Amendment ID: S2856-21-R1

Redraft Amendment 21

Decoupling 163(j)

Mr. Tarr moves that the proposed new text be amended by adding the following sections:-

"SECTION XX.  Section 1 of chapter 62 of the General Laws is hereby amended by striking out subsection (c) and inserting in place thereof the following subsection: -

(c) “Code”, the Internal Revenue Code of the United States, as amended on January 1, 2022 and in effect for the taxable year; but Code shall mean the Code as amended and in effect for the taxable year for sections 62(a)(1), 72, 105, 106, 108(f)(5), 139C, 223, 274(m), 274(n), 401 through 420, inclusive, 457, 529, 529A, 530, 951, 951A, 959, 961, 3401 and 3405 but excluding sections 402A and 408(q), and provided further that for purposes of determining the amount of business interest deductible under this chapter, the provisions of section 163(j) of the Code shall not apply.

SECTION XX.  Section 1 of chapter 63 of the General Laws is hereby amended by striking out the definition of “Code” therein and inserting in place thereof the following definition:-

“Code”, the Internal Revenue Code of the United States, as amended and in effect for the taxable year, unless otherwise provided; for section 163(j), Code shall mean the Code as amended and in effect for tax years beginning before January 1, 2018.

SECTION XX.  Section 30 of said chapter 63 is hereby amended by striking out the first sentence of paragraph 4 and inserting in place thereof the following sentence:-

“Net income”, gross income less the deductions, but not credits, allowable under the provisions of the Federal Internal Revenue Code, as amended and in effect for the taxable year; provided, however, that for section 163(j), Code shall mean the Code as amended and in effect for tax years beginning before January 1, 2018, and provided further that any deduction otherwise allowable which is allocable, in whole or in part, to one or more classes of income not included in a corporation’s taxable net income, as determined under subsection (a) of section 38, shall not be allowed.

SECTION XX.  Section 30 of said chapter 63 is hereby amended by adding the following new paragraph 4 (ix):-

(ix) For tax years commencing on or after January 1, 2024, no deduction shall be allowed resulting from a carryforward of disallowed business interest expense under section 163(j) of the Code. The amount of any carryforward of disallowed business interest expense under section 163(j) of the Code as of the tax year ending before January 1, 2024 shall be allowed as a deduction in 3 equal parts over 3 consecutive years, beginning with the first tax year commencing on or after January 1, 2024.

SECTION XX. Sections XX-XX shall be effective for taxable years beginning on or after January 1, 2024."

Moves to further amend by striking section 108 in its entirety.