HB1618: relative to net operating loss deductions under the business profits tax.

HB 1618-FN-A – AS INTRODUCED

2006 SESSION

06-2963

09/01

HOUSE BILL 1618-FN-A

AN ACT relative to net operating loss deductions under the business profits tax.

SPONSORS: Rep. Major, Rock 8; Sen. D'Allesandro, Dist 20

COMMITTEE: Ways and Means

ANALYSIS

This bill establishes that the net operating loss under the business profits tax shall be reduced by the business enterprise tax in the current tax year.

This bill was requested by the department of revenue administration.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

06-2963

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Six

AN ACT relative to net operating loss deductions under the business profits tax.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Business Profits Tax; Net Operating Loss Deductions. Amend the introductory paragraph of RSA 77-A:4, XIII to read as follows:

XIII. A deduction for the amount of the net operating loss carryover determined under section 172 of the United States Internal Revenue Code in effect on December 31, 1996. A net operating loss shall be apportioned in the year incurred according to RSA 77-A:3. The net operating loss shall be reduced by the business enterprise tax in the current tax year. Net operating losses may only be carried forward for the 10 years following the loss year. For taxable periods ending:

2 Effective Date. This act shall take effect July 1, 2006.

LBAO

06-2963

11/10/05

HB 1618-FN-A - FISCAL NOTE

AN ACT relative to net operating loss deductions under the business profits tax.

FISCAL IMPACT:

The Department of Revenue Administration indicates this bill will increase state unrestricted general fund revenue by $650,000 in FY 2007 and each year thereafter. There is no fiscal impact on state, county and local expenditures or county and local revenue.

METHODOLOGY:

The Department states that this bill establishes that the net operating loss under the business profits tax (BPT) shall be reduced by the business enterprise tax (BET) in the current year. The Department calculated that this tax change will increase BPT by $650,000 per year. The Department determined this by taking the net operating loss available after apportionment divided by the net operating loss available before apportionment to arrive at a ratio. This ratio was then multiplied times the amount of BET credit utilized as an offset against BPT. This result was then multiplied by the 8.5% BPT tax rate to arrive at the estimated revenue increase of $650,000. The Department states that this tax change can be administered within their existing budget and will impact only the general fund.