Connecticut General Statutes 12-506h – Deduction allowed in determining tax on interest income when taxpayer is shareholder in an electing small business corporation subject to tax on such interest
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Any shareholder in an electing small business corporation, as that term is defined in Section 1371 of the Internal Revenue Code, when filing for any taxable year as a taxpayer in this state for purposes of the tax imposed on dividends and interest income under section 12-506, shall be allowed a deduction from interest income subject to tax under said section 12-506, with such deduction determined as the amount of any such interest income, which with respect to such corporation is included for the taxable year in net income apportioned to Connecticut in accordance with section 12-218 for purposes of determining the tax applicable to such corporation under chapter 208.
Terms Used In Connecticut General Statutes 12-506h
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- dividends: means those dividends taxable for federal income tax purposes without regard to the dividend exclusion, but exclusive of exempt dividends. See Connecticut General Statutes 12-505
- 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. See Connecticut General Statutes 12-505
- 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. See Connecticut General Statutes 12-505
- 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. See Connecticut General Statutes 12-505