reglab/statecodes huggingface dataset:
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 A - Insurance Companies (§§ 30501 — 30512) › § 30502 - Life insurance companies gross income

In the case of a life insurance company, the term “gross income” means the gross amount of the gains from the sale of the property of the company, but does not include the income earned during the taxable year from interest, dividends, capital gain distributions made by a registered investment company, and rents.
Provided, That in the case of net capital gains made from the sale or exchange of assets kept in separate accounts under the terms and conditions provided in the Insurance Code of Puerto Rico, there shall only be included in the gross income any such net capital gains attributable to risks not assigned to other insurers during the taxable year. Furthermore, in the case of net capital gains made from the sale or exchange of assets kept in separate accounts, there shall be granted a deduction on the reserve for paying benefits, which shall never be greater than net capital gains included in the gross income, minus service fees and death benefits attributable to and directly charged on such gains.
History —Jan. 31, 2011, No. 1, § 1111.02, retroactive to Jan. 1, 2011.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30503 - Life insurance companies net income

In the case of a life insurance company, the term “net income” means the gross income, minus those expenses directly related to the production and earning of the gross income.
History —Jan. 31, 2011, No. 1, § 1111.03, retroactive to Jan. 1, 2011.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30505 - Taxable income not declared in return filed with the Secretary by a foreign life insurance company

(a) Every life insurance company subject to the provisions of § 30504 of this title to which notice of deficiency has been served in accordance with the provisions of Section 6212 of the United States Internal Revenue Code or any similar provision in the country of origin or organization, shall be required to notify in writing to the Secretary the amount attributable to Puerto Rico of the taxable income of the life insurance company determined by the Federal Internal Revenue Commissioner or tax official of the country of origin or organization, in excess of that declared in the income tax return filed with said official for the taxable year in question, and to pay the tax corresponding to the taxable income not declared in the return filed with the Secretary.
(b) The statutory period for the assessment of the tax that may result after applying subsection (a) shall not expire before the term of three (3) years has elapsed, counting as of the date in which the Secretary is notified of the foregoing. For purposes of this subsection, the date of notice shall be understood to be the date on which the communication to such effect that the taxpayer sends by registered mail, with return receipt requested, is received in the Department.
(c) Regardless of the provisions of § 30255(a)(2) of this title, the Secretary may grant to every foreign life insurance company subject to the provisions of § 30504 of this title, an extension of not more than six (6) months to file the return required in § 30242 of this title.
History —Jan. 31, 2011, No. 1, § 1111.05, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 117.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30506 - Income tax returns filed in other jurisdictions

Any foreign life insurance company covered by the provisions of § 30504(c)(1)(A) of this title and subject to the provisions of § 30504 of this title, shall accompany with the return required in § 30242 of this title, a certified copy of the income tax return (without annexes) filed with the Federal Internal Revenue Commissioner. In the case of a foreign life insurance company described in § 30504(c)(1)(B) of this title, a true and accurate copy of the income tax return (without annexes) filed with the tax official of its country of origin or organization shall accompany the return required § 30242 of this title.
History —Jan. 31, 2011, No. 1, § 1111.06, retroactive to Jan. 1, 2011.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30508 - Net operating loss

(a) General rule. — The benefit of the deduction for the net operating loss as allowed by § 30134 of this title shall be allowed to insurance companies subject to the tax imposed by § 30507 of this title, under regulations prescribed by the Secretary.
(b) Special rules. —
(1) Determination of net operating loss. — In determining the net operating loss for a taxable year of an insurance company subject to the tax imposed by § 30507 of this title, no deduction shall be allowed for interest described in § 30507(d)(6) of this title.
(2) Application of § 30134(b)(1) of this title. — In applying § 30134(b)(1) of this title to a subsequent taxable year of an insurance company subject to the tax imposed by § 30507 of this title, no deduction shall be allowed for interest described in § 30507(d)(6) of this title for such subsequent taxable year.
History —Jan. 31, 2011, No. 1, § 1111.08, retroactive to Jan. 1, 2011.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30509 - Taxes of the United States, possessions of the United States, and foreign countries

