This bill would modify the definition of gross income for Alabama income tax purposes and supersedes inconsistent Department of Revenue rules so that resident individuals, who are either partners or members of partnerships or limited liability companies, shareholders of Alabama S corporations, or beneficiaries of estates or trusts, during all or part of a tax year, must include their proportionate share of income from the pass-through entity, regardless of whether the income is earned within or outside of Alabama. This bill would provide resident individuals who are owners or beneficiaries of these pass-through entities an income tax credit for the income tax paid by the entity to other states or territories on behalf of the individual owner or beneficiaries because the other state imposes a withholding or composite return obligation or an entity-level tax on the pass-through entity.
This bill would also provide an income tax credit to resident individuals who are owners or beneficiaries of these pass-through entities for the amount of net income-based taxes paid by the pass-through entity to foreign countries.
Marsh first Substitute Offered
Third Reading Open
Read for the second time and placed on the calendar
Read for the first time and referred to the Senate committee on Finance and Taxation Education
Engrossed
Motion to Read a Third Time and Pass adopted Roll Call 648
Motion to Adopt adopted Roll Call 647
Ways and Means Education first Substitute Offered
Third Reading Passed
Read for the second time and placed on the calendar with 1 substitute and
Read for the first time and referred to the House of Representatives committee on Ways and Means Education
Source: Alabama Legislature