Any company that is (A) a limited partner in a partnership, other than an
investment partnership, that does business, owns or leases property or maintains an
office within this state and (B) not otherwise carrying on or doing business in this state
shall apportion the average value of its partnership interest within and without this state
under the provisions of subsection (a) of this section, except that the numerator and the
denominator of its apportionment fraction shall be its proportionate part of the partnership's apportionment factors. For purposes of this section, the partnership shall compute
its apportionment fraction and the numerator and the denominator of its apportionment
factors as if it were a company taxable both within and without this state. However, if
the commissioner determines that the company and the partnership are, in substance,
parts of a unitary business engaged in a single business enterprise, the company shall
be taxed in accordance with the provisions of subdivision (3) of this subsection and not
in accordance with the provisions of this subdivision.
(2) Any company that is (A) a limited partner (i) in an investment partnership or
(ii) in a limited partnership, other than an investment partnership, that does business,
owns or leases property or maintains an office within this state and (B) otherwise carrying
on or doing business in this state shall apportion its additional tax base, including the
average value of its partnership interest, within and without the state under the provisions
of subsection (a) of this section, except that the numerator and the denominator of its
apportionment factors shall include its proportionate part of the numerator and the denominator of the partnership's apportionment factors. For purposes of this section, the
partnership shall compute its apportionment fraction and the numerator and the denominator of its apportionment factors, as if it were a company taxable both within and
without this state.
(3) Any company that is a general partner in a partnership that does business, owns
or leases property or maintains an office within this state shall, whether or not it is
otherwise carrying on or doing business in this state, apportion its additional tax base,
including the average value of its partnership interest, within and without the state under
the provisions of subsection (a) of this section, except that the numerator and the denominator of its apportionment factors shall include its proportionate part of the numerator
and the denominator of the partnership's apportionment factors. For purposes of this
section, the partnership shall compute its apportionment fraction and the numerator and
the denominator of its apportionment factors, as if it were a company taxable both within
and without this state.
(c) This section shall not apply to insurance companies.
(P.A. 73-350, S. 12, 27; 73-616, S. 53, 67; P.A. 75-501, S. 2, 3; P.A. 77-539, S. 2, 3; 77-614, S. 139, 610; P.A. 96-197,
S. 7, 11.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973;
P.A. 73-616 made previous provisions applicable to taxpayer maintaining continuous place of business without the state
and provided that entire additional tax base is subject to tax if permanent or continuous place of business not maintained
without the state, effective June 1, 1973, and applicable to income years beginning on or after January 1, 1973; P.A. 75-501 made provisions applicable to taxpayer who "is taxable both within and without the state" and defined what is meant
by the term "taxable in another state", effective July 3, 1975, and applicable to income years ending on or after that date;
P.A. 77-539 included in terms of definition above taxpayers conducting business in another state as well as being subject
to taxes; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A.
96-197 made existing section Subsec. (a) and added new Subsec. (b) re apportionment of net income re companies that
are limited partners in a partnership and made technical changes, effective June 3, 1996, and applicable to income years
commencing on or after January 1, 1996.
Cited. 43 CS 42, 44, 46.
Sec. 12-219b. Election with respect to apportionment of net income. (a) With
respect to the taxation under this chapter in income years commencing on or after January
1, 1996, of a company's distributive share as a partner of partnership income or loss in
all partnerships in which it is or may become a partner, a company may, on or before
the due date, or, if applicable, the extended due date, of its corporation business tax
return for its income year beginning during 1996, make an election, on its corporation
business tax return for such income year, not to have the provisions of subsection (e)
of section 12-218 and subsection (b) of section 12-219a apply. Except as otherwise
provided by subsection (b) of this section, the election shall be irrevocable.
(b) If a company makes the election as provided in subsection (a) of this section,
such company may revoke such election, on its corporation business tax return and such
revocation shall not be effective for any income year beginning before January 1, 2001.
The revocation, if any, of such election shall be irrevocable.
(P.A. 96-197, S. 8, 11.)
History: P.A. 96-197 effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996.
Secs. 12-220 to 12-221. Allocation of minimum tax base. Apportionment of
additional tax. Allocation in special cases. Sections 12-220 to 12-221, inclusive, are
repealed.
(1949, Rev., S. 1901, 1902; 1951, 1953, S. 1097d; 1957, P.A. 560, S. 3; 1961, P.A. 356; 1967, P.A. 586, S. 2, 3; 1969,
P.A. 258, S. 2; 370, S. 1; 1971, P.A. 683, S. 3; P.A. 73-350, S. 13, 27.)
