CHAPTER 10 - INCOME TAX

AN ACT TO AMEND CHAPTER 6, OF THE REVISED CODE OF THE STATE OF DELAWARE, 1935, IN RELATION TO INCOME TAX.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Section 110, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 144 of said Code, as amended, be and the same is hereby further amended by striking out paragraph (1) under (b) of Section 110, and inserting in lieu thereof the following:

(1) A natural person twenty-one years of age or over who is a resident of the State of Delaware or who has been a resident of the State of Delaware at any time during the income year.

("RESIDENT" DEFINED)

The word "resident" applies only to natural persons and includes any person domiciled in the state, except a person who, though domiciled in the state, maintains no permanent place of abode within the state, but does maintain a permanent place of abode without the state, and who spends in the aggregate not to exceed thirty days of the taxable year within the state. In addition, it includes any person who maintains a permanent place of abode within the state and spends in the aggregate more than seven months of the taxable year within the state, whether or not domiciled in the state during any portion of said period, and such a person shall be taxed the same as though he had been domiciled in the state during the entire taxable year.

Section 2. That Section 110 (d) of Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 144 of said Code, be and the same is hereby further amended by striking out paragraph 9 and inserting in lieu thereof the following new paragraph:

Less the aggregate of the exemptions provided for in Section 112, and of the deductions provided for in Section 113.

Section 3. That Section 111, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 145 of said Code, as amended, be and the same is hereby amended by striking out paragraph (h) of said Section 111, and substituting in lieu thereof the following:

(h) In the case of the death of a taxpayer there shall be included in computing net income for the taxable period in which falls the date of his death, only amounts received or credited subject to withdrawal during such period, except, in the case of a taxpayer whose income is computed upon the basis of the accrual method of accounting, amounts (except amounts ineludible in computing a partner's net income) accrued only by reason of the death of the taxpayer shall not be included in computing net income for the period in which falls the date of the taxpayer's death.

(h) (1) All income accrued by reason of death only, as set forth in paragraph (h) of this Section shall constitute taxable income of the estate when received by it or of a beneficiary when received by him and not previously included in the return of the estate.

Section 4. That Section 112, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 146 of said Code, as amended, be and the same is hereby amended by adding a new paragraph to be known as 112 (a) (12).

(12) Amounts received as a pension, annuity or similar allowance for personal injuries or sickness resulting from active service in the armed forces of the United States.

Section 5. That Section 112, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 146 of said Code, as amended, be and the same is hereby amended by adding a new paragraph to be known as 112 (a) (13).

(13) Whenever the computation of any tax imposed by this act includes profits, gains, or income from a contract or contracts, with the United States or any department, agency or instrumentality thereof, or from any sub-contract, or sub-contracts thereunder, and after the filing of the return of payment of the tax, such profit, gain or income should be redetermined by renegotiating or repricing pursuant to the laws of the United States, upon the showing thereof, by the taxpayer by the filing of a claim within two years from the date the amount is finally determined, the tax for said taxable year shall be recomputed on the basis of redetermined profit, gain, or income, and credit or refund without interest allowed for any overpayment thereby appearing, without regard to whether the settlement in the renegotiation or repricing proceedings was voluntary or involuntary. Such recomputation, however, shall not be made nor shall credit or refund be allowed as herein provided unless and until satisfactory evidence has been presented to the State Tax Department that the sums due the United States by reason of such redetermination have been actually paid. The provisions of this paragraph shall apply to all income tax returns for the year 1942 and all subsequent years.

Section 6. That Section 113, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 147 of said Code, as amended, be and the same is hereby amended by striking out paragraph (3) of said Section 113, and inserting in lieu thereof the following:

(3) Taxes imposed upon and accrued or paid by the taxable, including Delaware Liquor and Gasoline Taxes, within the income year, except taxes imposed by this act and taxes assessed for local benefits of a kind tending to increase the value of the property assessed.

Section 7. That Section 113, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 147 of said Code, as amended, be and the same is hereby amended by adding the following new paragraph at the end of Section 113 (5).

(5a) Contributions to organizations falling within the above paragraph, but which are located outside the State of Delaware, but only if such contributions are for use in Delaware or for the use or benefit of residents of Delaware.

Section 8. That Section 113, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 147 of said Code, as amended, be and the same is hereby amended by striking out paragraph (14) of said Section 113, and substituting in lieu thereof the following:

(14) In the case of the death of the taxpayer there shall be allowed as deductions or credits for the taxable period, in which falls the date of his death, only amounts actually paid during such period, except, in the case of the taxpayer whose income is computed upon the basis of the accrual method of accounting, amounts (except amounts includible in computing a partner's net income) accrued only by reason of the death of the taxpayer shall not be allowed as deductions or credits for the period in which falls the date of the taxpayer's death.

(14a) All deductions accrued by reason of death only, as set forth in paragraph 14 of this Section, shall be allowable to the estate when paid by it, or to a beneficiary if paid by him and not previously allowed in the return of the estate.

Section 9. That Section 121, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 155 of said Code, as amended, be and the same is hereby amended by striking out paragraph (j) of Section 121, and substituting in lieu thereof the following:

(j) Submit to the Governor and to the Legislature an annual report covering the fiscal year ending June 30, including such recommendations concerning State taxes as may be deemed necessary.

Section 10. that Section 124(a)(1), of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 158 of said Code, as amended, be and the same is hereby amended by striking out paragraph (1) under (a) of Section 124, and substituting in lieu thereof the following:

(1) The full amount of the tax payable as the same shall appear on the face of the return, shall be paid to the Tax Department where the return is filed at the time fixed by law for filing return, but if the amount of tax payable is more than five dollars, the said tax may be paid in four equal installments, as follows:

Section 11. That Section 125, of said Chapter 6, of the Revised Code of the State of Delaware, 1935, being Code Section 159 of said Code as amended, be and the same is hereby amended by striking out paragraph (b) in said Section 125, and substituting in lieu thereof the following:

(b) If the Tax Department discovers from the examination of the return or otherwise that tax on the income of any taxable, or any portion thereof, has not been assessed, it may, at any time within two years after the time when the return was due, or if not filed on the due date within two years from the date the return was filed, assess the tax on the same and give notice to the taxable of such assessment and at the termination of thirty days, the additional tax determined by the Tax Department shall be due and payable unless the taxable or his agent or attorney shall have within said thirty days, filed complaint or appeal in writing over his signature from the assessment of the Tax Commissioner and request a hearing before the State Tax Board as provided in Section 120 (c) of this Article. The limitation of two years to the assessment of such tax shall not apply to the assessment of additional taxes upon returns which are fraudulent or the income thereon grossly understated or in cases where no return has been filed.

Section 12. That all acts or parts of acts inconsistent with this act are hereby repealed only to the extent of such inconsistency.

Approved April 19, 1945