Sec. 12-505. Definitions. - Connecticut Statutes

      Sec. 12-505. Definitions. (a) When used in this chapter, unless the context otherwise requires: (1) "Taxpayer" means (A) a husband and wife both of whom are residents in this state, whether or not they file for the taxable year a single federal income tax return jointly, and (B) each and every other individual who is a resident in this state, who have or has earnings received, credited or accrued in any taxable year from gains from the sale or exchange of capital assets, or from dividends or interest income subject to tax under this chapter and any husband and wife when either of such husband or wife, or both, are not residents in this state and who file for the taxable year a single federal income tax return jointly, and each and every other individual who is not a resident in this state, who have or has earnings received, credited or accrued in any taxable year from gains from the sale or exchange of real property located in Connecticut, provided such property is a capital asset or an asset treated as a capital asset or such sale or exchange is a transaction or event taxable as a sale or exchange of a capital asset; (2) "taxable year" means the same accounting period as the taxpayer's taxable year for federal income tax purposes or that portion of such year as either commences when the taxpayer becomes a resident or ends when the taxpayer ceases to be a resident of this state; (3) "dividends" means those dividends taxable for federal income tax purposes without regard to the dividend exclusion, but exclusive of exempt dividends; (4) "interest income" means (A) any interest income taxable for federal income tax purposes, exclusive of any such income with respect to which taxation by any state is prohibited by federal law, less any amounts forfeited to a bank, savings bank, savings and loan association, credit union or other depository institution, wherever located, as a penalty for premature withdrawal of funds from a time savings account, certificate of deposit, or similar class of deposit, and (B) any interest income from obligations issued by or on behalf of any state, political subdivision thereof, or public instrumentality, state or local authority, district, or similar public entity, exclusive of such income from obligations issued by or on behalf of the state of Connecticut, any political subdivision thereof, or public instrumentality, state or local authority, district, or similar public entity created under the laws of the state of Connecticut; (5) "Commissioner of Revenue Services" or "commissioner" means the Commissioner of Revenue Services; (6) "gains from the sale or exchange of capital assets" means (A) net gain as determined for federal income tax purposes, after due allowance for losses and holding periods, and with respect to any such gain which is earned, received in fact or constructively, accrued or credited to the taxpayer on or after January 1, 1987, but not later than February 8, 1989, deduction of sixty per cent of the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such taxable year, from (i) sales or exchanges of capital assets or assets treated as capital assets, other than notes, bonds or other obligations of the state of Connecticut or any of the political subdivisions thereof, or its or their respective agencies or instrumentalities, or (ii) from transactions or events taxable to the taxpayer as such sales or exchanges, and being the net amount includable in the taxpayer's adjusted gross income, with respect to all such sales, exchanges, transactions, or events, under the provisions of the internal revenue code in effect for the taxable year, exclusive of any gain or loss from the holding or trading of any dealer equity options, as defined in Section 1256 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and exclusive of any gain or loss of a nonresident taxpayer other than from the sale or exchange of real property located in Connecticut, provided such property is a capital asset or an asset treated as a capital asset or such sale or exchange is a transaction or event taxable as a sale or exchange of a capital asset and (B) net gains from sales or exchanges of certain property, as determined in accordance with Internal Revenue Service Form 4797, exclusive of any such net gain includable under subparagraph (A) in this definition of gains from the sale or exchange of capital assets; (7) "resident" means an individual: (A) Who is domiciled in this state; provided, if the individual maintains no permanent place of abode in this state, maintains a permanent place of abode elsewhere, and spends in the aggregate not more than thirty days of the taxable year in this state, he shall be deemed not a resident; or (B) who is not domiciled in this state but maintains a permanent place of abode in this state and is in this state for an aggregate of more than one hundred eighty-three days of the taxable year, unless he, not being domiciled in this state, is in the armed forces of the United States; (8) "person" means the taxpayer or any pledgee, assignee, receiver, referee, trustee, conservator, guardian, custodian or other fiduciary of the taxpayer acting for the taxpayer; (9) "adjusted gross income" means adjusted gross income for the taxable year of any taxpayer as determined for purposes of the federal income tax, but exclusive of any social security or tier 1 railroad retirement benefits included in the taxpayer's total adjusted gross income for such taxable year; (10) "exempt dividends" means any dividend or part thereof, other than a capital gain dividend, paid by a regulated investment company and designated by it as an exempt dividend, in accordance with subsection (d) of this section, in a written notice mailed to its shareholders not later than sixty days after the close of its taxable year.

