As Amended by House Committee
Session of 2000
HOUSE BILL No. 2972
By Representatives Phill Kline, Gilbert, Haley, Henderson,
Landwehr,
Powell, Rehorn, Spangler and Wagle
2-9
11 AN ACT enacting
the harnessing opportunity, performance and excel-
12 lence act; amending
K.S.A. 79-1109 and K.S.A. 1999 Supp. 40-2803,
13 40-2804, 74-5093,
74-5097, 74-5098 and 79-32,117 and repealing the
14 existing sections;
also repealing K.S.A. 1999 Supp. 74-50,100 and 74-
15 50,101.
16
17 Be it enacted by the Legislature of the
State of Kansas:
18 New Section
1. The purpose of this act is to promote and encourage
19 the improvement of the quality of life in
challenged neighborhoods by
20 allowing local resources to be invested in
implementing a locally devel-
21 oped and supported neighborhood
revitalization plan. This legislation,
22 allowing pilot programs, is intended to
focus on neighborhoods, not com-
23 mercial or industrial development. It is
vitally important that communities
24 are empowered to apply local solutions to
local problems and that state
25 government exercise greater faith in its
citizenry by allowing citizens in
26 these communities to apply their talents,
energy and creativity to building
27 a better future for their families and
neighbors. For this reason, this leg-
28 islation allows what otherwise would be
state resources, to be applied
29 locally for plans developed by the citizens
who will be directly affected
30 by the use of these funds.
31 New Sec.
2. (a) Any business firm as defined by K.S.A. 74-5093 and
32 amendments thereto which contributes to a
neighborhood revitalization
33 organization, shall be allowed a credit, as
provided in subsection (b),
34 against the tax imposed by the Kansas
income tax act, the tax on net
35 income of national banking associations,
state banks, trust companies or
36 savings and loan associations imposed under
article 11 of chapter 79 of
37 the Kansas Statutes Annotated, or the
premium tax on insurance com-
38 panies imposed under article 28 of chapter
40 of the Kansas Statutes
39 Annotated, if the board has been approved
to receive a grant pursuant to
40 K.S.A. 74-5097 and amendments thereto.
41 (b) The amount of
credit allowed pursuant to this section shall not
42 exceed 50% of the total amount contributed
during the taxable year by
43 the business firm to a board which has been
approved to receive a grant
2
1 pursuant to K.S.A. 74-5097 and
amendments thereto. Any tax credit not
2 used for the taxable year the
contribution was made may be carried over
3 for two succeeding taxable years or
until the total amount of credit is
4 used. Any portion of the credit
remaining unclaimed after two years shall
5 be refunded to the taxpayer. In no
event shall the total amount of credits
6 allowed under this section exceed
$5,000,000 for any one fiscal year.
7 (c) The
provisions of this section shall be applicable to all taxable
8 years beginning after December 31,
2001.
9 New Sec.
3. On and after July 1, 2000, there is hereby created, in
10 the state treasury, the urban
revitalization fund. All moneys in the urban
11 revitalization plan fund shall be expended
in accordance with appropri-
12 ations acts for the payment of grant money
awarded pursuant to K.S.A.
13 74-5097 and amendments thereto. Such moneys
shall be used only for
14 the implementation of the revitalization
plan.
15 New Sec.
4. (a) Subject to subsection (b), in each fiscal year, the
16 director of accounts and reports shall
transfer moneys, other than moneys
17 specifically dedicated to another source,
derived from the following
18 sources which are attributable to the
blighted areas challenged neigh-
19 borhoods subject to a revitalization
plan approved pursuant to K.S.A.
20 74-5097 and amendments thereto:
21 (1) State sales
tax under K.S.A. 79-3601 et seq., and amendments
22 thereto;
23 (2) state income
tax under K.S.A. 79-3201 et seq., and amendments
24 thereto; and
25 (3) state
property taxes under K.S.A. 72-6431, 76-6601 et seq.,
79-
26 2917 and 79-2918, and amendments
thereto.
27 Such money shall be
transferred from the state general fund and cred-
28 ited to the urban revitalization fund
created pursuant to section 2 and
29 amendments thereto. All transfers under
this section shall be considered
30 to be demand transfers from the state
general fund.
31 (b) Subject to
the provisions of subsection (d) on January 1, 2001,
32 and each year thereafter, the secretary of
revenue shall certify to the
33 director of accounts and reports the amount
of revenue attributable to
34 the blighted areas from the sources listed
in subsection (a).
