2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART II - Income Taxes (§§ 30041 — 30622) › Chapter 1004 - Tax Rates (§§ 30061 — 30090) › Subchapter B - Tax on Corporations (§§ 30071 — 30076) › § 30074 - Adjustments in computing alternative minimum net income

(a) Adjustments.— In determining the amount of the alternative minimum net income for any taxable year, the following treatment shall apply, in lieu of the treatment applicable for purposes of determining the regular tax.
(1) Depreciation.—
(A) Accelerated depreciation.— In the case of a taxpayer that elected to use the alternative accelerated depreciation method authorized under § 30181 of this title, the straight-line depreciation method authored by § 30127 of this title shall be used.
(B) In the case of a taxpayer that is not specifically excluded in subsection (e) of this section, who pursuant to a special law, has used an alternative accelerated depreciation method or other exemptions to the capitalization or depreciation requirements established in this Code, the straight-line depreciation method authorized under § 30127 of this title shall be used.
(2) Installment sales.— In the case of a dealer in personal property who, after December 31, 1986, disposes of personal property through the installment sales plan as contemplated in § 30175 of this title, the income from said disposition shall be determined without taking into account the installment sales method, and all payments to be received shall be deemed as received in the taxable year of such disposition.
(3) Long-term contracts.— In the case of a taxpayer who uses the contract completion method to declare income under long-term contracts as provided in § 30176 of this title, the gross taxable income related to such contract shall be determined through the accounting method known as percentage of completion method.
(4) Interest expense.— In the case of a financial institution, § 30137(f) of this title, shall apply with regard to the proportional assignment of interest expenses attributable to the interest income from exempt liabilities, regardless of their date of acquisition, except that the term “exempt liability” subject to this assignment shall not include liabilities consisting of mortgage loans granted or secured before September 1, 1987, by the Government and its agencies, municipalities, and instrumentalities, whose interest would have been deductible from gross income for purposes of the taxes imposed by Act No. 34 of June 4, 1975, as amended.
(5) Deduction of net operating loss.— In determining the alternative tax, the deduction of a net operating loss shall be allowed, as provided in subsection (d), in lieu of what is provided in § 30134 of this title.
(6) Deduction for expenses for services rendered outside of Puerto Rico.—
(A) For taxable years beginning before January 1, 2013.— In determining the alternative minimum tax, no deduction shall be allowed for expenses incurred or paid to a related party, as such term is defined in § 30431(a)(3) or § 30441(a)(3) of this title, whichever applies, for services rendered outside of Puerto Rico, if such payment for services are not subject to income taxes under this Code.
(B) For taxable years beginning after December 31, 2012.— In determining the alternative minimum tax, no adjustment shall be allowed on account of this.
(b) Adjustment for excess net income on the books.— The alternative minimum net income shall be increased by sixty percent (60%) of the amount, if any, by which the adjusted net income on the books exceeds the alternative minimum net income, determined without considering the increase provided herein, nor the deduction for net operating loss allowed for purposes of the alternative tax. For purposes of this subsection, the following is provided:
(1) In general.— The term “adjusted net income on the books” shall mean the net income or net loss determined in the income statement of the taxpayer, adjusted as provided in this subsection.
(2) Tax-exempt interest.— The taxpayer shall exclude income from interest derived from tax-exempt liabilities the provisions of § 30102(a)(3) of this title or under the provisions of any special law. The net income on the books shall be increased by the amount of interest expense assigned to exempt interest under subsection (a)(4) of this section and any amount that can be attributed to said exempt interest pursuant to the provisions of § 30137(a)(5) of this title. Those expenses (including interest expenses) incurred upon the acquisition or retention of exempt liabilities consisting of mortgage loans granted or secured before September 1, 1987, by the Government and its agencies, municipalities, and instrumentalities, which would have been deductible from gross income for purposes of the tax imposed by Act No. 34 of June 4, 1975, as amended, known as the ‘Financial Institutions Franchise Act,’ shall not be taken in consideration in the determination of this adjustment.
(3) Adjustment for amortization of goodwill and other intangibles other than goodwill.— The taxpayer shall adjust his/her costs or expenses for any difference between the cost of the amortization of goodwill and other intangibles taken in the determination of his/her net income on the books and the deduction for amortization of goodwill and other intangibles allowed by § 30127 of this title.
