0001| SENATE BILL 988 | 0002| 43rd legislature - STATE OF NEW MEXICO - first session, 1997 | 0003| INTRODUCED BY | 0004| CARLOS R. CISNEROS | 0005| | 0006| | 0007| | 0008| | 0009| | 0010| AN ACT | 0011| AMENDING SECTION 7-2-2 NMSA 1978 (BEING LAWS 1986, CHAPTER 20, | 0012| SECTION 26, AS AMENDED) TO EXCLUDE SOCIAL SECURITY BENEFITS | 0013| FROM NET INCOME OF A TAXPAYER FOR STATE INCOME TAX PURPOSES. | 0014| | 0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0016| Section 1. Section 7-2-2 NMSA 1978 (being Laws 1986, | 0017| Chapter 20, Section 26, as amended) is amended to read: | 0018| "7-2-2. DEFINITIONS.--For the purpose of the Income Tax | 0019| Act and unless the context requires otherwise: | 0020| A. "adjusted gross income" means adjusted gross | 0021| income as defined in Section 62 of the Internal Revenue Code, | 0022| as that section may be amended or renumbered; | 0023| B. "base income": | 0024| (1) means, for estates and trusts, that part | 0025| of the estate's or trust's income defined as taxable income and | 0001| upon which the federal income tax is calculated in the Internal | 0002| Revenue Code for income tax purposes plus, for taxable years | 0003| beginning on or after January 1, 1991, the amount of the net | 0004| operating loss deduction allowed by Section 172(a) of the | 0005| Internal Revenue Code, as that section may be amended or | 0006| renumbered, and taken by the taxpayer for that year; | 0007| (2) means, for taxpayers other than estates or | 0008| trusts, that part of the taxpayer's income defined as adjusted | 0009| gross income plus, for taxable years beginning on or after | 0010| January 1, 1991, the amount of the net operating loss deduction | 0011| allowed by Section 172(a) of the Internal Revenue Code, as that | 0012| section may be amended or renumbered, and taken by the taxpayer | 0013| for that year; and | 0014| (3) includes, for all taxpayers, any other | 0015| income of the taxpayer not included in adjusted gross income | 0016| but upon which a federal tax is calculated pursuant to the | 0017| Internal Revenue Code for income tax purposes, except amounts | 0018| for which a calculation of tax is made pursuant to Section 55 | 0019| of the Internal Revenue Code, as that section may be amended or | 0020| renumbered; "base income" also includes interest received on a | 0021| state or local bond; | 0022| C. "compensation" means wages, salaries, | 0023| commissions and any other form of remuneration paid to | 0024| employees for personal services; | 0025| D. "department" means the taxation and revenue | 0001| department, the secretary of taxation and revenue or any | 0002| employee of the department exercising authority lawfully | 0003| delegated to that employee by the secretary; | 0004| E. "fiduciary" means a guardian, trustee, executor, | 0005| administrator, committee, conservator, receiver, individual or | 0006| corporation acting in any fiduciary capacity; | 0007| F. "filing status" means "married filing joint | 0008| returns", "married filing separate returns", "head of | 0009| household", "surviving spouse" and "single", as those terms are | 0010| generally defined for federal tax purposes; | 0011| G. "fiscal year" means any accounting period of | 0012| twelve months ending on the last day of any month other than | 0013| December; | 0014| H. "head of household" means "head of household" as | 0015| generally defined for federal income tax purposes; | 0016| I. "individual" means a natural person, an estate, | 0017| a trust or a fiduciary acting for a natural person, trust or | 0018| estate; | 0019| J. "Internal Revenue Code" means the United States | 0020| Internal Revenue Code of 1986, as amended; | 0021| K. "lump-sum amount" means an amount that, for the | 0022| purpose of determining liability for federal income tax, was | 0023| not included in adjusted gross income but upon which the five- | 0024| year-averaging or the ten-year-averaging method of tax | 0025| computation provided in Section 402 of the Internal Revenue | 0001| Code, as that section may be amended or renumbered, was | 0002| applied; | 0003| L. "modified gross income" means all income of the | 0004| taxpayer and, if any, the taxpayer's spouse and dependents, | 0005| undiminished by losses and from whatever source derived, | 0006| including: | 0007| (1) compensation; | 0008| (2) net profit derived from business; | 0009| (3) gains