HB1385 (2016) Detail

(New Title) making certain changes to business profits tax provisions affecting a business organization when owners sell or exchange ownership interests in the business.


\t \t\t \t\t \t\t \t \t \t\t

HB 1385-FN-A - AS AMENDED BY THE SENATE

9Mar2016... 0828h

04/28/2016   1465s

2016 SESSION

\t16-2459

\t09/01

 

HOUSE BILL\t1385-FN-A

 

AN ACT\tmaking certain changes to business profits tax provisions affecting a business organization when owners sell or exchange ownership interests in the business.

 

SPONSORS:\tRep. Lovejoy, Rock. 36; Rep. Major, Rock. 14; Rep. Abrami, Rock. 19

 

COMMITTEE:\tWays and Means

 

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

 

AMENDED ANALYSIS

 

\tThis bill makes certain changes to business profits tax provisions affecting a business organization when owners sell or exchange ownership interests in the business.

 

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

 

Explanation:\tMatter added to current law appears in bold italics.

\t\tMatter removed from current law appears [in brackets and struckthrough.]

\t\tMatter which is either (a) all new or (b) repealed and reenacted appears in regular type.

9Mar2016... 0828h\t16-2459

04/28/2016   1465s\t09/01

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Sixteen

 

AN ACT\tmaking certain changes to business profits tax provisions affecting a business organization when owners sell or exchange ownership interests in the business.

 

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

 

\t1  Business Profits Tax; Addition to Gross Business Profits.  RSA 77-A:4, XIV is repealed and reenacted to read as follows:

\t\tXIV.  In the case of a business organization where an ownership interest in the business organization is sold or exchanged and the transaction, for federal income tax purposes, results in an increase in the basis of the assets for one or more of the parties to the transaction, the business organization shall:

\t\t\t(a)  Add to the gross business profits of the business organization, for each taxable period, an amount equal to the annual depreciation or amortization attributable to the increase in the basis of the assets recognized by the parties to the transaction for federal income tax purposes; and

\t\t\t(b)  Calculate the gain or loss on the sale or other disposition of the assets without regard to the basis increase recognized by any party to the transaction, for federal income tax purposes, from the sale or exchange of the ownership interest in the business organization.

\t2  Applicability.  Section 1 of this act shall take effect for sales or exchanges of ownership interests in business organizations that occur on and after January 1, 2016.

\t3  Effective Date.  This act shall take effect upon its passage.

 

\t\t\t\t\t\t\t\t\t\t\tLBAO

\t\t\t\t\t\t\t\t\t\t\t16-2459

\t\t\t\t\t\t\t\t\t\t\tAmended 5/10/16

 

HB 1385-FN-A- FISCAL NOTE

 

AN ACT\tmaking certain changes to business profits tax provisions affecting a business organization when owners sell or exchange ownership interests in the business.

 

 

FISCAL IMPACT:

The Department of Revenue Administration states this bill, as amended by the Senate (Amendment #2016-1465s), may decrease state general fund and education trust fund revenue by an indeterminable amount in FY 2017 and each year thereafter.  There is no fiscal impact on county and local revenue or state, county and local expenditures.

 

METHODOLOGY:

The Department of Revenue Administration states this bill repeals RSA 77-A:4, XIV and reenacts it to define how a business organization shall treat sales or exchanges of an ownership interest which results in an increase in basis of assets federally.  Any portion of the annual depreciation or amortization attributable to the increase in basis from the sale of an ownership interest shall be added back to the gross business profits of the business organization.  The gain or loss on the sale or disposition of the asset shall be calculated without regard to the basis increase recognized federally.  The Department states this bill is effective upon passage and will be applicable to any sales or exchanges of interest in a business organization that occur on and after January 1, 2016.  The Department states if this legislation had been in effect over the previous five tax years and business organizations had made an election, the fiscal impact would have resulted in the following decreases in state revenue:

 

\t\t\t \t\t\t\t \t\t\t \t\t\t\t \t\t\t \t\t\t\t \t\t\t \t\t\t\t \t\t\t \t\t\t\t \t\t

Tax Year 2010

($1.9 million)

Tax Year 2011

($0.9 million)

Tax Year 2012

($13.3 million)

Tax Year 2013

($6.6 million)

Tax Year 2014 (incomplete tax year)

($3.8 million)

\t\t

 

The Department states it is able to administer this bill with no increased expenditures.  This bill does not impact county and local revenue and expenditures.