House Bill No. 6781
               House Bill No. 6781

              PUBLIC ACT NO. 97-283


AN   ACT  CONCERNING  TAX  CREDITS  APPLIED  TO  S
CORPORATIONS.


    Be  it  enacted  by  the  Senate  and House of
Representatives in General Assembly convened:
    Section  1.  Subsection  (c) of section 12-217
of  the  general  statutes  is  repealed  and  the
following is substituted in lieu thereof:
    (c)  (1)  Notwithstanding  the  provisions  of
subsections (a) and  (b)  of  this  section,  "net
income",  in  the  case of an S corporation, means
the  percentage  of  the  nonseparately   computed
income  or  loss, as defined in Section 1366(a)(2)
of  the  Internal  Revenue   Code,   of   such   S
corporation,  without  separate  state  adjustment
pursuant to section  12-233  or  12-226a  for  the
compensation  of any officer or employee, to which
shall be added (A) any  taxes  imposed  under  the
provisions  of  this  chapter  which  are  paid or
accrued in the income year and (B)  any  taxes  in
any  state  of  the United States or any political
subdivision of such  state,  or  the  District  of
Columbia,  imposed on or measured by the income or
profits of a corporation which are paid or accrued
in  the income year as provided in subdivision (2)
of this subsection.
    (2)  For  income  years  commencing  prior  to
January 1, 1997, "net income"  means  one  hundred
per  cent of the amount computed under subdivision
(1)  of  this   subsection;   for   income   years
commencing  on or after January 1, 1997, and prior
to January 1, 1998, "net income" means ninety  per
cent  of the amount computed under subdivision (1)
of this subsection; for income years commencing on
or  after January 1, 1998, and prior to January 1,
1999, "net income" means seventy-five per cent  of
the  amount computed under subdivision (1) of this
subsection; for  income  years  commencing  on  or
after  January  1,  1999,  and prior to January 1,
2000, "net income" means fifty-five  per  cent  of
the  amount computed under subdivision (1) of this
subsection; for  income  years  commencing  on  or
after  January  1,  2000,  and prior to January 1,
2001, "net income" means thirty per  cent  of  the
amount  computed  under  subdivision  (1)  of this
subsection; for  income  years  commencing  on  or
after   January   1,   2001,   net   income  of  S
corporations as computed under subdivision (1)  of
this  subsection  shall  not be subject to the tax
under this chapter. [No] ANY S corporation subject
to  the tax [under the provisions of this chapter]
ON NET INCOME AS PROVIDED IN THIS SECTION shall be
eligible  for any credit against the tax otherwise
available to taxpayers under this chapter ONLY  TO
THE  EXTENT  AND  IN  THE  SAME  PERCENTAGE AS NET
INCOME  OF  SUCH  S  CORPORATION  IS  SUBJECT   TO
TAXATION UNDER THIS CHAPTER.
    Sec.  2.  This  act shall take effect from its
passage and shall be applicable  to  income  years
commencing on or after January 1, 1997.

Approved June 26, 1997