The amount of income, war-profit, and excess-profit taxes imposed by the United States, the possessions of the United States, and foreign countries shall be allowed as a credit against the tax of a domestic insurance company subject to the tax imposed by § 30501 or § 30507 of this title, to the extent provided in § 30201 of this title for domestic corporations, and in those cases, “net income”, as used in such section, means the net income as defined in this subchapter.
History —Jan. 31, 2011, No. 1, § 1111.09, retroactive to Jan. 1, 2011.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30510 - Computation of gross income

The gross income of insurance companies subject to the tax imposed in § 30507 of this title, shall not be determined in the manner provided in §§ 30151—30157 of this title.
History —Jan. 31, 2011, No. 1, § 1111.10, retroactive to Jan. 1, 2011.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30511 - Mutual insurance companies other than life

(a) Application of the law. — Mutual insurance companies, other than life, shall be taxed in the same manner as other corporations, except as hereinafter provided in this section.
(b) Gross income. — Mutual marine insurance companies shall include in their gross income the gross premiums collected and received, minus any amounts paid for reinsurance.
(c) Deductions. — In addition to the deductions allowed to corporations by § 30104 of this title, the following deductions shall also be allowed to insurance companies, unless otherwise allowed:
(1) Mutual insurance companies other than life. — In the case of mutual insurance companies other than life:
(A) The net addition required by law to be made within the taxable year to reserve funds, including in the case of assessment insurance companies the actual deposit of sums with officials of the Government of Puerto Rico or officials of any state or territory pursuant to law, as additions to guaranty or reserve funds, and
(B) the sums, other than dividends, paid within the taxable year on policy and annuity contracts.
(2) Mutual marine insurance companies. — In the case of mutual marine insurance companies, in addition to the deductions allowed in clause (1), unless otherwise allowed, amounts repaid to policy holders on account of premiums previously paid by them and interest paid thereon from the ascertainment and the payment thereof.
(3) Mutual insurance companies other than life or marine. — In the case of mutual insurance companies (including interinsurers and reciprocal underwriters, but not including mutual life and mutual marine insurance companies) requiring their members to make premium deposits to provide for losses and expenses, the amount of premium deposits returned to their policy holders, and the amount of premium deposits retained for the payment of losses, expenses, and reinsurance reserves.
History —Jan. 31, 2011, No. 1, § 1111.11, retroactive to Jan. 1, 2011.
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 A - Insurance Companies (§§ 30501 — 30512) › § 30512 - Exceptions

The provisions of this Subchapter G shall not apply to international insurers as defined in § 4304(4) of Title 26 of the Insurance Code of Puerto Rico.
History —Jan. 31, 2011, No. 1, § 1111.12, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30531 - Application of provisions

The provisions of this subchapter shall be applicable to special employee-owned corporations (hereinafter denominated “special corporations” in this subchapter) incorporated according to the provisions of Chapter XVI of Act No. 144 of August 10, 1995, as amended.
History —Jan. 31, 2011, No. 1, § 1113.01, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30532 - Special Corporation Computations

(a) Income and deductions.— The gross income of a special employee-owned corporation for any taxable year shall be determined as provided in §§ 30101 and 30102 of this title. Likewise, its net income or loss for any taxable year shall be determined as in the case of any other corporation, except that it must separately establish the items described in § 30534 of this title, and
(1) There shall not be allowed a deduction for net operating losses as provided in § 30134 of this title.
(2) There shall not be allowed a deduction for taxes as provided for in § 30124 of this title with respect to the taxes described in § 30201 of this title.
(3) There shall not be allowed the deductions provided in §§ 30072(d) and 30139 of this title.
(4) There shall not be allowed a deduction for gifts provided in § 30130 of this title
(5) Shall be entitled to flexible depreciation as provided in § 30181 of this title and to accelerated depreciation as provided in § 30182 of this title, subject to the limitations contained in such sections.
(b) Options for special corporations.— Any option affecting the computation of net income of a special employee-owned corporation shall be exercised by the same.
History —Jan. 31, 2011, No. 1, § 1113.02, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 118.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30533 - Imposition of tax to regular and special members, not the special corporation, on balances in internal capital accounts

