1999 Tax Law Changes - Corporate Income Tax XI. CORPORATE INCOME TAX G.S. 105-130.4(j)(3) - Conforming Change: This subsection was amended to add a reference to a "conversion" as a reason why a corporation would cease operations before the end of its income year. The change was made to reflect changes made in the corporation business laws concerning mergers, conversions, and consolidations. (Effective December 15, 1999; SB 835, s. 5.4, S.L. 99-369.) G.S. 105-130.5(b)(4) - Net Economic Loss Carryforward: This statute was amended in 1998 to allow net economic losses to be carried forward for 15 years instead of 5 years. The change first takes effect for tax year 1999. The change accompanies the change made in 1998 to G.S. 105-130.8. (Effective for taxable years beginning on or after January 1, 1999, and applies to losses incurred for taxable years beginning on or after January 1, 1993; HB 1326, s. 7, S.L. 98-171.) G.S. 105-130.5(b)(18) - Deduction for Income of Tobacco Settlement Trust: National tobacco companies have proposed to create a National Tobacco Growers Settlement Trust into which the companies will pay funds to provide payments to tobacco growers and allotment holders to offset the potential adverse economic consequences of likely changes in the tobacco market on the grower states such as North Carolina. This new subdivision provides a deduction from federal taxable income for any interest, investment earnings, and gains of a trust established by two or more manufacturers that signed a settlement agreement with the State to settle claims for damages attributable to a product of the manufacturers. The tax exemption will result in more funds being available to the beneficiaries. The exemption was added to both the corporate income tax laws and the individual income tax laws, in G.S. 105-134.6(b)(15), because it was uncertain when this exemption was enacted whether the trust would be established as a qualified settlement trust fund or as a regular trust. A qualified settlement trust fund is taxed as a corporation and a regular trust is taxed under the individual income tax laws. The exemption was added to both the corporate and individual income tax laws to cover both possibilities. (Effective for taxable years beginning on or after January 1, 1999; HB 74, s. 2, S.L. 99-333.) G.S. 105-130.8 - Economic Loss Carryforward: This statute was amended in 1998 to increase the number of years a net economic loss may be carried forward from five to fifteen years and to clarify the extent to which a return that is outside the statute of limitations can be adjusted for purposes of determining the net economic loss carryforward for a year that is within the statute of limitations. The fifteen-year carryforward is effective for tax years beginning on or after January 1, 1999, and applies to losses incurred for tax years beginning on or after January 1, 1993. For tax years 1999, 2000, and 2001, a loss that is more than 5 years old may offset no more than 15% of taxable income, but any remaining portion may be carried forward. For years beginning on or after January 1, 2002, the percentage limitation is repealed. The Secretary or the taxpayer can redetermine an item of income or loss originating in a closed year for the purpose of determining the correct amount of a net economic loss carried forward to a year that is open. (Effective for taxable years beginning on or after January 1, 1999; HB 1326, s. 6 and 8, S.L. 98-171.) G.S. 105-130.16 - Technical Change: This statute concerning the filing of a return was rewritten to incorporate more modern language, to divide it into three subsections, and to remove an obsolete reference to the specific wording of an affirmation set out in G.S. 105-130.17 before its revision in 1998. A reference to the penalty provisions of G.S. 105-236 was deleted because it is unnecessary. All of the penalties in G.S. 105-236 apply to a corporate return. (Effective July 22, 1999; SB 55, s. 22, S.L. 99-337.) G.S. 105-130.17(e) - Conforming Change: This subsection was amended to add a reference to a "conversion" as a reason why a corporation would cease operations before the end of its income year. The change was made to reflect changes made in the corporation business laws concerning mergers, conversions, and consolidations. (Effective December 15, 1999; SB 835, s. 5.5, S.L. 99-369.) G.S. 105-130.23 - Recodified: The credit for solar energy equipment in residential buildings was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.26 - Repealed: The credit for conversion of an industrial boiler to wood fuel was repealed because it was not used. Research established that it had never been claimed. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.27A - Repealed: The credit for construction of a peat facility was repealed because it was not used. Research established that it had never been claimed. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.29 - Repealed: The credit for construction of an olivine brick facility was repealed because it was not used. Research established that it had never been claimed. