CHAPTER 123

FORMERLY

HOUSE BILL NO. 264

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

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE :

Section 1. Amend § 6402(1) of Title 30 of the Delaware Code by striking said paragraph in its entirety and enacting a new § 6402(1) to read as follows:

"(1) 8.7 percent of its Headquarters Management Corporation taxable income; or".

Section 2. Amend §6404 of Title 30 of the Delaware Code by adding a new subsection "(e)" as follows:

"(e) Consolidated Returns. An affiliated group of Headquarters Management Corporations may elect to make a consolidated return with respect to the income tax imposed by § 6402 for the taxable year in lieu of separate returns. The making of a consolidated return shall be considered the election and consent of all members of the affiliated group. The tax due by an affiliated group of Headquarters Management Corporations filing a consolidated return shall be no less than the tax payable under § 6402(2) multiplied by the number of members reporting on the consolidated return.".

Section 3. Amend § 2061 of Title 30 of the Delaware Code by striking in the heading the words "taxable income" and substituting in lieu thereof the word "tax".

Section 4. Amend § 2061(a) of Title 30 of the Delaware Code by striking the words:

"Headquarters Management Corporation taxable income determined under § 6403 of this Title shall be reduced, but not below the tax payable under § 6402(2) of this Title, during such taxable year by"

and substituting in lieu thereof the words:

"the tax determined under § 6402 of this Title shall be credited during such taxable year, but not below the tax payable under § 6402(2), in the amount of".

Section 5. Amend § 2061(b) of Title 30 of the Delaware Code by striking the words:

"Headquarters Management Corporation taxable income determined under § 6403 of this Title shall be reduced, but not below the tax payable under § 6402(2) of this Title, during such taxable year as follows"

and substituting in lieu thereof the words:

"the tax determined under § 6402 of this Title shall be credited during such taxable year, but not below the tax payable under § 6402(2), in the amount of".

Section 6. Amend § 2061(b)(2)b of Title 30 of the Delaware Code by adding after the word "license" and before "by (i)" the words:

"(except that, for purposes of counting operating expenses allocated to this State before the effective date of such original license, operating expenses incurred solely by corporations whose activities within this State were confined to investment activities as defined in § 6401(8) of this Title shall not be counted)".

Section 7. Amend § 2061 of Title 30 of the Delaware Code by adding a new subsection "(c)" as follows:

"(c) For purposes of calculating the credit under § 2061(a) or (b), Headquarters Management Corporations electing to file consolidated income tax returns may elect to combine the calculations of employment and expenditures of all Headquarters Management Corporation members of the affiliated group.".

Section 8. This Act shall be effective for tax periods beginning on or after the first day of January, 2004.

Approved July 7, 2005