77-2716 Income tax; adjustments. - Nebraska Statutes

77-2716. Income tax; adjustments.(1) The following adjustments to federal adjusted gross income or, forcorporations and fiduciaries, federal taxable income shall be made for interestor dividends received:(a) There shall be subtracted interest or dividends received by theowner of obligations of the United States and its territories and possessionsor of any authority, commission, or instrumentality of the United States tothe extent includable in gross income for federal income tax purposes butexempt from state income taxes under the laws of the United States;(b) There shall be subtracted that portion of the total dividends andother income received from a regulated investment company which is attributableto obligations described in subdivision (a) of this subsection as reportedto the recipient by the regulated investment company;(c) There shall be added interest or dividends received by the ownerof obligations of the District of Columbia, other states of the United States,or their political subdivisions, authorities, commissions, or instrumentalitiesto the extent excluded in the computation of gross income for federal incometax purposes except that such interest or dividends shall not be added ifreceived by a corporation which is a regulated investment company;(d) There shall be added that portion of the total dividends and otherincome received from a regulated investment company which is attributableto obligations described in subdivision (c) of this subsection and excludedfor federal income tax purposes as reported to the recipient by the regulatedinvestment company; and(e)(i) Any amount subtracted under this subsection shall be reducedby any interest on indebtedness incurred to carry the obligations or securitiesdescribed in this subsection or the investment in the regulated investmentcompany and by any expenses incurred in the production of interest or dividendincome described in this subsection to the extent that such expenses, includingamortizable bond premiums, are deductible in determining federal taxable income.(ii) Any amount added under this subsection shall be reduced by anyexpenses incurred in the production of such income to the extent disallowedin the computation of federal taxable income.(2) There shall be allowed a net operating loss derived from or connectedwith Nebraska sources computed under rules and regulations adopted and promulgatedby the Tax Commissioner consistent, to the extent possible under the NebraskaRevenue Act of 1967, with the laws of the United States. For a resident individual,estate, or trust, the net operating loss computed on the federal income taxreturn shall be adjusted by the modifications contained in this section. Fora nonresident individual, estate, or trust or for a partial-year residentindividual, the net operating loss computed on the federal return shall beadjusted by the modifications contained in this section and any carryoversor carrybacks shall be limited to the portion of the loss derived from orconnected with Nebraska sources.(3) There shall be subtracted from federal adjusted gross income forall taxable years beginning on or after January 1, 1987, the amount of anystate income tax refund to the extent such refund was deducted under the InternalRevenue Code, was not allowed in the computation of the tax due under theNebraska Revenue Act of 1967, and is included in federal adjusted gross income.(4) Federal adjusted gross income, or, for a fiduciary, federal taxableincome shall be modified to exclude the portion of the income or loss receivedfrom a small business corporation with an election in effect under subchapterS of the Internal Revenue Code or from a limited liability company organizedpursuant to the Limited Liability Company Act or the Nebraska Uniform Limited Liability Company Act thatis not derived from or connected with Nebraska sources as determined in section 77-2734.01.(5) There shall be subtracted from federal adjusted gross income or,for corporations and fiduciaries, federal taxable income dividends receivedor deemed to be received from corporations which are not subject to the InternalRevenue Code.(6) There shall be subtracted from federal taxable income a portionof the income earned by a corporation subject to the Internal Revenue Codeof 1986 that is actually taxed by a foreign country or one of its politicalsubdivisions at a rate in excess of the maximum federal tax rate for corporations.The taxpayer may make the computation for each foreign country or for groupsof foreign countries. The portion of the taxes that may be deducted shallbe computed in the following manner:(a) The amount of federal taxable income from operations within a foreigntaxing jurisdiction shall be reduced by the amount of taxes actually paidto the foreign jurisdiction that are not deductible solely because the foreigntax credit was elected on the federal income tax return;(b) The amount of after-tax income shall be divided by one minus themaximum tax rate for corporations in the Internal Revenue Code; and(c) The result of the calculation in subdivision (b) of this subsectionshall be subtracted from the amount of federal taxable income used in subdivision(a) of this subsection. The result of such calculation, if greater than zero,shall be subtracted from federal taxable income.(7) Federal adjusted gross income shall be modified to exclude any amountrepaid by the taxpayer for which a reduction in federal tax is allowed undersection 1341(a)(5) of the Internal Revenue Code.(8)(a) Federal adjusted gross income or, for corporations and fiduciaries,federal taxable income shall be reduced, to the extent included, by incomefrom interest, earnings, and state contributions received from the Nebraskaeducational savings plan trust created in sections 85-1801 to 85-1814.