HB 241 - Income tax; resident limited partnership; nonresident member

First Reader Summary

A BILL to amend Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to income taxes, so as to provide that the distributive share of a nonresident member of a resident limited partnership which derives income exclusively from buying, selling, dealing in, and holding securities on its own behalf and not as a broker shall not constitute taxable income; and for other purposes.

Page Numbers - 1/ 2

Code Sections - 48-7-23

Recorded Votes

• Vote # 121 PASS 02/13/97

HB 241                                            LC 18 8063S 
 
 
 
 
 
 
                        A BILL TO BE ENTITLED 
                               AN ACT 
 
 
  1- 1  To amend Chapter 7 of Title 48 of the Official Code of 
  1- 2  Georgia Annotated, relating to income taxes, so as to 
  1- 3  provide that the distributive share of a nonresident member 
  1- 4  of a resident limited partnership which derives income 
  1- 5  exclusively from buying, selling, dealing in, and holding 
  1- 6  securities on its own behalf and not as a broker shall not 
  1- 7  constitute taxable income; to change certain provisions 
  1- 8  regarding taxation of partnerships; to change certain 
  1- 9  provisions regarding withholding tax on certain partnership 
  1-10  distributions; to provide for applicability; to provide an 
  1-11  effective date; to repeal conflicting laws; and for other 
  1-12  purposes. 
 
  1-13       BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA: 
 
  1-14                           SECTION 1. 
 
  1-15  Chapter 7 of Title 48 of the Official Code of Georgia 
  1-16  Annotated, relating to income taxes, is amended by striking 
  1-17  Code Section 48-7-23, relating to taxation of partnerships, 
  1-18  and inserting in its place the following: 
 
  1-19    "48-7-23. 
 
  1-20    The net income of a partnership shall be computed in the 
  1-21    same manner and on the same basis as in the case of an 
  1-22    individual except that the deduction of contributions for 
  1-23    charitable purposes allowed by the Internal Revenue Code 
  1-24    of 1986 shall not be allowed. Individuals carrying on 
  1-25    business in partnership shall be liable for income tax 
  1-26    only in their individual capacity; and each partner shall 
  1-27    include in his or her individual return his or her 
  1-28    distributive shares, whether distributed or not, of the 
  1-29    net income of the partnership for the taxable year except 
  1-30    as provided in subsection (c) of Code Section 48-7-24. If 
  1-31    the taxable year of a partner is different from that of 
  1-32    the partnership, the amount included in a partner's 
  1-33    individual return shall be based upon the income of the 
 
 
 
 
                                 -1- 
 
 
 
  2- 1    partnership for the taxable year of the partnership ending 
  2- 2    with or within the partner's taxable year." 
 
  2- 3                           SECTION 2. 
 
  2- 4  Said chapter is further amended by adding a new subsection 
  2- 5  at the end of Code Section 48-7-24, relating to certain 
  2- 6  resident and nonresident partnerships, to be designated 
  2- 7  subsection (c), to read as follows: 
 
  2- 8    "(c) Notwithstanding any other provision of this chapter 
  2- 9    to the contrary, the distributive share of a nonresident 
  2-10    member of a resident limited partnership or other similar 
  2-11    nontaxable entity which derives income exclusively from 
  2-12    buying, selling, dealing in, and holding securities on its 
  2-13    own behalf and not as a broker shall not constitute 
  2-14    taxable income under this chapter.  For purposes of this 
  2-15    subsection, a resident limited partnership shall not 
  2-16    include a family limited partnership the majority interest 
  2-17    of which is owned by one or more natural or naturalized 
  2-18    citizens related to each other within the fourth degree of 
  2-19    reckoning according to the laws of descent and 
  2-20    distribution." 
 
  2-21                           SECTION 3. 
 
  2-22  Said chapter is further amended by striking paragraph (1) of 
  2-23  subsection (a) of Code Section 48-7-129, relating to 
  2-24  withholding tax on certain partnership distributions, and 
  2-25  inserting in its place a new paragraph (1) to read as 
  2-26  follows: 
 
  2-27      "(a)(1) Any partnership, Subchapter 'S' corporation, or 
  2-28      limited liability company which owns property or does 
  2-29      business within this state shall be subject to a 
  2-30      withholding tax.  Such tax shall be withheld from any 
  2-31      distributions paid or credited to members who are not 
  2-32      residents of Georgia, except as provided in subsection 
  2-33      (c) of Code Section 48-7-24." 
 
  2-34                           SECTION 4. 
 
  2-35  This Act shall become effective upon its approval by the 
  2-36  Governor or upon its becoming law without such approval and 
  2-37  shall be applicable to all taxable years beginning on or 
  2-38  after January 1, 1997. 
 
  2-39                           SECTION 5. 
 
  2-40  All laws and parts of laws in conflict with this Act are 
  2-41  repealed. 
 
 
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