Bill Text: FL S1692 | 2019 | Regular Session | Introduced
Bill Title: Corporate Income Tax
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2019-03-26 - Laid on Table [S1692 Detail]
Download: Florida-2019-S1692-Introduced.html
Florida Senate - 2019 SB 1692 By Senator Rodriguez 37-00912B-19 20191692__ 1 A bill to be entitled 2 An act relating to the corporate income tax; amending 3 s. 220.03, F.S.; revising the definition of the term 4 “taxpayer”; defining terms; amending s. 220.13, F.S.; 5 revising the definition of the term “adjusted federal 6 income” to prohibit specified deductions, to limit 7 certain carryovers, and to require subtractions of 8 certain dividends paid and received within a water’s 9 edge group for the purpose of determining subtractions 10 from taxable income; conforming provisions to changes 11 made by the act; repealing s. 220.131, F.S., relating 12 to the adjusted federal income of affiliated groups; 13 creating s. 220.136, F.S.; specifying circumstances 14 under which a corporation is presumed to be, deemed to 15 be, or deemed not to be a member of a water’s edge 16 group; providing construction; defining the term 17 “United States”; creating s. 220.1363, F.S.; defining 18 the term “water’s edge reporting method”; specifying 19 requirements for, limitations on, and prohibitions in 20 calculating and reporting income in a water’s edge 21 group return; requiring all members of a water’s edge 22 group to use the water’s edge reporting method; 23 defining the term “sale”; specifying requirements for 24 designating the filing member and the taxable year of 25 the water’s edge group; specifying income reporting 26 requirements for certain members of the water’s edge 27 group; requiring that a water’s edge group return 28 include a specified computational schedule and 29 domestic disclosure spreadsheet; authorizing the 30 Department of Revenue to adopt rules; providing 31 legislative intent regarding the adoption of rules; 32 amending s. 220.14, F.S.; revising the calculation for 33 prorating a certain corporate income tax exemption to 34 reflect leap years; conforming a provision to changes 35 made by the act; amending ss. 220.15, 220.183, 36 220.1845, 220.1875, 220.191, 220.192, 220.193, and 37 220.51, F.S.; conforming provisions to changes made by 38 the act; amending s. 220.64, F.S.; providing 39 applicability of water’s edge group provisions to the 40 franchise tax; conforming provisions to changes made 41 by the act; amending ss. 288.1254 and 376.30781, F.S.; 42 conforming provisions to changes made by the act; 43 specifying, beginning on a specified date, 44 requirements for corporate tax return filings for 45 certain taxpayers; requiring that recaptured funds be 46 appropriated for a certain purpose; providing an 47 effective date. 48 49 WHEREAS, the Legislature finds that the separate accounting 50 system used to measure the income of multistate and 51 multinational corporations for tax purposes often places Florida 52 corporations at a competitive disadvantage and, moreover, that 53 corporate business is increasingly conducted through groups of 54 commonly owned corporations, and 55 WHEREAS, the Legislature intends to more accurately measure 56 the business activities of corporations by adopting a combined 57 system of income tax reporting, NOW, THEREFORE, 58 59 Be It Enacted by the Legislature of the State of Florida: 60 61 Section 1. Paragraph (z) of subsection (1) of section 62 220.03, Florida Statutes, is amended, and paragraphs (gg), (hh), 63 and (ii) are added to that subsection, to read: 64 220.03 Definitions.— 65 (1) SPECIFIC TERMS.—When used in this code, and when not 66 otherwise distinctly expressed or manifestly incompatible with 67 the intent thereof, the following terms shall have the following 68 meanings: 69 (z) “Taxpayer” means any corporation subject to the tax 70 imposed by this code, and includes all corporations that are 71 members of a water’s edge groupfor which a consolidated return72is filed under s. 220.131. However, the term“taxpayer”does not 73 include a corporation having no individuals,(including 74 individuals employed by an affiliate,)receiving compensation in 75 this state as defined in s. 220.15 when the only property owned 76 or leased by thesaidcorporation,(including an affiliate,)in 77 this state is located at the premises of a printer with which it 78 has contracted for printing, if such property consists of the 79 final printed product, property which becomes a part of the 80 final printed product, or property from which the printed 81 product is produced. 82 (gg) “Tax haven” means a jurisdiction to which any of the 83 following apply for a particular taxable year: 84 1. It is identified by the Organization for Economic Co 85 operation and Development as a tax haven or as having harmful 86 tax practices or a preferential tax regime. 87 2. It is a jurisdiction that does not impose any, or 88 imposes only a nominal, effective tax on relevant income. 89 3. It has laws or practices that prevent the effective 90 exchange of information with other governments for tax purposes, 91 regarding taxpayers who are subject to, or are benefiting from, 92 the tax regime. 