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 1013 - Other Special Taxpayers (§§ 30501 — 30622) › Subchapter E - Corporations of Individuals (§§ 30581 — 30590) › § 30583 - Effect of election on corporation

(a) General rule. — Except as otherwise provided in this subchapter, a corporation of individuals shall not be subject to the taxes imposed by this part.
(b) Computation of the taxable net income of the corporation. — The taxable net income of a corporation of individuals shall be computed in the same manner as in the case of an regular corporation, except that:
(1) The items described in § 30584(a)(1) of this title shall be separately stated, and
(2) the deductions referred to in § 30553(a)(1), (2), and (3) of this title shall not be allowed to the corporation.
(c) Elections of the corporation of individuals. —
(1) In general. — Except as provided in clause (2), the corporation of individuals shall make any election affecting the computation of items derived from such corporation.
(2) Exceptions. — In the case of a corporation of individuals, elections under the § 30201(a) of this title (relating to taxes paid to the United States, possessions of the United States and foreign countries) shall be made by each stockholder separately.
(d) Recapture of last-in, first-out (LIFO) method benefits. —
(1) In general. — If:
(A) A corporation of individuals was a regular corporation for the last taxable year before the first taxable year for which the election under § 30582(a) of this title was effective, and
(B) the corporation had an election under § 30177(d) of this title in effect for inventoried goods under the LIFO method for such last taxable year, the LIFO recapture amount shall be included in the gross income of the corporation for such last taxable year (and appropriate adjustments to the basis of inventory shall be made to take into account the amount included in gross income under this clause).
(2) Additional tax payable in installments. —
(A) In general. — Any increase in the tax imposed by this part by reason of this subsection shall be payable in three (3) equal installments.
(B) Date for payment of installments. — The first installment under paragraph (A) shall be paid not later than on the due date (determined without regard to extensions) for the filing of the return of the tax imposed by this part for the last taxable year for which the corporation was a regular corporation and the two (2) succeeding installments shall be paid not later than on the due date (as so determined) for the corporation’s return for the two (2) succeeding taxable years.
(C) No interest for period of extension. — Notwithstanding the provisions of §§ 33001 et seq. of this title, the date prescribed for the payment of each installment under this clause shall be determined under this clause.
(3) LIFO recapture amount. — For purposes of this subsection, the term “LIFO recapture amount” means the amount (if any) by which:
(A) The inventory amount of the inventory asset under the first-in, first-out (FIFO) method authorized by § 30177(d) of this title, exceeds
(B) the inventory amount of such assets under the LIFO method.
For purposes of this clause, inventory amounts shall be determined as of the close of the last taxable year referred to in clause (1).
(4) Other definitions. — For purposes of this subsection:
(A) LIFO method. — The term “LIFO method” means the method authorized by § 30177(d) of this title.
(B) Inventory assets. — The term “inventory assets” means stock or other property of a kind which would properly be included in the inventory of the corporation if on hand at the close of the taxable year.
(C) Method of determining inventory amount. — The inventory amount of assets under a method authorized by § 30177(d) of this title shall be determined:
(i) If the corporation uses the retail method of valuing inventories under § 30177(d) of this title, by using such method, or
(ii) if subparagraph (i) does not apply, by using cost or market, whichever is lower.
(e) Recapture of benefits of flexible depreciation, accelerated depreciation or any other authorized accelerated depreciation method. —
(1) In general. — If:
(A) A corporation of individuals was a regular corporation for the last taxable year before the first taxable year for which the election under § 30582(a) of this title was effective, and
(B) for said last taxable year the corporation had in effect an election under § 30181 of this title for the use of the method of flexible depreciation, accelerated depreciation or any other accelerated depreciation method authorized under the Income Tax Act of 1954, the recapture of the benefits of the flexible depreciation method, or of the accelerated depreciation method, shall be included in the gross income of the corporation for such last taxable year (and appropriate adjustments to the flexible or accelerated adjusted basis of the property shall take into consideration the amount included in gross income under this clause).
