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) › § 30589 - Definitions and special rules

(a) Pro rata share. — For purposes of this subchapter:
(1) In general. — Except as provided in clause (2), each shareholder’s pro rata share of any item for any taxable year shall be the sum of the amounts determined with respect to the shareholder:
(A) By assigning an equal portion of such item to each day of the taxable year, and
(B) then by dividing that portion pro rata among the shares outstanding on such day.
(2) Election to terminate year. — Under regulations prescribed by the Secretary, if any shareholder terminates the shareholder’s interest in the corporation during the taxable year and all affected shareholders and the corporation agree to the application of this clause, clause (1) shall be applied to the affected shareholders as if the taxable year consisted of 2 taxable years the first of which ends on the date of the termination.
(b) Post-termination transition period. —
(1) In general. — For purposes of this subchapter, the term “post-termination transition period” means:
(A) The period beginning on the day after the last day of the corporation’s last taxable year as a corporation of individuals and ending on the later of:
(i) The day which is one (1) year after such last day, or
(ii) the due date for filing the return for such last year as a corporation of individuals (including extensions), and
(B) the one hundred twenty (120)-day period beginning on the date of a determination that the corporation’s election under § 30582 of this title had terminated for a previous taxable year.
(2) Determination defined. — For purposes of clause (1), the term “determination” means:
(A) A final judicial ruling,
(B) a final agreement,
(C) an agreement between the corporation and the Secretary that the corporation failed to qualify as a corporation of individuals.
(c) Member of a family. — For purposes of this subchapter, the term “member of a family” means, spouses, ancestors, descendants, and any trust in benefit of such persons.
(d) Manner of making elections. — Any election under this subchapter, and any revocation under § 30582(d)(1) of this title, shall be made in such manner as the Secretary shall prescribe by regulations.
(e) Expenses not connected with the active conduct of a trade or business in Puerto Rico. — For purposes of § 30122 of this title, expenses not directly connected to the active conduct of a trade or business of the corporation of individuals shall not be allowed.
(f) Services rendered by a shareholder to the corporation of individuals. — In determining the net income of a corporation of individuals pursuant to § 30583(b) of this title, a corporation of individuals shall appropriate a reasonable compensation that reflects the value of the services in connection with the active conduct of the trade or business of the corporation which services were rendered by a shareholder of such corporation.
History —Jan. 31, 2011, No. 1, § 1115.09, retroactive to Jan. 1, 2011.