CHAPTER 188

FORMERLY

HOUSE BILL NO. 244

AS AMENDED BY HOUSE AMENDMENT NOS. 1 AND 2

AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO DELAWARE TAXES.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all the members of each House thereof concurring therein):

Section 1. Amend §535(k), Title 30 of the Delaware Code, by deleting the phrase were frivolous' as it appears in subparagraph (1)c. of said subsection and substituting in lieu thereof the phrase "indicate such position was frivolous".

Section 2. Amend §537(c), Title 30 of the Delaware Code by deleting said subsection (c) in its entirety and substituting in lieu thereof a new subsection (c) to read as follows:

"(c)(1) If more than the correct amount of tax required to be paid under the provisions of §1154 of this title is paid with respect to any payment of remuneration, proper adjustments, with respect to both the tax and the amount to be deducted, shall be made, without interest, in such manner and at such times as the Director may by regulations prescribe.

(2) If more than the correct amount of tax required to be paid under the provisions of §1154 of this title is paid or deducted with respect to any payment of remuneration and the overpayment cannot be adjusted under paragraph (1) of this subsection, the amount of the overpayment shall be refunded to the employer, subject to the limitations of paragraph (3) of this subsection, with interest calculated from the 46th day following the date of the claim for the refund, and in such manner and at such times (subject to the statute of limitations properly applicable thereto) as the Director may by regulations prescribe.

(3) In the case of an overpayment of tax required to be deducted and withheld under §1151 of this title, refund or credit shall be made to the employer only to the extent that the amount of such overpayment was not deducted and withheld by the employer."

Section 3. Amend §351, Title 30 of the Delaware Code, by adding

immediately after the phrase "Division of Revenue" as it first appears in said section the phrase "after January 1, 1989".

Section 4. Amend Section 5401(3), Title 30 of the Delaware Code by

striking said subsection in its entirety, and substituting in lieu thereof a new subsection (3) to read as follows:

(3) 'Value' means, in the case of any document granting, bargaining, selling or otherwise conveying any real estate or interest or leasehold interest therein, the amount of the actual consideration thereof, including liens or other encumbrances thereon and ground rents, or a commensurate part of the liens or other encumbrances and ground rents which encumber the interest in real estate and any other interest in real estate conveyed; provided that in the case of a transfer for an amount less than the highest appraised full value of said property for local real property tax purposes, 'value' shall mean the highest such appraised value unless the parties or one of them can demonstrate that fair market value is less than the highest appraised value, in which case 'value' shall mean fair market value, or actual consideration, whichever is greater. A demonstration that the transaction was at arm's length between unrelated parties shall be sufficient to demonstrate that the transaction was at fair market value."

Section 5. Amend §1124(c), Title 30 of the Delaware Code, by adding the following at the end of said subsection:

For purposes of this subsection, Intangible assets of the taxpayer which are treated as held for investment for federal Income tax purposes (or would be so treated if such assets were held by an individual) shall not be considered as property employed by the taxpayer in a business, trade, commerce, profession or vocation carried on in this State. Notwithstanding the foregoing and for purposes of this subsection, assets whose acquisition, management and disposition constitute integral parts of the taxpayer's regular trade or business operations (other than the operations of a taxpayer whose trade or business is that of investing) shall not be considered held for investment.'

Section 6. Amend §1902(b), Title 30 of the Delaware Code by adding to

said subsection the following new paragraph:

"(15) An entity that is registered as an investment company under the Investment Company Act of 1940, as amended [15 U.S.C. §80a-1 et seq.];"

Section 7. Amend §1902(b) of Title 30 of the Delaware Code by adding to said subsection the following new paragraph:

"(16) An entity that is a real estate investment trust as defined in §856 of the Internal Revenue Code of 1986 [26 U.S.C. §856] as amended."

Section 8. Amend §1124(b) of Title 30 of the Delaware Code by striking paragraph (2) of said subsection and substituting in lieu thereof a new paragraph (2) to read as follows:

"(2) The ownership or disposition of any interest in real or tangible personal property in this State (including that percentage of ordinary and capital gain dividends received from a real estate investment trust, as defined in §856 of the Internal Revenue Code [26 U.S.0 §856], that is attributable to rents from real property located in Delaware or gain from the disposition of real property located in Delaware);"

Section 9. Sections 1, 2, and 3 of this Act shall be effective for tax years commencing after December 31, 1991. Sections 4, 5, 6, 7, and 8 of this Act shall be effective upon enactment into law.

Section 10. Except with respect to Sections 7 and 8 of this Act solely in relation to each other, if any provision of this Act or the application thereof to any person or circumstances Is held Invalid, the invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

Approved February 4, 1994.