Sec. 12-221a. Petition for alternative method of apportionment. Regulations.
(a) If the method of apportionment prescribed in sections 12-218, 12-218a and 12-219a,
as administered by the Commissioner of Revenue Services and applied to the business
of any company, unfairly attributes to this state an undue proportion of its net income
or minimum tax base, such company may petition for an alternate method of apportionment by filing with its return to the commissioner a statement of its objections and of
such other proposed method of apportionment as it believes proper and equitable under
the circumstances, accompanied by supporting details and proofs. The commissioner,
within a reasonable time thereafter, shall notify the company whether the proposed
method is accepted as reasonable and equitable and, if so accepted, shall adjust the return
and tax accordingly.
(b) With respect to any company subject to the tax imposed under this chapter, the
commissioner, at any time within three years after the due date for the filing of such
return, or in the case of a completed return filed after such due date, within three years
after the date on which such return was received by the commissioner, which return is
based on the method of apportionment provided for in said sections 12-218, 12-218a
and 12-219a, may change such method if, in his opinion, such method has operated or
will operate so as to subject the company to taxation on a lesser portion of its net income
or minimum tax base than is equitably attributable to this state and shall thereupon
proceed to assess and collect taxes in accordance with such method as so changed by
him. On and after January 1, 1995, the commissioner may change such method only in
accordance with regulations establishing standards for such action, which the commissioner may adopt in accordance with the provisions of chapter 54.
(1969, P.A. 258, S. 1; 1971, P.A. 683, S. 4; P.A. 73-350, S. 14, 27; P.A. 77-614, S. 139, 610; P.A. 81-411, S. 3, 42;
May Sp. Sess. P.A. 94-4, S. 8, 85; P.A. 95-160, S. 64, 69; P.A. 96-197, S. 9, 11.)
History: 1971 act substituted "additional tax base" for "minimum tax base"; P.A. 73-350 substituted reference to Secs.
12-218a and 12-219a for reference to repealed Sec. 12-220a; P.A. 77-614 substituted commissioner of revenue services
for tax commissioner, effective January 1, 1979; P.A. 81-411 deleted reference to allocation, effective June 18, 1981, and
applicable to income years commencing on or after December 28, 1980; May Sp. Sess. P.A. 94-4 divided existing section
into Subsecs. (a) and (b) and in Subsec. (b) added provision requiring the adoption of regulations re change in apportionment
methods, effective June 9, 1994; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this
section; P.A. 96-197 amended Subsecs. (a) and (b) re replace "additional" with "minimum" in reference to the tax base,
effective June 3, 1996, and applicable to income years commencing on or after January 1, 1996.
Cited. 202 C. 412, 416, 417, 419-422, 424. Cited. 236 C. 156, 171.
Under former section, taxpayer could not, on its own initiative, omit filing the return prescribed by statute and file only
a return pursuant to an alternative method which had not yet been accepted or approved by tax commissioner. 26 CS 373,
376, 377. Cited. 41 CS 271-275, 277, 278. Cited. 44 CS 90, 94.
Sec. 12-222. Annual return. (a) Each company subject to the tax imposed under
this part shall render to the commissioner an annual return, signed by one of its principal
officers, on forms prescribed or furnished by the commissioner, stating specifically the
name of the company and the location of its principal office, the state where organized
and the date of organization, the names and locations of all subsidiaries, the amount of
its paid-up capital and surplus at the end of the income year, the amount of its undivided
profits and reserves at the end of such year, the par value of all indebtedness at the
end of such year, the items of gross income received during such year, the deductions
permitted by law, the interest and rental payments during such year, the dividend payments and changes in capital, surplus and undivided profits during such year, complete
balance sheets at the beginning and end of such year or period and such other facts as
the commissioner may require for the purpose of making any computation required by
this part.
(b) Such return shall be due on or before the first day of the month next succeeding
the due date of the company's corresponding federal income tax return for the income
year, determined without regard to any extension of time for filing, or, in the case of
any company that is not required to file a federal income tax return for the income year,
on or before the first day of the fourth month next succeeding the end of the income year.