The proportion of credit notices for productivity and patronage that special employee-owned corporations credit to internal capital accounts of ordinary and special members and which are not excluded from the members’ gross income pursuant to the provisions of § 30102(a)(17)(B) of this title shall not be subject to the income tax imposed by this part to corporations. Regular and special members shall be liable for income tax attributable to distributions made to them by means of credit notices for productivity and patronage, as if they had carried out the activity in their individual capacity. Notwithstanding the distributive share of regular and special members with respect to credited credit notices for productivity and patronage, which consist of tax-exempt interest earned and paid out by the special corporation, as well as income derived from agriculture subject to the deduction provided in § 30132 of this title, to the extent established in said section, shall preserve its character as tax-exempt income in the hands of regular and special members. Likewise, the distributive share of credit notices for productivity and patronage credited to internal capital accounts of regular and special members, with respect to income earned and paid out by the special corporation from activities or commercial transactions declared tax-exempt under the industrial and tax incentives laws, including for that purpose §§ 693 et seq. of Title 23, known as the “Puerto Rico Tourism Incentives Act of 1983”, and §§ 6001 et seq. of Title 23, known as the “Puerto Rico Tourism Development Act of 1993”, or any other tax exemption law similar in nature, shall be subject to the provisions related to distributions of tax-exempt income of each one of said laws, as applicable.
History —Jan. 31, 2011, No. 1, § 1113.03, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30534 - Inclusion of special corporation income

(a) General rule. — Upon determining his/her tax liability, each regular and special member shall take into consideration, separately, his/her distributive share of the income, gains or losses of the special employee-owned corporation, as well as the distributive share of the credit notices for productivity and patronage credited, for any taxable year of the special corporation ended within or simultaneously with the taxable year of such regular or special member, with respect to:
(1) Gains and losses from the sale or exchange of capital assets;
(2) gains and losses from the sale or exchange of property described in § 30141(i) of this title;
(3) contributions made to the entities described in § 30135(a)(3) of this title;
(4) dividends with respect to which the provisions of § 30086 of this title apply;
(5) tax withheld on the dividends described in clause (4);
(6) taxes described in § 30201 of this title;
(7) other items of income, gains, losses, deductions or credits, as established by the Secretary by regulation.
(b) Nature of items constituting distributive shares. — The nature of any item of income, gain, loss, deduction or credit included in the distributive share of a regular or special member under clauses (1)—(7) of subsection (a) shall be determined as if said item were realized by the member directly from the source from which it was realized by the special corporation, or incurred in the same manner incurred by the special corporation. Nevertheless, the distributive share which consists of dividends or profits subject to the provisions of § 30086 of this title in the hands of the special corporation will not retain their eligible distribution nature under said sections when the member is not him/herself an eligible person, as said term is defined in § 30086(d) of this title.
History —Jan. 31, 2011, No. 1, § 1113.04, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30535 - Accounting method for special employee-owned corporations and their regular and special members

The special employee-owned corporation and its regular and special members may opt for any of the accounting methods provided in § 30172 of this title. The accounting method selected by the special employee-owned corporation shall be the same as the accounting method of regular and special members.
History —Jan. 31, 2011, No. 1, § 1113.05, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30536 - Taxable year of corporations and their regular and special members

(a) Special corporation. — A special employee-owned corporation may adopt any taxable year regardless of the taxable year of its regular and special members. It may also change its taxable year, pursuant to the provisions of § 30180 of this title and any other rules established by the Secretary.
(b) Regular and special members. — A regular or special member may adopt any taxable year regardless of the taxable year of the special employee-owned corporation and may change his/her taxable year pursuant to the provisions of § 30180 of this title and any other rules established by the Secretary.
History —Jan. 31, 2011, No. 1, § 1113.06, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30537 - Organization expenditures

Expenditures and fees incurred by the special employee-owned corporation for its organization, or to promote the sale of, or for selling a share in said corporation, or to attract members, shall be deducted by the special corporation as a regular expense.
History —Jan. 31, 2011, No. 1, § 1113.07, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30538 - Nonrecognition of gain or loss on contributions of property made to special corporations