(b) Federal adjusted grossincome or, for corporations and fiduciaries, federal taxable income shallbe reduced by any contributions as a participant in the Nebraska educationalsavings plan trust, to the extent not deducted for federal income tax purposes,but not to exceed two thousand five hundred dollars per married filing separatereturn or five thousand dollars for any other return.(c) Federal adjusted grossincome or, for corporations and fiduciaries, federal taxable income shallbe increased by the amount resulting from the cancellation of a participationagreement refunded to the taxpayer as a participant in the Nebraska educationalsavings plan trust to the extent previously deducted as a contribution tothe trust.(9)(a) For income tax returns filed after September 10, 2001, for taxableyears beginning or deemed to begin before January 1, 2006, under the InternalRevenue Code of 1986, as amended, federal adjusted gross income or, for corporationsand fiduciaries, federal taxable income shall be increased by eighty-fivepercent of any amount of any federal bonus depreciation received under thefederal Job Creation and Worker Assistance Act of 2002 or the federal Jobsand Growth Tax Act of 2003, under section 168(k) or section 1400L of the InternalRevenue Code of 1986, as amended, for assets placed in service after September10, 2001, and before December 31, 2005.(b) For a partnership, limited liability company, cooperative, includingany cooperative exempt from income taxes under section 521 of the InternalRevenue Code of 1986, as amended, limited cooperative association, subchapterS corporation, or joint venture, the increase shall be distributed to thepartners, members, shareholders, patrons, or beneficiaries in the same manneras income is distributed for use against their income tax liabilities.(c) For a corporation with a unitary business having activity both insideand outside the state, the increase shall be apportioned to Nebraska in thesame manner as income is apportioned to the state by section 77-2734.05.(d) The amount of bonus depreciation added to federal adjusted grossincome or, for corporations and fiduciaries, federal taxable income by thissubsection shall be subtracted in a later taxable year. Twenty percent ofthe total amount of bonus depreciation added back by this subsection for taxyears beginning or deemed to begin before January 1, 2003, under the InternalRevenue Code of 1986, as amended, may be subtracted in the first taxable yearbeginning or deemed to begin on or after January 1, 2005, under the InternalRevenue Code of 1986, as amended, and twenty percent in each of the next fourfollowing taxable years. Twenty percent of the total amount of bonus depreciationadded back by this subsection for tax years beginning or deemed to begin onor after January 1, 2003, may be subtracted in the first taxable year beginningor deemed to begin on or after January 1, 2006, under the Internal RevenueCode of 1986, as amended, and twenty percent in each of the next four followingtaxable years.(10) For taxable years beginning or deemed to begin on or after January1, 2003, and before January 1, 2006, under the Internal Revenue Code of 1986,as amended, federal adjusted gross income or, for corporations and fiduciaries,federal taxable income shall be increased by the amount of any capital investmentthat is expensed under section 179 of the Internal Revenue Code of 1986, asamended, that is in excess of twenty-five thousand dollars that is allowedunder the federal Jobs and Growth Tax Act of 2003. Twenty percent of the totalamount of expensing added back by this subsection for tax years beginningor deemed to begin on or after January 1, 2003, may be subtracted in the firsttaxable year beginning or deemed to begin on or after January 1, 2006, underthe Internal Revenue Code of 1986, as amended, and twenty percent in eachof the next four following tax years.(11)(a) Federal adjusted gross income shall be reduced by contributions,up to two thousand dollars per married filing jointly return or one thousanddollars for any other return, and any investment earnings made as a participantin the Nebraska long-term care savings plan under the Long-Term Care SavingsPlan Act, to the extent not deducted for federal income tax purposes.(b) Federal adjusted gross income shall be increased by the withdrawalsmade as a participant in the Nebraska long-term care savings plan under theact by a person who is not a qualified individual or for any reason otherthan transfer of funds to a spouse, long-term care expenses, long-term careinsurance premiums, or death of the participant, including withdrawals madeby reason of cancellation of the participation agreement or termination ofthe plan, to the extent previously deducted as a contribution or as investmentearnings.(12) There shall be added to federal adjusted gross income for individuals,estates, and trusts any amount taken as a credit for franchise tax paid bya financial institution under sections 77-3801 to 77-3807 as allowed by subsection(5) of section 77-2715.07. SourceLaws 1967, c. 487, § 16, p. 1579; Laws 1983, LB 619, § 1; Laws 1984, LB 962, § 15; Laws 1984, LB 1124, § 3; Laws 1985, LB 273, § 50; Laws 1986, LB 774, § 9; Laws 1987, LB 773, § 9; Laws 1987, LB 523, § 20; Laws 1989, LB 458, § 2; Laws 1989, LB 459, § 3; Laws 1991, LB 773, § 13; Laws 1993, LB 121, § 504; Laws 1994, LB 977, § 13; Laws 1997, LB 401, § 2; Laws 1998, LB 1028, § 3; Laws 2000, LB 1003, § 15; Laws 2002, LB 1085, § 18; Laws 2003, LB 596, § 1; Laws 2005, LB 216, § 10; Laws 2006, LB 965, § 6; Laws 2006, LB 968, § 9; Laws 2007, LB338, § 1; Laws 2007, LB368, § 135; Laws 2007, LB456, § 2; Laws 2010, LB197, § 1; Laws 2010, LB888, § 104.Note: The Revisor of Statutes has pursuant to section 49-769 correlated LB197, section 1, with LB888, section 104, to reflect all amendments.Note: Changes made by LB197 became operative July 1, 2010. Changes made by LB888 became operative January 1, 2011. Cross ReferencesLimited Liability Company Act, see section 21-2601.Long-Term Care Savings Plan Act, see section 77-6101.Nebraska Uniform Limited Liability Company Act, see section 21-101.