(2) Any increase in the tax imposed by this part by reason of this subsection shall be payable not later than on the due date for the filing of the return imposed by this part for the last taxable year for which the corporation was a regular corporation.
(3) Benefits recapture amount of flexible depreciation or accelerated depreciation methods or any other accelerated depreciation method authorized under the Income Tax Act of 1954. — For purposes of this subsection, the term “recapture of benefits of the methods of flexible depreciation, accelerated depreciation or any other accelerated depreciation method authorized under the Income Tax Act of 1954” means the amount (if any) by which:
(A) The depreciation amount under the method of flexible or accelerated depreciation, authorized by §§ 30181 and 30182 of this title, or any other depreciation method authorized by the Income Tax Act of 1954, as amended, exceeds
(B) the depreciation amount under the straight-line depreciation method.
For purposes of the preceding phrase, depreciation amount shall be determined as of the close of the last taxable year referred to in clause (1).
(4) Straight-line depreciation method. — The term “straight-line depreciation method” means the method authorized by § 30127 of this title or Section 23(l) of the Income Tax Act of 1954, as amended.
(f) Recognition of deferred income under long-term contracts. —
(1) In general. — If:
(A) A corporation of individuals was a regular corporation for the last taxable year before the first taxable year for which the election under § 30582(a) of this title was effective, and
(B) for said last taxable year, the corporation elected to recognize gross income from installation, edification, and construction work contracts under the completed contract method, the income deferred under such method shall be included in the gross income of the corporation for such last taxable year.
(2) Any increase in the tax imposed by this part by reason of this subsection shall be payable not later than on the due date for the filing of the return of the tax imposed by this part for the last taxable year for which the corporation was a regular corporation.
(3) Recognition of deferred income under long-term contracts. — For purposes of this subsection, the term “recognition of deferred income under long-term contracts” means the amount (if any) by which:
(A) The amount of gross income under the percentage of completion method, exceeds
(B) the amount of gross income under the straight-line depreciation method.
For purposes of the preceding phrase, said amount shall be determined as of the close of the last taxable year referred to in clause (1) of this subsection.
(4) Completed contract. — The term “completed contract” means the method authorized under the regulations of § 30172 of this title.
(g) Recognition of deferred income from installment sales. —
(1) In general. — If:
(A) A corporation of individuals was a regular corporation for the last taxable year before the first taxable year for which the election under § 30582(a) of this title was effective, and
(B) for said last taxable year or any preceding taxable year, the corporation disposed of personal property under the installment sales method, the income deferred under said method shall be included in the gross income of the corporation for said last taxable year.
(2) Any increase in the tax imposed by this part by reason of this subsection shall be payable not later than on the due date for the filing of the return of the tax imposed by this part for the last taxable year for which the corporation was a regular corporation.
(3) Recognition of deferred income under the installment sales plan. — For purposes of this subsection, the term “recognition of deferred income under the installment sales method” means the amount (if any) by which:
(A) The amount of gross income disregarding the installment sales method, exceeds
(B) the amount of gross income under the installment sales method.
For purposes of the preceding phrase, said amount shall be determined as of the close of the last taxable year referred to in clause (1)(A).
(h) Earnings and profits deemed distributed. — In the case of a corporation of individuals which has earnings and profits accumulated as of the close of the taxable year prior to the first year for which the election described in § 30582 of this title is effective, or which has earnings and profits derived from liquidations or reorganizations, said earnings and profits shall be considered as distributed during the first two (2) taxable years of the corporation of individuals subject to the provisions of clauses (1) and (2) of § 30574(a) of this title. When referring to clauses (1) and (2) of § 30574(a) of this title, the term “special partnership” shall be understood to be “corporation of individuals”.
History —Jan. 31, 2011, No. 1, § 1115.03, retroactive to Jan. 1, 2011.