PRINTER'S NO. 3713
No. 2504 Session of 2008
INTRODUCED BY GERBER, EACHUS, TURZAI, REED, R. TAYLOR, ADOLPH,
ARGALL, BAKER, BEAR, BELFANTI, BENNINGHOFF, BOYD, BRENNAN,
BUXTON, CALTAGIRONE, CAPPELLI, CARROLL, CAUSER, CIVERA,
CLYMER, CONKLIN, COSTA, CREIGHTON, CUTLER, DALEY, DALLY,
DeLUCA, DENLINGER, DePASQUALE, DERMODY, ELLIS, J. EVANS,
EVERETT, FAIRCHILD, FLECK, FRANKEL, GEIST, GEORGE, GIBBONS,
GILLESPIE, GINGRICH, GODSHALL, GOODMAN, GRELL, GRUCELA,
HALUSKA, HARHAI, HARHART, HARKINS, HARPER, HARRIS, HENNESSEY,
HERSHEY, HESS, HORNAMAN, HUTCHINSON, KAUFFMAN, M. KELLER,
KENNEY, KESSLER, KILLION, KORTZ, KOTIK, KULA, LEACH, LENTZ,
LONGIETTI, MACKERETH, MAHONEY, MAJOR, MANDERINO, MANN, MANTZ,
MARKOSEK, MARSHALL, McCALL, McILHATTAN, McILVAINE SMITH,
METCALFE, MICOZZIE, MILLARD, R. MILLER, MILNE, MOYER, MUNDY,
MURT, MUSTIO, NAILOR, M. O'BRIEN, O'NEILL, PAYNE, PEIFER,
PETRARCA, PETRI, PHILLIPS, PICKETT, PRESTON, PYLE, QUINN,
RAMALEY, RAYMOND, READSHAW, REICHLEY, ROAE, ROSS, RUBLEY,
SABATINA, SAINATO, SANTONI, SAYLOR, SCAVELLO, SCHRODER, SEIP,
SHAPIRO, SIPTROTH, K. SMITH, M. SMITH, SOLOBAY, SONNEY,
STABACK, STEIL, R. STEVENSON, STURLA, SURRA, SWANGER,
J. TAYLOR, TRUE, VULAKOVICH, WALKO, WANSACZ, J. WHITE,
WOJNAROSKI, YOUNGBLOOD AND YUDICHAK, MAY 7, 2008
REFERRED TO COMMITTEE ON FINANCE, MAY 7, 2008
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," in corporate net income tax, further providing
11 for the definition of "taxable income."
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
1 Section 1. Section 401(3), 2(a)(9) and 4(c) of the act of
2 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
3 1971, amended July 12, 2006 (P.L.1137, No.116), are amended to
4 read:
5 Section 401. Definitions.--The following words, terms, and
6 phrases, when used in this article, shall have the meaning
7 ascribed to them in this section, except where the context
8 clearly indicates a different meaning:
9 * * *
10 (3) "Taxable income." * * *
11 2. In case the entire business of any corporation, other
12 than a corporation engaged in doing business as a regulated
13 investment company as defined by the Internal Revenue Code of
14 1986, is not transacted within this Commonwealth, the tax
15 imposed by this article shall be based upon such portion of the
16 taxable income of such corporation for the fiscal or calendar
17 year, as defined in subclause 1 hereof, and may be determined as
18 follows:
19 (a) Division of Income.
20 * * *
21 (9) (A) Except as provided in subparagraph (B):
22 (i) For taxable years beginning before January 1, 2007, all
23 business income shall be apportioned to this State by
24 multiplying the income by a fraction, the numerator of which is
25 the property factor plus the payroll factor plus three times the
26 sales factor and the denominator of which is five.
27 (ii) For taxable years beginning after December 31, 2006,
28 through December 31, 2007, all business income shall be
29 apportioned to this State by multiplying the income by a
30 fraction, the numerator of which is the sum of fifteen times the
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1 property factor, fifteen times the payroll factor and seventy
2 times the sales factor and the denominator of which is one
3 hundred.
4 (iii) For taxable years beginning after December 31, 2007,
5 through December 31, 2008, all business income shall be
6 apportioned to this State by multiplying the income by a
7 fraction, the numerator of which is the sum of seven and one-
8 half times the property factor, seven and one-half times the
9 payroll factor and eighty-five times the sales factor and the
10 denominator of which is one hundred.
11 (B) (i) For taxable years beginning after December 31,
12 2008, all business income shall be apportioned to this State by
13 multiplying the income by the sales factor.
14 (ii) For purposes of apportionment of the capital stock -
15 franchise tax as provided in section 602 of Article VI of this
16 act, the apportionment fraction shall be the property factor
17 plus the payroll factor plus the sales factor as the numerator,
18 and the denominator shall be three.
19 * * *
20 (4) * * *
21 (c) (1) The net loss deduction shall be the lesser of:
22 (A) (I) For taxable years beginning before January 1, 2007,
23 two million dollars ($2,000,000);
24 (II) For taxable years beginning after December 31, 2006,
25 and through December 31, 2007, the greater of twelve and one-
26 half per cent of taxable income as determined under subclause 1
27 or, if applicable, subclause 2 or three million dollars
28 ($3,000,000); [or]
29 (III) For taxable years beginning after December 31, 2007,
30 through December 31, 2008, the greater of fifty per cent of
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1 taxable income as determined under subclause 1 or, if
2 applicable, subclause 2 or three million dollars ($3,000,000);
3 (IV) For taxable years beginning after December 31, 2008,
4 one hundred per cent of the taxable income as determined under
5 subclause 1 or, if applicable, subclause 2; or
6 (B) The amount of the net loss or losses which may be
7 carried over to the taxable year or taxable income as determined
8 under subclause 1 or, if applicable, subclause 2.
9 (1.1) In no event shall the net loss deduction include more
10 than five hundred thousand dollars ($500,000), in the aggregate,
11 of net losses from taxable years 1988 through 1994.
12 (2) (A) A net loss for a taxable year may only be carried
13 over pursuant to the following schedule:
14 Taxable Year Carryover
15 1981 1 taxable year
16 1982 2 taxable years
17 1983-1987 3 taxable years
18 1988 2 taxable years plus
19 1 taxable year
20 starting with the
21 1995 taxable year
22 1989 1 taxable year plus
23 2 taxable years
24 starting with the
25 1995 taxable year
26 1990-1993 3 taxable years
27 starting with the
28 1995 taxable year
29 1994 1 taxable year
30 1995-1997 10 taxable years
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1 1998 and thereafter 20 taxable years
2 (B) The earliest net loss shall be carried over to the
3 earliest taxable year to which it may be carried under this
4 schedule. The total net loss deduction allowed in any taxable
5 year shall not exceed:
6 (I) Two million dollars ($2,000,000) for taxable years
7 beginning before January 1, 2007.
8 (II) The greater of twelve and one-half per cent of the
9 taxable income as determined under subclause 1 or, if
10 applicable, subclause 2 or three million dollars ($3,000,000)
11 for taxable years beginning after December 31, 2006[.], and
12 before January 1, 2008.
13 (III) The greater of fifty per cent of the taxable income as
14 determined under subclause 1 or, if applicable, subclause 2 or
15 three million dollars ($3,000,000) for taxable years beginning
16 after December 31, 2007, through December 31, 2008.
17 (IV) The greater of one hundred percent of the taxable
18 income as determined under subclause 1 or, if applicable,
19 subclause 2 for taxable years beginning after December 31, 2008.
20 * * *
21 Section 2. This act shall take effect immediately.
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