2010 New Hampshire Statutes
TITLE V TAXATION
CHAPTER 77-E BUSINESS ENTERPRISE TAX
Section 77-E:1 Definitions.
77-E:1 Definitions. In this chapter:
I. "Accumulated revenues and profits'' means:
(a) In the case of a corporation, other than a subchapter S corporation, the amount determined to be earnings and profits for federal income tax purposes; or
(b) In the case of all other business enterprises, including subchapter S corporations, the total undistributed revenues of the enterprise from whatever source derived, except that no distribution of capital, whether in liquidation or otherwise, shall be included in the enterprise value tax base.
II. "Business activity'' means a transfer of legal or equitable title to or rental of property, whether real, personal or mixed, tangible or intangible, or the performance of services, or a combination thereof, made or engaged in, or caused to be made or engaged in, whether in intrastate, interstate, or foreign commerce, with the object of gain, benefit, income, revenue or advantage, whether direct or indirect, to the business enterprise or to others, but shall not include the services rendered by an employee to an employer or services as a director of a corporation. Although an activity of an enterprise may be incidental to another of its business activities, each activity shall be considered to be business engaged in or carried on within the meaning of this chapter. Notwithstanding any other provision of this paragraph, a holder of an ownership interest in a qualified investment company as defined in RSA 77-E:1, XIV, shall not be deemed to be carrying on any business activity within this state due solely to its holding an ownership interest in such qualified investment company.
III. "Business enterprise'' means any profit or nonprofit enterprise or organization, whether corporation, partnership, limited liability company, proprietorship, association, trust, business trust, real estate trust or other form of organization engaged in or carrying on any business activity within this state, except such enterprises as are expressly made exempt from income taxation under section 501(c)(3) of the United States Internal Revenue Code to the extent such enterprise does not engage in any business activity constituting unrelated business activity as defined by section 513 of the United States Internal Revenue Code. Each business enterprise under this definition shall be subject to the tax imposed under RSA 77-E as a separate entity except that trusts treated as grantor trusts under section 671 of the United States Internal Revenue Code shall be included in the return of their owners, and such owners shall be subject to the tax thereon to the extent any such owners would be considered a business enterprise hereunder notwithstanding the existence of the trust. The use of consolidated returns as defined in the United States Internal Revenue Code or of combined reporting is not permitted. Notwithstanding any other provision of this paragraph, an enterprise shall not be characterized as a business enterprise and shall be excluded from taxation at the entity level if it is a qualified investment company as defined in RSA 77-E:1, XIV.
IV. "Commissioner'' means the commissioner of revenue administration.
V. "Compensation'' means all wages, salaries, fees, bonuses, commissions or other payments paid or accrued in the taxable period on behalf of or for the benefit of employees, officers, or directors of the business enterprise and subject to or specifically exempt from withholding under section 3401 of the United States Internal Revenue Code except such payments as are made expressly exempt from withholding under sections 3401(a)(1), (9), (10), (13), (14), (15), (16), (18), (19), and (20); the amount of any deduction taken under RSA 77-A:4, III in the taxable period; and any net earnings from self-employment subject to tax under section 1401 of the United States Internal Revenue Code to the extent not included in the amount of any deduction taken under RSA 77-A:4, III in the taxable period.
VI. "Dividends'' means any distribution of money or property, other than the distribution of newly issued stock of the same enterprise, to the owners of a business enterprise with respect to their ownership interest in such enterprise from the accumulated revenues and profits of the enterprise. The term "dividends'' shall not include:
(a) Distributions of money or property to beneficiaries of a trust qualified under section 401 of the United States Internal Revenue Code;
(b) Cash or non-cash payments of life, sickness, accident, or other benefits to members or their dependents or designated beneficiaries from a voluntary employee's beneficiary association qualified under section 501(c)(9) of the United States Internal Revenue Code;
(c) Distributions of money or property to participants from any common trust fund as defined under section 584 of the United States Internal Revenue Code;
(d) Policyholder dividends as defined under section 808 of the United States Internal Revenue Code, to the extent such dividends are not reduced pursuant to section 809 of the United States Internal Revenue Code;
(e) Payment of interest on deposits of depositors of a mutual bank or credit union; or
(f) Distributions of money or property to or on behalf of beneficiaries of a trust which is either subject to taxation under section 641 or described in section 664 of the United States Internal Revenue Code, provided that, this subparagraph shall apply only to the extent that such trust limits its activities to personal investment activities which do not constitute business activities, and those incidental to or in support of such personal investment activities.
