AN ACT
RELATING TO TAXATION; AMENDING THE
DEFINITION OF RESIDENT FOR PURPOSES OF THE INCOME TAX ACT.
BE IT ENACTED BY THE LEGISLATURE OF
THE STATE OF NEW MEXICO:
Section 1. Section 7-2-2 NMSA 1978 (being Laws 1986,
Chapter 20, Section 26, as amended) is amended to read:
"7-2-2. DEFINITIONS.--For the purpose of the Income
Tax Act and unless the context requires otherwise:
A. "adjusted gross income" means
adjusted gross income as defined in Section 62 of the Internal Revenue Code, as
that section may be amended or renumbered;
B. "base income":
(1) means, for estates and trusts, that part of
the estate's or trust's income defined as taxable income and upon which the
federal income tax is calculated in the Internal Revenue Code for income tax
purposes plus, for taxable years beginning on or after January 1, 1991, the
amount of the net operating loss deduction allowed by
Section 172(a) of the Internal Revenue
Code, as that section may be amended or renumbered, and taken by the taxpayer
for that year;
(2) means, for taxpayers other than estates or
trusts, that part of the taxpayer's income defined as adjusted gross income plus,
for taxable years beginning on or after January 1, 1991, the amount of the net
operating loss deduction allowed by Section 172(a) of the Internal Revenue
Code, as that section may be amended or renumbered, and taken by the taxpayer
for that year; and
(3) includes, for all taxpayers, any other income
of the taxpayer not included in adjusted gross income but upon which a federal
tax is calculated pursuant to the Internal Revenue Code for income tax
purposes, except amounts for which a calculation of tax is made pursuant to
Section 55 of the Internal Revenue Code, as that section may be amended or
renumbered; "base income" also includes interest received on a state
or local bond;
C. "compensation" means wages,
salaries, commissions and any other form of remuneration paid to employees for
personal services;
D. "department" means the taxation and
revenue department, the secretary or any employee of the department exercising
authority lawfully delegated to that employee by the secretary;
E. "fiduciary" means a guardian,
trustee, executor, administrator, committee, conservator, receiver, individual
or corporation acting in any fiduciary capacity;
F. "filing status" means "married
filing joint returns", "married filing separate returns",
"head of household", "surviving spouse" and
"single", as those terms are generally defined for federal tax
purposes;
G. "fiscal year" means any accounting
period of twelve months ending on the last day of any month other than
December;
H. "head of household" means
"head of household" as generally defined for federal income tax
purposes;
I. "individual" means a natural
person, an estate, a trust or a fiduciary acting for a natural person, trust or
estate;
J. "Internal Revenue Code" means the
United States Internal Revenue Code of 1986, as amended;
K. "lump-sum amount" means an amount
that, for the purpose of determining liability for federal income tax, was not
included in adjusted gross income but upon which the five-year-averaging or the
ten-year-averaging method of tax computation provided in Section 402 of the
Internal Revenue Code, as that section may be amended or renumbered, was
applied;
L. "modified gross income" means all
income of the taxpayer and, if any, the taxpayer's spouse and dependents,
undiminished by losses and from whatever source derived, including:
(1) compensation;
(2) net profit derived from business;
(3) gains derived from dealings in property;
(4) interest;
(5) net rents;
(6) royalties;
(7) dividends;
(8) alimony and separate maintenance payments;
(9) annuities;
(10) income from life insurance and endowment
contracts;
(11) pensions;
(12) discharge of indebtedness;
(13) distributive share of partnership income;
(14) income in respect of a decedent;
(15) income from an interest in an estate or
trust;
(16) social security benefits;
(17) unemployment compensation benefits;
(18) workers' compensation benefits;
(19) public assistance and welfare benefits;
(20) cost-of-living allowances; and
(21) gifts;
M. "modified gross income" does not
include:
(1) payments for hospital, dental, medical or
drug expenses whether made to or on behalf of the taxpayer;
(2) the value of room and board provided by
federal, state or local governments or by private individuals or agencies based
upon financial need and not as a form of compensation;
(3) payments made pursuant to a federal, state or
local government program directly or indirectly to a third party on behalf of
the taxpayer when identified to a particular use or invoice by the payer; or
(4) payments made pursuant to
Sections 7-2-14, 7-2-18, 7-2-18.1 and
7-3-9 NMSA 1978;
N. "net income" means, for estates and
trusts, base income adjusted to exclude amounts that the state is prohibited
from taxing because of the laws or constitution of this state or the United
States and means, for taxpayers other than estates or trusts, base income
adjusted to exclude:
(1) an amount equal to the standard deduction
allowed the taxpayer for the taxpayer's taxable year by Section 63 of the
Internal Revenue Code, as that section may be amended or renumbered;
