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11  AN ACT relating to income taxation; concerning the exemption of retire-
12    ment benefits therefrom; amending K.S.A. 1996 Supp. 79-32,117 and
13    repealing the existing section.
14
15  Be it enacted by the Legislature of the State of Kansas:
16    Section 1.  K.S.A. 1996 Supp. 79-32,117 is hereby amended to read
17  as follows: 79-32,117. (a) The Kansas adjusted gross income of an indi-
18  vidual means such individual's federal adjusted gross income for the tax-
19  able year, with the modifications specified in this section.
20    (b)  There shall be added to federal adjusted gross income:
21    (i)  Interest income less any related expenses directly incurred in the
22  purchase of state or political subdivision obligations, to the extent that
23  the same is not included in federal adjusted gross income, on obligations
24  of any state or political subdivision thereof, but to the extent that interest
25  income on obligations of this state or a political subdivision thereof issued
26  prior to January 1, 1988, is specifically exempt from income tax under the
27  laws of this state authorizing the issuance of such obligations, it shall be
28  excluded from computation of Kansas adjusted gross income whether or
29  not included in federal adjusted gross income. Interest income on obli-
30  gations of this state or a political subdivision thereof issued after Decem-
31  ber 31, 1987, shall be excluded from computation of Kansas adjusted
32  gross income whether or not included in federal adjusted gross income.
33    (ii)  Taxes on or measured by income or fees or payments in lieu of
34  income taxes imposed by this state or any other taxing jurisdiction to the
35  extent deductible in determining federal adjusted gross income and not
36  credited against federal income tax. This paragraph shall not apply to taxes
37  imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
38  ments thereto, for privilege tax year 1995, and all such years thereafter.
39    (iii)  The federal net operating loss deduction.
40    (iv)  Federal income tax refunds received by the taxpayer if the de-
41  duction of the taxes being refunded resulted in a tax benefit for Kansas
42  income tax purposes during a prior taxable year. Such refunds shall be
43  included in income in the year actually received regardless of the method
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 1  of accounting used by the taxpayer. For purposes hereof, a tax benefit
 2  shall be deemed to have resulted if the amount of the tax had been de-
 3  ducted in determining income subject to a Kansas income tax for a prior
 4  year regardless of the rate of taxation applied in such prior year to the
 5  Kansas taxable income, but only that portion of the refund shall be in-
 6  cluded as bears the same proportion to the total refund received as the
 7  federal taxes deducted in the year to which such refund is attributable
 8  bears to the total federal income taxes paid for such year. For purposes
 9  of the foregoing sentence, federal taxes shall be considered to have been
10  deducted only to the extent such deduction does not reduce Kansas tax-
11  able income below zero.
12    (v)  The amount of any depreciation deduction or business expense
13  deduction claimed on the taxpayer's federal income tax return for any
14  capital expenditure in making any building or facility accessible to the
15  handicapped, for which expenditure the taxpayer claimed the credit al-
16  lowed by K.S.A. 79-32,177, and amendments thereto.
17    (vi)  Any amount of designated employee contributions picked up by
18  an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
19  and amendments to such sections.
20    (vii)  The amount of any charitable contribution made to the extent
21  the same is claimed as the basis for the credit allowed pursuant to K.S.A.
22  1996 Supp. 79-32,196, and amendments thereto.
23    (c)  There shall be subtracted from federal adjusted gross income:
24    (i)  Interest or dividend income on obligations or securities of any
25  authority, commission or instrumentality of the United States and its pos-
26  sessions less any related expenses directly incurred in the purchase of
27  such obligations or securities, to the extent included in federal adjusted
28  gross income but exempt from state income taxes under the laws of the
29  United States.
30    (ii)  Any amounts received which are included in federal adjusted
31  gross income but which are specifically exempt from Kansas income tax-
32  ation under the laws of the state of Kansas.
33    (iii)  The portion of any gain or loss from the sale or other disposition
34  of property having a higher adjusted basis for Kansas income tax purposes
35  than for federal income tax purposes on the date such property was sold
36  or disposed of in a transaction in which gain or loss was recognized for
37  purposes of federal income tax that does not exceed such difference in
38  basis, but if a gain is considered a long-term capital gain for federal in-
39  come tax purposes, the modification shall be limited to that portion of
40  such gain which is included in federal adjusted gross income.
41    (iv)  The amount necessary to prevent the taxation under this act of
42  any annuity or other amount of income or gain which was properly in-
43  cluded in income or gain and was taxed under the laws of this state for a
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 1  taxable year prior to the effective date of this act, as amended, to the
 2  taxpayer, or to a decedent by reason of whose death the taxpayer acquired
 3  the right to receive the income or gain, or to a trust or estate from which
 4  the taxpayer received the income or gain.
 5    (v)  The amount of any refund or credit for overpayment of taxes on
 6  or measured by income or fees or payments in lieu of income taxes im-
 7  posed by this state, or any taxing jurisdiction, to the extent included in
 8  gross income for federal income tax purposes.
 9    (vi)  Accumulation distributions received by a taxpayer as a beneficiary
10  of a trust to the extent that the same are included in federal adjusted
11  gross income.
12    (vii)  For all taxable years commencing after December 31, 1996,
13  amounts received as annuities under the federal civil service retirement
14  system from the civil service retirement and disability fund and other
15  amounts received as retirement benefits in whatever form which were
16  earned for being employed by the federal government or for service in
17  the armed forces of the United States from whatever source to the extent
18  included in federal adjusted gross income.
19    (viii)  Amounts received by retired railroad employees as a supple-
20  mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
21  et seq.
22    (ix)  Amounts received by retired employees of a city and by retired
23  employees of any board of such city as retirement allowances pursuant to
24  K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
25  ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
26  amendments thereto.
27    (x) (ix)  For taxable years beginning after December 31, 1976, the
28  amount of the federal tentative jobs tax credit disallowance under the
29  provisions of 26 U.S.C. 280 C. For taxable years ending after December
30  31, 1978, the amount of the targeted jobs tax credit and work incentive
31  credit disallowances under 26 U.S.C. 280 C.
32    (xi) (x)  For taxable years beginning after December 31, 1986, divi-
33  dend income on stock issued by Kansas Venture Capital, Inc.
34    (xii)  For taxable years beginning after December 31, 1989, amounts
35  received by retired employees of a board of public utilities as pension and
36  retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
37  and amendments thereto.
38    (xiii) (xi)  For taxable years beginning after December 31, 1993, the
39  amount of income earned on contributions deposited to an individual
40  development account under K.S.A. 1996 Supp. 79-32,117h, and amend-
41  ments thereto.
42    (d)  There shall be added to or subtracted from federal adjusted gross
43  income the taxpayer's share, as beneficiary of an estate or trust, of the
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 1  Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
 2  amendments thereto.
 3    (e)  The amount of modifications required to be made under this sec-
 4  tion by a partner which relates to items of income, gain, loss, deduction
 5  or credit of a partnership shall be determined under K.S.A. 79-32,131,
 6  and amendments thereto, to the extent that such items affect federal
 7  adjusted gross income of the partner.
 8    Sec. 2.  K.S.A. 1996 Supp. 79-32,117 is hereby repealed.
 9    Sec. 3.  This act shall take effect and be in force from and after its
10  publication in the statute book.