GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1999

S	1 

SENATE BILL 55

Short Title:  Revenue Laws Technical Changes.	(Public)

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Sponsors: Senators Cochrane, Dalton, Hartsell, Hoyle, Kerr, and Webster.

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Referred to:  Finance.

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February 9, 1999

A BILL TO BE ENTITLED
AN ACT TO MAKE TECHNICAL AND CONFORMING CHANGES TO THE REVENUE LAWS AND RELATED STATUTES.
The General Assembly of North Carolina enacts:
Section 1.  Section 7 of S.L. 1998-158 reads as rewritten:
"Section 7.  This act is effective when it becomes law."
Section 2.  G.S. 1C-1601(a)(9) reads as rewritten:
"(a)	Exempt property. – Each individual, resident of this State, who is a debtor is entitled to retain free of the enforcement of the claims of creditors:
...
(9)	Individual retirement plans as defined in the Internal Revenue Code and any plan treated in the same manner as an individual retirement plan under the Internal Revenue Code. For purposes of this subdivision, 'Internal Revenue Code' means Code as defined in G.S. 105-228.90."
Section 3.(a) G.S. 10A-4(b) reads as rewritten:
"(b)	A person qualified for a notarial commission shall meet all of the following requirements:
(1)	Be at least 18 years of age.
(2)	Reside or work in this State.
(3)	Satisfactorily complete a course of study that is approved by the Secretary and consists of not less than three hours nor more than six hours of classroom instruction provided by community colleges throughout the State, unless the person is a licensed member of the Bar of this State.
(4)	Purchase and keep as a reference a manual approved by the Secretary that describes the duties, authority, and ethical responsibilities of notaries public.
(5)	Submit an application containing no significant misstatement or omission of fact. The application form shall be provided by the Secretary and be available at the register of deeds office in each county. Every application shall bear the signature of the applicant written with pen and ink, and the signature shall be acknowledged by the applicant before a person authorized to administer oaths. The applicant shall also obtain the recommendation of one publicly elected official in North Carolina whose recommendation shall be contained on the application.
(6)	Pay a nonrefundable fee of thirty dollars ($30.00)."
Section 3.(b) G.S. 10A-7(a) reads as rewritten:
"(a)	The course of study required by G.S. 10A-4(b) shall be taught by an instructor certified in accordance with rules adopted by the Secretary. An instructor must meet the following requirements to be certified to teach a course of study for notaries public:
(1)	Complete and pass a six-hour instructor's course taught by the Director or other person approved by the Secretary.
(2)	Have six months of active experience as a notary public.
(3)	Maintain a current commission as a notary public.
(4)	Purchase the current notary public guidebook.
(5)	Pay a nonrefundable fee of fifty dollars ($50.00).
)"
Section 3.(c)	This section becomes effective July 1, 1999.
Section 4.  G.S. 28A-21-2(a) reads as rewritten:
"(a)	Unless the time for filing the final account has been extended by the clerk of superior court, the personal representative or collector must file the final account for settlement within one year after qualifying or within six months after receiving a State estate or inheritance tax release, whichever is later. If no estate or inheritance tax return was required to be filed for the estate, the personal representative or collector shall so certify in the final account filed with the clerk of superior court. Such certification shall list the amount and value of all of the decedent's property, and with respect to real estate, its particular location within or outside the State, including any property transferred by the decedent over which the decedent had retained any interest, or any property transferred within three years prior to the date of the decedent's death, and after being filed and accepted by the clerk of the superior court shall be prima facie evidence that such property is free of any State inheritance or State estate tax liability. The personal representative or collector shall produce vouchers for all payments or verified proof for all payments in lieu of vouchers. With the approval of the clerk of superior court, such account may be filed voluntarily at any time. In all cases, the accounting shall be reviewed, audited and recorded by the clerk of superior court in the manner prescribed in G.S. 28A-21-1."
Section 5.  G.S. 29-13 reads as rewritten:
"§ 29-13. Descent and distribution upon intestacy.
All the estate of a person dying intestate shall descend and be distributed, subject to the payment of costs of administration and other lawful claims against the estate, and subject to the payment by the recipient of State inheritance or estate taxes, as provided in this Chapter."
Section 6.  G.S. 29-20 reads as rewritten:
"§ 29-20. Descent and distribution upon intestacy of illegitimate children.
All the estate of a person dying illegitimate and intestate shall descend and be distributed, subject to the payment of costs of administration and other lawful claims against the estate, and subject to the payment by the recipient of State inheritance or estate taxes, as provided in this Article."
Section 7.  G.S. 36A-100(c) reads as rewritten:
