Special Session House Bill 1 - Entities
Frequently asked questions on how Special Session House Bill 1 of 2010 may affect you.
As a limited liability company (or partnership or association) with non-transferable shares, how does the passage of Special Session House Bill 1 affect me?
Under Special Session House Bill 1, limited liability companies with non-transferable shares (also partnerships and associations with non-transferable shares) that receive income from interest and dividends during taxable periods ending on or after December 31, 2010, are required to report and pay I&D Tax. To further illustrate the effective date of the repeal in Special Session House Bill 1, we provide two examples:
- If a limited liability company with non-transferable shares has a taxable period ending September 30, 2010 and receives dividend income during that taxable period, the limited liability company is not subject to I&D Tax. (The limited liability company's taxable period ends before December 31, 2010).
- If, however, a limited liability company with non-transferable shares has a taxable period ending December 31, 2010 and receives dividend income during that taxable period, the limited liability company is subject to I&D Tax. (The limited liability company's taxable period ends on December 31, 2010).
As a limited liability company subject to I&D Tax for taxable period ending December 31, 2010, will I be charged underpayment of estimate penalties for I&D Tax even though I was not subject to the I&D Tax during the last taxable period?
No, since you were not required to file a tax return for income received from interest and dividends last tax period; this would be considered your first tax period.