As Amended by Senate Committee

          Session of 1998
By Committee on Financial Institutions and Insurance
          10             AN ACT concerning financial institutions; consolidated returns for taxa-
11             tion under article 11 of chapter 79 of the Kansas Statutes Annotated;
12             duties of the secretary of revenue.
14       Be it enacted by the Legislature of the State of Kansas:
15           Section 1. (a) Any taxpayer described in K.S.A. 79-1106 and amend-
16       ments thereto which owns stock in a subsidiary that owns, holds or man-
17       ages all or part of the taxpayer's securities portfolio, shall, capitalizes or
18       utilizes an affiliate with one of the affiliate's purposes being to
19       make, hold or manage for, or on behalf of, the taxpayer, investments
20       in securities which the taxpayer would be permitted to make for its
21       own account may be required to file consolidated returns or combined
22       reports for purposes of determining the tax liability under article 11 of
23       chapter 79 of the Kansas Statutes Annotated as if such taxpayer and sub-
24       sidiary affiliate were one entity.
25           (b) (1) Any taxpayer required to file a consolidated return or com-
26       bined report under section 1 and amendments thereto, and required to
27       determine an apportionment percentage under K.S.A. 79-1129 and
28       amendments thereto shall not include in either the numerator or the
29       denominator of the receipts factor described in K.S.A. 79-1130 and
30       amendments thereto amounts received from or provided to a subsidiary
31       an affiliate described in subsection (a) as consideration from investment
32       assets and activities and trading assets and activities that represent in-
33       ter-company transactions between the taxpayer and such subsidiary af-
34       filiate; and
35           (2) receipts as described in subsection (m) of K.S.A. 79-1130 and
36       amendments thereto received by a subsidiary an affiliate described in
37       subsection (a) shall be treated by a taxpayer required to file a consolidated
38       return or combined report under section 1 and amendments thereto as
39       receipts of the taxpayer.
40           (c) For taxpayers described in K.S.A. 79-1106 and amendments
41       thereto, the secretary of revenue may require returns on a consolidated
42       basis or combined reporting and may distribute or allocate gross in-
43       come, deductions, credits, or allowances between two or more organi-

SB 541--Am.


  1       zations, trades or businesses, whether or not incorporated, or organized
  2       in the United States or Kansas or affiliated, owned or controlled directly
  3       or indirectly by the same interests, if the secretary of revenue determines
  4       such allocation is necessary to prevent evasion of taxes or to clearly reflect
  5       income of the organizations, trades or businesses.
  6           (d) This provisions of this section shall be applicable to all taxable
  7       years commencing after December 31, 1997.
  8           (e) This section shall be and constitute a part of and shall be supple-
  9       mental to the privilege tax statutes enacted at K.S.A. 79-1106 et seq. and
10       amendments thereto.
11           Sec. 2. This act shall take effect and be in force from and after its
12       publication in the statute book.