COMMITTEE SUBSTITUTE FOR
H. B. 2120
(By Delegate Kiss (By Request))
(Originating in the Committee on Finance)
[February 14, 1995]
A BILL to amend and reenact section six, article twenty-three,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to taxation; business
franchise tax; and exempting passive family partnerships from
the first two hundred dollars of business franchise tax
liability by establishing a credit therefor.
Be it enacted by the Legislature of West Virginia:
That section six, article twenty-three, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 23. BUSINESS FRANCHISE TAX.
§11-23-6. Imposition of tax; change in rate of tax.
(a) General. -- An annual business franchise tax is hereby
imposed on the privilege of doing business in this state and in
respect of the benefits and protections conferred. Such tax shall be collected from every domestic corporation, every corporation
having its commercial domicile in this state, every foreign or
domestic corporation owning or leasing real or tangible personal
property located in this state or doing business in this state and
from every partnership owning or leasing real or tangible personal
property located in this state or doing business in this state,
effective on and after the first day of July, one thousand nine
hundred eighty-seven: Provided, That for taxable years ending
after the thirty-first day of December, one thousand nine hundred
ninety-four, there shall be a tax credit for the first two hundred
dollars of tax liability imposed under this article on any family
partnership engaged solely in the passive activities of holding or
investing in tangible or intangible personal property and engaged
in no other business activities whatsoever. For purposes of this
subsection, a family partnership is any partnership, as defined in
section three of this article, and including a limited liability
partnership or limited liability company, in which more than eighty
percent of the capital or profits interests is held, at all times
during the taxable year of the family partnership, directly or
indirectly by an individual or individuals who are related as set
forth in section 267(b) or 707(b) of the Internal Revenue Code of
1986, as amended, and none of the partnership or membership interests are held, at any time during the taxable year of the
family partnership, by any corporation that is not an electing
small business corporation, as defined in section 1362 of the
Internal Revenue Code, during such taxable year.
(b) Amount of tax and rate; effective date.
(1) On and after the first day of July, one thousand nine
hundred eighty-seven, the amount of tax shall be the greater of
fifty dollars or fifty-five one hundredths of one percent of the
value of the tax base, as determined under this article: Provided,
That when the taxpayer's first taxable year under this article is
a short taxable year, the taxpayer's liability shall be prorated
based upon the ratio which the number of months in which such short
taxable year bears to twelve: Provided, however, That this
subdivision (1) shall not apply to taxable years beginning on or
after the first day of January, one thousand nine hundred
eighty-nine.
(2) Taxable years after December 31, 1988. -- For taxable
years beginning on or after the first day of January, one thousand
nine hundred eighty-nine, the amount of tax due under this article
shall be the greater of fifty dollars or seventy-five one
hundredths of one percent of the value of the tax base as
determined under this article: Provided, That when the taxpayer's taxable year for federal income tax purposes is a short taxable
year, the tax determined by application of the tax rate to the
taxpayer's tax base shall be prorated based upon the ratio which
the number of months in such short taxable year bears to twelve:
Provided, however, That when the taxpayer's first taxable year
under this article is less than twelve months, the taxpayer's
liability shall be prorated based upon the ratio which the number
of months taxpayer was doing business in this state bears to twelve
but in no event shall the tax due be less than fifty dollars.