Date Requested:March 22, 2005
Time Requested:05:06 PM
Agency: State Tax Department
CBD Number: Version: Bill Number: Resolution Number:
2005R1911 Intro SB643
CBD Subject: Income from Small Business Trust Taxed
FUND(S)
General Revenue Fund
Sources of Revenue
General Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The purpose of this bill is to tax income of an electing small business trust which is attributable to S corporation stock held by the trust. Although such income is taxable at the federal level, it is not included in federal taxable income, which is the starting point for West Virginia taxation of trusts and thereby escapes this State’s Personal Income Tax; and make technical changes in the denominator of the fraction used in computation of tax for nonresident individuals, and in an erroneous cross-reference to W. Va. Code §11-21-45, which does not exist.
    
    According to our interpretation, and based upon available data, passage of this bill will result ina minimal increase in General Revenue. Taxing the income of an electing small business trust which is attributable to S corporation stock held by the trust will result in a minimal increase in revenue.
    
    There would be no additional administrative costs for the Tax Department associated with passage of this bill.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2005
Increase/Decrease
(use"-")
2006
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
    Passage of this bill would tax income of an electing small business trust which is attributable to S corporation stock held by the trust. Although such income is taxable at the federal level, it is not included in federal taxable income, which is the starting point for West Virginia taxation of trusts and thereby escapes this State’s Personal Income Tax; and make technical changes in the denominator of the fraction used in computation of tax for nonresident individuals, and in an erroneous cross-reference to W. Va. Code §11-21-45, which does not exist.
    
    According to our interpretation, and based upon available data, passage of this bill will result in a minimal increase in General Revenue. Taxing the income of an electing small business trust which is attributable to S corporation stock held by the trust will result in a minimal increase in revenue.
    
    There would be no additional administrative costs for the Tax Department associated with passage of this bill.


Memorandum
Person submitting Fiscal Note:
Mark Muchow
Email Address:
kpetry@prodigy.net