(a) General rule. — No gain or loss shall be recognized to a special employee-owned corporation or to its members or shareholders in the case of a contribution of money or other property to the special corporation, except as provided in subsections (b) and (c) of this section.
(b) Flexibly depreciated property. — In the case of a contribution of flexibly depreciated property, no gain or loss shall be recognized to a special corporation or its members or stockholders unless they elect otherwise. The election to recognize gain or loss shall be irrevocable.
(c) Property subject to liability or lien. — In the case of a property contribution that is subject to liability or lien, which is assumed by the special corporation, gain shall be recognized to the contributing member or stockholder to the extent that the liability or lien portion from which he/she is discharged exceeds the adjusted basis for the contributing member or stockholder, on the contributed property.
History —Jan. 31, 2011, No. 1, § 1113.08, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30539 - Income and credits of regular and special members

In computing his/her taxable income and his/her income tax for any taxable year, each regular or special member shall include as income or as loss from the operation of a trade or business, the share of the credit notices for productivity or patronage distributed to him/her, or the losses included in his/her internal capital account in the special employee-owned corporation shall be reduced. Provided, That the regular or special members of a special employee-owned corporation shall pay, in lieu of any other taxes imposed by this part, a twenty percent (20%) tax on the amount of any distribution of the credit notices for productivity and patronage that has been capitalized and excluded from the gross income of the special employee-owned corporation, pursuant to the provisions of § 30102(a)(17)(B) of this title, and that has been withheld until the complete disassociation of the regular or special member from the corporation; the regular or special member may opt to include such distribution as part of his/her gross income in the income tax return for the year the distribution is made and pay a tax, in accordance with normal tax rates, whichever is more beneficial to the regular or special member. In the case that at the time of the disassociation of the regular member from the special corporation, the balance in the capital internal account reflects a loss, it shall be treated a regular loss.
In the event that the regular member uses the amount received to acquire his/her membership certificate in another special corporation in which he/she is subsequently a regular member, the gain realized, if any, to the extent of the amount used for such purposes, shall be deferred while his/her relationship as regular member in such special corporation continues. Such transfer or reinvestment shall be made within a term not greater than one (1) year from the close of the regular member’s taxable year in which the transfer was made or the distribution effected. In the alternative, the gain realized will be taxed in accordance with the provisions of this section.
History —Jan. 31, 2011, No. 1, § 1113.09, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30540 - Determination of internal capital account basis for payment of membership certificates through property contribution

(a) General rule. — The basis of the internal capital accounts of regular, special or corporate members, with regards to the payment of the certificate of membership in a special employee-owned corporation through property contribution, shall be the adjusted basis on said property for the member in question at the time of the contribution.
(b) Exceptions. —
(1) Flexibly depreciated property. — When the property contributed to the special employee-owned corporation has been flexibly depreciated, the basis of the internal capital account of the regular, special or corporate member shall be equal to the flexibly adjusted basis (as defined in § 30181(d)(2) of this title) of the contributed property, increased by the gain or decreased by the loss recognized in the contribution.
(2) Property subject to accelerated depreciation. — When the property contributed to the special employee-owned corporation has been subject to accelerated depreciation, the basis of the internal capital account of the regular, special or corporate member shall be equal to the contributed property basis, decreased by the depreciation claimed under the accelerated depreciation method, increased by any gain, or decreased by any loss recognized in the contribution.
(3) Property subject to encumbrance. — When the property contributed to the special employee-owned corporation is subject to liabilities or encumbrances from which the transferor is discharged, the basis of the internal capital account of the regular, special or corporate member shall be the adjusted basis on such property for that particular member at the time of the contribution, increased by the recognized gain to the contributing member or decreased by the amount of the part of the liability or encumbrance from which such member is discharged as a result of the contribution.
History —Jan. 31, 2011, No. 1, § 1113.10, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30541 - Basis of property contributed to special employee-owned corporations

