Arkansas Code of 1987 (2023) › Title 26 - TAXATION (§§ 26-1-101 — 26-82-119) › Subtitle 5 - STATE TAXES (§§ 26-50-101 — 26-65-108) › Chapter 65 - ELECTIVE PASS-THROUGH ENTITY TAX ACT (§§ 26-65-101 — 26-65-108) › Section 26-65-103 - Pass-through entity tax

(a)
Before the fifteenth day of the fourth month of the taxable year, an affected business entity shall pay to the Secretary of the Department of Finance and Administration the tax determined under this section.
(b)
(1)
(A)
Except as provided in subdivision (b)(1)(B) of this section, a tax equal to the top marginal income-tax rate under §
26-51-201(a)
is levied on the net taxable income of an affected business entity, as determined under Chapter 51 of this title, including any applicable basis adjustments, to the extent that the income is reported to the secretary as business income derived from the affected business entity.
(B)
For an affected business entity that has a net capital gain, the rate of tax on the capital gain shall be fifty percent (50%) of the rate specified in subdivision (b)(1)(A) of this section.
(2)
If the tax levied under subdivision (b)(1) of this section results in a net operating loss for an affected business entity, the affected business entity may carry forward the net operating loss in the same manner and for the same number of years as provided under §
26-51-427
.
(3)
An affected business entity that is a member of another affected business entity shall subtract its distributive share of the income or add its distributive share of the loss from the other affected business entity to the extent that the income or loss was derived from or connected with sources within this state.
(4)
A nonresident individual who is a member of an affected business entity is not required to file an individual income tax return if, for the taxable year, the only source of income derived from or connected with sources within this state for the member or, if a joint income tax return is filed, the member and his or her spouse, is from one (1) or more affected business entities and each affected business entity files and pays the taxes due under this section.
(5)
An affected business entity that files a return in Arkansas and has income from both within and without Arkansas shall apportion income to Arkansas under the Uniform Division of Income for Tax Purposes Act, §
26-51-701
et seq.
(6)
An affected business entity that receives or earns a tax credit to be applied against the income tax imposed under Chapter 51 of this title may instead elect to apply the tax credit to reduce the tax imposed under this chapter, subject to any limitations applicable to the tax credit.
(c)
An affected business entity shall report to the members of the affected business entity, for each taxable year, each member's respective pro rata share of the tax imposed under this section on the affected business entity based on the pro rata interest of each member as reported to the secretary under §
26-65-108
.
Amended by Act 2021EX2, No. 2,§ 11, eff. for tax years beginning on or after January 1, 2022.
Amended by Act 2021EX2, No. 1,§ 11, eff. for tax years beginning on or after January 1, 2022.
Added by Act 2021, No. 362,§ 2, eff. for tax years beginning on or after 1/1/2022..