VII. "Employee'' means an employee as defined in section 3401(c) of the United States Internal Revenue Code. Any person from whom an employer is required to withhold for federal income tax purposes shall prima facie be deemed an employee.
VIII. "Employer'' means an employer as defined in section 3401(d) of the United States Internal Revenue Code. Any person required to withhold for federal income tax purposes shall prima facie be deemed an employer.
IX. "Enterprise value tax base'' means the sum of all compensation paid or accrued, interest paid or accrued, and dividends paid by the business enterprise, before special adjustments provided in RSA 77-E:3 or apportionment as provided in RSA 77-E:4.
X. "Gross business receipts'' means all income for federal income tax purposes from whatever source derived in the conduct of business activity, including but not limited to gross proceeds from sales, compensation for rendering services, gross proceeds realized from trading in stocks, bonds, or other evidences of indebtedness, gross proceeds realized from sale of assets used in trade or business, interest, discount, gross rents, royalties, fees, commissions, dividends, without any deduction on account of the cost of property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense paid or accrued and without any deduction on account of losses. In the case of non-profit enterprises not required to pay income taxes, the sum of all revenues derived in the conduct of business activity, including but not limited to the items included in the preceding sentence. Any receipts that would otherwise be considered "gross business receipts'' received by an enterprise that constitutes a qualified trust under section 401, or is defined in section 501(c)(9), or section 584, of the United States Internal Revenue Code shall not be included in gross business receipts for purposes of this chapter.
XI. "Interest'' means all amounts paid or accrued for the use or forbearance of money or property. The term "interest'' shall not include amounts paid, credited or set aside in connection with reserves by insurers to fulfill policy and contractual responsibilities to policy holders or by voluntary employees' beneficiary associations qualified under section 501(c)(9) of the United States Internal Revenue Code to fulfill obligations to members.
XII. "Prescribed filing date'' means the original statutory due date, or approved extended due date.
XIII. "Prescribed payment date'' means the original statutory due date.
XIV. (a) "Qualified investment company'' means:
(1) A regulated investment company as defined in section 851 of the United States Internal Revenue Code as defined in RSA 77-E:1, XVII;
(2) An organization that is an investment company under the Investment Company Act of 1940, as amended;
(3) An organization that would be an investment company under the Investment Company Act of 1940, as amended, but for the exception from investment company status provided by section 3(c)(1) or 3(c)(7) of said Investment Company Act; or
(4) A qualified community development entity as defined in section 45D of the United States Internal Revenue Code, which entity is owned, controlled, or managed, directly or indirectly, by the business finance authority of the state of New Hampshire.
(b) A qualified investment company shall limit its activities to investment or other activities consistent with its organizational purpose and those incidental to or in support of such activities provided that any such exception from investment company status by reason of section 3(c)(7) is available only to issuers whose securities are owned by persons or organizations who are deemed under section 3(c)(7) or any order, regulation or interpretation thereunder not to require protection under the provisions of the Investment Company Act by reason of their size, nature, status, or sophistication. A business organization seeking qualified investment company status shall file an election pursuant to RSA 77-A:5-b.
XV. "Taxable enterprise value tax base'' means the enterprise value tax base adjusted by the special adjustments provided in RSA 77-E:3 and then adjusted by the method of apportionment provided in RSA 77-E:4.
XVI. "Taxable period'' means the calendar or fiscal year, or fractional part of a year, which the business enterprise uses for federal income tax purposes. If the business enterprise is not required to make and file a return for federal income tax purposes, taxable period means the calendar or fiscal year, or fractional part of a year, the enterprise has adopted for financial purposes.
XVII. "United States Internal Revenue Code'' means the United States Internal Revenue Code of 1986, as amended, without the rules, regulations, forms, and procedures of the United States Internal Revenue Service. The rules, regulations, forms and procedures of the United States Internal Revenue Service may, however, be used by the commissioner of revenue administration in formulating rules for adoption under RSA 541-A. This definition shall be operative unless and until a specific statutory exception to its adoption is provided in this chapter, or until the application of one of its provisions is held to violate the New Hampshire constitution.
Source. 1993, 350:19, eff. July 1, 1993; 358:109, eff. at 12:01 a.m., July 1, 1993. 1996, 154:2. 1998, 163:7, eff. July 1, 1998. 2004, 143:6, eff. May 24, 2004. 2011, 181:3, eff. June 14, 2011.
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