derived from dealings in property; | 0010| (4) interest; | 0011| (5) net rents; | 0012| (6) royalties; | 0013| (7) dividends; | 0014| (8) alimony and separate maintenance payments; | 0015| (9) annuities; | 0016| (10) income from life insurance and endowment | 0017| contracts; | 0018| (11) pensions; | 0019| (12) discharge of indebtedness; | 0020| (13) distributive share of partnership income; | 0021| (14) income in respect of a decedent; | 0022| (15) income from an interest in an estate or | 0023| trust; | 0024| (16) social security benefits; | 0025| (17) unemployment compensation benefits; | 0001| (18) workers' compensation benefits; | 0002| (19) public assistance and welfare benefits; | 0003| (20) cost-of-living allowances; and | 0004| (21) gifts; | 0005| M. "modified gross income" does not include: | 0006| (1) payments for hospital, dental, medical or | 0007| drug expenses whether made to or on behalf of the taxpayer; | 0008| (2) the value of room and board provided by | 0009| federal, state or local governments or by private individuals | 0010| or agencies based upon financial need and not as a form of | 0011| compensation; | 0012| (3) payments made pursuant to a federal, state | 0013| or local government program directly or indirectly to a third | 0014| party on behalf of the taxpayer when identified to a particular | 0015| use or invoice by the payer; or | 0016| (4) payments made pursuant to Sections | 0017| 7-2-14, [7-2-14.1] 7-2-18, 7-2-18.1 and 7-3-9 NMSA 1978; | 0018| N. "net income" means, for estates and trusts, base | 0019| income adjusted to exclude amounts that the state is prohibited | 0020| from taxing because of the laws or constitution of this state | 0021| or the United States and means, for taxpayers other than | 0022| estates or trusts, base income adjusted to exclude: | 0023| (1) an amount equal to the standard deduction | 0024| allowed the taxpayer for the taxpayer's taxable year by Section | 0025| 63 of the Internal Revenue Code, as that section may be amended | 0001| or renumbered; | 0002| (2) an amount equal to the itemized | 0003| deductions, as defined in Section 63 of the Internal Revenue | 0004| Code, as that section may be amended or renumbered, allowed the | 0005| taxpayer for the taxpayer's taxable year less the amount | 0006| excluded pursuant to Paragraph (1) of this subsection; | 0007| (3) an amount equal to the product of the | 0008| exemption amount allowed for the taxpayer's taxable year by | 0009| Section 151 of the Internal Revenue Code, as that section may | 0010| be amended or renumbered, multiplied by the number of personal | 0011| exemptions allowed for federal income tax purposes; | 0012| (4) income from obligations of the United | 0013| States of America less expenses incurred to earn that income; | 0014| (5) the amount of social security benefits | 0015| included in the taxpayer's base income; | 0016| [(5)] (6) other amounts that the state is | 0017| prohibited from taxing because of the laws or constitution of | 0018| this state or the United States; | 0019| [(6)] (7) for taxable years that began | 0020| prior to January 1, 1991, an amount equal to the sum of: | 0021| (a) net operating loss carryback | 0022| deductions to that year from taxable years beginning prior to | 0023| January 1, 1991 claimed and allowed, as provided by the | 0024| Internal Revenue Code; and | 0025| (b) net operating loss carryover | 0001| deductions to that year claimed and allowed; and | 0002| [(7)] (8) for taxable years beginning on | 0003| or after January 1, 1991, an amount equal to the sum of any net | 0004| operating loss carryover deductions to that year claimed and | 0005| allowed, provided that the amount of any net operating loss | 0006| carryover from a taxable year beginning on or after January 1, | 0007| 1991 may be excluded only as follows: | 0008| (a) in the case of a timely filed | 0009| return, in the taxable year immediately following the taxable | 0010| year for which the return is filed; or | 0011| (b) in the case of amended returns or | 0012| original returns not timely filed, in the first taxable year | 0013| beginning after the date on which the return or amended return | 0014| establishing the net operating loss is filed; and | 0015| (c) in either case, if the net operating | 0016| loss carryover exceeds the amount of net income exclusive of | 0017| the net operating loss carryover