      (b) Any husband and wife subject to tax under this chapter for any taxable year who are entitled to file a single return jointly for such taxable year for purposes of the federal income tax shall be required to file a single tax return jointly for the purposes of the tax imposed under this chapter, whether or not such husband and wife file a single federal or state income tax return jointly for such taxable year, if such husband and wife reside in the same permanent place of abode on the closing date of such taxable year.

      (c) Every real estate reporting person, as defined in subsection (e) of Section 6045 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and the regulations thereunder, who is involved in any real estate transaction relating to real property located in this state, shall, on or before the last day of February of the year following the calendar year for which the return under subsection (a) of said Section 6045 was required to be made, file with the Commissioner of Revenue Services a copy of such return and a copy of each statement furnished under subsection (b) of said Section 6045 with respect to real estate transactions relating to real property located in this state.

      (d) If, at the close of each quarter of its taxable year, at least fifty per cent of the value of the total assets of a regulated investment company consists of obligations with respect to which taxation by this state is prohibited by federal law, the company shall be qualified to pay exempt dividends to its shareholders. The value of the total assets of a regulated investment company shall be the value as defined in Section 851(c)(4) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended. If the aggregate amount of dividends designated as exempt dividends with respect to a taxable year of any company is greater than an amount equal to the sum of the amount of interest income derived from obligations with respect to which taxation by this state is prohibited by federal law less the amount allowed as a deduction under Section 212 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, for the production or collection of such interest income, the portion of such distribution which shall constitute an exempt dividend shall be only that portion of the amount so designated as the amount of such excess for such taxable year bears to the amount so designated.

      (June, 1969, P.A. 1, S. 26; June, 1971, P.A. 8, S. 9; 1972, P.A. 271, S. 3; P.A. 73-356, S. 1, 10; P.A. 75-213, S. 42, 53; P.A. 76-435, S. 48, 82; P.A. 77-614, S. 139, 610; Nov. Sp. Sess. P.A. 81-4, S. 23, 32; P.A. 82-325, S. 3, 7; June Sp. Sess. P.A. 83-1, S. 10, 15; June Sp. Sess. P.A. 83-37, S. 2, 3; P.A. 85-159, S. 11, 19; 85-469, S. 3, 4, 6; P.A. 87-559, S. 1, 3; P.A. 89-251, S. 16, 203; 89-304, S. 1, 2; P.A. 90-148, S. 5, 34; June Sp. Sess. P.A. 91-3, S. 123, 168; May Sp. Sess. P.A. 92-5, S. 31, 37; P.A. 94-175, S. 4, 32; May Sp. Sess. P.A. 94-4, S. 80, 85; P.A. 95-160, S. 64, 69.)