(c) The commissioner may grant a reasonable extension of time for filing a return,
if the company files a tentative return and application for extension of time in which to
file a return, on forms furnished or prescribed by the commissioner, and pays the tax
reported to be due on such tentative return on or before the original due date of the
return, as provided in subsection (b) of this section. Any additional tax which may be
found to be due on the filing of the return as allowed by such extension shall bear interest
at the rate of one per cent per month or fraction thereof from the original due date of
the return to the date of actual payment. Notwithstanding the provisions of section 12-229, if the commissioner grants a reasonable extension of time for filing a return, no
penalty shall be imposed on account of any failure to pay the amount of tax reported to
be due on a return within the time specified under the provisions of this chapter if the
excess of the amount of tax shown on the return over the amount of tax paid on or before
the original due date of such return is no greater than ten per cent of the amount of tax
shown on such return, and any balance due shown on such return is remitted with such
return on or before the extended due date of such return.
(d) In any case in which the commissioner believes that it would be advantageous
for the computation of the tax as imposed by this part, such state return shall be accompanied by a true copy of the last income tax return, if any, made to the Internal Revenue
Service.
(e) The amount of tax reported to be due on such return or tentative return shall be
due and payable on or before the original due date of the return, as defined in subsection
(b) of this section.
(f) Payment shall be made in cash or by check, draft or money order drawn to the
order of the Commissioner of Revenue Services.
(1949 Rev., S. 1903; 1955, S. 1098d; 1957, P.A. 560, S. 4; P.A. 77-614, S. 139, 610; P.A. 78-178, S. 1, 2; P.A. 85-381,
S. 2; P.A. 87-37; P.A. 90-160, S. 1; P.A. 98-244, S. 7, 35; P.A. 99-121, S. 6, 28; June Sp. Sess. P.A. 01-6, S. 25, 85.)
History: P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979;
P.A. 78-178 changed deadline for extension requests from fifteenth day of third month following close of taxable year to
ninetieth day following close of taxable year, effective May 17, 1978, and applicable to income years ending after that
date; P.A. 85-381 divided section into Subsecs. and (1) deleted "fiduciary" in referring to taxpayers subject to tax under
part I of the corporation business tax and (2) provided that the return and tax shall be due before the first day of the fourth
month next succeeding the end of the taxpayer's income year and that payment shall be made by cash, check, draft or
money order; P.A. 87-37 amended the due date for returns and payment of tax so as to include the last day on which such
return or payment is due by substituting "on or before" preceding such date for the word "before" preceding such date;
P.A. 90-160 amended Subsec. (a) by deleting the requirement that the annual return for a corporation be rendered under
oath and inserted in lieu thereof the requirement that the return be signed by one of the corporation's principal officers;
P.A. 98-244 moved due date of corporation business tax return of an S corporation from the first day of the fourth month
following the close of the income year to the fifteenth day of the fourth month following the close of the income year,
effective June 8, 1998, and applicable to income years commencing on or after January 1, 1998; P.A. 99-121 amended
Subsec.(c) to allow a taxpayer who has been granted an extension to avoid a late payment penalty as long as the balance
due is ten per cent or less and is remitted with the corporation business tax return, effective June 3, 1999, and applicable
to income years commencing on or after January 1, 1999; June Sp. Sess. P.A. 01-6 amended Subsecs. (b) to (e) to coordinate
dates under section with corresponding federal returns and make conforming changes to other due dates and extension
periods, effective July 1, 2001, and applicable to income years commencing on or after January 1, 2001.
Cited. 124 C. 406; 129 C. 664; 135 C. 61.
Subsec. (b):
Cited. 44 CS 90, 92; Id., 126, 130.
Subsec. (c):
Cited. 44 CS 90-92, 98; Id., 126, 130.
Sec. 12-223. Returns of affiliated corporations. Section 12-223 is repealed.
(1949 Rev., S. 1904; P.A. 73-350, S. 26, 27.)
Sec. 12-223a. Combined corporation business tax return. (a) Any taxpayer included in a consolidated return with one or more other corporations for federal income
tax purposes may elect to file a combined return under this chapter together with such
other companies subject to the tax imposed thereunder as are included in the federal
consolidated corporation income tax return and such combined return shall be filed in
such form and setting forth such information as the Commissioner of Revenue Services
may require. Notice of an election made pursuant to the provisions of this subsection
and consent to such election must be submitted in written form to the Commissioner of
Revenue Services by each corporation so electing not later than the due date, or if an
extension of time to file has been requested and granted, the extended due date of the
returns due from the electing corporations for the initial income year for which the
election to file a combined return is made. Such election shall be in effect for such initial
income year and for each succeeding income years unless and until such election is
revoked in accordance with the provisions of subsection (d) of this section.