(2) an amount equal to the itemized deductions,
as defined in Section 63 of the Internal Revenue Code, as that section may be
amended or renumbered, allowed the taxpayer for the taxpayer's taxable year
less the amount excluded pursuant to Paragraph (1) of this subsection;
(3) an amount equal to the product of the
exemption amount allowed for the taxpayer's taxable year by Section 151 of the
Internal Revenue Code, as that section may be amended or renumbered, multiplied
by the number of personal exemptions allowed for federal income tax purposes;
(4) income from obligations of the United States
of America less expenses incurred to earn that income;
(5) other amounts that the state is prohibited
from taxing because of the laws or constitution of this state or the United
States;
(6) for taxable years that began prior to January
1, 1991, an amount equal to the sum of:
(a) net operating loss carryback deductions to
that year from taxable years beginning prior to January 1, 1991 claimed and
allowed, as provided by the Internal Revenue Code; and
(b) net operating loss carryover deductions to
that year claimed and allowed; and
(7) for taxable years beginning on or after
January 1, 1991, an amount equal to the sum of any net operating loss carryover
deductions to that year claimed and allowed, provided that the amount of any
net operating loss carryover from a taxable year beginning on or after January 1,
1991 may be excluded only as follows:
(a) in the case of a timely filed return, in the
taxable year immediately following the taxable year for which the return is
filed; or
(b) in the case of amended returns or original
returns not timely filed, in the first taxable year beginning after the date on
which the return or amended return establishing the net operating loss is
filed; and
(c) in either case, if the net operating loss
carryover exceeds the amount of net income exclusive of the net operating loss
carryover for the taxable year to which the exclusion first applies, in the
next four succeeding taxable years in turn until the net operating loss
carryover is exhausted; in no event shall a net operating loss carryover be
excluded in any taxable year after the fourth taxable year beginning after the
taxable year to which the exclusion first applies;
O. "net operating loss" means any net
operating loss, as defined by Section 172(c) of the Internal Revenue Code, as
that section may be amended or renumbered, for a taxable year as further
increased by the income, if any, from obligations of the United States for that
year less related expenses;
P. "net operating loss carryover"
means the amount, or any portion of the amount, of a net operating loss for any
taxable year that, pursuant to Paragraph (6) or (7) of Subsection N of this
section, may be excluded from base income;
Q. "nonresident" means every
individual not a resident of this state;
R. "person" means any individual,
estate, trust, receiver, cooperative association, club, corporation, company,
firm, partnership, limited liability company, joint venture, syndicate or other
association; "person" also means, to the extent permitted by law, any
federal, state or other governmental unit or subdivision or agency, department
or instrumentality thereof;
S. "resident" means an individual who
is domiciled in this state during any part of the taxable year or an individual
who is physically present in this state for one hundred eighty-five days or
more during the taxable year; but any individual, other than someone who was
physically present in the state for one hundred eighty-five days or more during
the taxable year, who, on or before the last day of the taxable year, changed
his place of abode to a place without this state with the bona fide intention
of continuing actually to abide permanently without this state is not a
resident for the purposes of the Income Tax Act for periods after that change
of abode;
T. "secretary" means the secretary of
taxation and revenue or the secretary's delegate;
U. "state" means any state of the
United States, the District of Columbia, the commonwealth of Puerto Rico, any
territory or possession of the United States or any political subdivision of a
foreign country;
V. "state or local bond" means a bond
issued by a state other than New Mexico or by a local government other than one
of New Mexico's political subdivisions, the interest from which is excluded
from income for federal income tax purposes under Section 103 of the Internal
Revenue Code, as that section may be amended or renumbered;
W. "surviving spouse" means
"surviving spouse" as generally defined for federal income tax
purposes;
X. "taxable income" means net income
less any lump-sum amount;
Y. "taxable year" means the calendar
year or fiscal year upon the basis of which the net income is computed under
the Income Tax Act and includes, in the case of the return made for a
fractional part of a year under the provisions of the Income Tax Act, the
period for which the return is made; and
Z. "taxpayer" means any individual
subject to the tax imposed by the Income Tax Act."
Section 2. APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2003.
HB 920
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