93 4. It lacks transparency. For purposes of this 94 subparagraph, a tax regime lacks transparency if the details of 95 legislative, legal, or administrative requirements are not open 96 to public scrutiny and apparent or are not consistently applied 97 among similarly situated taxpayers. 98 5. It facilitates the establishment of foreign-owned 99 entities without the need for a local substantive presence or 100 prohibits the entities from having any commercial impact on the 101 local economy. 102 6. It explicitly or implicitly excludes the jurisdiction’s 103 resident taxpayers from taking advantage of the tax regime’s 104 benefits or prohibits enterprises that benefit from the regime 105 from operating in the jurisdiction’s domestic market. 106 7. It has created a tax regime that is favorable for tax 107 avoidance based on an overall assessment of relevant factors, 108 including whether the jurisdiction has a significant untaxed 109 offshore financial or other services sector relative to its 110 overall economy. 111 (hh) “Tax regime” means a set or system of rules, laws, 112 regulations, or practices by which taxes are imposed on any 113 person, corporation, or entity or on any income, property, 114 incident, indicia, or activity pursuant to government authority. 115 (ii) “Water’s edge group” means a group of corporations 116 related through common ownership whose business activities are 117 integrated with, dependent upon, or contribute to a flow of 118 value among members of the group. 119 Section 2. Section 220.13, Florida Statutes, is amended to 120 read: 121 220.13 “Adjusted federal income” defined.— 122 (1) The term “adjusted federal income” means an amount 123 equal to the taxpayer’s taxable income as defined in subsection 124 (2), or such taxable income of a water’s edge groupmore than125one taxpayeras provided in s. 220.1363s. 220.131, for the 126 taxable year, adjusted as follows: 127 (a) Additions.—There shall be added to such taxable income: 128 1.a. The amount of any tax upon or measured by income, 129 excluding taxes based on gross receipts or revenues, paid or 130 accrued as a liability to the District of Columbia or any state 131 of the United States which is deductible from gross income in 132 the computation of taxable income for the taxable year. 133 b. Notwithstanding sub-subparagraph a., if a credit taken 134 under s. 220.1875 is added to taxable income in a previous 135 taxable year under subparagraph 11. and is taken as a deduction 136 for federal tax purposes in the current taxable year, the amount 137 of the deduction allowed shall not be added to taxable income in 138 the current year. The exception in this sub-subparagraph is 139 intended to ensure that the credit under s. 220.1875 is added in 140 the applicable taxable year and does not result in a duplicate 141 addition in a subsequent year. 142 2. The amount of interest which is excluded from taxable 143 income under s. 103(a) of the Internal Revenue Code or any other 144 federal law, less the associated expenses disallowed in the 145 computation of taxable income under s. 265 of the Internal 146 Revenue Code or any other law, excluding 60 percent of any 147 amounts included in alternative minimum taxable income, as 148 defined in s. 55(b)(2) of the Internal Revenue Code, if the 149 taxpayer pays tax under s. 220.11(3). 150 3. In the case of a regulated investment company or real 151 estate investment trust, an amount equal to the excess of the 152 net long-term capital gain for the taxable year over the amount 153 of the capital gain dividends attributable to the taxable year. 154 4. That portion of the wages or salaries paid or incurred 155 for the taxable year which is equal to the amount of the credit 156 allowable for the taxable year under s. 220.181. This 157 subparagraph shall expire on the date specified in s. 290.016 158 for the expiration of the Florida Enterprise Zone Act. 159 5. That portion of the ad valorem school taxes paid or 160 incurred for the taxable year which is equal to the amount of 161 the credit allowable for the taxable year under s. 220.182. This 162 subparagraph shall expire on the date specified in s. 290.016 163 for the expiration of the Florida Enterprise Zone Act. 164 6. The amount taken as a credit under s. 220.195 which is 165 deductible from gross income in the computation of taxable 166 income for the taxable year. 167 7. That portion of assessments to fund a guaranty 168 association incurred for the taxable year which is equal to the 169 amount of the credit allowable for the taxable year. 170 8. In the case of a nonprofit corporation which holds a 171 pari-mutuel permit and which is exempt from federal income tax 172 as a farmers’ cooperative, an amount equal to the excess of the 173 gross income attributable to the pari-mutuel operations over the 174 attributable expenses for the taxable year. 175 9. The amount taken as a credit for the taxable year under 176 s. 220.1895. 177 10. Up to nine percent of the eligible basis of any 178 designated project which is equal to the credit allowable for 179 the taxable year under s. 220.185. 