(b) Any taxpayer, other than a corporation filing a combined return with one or
more other corporations under subsection (a) of this section, which owns or controls
either directly or indirectly substantially all the capital stock of one or more corporations,
or substantially all the capital stock of which is owned or controlled either directly or
indirectly by one or more other corporations or by interests which own or control either
directly or indirectly substantially all the capital stock of one or more other corporations,
may, in the discretion of the Commissioner of Revenue Services, be required or permitted by written approval of the Commissioner of Revenue Services to make a return on
a combined basis covering any such other corporations and setting forth such information as the Commissioner of Revenue Services may require, provided no combined
return covering any corporation not subject to tax under this chapter shall be required
unless the Commissioner of Revenue Services deems such a return necessary, because
of intercompany transactions or some agreement, understanding, arrangement or transaction referred to in section 12-226a, in order properly to reflect the tax liability under
this part.
(c) (1) (A) In the case of a combined return, the tax shall be measured by the sum
of the separate net income or loss of each corporation included or the minimum tax base
of the included corporations but only to the extent that said income, loss or minimum
tax base of any included corporation is separately apportioned to Connecticut in accordance with the provisions of section 12-218, 12-218b, 12-219a or 12-244, whichever
is applicable. In computing said net income or loss, intercorporate dividends shall be
eliminated, and in computing the combined additional tax base, intercorporate stockholdings shall be eliminated.
(B) In computing said net income or loss, any intangible expenses and costs, as
defined in section 12-218c, any interest expenses and costs, as defined in section 12-218c, and any income attributable to such intangible expenses and costs or to such
interest expenses and costs shall be eliminated, provided the corporation that is required
to make adjustments under section 12-218c for such intangible expenses and costs or
for such interest expenses and costs, and the related member or members, as defined in
section 12-218c, are included in such combined return. If any such income and any
such expenses and costs are eliminated as provided in this subparagraph, the intangible
property, as defined in section 12-218c, of the corporation eliminating such income
shall not be taken into account in apportioning under the provisions of section 12-219a
the tax calculated under subsection (a) of section 12-219 of such corporation.
(2) If the method of determining the combined measure of such tax in accordance
with this subsection for two or more affiliated companies validly electing to file a combined return under the provisions of subsection (a) of this section is deemed by such
companies to unfairly attribute an undue proportion of their total income or minimum tax
base to this state, said companies may submit a petition in writing to the Commissioner of
Revenue Services for approval of an alternate method of determining the combined
measure of their tax not later than sixty days prior to the due date of the combined return
to which the petition applies, determined with regard to any extension of time for filing
such return, and said commissioner shall grant or deny such approval before said due
date. In deciding whether or not the companies included in such combined return should
be granted approval to employ the alternate method proposed in such petition, the Commissioner of Revenue Services shall consider approval only in the event that the petitioners have clearly established to the satisfaction of said commissioner that all the companies included in such combined return are, in substance, parts of a unitary business
engaged in a single business enterprise and further that there are substantial intercorporate business transactions among such included companies.
(3) Upon the filing of a combined return under subsection (a) or (b) of this section,
combined returns shall be filed for all succeeding income years or periods for those
corporations reporting therein, provided, in the case of corporations filing under subsection (a) of this section, such corporations are included in a federal consolidated corporation income tax return filed for the succeeding income years and, in the case of a corporation filing under subsection (b) of this section, the aforesaid ownership or control
continues in full force and effect and is not extended to other corporations, and further,
provided no substantial change is made in the nature or locations of the operations of
such corporations.
(d) Notwithstanding the provisions of subsections (a) and (c) of this section, any
taxpayer which has elected to file a combined return under this chapter as provided in
said subsection (a), may subsequently revoke its election to file a combined corporation
business tax return and elect to file a separate corporation business tax return under this
chapter, although continuing to be included in a federal consolidated corporation income
tax return with other companies subject to tax under this chapter, provided such election
shall not be effective before the fifth income year immediately following the initial
income year in which the corporation elected to file a combined return under this chapter.
Notice of an election made pursuant to the provisions of this subsection and consent to
such election must be submitted in written form to the Commissioner of Revenue Services by each corporation that had been included in such combined return not later than
the due date, or if an extension of time to file has been requested and granted, extended
due date of the separate returns due from the electing corporations for the initial income
year for which the election to file separate returns is made. The election to file separate
returns shall be irrevocable for and applicable for five successive income years.
