11 AN ACT relating to income taxation; authorizing credits for property tax
12 paid by certain telecommunications companies [and individuals;
13 providing credit for certain expenses incurred by food locker
14 plants and for certain expenses of small businesses; providing
15 credits therefrom for dependent education expenses and teach-
16 ing aid contributions; amending K.S.A. 1999 Supp. 79-32,117
17 and repealing the existing section].
18
19 Be it enacted by the Legislature of the State of Kansas:
20 Section 1. (a) For all taxable years commencing after December 31,
21 19992000, and with respect to property itially] acquired [and placed
22 into service] on and after January 1, 20002001, there shall be allowed
23 as a credit against the tax liability imposed by the Kansas income tax act
24 of a telecommunications company, as defined in K.S.A. 79-3271 and
25 amendments thereto, an amount equal to the difference between the
26 property tax levied and paid on property assessed at the 33% assessment
27 rate and the property tax which would be levied and paid on such property
28 if assessed at a 25% assessment rate.
29 (b) For all taxable years commencing after December 31, 2002, and
30 with respect to property acquired prior to January 1, 2000, there shall be
31 allowed as a credit against the tax liability imposed by the Kansas income
32 tax act of a telecommunications company, as defined in K.S.A. 79-3271
33 and amendments thereto, an amount equal to the difference between the
34 property tax levied and paid on property assessed at the 33% assessment
35 rate and the property tax which would be levied and paid on such property
36 if assessed at a 25% assessment rate, except that, for taxable year 2003,
37 the credit shall be equal to 25% of such amount, for taxable year 2004,
38 the credit shall be equal to 50% of such amount, for taxable year 2005,
39 the credit shall be equal to 75% of such amount and for taxable year 2006,
40 and all such taxable years thereafter, the credit shall be equal to 100% of
41 such amount.
42 (c)(b) If the amount of the tax credit determined under subsections
2
1 subsection (a) and (b) exceeds the tax liability for the telecommunica-
2 tions company for any taxable year, the amount thereof which exceeds
3 such tax liability shall be refunded to the telecommunications company.
4 If the telecommunications company is a corporation having an election
5 in effect under subchapter S of the federal internal revenue code, a part-
6 nership or a limited liability company, the credit provided by this section
7 shall be claimed by the shareholders of such corporation, the partners of
8 such partnership or the members of such limited liability company in the
9 same manner as such shareholders, partners or members account for their
10 proportionate shares of income or loss of the corporation, partnership or
11 limited liability company.
12 (d)(c) As used in this section, the term ``acquired'' shall not include
13 the transfer of property pursuant to an exchange for stock securities, or
14 the transfer of assets of one business entity to another due to a merger
15 or other consolidation.
16 [New Sec. 2. For all taxable years commencing after Decem-
17 ber 31, 1999, there shall be allowed as a credit against the tax
18 liability imposed under the Kansas income tax act upon an individ-
19 ual who is certificated to instruct and educate students of grades
20 kindergarten through 12 in an accredited school, whether public
21 or otherwise, an amount, not to exceed $100, equal to the purchase
22 costs of equipment, materials or other teaching aids for use in the
23 classroom to assist in the education of the students of such indi-
24 vidual. If the amount of such tax credit exceeds the individual's
25 income tax liability for the appropriate taxable year, such excess
26 amount shall be refunded.
27 [Sec. 3. K.S.A. 1999 Supp. 79-32,117 is hereby amended to
28 read as follows: 79-32,117. (a) The Kansas adjusted gross income
29 of an individual means such individual's federal adjusted gross in-
30 come for the taxable year, with the modifications specified in this
31 section.
32 [(b) There shall be added to federal adjusted gross income:
33 [(i) Interest income less any related expenses directly incurred
34 in the purchase of state or political subdivision obligations, to the
35 extent that the same is not included in federal adjusted gross in-
36 come, on obligations of any state or political subdivision thereof,
37 but to the extent that interest income on obligations of this state
38 or a political subdivision thereof issued prior to January 1, 1988,
39 is specifically exempt from income tax under the laws of this state
40 authorizing the issuance of such obligations, it shall be excluded
41 from computation of Kansas adjusted gross income whether or not
42 included in federal adjusted gross income. Interest income on ob-
43 ligations of this state or a political subdivision thereof issued after
3
1 December 31, 1987, shall be excluded from computation of Kansas
2 adjusted gross income whether or not included in federal adjusted
3 gross income.
