S729 - Various Changes to the Revenue Laws. (SL 2016-5)

Overview: S.L. 2016-5 makes various changes to the Revenue Laws including the following changes with broader impact:

• Limits the qualified interest expense deduction for interest paid to a related corporation to 15% (from 30%) of acorporate taxpayer'ss adjusted taxable income and allows an unlimited qualified interest expense deduction if the corporate taxpayer can trace the interest expense to a unrelated lender.
• Restores a miscellaneous itemized deduction applicable whenindividual taxpayerss restores a substantial amount held under claim of right that the taxpayer included in gross income for a prior taxable year because it appeared that taxpayer had an unrestricted right to that item.
• Adds a deduction forindividual taxpayerss who report business income on a Schedule C to equalize treatment of individual taxpayers and corporate taxpayers reporting ordinary and necessary business expenses where the expense was taken as a tax credit for federal purposes.
• Provides thatindividual taxpayerss must adjust federal adjusted gross income to prevent a double benefit of the federal net operating loss (NOL) carryover.
• Repeals thesales taxx exemption for items sold by a nonprofit organization when the receipts from the sale of the items will be directly or indirectly contributed to the State or school.
• Creates a newsales taxx exemption for food, prepared food, soft drinks, and other items of tangible personal property sold not for profit for or at an event that is sponsored by an elementary or secondary school when the net proceeds will be given to the school.
• Disallows the State governmentsales taxx exemption and sales tax refund of local taxes paid on indirect purchases for occupational licensing boards and State governmental entities that are specifically designated to apply for a sales tax refund under G.S. 105-164.14.

This act became effective May 11, 2016; however, most sections have an effective date based on the tax reporting period for the type of tax. Please see the full summary for additional detail.