"(c)	A person having the right to designate the beneficiary under a life insurance policy, employee benefit plan or group life insurance policy described in subsection (a) or (b) of this section may designate as such beneficiary a trustee named or to be named in his will whether or not the will is in existence at the time of the designation. The proceeds received by the trustee shall be held and disposed of as part of the trust estate under the terms of the will as they exist at the death of the testator. If no qualified trustee makes claim to the proceeds within six months after the death of the decedent or if within that period it is established that no trustee can qualify to receive the proceeds, payments shall be made to the personal representative of the estate of the person making the designation unless it is otherwise provided by an alternative designation or by the policy or plan. The proceeds received by the trustee shall not be subject to claims against the estate of the decedent or to estate or inheritance taxes to any greater extent than if the proceeds were payable directly to the beneficiary or beneficiaries named in the trust. The proceeds may be commingled with any other assets which may properly become part of such trust, but the proceeds shall not become part of the decedent's estate for purposes of trust administration unless the will of the decedent expressly so provides."
Section 8.  G.S. 36A-125(a) reads as rewritten:
"(a)	If at any time the trustee of a noncharitable irrevocable trust determines in good faith that the value of the assets held in trust is ten thousand dollars ($10,000) or less, and the continuance of the trust pursuant to its terms in relation to the cost of its administration would defeat or substantially impair the accomplishment of the purposes of the trust, the trustee, without approval of the court, may, but is not required to, terminate the trust and distribute the trust property, including principal and undistributed income, to the beneficiaries in a manner which conforms as nearly as possible to the intention of the settlor as determined by the trustee from the trust agreement; provided, however, that the trust property, including principal and undistributed income, shall be distributed to the income beneficiary of the trust if the trust otherwise qualifies for the marital deduction for federal estate tax or North Carolina estate or inheritance tax purposes, or is a Qualified Subchapter S Trust as defined in the Internal Revenue Code.  The trustee may enter into an agreement or make such other provisions that the trustee deems necessary or appropriate to protect the interests of the beneficiaries and to carry out the intent and purpose of the trust."
Section 9.  G.S. 41-2.1(f) reads as rewritten:
"(f)	This section does not repeal or modify any provisions of the law relating to estate or inheritance taxes."
Section 10.  G.S. 41-2.2(d) reads as rewritten:
"(d)	This section does not repeal or modify any provisions of the law relating to estate or inheritance taxes."
Section 11.  G.S. 41-2.5(d) reads as rewritten:
"(d)	This section does not repeal or modify any provisions of the law relating to estate or inheritance taxes."
Section 12.  G.S. 105-114(b)(2) reads as rewritten:
"(b)	Definitions. – The following definitions apply in this Article:
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(2)	Corporation. – A domestic corporation, a foreign corporation, an electric membership corporation organized under Chapter 117 of the General Statutes or doing business in this State, or an association that is organized for pecuniary gain, has capital stock represented by shares, whether with or without par value, and has privileges not possessed by individuals or partnerships. The term includes a mutual or capital stock savings and loan association or building and loan association chartered under the laws of any state or of the United States.  The term does not include a limited liability company."
Section 13.  G.S. 105-122(a) reads as rewritten:
"(a)	Every corporation, domestic and foreign, incorporated, or, by an act, domesticated under the laws of this State or doing business in this State, except as otherwise provided in this Article, shall, on or before the fifteenth day of the third month following the end of its income year, annually make and deliver to the Secretary in the form prescribed by the Secretary a full, accurate, and complete report and statement signed by either its president, vice-president, treasurer, assistant treasurer, secretary or assistant secretary, containing the facts and information required by the Secretary as shown by the books and records of the corporation at the close of the income year.
There shall be annexed to the return required by this subsection the affirmation of the officer signing the return.  ".
Section 14.  G.S. 105-130.16 reads as rewritten:
"§ 105-130.16. Returns.
(a)	Every corporation doing business in this State must file with the Secretary an income tax return under affirmation, showing specifically the items of gross income and the deductions allowed by this Part, and any other facts the Secretary requires to make any computation required by this Part.
The return of a corporation must be signed by its president, vice-president, treasurer, assistant treasurer, secretary, or assistant secretary. The officer signing the return must also furnish an oath or affirmation verifying the return, in the form required by the Secretary.
