Session of 1999
HOUSE BILL No. 2127
By Committee of Taxation
9 AN ACT relating to income taxing; allowing credits for qualified endow-
10 ment contributions; amending K.S.A. 1998 Supp. 79-32,117 and re-
11 pealing the existing section.
13 Be it enacted by the Legislature of the State of Kansas:
14 New Section 1. (a) For any taxable year commencing after Decem-
15 ber 31, 1998, but before January 1, 2003, a credit shall be allowed against
16 the tax liability of a taxpayer imposed by the Kansas income tax act in an
17 amount equal to 50% of the aggregate amount of a planned gift made by
18 a taxpayer during the taxable year to any qualified endowment, or
19 $10,000, whichever is less.
20 (b) A contribution to a qualified endowment by a small business cor-
21 poration or partnership not subject to the tax imposed by the Kansas
22 income tax act shall qualify for the credit allowed by subsection (a) if
23 attributed to shareholders or partners in the same proportion used to
24 report the income or loss of the corporation or partnership for income
25 tax purposes. The amount of such credit shall not exceed $10,000 for each
26 shareholder or partner.
27 (c) The credit allowed by subsections (a) and (b) shall not exceed the
28 amount of tax imposed by the Kansas income tax act reduced by the sum
29 of any other credits allowable pursuant to law.
30 (d) As used in this section:
31 (1) "Planned gift" means an irrevocable contribution to a permanent
32 endowment held by a tax-exempt organization, or for a tax-exempt or-
33 ganization, when the contribution uses any of the following techniques
34 that are authorized under the federal internal revenue code: (A) Chari-
35 table remainer unitrusts, as defined by section 664 of the federal internal
36 revenue code;
37 (B) charitable remainder annuity trusts, as defined by section 664 of
38 the federal internal revenue code;
39 (C) pooled income fund trusts, as defined by section 642(c)(5) of the
40 federal internal revenue code;
41 (D) charitable lead unitrusts qualifying under section 170(f)(2)(B) of
42 the federal internal revenue code;
43 (E) charitable lead annuity trusts qualifying under section
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1 170(f)(2)(B) of the federal internal revenue code;
2 (F) charitable gift annuities undertaken pursuant to section 1011(b)
3 of the federal internal revenue code;
4 (G) deferred charitable gift annuities undertaken pursuant to section
5 1011(b) of the federal internal revenue code;
6 (H) charitable life estate agreements qualifying under section
7 170(f)(3)(B) of the federal internal revenue code;
8 (I) paid-up life insurance policies meeting the requirements of sec-
9 tion 170 of the federal internal revenue code.
10 (2) "Qualified endowment" means a permanent, irrevocable fund
11 that is held by a Kansas incorporated or established organization that:
12 (A) Is a tax-exempt organization under section 501(c)(3) of the federal
13 internal revenue code; or
14 (B) is a bank or trust company that is holding the fund on behalf of
15 a tax-exempt organization.
16 Sec. 2. K.S.A. 1998 Supp. 79-32,117 is hereby amended to read as
17 follows: 79-32,117. (a) The Kansas adjusted gross income of an individual
18 means such individual's federal adjusted gross income for the taxable year,
19 with the modifications specified in this section.
20 (b) There shall be added to federal adjusted gross income:
21 (i) Interest income less any related expenses directly incurred in the
22 purchase of state or political subdivision obligations, to the extent that
23 the same is not included in federal adjusted gross income, on obligations
24 of any state or political subdivision thereof, but to the extent that interest
25 income on obligations of this state or a political subdivision thereof issued
26 prior to January 1, 1988, is specifically exempt from income tax under the
27 laws of this state authorizing the issuance of such obligations, it shall be
28 excluded from computation of Kansas adjusted gross income whether or
29 not included in federal adjusted gross income. Interest income on obli-
30 gations of this state or a political subdivision thereof issued after Decem-
31 ber 31, 1987, shall be excluded from computation of Kansas adjusted
32 gross income whether or not included in federal adjusted gross income.
33 (ii) Taxes on or measured by income or fees or payments in lieu of
34 income taxes imposed by this state or any other taxing jurisdiction to the
35 extent deductible in determining federal adjusted gross income and not
36 credited against federal income tax. This paragraph shall not apply to taxes
37 imposed under the provisions of K.S.A. 79-1107 or 79-1108, and amend-
38 ments thereto, for privilege tax year 1995, and all such years thereafter.
39 (iii) The federal net operating loss deduction.
40 (iv) Federal income tax refunds received by the taxpayer if the de-
41 duction of the taxes being refunded resulted in a tax benefit for Kansas
42 income tax purposes during a prior taxable year. Such refunds shall be
43 included in income in the year actually received regardless of the method
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1 of accounting used by the taxpayer. For purposes hereof, a tax benefit
2 shall be deemed to have resulted if the amount of the tax had been de-
3 ducted in determining income subject to a Kansas income tax for a prior
4 year regardless of the rate of taxation applied in such prior year to the
5 Kansas taxable income, but only that portion of the refund shall be in-
6 cluded as bears the same proportion to the total refund received as the
7 federal taxes deducted in the year to which such refund is attributable
8 bears to the total federal income taxes paid for such year. For purposes
9 of the foregoing sentence, federal taxes shall be considered to have been
10 deducted only to the extent such deduction does not reduce Kansas tax-
11 able income below zero.
12 (v) The amount of any depreciation deduction or business expense
13 deduction claimed on the taxpayer's federal income tax return for any
14 capital expenditure in making any building or facility accessible to the
15 handicapped, for which expenditure the taxpayer claimed the credit al-
16 lowed by K.S.A. 79-32,177, and amendments thereto.