      History: 1971 act defined "dividends", "resident" and "person", redefined "taxpayer" to include persons receiving gains from dividends and "taxable year" to be year or portion of year commencing after December 31, 1970, and greatly expanded definition of "gains from the sale or exchange of capital assets"; 1972 act excluded from consideration as dividends those distributed by a DISC; P.A. 73-356 included under "taxpayer" resident husband and wife filing joint federal income tax return and deleted reference to dividends under "taxpayer" definition, redefined "taxable year" in terms of residency, included "custodian" in definition of person, redefined "gains from the sale or exchange of capital assets" and deleted definition of "dividends", effective May 4, 1973, and applicable to taxable years beginning on or after January 1, 1973; P.A. 75-213 restored definition of "dividends" and included reference to dividends under "taxpayer", defined "adjusted gross income", excluded notes, bonds or other obligations of the state or political subdivisions or agents or instrumentalities from consideration as capital assets and made technical changes, effective July 1, 1975, and applicable to taxable years commencing on and after January 1, 1975; P.A. 76-435 made technical changes; P.A. 77-614 substituted commissioner of revenue services for tax commissioner, effective January 1, 1979; Nov. Sp. Sess. P.A. 81-4 added Subdiv. (B) in definition of "gains from the sale or exchange of capital assets", effective January 27, 1982, and applicable to taxable years of taxpayers commencing on or after January 1, 1981; P.A. 82-325 revised effective date of Nov. Sp. Sess. act but without affecting this section; June Sp. Sess. P.A. 83-1 added definition of interest income subject to tax under chapter 224, effective July 1, 1983 and applicable to taxable years of taxpayers commencing on or after January 1, 1983; June Sp. Sess. P.A. 83-37 amended definition of "interest income" relating to "any interest income from obligations of any state or political subdivision thereof, exclusive of such income from obligations of the state of Connecticut or any political subdivision thereof" to include any interest income from obligations "issued by or on behalf" of any state, political subdivision thereof, "or public instrumentality, state or local authority, district, or similar public entity" and to exclude such income from obligations "issued by or on behalf" of the state of Connecticut, any political subdivision thereof, "or public instrumentality, state or local authority, district, or similar public entity created under the laws of the state of Connecticut"; P.A. 85-159 amended definition of "adjusted gross income" to exclude social security and tier I railroad retirement benefits, effective May 16, 1985, and applicable to taxable years commencing on or after July 1, 1985; P.A. 85-469 provided for deduction from interest income for penalties of premature withdrawal of funds and revised effective date of P.A. 85-159 making this section applicable to taxable years commencing on or after January 1, 1985; P.A. 87-559 amended the definition of "gains from the sale or exchange of capital assets" to provide that determination of such gains, for purposes of the Connecticut tax, shall allow a deduction of 60% of the excess of net long-term capital gain for the taxable year over net short-term capital loss for such year and to specify that net gains from sales or exchanges of certain property is determined in accordance with Internal Revenue Service Form 4797, effective July 6, 1987, and applicable to taxable years of taxpayers commencing on or after January 1, 1987; P.A. 89-251 amended the definition of gains from the sale or exchange of capital assets so that the deduction of 60% of the excess of net long-term capital gain over the net short-term capital loss for the taxable year is not applicable in the determination of such gains after February 8, 1989, and added Subsec. (b) providing that husband and wife filing a single return jointly under federal income tax shall be required to file a single return jointly under the Connecticut tax on dividends, interest income and capital gains, effective July 1, 1989, and applicable to taxable years commencing on or after January 1, 1989; P.A. 89-304 amended the definition of gains from the sale or exchange of capital assets so that gains subject to tax in Connecticut shall not include any gains from holding or trading dealer equity options, as such options are defined in the Internal Revenue Code, effective June 27, 1989, and applicable to taxable years commencing on or after January 1, 1989; P.A. 90-148 amended definition of gains from the sale of capital assets subject to tax in Connecticut to include any gain from the sale of real property in Connecticut even though the seller is not a resident and added Subsec. (c) providing that anyone required to file a return under the Internal Revenue Code with respect to a real estate transaction in this state shall file a copy of the return with the commissioner of revenue services even though not a resident of Connecticut, effective May 18, 1990, and applicable to taxable years commencing on or after January 1, 1990; June Sp. Sess. P.A. 91-3 amended Subsec. (a) to exclude exempt dividends, as defined therein, from the definition of dividend, amended Subsec. (b) to require most husbands and wives to file joint returns, and added Subsec. (d), re payment of exempt dividends by a regulated investment company, effective August 22, 1991, and applicable to taxable years of taxpayers commencing on or after January 1, 1991; May Sp. Sess. P.A. 92-5 amended Subsec. (d) to make a technical change; P.A. 94-175 divided Subsec. (a) into Subdivs. and Subparas., replacing designators as necessary, effective June 2, 1994; May Sp. Sess. P.A. 94-4 revised effective date of P.A. 94-175 but without affecting this section; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section.

      Net capital losses not usable against dividends. 163 C. 478. Gain realized, when. Id., 520. Persons maintaining permanent place of abode in Connecticut are taxpayers within meaning of this section. 170 C. 567. Cited. 173 C. 506. Because this statute specifically incorporates the federal scheme of dividend taxation, proceeds of a money market fund, except for capital gains distribution, are treated as dividend, not as interest, income. 185 C. 186. "Dividends taxable for federal income tax purposes" construed and discussed. 188 C. 206. Cited. 199 C. 133. Allows application of federal tax principles regardless of length of taxable year in Connecticut. 213 C. 19. Cited. 234 C. 614.