(b)	When the Secretary has reason to believe that any corporation so conducts its trade or business in such manner as to either directly or indirectly distort its true net income and the net  income properly attributable to the State, whether by the arbitrary shifting of income, through price fixing, charges for service, or otherwise, whereby the net income is arbitrarily assigned to one or another unit in a group of taxpayers carrying on business under a substantially common control, the Secretary may require any facts the Secretary considers necessary for the proper computation of the entire net income and the net income properly attributable to the State, and in determining these computations the Secretary must have regard to the fair profit which would normally arise from the conduct of the trade or business.
(c)	When any corporation liable to taxation under this Part conducts its business in such a manner as to either directly or indirectly benefit the members or stockholders thereof or any person interested in the business by selling its products or goods or commodities in which it deals at less than the fair price which might be obtained therefor, or when a corporation, a substantial portion of whose capital stock is owned either directly or indirectly by another corporation, acquires and disposes of the products of the corporation so owning a substantial portion of its stock in such a manner as to create a loss or improper net income for either of the corporations, or when a corporation, owning directly or indirectly a substantial portion of the stock of another corporation, acquires and disposes of the products of the corporation of which it so owns a substantial portion of the stock in such manner as to create a loss or improper net income for either of the corporations, the Secretary may determine the amount of taxable income of any such corporations for the calendar or fiscal year, having due regard to the reasonable profits which, but for such arrangement or understanding, might or could have been obtained by the corporations liable to taxation under this Part from dealing in such products, goods or commodities."
Section 15.  G.S. 105-130.33(a) reads as rewritten:
"(a)	Any corporation that constructs or installs a hydroelectric generator with a capacity of at least three kilowatts (3KW) at an existing dam or free flowing stream located in this State shall be allowed a credit against the tax imposed by this Part equal to ten percent (10%) of the installation and equipment costs of the hydroelectric generator paid during the taxable year. The credit allowed under this section may not exceed five thousand dollars ($5,000) for any single installation.  No credit is allowed, however, to the extent that any of the costs of the system were provided by federal, State, or local grants. To secure the credit allowed by this section, the taxpayer must own or control the site at the time the hydroelectric generator is installed. The credit allowed by this section may not exceed the amount of the tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, except payments of tax made by or on behalf of the taxpayer."
Section 16.  G.S. 105-131.7(d) reads as rewritten:
"(d)	The agreements required to be filed pursuant to subsection (c) of this section shall be filed at the following times:
(1)	At the time the annual return is required to be filed for the first taxable period for which the S Corporation becomes subject to the provisions of this Part; and
(2)	At the time the annual return is required to be filed for any taxable period in which the corporation has a nonresident shareholder on whose behalf such an agreement has not been previously filed."
Section 17.  G.S. 105-154(c) reads as rewritten:
"(c)	Information Returns of Partnerships. – A partnership doing business in this State and required to file a return under the Code shall file an information return with the Secretary.  A partnership that the Secretary believes to be doing business in this State and to be required to file a return under the Code shall file an information return when requested to do so by the Secretary.  The information return shall contain all information required by the Secretary.  It shall state specifically the items of the partnership's gross income, the deductions allowed under the Code, and the adjustments required by this Part.  The information return shall also include the name and address of each person who would be entitled to share in the partnership's net income, if distributable, and the amount each person's distributive share would be.  The information return shall specify the part of each person's distributive share of the net income that represents corporation dividends.  The information return shall be signed by one of the partners under affirmation in the form required by the Secretary.
A partnership that files an information return under this subsection shall furnish to each person who would be entitled to share in the partnership's net income, if distributable, any information necessary for that person to properly file a State income tax return.  The information shall be in the form prescribed by the Secretary and must be furnished on or before the due date of the information return."
Section 18.  G.S. 105-163.011 reads as rewritten:
"§ 105-163.011.  (Repealed effective for investments made on or after January 1, 2003) Tax credits allowed.
(a)	No Credit for Brokered Investments. – No credit is allowed under this section for a purchase of equity securities or subordinated debt if a broker's fee or commission or other similar remuneration is paid or given directly or indirectly for soliciting the purchase.
