§235-2.45  Operation of certain Internal
Revenue Code provisions; sections 641 to 7518.  (a)  Section 641 (with
respect to imposition of tax) of the Internal Revenue Code shall be operative
for the purposes of this chapter subject to the following:



(1)  The deduction for exemptions shall be allowed as
provided in section 235-54(b);



(2)  The deduction for contributions and gifts in
determining taxable income shall be limited to the amount allowed in the case
of an individual, unless the contributions and gifts are to be used exclusively
in the State; and



(3)  The tax imposed by section 1(e) of the Internal
Revenue Code as applied by section 641 of the Internal Revenue Code is hereby
imposed by this chapter at the rate and amount as determined under section 235-51
on estates and trusts.



(b)  Section 667 (with respect to treatment of
amounts deemed distributed by trusts in preceding years) of the Internal
Revenue Code shall be operative for the purposes of this chapter and the tax
imposed therein is hereby imposed by this chapter at the rate determined under
this chapter; except that the reference to tax-exempt interest to which section
103 of the Internal Revenue Code applies in section 667(a) of the Internal
Revenue Code shall instead be a reference to tax-exempt interest to which
section 235-7(b) applies.



(c)  Section 685 (with respect to treatment of
qualified funeral trusts) of the Internal Revenue Code shall be operative for
purposes of this chapter, except that the tax imposed under this chapter shall
be computed at the tax rates provided under section 235-51, and no deduction
for the exemption amount provided in section 235-54(b) shall be allowed.  The
cost-of-living adjustment determined under section 1(f)(3) of the Internal
Revenue Code shall be operative for the purpose of applying section 685(c)(3)
under this chapter.



(d)  Section 704 of the Internal Revenue Code
(with respect to a partner's distributive share) shall be operative for
purposes of this chapter; except that section 704(b)(2) shall not apply to:



(1)  Allocations of the high technology business
investment tax credit allowed by section 235-110.9 for investments made before
May 1, 2009;



(2)  Allocations of net operating loss pursuant to
section 235-111.5;



(3)  Allocations of the attractions and educational
facilities tax credit allowed by section 235-110.46; or



(4)  Allocations of low-income housing tax credits
among partners under section 235-110.8.



(e)  Section 1212 (with respect to capital loss
carrybacks and carryforwards) of the Internal Revenue Code shall be operative
for the purposes of this chapter; except that for the purposes of this chapter,
the capital loss carryback provisions of section 1212 shall not be operative
and the capital loss carryforward allowed by section 1212(a) shall be limited
to five years; except for a qualified high technology business as defined in
section 235-7.3, which shall be limited to fifteen years.



(f)  Section 1221 (with respect to the
definition of capital assets) is operative; provided that the provisions of section
301 of Public Law 110-343, which provide that gain or loss from the sale or
exchange of any applicable preferred stock by any applicable financial
institution (such terms being defined by Public Law 110-343) shall be treated
as ordinary income or loss, shall not be operative.  A sale or exchange of any
applicable preferred stock by any applicable financial institution (as those
terms are defined by section 301 of Public Law 110-343) shall be treated as a
sale of a capital asset and taxed accordingly.



(g)  Subchapter S (sections 1361 to 1379) (with
respect to tax treatment of S corporations and their shareholders) of chapter 1
of the Internal Revenue Code shall be operative for the purposes of this
chapter as provided in part VII.



(h)  Section 1400N (with respect to tax
benefits for Gulf Opportunity Zone) of the Internal Revenue Code shall be
operative for the purposes of this chapter, except that sections 1400N(a) (with
respect to tax-exempt bond financing); 1400N(b) (with respect to advance
refundings of certain tax-exempt bonds); 1400N(c) (with respect to the low
income housing credit); 1400N(d) (with respect to special allowance for certain
property acquired on or after August 28, 2005); 1400N(e) (with respect to
increase in expensing under section 179); 1400N(h) (with respect to increase in
rehabilitation credit); 1400N(l) (with respect to credit to holders of Gulf tax
credit bonds); 1400N(m) (with respect to application of new markets tax credit
to investments in community development entities serving Gulf Opportunity
Zone); 1400N(n) (with respect to treatment of representations regarding income
eligibility for purposes of qualified residential rental project
requirements) shall not be operative for purposes of this chapter.



(i)  Section 1400S (with respect to additional
tax relief provisions) of the Internal Revenue Code shall be operative for the
purposes of this chapter, except that section 1400S(d) (with respect to the
special rule for determining earned income) shall not be operative for the
purposes of this chapter.



(j)  Section 6015 (with respect to relief from
joint and several liability on joint return) of the Internal Revenue Code is
operative for purposes of this chapter.



(k)  Sections 6103(i)(3)(C) and 6103(i)(7)
(with respect to disclosures of information to the United States Justice
Department or appropriate federal or state law enforcement agency for purposes
of investigating terrorist incidents, threats, or activities, and for analyzing
intelligence concerning investigating terrorist incidents, threats, or
activities) of the Internal Revenue Code shall be operative for the purposes of
this chapter.



(l)  Subchapter C (sections 6221 to 6233) (with
respect to tax treatment of partnership items) of chapter 63 of the Internal Revenue
Code shall be operative for the purposes of this chapter.



(m)  Subchapter D (sections 6240 to 6255) (with
respect to simplified audit procedures for electing large partnerships) of the
Internal Revenue Code shall be operative for the purposes of this chapter, with
due regard to chapter 232 relating to tax appeals.



(n)  Section 6501(e) (with respect to
limitation on assessment and collection where there is a substantial omission
of items) of the Internal Revenue Code shall be operative for purposes of this
chapter.



(o)  Section 6511(h) (with respect to running
of periods of limitation suspended while taxpayer is unable to manage financial
affairs due to disability) of the Internal Revenue Code shall be operative for
purposes of this chapter, with due regard to section 235-111 relating to the
limitation period for assessment, levy, collection, or credit.



(p)  Section 7518 (with respect to capital
construction fund for commercial fishers) of the Internal Revenue Code shall be
operative for the purposes of this chapter.  Qualified withdrawals for the
acquisition, construction, or reconstruction of any qualified asset that is
attributable to deposits made before the effective date of this section shall
not reduce the basis of the asset when withdrawn.  Qualified withdrawals shall
be treated on a first-in-first-out basis. [L 2000, c 148, pt of §2, c 174, §1,
and c 297, pt of §5; am L 2001, c 45, §2 and c 221, §6; am L 2003, c 100, §4;
am L 2005, c 60, §4; am L 2006, c 124, §2; am L 2008, c 93, §3; am L 2009, c
133, §4 and c 178, §2]



 



Note



 



  The 2008 amendment applies to taxable years beginning after
December 31, 2007; provided that the retroactive and prospective effective
dates contained in the congressional acts relating to the Internal Revenue Code
and enacted during 2007 shall be operative for chapter 235.  L 2008, c 93, §7.



  The L 2009, c 178 amendment applies to investments made,
renovation costs incurred, or eligible depreciable tangible property placed in
service on or after May 1, 2009.  L 2009, c 178, §10.