GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 15

Short Title:  Conform Tax on Restored Income.	(Public)

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Sponsors: Representatives Cansler, Blue, Capps, Church, Neely, Shubert; Aldridge, Creech, Davis, Hall, Hardy, Ives, McComas, and McMahan.

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Referred to:  Finance.

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February 3, 1997

A BILL TO BE ENTITLED
AN ACT TO CONFORM TO FEDERAL TAX TREATMENT OF INCOME RESTORED UNDER A CLAIM OF RIGHT.
The General Assembly of North Carolina enacts:
Section 1.  Article 9 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-266.2. Refund of tax paid on substantial income later restored.
This section applies to a taxpayer who is subject to the alternative tax under § 1341(a)(5) of the Code for the current taxable year because the taxpayer restored an item of income that had been included in the taxpayer's gross income for an earlier taxable year.  For the purpose of Article 4 of this Chapter, the taxpayer is considered to have made a payment of tax for the current taxable year on the later of the date the return for the current taxable year was filed or the date the return was due to be filed.  The amount of this payment of tax is (i) the amount the taxpayer's tax under Article 4 for the earlier taxable year was increased because the item of income was included in gross income for that year minus (ii) the amount the taxpayer's tax under Article 4 for the current taxable year was decreased because the item was deductible for that year.  To the extent this payment of tax creates an overpayment, the overpayment is refundable in accordance with G.S. 105-266."
Section 2.  This act is effective for taxable years beginning on or after January 1, 1995.