Budget Amendment ID: FY2014-S3-45-R1

Redraft OTH 45

Close Obsolete Tax Break and Increase Local Aid Funding

Mr. Montigny moved that the proposed new text be amended by inserting at the end therof the following new sections:-


SECTION____ .   Chapter 63 of the General Laws is hereby further amended by inserting after section 29E the following section:-

Section 29F. (a) When 50 per cent or more of the capital interests or profits interest in an entity that is engaged in a non-insurance trade or business and that would otherwise be treated as a partnership or disregarded entity for purposes of this chapter is owned, directly or indirectly, by an insurance company described in sections 20 to 29E, inclusive, the net income that passes through to that insurance company with respect to the non-insurance trade or business shall be taxed to the partnership or disregarded entity as if the partnership or disregarded entity were a corporation subject to tax under this chapter.

(b) A partnership or disregarded entity, described in subsection (a), shall file a return in the manner of a business corporation under the applicable section of this chapter with respect to the non-insurance income and activities of such partnership or disregarded entity, and shall pay the associated excise, taking into account only the portion of such net income that would otherwise pass through to an insurance company described in sections 20 to 29E, inclusive. To the extent applicable, income that is taxable to the partnership or disregarded entity under this section, and any related tax attributes and activities, shall be included and taken into account in a combined report filed under section 32B.

(c) As used in this section, the term "partnership or disregarded entity" shall include a real estate investment trust, in this subsection called a REIT, within the meaning of Section 856 of the Internal Revenue Code of 1986, as amended. In any case in which this section applies to the ownership of a REIT, the dividends paid deduction to which the REIT is entitled under the Code, to the extent attributable to the income taxed under this section, shall not be recognized.

(d) The commissioner may issue regulations or other guidance to implement this section.”

SECTION___. Any revenues generated by Sections____ to ____ of this act shall be used to supplement the funding of the department of veterans’ services provided in line item 1410-0400 of this act.

SECTION__ Section 6 of chapter 115 of the General Laws, as appearing in the 2010 Official Edition, is hereby amended by striking the words “seventy five percent” in line 19 and inserting in their place, the words “ninety five percent”.