4 [(ii) Taxes on or measured by income or fees or payments in
5 lieu of income taxes imposed by this state or any other taxing ju-
6 risdiction to the extent deductible in determining federal adjusted
7 gross income and not credited against federal income tax. This
8 paragraph shall not apply to taxes imposed under the provisions
9 of K.S.A. 79-1107 or 79-1108, and amendments thereto, for privi-
10 lege tax year 1995, and all such years thereafter.
11 [(iii) The federal net operating loss deduction.
12 [(iv) Federal income tax refunds received by the taxpayer if the
13 deduction of the taxes being refunded resulted in a tax benefit for
14 Kansas income tax purposes during a prior taxable year. Such re-
15 funds shall be included in income in the year actually received
16 regardless of the method of accounting used by the taxpayer. For
17 purposes hereof, a tax benefit shall be deemed to have resulted if
18 the amount of the tax had been deducted in determining income
19 subject to a Kansas income tax for a prior year regardless of the
20 rate of taxation applied in such prior year to the Kansas taxable
21 income, but only that portion of the refund shall be included as
22 bears the same proportion to the total refund received as the fed-
23 eral taxes deducted in the year to which such refund is attributable
24 bears to the total federal income taxes paid for such year. For
25 purposes of the foregoing sentence, federal taxes shall be consid-
26 ered to have been deducted only to the extent such deduction does
27 not reduce Kansas taxable income below zero.
28 [(v) The amount of any depreciation deduction or business ex-
29 pense deduction claimed on the taxpayer's federal income tax re-
30 turn for any capital expenditure in making any building or facility
31 accessible to the handicapped, for which expenditure the taxpayer
32 claimed the credit allowed by K.S.A. 79-32,177, and amendments
33 thereto.
34 [(vi) Any amount of designated employee contributions picked
35 up by an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919
36 and 74-4965, and amendments to such sections.
37 [(vii) The amount of any charitable contribution made to the
38 extent the same is claimed as the basis for the credit allowed pur-
39 suant to K.S.A. 79-32,196, and amendments thereto.
40 [(viii) The amount of any costs incurred for improvements to a
41 swine facility, claimed for deduction in determining federal ad-
42 justed gross income, to the extent the same is claimed as the basis
43 for any credit allowed pursuant to K.S.A. 1999 Supp. 79-32,204
4
1 and amendments thereto.
2 [(ix) The amount of any ad valorem taxes and assessments paid
3 and the amount of any costs incurred for habitat management or
4 construction and maintenance of improvements on real property,
5 claimed for deduction in determining federal adjusted gross in-
6 come, to the extent the same is claimed as the basis for any credit
7 allowed pursuant to K.S.A. 79-32,203 and amendments thereto.
8 [(x) The amount of any contribution made to an elementary or sec-
9 ondary school to the extent the same is claimed as the basis for the credit
10 allowed pursuant to section 2.
11 [(c) There shall be subtracted from federal adjusted gross
12 income:
13 [(i) Interest or dividend income on obligations or securities of
14 any authority, commission or instrumentality of the United States
15 and its possessions less any related expenses directly incurred in
16 the purchase of such obligations or securities, to the extent in-
17 cluded in federal adjusted gross income but exempt from state
18 income taxes under the laws of the United States.
19 [(ii) Any amounts received which are included in federal ad-
20 justed gross income but which are specifically exempt from Kansas
21 income taxation under the laws of the state of Kansas.
22 [(iii) The portion of any gain or loss from the sale or other
23 disposition of property having a higher adjusted basis for Kansas
24 income tax purposes than for federal income tax purposes on the
25 date such property was sold or disposed of in a transaction in which
26 gain or loss was recognized for purposes of federal income tax that
27 does not exceed such difference in basis, but if a gain is considered
28 a long-term capital gain for federal income tax purposes, the mod-
29 ification shall be limited to that portion of such gain which is in-
30 cluded in federal adjusted gross income.
31 [(iv) The amount necessary to prevent the taxation under this
32 act of any annuity or other amount of income or gain which was
33 properly included in income or gain and was taxed under the laws
34 of this state for a taxable year prior to the effective date of this act,
35 as amended, to the taxpayer, or to a decedent by reason of whose
36 death the taxpayer acquired the right to receive the income or
37 gain, or to a trust or estate from which the taxpayer received the
38 income or gain.
39 [(v) The amount of any refund or credit for overpayment of
40 taxes on or measured by income or fees or payments in lieu of
41 income taxes imposed by this state, or any taxing jurisdiction, to
42 the extent included in gross income for federal income tax
43 purposes.
5
1 [(vi) Accumulation distributions received by a taxpayer as a
2 beneficiary of a trust to the extent that the same are included in
3 federal adjusted gross income.