The basis to a special employee-owned corporation for the contributed property by an ordinary, special or corporate member shall be the adjusted basis of said property for the member in question at the time of the contribution, increased by the gain recognized to the contributing member (pursuant to § 30538 of this title) in case of property subject to liabilities or encumbrances. In the event that the contributed property had been flexibly depreciated, the basis of such property for the special corporation shall be equal to the flexibly adjusted basis (as defined in § 30181(d)(2) of this title) of the contributed property, increased by the gain or decreased by the loss recognized to the contributing member. In the event that the contributed property had been subject to accelerated depreciation, the basis of said property for the special corporation shall be equal to the contributed property basis, decreased by the depreciation claimed under the accelerated depreciation method, increased by the gain, or decreased by the loss recognized to the contributing member.
History —Jan. 31, 2011, No. 1, § 1113.11, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30542 - Effect of certain corporate reorganizations

When a for-profit corporation establishes a subsidiary under the provisions of this subchapter and Chapter XVI of Act No. 144 of August 10, 1995, as amended, as part of a reorganization plan through which the parent corporation, in turn, will be converted to a special employee-owned corporation by means of merger, consolidation or any other method, or with the purpose to segregate a part or segment of its operations, or to liquidate the entity as such, it shall have a maximum term of five (5) years to complete said reorganization and conversion plan. Such term shall also apply to for-profit corporations that amend their certificate of incorporation to convert to a special employee-owned corporation, whose amendment or conversion should also be consigned in a reorganization plan.
For these purposes, the parent corporation or special employee-owned corporation involved should, on or before a period of one hundred eighty-three (183) days after effecting the reorganization or amendment, file an application with the Secretary for an administrative opinion to the effect that such conversion meets the requirements contained in Section 1501 of Act No. 3 of January 9, 1956, as amended, and said transaction does not have the purpose of evading the payment of taxes. The administrative opinion thus requested shall be issued by the Secretary within a term not greater than ninety (90) days. The Secretary may establish by regulation the information and any other documentation that he/she may deem necessary in order to issue such opinion.
The requirement for an administrative opinion shall also be applicable to special employee-owned corporations which do not emerge as a result of a conversion or corporate reorganization, but which have been organized to carry out a new economic activity.
In those cases in which the Secretary determines that terms of the reorganization were not complied with within the prescribed time period, this shall constitute prima facie evidence that the sole purpose of the transaction was to evade payment of income taxes of the Government of Puerto Rico, in which case said parent corporation and subsidiary shall be subject to the assessment, by the Secretary, of the tax corresponding to the years during which said corporation and its members received the benefits of this subchapter. The procedure to be used shall be equivalent to that provided in §§ 33001 et seq. of this title related to the assessment of taxes in jeopardy and pursuant to the regulations that the Secretary may adopt for this purpose.
History —Jan. 31, 2011, No. 1, § 1113.12, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30543 - Treatment of certain distributions

(a) Taxation on regular, special or corporate members with respect to accrued earnings and profits from taxable years in which the corporation was not a special employee-owned corporation. — Any distribution made by a special employee-owned corporation to regular, special or corporate members from earnings and profits accrued during years in which the corporation was not a special corporation, including earnings and profits derived from reorganizations with persons other than special corporations, shall be subject to the provisions of this subtitle without regard to this subchapter.
(b) Source of distributions. — In those cases in which the special employee-owned corporation has accrued earnings and profits of those described in subsection (a), the Board of Directors of the special corporation will determine the source of the distribution or credit notices made.
History —Jan. 31, 2011, No. 1, § 1113.13, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30544 - Credit for payment of membership certificates by ordinary and special members

(a) General rule. — It shall be granted to any person to whom a certificate of membership is issued as a regular or special member of the special corporation, a credit equal to twenty-five percent (25%) of the total amount paid for said certificate, up to a maximum of one thousand dollars ($1,000). In the event that the certificate has been paid by a regular member in property, the cost or adjusted basis of the contributed property for such member shall be taken as credit. The credit shall be taken against the determined income tax for the year in which the required payments to acquire the certificate are made, whether in full or in installments in one or more taxable years, as applicable. The granted credit shall not be applicable against the alternate minimum tax of individuals. Such credit shall not be available if the regular member terminates his/her relationship with the special corporation and uses the amount received to pay for his/her membership certificate in another special corporation in which he/she subsequently becomes an ordinary member, except and to the extent that the cost of the new membership certificate exceeds the cost of the certificate in the corporation where he/she used to be a regular member.
(b) Credit carryover. — In the event that the amount of credit allowed exceeds the determined income tax for the taxable year referred to in subsection (a), the excess may be carried over during the two (2) succeeding taxable years.
History —Jan. 31, 2011, No. 1, § 1113.14, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30545 - Treatment of interest paid on balance of productivity and patronage credit notices

