Corporate Income Tax
Deductibility of certain items for corporate income tax purposes.
Office of Policy & Research
March 24, 2009
Re: Kansas Income Tax
Your correspondence of January 9, 2009 has been referred to me for response. Thank you for your inquiry and please accept my apologies for the delay in responding.
In your e-mail you inquire as to the deductibility of certain items for corporate income tax purposes. Your questions, and our responses, are set forth below.
Per KSA Sec. 79-32,138(b), state and local taxes imposed on or measured by income or fees in lieu of income tax are not deductible for Kansas corporate income tax purposes. To the extent such taxes are deducted on the federal return, they must be added back to arrive at Kansas net income. Some state taxes from other jurisdictions do not neatly fall into this description. I would like to know whether the following taxes are deductible for Kansas corporate income tax purposes:
1) Ohio Franchise Tax
net worth portion - deductible
income based portion - not deductible
2) Ohio Commercial Activity Tax (CAT)
3) Michigan Single Business Tax (SBT)
4) Michigan Business Tax (MBT)
income based portion-not deductible
modified gross receipts portion-deductible
5) Texas Franchise Tax, KS Opinion Letter O-2003-001
6) Texas Revised Margins Tax, KS Opinion Letter O-2008-004, 9/2/08
not deductible if determined by deducting cost of goods sold or
compensation from gross receipts
I trust this information is of assistance. If I can be of further service, please feel free to contact me.
NOTE: This opinion letter is based solely on the facts provided in your request for advice. If material facts or information were not disclosed this letter is null and void. This letter will be revoked without further action by the Department if the statutes, administrative regulations, published revenue rulings, or court decisions that materially affect this opinion are changed.
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