180 11. The amount taken as a credit for the taxable year under 181 s. 220.1875. The addition in this subparagraph is intended to 182 ensure that the same amount is not allowed for the tax purposes 183 of this state as both a deduction from income and a credit 184 against the tax. This addition is not intended to result in 185 adding the same expense back to income more than once. 186 12. The amount taken as a credit for the taxable year under 187 s. 220.192. 188 13. The amount taken as a credit for the taxable year under 189 s. 220.193. 190 14. Any portion of a qualified investment, as defined in s. 191 288.9913, which is claimed as a deduction by the taxpayer and 192 taken as a credit against income tax pursuant to s. 288.9916. 193 15. The costs to acquire a tax credit pursuant to s. 194 288.1254(5) that are deducted from or otherwise reduce federal 195 taxable income for the taxable year. 196 16. The amount taken as a credit for the taxable year 197 pursuant to s. 220.194. 198 17. The amount taken as a credit for the taxable year under 199 s. 220.196. The addition in this subparagraph is intended to 200 ensure that the same amount is not allowed for the tax purposes 201 of this state as both a deduction from income and a credit 202 against the tax. The addition is not intended to result in 203 adding the same expense back to income more than once. 204 (b) Subtractions.— 205 1. There shall be subtracted from such taxable income: 206 a. The net operating loss deduction allowable for federal 207 income tax purposes under s. 172 of the Internal Revenue Code 208 for the taxable year, except that any net operating loss that is 209 transferred pursuant to s. 220.194(6) may not be deducted by the 210 seller, 211 b. The net capital loss allowable for federal income tax 212 purposes under s. 1212 of the Internal Revenue Code for the 213 taxable year, 214 c. The excess charitable contribution deduction allowable 215 for federal income tax purposes under s. 170(d)(2) of the 216 Internal Revenue Code for the taxable year, and 217 d. The excess contributions deductions allowable for 218 federal income tax purposes under s. 404 of the Internal Revenue 219 Code for the taxable year. 220 221 However, a net operating loss and a capital loss shall never be 222 carried back as a deduction to a prior taxable year, but all 223 deductions attributable to such losses shall be deemed net 224 operating loss carryovers and capital loss carryovers, 225 respectively, and treated in the same manner, to the same 226 extent, and for the same time periods as are prescribed for such 227 carryovers in ss. 172 and 1212, respectively, of the Internal 228 Revenue Code. A deduction is not allowed for net operating 229 losses, net capital losses, or excess contribution deductions 230 under 26 U.S.C. ss. 170(d)(2), 172, 1212, and 404 for a member 231 of a water’s edge group which is not a United States member. 232 Carryovers of net operating losses, net capital losses, or 233 excess contribution deductions under 26 U.S.C. ss. 170(d)(2), 234 172, 1212, and 404 may be subtracted only by the member of the 235 water’s edge group which generates a carryover. 236 2. There shall be subtracted from such taxable income any 237 amount to the extent included therein the following: 238 a. Dividends treated as received from sources without the 239 United States, as determined under s. 862 of the Internal 240 Revenue Code. 241 b. All amounts included in taxable income under s. 78 or s. 242 951 of the Internal Revenue Code. 243 244 However, as to any amount subtracted under this subparagraph, 245 there shall be added to such taxable income all expenses 246 deducted on the taxpayer’s return for the taxable year which are 247 attributable, directly or indirectly, to such subtracted amount. 248 Further, no amount shall be subtracted with respect to dividends 249 paid or deemed paid by a Domestic International Sales 250 Corporation. 251 3. Amounts received by a member of a water’s edge group as 252 dividends paid by another member of the water’s edge group must 253 be subtracted from the taxable income to the extent that the 254 dividends are included in the taxable income. 255 4.3.In computing “adjusted federal income” for taxable 256 years beginning after December 31, 1976, there shall be allowed 257 as a deduction the amount of wages and salaries paid or incurred 258 within this state for the taxable year for which no deduction is 259 allowed pursuant to s. 280C(a) of the Internal Revenue Code 260 (relating to credit for employment of certain new employees). 261 5.4.There shall be subtracted from such taxable income any 262 amount of nonbusiness income included therein. 263 6.5.There shall be subtracted any amount of taxes of 264 foreign countries allowable as credits for taxable years 265 beginning on or after September 1, 1985, under s. 901 of the 266 Internal Revenue Code to any corporation which derived less than 267 20 percent of its gross income or loss for its taxable year 268 ended in 1984 from sources within the United States, as 269 described in s. 861(a)(2)(A) of the Internal Revenue Code, not 270 including credits allowed under ss. 902 and 960 of the Internal 271 Revenue Code, withholding taxes on dividends within the meaning 272 of sub-subparagraph 2.a., and withholding taxes on royalties, 273 interest, technical service fees, and capital gains. 