Session of 1998
                   
HOUSE BILL No. 2712
         
By Representative Welshimer
         
1-23
            9             AN ACT relating to income taxation; providing a credit therefrom for
10             contribution amounts made to metropolitan area transit systems;
11             amending K.S.A. 79-32,117 and repealing the existing section.
12            
13       Be it enacted by the Legislature of the State of Kansas:
14           New Section 1. For all taxable years commencing after December
15       31, 1997, there shall be allowed as a credit against the tax liability of a
16       taxpayer imposed under the Kansas income tax act which contributes to
17       a metropolitan area transit system. The amount of credit allowed for de-
18       duction in any taxable year shall not exceed the lesser of $300 or the
19       amount of the tax imposed under such act reduced by the sum of any
20       other credits allowable pursuant to law.
21           Sec. 2. K.S.A. 79-32,117 is hereby amended to read as follows: 79-
22       32,117. (a) The Kansas adjusted gross income of an individual means such
23       individual's federal adjusted gross income for the taxable year, with the
24       modifications specified in this section.
25           (b) There shall be added to federal adjusted gross income:
26           (i) Interest income less any related expenses directly incurred in the
27       purchase of state or political subdivision obligations, to the extent that
28       the same is not included in federal adjusted gross income, on obligations
29       of any state or political subdivision thereof, but to the extent that interest
30       income on obligations of this state or a political subdivision thereof issued
31       prior to January 1, 1988, is specifically exempt from income tax under the
32       laws of this state authorizing the issuance of such obligations, it shall be
33       excluded from computation of Kansas adjusted gross income whether or
34       not included in federal adjusted gross income. Interest income on obli-
35       gations of this state or a political subdivision thereof issued after Decem-
36       ber 31, 1987, shall be excluded from computation of Kansas adjusted
37       gross income whether or not included in federal adjusted gross income.
38           (ii) Taxes on or measured by income or fees or payments in lieu of
39       income taxes imposed by this state or any other taxing jurisdiction to the
40       extent deductible in determining federal adjusted gross income and not
41       credited against federal income tax. This paragraph shall not apply to taxes
42       imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
43       ments thereto, for privilege tax year 1995, and all such years thereafter.

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  1           (iii) The federal net operating loss deduction.
  2           (iv) Federal income tax refunds received by the taxpayer if the de-
  3       duction of the taxes being refunded resulted in a tax benefit for Kansas
  4       income tax purposes during a prior taxable year. Such refunds shall be
  5       included in income in the year actually received regardless of the method
  6       of accounting used by the taxpayer. For purposes hereof, a tax benefit
  7       shall be deemed to have resulted if the amount of the tax had been de-
  8       ducted in determining income subject to a Kansas income tax for a prior
  9       year regardless of the rate of taxation applied in such prior year to the
10       Kansas taxable income, but only that portion of the refund shall be in-
11       cluded as bears the same proportion to the total refund received as the
12       federal taxes deducted in the year to which such refund is attributable
13       bears to the total federal income taxes paid for such year. For purposes
14       of the foregoing sentence, federal taxes shall be considered to have been
15       deducted only to the extent such deduction does not reduce Kansas tax-
16       able income below zero.
17           (v) The amount of any depreciation deduction or business expense
18       deduction claimed on the taxpayer's federal income tax return for any
19       capital expenditure in making any building or facility accessible to the
20       handicapped, for which expenditure the taxpayer claimed the credit al-
21       lowed by K.S.A. 79-32,177, and amendments thereto.
22           (vi) Any amount of designated employee contributions picked up by
23       an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
24       and amendments to such sections.
25           (vii) The amount of any charitable contribution made to the extent
26       the same is claimed as the basis for the credit allowed pursuant to K.S.A.
27       79-32,196, and amendments thereto.
28           (viii) The amount of any contributions made to the extent the same is
29       claimed as the basis for the credit allowed pursuant to section 1.
30           (c) There shall be subtracted from federal adjusted gross income:
31           (i) Interest or dividend income on obligations or securities of any
32       authority, commission or instrumentality of the United States and its pos-
33       sessions less any related expenses directly incurred in the purchase of
34       such obligations or securities, to the extent included in federal adjusted
35       gross income but exempt from state income taxes under the laws of the
36       United States.
37           (ii) Any amounts received which are included in federal adjusted
38       gross income but which are specifically exempt from Kansas income tax-
39       ation under the laws of the state of Kansas.
40           (iii) The portion of any gain or loss from the sale or other disposition
41       of property having a higher adjusted basis for Kansas income tax purposes
42       than for federal income tax purposes on the date such property was sold
43       or disposed of in a transaction in which gain or loss was recognized for