35 (c) On January 1,
2001, and each year thereafter, an amount equal to
36 the moneys transferred pursuant to
subsection (a) shall be transferred
37 from the state economic initiatives
development fund and credited to the
38 state general fund.
39 (d) The amount of
money transferred pursuant to subsection (a) shall
40 not exceed $2,000,000
not be less than $2,000,000 or more than
41 $3,000,000 from the revenue sources
listed in subsection (a) which are
42 generated from a blighted
area challenged neighborhood.
43 (e) The
provisions of this section shall expire June 30, 2005.
3
1 Sec.
5. K.S.A. 1999 Supp. 40-2803 is hereby amended to read as
2 follows: 40-2803. For the purpose of
computing the tax imposed upon
3 life insurance companies under the
provisions of this act the term ``net
4 income'' shall mean the net taxable
income for the preceding calendar
5 year of such company as determined
under the provisions of section 802
6 of the federal internal
revenue code of 1954, as heretofore or hereafter
7 amended. The term ``net income''
shall not include dividends received
8 from stock issued by Kansas Venture
Capital, Inc. to the extent such
9 dividends are included in the Kansas
taxable income of a corporation,
10 interest income on obligations of this
state or a political subdivision
11 thereof which is specifically exempt from
income tax under the laws of
12 this state authorizing the issuance of such
obligations. The term ``net
13 income'' shall include the amount of any
charitable contribution made to
14 the extent the same is claimed as the basis
for the credit allowed pursuant
15 to K.S.A. 79-32,196 and amendments
thereto. The term ``net income'' shall
16 include the amount of any charitable
contribution made to the extent the
17 same is claimed as the basis for the
credit allowed pursuant to section
1
18 2 and amendments thereto. In
case the entire business of such company
19 is not transacted within this state, the
net income for the purposes of this
20 act shall be determined by multiplying such
net income by a fraction, the
21 numerator of which shall be the premiums
received from business trans-
22 acted within this state and the denominator
of which is the amount of
23 premiums received by such company from all
its business. Insurance com-
24 panies connected through stock ownership,
which operate under common
25 control and management are hereby
authorized to make a consolidated
26 return for the purpose of determining ``net
income'' under the provisions
27 of this section and intercompany
transactions shall not be considered or
28 included for the purpose of such
determination.
29 Sec.
6. K.S.A. 1999 Supp. 40-2804 is hereby amended to read as
30 follows: 40-2804. For the purpose of
computing the tax imposed under
31 the provisions of this act the term ``net
income'' as applied to a domestic
32 fire and casualty insurance company shall
mean the amount required to
33 be reported as ``net income'' in the annual
statement form required to be
34 filed by such company with the Kansas
commissioner of insurance under
35 the provisions of K.S.A. 40-225, and
amendments thereto; as applied to
36 a domestic mutual hail insurance company
the term ``net income'' shall
37 mean the amount required to be reported as
``net income,'' annual in-
38 crease in reserve fund in section VII of
the annual statement form re-
39 quired to be filed by such company with the
Kansas commissioner of
40 insurance under the provisions of K.S.A.
40-225, and amendments
41 thereto; and as applied to a domestic
county mutual fire insurance com-
42 pany the term ``net income'' shall mean the
amount required to be re-
43 ported as ``net income,'' annual net gain
in its combined reserve and
4
1 general funds in section VII of the
annual statement form required to be
2 filed by such company with the Kansas
commissioner of insurance under
3 the provisions of K.S.A. 40-225, and
amendments thereto. If any such
4 domestic fire and casualty insurance
company, domestic mutual hail in-
5 surance company, or domestic county
mutual fire insurance company
6 does business in states other than
Kansas its ``net income'' shall be de-
7 termined by the proportion of net
premiums (gross premiums less can-
8 cellations) received from business
written in Kansas compared to total
9 net premiums received from all its
business. Insurance companies con-
10 nected through stock ownership with a
common parent corporation,
11 which operate under common control and
management are hereby au-
12 thorized to make a consolidated return for
the purpose of determining
13 ``net income'' under the provisions of this
section and intercompany trans-
14 actions shall not be considered or included
for the purpose of such de-
15 termination. If a domestic insurance
company is exempt for any reason
16 from filing an annual statement with the
Kansas insurance department,
17 its net income shall be determined in the
same manner as herein pro-
18 vided. For the purposes of this section,
the term ``net income'' shall not
19 include dividends received from stock
issued by Kansas Venture Capital,
20 Inc. to the extent such dividends are
included in the Kansas taxable in-
21 come of a corporation, interest income on
obligations of this state or a
22 political subdivision thereof which is
specifically exempt from income tax
23 under the laws of this state authorizing
the issuance of such obligations.
