Bill Text - SB58 (2011)

Adding qualified community development entities to the definition of "qualified investment company" under the business profits tax and the business enterprise tax.


Revision: June 15, 2011, midnight

CHAPTER 181

SB 58-FN-A – FINAL VERSION

03/16/11 0686s

03/30/11 1181s

03/30/11 1276s

4May2011… 1580h

18May2011… 1859h

2011 SESSION

11-0999

09/03

SENATE BILL 58-FN-A

AN ACT adding qualified community development entities to the definition of “qualified investment company” under the business profits tax and the business enterprise tax.

SPONSORS: Sen. Odell, Dist 8

COMMITTEE: Ways and Means

AMENDED ANALYSIS

This bill adds qualified community development entities to the definition of “qualified investment company” under the business profits tax and the business enterprise tax.

The bill also adds a special rule to clarify tax treatment of capital gains earned by holders of ownership interests in qualified investment companies, mutual funds, and unit investment trusts.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/16/11 0686s

03/30/11 1181s

03/30/11 1276s

4May2011… 1580h

18May2011… 1859h

11-0999

09/03

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Eleven

AN ACT adding qualified community development entities to the definition of “qualified investment company” under the business profits tax and the business enterprise tax.

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

181:1 Purpose. The general court finds:

I. The New Hampshire business finance authority has been authorized by the United States Treasury Department to allocate federal New Markets Tax Credits to support economic development in certain eligible low-income areas of the state.

II. Under the federal New Markets Tax Credit Program, the business finance authority is required to establish certain “qualified community development entities” for purposes of facilitating investment by third parties to support economic development transactions.

III. This act ensures that “qualified community development entities" established by the business finance authority will not be subject to the business profits tax, the business enterprise tax, or the interest and dividends tax. The ultimate recipient of the investment funds, however, will continue to be subject to these taxes.

181:2 Business Profits Tax; Definitions; Qualified Investment Company. Amend RSA 77-A:1, XXI(a) to read as follows:

XXI.(a) “Qualified investment company” means:

(1) A regulated investment company as defined in section 851 of the United States Internal Revenue Code as defined in RSA 77-A:1, XX;

(2) An organization that is an investment company under the Investment Company Act of 1940 as amended; [or]

(3) An organization that would be an investment company under the Investment Company Act of 1940, as amended, but for the exception from investment company status provided by section 3(c)(1) or 3(c)(7) of said Investment Company Act[.]; or

(4) A qualified community development entity as defined in section 45D of the United States Internal Revenue Code, which entity is owned, controlled, or managed, directly or indirectly, by the business finance authority of the state of New Hampshire.

181:3 Business Enterprise Tax; Definitions; Qualified Investment Company. Amend RSA 77-E:1, XIV(a) to read as follows:

XIV.(a) “Qualified investment company” means:

(1) A regulated investment company as defined in section 851 of the United States Internal Revenue Code as defined in RSA 77-E:1, XVII;

(2) An organization that is an investment company under the Investment Company Act of 1940, as amended; [or]

(3) An organization that would be an investment company under the Investment Company Act of 1940, as amended, but for the exception from investment company status provided by section 3(c)(1) or 3(c)(7) of said Investment Company Act[.]; or

(4) A qualified community development entity as defined in section 45D of the United States Internal Revenue Code, which entity is owned, controlled, or managed, directly or indirectly, by the business finance authority of the state of New Hampshire.

181:4 Taxation of Income; What Taxable. RSA 77:4, V is repealed and reenacted to read as follows:

V. Amounts reported and taxed federally as dividends or interest to a holder of an ownership interest in a qualified investment company as defined in RSA 77-A:1, XXI, a mutual fund, or a unit investment trust.

181:5 Taxation of Income; Dividends Earned on Certain Mutual Funds and Distributions Received on Unit Investment Trusts Not Taxable. RSA 77:4-d is repealed and reenacted to read as follows:

77:4-d Special Rule for Qualified Investment Companies, Mutual Funds, and Unit Investment Trusts. Notwithstanding any other provision of RSA 77:4, the following income items shall not be treated as dividends or interest income taxable under this chapter:

I. Amounts accruing to the holder of an ownership interest in a qualified investment company, as defined in RSA 77-A:1, XXI, or a mutual fund or investment income earned or distributions received by the holder of an ownership interest in a unit investment trust, which qualified investment company, mutual fund, or unit investment trust invests solely in New Hampshire tax-exempt tax anticipation notes, bond anticipation notes, and other instruments exempt under New Hampshire law.

II. Amounts reported and taxed federally as capital gains to the holder of an ownership interest in a qualified investment company, as defined in RSA 77-A:1, XXI, a mutual fund, or a unit investment trust.

181:6 Applicability. Sections 1-3 of this act shall apply to taxable periods ending on or after December 31, 2010. Sections 4 and 5 of this act shall apply to taxable periods beginning on or after January 1, 2011, and also to taxable periods ending before January 1, 2011 if the taxable period is subject to assessment of tax and appealed pursuant to RSA 21-J:28-b.

181:7 Effective Date. This act shall take effect upon its passage.

Approved: June 14, 2011

Effective Date: June 14, 2011

None