Missouri Code of State Regulations › Title 12 - DEPARTMENT OF REVENUE › Division 10 - Director of Revenue › Chapter 2 - Income Tax › Section 12 CSR 10-2.155 - Regulated Investment Companies

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This rule explains when a taxpayer may
				  deduct or must add back income from a regulated investment company on its
				  Missouri return.
PUBLISHER'S NOTE: The secretary of state has
				  determined that the publication of the entire text of the material which is
				  incorporated by reference as a portion of this rule would be unduly cumbersome
				  or expensive. Therefore, the material which is so incorporated is on file with
				  the agency who filed this rule, and with the Office of the Secretary of State.
				  Any interested person may view this material at either agency's headquarters or
				  the same will be made available at the Office of the Secretary of State at a
				  cost not to exceed actual cost of copy reproduction. The entire text of the
				  rule is printed here. This note refers only to the incorporated by reference
				  material.
(1) The term
				regulated investment company, (RIC or mutual fund) as used in this rule, shall
				mean an organization which meets the qualifications and has made the proper
				election required by
Internal Revenue Code
(IRC) section
				851.
(2) Pass through of
				Exempt-Interest on United States Obligations. As used in this section, the term
				United States Obligations means those obligations described in section
				143.121.3(a), RSMo, including those obligations described in
				12
				CSR 10-2.150. An RIC having income from United States
				Obligations may pass the exempt character of that income through to its
				shareholders as state income tax exempt-interest dividends. To the extent
				provided in this section, this exempt-interest is allowable as a modification
				on the shareholder's income tax return. The modification allowed will be the
				amount received by the shareholder as a state income tax exempt-interest
				dividend, less the amounts described in subsections (2)(A) and (B). A state
				income tax exempt-interest dividend means any dividend or part of a dividend
				paid by an RIC, attributable to United States Obligations (other than
				exempt-interest dividends as defined in
Internal Revenue Code
(Section 852(b)(5)) as determined by the RIC, and designated by the RIC as a
				state income tax exempt-interest dividend in a written notice mailed to its
				shareholders not later than sixty (60) days after the close of its taxable
				year. The notice also must state the amount of interest paid or expense
				incurred by an RIC in the production of the state income tax exempt-interest
				dividends. The taxpayer's state income tax exempt-interest dividends shall be
				reduced by the amount of-
(A) The federal
				corporate dividend received deduction attributable to the state tax
				exempt-interest dividends; and
(B)
				Interest paid or expense incurred to produce the state tax exempt-interest
				dividends, to the extent that the interest paid or expense incurred exceeds
				five hundred dollars ($500) pursuant to section 143.121.3(a), RSMo.