24 For the purposes of this section, the term
``net income'' shall include the
25 amount of any charitable contribution made
to the extent the same is
26 claimed as the basis for the credit allowed
pursuant to K.S.A. 79-32,196
27 and amendments thereto. The term
``net income'' shall include the amount
28 of any charitable contribution made to
the extent the same is claimed as
29 the basis for the credit allowed
pursuant to section 1 2 and
amendments
30 thereto.
31 Sec.
7. K.S.A. 1999 Supp. 74-5093 is hereby amended to read as
32 follows: 74-5093. As used in this act:
33
(a) ``Blighted area'' has the meaning ascribed to it
in K.S.A. 12-1771
34 and amendments
thereto;
35 (a) ``Business
firm'' means any business entity authorized to do busi-
36 ness in the state of Kansas which is
subject to the state income tax imposed
37 by the provisions of the Kansas income
tax act, any national banking
38 association, state bank, trust company
or savings and loan association
39 paying an annual tax on its net income
pursuant to article 11 of chapter
40 79 of the Kansas Statutes Annotated, or
any insurance company paying
41 an annual tax on its net income pursuant
to article 28 of chapter 40 of
42 the Kansas Statutes Annotated;
43
(b) ``challenged neighborhood'' means:
5
1 (1) An
area in which there is a predominance of buildings or im-
2 provements which by reason of
dilapidation, deterioration, obsolescence,
3 inadequate provision for
ventilation, light, air, sanitation, or open spaces,
4 high density of population and
overcrowding, the existence of conditions
5 which endanger life or property by
fire and other causes or a combination
6 of such factors, is conducive to
ill health, transmission of disease, infant
7 mortality, juvenile delinquency or
crime and which is detrimental to the
8 public health, safety or
welfare;
9 (2) an
area which by reason of the presence of a substantial
number
10 of deteriorated or deteriorating
structures, defective or inadequate streets,
11 incompatible land use relationships,
faulty lot layout in relation to size,
12 adequacy, accessibility or usefulness,
unsanitary or unsafe conditions, de-
13 terioration of site or other
improvements, diversity of ownership, tax or
14 special assessment delinquency exceeding
the actual value of the land,
15 defective or unusual conditions of
title, or the existence of conditions
16 which endanger life or property by fire
and other causes, or a combination
17 of such factors, substantially impairs
or arrests the sound growth of a
18 municipality, retards the provision of
housing accommodations or con-
19 stitutes an economic or social liability
and is detrimental to the public
20 health, safety or welfare in its present
condition and use; or
21 (3) an area in
which there is a predominance of buildings or improve-
22 ments which by reason of age, history,
architecture or significance should
23 be preserved or restored to productive
use; and
24 (4) an area
which contains not less than 80% of land that is zoned
25 for residential use.
26 (b)
(c) ``committee'' means the community strategic
planning grant
27 committee established by K.S.A. 74-5095 and
amendments thereto;
28 (c)
(d) ``metropolitan county'' means the county of
Douglas, Johnson,
29 Leavenworth, Sedgwick, Shawnee or
Wyandotte;
30 (d)
(e) ``neighborhood revitalization organization'' means
any group
31 organized for the purpose of encouraging
economic development or per-
32 forming community services in a
blighted area challenged neighborhood
33 of a metropolitan county
and which:
34 (1) Has
obtained a ruling from the internal revenue service of the
35 United States department of the treasury
that such organization is exempt
36 from income taxation under the
provisions of section 501(c)(3) of the fed-
37 eral internal revenue code of 1986;
or
38 (2) is
incorporated in the state of Kansas or another state as a
non-
39 stock, nonprofit corporation; or
40 (3) has been
designated as a community development corporation by
41 the United States government under the
provisions of title VII of the
42 economic opportunity act of 1964;
or
43 (4) is
chartered by the United States congress; and
6
1
(e) (f) ``nonmetropolitan county''
means any county which is not a
2 metropolitan county.