4 [(vii) Amounts received as annuities under the federal civil
5 service retirement system from the civil service retirement and
6 disability fund and other amounts received as retirement benefits
7 in whatever form which were earned for being employed by the
8 federal government or for service in the armed forces of the
9 United States.
10 [(viii) Amounts received by retired railroad employees as a
11 supplemental annuity under the provisions of 45 U.S.C. 228b (a)
12 and 228c (a)(1) et seq.
13 [(ix) Amounts received by retired employees of a city and by
14 retired employees of any board of such city as retirement allow-
15 ances pursuant to K.S.A. 13-14,106, and amendments thereto, or
16 pursuant to any charter ordinance exempting a city from the pro-
17 visions of K.S.A. 13-14,106, and amendments thereto.
18 [(x) For taxable years beginning after December 31, 1976, the
19 amount of the federal tentative jobs tax credit disallowance under
20 the provisions of 26 U.S.C. 280 C. For taxable years ending after
21 December 31, 1978, the amount of the targeted jobs tax credit and
22 work incentive credit disallowances under 26 U.S.C. 280 C.
23 [(xi) For taxable years beginning after December 31, 1986, div-
24 idend income on stock issued by Kansas Venture Capital, Inc.
25 [(xii) For taxable years beginning after December 31, 1989,
26 amounts received by retired employees of a board of public utili-
27 ties as pension and retirement benefits pursuant to K.S.A. 13-1246,
28 13-1246a and 13-1249 and amendments thereto.
29 [(xiii) For taxable years beginning after December 31, 1993,
30 the amount of income earned on contributions deposited to an
31 individual development account under K.S.A. 79-32,117h, and
32 amendments thereto.
33 [(xiv) For all taxable years commencing after December 31,
34 1996, that portion of any income of a bank organized under the
35 laws of this state or any other state, a national banking association
36 organized under the laws of the United States, an association or-
37 ganized under the savings and loan code of this state or any other
38 state, or a federal savings association organized under the laws of
39 the United States, for which an election as an S corporation under
40 subchapter S of the federal internal revenue code is in effect,
41 which accrues to the taxpayer who is a stockholder of such cor-
42 poration and which is not distributed to the stockholders as divi-
43 dends of the corporation.
6
1 [(xv) For all taxable years beginning after December 31, 1999,
2 amounts not exceeding $2,000 for each designated beneficiary
3 which are contributed to a family postsecondary education savings
4 account established under the Kansas postsecondary education
5 savings program for the purpose of paying the qualified higher
6 education expenses of a designated beneficiary at an institution of
7 postsecondary education. The terms and phrases used in this par-
8 agraph shall have the meaning respectively ascribed thereto by the
9 provisions of K.S.A. 1999 Supp. 75-643, and amendments thereto,
10 and the provisions of such section are hereby incorporated by ref-
11 erence for all purposes thereof.
12 [(d) There shall be added to or subtracted from federal ad-
13 justed gross income the taxpayer's share, as beneficiary of an estate
14 or trust, of the Kansas fiduciary adjustment determined under
15 K.S.A. 79-32,135, and amendments thereto.
16 [(e) The amount of modifications required to be made under
17 this section by a partner which relates to items of income, gain,
18 loss, deduction or credit of a partnership shall be determined un-
19 der K.S.A. 79-32,131, and amendments thereto, to the extent that
20 such items affect federal adjusted gross income of the partner.
21 [Sec. 4. K.S.A. 1999 Supp. 79-32,117 is hereby repealed.
22 [Sec. 5. (a) For all taxable years commencing after December
23 31, 1999, there shall be allowed as a credit against the tax liability
24 imposed by the Kansas income tax act upon a resident individual
25 who is 65 years of age or older an amount equal to the product of
26 the property tax actually and timely paid upon such individual's
27 principal dwelling during the appropriate income tax year multi-
28 plied by the applicable percentage determined in accordance with
29 the following schedule:
30 [Taxpayers KansasApplicable % of
31 [Adjusted Gross IncomeProperty tax paid
32
[$0 to $10,000
30%
33
[Over $10,000 but not over $20,000
20%
34
[Over $20,000 but not over $30,000
10%
35
[Over $30,000
0
36 [(b) As used in this section, ``taxpayer's Kansas adjusted gross
37 income'' shall be determined without regard to the modifications
38 specified by subsections (c)(i), (ii) regarding Kansas public em-
39 ployee retirement system retirement benefits, (vii), (ix) and (xii) of
40 K.S.A. 79-32,117, and amendments thereto, and shall not include
41 social security disability payments.
