Revision: May 20, 2010, midnight
SB 483-FN-A – VERSION ADOPTED BY BOTH BODIES
03/10/10 0892s
12May2010… 1924h
2010 SESSION
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
This bill recognizes Internal Revenue Code section 1031 like-kind exchanges which use federally disregarded entities as the recipient of replacement property, but emphasizes the character of such entities as separate entities for purposes of New Hampshire business profits tax.
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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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.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
12May2010… 1924h
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.
I. In the case of a qualified like-kind exchange under Internal Revenue Code section 1031, in which a business organization uses a single member limited liability company, revocable trust, or other entity disregarded for federal income tax purposes as the recipient of replacement property, the recipient entity shall take the basis of the relinquished property as held by the parent business organization, prior to the exchange, as computed for federal income tax purposes.
II. The recipient of the replacement property, for all other purposes, and in keeping with the requirements of separate entity taxation under this chapter, shall be a business organization, as defined in RSA 77-A:1, I and subject to the provisions of RSA 77-A.
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
Amended 05/17/10
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, as amended by the House (Amendment #2010-1924h), 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.