3 Sec.
8. K.S.A. 1999 Supp. 74-5097 is hereby amended to read as
4 follows: 74-5097. (a) Subject to the
provisions of appropriations acts and
5 in accordance with the provisions of
this act, the department of commerce
6 and housing may
shall provide planning grants and
action grants to city-
7 county economic development
organizations located in nonmetropolitan
8 counties, for the development
and implementation of countywide eco-
9 nomic developmentstrategy
plans or to neighborhood revitalization or-
10 ganizations, in metropolitan
counties, for the planning and implementa-
11 tion of urban economic
development revitalization plans.
12 (b) The committee
shall establish grant eligibility criteria for appli-
13 cants in both metropolitan and
nonmetropolitan counties, and shall ad-
14 minister the competitive selection process
for the awarding of planning
15 grants and action grants.
The committee shall submit its recommenda-
16 tions for grant awards to the
secretary of commerce and housing for final
17 determination and
award.
18 (1) Grant
applicants from nonmetropolitan counties shall be
subject
19 to the following conditions.
Planning grants shall be for the development
20 of countywide economic development
strategy plans. No planning grant
21 shall exceed $15,000 for any single
county economic development plan.
22 An additional award for an amount
not to exceed $5,000 may be granted
23 for each additional county
participating in the development of a joint
24 multi-county strategic economic
development plan, except that under no
25 circumstances shall the total
planning grant exceed $35,000. Any city-
26 county economic development
organization receiving a planning grant
27 shall be required to provide
additional funds equaling 25% of the amount
28 of the planning grant. Action
grants shall be for the implementation of
29 countywide economic development
strategy plans. Total action grants
30 shall not exceed $25,000 for any
single county action grant application.
31 An additional award for an amount
not to exceed $10,000 may be granted
32 for each additional county
participating in a joint multi-county action
33 grant implementation effort, except
that under no circumstances shall the
34 action grant totals exceed $65,000.
Any city-county economic develop-
35 ment organization receiving a grant
shall be required to provide additional
36 funds equaling 100% of the amount
of the action grant. Not more than
37 one planning grant may be awarded
to any one county or combination of
38 counties.
39 (1) An
application shall include:
40 (A) The name
and address of the organization;
41 (B) the name
and address of each member of the organization;
42 (C) the names
of the officers of the organization;
43 (D) a copy of
the organization's by-laws;
7
1 (E) a
copy of the organization's strategic plan for
revitalization;
2 (F) the
resolution of approval required by paragraph (4);
3 (G) the
identification of any private involvement in the
implementa-
4 tion of the plan, including, but
not limited to, monetary or in-kind
5 donations;
6 (H) a
description of the challenged neighborhood to be
revitalized
7 including maps, drawings and
photographs;
8 (I) the
demographics of the challenged neighborhood to be
revitalized;
9 (J) a
list of the names and addresses of the people who were
involved
10 in preparation of the revitalization
plan;
11 (K) the method
to be used to revise the economic
development revi-
12 talization plan, if
necessary;
13 (L) the method
or criteria to be used to measure the success of the
14 economic
development revitalization plan;
15 (M) the
identification of other governmental resources available to
or
16 which will be used by the
organization;
17 (N) the method
of continued community input in the revitalization of
18 the challenged neighborhood;
19 (O) a copy of
the annual budget of the organization;
20 (P) a
procedure for an annual financial review or audit of the
activ-
21 ities of the board in relation to the
challenged neighborhood; and
22 (Q) any other
information deemed necessary by the committee.
23 (2) When
selecting an application for approval the committee's con-
24 sideration shall include, but not be
limited to:
25 (A) The amount
of local investment in the revitalization plan, both
26 private and public;
27 (B) the amount
of local community involvement, financially and
28 otherwise;
29 (C) whether
there is a commitment to the continuance of existing
30 programs in the blighted
area challenged neighborhood under the
re-
31 vitalization plan;
32 (D) whether
there is an enhancement of existing programs in the
33 blighted area
challenged neighborhood under the revitalization
plan;
34 (E) the
percentage of the organization's budget for salary and
admin-
35 istration; and
36 (F) the extent
to which the plan will improve the quality of life of the
37 residents of the challenged
neighborhood.
38 (3) The
secretary shall approve three
applications one application
39 from those recommendations made by the
committee.
40 (2)
(4) Neighborhood revitalization organizations
from metropolitan
41 counties shall be subject
to the following conditions.: (A) The
officers
42 of the revitalization organization shall
be elected annually com-
43 mencing after the organization's first
year of operation. The offi-
8
1 cers shall be elected by vote of
electors residing in the challenged
2 neighborhood as identified in the
revitalization plan.
