Session of 1998
By Senators Donovan, Becker, Bleeker, Brownlee, Clark, Downey, Gil-
                strap, Gooch, Goodwin, Harrington, Huelskamp, Morris, Petty, Pugh,
                Schraad, Steineger and Umbarger
          11             AN ACT relating to income taxation; providing credits therefrom for
12             teaching aid contributions; amending K.S.A. 79-32,117 and repealing
13             the existing section.
15       Be it enacted by the Legislature of the State of Kansas:
16           New Section 1. For all taxable years commencing after December
17       31, 1997, there shall be allowed as a credit against the tax liability imposed
18       under the Kansas income tax act upon an individual who is certificated
19       to instruct and educate students of grades kindergarten through 12 in an
20       accredited school, whether public or otherwise, an amount, not to exceed
21       $500, equal to the purchase costs of equipment, materials or other teach-
22       ing aids for use in the classroom to assist in the education of the students
23       of such individual. If the amount of such tax credit exceeds the individual's
24       income tax liability for the appropriate taxable year, such excess amount
25       shall be refunded.
26           Sec. 2. K.S.A. 79-32,117 is hereby amended to read as follows: 79-
27       32,117. (a) The Kansas adjusted gross income of an individual means such
28       individual's federal adjusted gross income for the taxable year, with the
29       modifications specified in this section.
30           (b) There shall be added to federal adjusted gross income:
31           (i) Interest income less any related expenses directly incurred in the
32       purchase of state or political subdivision obligations, to the extent that
33       the same is not included in federal adjusted gross income, on obligations
34       of any state or political subdivision thereof, but to the extent that interest
35       income on obligations of this state or a political subdivision thereof issued
36       prior to January 1, 1988, is specifically exempt from income tax under the
37       laws of this state authorizing the issuance of such obligations, it shall be
38       excluded from computation of Kansas adjusted gross income whether or
39       not included in federal adjusted gross income. Interest income on obli-
40       gations of this state or a political subdivision thereof issued after Decem-
41       ber 31, 1987, shall be excluded from computation of Kansas adjusted
42       gross income whether or not included in federal adjusted gross income.
43           (ii) Taxes on or measured by income or fees or payments in lieu of

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  1       income taxes imposed by this state or any other taxing jurisdiction to the
  2       extent deductible in determining federal adjusted gross income and not
  3       credited against federal income tax. This paragraph shall not apply to taxes
  4       imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
  5       ments thereto, for privilege tax year 1995, and all such years thereafter.
  6           (iii) The federal net operating loss deduction.
  7           (iv) Federal income tax refunds received by the taxpayer if the de-
  8       duction of the taxes being refunded resulted in a tax benefit for Kansas
  9       income tax purposes during a prior taxable year. Such refunds shall be
10       included in income in the year actually received regardless of the method
11       of accounting used by the taxpayer. For purposes hereof, a tax benefit
12       shall be deemed to have resulted if the amount of the tax had been de-
13       ducted in determining income subject to a Kansas income tax for a prior
14       year regardless of the rate of taxation applied in such prior year to the
15       Kansas taxable income, but only that portion of the refund shall be in-
16       cluded as bears the same proportion to the total refund received as the
17       federal taxes deducted in the year to which such refund is attributable
18       bears to the total federal income taxes paid for such year. For purposes
19       of the foregoing sentence, federal taxes shall be considered to have been
20       deducted only to the extent such deduction does not reduce Kansas tax-
21       able income below zero.
22           (v) The amount of any depreciation deduction or business expense
23       deduction claimed on the taxpayer's federal income tax return for any
24       capital expenditure in making any building or facility accessible to the
25       handicapped, for which expenditure the taxpayer claimed the credit al-
26       lowed by K.S.A. 79-32,177, and amendments thereto.
27           (vi) Any amount of designated employee contributions picked up by
28       an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
29       and amendments to such sections.
30           (vii) The amount of any charitable contribution made to the extent
31       the same is claimed as the basis for the credit allowed pursuant to K.S.A.
32       79-32,196, and amendments thereto.
33           (viii) The amount of any contribution made to an elementary or sec-
34       ondary school to the extent the same is claimed as the basis for the credit
35       allowed pursuant to section 1.
36           (c) There shall be subtracted from federal adjusted gross income:
37           (i) Interest or dividend income on obligations or securities of any
38       authority, commission or instrumentality of the United States and its pos-
39       sessions less any related expenses directly incurred in the purchase of
40       such obligations or securities, to the extent included in federal adjusted
41       gross income but exempt from state income taxes under the laws of the
42       United States.
43           (ii) Any amounts received which are included in federal adjusted

