HB 367 — PUBLIC PEACE, HEALTH, SAFETY & WELFARE

HOUSE TAXATION AND REVENUE COMMITTEE SUBSTITUTE FOR HOUSE RULES AND ORDER OF BUSINESS COMMITTEE SUBSTITUTE FOR HOUSE BILL 367 53RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION , 2018 4 6 8 10 AN ACT RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE;

u [ (1) means, for estates and trusts, that part .210617.1.210654.1 HRC/HBHTRC/HRC/HB 367 of the estate's or trust's income defined as taxable income and upon which the federal income tax is calculated in the Internal Revenue Code for income tax purposes plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and taken by the taxpayer for that year;

.210617.1.210654.1 - 2 - HRC/HBHTRC/HRC/HB 367 (a) such amount is transferred to another qualified tuition program, as defined in Section 529 of the Internal Revenue Code, not authorized in the Education Trust Act;

"fiscal year" means any accounting period of u [ twelve months ending on the last day of any month other than .210617.1.210654.1 - 3 - HRC/HBHTRC/HRC/HB 367 December;

.210617.1.210654.1 - 4 - HRC/HBHTRC/HRC/HB 367 (8) alimony and separate maintenance payments;

e a n b 24 (3) payments pursuant to a federal, state or u [ local government program directly or indirectly to a third .210617.1.210654.1 - 5 - HRC/HBHTRC/HRC/HB 367 party on behalf of the taxpayer when identified to a particular use or invoice by the payer;

(2)except, anfor amounta equalhead toof thehousehold itemizedfor deductions defined in Section 63 of the Internaltaxable Revenueyear Code,beginning asJanuary that1, e2018, ean 17amount sectionequal mayto bethe amendedstandard ordeduction renumbered, allowed the taxpayer forby ethat eversion nof dSection 1863 theof taxpayer'se taxablee year17 less the amountInternal excludedRevenue pursuantCode =that =applied l ] 19 to Paragraph (1) of this subsection and less the amounttaxable ofyear ae le rn id 2018 statebeginning andJanuary local1, income2017; and sales taxes included in the t e a t taxpayer's itemized deductions;

m= m= 21l e] d19 (3)(2) an amount equal to the productitemized deductions a l r i 20 defined in Section 63 of the rInternal eRevenue 22Code, cas that t e ra ct 23section exemptionmay amountbe amended or renumbered, allowed the taxpayer for m m 21 e d the taxpayer's taxable year byless ethe aamount nexcluded bpursuant 24r Sectione 15122 ofc thee Internalr Revenuec Code,23 asto thatParagraph section(1) mayof uthis [subsection beand amendedless orthe renumbered,amount multipliedof bye thea numbern ofb personal24 .210617.1state -and 6local -income HRC/HBand 367sales exemptionstaxes allowedincluded forin federalthe incomeu tax[ purposes;taxpayer's itemized deductions;

.210654.1 - 6 - HTRC/HRC/HB 367 (3) an amount equal to the product of the exemption amount allowed for the taxpayer's taxable year by Section 151 of the Internal Revenue Code, as that section may be amended or renumbered, multiplied by the number of personal exemptions allowed for federal income tax purposes;

(5) other amounts that the state is prohibited e e 17 from taxing because of the laws or constitution of this state e e n d 18 or the United States;

= = l ] 19 (6) for taxable years that began prior to a l r i 20 January 1, 1991, an amount equal to the sum of:

et e 17a t (a) net operating loss carryback em em n21 e d 18 deductions to that year from taxable years beginning prior to =r =e l22 ]c 19e r c 23 January 1, 1991 claimed and allowed, as provided by the e a ln rb i24 20 Internal Revenue Code;

and tu e[ a t (b) net operating loss carryover m.210654.1 m- 217 e- dHTRC/HRC/HB 367 deductions to that year claimed and allowed;

r e 22 c e r c 23 (7) for taxable years beginning on or after e a n b 24 January 1, 1991 and prior to January 1, 2013, an amount equal u [ to the sum of any net operating loss carryover deductions to .210617.1 - 7 - HRC/HB 367 that year claimed and allowed, provided that the amount of any net operating loss carryover from a taxable year beginning on or after January 1, 1991 and prior to January 1, 2013 may be excluded only as follows:

and (c) in either case, if the net operating e e 17 loss carryover exceeds the amount of net income exclusive of e e n d 18 the net operating loss carryover for the taxable year to which = = l ] 19 the exclusion first applies, in the next four succeeding a l r i 20 taxable years in turn until the net operating loss carryover is et e 17a t exhausted for any net operating loss carryover from a taxable em em n21 de 18d year prior to January 1, 2013;

in no event shall a net =r =e l22 ]c 19e r c 23 operating loss carryover from a taxable year beginning prior to e a ln rb i24 20 January 1, 2013 be excluded in any taxable year after the tu e[ a t fourth taxable year beginning after the taxable year to which m.210654.1 m- 218 e- dHTRC/HRC/HB 367 the exclusion first applies;

r e 22 c e r c 23 (8) for taxable years beginning on or after e a n b 24 January 1, 2013, an amount equal to the sum of any net u [ operating loss carryover deductions to that year claimed and .210617.1 - 8 - HRC/HB 367 allowed;

and (c) in either case, if the net operating loss carryover exceeds the amount of net income exclusive of the net operating loss carryover for the taxable year to which e e 17 the exclusion first applies, in the next nineteen succeeding e e n d 18 taxable years in turn until the net operating loss carryover is = = l ] 19 exhausted for any net operating loss carryover from a taxable a l r i 20 year beginning on or after January 1, 2013;

in no event shall a et e 17a t net operating loss carryover from a taxable year beginning:

1) em em n21 e d 18 prior to January 1, 2013 be excluded in any taxable year after =r =e l22 ]c 19e r c 23 the fourth taxable year beginning after the taxable year to e a ln rb i24 20 which the exclusion first applies;

and 2) on or after January tu e[ a t 1, 2013 be excluded in any taxable year after the nineteenth m.210654.1 m- 219 e- dHTRC/HRC/HB 367 taxable year beginning after the taxable year to which the r e 22 c e r c 23 exclusion first applies;

and e a n b 24 (9) for taxable years beginning on or after u [ January 1, 2011, an amount equal to the amount included in .210617.1 - 9 - HRC/HB 367 adjusted gross income that represents a refund of state and local income and sales taxes that were deducted for federal tax purposes in taxable years beginning on or after January 1, 2010;

"net operating loss carryover" means the amount, or any portion of the amount, of a net operating loss for any e e 17 taxable year that, pursuant to Paragraph (6), (7) or (8) of e e n d 18 Subsection N of this section, may be excluded from base income;

= = l ] 19 Q.

"nonresident" means every individual not a a l r i 20 resident of this state;

et e 17a t R.

"person" means any individual, estate, trust, em em n21 e d 18 receiver, cooperative association, club, corporation, company, =r =e l22 ]c 19e r c 23 firm, partnership, limited liability company, joint venture, e a ln rb i24 20 syndicate or other association;

"person" also means, to the tu e[ a t extent permitted by law, any federal, state or other m.210654.1 m- 2110 e- dHTRC/HRC/HB 367 governmental unit or subdivision or agency, department or r e 22 c e r c 23 instrumentality thereof;

e a n b 24 S.

"resident" means an individual who is domiciled u [ in this state during any part of the taxable year or an .210617.1 - 10 - HRC/HB 367 individual who is physically present in this state for one hundred eighty-five days or more during the taxable year;

e e 17 U.

"state" means any state of the United States, e e n d 18 the District of Columbia, the commonwealth of Puerto Rico, any = = l ] 19 territory or possession of the United States or any political a l r i 20 subdivision of a foreign country;

et e 17a t V.

"state or local bond" means a bond issued by a em em n21 e d 18 state other than New Mexico or by a local government other than =r =e l22 ]c 19e r c 23 one of New Mexico's political subdivisions, the interest from e a ln rb i24 20 which is excluded from income for federal income tax purposes tu e[ a t under Section 103 of the Internal Revenue Code, as that section m.210654.1 m- 2111 e- dHTRC/HRC/HB 367 may be amended or renumbered;

r e 22 c e r c 23 W.

"surviving spouse" means "surviving spouse" as e a n b 24 generally defined for federal income tax purposes;

u [ X.

"taxable income" means net income less any lump- .210617.1 - 11 - HRC/HB 367 sum amount;

"taxpayer" means any individual subject to the tax imposed by the Income Tax Act." - 12 - 11 13 15 e e 17 e e n d 18 = = l ] 19 a l r i 20 t e a t m m 21 e d r e 22 c e r c 23 e a n b 24 u [ .210617.1.210654.1