3 (B) Prior
to applying to the committee, the neighborhood revitalization
4 organization must submit its
application to a local economic development
5 organization designated by
the county commission of the county the gov-
6 erning body of the city in
which the organization challenged
neighborhood
7 is located. The local
economic development organization No plan
shall
8 require the condemnation
of existing residential property. The
governing
9 body shall review the application
to ensure that the plan is consistent with
10 the city's strategic plan. If the city
has not adopted a strategic plan, the
11 governing body shall review the
application and determine whether the
12 application should be funded on the basis
of local needs and priorities.
13 No plan shall
require allow the condemnation of
existing occupied res-
14 idential property. The governing body
shall signify its approval of an
15 application by passage of a
resolution. If the application is approved by
16 the local economic development
organization and endorsed by resolution
17 by the county commission and
the governing body of the city in which
18 the blighted area
challenged neighborhood is located, the application
19 shall be forwarded to the committee for
further consideration. Planning
20 grants shall be for the development
of urban economic development strat-
21 egy plans. No planning grant shall
exceed $15,000 for any single urban
22 economic development plan. Any
neighborhood revitalization organiza-
23 tion receiving a planning grant
shall be required to provide additional
24 funds equaling 25% of the amount of
the planning grant. Action grants
25 shall be for the implementation of
urban economic development strategy
26 plans. Total action grants shall
not exceed $25,000 for any single urban
27 action grant application. Any
neighborhood revitalization organization re-
28 ceiving a grant shall be required
to provide additional funds equaling
29 100% of the amount of the action
grant. Not more than one planning
30 grant may be awarded to any one
neighborhood revitalization
31 organization.
32 (3) No
funds shall be granted under this act to applicants from
met-
33 ropolitan counties unless such
funds are specifically appropriated for that
34 purpose.
35 (4) The
secretary of commerce and housing may authorize a
recipient
36 of a planning grant, who has
unexpended funds from such planning grant,
37 to apply such funds to the
implementation of the recipient's approved
38 strategic economic development
plan. Any unexpended planning grant
39 funds applied to the implementation
of such strategic economic devel-
40 opment plan shall require the
appropriate 100% match. Application of
41 the unexpended planning grant funds
to the implementation of the stra-
42 tegic economic development plan may
result in the reduction of any sub-
43 sequent action grant awarded to the
recipient.
9
1
(c) The secretary of commerce and housing may enter into an
agree-
2 ment with economic
development service providers to provide reim-
3 bursement to such providers
for expenses incurred in strategic planning
4 activities which do not
relate to the facilitation of a specific strategic
plan.
5 Such activities may include,
but are not limited to, preapplication con-
6 sulting and maintenance of
economic development data bases. Such ex-
7 penses shall be paid on a per
project basis and must be preapproved by
8 the secretary.
9
(d) Each city-county economic development organization or
neigh-
10 borhood revitalization organization
which has received a planning grant
11 beginning on and after July 1,
1990, shall assess the effectiveness of the
12 strategic planning process under
this program and the local preparedness
13 in engaging in such process. Such
assessment shall be submitted to the
14 Kansas department of commerce and
housing within three months after
15 completion of a strategic plan. The
status report developed pursuant to
16 subsection (f) shall include a
summary of all strategic plan assessments
17 received for a twelve-month period
prior to the submittal of the report
18 to the joint committee on economic
development. However, the summary
19 may not include assessments
submitted within 30 days of the submittal
20 of the department's report. Any
such assessments shall be included in a
21 subsequent annual
report.
22 (c) Beginning
in fiscal year 2001 and each year thereafter, each
of the
23 three boards whose applications
have the board whose application has
24 been selected for approval by the
secretary shall receive a grant not to
25 exceed
$2,000,000 $3,000,000. Such money
shall be used for the purposes
26 specified in the board's plan.
27 (d) The
secretary shall adopt any rules and regulations necessary
to
28 implement the provisions of this
section.
29 (e) Each
city-county economic development organization or
neigh-
30 borhood revitalization organization which
has received an action a grant
31 beginning on and after July 1,
1990 2001, shall assess the extent to
which
32 goals identified in its
action economic
development revitalization plan
33 application have been met. Such assessment
shall rely on quantifiable
34 criteria to the greatest possible degree.
Such assessment shall be submit-
35 ted to the Kansas department of commerce
and housing within three
36 months after intended actions identified
for implementation in the action
37 grant application
plan have been undertaken. The status report developed
38 pursuant to subsection (f) shall include a
summary of all action plan as-
39 sessments received for a twelve-month
period prior to the submittal of
40 the report to the joint committee on
economic development. However,
41 the summary may not include assessments
submitted within 30 days of
42 the submittal of the department's report.
