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SPONSOR: |
Rep. Hudson & Sen. Marshall |
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HOUSE BILL NO. 567 AS AMENDED BY HOUSE AMENDMENT NO. 1 |
AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO DELAWARE TAXES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
(Three-Fifths Majority of all members elected to each house thereof concurring therein):
Section 1. Amend § 1106(b), Title 30 of the Delaware Code, by adding a new paragraph "(9)" to read as follows:
"(9) The amount of any refund of Delaware State income taxes imposed under this Chapter, to the extent shall be included in federal adjusted gross income for the tax period.".
Section 2. Amend § 1635, Title 30 of the Delaware Code, by designating existing § 1635 as Subsection (a) of said Section and adding to said Section a new Subsection "(b)" to read as follows:
"(b) in the case of an electing small business trust as defined in § 1631(e) of the Internal Revenue Code [26 U.S.C. § 1631(e)] there shall be added to the amount calculated pursuant to Subsection (a), to the extent not otherwise included in such amount, the taxable income of the portion of the trust consisting of S corporation stock that is treated as a separate trust pursuant to § 641(c) of the Internal Revenue Code [26 U.S.C. § 641(c)].".
Section 3. Amend § 1636(a), Title 30 of the Delaware Code, by striking said subsection in its entirety and substituting in lieu thereof a new "§ 1636(a)" to read as follows:
"(a)(1) Allowance of deduction. Except as provided in paragraph (2), a resident estate or resident trust shall be allowed a deduction against the taxable income otherwise computed under Chapter 11 of this Title for any taxable year for the amount of its federal taxable income, as modified by § 1106 of this Title, which is, under the terms of the governing instrument, set aside for future distribution to nonresident beneficiaries.
(2) Electing small business trusts. No deduction shall be allowed the nonresident beneficiaries of an electing small business trust as defined in § 1631(e) of the Internal Revenue Code [26 U.S.C. § 1631(e)] for the taxable income of the portion of the trust consisting of S corporation stock that is treated as a separate trust pursuant to § 641(c) of the Internal Revenue Code [26 U.S.C. §641(c)] and to the extent that it constitutes income derived from sources within Delaware.".
Section 4. Section 1 of this Act confirms the operation of the personal income tax law since its inception. Sections 2 and 3 of this Act shall be effective for tax periods commencing after December 31, 1996.