43-106
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43-106. Application of internal revenue code to income tax for the 1993 taxable year A. For all purposes of computing income tax for individuals and Arizona taxable income for corporations, estates, trusts and partnerships pursuant to this title for taxable years beginning from and after December 31, 1992 through December 31, 1993, "internal revenue code" means the United States internal revenue code of 1986, as amended, and in effect on November 8, 1993, including those provisions that became effective during 1993 with the specific adoption of their retroactive effective dates, but excluding any change to such code enacted after November 8, 1993. B. In addition to the subtractions allowed by sections 43-1022, 43-1122 and 43-1332, and subject to section 43-1094 in the case of a nonresident, in computing Arizona income tax liability an individual, corporation, estate or trust, as applicable, may subtract the following amounts from Arizona gross income with respect to taxable years beginning before January 1, 1994: 1. For taxable years beginning from and after December 31, 1992: (a) The excess depreciation of nonresidential real property placed in service on or after May 13, 1993 determined by using a recovery period of thirty-one and one-half years over the amount of the depreciation deduction computed pursuant to section 168 of the internal revenue code. (b) The excess amortization, if any, of an intangible asset listed in section 197 of the internal revenue code amortized pursuant to the internal revenue code in effect on January 1, 1993 over the amount of amortization computed pursuant to section 197 of the internal revenue code. (c) The amount of gain recognized pursuant to section 475 of the internal revenue code by a dealer in securities for the taxable year. 2. The portion of any wages or salaries paid or incurred by the taxpayer for the taxable year that is equal to the amount of the federal targeted jobs credit that the taxpayer received under section 51 of the internal revenue code. This paragraph applies retroactively with respect to employees who began work for the taxpayer from and after June 30, 1992. 3. The portion of qualified clinical testing expenditures paid or incurred by the taxpayer for the taxable year that is equal to the amount of the federal orphan drug credit that the taxpayer received under section 28 of the internal revenue code. This paragraph applies retroactively to taxable years ending from and after June 30, 1992. 4. The portion of research and experimental expenditures paid or incurred by the taxpayer for the taxable year that is equal to the amount of the federal credit for research activities that the taxpayer received under section 41 of the internal revenue code. This paragraph applies retroactively to taxable years ending from and after June 30, 1992. C. For the purposes of the subtractions allowed under subsection B of this section: 1. A shareholder of an S corporation, as defined in section 1361 of the internal revenue code, may subtract a proportionate share of the S corporation's income or expense items allowed as subtractions under subsection B of this section. For the purpose of the subtractions allowed under subsection B, paragraphs 2, 3 and 4 of this section, the shareholder is considered to be the taxpayer who paid or incurred the qualifying expenses. 2. A partnership may subtract its income or expense items allowed as subtractions under subsection B of this section. For the purpose of the subtractions allowed under subsection B, paragraphs 2, 3 and 4 of this section, the partnership is considered to be the taxpayer that received the federal tax credits. D. In addition to the deductions allowed by section 43-1042, in computing taxable income for taxable years beginning from and after December 31, 1992 through December 31, 1993, an individual may deduct the amount of investment interest, as defined in section 163 of the internal revenue code, that exceeds the net investment income but does not exceed the amount of the net capital gain from dispositions of property held for investment that the taxpayer did not elect to include in computing the allowable investment interest deduction under the internal revenue code. E. In addition to the subtractions allowed by section 43-1122, a corporation may subtract the following amounts from Arizona gross income with respect to taxable years ending on or after March 4, 1991 and beginning before January 1, 1994: 1. The amount of losses by a thrift institution with respect to principal, capital or a similar amount on disposition or write down on assets with respect to which the institution has received reimbursements from the federal savings and loan insurance corporation during the taxable year. 2. The amount of federal savings and loan insurance corporation assistance that was received by a thrift institution during the taxable year and that was taken into account in computing worthless debt or addition to bad debt reserve. F. In addition to the subtractions allowed by section 43-1332, in computing the Arizona taxable income of an estate or trust for taxable years beginning from and after December 31, 1992 through December 31, 1993, a subtraction is allowed for the amount of investment interest, as defined in section 163 of the internal revenue code, that exceeds the net investment income but does not exceed the amount of the net capital gain from dispositions of property held for investment that the taxpayer did not elect to include in computing the allowable investment interest deduction under the internal revenue code. |