Any such assessments shall be
43 included in a subsequent annual report.
10
1 (f) As a
part of the annual report required pursuant to K.S.A. 1999
2 Supp. 74-5049, and amendments
thereto, the Kansas department of com-
3 merce and housing shall present a
status report of activities including,
4 but not limited to, specifics
of community strengths and weaknesses and
5 planning issues and
strategies undertaken under the provisions of this
act
6 to the joint committee on economic
development.
7 Sec.
9. K.S.A. 1999 Supp. 74-5098 is hereby amended to read as
8 follows: 74-5098. City-county
economic development organizations or
9 neighborhood
Neighborhood revitalization organizations may use
plan-
10 ning grant proceeds
for: The acquisition of technical assistance for strat-
11 egy development
activities,; identification of specific
projects, and other
12 related services from educational
institutions or other economic devel-
13 opment service providers.
City-county economic development organiza-
14 tions or neighborhood economic
development organizations can use ac-
15 tion grants for;
hiring of technical assistance, implementation, evaluation
16 and reassessment of strategies, purchasing
of equipment and other serv-
17 ices, and economic development
activities undertaken by public-private
18 partnerships as authorized for
cities and for counties pursuant to law.
19 Action grants shall not be used for
the purchase or lease of land or the
20 purchase, lease or construction of
buildings or payment of salaries and
21 benefits for permanent employees of
any public or quasi-public agency
22 and such other services, real or
personal property as may be prescribed
23 in the economic
development revitalization plan.
24 Sec. 10. K.S.A. 79-1109
is hereby amended to read as follows:
25 79-1109. As used in this act ``net
income'' shall mean the Kansas
26 taxable income of corporations as
defined in K.S.A. 79-32,138, and
27 amendments thereto, determined without
regard to the provisions
28 of K.S.A. 79-32,139, and amendments
thereto, and the provisions
29 of paragraph (xiv) of subsection (c) of
K.S.A. 79-32,117, and amend-
30 ments thereto, plus income received from
obligations or securities
31 of the United States or any authority,
commission or instrumen-
32 tality of the United States and its
possessions to the extent not
33 included in Kansas taxable income of a
corporation and income
34 received from obligations of this state
or a political subdivision
35 thereof which is exempt from income tax
under the laws of this
36 state; less dividends received from
stock issued by Kansas Venture
37 Capital, Inc. to the extent such
dividends are included in the Kan-
38 sas taxable income of a corporation,
interest paid on time deposits
39 or borrowed money and dividends paid on
withdrawable shares of
40 savings and loan associations to the
extent not deducted in arriving
41 at Kansas taxable income of a
corporation.
42 Savings and loan
associations shall be allowed as a deduction
43 from net income, as hereinbefore
defined, a reserve established
11
1 for the sole purpose of meeting or
absorbing losses, in the amount
2 of 5% of such net income
determined without benefit of such de-
3 duction, but no further deduction
shall be allowed for losses when
4 actually sustained and charged
against such reserve, unless such
5 reserve shall have been fully
absorbed thereby; or, in the alter-
6 native, a reasonable addition to a
reserve for losses based on past
7 experience, under such rules and
regulations as the secretary of
8 revenue may prescribe.
9 The
term ``net income'' shall include the amount of any charitable
con-
10 tribution made to the extent the same is
claimed as the basis for the credit
11 allowed pursuant to section 2.
12 Sec.
10. 11. K.S.A. 1999 Supp.
79-32,117 is hereby amended to read
13 as follows: 79-32,117. (a) The Kansas
adjusted gross income of an indi-
14 vidual means such individual's federal
adjusted gross income for the tax-
15 able year, with the modifications specified
in this section.
16 (b) There shall
be added to federal adjusted gross income:
17 (i) Interest
income less any related expenses directly incurred in the
18 purchase of state or political subdivision
obligations, to the extent that
19 the same is not included in federal
adjusted gross income, on obligations
20 of any state or political subdivision
thereof, but to the extent that interest
21 income on obligations of this state or a
political subdivision thereof issued
22 prior to January 1, 1988, is specifically
exempt from income tax under the
23 laws of this state authorizing the issuance
of such obligations, it shall be
24 excluded from computation of Kansas
adjusted gross income whether or
25 not included in federal adjusted gross
income. Interest income on obli-
26 gations of this state or a political
subdivision thereof issued after Decem-
27 ber 31, 1987, shall be excluded from
computation of Kansas adjusted
28 gross income whether or not included in
federal adjusted gross income.