To the extent that the bylaws of the special corporation authorize payment of interest over unpaid credit notices for productivity and patronage or over other unpaid credited distributions to regular and special members, as reflected in the individual internal capital accounts of each member, the interest thus paid shall be exempt from the payment of income tax under this part. This treatment is not extensive to interest paid to corporate members.
History —Jan. 31, 2011, No. 1, § 1113.15, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30546 - Payment to deceased regular or special member’s successor in interest

The amounts to be paid to the heirs or successors of a deceased regular or special member of a special corporation, pursuant to the provisions of § 3873(g) of Title 14, known as the “General Corporations Act”, or that may be includible, pursuant to § 30539 of this title in the gross income of a successor in interest of a deceased member, shall be considered as income with respect to a decedent, pursuant to the provisions of § 30113 of this title.
History —Jan. 31, 2011, No. 1, § 1113.16, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30547 - Treatment of preferred stock

(a) Distributions. — The amounts distributed to preferred stock holders by a special corporation that is not subject to preferential tax treatment under any special statute with respect to tax exemptions which constitute a taxable dividend, shall be subject to a tax equal to ten percent (10%) of the amount of the distribution.
(b) Sale or exchange of preferred stock. — The gain from the sale or exchange of preferred stock in a special corporation shall be subject to a ten-percent (10%) tax over the amount of the realized gain, if any. In the event that a loss is sustained, the same shall be considered as a regular loss.
History —Jan. 31, 2011, No. 1, § 1113.17, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30548 - Special exemption to special employee-owned corporations engaged in manufacturing and not enjoying tax exemption under tax or industrial incentive laws

(a) Special corporations engaged in manufacturing that are not enjoying tax exemption under tax or industrial incentive laws, shall be entitled to choose one of the two (2) following deductions:
(1) Special corporations whose net income not assigned to the collective reserve account and the social fund, and which has not been capitalized, exceeds two hundred thousand dollars ($200,000), and which has maintained an average employment or working position for regular members of twenty (20) or more persons during such taxable year, may deduct the first forty thousand dollars ($40,000) of said income from credit notices for productivity and patronage ratably distributed to their regular and special members that have not been capitalized, as applicable, so that said amount may be fully exempt from the payment of income tax.
(2) Special corporations which for any taxable year derive total net income of less than twenty thousand dollars ($20,000) per job or working position for regular production members, may take a deduction equal to fifteen percent (15%) of their payroll or total production income advances, up to a maximum of fifty percent (50%) of the credit notices for productivity and patronage distributed during the taxable year to its regular and special members, as applicable.
History —Jan. 31, 2011, No. 1, § 1113.18, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30549 - Deduction for special employee-owned corporations for the creation of new jobs

A fifteen percent (15%) annual deduction from the payroll or total income advances attributable to the creation of three (3) to five (5) jobs or working positions for new regular members by a special employee-owned corporation shall be granted. Such deduction shall be twenty percent (20%) of said payroll or total income advances when six (6) to ten (10) jobs or working positions for regular members are created and twenty-five percent (25%) when eleven (11) or more new jobs or working positions for regular members are created. Such deduction shall be allowed starting with the first three (3) taxable years from the creation or organization of the special corporation. To enjoy the allowable deduction, the special corporation shall keep the existing employment or working position level for regular members and payroll or total income advance existing during the immediately preceding taxable year, as applicable.
Any special employee-owned corporation that claims this deduction shall include, as part of its information return, a list of the jobs or working positions for new regular members created during such taxable year, including the name of the employee or regular member, beginning date of employment, his/her classification and salary or income advance earned during said taxable year.
History —Jan. 31, 2011, No. 1, § 1113.19, retroactive to Jan. 1, 2011.
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 C - Special Employee-Owned Corporations and Regular and Special Members (§§ 30531 — 30550) › § 30550 - Sale of shares to a special employee-owned corporation or to employees to organize a special employee-owned corporation

