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AN ACT concerning taxation; relating to meat and poultry packing facil-
  ities; amending K.S.A. 1996 Supp. 79-32,117 and repealing the existing
  section.
Be it enacted by the Legislature of the State of Kansas:
  New Section 1.  (a) Any taxpayer who makes expenditures for the
purpose of making an existing business facility, which employs 11 to 250
employees and is required to be inspected by the federal authorities or
registered pursuant to K.S.A. 65-6a34, and amendments thereto, in com-
pliance with the regulations of the food safety and inspection service of
the United States department of agriculture concerning the sanitation
standard operating procedures and the hazard analysis and critical control
points, pursuant to 9 C.F.R. 304, 308, 310, 320, 327, 381, 416 and 417,
which facility or equipment is on real property located in this state and
used in a trade or business or held for the production of income, shall be
entitled to claim an income tax credit in an amount equal to 20% of such
expenditures or, the amount of $10,000, whichever is less, against the
income tax liability imposed against such taxpayer pursuant to article 32
of chapter 79 of the Kansas Statutes Annotated. Such tax credit shall be
deducted from the taxpayer's income tax liability for the taxable year in
which the expenditures are made by the taxpayer. If the amount of such
tax credit exceeds the taxpayer's income tax liability for such taxable year,
the amount thereof which exceeds such tax liability may be carried over
for deduction from the taxpayer's income tax liability in the next suc-
ceeding taxable year or years until the total amount of the tax credit has
been deducted from tax liability, except that no such tax credit shall be
carried over for deduction after the fourth taxable year succeeding the
taxable year in which the expenditures are made. In no event shall the
aggregate of any such credit for a taxpayer exceed $10,000.
  (b)  Any taxpayer who makes expenditures for the purpose of making
an existing business facility, which employs 10 or fewer employees and is
required to be inspected by the federal authorities or registered pursuant
to K.S.A. 65-6a34, and amendments thereto, in compliance with the reg-
ulations of the food safety and inspection service of the United States
department of agriculture concerning the sanitation standard operating
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 1  procedures and the hazard analysis and critical control points, pursuant
 2  to 9 C.F.R. 304, 308, 310, 320, 327, 381, 416 and 417, which facility or
 3  equipment is on real property located in this state and used in a trade or
 4  business or held for the production of income, shall be entitled to claim
 5  an income tax credit in an amount equal to 30% of such expenditures or,
 6  the amount of $10,000, whichever is less, against the income tax liability
 7  imposed against such taxpayer pursuant to article 32 of chapter 79 of the
 8  Kansas Statutes Annotated. Such tax credit shall be deducted from the
 9  taxpayer's income tax liability for the taxable year in which the expendi-
10  tures are made by the taxpayer. If the amount of such tax credit exceeds
11  the taxpayer's income tax liability for such taxable year, the amount
12  thereof which exceeds such tax liability may be carried over for deduction
13  from the taxpayer's income tax liability in the next succeeding taxable year
14  or years until the total amount of the tax credit has been deducted from
15  tax liability, except that no such tax credit shall be carried over for de-
16  duction after the fourth taxable year succeeding the taxable year in which
17  the expenditures are made. In no event shall the aggregate of any such
18  credit for a taxpayer exceed $10,000.
19    (c)  As used in this section, ``expenditures'' shall include, but not be
20  limited to, the purchase of equipment or machinery, the retrofitting of
21  existing equipment or machinery or the remodeling of the facilities.
22    (d)  This provisions of this section shall apply to all taxable years com-
23  mencing after December 31, 1996.
24    Sec. 2.  K.S.A. 1996 Supp. 79-32,117 is hereby amended to read as
25  follows: 79-32,117. (a) The Kansas adjusted gross income of an individual
26  means such individual's federal adjusted gross income for the taxable year,
27  with the modifications specified in this section.
28    (b)  There shall be added to federal adjusted gross income:
29    (i)  Interest income less any related expenses directly incurred in the
30  purchase of state or political subdivision obligations, to the extent that
31  the same is not included in federal adjusted gross income, on obligations
32  of any state or political subdivision thereof, but to the extent that interest
33  income on obligations of this state or a political subdivision thereof issued
34  prior to January 1, 1988, is specifically exempt from income tax under the
35  laws of this state authorizing the issuance of such obligations, it shall be
36  excluded from computation of Kansas adjusted gross income whether or
37  not included in federal adjusted gross income. Interest income on obli-
38  gations of this state or a political subdivision thereof issued after Decem-
39  ber 31, 1987, shall be excluded from computation of Kansas adjusted
40  gross income whether or not included in federal adjusted gross income.
41    (ii)  Taxes on or measured by income or fees or payments in lieu of
42  income taxes imposed by this state or any other taxing jurisdiction to the
43  extent deductible in determining federal adjusted gross income and not
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 1  credited against federal income tax. This paragraph shall not apply to taxes
 2  imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
 3  ments thereto, for privilege tax year 1995, and all such years thereafter.
 4    (iii)  The federal net operating loss deduction.