29 (ii) Taxes on or
measured by income or fees or payments in lieu of
30 income taxes imposed by this state or any
other taxing jurisdiction to the
31 extent deductible in determining federal
adjusted gross income and not
32 credited against federal income tax. This
paragraph shall not apply to taxes
33 imposed under the provisions of K.S.A.
79-1107 or 79-1108, and amend-
34 ments thereto, for privilege tax year 1995,
and all such years thereafter.
35 (iii) The federal
net operating loss deduction.
36 (iv) Federal
income tax refunds received by the taxpayer if the de-
37 duction of the taxes being refunded
resulted in a tax benefit for Kansas
38 income tax purposes during a prior taxable
year. Such refunds shall be
39 included in income in the year actually
received regardless of the method
40 of accounting used by the taxpayer. For
purposes hereof, a tax benefit
41 shall be deemed to have resulted if the
amount of the tax had been de-
42 ducted in determining income subject to a
Kansas income tax for a prior
43 year regardless of the rate of taxation
applied in such prior year to the
12
1 Kansas taxable income, but only that
portion of the refund shall be in-
2 cluded as bears the same proportion
to the total refund received as the
3 federal taxes deducted in the year to
which such refund is attributable
4 bears to the total federal income
taxes paid for such year. For purposes
5 of the foregoing sentence, federal
taxes shall be considered to have been
6 deducted only to the extent such
deduction does not reduce Kansas tax-
7 able income below zero.
8 (v) The
amount of any depreciation deduction or business expense
9 deduction claimed on the taxpayer's
federal income tax return for any
10 capital expenditure in making any building
or facility accessible to the
11 handicapped, for which expenditure the
taxpayer claimed the credit al-
12 lowed by K.S.A. 79-32,177, and amendments
thereto.
13 (vi) Any amount
of designated employee contributions picked up by
14 an employer pursuant to K.S.A. 12-5005,
20-2603, 74-4919 and 74-4965,
15 and amendments to such
sections thereto.
16 (vii) The amount
of any charitable contribution made to the extent
17 the same is claimed as the basis for the
credit allowed pursuant to K.S.A.
18 79-32,196, and amendments thereto.
19 (viii) The amount
of any costs incurred for improvements to a swine
20 facility, claimed for deduction in
determining federal adjusted gross in-
21 come, to the extent the same is claimed as
the basis for any credit allowed
22 pursuant to K.S.A. 1999 Supp. 79-32,204 and
amendments thereto.
23 (ix) The amount
of any ad valorem taxes and assessments paid and
24 the amount of any costs incurred for
habitat management or construction
25 and maintenance of improvements on real
property, claimed for deduc-
26 tion in determining federal adjusted gross
income, to the extent the same
27 is claimed as the basis for any credit
allowed pursuant to K.S.A. 79-32,203
28 and amendments thereto.
29 (x) The amount
of any charitable contribution made to the extent the
30 same is claimed as the basis for the
credit allowed pursuant to section 1
31 and amendments thereto.
32 (c) There shall
be subtracted from federal adjusted gross income:
33 (i) Interest or
dividend income on obligations or securities of any
34 authority, commission or instrumentality of
the United States and its pos-
35 sessions less any related expenses directly
incurred in the purchase of
36 such obligations or securities, to the
extent included in federal adjusted
37 gross income but exempt from state income
taxes under the laws of the
38 United States.
39 (ii) Any amounts
received which are included in federal adjusted
40 gross income but which are specifically
exempt from Kansas income tax-
41 ation under the laws of the state of
Kansas.
42 (iii) The portion
of any gain or loss from the sale or other disposition
43 of property having a higher adjusted basis
for Kansas income tax purposes
13
1 than for federal income tax purposes
on the date such property was sold
2 or disposed of in a transaction in
which gain or loss was recognized for
3 purposes of federal income tax that
does not exceed such difference in
4 basis, but if a gain is considered a
long-term capital gain for federal in-
5 come tax purposes, the modification
shall be limited to that portion of
6 such gain which is included in
federal adjusted gross income.