(a) General rule. — No gain shall be recognized if shares of a corporation were sold or exchanged to a special corporation or to employees for the organization of a special corporation, subject to compliance with the following requirements:
(1) The special employee-owned corporation or such employees hold immediately after such sale or exchange, at least fifty-five percent (55%) of the outstanding voting stock of said corporation.
(2) The special corporation or such employees acquire within a period of time not greater than three (3) years, eighty percent (80%) of the outstanding voting stock of said corporation.
(3) The proceeds from the sale or exchange are invested in similar property.
(4) The period to replace or reinvest the proceeds from the sale or exchange begins three (3) months before the sale or exchange of the shares of the corporation and ends twelve (12) months after said sale or exchange takes place.
(5) The taxpayer must file a written statement verified by the special corporation whereby he/she certifies that said shares have been sold or exchanged at the price paid for the same, and the percentage represented by said shares with regards to the total voting stock issued and outstanding of said corporation.
(b) Definition of similar property. — For purposes of this section, the term “similar property” shall have the same meaning as that provided in § 30144(f) of this title to the extent that it is not inconsistent with the provisions of this section.
(c) Impossibility of acquiring similar property. — When the taxpayer is an individual and proves to the Secretary’s satisfaction that he/she has not been able to acquire similar property within the prescribed statutory period, the gain, if any, shall be treated as if it were a long-term capital gain, as said term is defined in § 30141(a)(4) of this title.
History —Jan. 31, 2011, No. 1, § 1113.20, retroactive to Jan. 1, 2011.
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 D - Special Partnerships and Partners (§§ 30551 — 30578) › § 30552 - Partners, not the special partnership, subject to tax

A special partnership that has made an option under the provisions of this subchapter shall not be subject to the income tax imposed by this part on partnerships. Partners shall be liable for taxes on income attributable to their distributive share of the special partnership’s net income. The application of this provision by itself shall not have the effect of treating a partner not otherwise engaged in trade or business within Puerto Rico, as engaged in trade or business in Puerto Rico.
History —Jan. 31, 2011, No. 1, § 1114.02, retroactive to Jan. 1, 2011.
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 D - Special Partnerships and Partners (§§ 30551 — 30578) › § 30553 - Special partnership computations

(a) Income and deductions. — Gross income of a special partnership for any taxable year shall be determined as provided in §§ 30101 and 30102 of this title. Likewise, net income or loss shall be determined for any taxable year as in the case of any other partnership, except that it shall separately determine the items described in § 30556(a) of this title, and:
(1) No deduction shall be allowed for net operating losses as provided in § 30134 of this title.
(2) No deduction shall be allowed for taxes as provided in § 30124 of this title with regard to the taxes described in § 30201 of this title.
(3) The deductions provided in §§ 30072(d) and 30139 of this title shall not be allowed.
(4) It shall be entitled to flexible depreciation as provided in Section 1040 within the limitations of said section, and to accelerated depreciation as provided in § 30181 of this title.
(b) Special partnership options. — Any option affecting the computation of a special partnership’s net income shall be made by the partnership.
History —Jan. 31, 2011, No. 1, § 1114.03, retroactive to Jan. 1, 2011.
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 D - Special Partnerships and Partners (§§ 30551 — 30578) › § 30554 - Accounting method for special partnerships and their partners

The special partnership may choose any of the accounting methods provided in § 30172 of this title. A partner’s distributive share of the special partnership’s net income shall be determined in accordance with the accounting method chosen by the special partnership.
History —Jan. 31, 2011, No. 1, § 1114.04, retroactive to Jan. 1, 2011.
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 D - Special Partnerships and Partners (§§ 30551 — 30578) › § 30558 - Organization and syndication expenses

The expenses and fees incurred by the special partnership for its organization, or to promote the sale of, or to sell an interest in such special partnership, shall be treated as deferred expenses allowable as a deduction proportionately over a period of not less than sixty (60) months beginning with the first month in which the partnership begins its operations. The Secretary shall prescribe by regulation the application of this section.
History —Jan. 31, 2011, No. 1, § 1114.08, retroactive to Jan. 1, 2011.