(P.A. 73-350, S. 19, 27; P.A. 74-304, S. 1, 3; P.A. 77-534, S. 1, 2; 77-607, S. 1, 2; 77-614, S. 139, 587, 610; P.A. 78-303, S. 85, 136; P.A. 81-411, S. 4, 42; P.A. 96-197, S. 10, 11; P.A. 98-110, S. 21, 27; 98-244, S. 8, 35; P.A. 00-174, S. 26,
83; June Sp. Sess. P.A. 01-6, S. 26, 85; June 30 Sp. Sess. P.A. 03-1, S. 90; June 30 Sp. Sess. P.A. 03-6, S. 81.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973;
P.A. 74-304 substituted "additional tax base" for "minimum base" and clarified provisions re combined returns, effective
May 30, 1974, and applicable to income years beginning on or after January 1, 1973; P.A. 77-534 amended Subsec. (1)
to add provisions re notice of election to submit combined return, effective June 29, 1977, and applicable to income years
ending on or after that date; P.A. 77-607 clarified use of combined net income as basis for tax, added provisions re approval
of alternate method of computing tax by tax commissioner and added Subsec. (4) re switching from combined filing to
separate filing, effective July 6, 1977, and applicable to income years beginning on or after January 1, 1977; P.A. 77-614
and P.A. 78-303 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; P.A. 81-411 changed reference to consolidated return to combined return and deleted reference to separate allocation, effective
June 18, 1981, and applicable to income years commencing on or after December 28, 1980; P.A. 96-197 amended Subdiv.
(3) to replace "additional" with "minimum" in reference to the tax base, effective June 3, 1996, and applicable to income
years commencing on or after January 1, 1996; P.A. 98-110 added provisions re treatment of Sec. 12-218c and made
technical changes, effective May 19, 1998, and applicable to income years commencing on or after January 1, 1999; P.A.
98-244 allowed corporations to revoke combined return status after the fifth income year immediately following the year
of the election to file a combined return, effective June 8, 1998, and applicable to income years commencing on or after
January 1, 1998; P.A. 00-174 amended Subsec. (c)(1) to divide provisions into Subparas. (A) and (B) and to provide for
treatment of intangible property for purposes of the tax imposed under Sec. 12-219 for corporations eliminating income,
expenses or costs under this section, effective May 26, 2000, and applicable to income years commencing on or after
January 1, 2000; June Sp. Sess. P.A. 01-6 amended Subsec. (c)(2) to provide for due dates of petitions in the case of returns
for which there is an extension of time, effective July 1, 2001, and applicable to income years commencing on or after
January 1, 2001, with respect to petitions filed on or after October 1, 2001; June 30 Sp. Sess. P.A. 03-1 made technical
changes in Subsec. (a), amended Subsec. (c) to provide for calculation of tax in case of combined return, redesignated
existing Subsec. (c)(2) as new Subsec. (d) and amended same by making technical changes and adding required finding
re accuracy of tax liability, redesignated existing Subsecs. (c)(3) and (d) as Subsecs. (e) and (f), and made technical changes
in Subsec. (f), effective August 16, 2003, and applicable to income years commencing on or after January 1, 2003; June
30 Sp. Sess. P.A. 03-6 repealed changes made by June 30 Sp. Sess. P.A. 03-1, restoring prior version of section, and added
reference to Sec. 12-218b in Subsec. (c)(1)(A), effective August 20, 2003, and applicable to income years commencing
on or after January 1, 2003.
Cited. 43 CS 91, 92.
Sec. 12-223b. Intercompany rents and business receipts. (a) Intercompany rents
shall not be included in the computation of the value of property rented as a property
factor in the apportionment fraction if the lessor and lessee are included in a combined
return as provided in section 12-223a.
(b) Intercompany business receipts, receipts by a corporation included in a combined return from any other corporation included in such return, shall not be included
in the computation of the receipts factor of the apportionment fraction.
(P.A. 73-350, S. 21, 22, 27; P.A. 74-304, S. 2, 3; P.A. 81-411, S. 5, 42.)
History: P.A. 73-350, effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973;
P.A. 74-304 substituted "included in a combined return" for "taxed on a combined basis", effective May 30, 1974, and
applicable to income years beginning on or after January 1, 1973; P.A. 81-411 made technical change substituting receipts
for sales, effective June 18, 1981, and applicable to income years commencing on or after December 28, 1980.
