State Codes and Statutes
Statutes > Nebraska > Chapter77 > 77-2734_0177-2734.01. Small business corporation shareholders;limited liability company members; determination of income; credit; Tax Commissioner;powers; return; when required.(1) Residents of Nebraskawho are shareholders of a small business corporation having an election ineffect under subchapter S of the Internal Revenue Code or who are membersof a limited liability company organized pursuant to the Limited LiabilityCompany Act or the NebraskaUniform Limited Liability Company Act shall include in their Nebraskataxable income, to the extent includable in federal gross income, their proportionateshare of such corporation's or limited liability company's federal incomeadjusted pursuant to this section. Income or loss from such corporation orlimited liability company conducting a business, trade, profession, or occupationshall be included in the Nebraska taxable income of a shareholder or memberwho is a resident of this state to the extent of such shareholder's or member'sproportionate share of the net income or loss from the conduct of such business,trade, profession, or occupation within this state, determined under subsection(2) of this section. A resident of Nebraska shall include in Nebraska taxableincome fair compensation for services rendered to such corporation or limitedliability company. Compensation actually paid shall be presumed to be fairunless it is apparent to the Tax Commissioner that such compensation is materiallydifferent from fair value for the services rendered or has been manipulatedfor tax avoidance purposes.(2) The income of any small business corporation having an electionin effect under subchapter S of the Internal Revenue Code or limited liabilitycompany organized pursuant to the Limited Liability Company Act or the Nebraska Uniform Limited LiabilityCompany Act that is derived from or connected with Nebraska sourcesshall be determined in the following manner:(a) If the small business corporation is a member of a unitary group,the small business corporation shall be deemed to be doing business withinthis state if any part of its income is derived from transactions with othermembers of the unitary group doing business within this state, and such corporationshall apportion its income by using the apportionment factor determined forthe entire unitary group, including the small business corporation, undersections 77-2734.05 to 77-2734.15;(b) If the small business corporation or limited liability company isnot a member of a unitary group and is subject to tax in another state, itshall apportion its income under sections 77-2734.05 to 77-2734.15; and(c) If the small business corporation or limited liability company isnot subject to tax in another state, all of its income is derived from orconnected with Nebraska sources.(3) Nonresidents of Nebraska who are shareholders of such corporationsor members of such limited liability companies shall file a Nebraska incometax return and shall include in Nebraska adjusted gross income their proportionateshare of the corporation's or limited liability company's Nebraska incomeas determined under subsection (2) of this section.(4) The nonresident shareholder or member shall execute and forwardto the corporation or limited liability company before the filing of the corporation'sor limited liability company's return an agreement which states he or shewill file a Nebraska income tax return and pay the tax on the income derivedfrom or connected with sources in this state, and such agreement shall beattached to the corporation's or limited liability company's Nebraska returnfor such taxable year.(5) In the absence of the nonresident shareholder's or member's executedagreement being attached to the Nebraska return, the corporation or limitedliability company shall remit with the return an amount equal to the highestindividual income tax rate determined under section 77-2715.02 multipliedby the nonresident shareholder's or member's share of the corporation's orlimited liability company's income which was derived from or attributableto this state. The amount remitted shall be allowed as a credit against theNebraska income tax liability of the shareholder or member.(6) The Tax Commissioner may allow a nonresident individual shareholderor member to not file a Nebraska income tax return if the nonresident individualshareholder's or member's only source of Nebraska income was his or her shareof the small business corporation's or limited liability company's incomewhich was derived from or attributable to sources within this state, the nonresidentdid not file an agreement to file a Nebraska income tax return, and the smallbusiness corporation or limited liability company has remitted the amountrequired by subsection (5) of this section on behalf of such nonresident individualshareholder or member. The amount remitted shall be retained in satisfactionof the Nebraska income tax liability of the nonresident individual shareholderor member.(7) A small business corporation or limited liability company returnshall be filed only if one or more of the shareholders of the corporationor members of the limited liability company are not residents of the Stateof Nebraska or if such corporation or limited liability company has incomederived from sources outside this state.(8) For purposes of this section, any shareholder or member of the corporationor limited liability company that is a grantor trust of a nonresident shallbe disregarded and this section shall apply as though the nonresident grantorwas the shareholder or member. SourceLaws 1984, LB 1124, § 4; Laws 1985, LB 273, § 54; Laws 1987, LB 773, § 18; Laws 1987, LB 523, § 23; Laws 1991, LB 773, § 16; Laws 1993, LB 121, § 508; Laws 2005, LB 216, § 12; Laws 2008, LB915, § 3; Laws 2010, LB888, § 105.Operative Date: January 1, 2011 Cross ReferencesLimited Liability Company Act, see section 21-2601.Nebraska Uniform Limited Liability Company Act, see section 21-101.