7 (iv) The
amount necessary to prevent the taxation under this act of
8 any annuity or other amount of income
or gain which was properly in-
9 cluded in income or gain and was
taxed under the laws of this state for a
10 taxable year prior to the effective date of
this act, as amended, to the
11 taxpayer, or to a decedent by reason of
whose death the taxpayer acquired
12 the right to receive the income or gain, or
to a trust or estate from which
13 the taxpayer received the income or
gain.
14 (v) The amount of
any refund or credit for overpayment of taxes on
15 or measured by income or fees or payments
in lieu of income taxes im-
16 posed by this state, or any taxing
jurisdiction, to the extent included in
17 gross income for federal income tax
purposes.
18 (vi) Accumulation
distributions received by a taxpayer as a beneficiary
19 of a trust to the extent that the same are
included in federal adjusted
20 gross income.
21 (vii) Amounts
received as annuities under the federal civil service
22 retirement system from the civil service
retirement and disability fund
23 and other amounts received as retirement
benefits in whatever form
24 which were earned for being employed by the
federal government or for
25 service in the armed forces of the United
States.
26 (viii) Amounts
received by retired railroad employees as a supple-
27 mental annuity under the provisions of 45
U.S.C. 228b (a) and 228c (a)(1)
28 et seq.
29 (ix) Amounts
received by retired employees of a city and by retired
30 employees of any board of such city as
retirement allowances pursuant to
31 K.S.A. 13-14,106, and amendments thereto,
or pursuant to any charter
32 ordinance exempting a city from the
provisions of K.S.A. 13-14,106, and
33 amendments thereto.
34 (x) For taxable
years beginning after December 31, 1976, the amount
35 of the federal tentative jobs tax credit
disallowance under the provisions
36 of 26 U.S.C. 280 C. For taxable years
ending after December 31, 1978,
37 the amount of the targeted jobs tax credit
and work incentive credit dis-
38 allowances under 26 U.S.C. 280 C.
39 (xi) For taxable
years beginning after December 31, 1986, dividend
40 income on stock issued by Kansas Venture
Capital, Inc.
41 (xii) For taxable
years beginning after December 31, 1989, amounts
42 received by retired employees of a board of
public utilities as pension and
43 retirement benefits pursuant to K.S.A.
13-1246, 13-1246a and 13-1249
14
1 and amendments thereto.
2 (xiii) For
taxable years beginning after December 31, 1993, the
3 amount of income earned on
contributions deposited to an individual
4 development account under K.S.A.
79-32,117h, and amendments thereto.
5 (xiv) For
all taxable years commencing after December 31, 1996, that
6 portion of any income of a bank
organized under the laws of this state or
7 any other state, a national banking
association organized under the laws
8 of the United States, an association
organized under the savings and loan
9 code of this state or any other
state, or a federal savings association or-
10 ganized under the laws of the United
States, for which an election as an
11 S corporation under subchapter S of the
federal internal revenue code is
12 in effect, which accrues to the taxpayer
who is a stockholder of such
13 corporation and which is not distributed to
the stockholders as dividends
14 of the corporation.
15 (xv) For all
taxable years beginning after December 31, 1999,
16 amounts not exceeding $2,000 for each
designated beneficiary which are
17 contributed to a family postsecondary
education savings account estab-
18 lished under the Kansas postsecondary
education savings program for the
19 purpose of paying the qualified higher
education expenses of a designated
20 beneficiary at an institution of
postsecondary education. The terms and
21 phrases used in this paragraph shall have
the meaning respectively as-
22 cribed thereto by the provisions of K.S.A.
1999 Supp. 75-643, and amend-
23 ments thereto, and the provisions of such
section are hereby incorporated
24 by reference for all purposes thereof.
25 (d) There shall
be added to or subtracted from federal adjusted gross
26 income the taxpayer's share, as beneficiary
of an estate or trust, of the
27 Kansas fiduciary adjustment determined
under K.S.A. 79-32,135, and
28 amendments thereto.
29 (e) The amount of
modifications required to be made under this sec-
30 tion by a partner which relates to items of
income, gain, loss, deduction
31 or credit of a partnership shall be
determined under K.S.A. 79-32,131,
32 and amendments thereto, to the extent that
such items affect federal
33 adjusted gross income of the
partner.
34 Sec. 11.
12. K.S.A. 79-1109 and K.S.A. 1999 Supp.
40-2803, 40-
35 2804, 74-5093, 74-5097, 74-5098, 74-50,100,
74-50,101 and 79-32,117 are
36 hereby repealed.
37 Sec.
12. 13. This act shall take
effect and be in force from and after
38 its publication in the statute book.