(b)	Individuals. – Subject to the limitations contained in G.S. 105-163.012, an individual who purchases the equity securities or subordinated debt of a qualified business venture or a qualified grantee business directly from that business is allowed as a credit against the tax imposed by Part 2 of this Article for the taxable year an amount equal to twenty-five percent (25%) of the amount invested. The aggregate amount of credit allowed an individual for one or more investments in a single taxable year under this Part, whether directly or indirectly as owner of a pass-through entity, may not exceed fifty thousand dollars ($50,000). The credit may not be taken for the year in which the investment is made but shall be taken for the taxable year beginning during the calendar year in which the application for the credit becomes effective as provided in subsection (c) of this section.
(b1)	Pass-Through Entities. – This subsection does not apply to a pass-through entity that has committed capital under management in excess of five million dollars ($5,000,000) or to a pass-through entity that is a qualified grantee business, a qualified business venture, or a North Carolina Enterprise Corporation. Subject to the limitations provided in G.S. 105-163.012, a pass-through entity that purchases the equity securities or subordinated debt of a qualified grantee business or a qualified business venture directly from the business is eligible for a tax credit equal to twenty-five percent (25%) of the amount invested. The aggregate amount of credit allowed a pass-through entity for one or more investments in a single taxable year under this Part, whether directly or indirectly as owner of another pass-through entity, may not exceed seven hundred fifty thousand dollars ($750,000). The pass-through entity is not eligible for the credit for the year in which the investment by the pass-through entity is made but shall be eligible for the credit for the taxable year beginning during the calendar year in which the application for the credit becomes effective as provided in subsection (c) of this section.
Each individual who is an owner of a pass-through entity is allowed as a credit against the tax imposed by Part 2 of this Article for the taxable year an amount equal to the owner's allocated share of the credits for which the pass-through entity is eligible under this subsection. The aggregate amount of credit allowed an individual for one or more investments in a single taxable year under this Part, whether directly or indirectly as owner of a pass-through entity, may not exceed fifty thousand dollars ($50,000).
If an owner's share of the pass-through entity's credit is limited due to the maximum allowable credit under this section for a taxable year, the pass-through entity and its owners may not reallocate the unused credit among the other owners.
(c)	Application. – To be eligible for the tax credit provided in this section, the taxpayer must file an application for the credit with the Secretary on or before April 15 of the year following the calendar year in which the investment was made. The Secretary may grant extensions of this deadline, as the Secretary finds appropriate, upon the request of the taxpayer, except that the application may not be filed after September 15 of the year following the calendar year in which the investment was made. An application is effective for the year in which it is timely filed. The application shall be on a form prescribed by the Secretary and shall include any supporting documentation that the Secretary may require. If an investment for which a credit is applied for was paid for other than in money, the taxpayer shall include with the application a certified appraisal of the value of the property used to pay for the investment. The application for a credit for an investment made by a pass-through entity must be filed by the pass-through entity.
(d)	Penalties. – The penalties provided in G.S. 105-236 apply in this Part."
Section 19.  G.S. 105-194 reads as rewritten:
"§ 105-194. Death of donor within three years; time of assessment.
If a donor dies within three years after filing a return, gift taxes may be assessed at any time within those three years, or on or before the date of final settlement of the donor's State estate or inheritance taxes, whichever is later."
Section 20.  G.S. 105-253(a) reads as rewritten:
"(a)	Any officer, trustee, or receiver of any corporation or limited liability company required to file a report with the Secretary who has custody of funds of the corporation or company and who allows the funds to be paid out or distributed to the stockholders of the corporation or company without having remitted to the Secretary any State taxes that are due is personally liable for the payment of the tax."
Section 21.(a) G.S. 105-275 is amended by adding a new subdivision to read:
"(41)	Objects of art held by the North Carolina State Art Society, Incorporated."
Section 21.(b) G.S. 140-15 reads as rewritten:
"§ ¨."
Section 22.  This act does not affect the rights or liabilities of the State, a taxpayer, or another person arising under a statute amended or repealed by this act before the effective date of its amendment or repeal; nor does it affect the right to any refund or credit of a tax that accrued under the amended or repealed statute before the effective date of its amendment or repeal.
Section 23.  Except as otherwise provided in this act, this act is effective when it becomes law.