Senate Bill No. 1209

Public Act No. 99-83

An Act Concerning S Corporations and the Neighborhood Assistance Program.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (c) of section 12-217 of the general statutes is repealed and the following is substituted in lieu thereof:

(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 12-633, 12-634, 12-635 and 12-635a.

Sec. 2. This act shall take effect from its passage and shall be applicable to income years commencing on or after January 1, 1999.

Approved June 3, 1999

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