Arkansas Administrative Code › Agency 006 - Department of Finance and Administration › Division 05 - Division of Revenues › Rule 006.05.22-003 - Arkansas Elective Pass-Through Entity Tax

Current through Register Vol. 49, No. 6, June, 2024
I.
Citation.
This rule shall be cited as the "Arkansas Elective Pass-Through
				Entity Tax Rule."
II.
Definitions.
As used in this rule:
(a) "Affected business entity" means a
			 business entity in which members that hold more than fifty percent (50%) of the
			 voting rights in the business entity elect on an annual basis before the due
			 date or extended due date of the business entity's income tax return to be
			 taxed under the Elective Pass-Through Entity Act. Ark. Code Ann. §
									26-65-101 el seq.
(b) 'Applicable basis adjustments" means any
			 increase or decrease to an affected business entity's basis in its property as
			 a result of income, gain, loss, distribution, disposition, or transfer
			 necessary to calculate the cost of or investment in such property.
(c) "Business entity" means an entity,
			 including without limitation a general partnership, limited partnership,
			 limited liability company with one or more members, or for federal income tax
			 purposes, a Subchapter S corporation, that, whether privately owned or publicly
			 traded:
(1) Is engaged in a business for
			 profit; and
(2) Is required to file
			 a return under the Arkansas income tax law.
(d) "Member" means a:
(1) Shareholder of a Subchapter S
			 corporation:
(2) Partner in a
			 general partnership, limited partnership, or limited liability partnership;
			 and
(3) Member of a limited
			 liability company.
(e)
			 "Net operating loss" means the same as defined in §
									26-51-427.
(f) "Nonresident"' means the same as defined
			 in §
									26-51-102.
(g) "'Pass-Through Entity Tax" means the tax
			 imposed by the Elective Pass-Through Entity Tax Act.
(h) "Pro rata interest" means a member's
			 percentage of allocation of the profits of an affected business
			 entity.
(i) "Resident" means the
			 same as defined in §
									26-51-102.
(j) "Secretary" means the Secretary of the
			 Arkansas Department of Finance and Administration or his or her
			 designees.
(k) "Substantially
			 Similar Tax" means a tax that is levied on the aggregate taxable income ot each
			 of the persons that have an ownership interest in an entity that is engaged in
			 business for profit. The Department will annually publish a non-exhaustive list
			 of states that have enacted a substantially similar tax on its website prior to
			 February 1 of each year. The final such list will be published in February 2026
			 unless the Secretary, in his or her sole discretion, decides to publish the
			 list in one or more subsequent years. Any changes in law that affect the levy,
			 collection, implementation, administration, remittance, or calculation of a
			 substantially similar tax could result in that tax being treated as not
			 substantially similar, regardless of its inclusion in the annual list of
			 substantially similar taxes. The fact that a tax is not included on the annual
			 list is not conclusive to the determination of whether the tax is a
			 substantially similar tax.
(l)
			 "Taxable year" means the calendar year, or the fiscal year ending during such
			 calendar year, upon the basis of which taxable income is computed.
Authority.
Ark. Code Ann. §
									26-65-102; Ark. Code Ann. §
									26-65-105.