42 [(c) If the amount of the tax credit determined pursuant to this
43 section exceeds the individual's tax liability for any taxable year,
7
1 such excess amount shall be refunded to the individual.
2 [(d) Any individual who claims the credit allowable pursuant to
3 this section shall not be eligible to make a claim pursuant to the
4 homestead property tax refund act.
5 [Sec. 6. (a) For all taxable years commencing after December
6 31, 1997, there shall be allowed as a credit against the tax liability
7 of a taxpayer who operates a food locker plant imposed under the
8 Kansas income tax act, an amount equal to any expenses paid for
9 improvements in the facilities of such food locker plant required
10 by federal law. The credit allowed by this section in any taxable
11 year to the taxpayer shall not exceed $10,000. If the amount of
12 such tax credit exceeds the taxpayer's income tax liability for any
13 such taxable year, such excess amount may be carried over for
14 deduction from the taxpayer's tax liability in the next succeeding
15 taxable year or years until the total amount of the tax credit has
16 been deducted from tax liability.
17 [(b) As used in this section ``food locker plant'' means a plant
18 which: (1) Is inspected by the Kansas department of agriculture as
19 provided under the Kansas meat and poultry inspection act; and
20 [(2) prepares meat, meat food products, poultry or poultry
21 products which have been inspected and passed and which are
22 being prepared and sold in normal retail quantities; or
23 [(3) prepares such meat, meat products, poultry or poultry
24 products for the owner of such food locker plant.
25 [Sec. 7. (a) For all taxable years commencing after December
26 31, 2000, there shall be allowed as a credit against the tax liability
27 of a taxpayer who operates a food locker plant imposed under the
28 Kansas income tax act, an amount equal to 75% of the usual and
29 customary fee for custom processing of deer provided the meat is
30 donated to charity uses. The credit allowed by this section in any
31 taxable year to the taxpayer shall not exceed $10,000. If the
32 amount of such tax credit exceeds the taxpayer's income tax lia-
33 bility for any such taxable year, such excess amount may be carried
34 over for deduction from the taxpayer's tax liability in the next suc-
35 ceeding taxable year or years until the total amount of the tax
36 credit has been deducted from tax liability.
37 [(b) As used in this section ``food locker plant'' means a plant
38 which: (1) Is inspected by the Kansas department of agriculture as
39 provided under the Kansas meat and poultry inspection act; and
40 [(2) prepares meat, meat food products, poultry or poultry
41 products which have been inspected and passed and which are
42 being prepared and sold in normal retail quantities; or
43 [(3) prepares such meat, meat products, poultry or poultry
8
1 products for the owner of such food locker plant.]
2 [Sec. 8. (a) For all taxable years commencing after December
3 31, 1999, there shall be allowed as a credit against the tax liability
4 of an eligible small business imposed under the Kansas income tax
5 act, an amount equal to any amount paid to the United States small
6 business administration as a guaranty fee pursuant to the obtaining
7 of financing guaranteed by such administration. If such business
8 is a corporation having an election in effect under subchapter S of
9 the federal internal revenue code, a partnership or a limited lia-
10 bility company, the credit provided by this section shall be claimed
11 by the shareholders of such corporation, the partners of such part-
12 nership or the members of such limited liability company in the
13 same manner as such shareholders, partners or members account
14 for their proportionate shares of the income or loss of the corpo-
15 ration, partnership or limited liability company.
16 [(b) The credit authorized by this section shall only be claimed
17 against the tax liability resulting from income generated by the
18 small business. If an income tax return upon which this credit is
19 claimed includes adjusted gross income from sources other than
20 the small business, the credit shall only be allowed to be claimed
21 upon a percentage of the income tax liability which does not ex-
22 ceed the percentage of adjusted gross income generated by the
23 small business as compared to the total adjusted gross income
24 shown on the return.
25 [(c) If the amount of the tax credit allowed by this section ex-
26 ceeds the taxpayer's income tax liability for such taxable year, the
27 amount thereof which exceeds such tax liability may be carried
28 over for deduction from the taxpayer's income tax liability in the
29 next succeeding taxable year or years until the total amount of the
30 tax credit has been deducted from tax liability.
31 [(d) As used in this section, ``eligible small business'' shall have
32 the meaning ascribed thereto by subsection (b) of section 44 of the
33 federal internal revenue code without regard to subparagraph (2)
34 thereof.
35 Sec. 2.[9.] This act shall take effect and be in force from and after
36 its publication in the statute book.