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PS 92(5)

Computation of Receipts Factor for Corporation Business Tax Purposes


BACKGROUND: In enacting 1981 Conn. Pub. Acts 411, §2, the Connecticut General Assembly repealed provisions of Conn. Gen. Stat. §12-218 that required allocation (rather than apportionment) of interest, taxable dividends, net gains or losses from sales or book write-offs of intangible assets and not gains or losses from sales, scrappage, abandonment, book write-offs or rentals of tangible assets held, owned or used in connection with the trade or business but not for sale or for rent in the regular course of business. While the receipts factor under Conn. Gen. Stat. §12-218 had previously excluded any income that was specifically allocated, the part of gross receipts which was assignable to Connecticut now expressly included interest managed or controlled within Connecticut, net gains from the sale or other disposition of intangible assets managed or controlled within Connecticut, and net gains from the sale or other disposition of tangible assets situated within Connecticut. Significant in their omission from the receipts factor, as amended by 1981 Conn. Pub. Acts 411, §2, were dividends received. This omission was logically consistent with the concomitant amendment of Conn. Gen. Stat. §12-217 by 1981 Conn. Pub. Acts 411, §1, allowing the deduction of dividends received that had not been otherwise deducted from gross income. Since the enactment of 1981 Conn. Pub. Acts 411, the Department has interpreted Conn. Gen. Stat. §12-218 as excluding from the receipts factor dividends received.


PURPOSE: This Policy Statement clarifies that the amendment made to Conn. Gen. Stat. §12-217 by 1991 Conn. Pub. Acts 3, §100 (June Spec. Sess.), limiting the deductibility of dividends received has no effect on the continued exclusion of dividends received from the receipts factor.


EFFECTIVE DATE: Effective upon issuance and applicable to income years commencing during 1991 and thereafter.


STATUTORY AUTHORITY: Conn. Gen. Stat. §12-218, as amended by 1981 Conn. Pub. Acts 411, §2.


DIVIDENDS ARE STILL EXCLUDED FROM RECEIPTS FACTOR: 1991 Conn. Pub. Acts 3 (June Spec. Sess.) amended Conn. Gen. Stat. §12-217, but made no amendment to Conn. Gen. Stat. §12-218. The Department's interpretation of Conn. Gen. Stat. §12-218 as excluding from the receipts factor dividends received is unaffected by the enactment of 1991 Conn. Pub. Acts 3 (June Spec. Sess.).


EFFECT ON OTHER DOCUMENTS: None affected.  

PS 92(5)
Corporation Business Tax
Issued 4/22/92