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  1       purposes of federal income tax that does not exceed such difference in
  2       basis, but if a gain is considered a long-term capital gain for federal in-
  3       come tax purposes, the modification shall be limited to that portion of
  4       such gain which is included in federal adjusted gross income.
  5           (iv) The amount necessary to prevent the taxation under this act of
  6       any annuity or other amount of income or gain which was properly in-
  7       cluded in income or gain and was taxed under the laws of this state for a
  8       taxable year prior to the effective date of this act, as amended, to the
  9       taxpayer, or to a decedent by reason of whose death the taxpayer acquired
10       the right to receive the income or gain, or to a trust or estate from which
11       the taxpayer received the income or gain.
12           (v) The amount of any refund or credit for overpayment of taxes on
13       or measured by income or fees or payments in lieu of income taxes im-
14       posed by this state, or any taxing jurisdiction, to the extent included in
15       gross income for federal income tax purposes.
16           (vi) Accumulation distributions received by a taxpayer as a beneficiary
17       of a trust to the extent that the same are included in federal adjusted
18       gross income.
19           (vii) Amounts received as annuities under the federal civil service
20       retirement system from the civil service retirement and disability fund
21       and other amounts received as retirement benefits in whatever form
22       which were earned for being employed by the federal government or for
23       service in the armed forces of the United States.
24           (viii) Amounts received by retired railroad employees as a supple-
25       mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
26       et seq.
27           (ix) Amounts received by retired employees of a city and by retired
28       employees of any board of such city as retirement allowances pursuant to
29       K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
30       ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
31       amendments thereto.
32           (x) For taxable years beginning after December 31, 1976, the amount
33       of the federal tentative jobs tax credit disallowance under the provisions
34       of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
35       the amount of the targeted jobs tax credit and work incentive credit dis-
36       allowances under 26 U.S.C. 280 C.
37           (xi) For taxable years beginning after December 31, 1986, dividend
38       income on stock issued by Kansas Venture Capital, Inc.
39           (xii) For taxable years beginning after December 31, 1989, amounts
40       received by retired employees of a board of public utilities as pension and
41       retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
42       and amendments thereto.
43           (xiii) For taxable years beginning after December 31, 1993, the

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  1       amount of income earned on contributions deposited to an individual
  2       development account under K.S.A. 79-32,117h, and amendments thereto.
  3           (xiv) For all taxable years commencing after December 31, 1996, that
  4       portion of any income of a bank organized under the laws of this state or
  5       any other state, a national banking association organized under the laws
  6       of the United States, an association organized under the savings and loan
  7       code of this state or any other state, or a federal savings association or-
  8       ganized under the laws of the United States, for which an election as an
  9       S corporation under subchapter S of the federal internal revenue code is
10       in effect, which accrues to the taxpayer who is a stockholder of such
11       corporation and which is not distributed to the stockholders as dividends
12       of the corporation.
13           (d) There shall be added to or subtracted from federal adjusted gross
14       income the taxpayer's share, as beneficiary of an estate or trust, of the
15       Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
16       amendments thereto.
17           (e) The amount of modifications required to be made under this sec-
18       tion by a partner which relates to items of income, gain, loss, deduction
19       or credit of a partnership shall be determined under K.S.A. 79-32,131,
20       and amendments thereto, to the extent that such items affect federal
21       adjusted gross income of the partner.
22           Sec. 3. K.S.A. 79-32,117 is hereby repealed.
23           Sec. 4. This act shall take effect and be in force from and after its
24       publication in the statute book.
25