(4) Dividends.— The taxpayer shall exclude the total amount received as dividends from a domestic corporation or from industrial development income or tourist development income (as defined in the Puerto Rico Tourist Development Act of 1993, §§ 6001 et seq. of Title 23, or any similar previous or successor law) or green energy income under §§ 10421 et seq. of this title, known as the “Green Energy Incentives Act of Puerto Rico” or any similar previous or successor law, up to the amount that such dividends have not been included in the net income for regular tax purposes.
(5) Industrial development income, green energy income, and tourist development exempt income.— Net income on the books shall not include net industrial development income, or green energy income under §§ 10421 et seq. of this title, known as the “Green Energy Incentives Act of Puerto Rico”, or any similar previous or successor law, or net income tax constitutes net tourist development income, as said term is defined in the Puerto Rico Tourist Development Act of 1993, §§ 6001 et seq. of Title 23, or any previous or subsequent similar law.
(6) Bona-fide agricultural business income.— Net income on the books shall be reduced by the amount of the deduction for income derived from a bona-fide agricultural business allowable under the provisions in § 30132 of this title.
(7) Adjustment for use of the equity method.— The taxpayer shall exclude or include, as the case may be, the amount of any income or loss items attributable to his/her investment in another corporation that have been computed by the accountant in the taxpayer’s income statement, having used the equity method.
(8) Adjustments for certain taxes.— The taxpayer shall exclude any Puerto Rico income taxes and any income and excess profit taxes imposed by the United States, any United States possessions, or any foreign country, that were directly or indirectly taken into account in the taxpayer’s income statement. The preceding sentence shall not apply to taxes imposed by a foreign country, the United States, or United States possessions, if the taxpayer elects not to avail him/herself of the benefits of § 30201 of this title.
(9) Foreign corporations.— In the case of a foreign corporation, the necessary adjustments shall be made for the net income on the books to reflect only the income, expense, and loss items that are actually related to the operation of a trade or business in Puerto Rico.
(10) Catastrophe loss insurance reserve.— The net income on the books shall be reduced by the amount provided as reserve for payment of catastrophe loss insurance required by §§ 2501—2509 of Title 26, known as the Insurance Code of Puerto Rico.
(11) Secretary’s authority to adjust items.— The Secretary shall, through regulations to that effect, adopt the necessary provisions to avoid the omission or duplication of any item when determining the adjusted net income on the books.
(c) Income statement.— For purposes of this section, the term “income statement” shall have the meaning provided in § 30255(c) of this title.
(d) Definition of net operating loss deduction for determining the alternative tax.—
(1) In general.— For purposes of subsection (a)(5) of this section, the term “net operating loss deduction for determining the alternative tax” means the net operating loss deduction allowed under § 30134 of this title, except that:
(A) The amount of such deduction shall not exceed eighty percent (80%) of the alternative minimum net income, determined without regard to such deduction, and
(B) in determining the amount of such deduction, the net operating loss for any taxable year, within the meaning of § 30134(a) of this title, shall be adjusted as provided in subsections (a) and (b) of this section.
(e) Exception for certain corporations.— The provisions of §§ 30173 and 30174 of this title shall not apply to:
(1) Special partnerships that have an election in effect for the taxable year under the provisions of § 30562 of this title;
(2) corporations of individuals who have an election in effect for the taxable year under the provisions of § 30582 of this title;
(3) the registered investment companies that pay taxes according to the provisions of § 30521 of this title;
(4) real estate investment trusts exempt under § 30471(a)(8)(F) of this title;
(5) special employee-owned corporations organized pursuant to §§ 3501 et seq. of Title 14, known as the “General Corporations Act”, or any other similar or subsequent law;
(6) corporations that are operating or operate under the provisions of §§ 10641 et seq. of this title, known as the “Economic Incentives Act for the Development of Puerto Rico”, or any other preceding or subsequent similar law, or under §§ 6001 et seq. of Title 23, known as the “Puerto Rico Tourist Development Act”, or any other preceding or subsequent similar law, or under the provisions of any other special law that grants a tax exemption with regard to income derived from its operations, but only with regard to income derived from its operations covered under a tax exemption decree, resolution or grant conferred under said laws, or up to the amount of the exemption granted by any special law, and
(7) corporations that operate a bona fide agricultural business up to the limit that the income derived from such activity is allowed as a deduction under the provisions of § 30132 of this title.
History —Jan. 31, 2011, No. 1, § 1022.04, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 13; June 30, 2013, No. 40, § 13.