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.30 - Recodified: The credit for construction of a methane gas facility was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.31 - Recodified: The credit for installation of a wind energy device was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.32 - Recodified: The credit for installation of solar energy equipment for the production of heat or electricity in certain processes was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.33 - Technical Change and Recodification: A technical change added the missing word "generator" from subsection (a). Subsequently, the credit for installation of a hydroelectric generator was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Technical change effective July 22, 1999; SB 55, s. 23, S.L. 99-337; repeal and recodification effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.34 - Conservation Tax Credit Cap Raised: This section was amended in 1998 to increase the maximum annual credit allowed for donating conservation property from $250,000 to $500,000. The change first takes effect for tax year 1999. (Effective for taxable years beginning on or after January 1, 1999; SB 1366, s. 29A.13, S.L. 98-212.) G.S. 105-130.42 - Recodified: The credit for rehabilitating an historic structure was repealed and its provisions were incorporated in new Article 3D. (Effective for taxable years beginning on or after January 1, 1999; SB 251, S.L. 99-389.) G.S. 105-130.45 - New Credit for Manufacturing Cigarettes for Export: This new statute was enacted to provide a corporate income tax credit to R.J. Reynolds. Other taxpayers that meet the requirements of the statute will also be eligible for the tax credit. The credit is for manufacturing cigarettes in the United States for exportation to a foreign country. The amount of credit is determined by comparing the current year exportation volume to the volume exported during calendar year 1998. The following credit amounts are allowed based on the comparison: Percent of base year Credit per 1000 cigarettes exported 120% or more 40¢ 119% - 100% 35¢ 99% - 80% 30¢ 79% - 60% 25¢ 59% - 50% 20¢ Less than 50% none The credit is limited to $6,000,000 per taxpayer or 50% of the income tax liability, whichever is less. Any unused credit may be carried forward for five years. (Effective for taxable years beginning January 1, 1999, and is repealed effective for cigarettes exported on or after January 1, 2005; HB 74, s. 4, S.L. 99-333.) G.S. 105-131.7(d) - Conforming Change: The statute was amended to delete the reference to "Division" and substitute a reference to "Part". In 1998, the five Divisions in Article 4 were redesignated as Parts to establish uniform designations throughout the statutes. This needed conforming change was not made at that time. (Effective July 22, 1999; SB 55, s. 24, S.L. 99-337.)
1999 Tax Law Changes - Corporate Income Tax XI. CORPORATE INCOME TAX G.S. 105-130.4(j)(3) - Conforming Change: This subsection was amended to add a reference to a "conversion" as a reason why a corporation would cease operations before the end of its income year. The change was made to reflect changes made in the corporation business laws concerning mergers, conversions, and consolidations. (Effective December 15, 1999; SB 835, s. 5.4, S.L. 99-369.) G.S. 105-130.5(b)(4) - Net Economic Loss Carryforward: This statute was amended in 1998 to allow net economic losses to be carried forward for 15 years instead of 5 years. The change first takes effect for tax year 1999. The change accompanies the change made in 1998 to G.S. 105-130.8. (Effective for taxable years beginning on or after January 1, 1999, and applies to losses incurred for taxable years beginning on or after January 1, 1993; HB 1326, s. 7, S.L. 98-171.) G.S. 105-130.5(b)(18) - Deduction for Income of Tobacco Settlement Trust: National tobacco companies have proposed to create a National Tobacco Growers Settlement Trust into which the companies will pay funds to provide payments to tobacco growers and allotment holders to offset the potential adverse economic consequences of likely changes in the tobacco market on the grower states such as North Carolina. This new subdivision provides a deduction from federal taxable income for any interest, investment earnings, and gains of a trust established by two or more manufacturers that signed a settlement agreement with the State to settle claims for damages attributable to a product of the manufacturers. The tax exemption will result in more funds being available to the beneficiaries. The exemption was added to both the corporate income tax laws and the individual income tax laws, in G.S. 105-134.6(b)(15), because it was uncertain when this exemption was enacted whether the trust would be established as a qualified settlement trust fund or as a regular trust. A qualified settlement trust fund is taxed as a corporation and a regular trust is taxed under the individual income tax laws. The exemption was added to both the corporate and individual income tax laws to cover both possibilities. (Effective for taxable years beginning on or after January 1, 1999; HB 74, s. 2, S.L. 99-333.) G.S. 105-130.8 - Economic Loss Carryforward: This statute was amended in 1998 to increase the number of years a net economic loss may be carried forward from five to fifteen years and to clarify the extent to which a return that is outside the statute of limitations can be adjusted for purposes of determining the net economic loss carryforward for a year that is within the statute of limitations. The fifteen-year carryforward is effective for