Bill Text - SB483 (2010)

Relative to the interpretation of Internal Revenue Code section 1031 as it relates to taxation under the business profits tax.


Revision: March 11, 2010, midnight

SB 483-FN-A – AS AMENDED BY THE SENATE

03/10/10 0892s

2010 SESSION

10-2791

09/04

SENATE BILL 483-FN-A

AN ACT relative to the interpretation of Internal Revenue Code section 1031 as it relates to taxation under the business profits tax.

SPONSORS: Sen. D'Allesandro, Dist 20; Sen. Gallus, Dist 1; Sen. Reynolds, Dist 2; Sen. Gilmour, Dist 12; Rep. W. Douglas Scamman, Rock 13; Rep. Peterson, Hills 3

COMMITTEE: Ways and Means

ANALYSIS

This bill establishes a special rule for purposes of taxation under the business profits tax for exchanges of like kind property under Internal Revenue Code section 1031.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/10/10 0892s

10-2791

09/04

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Ten

AN ACT relative to the interpretation of Internal Revenue Code section 1031 as it relates to taxation under the business profits tax.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Section; Special Rule for Exchanges of Like Kind Property Under Internal Revenue Code Section 1031. Amend RSA 77-A by inserting after section 4-a the following new section:

77-A:4-b Special Rule for Exchanges of Like Kind Property Under Internal Revenue Code Section 1031. Notwithstanding the requirement of separate entity taxation included within the definition of a business organization, no gain or loss shall be recognized by a business organization if the replacement property received in a transaction qualifying for non-recognition of income pursuant to Internal Revenue Code section 1031 is placed in a revocable trust, a single-member limited liability company, or other entity treated as a disregarded entity under the provisions of the United States Internal Revenue Code of 1986 as amended. The basis of the replacement property received shall be the basis of the relinquished property as held by the business organization prior to the exchange as computed for federal income tax purposes. The department of revenue administration shall recognize any like-kind exchange that qualifies under the provisions of Internal Revenue Code section 1031, United States Department of the Treasury Income Tax Regulations, or pronouncements issued by the Internal Revenue Service relating to like-kind exchanges.

2 Applicability. This act shall apply to any taxable period that began on or after January 1, 2004.

3 Effective Date. This act shall take effect upon its passage.

LBAO

10-2791

Revised 02/03/10

SB 483 FISCAL NOTE

AN ACT relative to the interpretation of Internal Revenue Code section 1031 as it relates to taxation under the business profits tax.

FISCAL IMPACT:

      The Department of Revenue Administration states this bill will decrease state general fund and education trust fund revenue by an indeterminable amount in FY 2011 and each fiscal year thereafter. This bill will have no fiscal impact on state, county and local expenditures or county and local revenue.

METHODOLOGY:

    The Department of Revenue Administration states this bill establishes a special rule for purposes of taxation under the business profits tax (BPT) for exchanges of like kind property under Internal Revenue Code section 1031. The Department states the audit division currently has approximately $5 million in outstanding assessments relating to the subject matter of this bill. The retroactive effective date would eliminate those assessments and all future revenue collection on this issue. Therefore, the decrease in state revenue is projected at $5 million in FY 2011 and an indeterminable loss of revenue in each fiscal year thereafter. Since this tax provision impacts BPT, a portion of the revenue decrease would decrease state general fund revenue and decrease education trust fund revenue.