for the taxable year to which | 0018| the exclusion first applies, in the next four succeeding | 0019| taxable years in turn until the net operating loss carryover is | 0020| exhausted; in no event shall a net operating loss carryover be | 0021| excluded in any taxable year after the fourth taxable year | 0022| beginning after the taxable year to which the exclusion first | 0023| applies; | 0024| O. "net operating loss" means any net operating | 0025| loss, as defined by Section 172(c) of the Internal Revenue | 0001| Code, as that section may be amended or renumbered, for a | 0002| taxable year as further increased by the income, if any, from | 0003| obligations of the United States for that year less related | 0004| expenses; | 0005| P. "net operating loss carryover" means the amount, | 0006| or any portion of the amount, of a net operating loss for any | 0007| taxable year that, pursuant to Paragraph (6) or (7) of | 0008| Subsection N of this section, may be excluded from base income; | 0009| Q. "nonresident" means every individual not a | 0010| resident of this state; | 0011| R. "person" means any individual, estate, trust, | 0012| receiver, cooperative association, club, corporation, company, | 0013| firm, partnership, limited liability company, joint venture, | 0014| syndicate or other association; "person" also means, to the | 0015| extent permitted by law, any federal, state or other | 0016| governmental unit or subdivision or agency, department or | 0017| instrumentality thereof; | 0018| S. "resident" means an individual who is domiciled | 0019| in this state during any part of the taxable year; but any | 0020| individual who, on or before the last day of the taxable year, | 0021| changed his place of abode to a place without this state with | 0022| the bona fide intention of continuing actually to abide | 0023| permanently without this state is not a resident for the | 0024| purposes of the Income Tax Act; | 0025| T. "secretary" means the secretary of taxation and | 0001| revenue or the secretary's delegate; | 0002| U. "state" means any state of the United States, | 0003| the District of Columbia, the commonwealth of Puerto Rico, any | 0004| territory or possession of the United States or any political | 0005| subdivision of a foreign country; | 0006| V. "state or local bond" means a bond issued by a | 0007| state other than New Mexico or by a local government other than | 0008| one of New Mexico's political subdivisions, the interest from | 0009| which is excluded from income for federal income tax purposes | 0010| under Section 103 of the Internal Revenue Code, as that section | 0011| may be amended or renumbered; | 0012| W. "surviving spouse" means "surviving spouse" as | 0013| generally defined for federal income tax purposes; | 0014| X. "taxable income" means net income less any lump- | 0015| sum amount; | 0016| Y. "taxable year" means the calendar year or fiscal | 0017| year upon the basis of which the net income is computed under | 0018| the Income Tax Act and includes, in the case of the return made | 0019| for a fractional part of a year under the provisions of the | 0020| Income Tax Act, the period for which the return is made; and | 0021| Z. "taxpayer" means any individual subject to the | 0022| tax imposed by the Income Tax Act." | 0023| Section 2. APPLICABILITY.--The provisions of this act | 0024| shall apply to taxable years beginning on and after January 1, | 0025| 1997. | 0001|  | 0002| | 0003| | 0004| FORTY-THIRD LEGISLATURE | 0005| FIRST SESSION, 1997 | 0006| | 0007| | 0008| March 7, 1997 | 0009| | 0010| Mr. President: | 0011| | 0012| Your WAYS AND MEANS COMMITTEE, to whom has been | 0013| referred | 0014| | 0015| SENATE BILL 988 | 0016| | 0017| has had it under consideration and reports same with | 0018| recommendation that it DO PASS, and thence referred to the | 0019| FINANCE COMMITTEE. | 0020| | 0021| Respectfully submitted, | 0022| | 0023| | 0024| | 0025| | 0001| __________________________________ | 0002| Carlos R. Cisneros, Chairman | 0003| | 0004| | 0005| | 0006| Adopted_______________________ Not | 0007| Adopted_______________________ | 0008| (Chief Clerk) (Chief Clerk) | 0009| | 0010| | 0011| Date ________________________ | 0012| | 0013| | 0014| The roll call vote was 8 For 0 Against | 0015| Yes: 8 | 0016| No: 0 | 0017| Excused: Jennings | 0018| Absent: None | 0019| | 0020| | 0021| S0988WM1 | 0022| |