GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 1997
SESSION LAW 1998-171
The General Assembly of North Carolina enacts:
Section 1. G.S. 105-228.90(b)(1a) reads as rewritten:
"(1a)
Code. - The Internal Revenue Code as enacted as of January 1, 1997, September
1, 1998, including any provisions enacted as of that date which become effective
either before or after that date."
Section 2. G.S. 105-134.6(b)(12) is repealed.
Section 3. G.S. 105-134.6(b)(13) reads as rewritten:
"(13)
The amount that is distributed to a beneficiary of the Parental Savings Trust
Fund of the State Education Assistance Authority if the earnings on the
amount are excluded from income under subdivision (12) of this subsection or
section 529 of the Code. unless the distribution is a refund of earnings
described in section 529 of the Code."
Section 4. G.S. 105-188 is amended by adding a new subsection to read:
"(k) Qualified Tuition Programs. - The provisions of section 529(c)(2) and (5) of the Code apply to this Article. If a donor elects to take a contribution into account ratably over a five-year period as provided in section 529(c)(2) of the Code, that election applies for the purposes of this Article."
Section 5. Notwithstanding Section 1 of this act, to the extent an amendment to the Internal Revenue Code enacted after January 1, 1997, would increase North Carolina taxable income for a taxpayer's tax year beginning before January 1, 1998, the amendment does not apply to the taxpayer for that tax year.
Section 6. G.S. 105-130.8, as amended by S.L. 1998-98, reads as rewritten:
"§ 105-130.8. Net economic loss.
(a) Net economic
losses sustained by a corporation in any or all of the five 15 preceding
income years shall be allowed as a deduction to such the corporation
subject to the following limitations:
(1)
The purpose in allowing the deduction of a net economic loss of a prior year or
years is that of granting to grant some measure of relief to
the corporation which that has incurred economic misfortune or which
is otherwise materially affected by strict adherence to the annual accounting
rule in the determination of net income. The deduction herein specified allowed
in this section does not authorize the carrying forward of any particular
items or category of loss except to the extent that such loss or losses
shall result the loss results in the impairment of the net economic
situation of the corporation so as to result in a net economic loss as hereinafter
defined. defined in this section.
(2)
The net economic loss for any year shall mean means the amount by
which allowable deductions for the year other than prior year losses shall exceed
income from all sources in the year including any income not taxable under this
Part.
(3)
Any net economic loss of a prior year or prior years brought
forward and claimed as a deduction in any income year may be deducted from net
income of the year only to the extent that such carry-over the loss
carried forward from the prior year or years shall exceed exceeds
any income not taxable under this Part received in the same year in which
the deduction is claimed, except that in the case of a corporation required to
allocate and apportion to North Carolina its net income, as defined in this
Part, only such that proportionate part of the net economic
loss of a prior year shall be deductible from total income allocable to this
State as would be determined by the use of the allocation and apportionment
provisions of G.S. 105-130.4 for the year of such the loss.
(4)
A net economic loss carried forward from any year shall first be applied to, or
offset by, any income taxable or nontaxable of the next succeeding year before
any portion of such the loss may be carried forward to a
succeeding year. year, except that a loss that is more than five
years old may offset no more than fifteen percent (15%) of any taxable income
for a taxable year before the remaining portion may be carried forward to a
succeeding year.
(5) For purposes of this section, any income item deductible in determining State net income under the provisions of G.S. 105-130.5 and any nonbusiness income not allocable to this State under the provisions of G.S. 105-130.4 shall be considered as income not taxable under this Part.
(6)
No loss shall either directly or indirectly be carried forward more than five
15 years.
(b) A corporation claiming a deduction for a loss for the current year or carried forward from a prior year must maintain and make available for inspection by the Secretary all records necessary to determine and verify the amount of the deduction. The Secretary or the taxpayer may redetermine an item originating in a taxable year that is closed under the statute of limitations for the purpose of determining the amount of net economic loss that can be carried forward to a taxable year that remains open under the statute of limitations."
Section 7. G.S. 105-130.5(b)(4) reads as rewritten:
"(4)
Losses in the nature of net economic losses sustained by the corporation in any
or all of the five 15 preceding years pursuant to the provisions
of G.S. 105-130.8. Provided, a A corporation required to
allocate and apportion its net income under the provisions of G.S. 105-130.4
shall deduct its allocable net economic loss only from total income allocable
to this State pursuant to the provisions of G.S. 105-130.8."
Section 8. Effective for taxable years beginning on or after January 1, 2002, G.S. 105-130.8(a)(4), as amended by this act, reads as rewritten:
"(4)
A net economic loss carried forward from any year shall first be applied to, or
offset by, any income taxable or nontaxable of the next succeeding year before
any portion of the loss may be carried forward to a succeeding year, except
that a loss that is more than five years old may offset no more than fifteen
percent (15%) of any taxable income for a taxable years before the remaining
portion may be carried forward to a succeeding year."
Section 9. G.S. 105-467(5), as amended by S.L. 1998-98, reads as rewritten:
"(5) The sales price of
food that is not otherwise exempt from tax pursuant to G.S. 105-164.13 but
would be exempt from the State sales and use tax pursuant to G.S. 105-164.13 if
it were issued purchased under the Food Stamp Program, 7 U.S.C. §
51."
Section 10(a). Section 9 of Senate Bill 1230, 1997 General Assembly, is repealed.
Section 10(b). G.S. 105-164.13(11)a., as amended by Section 14 of S.L. 1998-98, reads as rewritten:
"a. Motor fuel, as defined in G.S. 105-449.60, except motor fuel for which a refund of the per gallon excise tax is allowed under G.S. 105-449.105A or G.S. 105-449.107."
Section 11(a). Sections 6 and 7 of this act are effective for taxable years beginning on or after January 1, 1999, and apply to losses incurred for taxable years beginning on or after January 1, 1993. Section 8 of this act becomes effective for taxable years beginning on or after January 1, 2002.
Section 11(b). Section 4 of this act becomes effective for taxable years beginning on or after January 1, 1998. The remainder of this act is effective when it becomes law.
In the General Assembly read three times and ratified this the 24th day of September, 1998.
s/ Marc Basnight
President Pro Tempore of the Senate
s/ Harold J. Brubaker
Speaker of the House of Representatives
s/ James B. Hunt, Jr.
Governor
Approved 10:10 a.m. this 2nd day of October, 1998