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  1       gross income but which are specifically exempt from Kansas income tax-
  2       ation under the laws of the state of Kansas.
  3           (iii) The portion of any gain or loss from the sale or other disposition
  4       of property having a higher adjusted basis for Kansas income tax purposes
  5       than for federal income tax purposes on the date such property was sold
  6       or disposed of in a transaction in which gain or loss was recognized for
  7       purposes of federal income tax that does not exceed such difference in
  8       basis, but if a gain is considered a long-term capital gain for federal in-
  9       come tax purposes, the modification shall be limited to that portion of
10       such gain which is included in federal adjusted gross income.
11           (iv) The amount necessary to prevent the taxation under this act of
12       any annuity or other amount of income or gain which was properly in-
13       cluded in income or gain and was taxed under the laws of this state for a
14       taxable year prior to the effective date of this act, as amended, to the
15       taxpayer, or to a decedent by reason of whose death the taxpayer acquired
16       the right to receive the income or gain, or to a trust or estate from which
17       the taxpayer received the income or gain.
18           (v) The amount of any refund or credit for overpayment of taxes on
19       or measured by income or fees or payments in lieu of income taxes im-
20       posed by this state, or any taxing jurisdiction, to the extent included in
21       gross income for federal income tax purposes.
22           (vi) Accumulation distributions received by a taxpayer as a beneficiary
23       of a trust to the extent that the same are included in federal adjusted
24       gross income.
25           (vii) Amounts received as annuities under the federal civil service
26       retirement system from the civil service retirement and disability fund
27       and other amounts received as retirement benefits in whatever form
28       which were earned for being employed by the federal government or for
29       service in the armed forces of the United States.
30           (viii) Amounts received by retired railroad employees as a supple-
31       mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
32       et seq.
33           (ix) Amounts received by retired employees of a city and by retired
34       employees of any board of such city as retirement allowances pursuant to
35       K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
36       ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
37       amendments thereto.
38           (x) For taxable years beginning after December 31, 1976, the amount
39       of the federal tentative jobs tax credit disallowance under the provisions
40       of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
41       the amount of the targeted jobs tax credit and work incentive credit dis-
42       allowances under 26 U.S.C. 280 C.
43           (xi) For taxable years beginning after December 31, 1986, dividend

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  1       income on stock issued by Kansas Venture Capital, Inc.
  2           (xii) For taxable years beginning after December 31, 1989, amounts
  3       received by retired employees of a board of public utilities as pension and
  4       retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
  5       and amendments thereto.
  6           (xiii) For taxable years beginning after December 31, 1993, the
  7       amount of income earned on contributions deposited to an individual
  8       development account under K.S.A. 79-32,117h, and amendments thereto.
  9           (xiv) For all taxable years commencing after December 31, 1996, that
10       portion of any income of a bank organized under the laws of this state or
11       any other state, a national banking association organized under the laws
12       of the United States, an association organized under the savings and loan
13       code of this state or any other state, or a federal savings association or-
14       ganized under the laws of the United States, for which an election as an
15       S corporation under subchapter S of the federal internal revenue code is
16       in effect, which accrues to the taxpayer who is a stockholder of such
17       corporation and which is not distributed to the stockholders as dividends
18       of the corporation.
19           (d) There shall be added to or subtracted from federal adjusted gross
20       income the taxpayer's share, as beneficiary of an estate or trust, of the
21       Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
22       amendments thereto.
23           (e) The amount of modifications required to be made under this sec-
24       tion by a partner which relates to items of income, gain, loss, deduction
25       or credit of a partnership shall be determined under K.S.A. 79-32,131,
26       and amendments thereto, to the extent that such items affect federal
27       adjusted gross income of the partner.
28           Sec. 3. K.S.A. 79-32,117 is hereby repealed.
29           Sec. 4. This act shall take effect and be in force from and after its
30       publication in the statute book.