17 (vi) Any amount of designated employee contributions picked up by
18 an employer pursuant to K.S.A. 12-5005, 20-2603, 74-4919 and 74-4965,
19 and amendments to such sections.
20 (vii) The amount of any charitable contribution made to the extent
21 the same is claimed as the basis for the credit allowed pursuant to K.S.A.
22 79-32,196, and amendments thereto or section 1.
23 (viii) The amount of any costs incurred for improvements to a swine
24 facility, claimed for deduction in determining federal adjusted gross in-
25 come, to the extent the same is claimed as the basis for any credit allowed
26 pursuant to K.S.A. 1998 Supp. 79-32,204 and amendments thereto.
27 (ix) The amount of any ad valorem taxes and assessments paid and
28 the amount of any costs incurred for habitat management or construction
29 and maintenance of improvements on real property, claimed for deduc-
30 tion in determining federal adjusted gross income, to the extent the same
31 is claimed as the basis for any credit allowed pursuant to K.S.A. 79-32,203
32 and amendments thereto.
33 (c) There shall be subtracted from federal adjusted gross income:
34 (i) Interest or dividend income on obligations or securities of any
35 authority, commission or instrumentality of the United States and its pos-
36 sessions less any related expenses directly incurred in the purchase of
37 such obligations or securities, to the extent included in federal adjusted
38 gross income but exempt from state income taxes under the laws of the
39 United States.
40 (ii) Any amounts received which are included in federal adjusted
41 gross income but which are specifically exempt from Kansas income tax-
42 ation under the laws of the state of Kansas.
43 (iii) The portion of any gain or loss from the sale or other disposition
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1 of property having a higher adjusted basis for Kansas income tax purposes
2 than for federal income tax purposes on the date such property was sold
3 or disposed of in a transaction in which gain or loss was recognized for
4 purposes of federal income tax that does not exceed such difference in
5 basis, but if a gain is considered a long-term capital gain for federal in-
6 come tax purposes, the modification shall be limited to that portion of
7 such gain which is included in federal adjusted gross income.
8 (iv) The amount necessary to prevent the taxation under this act of
9 any annuity or other amount of income or gain which was properly in-
10 cluded in income or gain and was taxed under the laws of this state for a
11 taxable year prior to the effective date of this act, as amended, to the
12 taxpayer, or to a decedent by reason of whose death the taxpayer acquired
13 the right to receive the income or gain, or to a trust or estate from which
14 the taxpayer received the income or gain.
15 (v) The amount of any refund or credit for overpayment of taxes on
16 or measured by income or fees or payments in lieu of income taxes im-
17 posed by this state, or any taxing jurisdiction, to the extent included in
18 gross income for federal income tax purposes.
19 (vi) Accumulation distributions received by a taxpayer as a beneficiary
20 of a trust to the extent that the same are included in federal adjusted
21 gross income.
22 (vii) Amounts received as annuities under the federal civil service
23 retirement system from the civil service retirement and disability fund
24 and other amounts received as retirement benefits in whatever form
25 which were earned for being employed by the federal government or for
26 service in the armed forces of the United States.
27 (viii) Amounts received by retired railroad employees as a supple-
28 mental annuity under the provisions of 45 U.S.C. 228b (a) and 228c (a)(1)
29 et seq.
30 (ix) Amounts received by retired employees of a city and by retired
31 employees of any board of such city as retirement allowances pursuant to
32 K.S.A. 13-14,106, and amendments thereto, or pursuant to any charter
33 ordinance exempting a city from the provisions of K.S.A. 13-14,106, and
34 amendments thereto.
35 (x) For taxable years beginning after December 31, 1976, the amount
36 of the federal tentative jobs tax credit disallowance under the provisions
37 of 26 U.S.C. 280 C. For taxable years ending after December 31, 1978,
38 the amount of the targeted jobs tax credit and work incentive credit dis-
39 allowances under 26 U.S.C. 280 C.
40 (xi) For taxable years beginning after December 31, 1986, dividend
41 income on stock issued by Kansas Venture Capital, Inc.
42 (xii) For taxable years beginning after December 31, 1989, amounts
43 received by retired employees of a board of public utilities as pension and
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1 retirement benefits pursuant to K.S.A. 13-1246, 13-1246a and 13-1249
2 and amendments thereto.
3 (xiii) For taxable years beginning after December 31, 1993, the
4 amount of income earned on contributions deposited to an individual
5 development account under K.S.A. 79-32,117h, and amendments thereto.
6 (xiv) For all taxable years commencing after December 31, 1996, that
7 portion of any income of a bank organized under the laws of this state or
8 any other state, a national banking association organized under the laws
9 of the United States, an association organized under the savings and loan
10 code of this state or any other state, or a federal savings association or-
11 ganized under the laws of the United States, for which an election as an
12 S corporation under subchapter S of the federal internal revenue code is
13 in effect, which accrues to the taxpayer who is a stockholder of such
14 corporation and which is not distributed to the stockholders as dividends
15 of the corporation.
16 (d) There shall be added to or subtracted from federal adjusted gross
17 income the taxpayer's share, as beneficiary of an estate or trust, of the
18 Kansas fiduciary adjustment determined under K.S.A. 79-32,135, and
19 amendments thereto.
20 (e) The amount of modifications required to be made under this sec-
21 tion by a partner which relates to items of income, gain, loss, deduction
22 or credit of a partnership shall be determined under K.S.A. 79-32,131,
23 and amendments thereto, to the extent that such items affect federal
24 adjusted gross income of the partner.
25 Sec. 3. K.S.A. 1998 Supp. 79-32,117 is hereby repealed.
26 Sec. 4. This act shall take effect and be in force from and after its
27 publication in the statute book.