 5    (iv)  Federal income tax refunds received by the taxpayer if the de-
 6  duction of the taxes being refunded resulted in a tax benefit for Kansas
 7  income tax purposes during a prior taxable year. Such refunds shall be
 8  included in income in the year actually received regardless of the method
 9  of accounting used by the taxpayer. For purposes hereof, a tax benefit
10  shall be deemed to have resulted if the amount of the tax had been de-
11  ducted in determining income subject to a Kansas income tax for a prior
12  year regardless of the rate of taxation applied in such prior year to the
13  Kansas taxable income, but only that portion of the refund shall be in-
14  cluded as bears the same proportion to the total refund received as the
15  federal taxes deducted in the year to which such refund is attributable
16  bears to the total federal income taxes paid for such year. For purposes
17  of the foregoing sentence, federal taxes shall be considered to have been
18  deducted only to the extent such deduction does not reduce Kansas tax-
19  able income below zero.
20    (v)  The amount of any depreciation deduction or business expense
21  deduction claimed on the taxpayer's federal income tax return for any
22  capital expenditure in making any building or facility accessible to the
23  handicapped, for which expenditure the taxpayer claimed the credit al-
24  lowed by K.S.A. 79-32,177, and amendments thereto.
25    (vi)  Any amount of designated employee contributions picked up by
26  an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
27  and amendments to such sections.
28    (vii)  The amount of any charitable contribution made to the extent
29  the same is claimed as the basis for the credit allowed pursuant to K.S.A.
30  1996 Supp. 79-32,196, and amendments thereto.
31    (viii)  The amount of any depreciation deduction or business expense
32  deduction claimed on the taxpayer's federal income tax return for any
33  capital expenditure in making any building or facility in compliance with
34  the regulations of the food safety and inspection service of the United
35  States department of agriculture, for which expenditure the taxpayer
36  claimed the credit allowed by section 1, and amendments thereto.
37    (c)  There shall be subtracted from federal adjusted gross income:
38    (i)  Interest or dividend income on obligations or securities of any
39  authority, commission or instrumentality of the United States and its pos-
40  sessions less any related expenses directly incurred in the purchase of
41  such obligations or securities, to the extent included in federal adjusted
42  gross income but exempt from state income taxes under the laws of the
43  United States.
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 1    (ii)  Any amounts received which are included in federal adjusted
 2  gross income but which are specifically exempt from Kansas income tax-
 3  ation under the laws of the state of Kansas.
 4    (iii)  The portion of any gain or loss from the sale or other disposition
 5  of property having a higher adjusted basis for Kansas income tax purposes
 6  than for federal income tax purposes on the date such property was sold
 7  or disposed of in a transaction in which gain or loss was recognized for
 8  purposes of federal income tax that does not exceed such difference in
 9  basis, but if a gain is considered a long-term capital gain for federal in-
10  come tax purposes, the modification shall be limited to that portion of
11  such gain which is included in federal adjusted gross income.
12    (iv)  The amount necessary to prevent the taxation under this act of
13  any annuity or other amount of income or gain which was properly in-
14  cluded in income or gain and was taxed under the laws of this state for a
15  taxable year prior to the effective date of this act, as amended, to the
16  taxpayer, or to a decedent by reason of whose death the taxpayer acquired
17  the right to receive the income or gain, or to a trust or estate from which
18  the taxpayer received the income or gain.
19    (v)  The amount of any refund or credit for overpayment of taxes on
20  or measured by income or fees or payments in lieu of income taxes im-
21  posed by this state, or any taxing jurisdiction, to the extent included in
22  gross income for federal income tax purposes.
23    (vi)  Accumulation distributions received by a taxpayer as a beneficiary
24  of a trust to the extent that the same are included in federal adjusted
25  gross income.
26    (vii)  Amounts received as annuities under the federal civil service
27  retirement system from the civil service retirement and disability fund
28  and other amounts received as retirement benefits in whatever form
29  which were earned for being employed by the federal government or for
30  service in the armed forces of the United States.
31    (viii)  Amounts received by retired railroad employees as a supple-
32  mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
33  et seq.
34    (ix)  Amounts received by retired employees of a city and by retired
35  employees of any board of such city as retirement allowances pursuant to
36  K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
37  ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
38  amendments thereto.
39    (x)  For taxable years beginning after December 31, 1976, the amount
40  of the federal tentative jobs tax credit disallowance under the provisions
41  of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
42  the amount of the targeted jobs tax credit and work incentive credit dis-
43  allowances under 26 U.S.C. 280 C.
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 1    (xi)  For taxable years beginning after December 31, 1986, dividend
 2  income on stock issued by Kansas Venture Capital, Inc.
 3    (xii)  For taxable years beginning after December 31, 1989, amounts
 4  received by retired employees of a board of public utilities as pension and
 5  retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
 6  and amendments thereto.
 7    (xiii)  For taxable years beginning after December 31, 1993, the
 8  amount of income earned on contributions deposited to an individual
 9  development account under K.S.A. 1996 Supp. 79-32,117h, and amend-
10  ments thereto.
11    (d)  There shall be added to or subtracted from federal adjusted gross
12  income the taxpayer's share, as beneficiary of an estate or trust, of the
13  Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
14  amendments thereto.
15    (e)  The amount of modifications required to be made under this sec-
16  tion by a partner which relates to items of income, gain, loss, deduction
17  or credit of a partnership shall be determined under K.S.A. 79-32,131,
18  and amendments thereto, to the extent that such items affect federal
19  adjusted gross income of the partner.
20    Sec. 3.  K.S.A. 1996 Supp. 79-32,117 is hereby repealed.
21    Sec. 4.  This act shall take effect and be in force from and after its
22  publication in the statute book.