Connecticut Administrative Code › Title 12 - Taxation › 740(a) - INCOME TAX › Part VI - Credit for income taxes paid to another jurisdiction › Section 12-704(a)-2 - Limitations-general

Current through July 10, 2024
(a) The amount of the credit against
				Connecticut income tax for income taxes paid to a qualifying jurisdiction(s) is
				subject to the limitations provided in subsections (b), (c), (d), and (e) of
				this section and in §
									12-704(c)-1
				of this Part. Where the credit is claimed for income taxes paid to two or more
				qualifying jurisdictions, other than income taxes paid to a state and one or
				more of its political subdivisions, these limitations shall be applied
				separately in accordance with this section to each such jurisdiction. Where the
				credit is claimed for income taxes paid to a state and one or more of its
				political subdivisions, the credit is subject to the limitations provided in
				§
									12-704(a)-3
				and in §
									12-704(c)-1
				of this Part (and not to the limitations provided in this section).
(b) The credit for income tax paid to a
				qualifying jurisdiction cannot exceed the income tax paid to a qualifying
				jurisdiction.
(c) The credit for
				income tax paid to a qualifying jurisdiction cannot exceed the ratio of the
				Connecticut tax liability that a taxpayer's Connecticut adjusted gross income
				derived from or connected with sources in such qualifying jurisdiction bears to
				such taxpayer's Connecticut adjusted gross income. In the case of a part-year
				resident, the credit for income tax paid to a qualifying jurisdiction cannot
				exceed that ratio of the Connecticut tax liability during the residence portion
				of the taxable year that the taxpayer's Connecticut adjusted gross income
				derived from or connected with sources in the qualifying jurisdiction during
				the residence portion of the taxable year bears to the taxpayer's Connecticut
				adjusted gross income during such portion of the year.
(d) Where a taxpayer is subject to income
				taxation in more than one qualifying jurisdiction, and a net loss derived from
				or connected with sources within one such jurisdiction has reduced the
				taxpayer's Connecticut adjusted gross income, the credit for income tax paid to
				a qualifying jurisdiction cannot reduce the Connecticut tax payable to an
				amount less than would have been due if the net loss were excluded from the
				taxpayer's Connecticut adjusted gross income. In such event, the net loss shall
				be added back to Connecticut adjusted gross income in applying the provisions
				of subsection (c) of this section.
(e) The credit for income tax paid to a
				qualifying jurisdiction(s) cannot exceed the Connecticut tax
				liability.
(f) The following
				examples illustrate the application of subsections (b), (c) and (d) of this
				section:
Example 1.
For taxable year 1992, Taxpayer
				  B, a resident trust, has Connecticut taxable income derived from or connected
				  with sources in qualifying jurisdiction U of $80,000. B's Connecticut taxable
				  income is $160,000. B paid income tax of $4,800 to jurisdiction U. B's
				  Connecticut tax liability before the credit is $7,200. B is allowed a credit
				  for income tax paid to jurisdiction U of $3,600 ((80,000/ 160,000) x
				  7,200).
Example 2.
For taxable year 1992, Taxpayers
				  C and D, married resident individuals filing a joint Connecticut income tax
				  return, have the following items included in Connecticut adjusted gross
				  income:
Income from jurisdiction V
$100,000
Net loss from jurisdiction W
(100,000)
Other income
100,000
Connecticut adjusted gross income
$100,000
C and D paid income tax of $6,000 to jurisdiction V, but,
				  although they filed an income tax return with jurisdiction W, they did not owe
				  any income tax thereto for taxable year 1992. C and D's Connecticut tax
				  liability before the credit is $4,500. They are allowed a credit for income tax
				  paid to jurisdiction V of $2,250 ((100,000/ (100,000 + 100,000)) x
				  4,500).
Example 3.
For taxable year 1992 Taxpayer E,
				  a single individual, was a resident of Connecticut until September 30, 1992
				  when he became a resident of jurisdiction X. During the resident period, E
				  worked in qualifying jurisdiction Y, earning $50,000 from jurisdiction Y
				  sources. E's total Connecticut adjusted gross income for his resident period
				  was $75,000, and for the entire taxable year was $100,000. E paid income tax to
				  jurisdiction Y in the amount of $3,000. The Connecticut income tax before the
				  credit for E's period of residence was $3,375 (75,000 x 4.5%). E is allowed a
				  credit for income tax paid to jurisdiction Y of $2,250 ((50,000/75,000) x
				  3,375).
(g) While this
				section pertains to Section
				12-704(a)
				of the general statutes, for purposes of supplementary interpretation, as the
				phrase is used in Section
				12-2
				of the general statutes, the adoption of this section is authorized by Section
				12-740(a)
				of the general statutes.