tax years beginning on or after January 1, 1999, and applies to losses incurred for tax years beginning on or after January 1, 1993. For tax years 1999, 2000, and 2001, a loss that is more than 5 years old may offset no more than 15% of taxable income, but any remaining portion may be carried forward. For years beginning on or after January 1, 2002, the percentage limitation is repealed. The Secretary or the taxpayer can redetermine an item of income or loss originating in a closed year for the purpose of determining the correct amount of a net economic loss carried forward to a year that is open. (Effective for taxable years beginning on or after January 1, 1999; HB 1326, s. 6 and 8, S.L. 98-171.) G.S. 105-130.16 - Technical Change: This statute concerning the filing of a return was rewritten to incorporate more modern language, to divide it into three subsections, and to remove an obsolete reference to the specific wording of an affirmation set out in G.S. 105-130.17 before its revision in 1998. A reference to the penalty provisions of G.S. 105-236 was deleted because it is unnecessary. All of the penalties in G.S. 105-236 apply to a corporate return. (Effective July 22, 1999; SB 55, s. 22, S.L. 99-337.) G.S. 105-130.17(e) - Conforming Change: This subsection was amended to add a reference to a "conversion" as a reason why a corporation would cease operations before the end of its income year. The change was made to reflect changes made in the corporation business laws concerning mergers, conversions, and consolidations. (Effective December 15, 1999; SB 835, s. 5.5, S.L. 99-369.) G.S. 105-130.23 - Recodified: The credit for solar energy equipment in residential buildings was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.26 - Repealed: The credit for conversion of an industrial boiler to wood fuel was repealed because it was not used. Research established that it had never been claimed. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.27A - Repealed: The credit for construction of a peat facility was repealed because it was not used. Research established that it had never been claimed. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.29 - Repealed: The credit for construction of an olivine brick facility was repealed because it was not used. Research established that it had never been claimed. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.30 - Recodified: The credit for construction of a methane gas facility was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.31 - Recodified: The credit for installation of a wind energy device was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.32 - Recodified: The credit for installation of solar energy equipment for the production of heat or electricity in certain processes was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.33 - Technical Change and Recodification: A technical change added the missing word "generator" from subsection (a). Subsequently, the credit for installation of a hydroelectric generator was repealed and its provisions were incorporated in new G.S. 105-129.16A, the consolidated credit in Article 3B for investing in renewable energy property. (Technical change effective July 22, 1999; SB 55, s. 23, S.L. 99-337; repeal and recodification effective for taxable years beginning on or after January 1, 2000; HB 1472, s. 1, S.L. 99-342.) G.S. 105-130.34 - Conservation Tax Credit Cap Raised: This section was amended in 1998 to increase the maximum annual credit allowed for donating conservation property from $250,000 to $500,000. The change first takes effect for tax year 1999. (Effective for taxable years beginning on or after January 1, 1999; SB 1366, s. 29A.13, S.L. 98-212.) G.S. 105-130.42 - Recodified: The credit for rehabilitating an historic structure was repealed and its provisions were incorporated in new Article 3D. (Effective for taxable years beginning on or after January 1, 1999; SB 251, S.L. 99-389.) G.S. 105-130.45 - New Credit for Manufacturing Cigarettes for Export: This new statute was enacted to provide a corporate income tax credit to R.J. Reynolds. Other taxpayers that meet the requirements of the statute will also be eligible for the tax credit. The credit is for manufacturing cigarettes in the United States for exportation to a foreign country. The amount of credit is determined by comparing the current year exportation volume to the volume exported during calendar year 1998. The following credit amounts are allowed based on the comparison: Percent of base year Credit per 1000 cigarettes exported 120% or more 40¢ 119% - 100% 35¢ 99% - 80% 30¢ 79% - 60% 25¢ 59% - 50% 20¢ Less than 50% none The credit is limited to $6,000,000 per taxpayer or 50% of the income tax liability, whichever is less. Any unused credit may be carried forward for five years. (Effective for taxable years beginning January 1, 1999, and is repealed effective for cigarettes exported on or after January 1, 2005; HB 74, s. 4, S.L. 99-333.) G.S. 105-131.7(d) - Conforming Change: The statute was amended to delete the reference to "Division" and substitute a reference to "Part". In 1998, the five Divisions in Article 4 were redesignated as Parts to establish uniform designations throughout the statutes. This needed conforming change was not made at that time. (Effective July 22, 1999; SB 55, s. 24, S.L. 99-337.)
