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) › § 30584 - Pass-through of items to shareholders

(a) Determination of stockholder’s tax liability.—
(1) In general.— In determining the tax under this part of a stockholder for the stockholder’s taxable year in which the taxable year of the corporation of individuals ends (or for the final taxable year of a stockholder who dies, or of a trust or estate which terminates, before the end of the taxable year of the corporation), there shall be taken into account the stockholder’s pro rata share of the corporation’s income loss, deduction, or credit to be included separately as determined in subsections (b) and (d) which could affect the tax liability of any stockholder, and
(2) Limitation on allowable losses or deductions.— For purposes of clause (1), the pro rata share of a stockholder in the losses or deductions of a corporation of individuals incurred during a taxable year shall be allowed only to the amount established in § 30122(d)(1) of this title.
(b) Income, loss, deductions or credit items.— Each shareholder shall take in consideration separately (subject to conditions and limitations provided by this part) its distributive share in the corporation of individuals, with respect to:
(1) Gains and losses in the sale or exchange of capital assets owned by the corporation of individuals for not more than six (6) months;
(2) gains and losses in the sale or exchange of capital assets owned by the corporation of individuals for more than six (6) months;
(3) gains and losses in the sale or exchange of properties described in § 30141(i) of this title;
(4) gains and losses in the sale or exchange of all the assets in an exempt business under the Puerto Rico Tourist Development Act of 1993, §§ 6001 et seq. of this title;
(5) dividends to which the provisions of §§ 30086 of this title;
(6) withheld tax from dividends described in clause (5);
(7) taxes described in §§ 30201 and 30272 of this title;
(8) taxes described in §§ 30273 and 1082.09 [sic] of this title;
(9) income or losses derived from activities covered by a resolution or concession of an exemption, as the case may be, under the Puerto Rico Tourist Incentive Act of 1983, §§ 693 et seq. of this title, or the Puerto Rico Tourist Development Act of 1993, §§ 6001 et seq. of Title 23, or any other succeeding similar law;
(10) net income or losses of the corporation of individuals, excluding the items whose separate consideration is required under other clauses of this subsection, and
(11) other income, gain, loss, deduction, or credit items, as provided by the Secretary through regulations, including the distributive share of each partner in the amount of expenses incurred or paid to a related party or a home office located outside of Puerto Rico, in the value of personal property purchased from such parties, as provided in § 30073 of this title, and in the gross income, as defined in § 30090(e) of this title.
The provisions of this subsection shall not apply to a shareholder subject to the tax imposed by § 30431(a) of this title, in accordance with subsection (i) of this section. For purposes of § 30431(a) of this title, the shareholder’s distributive share in the net income of the corporation of individuals shall be the total amount of clauses (1) through (5), and (9) through (11) of subsection (a).
(c) Option for treatment of some items as ordinary income or ordinary loss.—
(1) For any taxable year, a stockholder may opt, with respect to each corporation of individuals, to treat its distributive share in the items described in clauses (1)—(3), (5) and (11) of subsection (b) as part of its ordinary income or loss under subsection (b)(10), except that for such purposes the amount allowed as a deduction for its distributive share in the losses of the sale or exchange of capital assets by the corporation shall be limited to the amount includible as its distributive share in the gains of the corporation in said sales or exchanges.
(2) The option provided in clause (1) shall be made by the stockholder in accordance with the regulations promulgated by the Secretary and, once it is made for a particular taxable year, shall be irrevocable with respect to that year.
(d) Credit.— The stockholder may claim as credit against its tax responsibility the participation of any credit provided by subsections (a) and (f) of § 6013 of this title, credits under Articles 14 and 16 of the Investment Capital Funds Act, and the tax imposed under § 10042(a) of this title, or by any future law of similar nature. The participation of a stockholder in the credits described in this subsection shall be determined and reported by the corporation in accordance with subsection (b).
(e) Character of attributed items.— The character of any item included in a stockholder’s pro rata share pursuant to subsection (a)(1) shall be determined as if said item was derived directly from the source from which it was derived by the corporation.
(f) Gross income of a stockholder.— In any case where it is necessary to determine the gross income of a stockholder for purposes of this part, said gross income shall include the stockholder’s pro rata share of the gross income of the corporation.
(g) Special rules for losses and deductions.—
(1) Cannot exceed stockholder’s basis in stock and debt.— The aggregate amount of losses and deductions used by a stockholder under subsection (a) for any taxable year shall not exceed the sum of:
(A) The adjusted basis of the stockholder’s stock in the corporation of individuals (determined considering § 30585(a)(1) of this title for the taxable year), and
(B) the stockholder’s adjusted basis of any indebtedness of the corporation of individuals to the stockholder (determined without regard to any adjustment under § 30585(b)(2) of this title for the taxable year).
(2) Indefinite carryover of disallowed losses and deductions.— Any loss or deduction which is disallowed for any taxable year by reason of clause (1) shall be treated as incurred by the corporation in the following taxable year with respect to that stockholder.
(3) Carryover of disallowed losses and deductions to post-termination transition period.—
(A) In general.— If for the last taxable year of a corporation for which it was a corporation of individuals a loss or deduction was disallowed by reason of clause (1), such loss or deduction shall be treated as incurred by the stockholder on the last day of any post-termination transition period.
(B) It cannot exceed stockholder’s basis in stock.— The aggregate amount of losses and deductions taken into account by a stockholder under paragraph (A) shall not exceed the adjusted basis of the shareholder’s stock in the corporation (estimated at the close of the last day of the post-termination transition period and without regard to this clause).
(C) Adjustment in basis of stock.— The basis in the stock of the corporation shall be reduced by the amount allowed as a deduction by reason of this clause.
(h) Treatment of family group.— If an individual who is a member of a family (within the meaning of § 30589(c) of this title) of one or more stockholders of a corporation of individuals renders services for the corporation or furnishes capital to the corporation without receiving reasonable compensation therefor, the Secretary shall make the proper adjustments to the items allowed to said individual and said stockholders in order to reflect the value of said services or capital.
(i) Treatment of tax imposed on built-in gains.— If any tax is imposed on a corporation of individuals pursuant to § 30588 of this title for any taxable year, for purposes of subsection (a), the amount so imposed shall be treated as a loss incurred by the corporation of individuals during said taxable year. The character of said loss shall be determined by the pro rata allocation of the loss among the recognized built-in gains that gave rise to said tax.
(j) Treatment of distributive participation to alien stockholders.— The income share of a corporation of individuals distributable to its shareholders who are alien non-residents of Puerto Rico shall be treated as a distribution made at the end of the corporation of individual’s taxable year, and the same shall be regulated by the provisions of §§ 30278, 30280, and 30431 of this title. Notwithstanding, the amount of tax withheld under said provisions shall be remitted to the Department no later than the fifteenth (15th) day of the third (3rd) month following the close day of the taxable year of the corporation of an individual or the fifteenth (15th) day of the forth (4th) month following said close, when an extension has been granted in accordance with the provisions of § 30247(c) of this title
History —Jan. 31, 2011, No. 1, § 1115.04, retroactive to Jan. 1, 2011; June 30, 2013, No. 40, § 32.