Sec. 12-223c. Minimum tax in combined return. Each corporation included in
a combined return shall pay the minimum tax of two hundred fifty dollars prescribed
under section 12-219. No tax credit allowed against the tax imposed by this chapter
shall reduce an included corporation's tax calculated under section 12-219 to an amount
less than two hundred fifty dollars.
(P.A. 73-350, S. 23, 27; P.A. 81-66, S. 3, 5; 81-255, S. 23, 37; P.A. 85-159, S. 3, 19; 85-469, S. 4, 6; P.A. 89-16, S. 3,
31; May 9 Sp. Sess. P.A. 02-1, S. 58.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973;
P.A. 81-66 increased minimum tax from fifty to one hundred dollars, effective May 4, 1981, and applicable to income
years commencing on or after January 1, 1981; P.A. 81-255 increased minimum tax to two hundred fifty dollars, effective
July 1, 1981, and applicable to income years commencing on or after January 1, 1981; P.A. 85-159 reduced minimum tax
to one hundred dollars, applicable with respect to income years of corporations commencing on or after January 1, 1985;
P.A. 85-469 revised effective date of P.A. 85-159 but without affecting this section; P.A. 89-16 increased the minimum
tax payable in accordance with this section from one hundred to two hundred fifty dollars, effective March 23, 1989, and
applicable to income years of corporations commencing on or after January 1, 1989; May 9 Sp. Sess. P.A. 02-1 deleted
provision re corporation whose tax is computed and paid on the combined basis and added provision re the effect of tax
credits on the minimum tax, effective July 1, 2002, and applicable to income years commencing on or after January 1, 2002.
Cited. 220 C. 665, 672, 673, 676.
Sec. 12-223d. Assessments against one or more taxpayers in combined return.
In case a combined return is made as provided by section 12-223a, the Commissioner
of Revenue Services may assess the entire tax computed on the basis of such return
against any one or more of the taxpayers covered by the return, in such proportions as
he shall determine, but every such taxpayer shall be liable for the entire tax.
(P.A. 73-350, S. 24, 27; P.A. 77-614, S. 139, 610.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973;
P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979.
Sec. 12-223e. Readjustment of taxes on revision of combined return. If revision
shall be made of a combined return for the purpose of the tax of two or more corporations,
or of an assessment based upon such a return, the Commissioner of Revenue Services
shall have power to readjust the taxes of each taxpayer included in such return, or, if
revision is made of a return or an assessment against a taxpayer which might have been
included in a combined return when the tax was originally reported or assessed, the
Commissioner of Revenue Services shall have power to resettle the tax against such
taxpayer and any other taxpayers which might have been included in such report upon
a combined basis, and shall adjust the taxes of each such taxpayer accordingly.
(P.A. 73-350, S. 25, 27; P.A. 77-614, S. 139, 610.)
History: P.A. 73-350 effective May 9, 1973, and applicable to income years beginning on or after January 1, 1973;
P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979.
Sec. 12-223f. Supplementary tax due from corporations filing a combined return under section 12-223a for income years commencing on or after January 1,
1990. Notwithstanding the provisions of sections 12-223a to 12-223e, inclusive, the tax
due in relation to any corporations which have filed a combined return for any income
year with other corporations for the tax imposed under this chapter in accordance with
section 12-223a shall be determined as follows: (1) The tax which would be due from
each such corporation if it were filing separately under this chapter shall be determined,
and the total for all corporations included in the combined return shall be added together;
(2) the tax which would be jointly due from all corporations included in the combined
return in accordance with the provisions of said sections 12-223a to 12-223e, inclusive,
shall be determined; and (3) the total determined pursuant to subdivision (2) of this
section shall be subtracted from the amount determined pursuant to subdivision (1) of
this section. The resulting amount, in an amount not to exceed two hundred fifty thousand
dollars, shall be added to the amount determined to be due pursuant to said sections 12-223a to 12-223e, inclusive, and shall be due and payable as a part of the tax imposed
pursuant to this chapter.
(P.A. 89-251, S. 23, 203; June 30 Sp. Sess. P.A. 03-6, S. 80.)
History: P.A. 89-251, Sec. 23 effective July 1, 1989, and applicable to income years commencing on or after January
1, 1990; June 30 Sp. Sess. P.A. 03-6 increased the potential supplementary tax determined under this section from twenty-five thousand dollars to two hundred fifty thousand dollars, effective August 20, 2003, and applicable to income years
commencing on or after January 1, 2003.