SB 18 — repeal income modifications for the bank franchise tax pertaining to bad debts.

26.372.1526.372.16 101st Legislative Session 18 South Dakota Legislature Senate Bill 18 IntroducedENROLLED by:A N ACT ENTITLED An Act to repeal income modifications for the bank franchise tax pertaining to bad debts.

TheB ChairE ofIT theENACTED CommitteeBY onTHE TaxationLEGISLATURE atOF theTHE requestS ofTATE theOF DepartmentS ofOUTH RevenueD AnAKOTA Act: to repeal income modifications for the bank franchise tax pertaining to bad debts.

B E IT ENACTED BY THE L EGISLATURE OF THE STATE OF SOUTH D AKOTA :

This section applies to §§ 10-4-9.1, 10-4-9.2, 10-4-9.3, 10-4-9.4, 10-4-39, 10- 6-157, and 10-43-10.1, and subdivisions 10-6A-1(7), 10-6B-1(5), 10-18A-1(6), 10-43- 10.3(6)10.3(5), 10-43-10.3(5), and 10-45A-1(5).

(2) All income taxes paid or accrued, as the case may be applicable, during the tax year under the provisions of chapter 10-43 this chapter or under the provisions of any income tax, or franchise or privilege taxes measured by income levied by any other state or political subdivision to the extent that such the taxes were deducted to determine federal taxable income;

(3) BadAny debtamount deductionsreceived inas excessa refund of creditsfederal actuallyincome ascertainedtaxes toduring bethe worthlesstax andyear chargedif offthat withinamount thewas taxpreviously year;deducted in determining net income;

(4) AnyDividends amountreceived subsequentlyfrom receivedother oncorporations accountto ofthe aextent badthat debtthe previouslydividends chargedhave offbeen deducted from net income as adetermined deductionunder forthe taxInternal purposes;Revenue Code;

and (5) Any amountcapital receivedloss asfrom: a refund of federal income taxes during the tax year if that amount was previously deducted in determining net income;

Overstrikes26.372.16 indicate2 deleted18 language.(a) Liquidating sales within the twelve-month period beginning on the date on which a financial institution adopts a plan of complete liquidation, if all the assets of the financial institution are distributed in complete liquidation, less assets retained to meet claims within the twelve-month period;

26.372.15or 2(b) 18The (6)(4)distribution Dividendsof receivedproperty fromin othercomplete corporationsliquidation toof the extentfinancial institution that suchis thesubject dividendsto havefederal beencorporate deductedincome fromtaxes netpursuant incometo as§ determined336 underof the Internal Revenue Code;Code.

and (7)(5) Any capital loss from liquidating :

(a) Liquidating sales within the twelve-month period beginning on the date on which a financial institution adopts a plan of complete liquidation, if all of the assets of the financial institution are distributed in complete liquidation, less assets retained to meet claims within the twelve-month period, or from the ;

or (b) The distribution of property in complete liquidation of the financial institution which that is subject to federal corporate income taxes pursuant to § 336 of the Internal Revenue Code.

(1) Dividends received from financial institutions subject to taxation under this chapter, to the extent such the dividends were included in taxable income as determined under the Internal Revenue Code;

(3) Any interest expense described in §§ 291(e)(1)(B) and 265(b) of the Internal Revenue Code, which interest expense shall be is deductible;

(4) Any capital gain fromfrom: liquidating :

(a) Liquidating sales within the twelve-month period beginning on the date on which a financial institution adopts a plan of complete liquidation, if all of the assets of the financial institution are distributed in complete liquidation, less assets retained to meet claims within the twelve-month period,period; or from the ;

or (b) The distribution of property in complete liquidation of the financial institution which that is subject to federal corporate income taxes pursuant to § 336 of the Internal Revenue Code;

(5) AnyFor adjustmentthose tofinancial taxableinstitutions incomemaking duean election pursuant to a26 changeUSC in§ 1362(a) of the methodUnited usedStates toInternal computeRevenue theCode, as defined by § 10-1-47, imputed federal badincome debttaxes deductionin wherean amount equal to the adjustmenttaxes hasthat alreadywould have been includedpaid inon taxablenet income foras purposesdefined ofin § 10-43-10.1 had the financial institution continued to file its federal tax imposedreturn bywithout thismaking chapter;an election to file pursuant to 26 USC § 1362(a);

Overstrikesand indicate(6) deletedFor language.those financial institutions organized as limited liability companies, imputed federal income taxes in an amount equal to the taxes that would have been paid SB18 ENROLLED 26.372.16 3 18 on net income as defined in § 10-43-10.1 had the financial institution elected to file as a subchapter C corporation under the Internal Revenue Code.

26.372.15SB18 3ENROLLED 1826.372.16 (6)4 For18 thoseAn financialAct institutions making an election pursuant to 26repeal USC § 1362(a) of the United States Internal Revenue Code, as defined by § 10-1-47, imputed federal income taxesmodifications infor an amount equal to the taxesbank thatfranchise would have been paid on net income as defined in § 10-43-10.1 had the financial institution continued to file its federal tax returnpertaining without making an election to filebad pursuantdebts. to 26 USC § 1362(a);

andReceived (7)(6)at Forthis thoseExecutive financialOffice institutionsI organizedcertify asthat limited liability companies, imputed federal income taxes in an amount equal to the taxesattached thatAct wouldoriginated have been paid on net income as defined in §this 10-43-10.1_____ hadday theof financial_____________, institutionthe: elected to file as a subchapter C corporation under the Internal Revenue Code.

Underscoresat indicate____________M. new language.

OverstrikesSenate indicateas deletedBill language.No.

18 By Secretary of the Senate for the Governor The attached Act is hereby approved this ________ day of President of the Senate ______________, A.D., 2026 Attest:

Governor Secretary of the Senate STATE OF SOUTH DAKOTA, ss.

Office of the Secretary of State Speaker of the House Filed ____________, 2026 Attest:

at _________ o'clock __M.

Chief Clerk of the House Secretary of State Senate Bill No.

18 By File No.

____ Asst.

Secretary of State Chapter No.

______ SB18 ENROLLED