274 7.6.Notwithstanding any other provision of this code, 275 except with respect to amounts subtracted pursuant to 276 subparagraphs 1. and 4.3., any increment of any apportionment 277 factor which is directly related to an increment of gross 278 receipts or income which is deducted, subtracted, or otherwise 279 excluded in determining adjusted federal income shall be 280 excluded from both the numerator and denominator of such 281 apportionment factor. Further, all valuations made for 282 apportionment factor purposes shall be made on a basis 283 consistent with the taxpayer’s method of accounting for federal 284 income tax purposes. 285 (c) Installment sales occurring after October 19, 1980.— 286 1. In the case of any disposition made after October 19, 287 1980, the income from an installment sale shall be taken into 288 account for the purposes of this code in the same manner that 289 such income is taken into account for federal income tax 290 purposes. 291 2. Any taxpayer who regularly sells or otherwise disposes 292 of personal property on the installment plan and reports the 293 income therefrom on the installment method for federal income 294 tax purposes under s. 453(a) of the Internal Revenue Code shall 295 report such income in the same manner under this code. 296 (d) Nonallowable deductions.—A deduction for net operating 297 losses, net capital losses, or excess contributions deductions 298 under ss. 170(d)(2), 172, 1212, and 404 of the Internal Revenue 299 Code which has been allowed in a prior taxable year for Florida 300 tax purposes shall not be allowed for Florida tax purposes, 301 notwithstanding the fact that such deduction has not been fully 302 utilized for federal tax purposes. 303 (e) Adjustments related to federal acts.—Taxpayers shall be 304 required to make the adjustments prescribed in this paragraph 305 for Florida tax purposes with respect to certain tax benefits 306 received pursuant to the Economic Stimulus Act of 2008, the 307 American Recovery and Reinvestment Act of 2009, the Small 308 Business Jobs Act of 2010, the Tax Relief, Unemployment 309 Insurance Reauthorization, and Job Creation Act of 2010, the 310 American Taxpayer Relief Act of 2012, the Tax Increase 311 Prevention Act of 2014, the Consolidated Appropriations Act, 312 2016, and the Tax Cuts and Jobs Act of 2017. 313 1. There shall be added to such taxable income an amount 314 equal to 100 percent of any amount deducted for federal income 315 tax purposes as bonus depreciation for the taxable year pursuant 316 to ss. 167 and 168(k) of the Internal Revenue Code of 1986, as 317 amended by s. 103 of Pub. L. No. 110-185, s. 1201 of Pub. L. No. 318 111-5, s. 2022 of Pub. L. No. 111-240, s. 401 of Pub. L. No. 319 111-312, s. 331 of Pub. L. No. 112-240, s. 125 of Pub. L. No. 320 113-295, s. 143 of Division Q of Pub. L. No. 114-113, and s. 321 13201 of Pub. L. No. 115-97, for property placed in service 322 after December 31, 2007, and before January 1, 2027. For the 323 taxable year and for each of the 6 subsequent taxable years, 324 there shall be subtracted from such taxable income an amount 325 equal to one-seventh of the amount by which taxable income was 326 increased pursuant to this subparagraph, notwithstanding any 327 sale or other disposition of the property that is the subject of 328 the adjustments and regardless of whether such property remains 329 in service in the hands of the taxpayer. 330 2. There shall be added to such taxable income an amount 331 equal to 100 percent of any amount in excess of $128,000 332 deducted for federal income tax purposes for the taxable year 333 pursuant to s. 179 of the Internal Revenue Code of 1986, as 334 amended by s. 102 of Pub. L. No. 110-185, s. 1202 of Pub. L. No. 335 111-5, s. 2021 of Pub. L. No. 111-240, s. 402 of Pub. L. No. 336 111-312, s. 315 of Pub. L. No. 112-240, and s. 127 of Pub. L. 337 No. 113-295, for taxable years beginning after December 31, 338 2007, and before January 1, 2015. For the taxable year and for 339 each of the 6 subsequent taxable years, there shall be 340 subtracted from such taxable income one-seventh of the amount by 341 which taxable income was increased pursuant to this 342 subparagraph, notwithstanding any sale or other disposition of 343 the property that is the subject of the adjustments and 344 regardless of whether such property remains in service in the 345 hands of the taxpayer. 346 3. There shall be added to such taxable income an amount 347 equal to the amount of deferred income not included in such 348 taxable income pursuant to s. 108(i)(1) of the Internal Revenue 349 Code of 1986, as amended by s. 1231 of Pub. L. No. 111-5. There 350 shall be subtracted from such taxable income an amount equal to 351 the amount of deferred income included in such taxable income 352 pursuant to s. 108(i)(1) of the Internal Revenue Code of 1986, 353 as amended by s. 1231 of Pub. L. No. 111-5. 354 4. Subtractions available under this paragraph may be 355 transferred to the surviving or acquiring entity following a 356 merger or acquisition and used in the same manner and with the 357 same limitations as specified by this paragraph. 358 5. The additions and subtractions specified in this 359 paragraph are intended to adjust taxable income for Florida tax 360 purposes, and, notwithstanding any other provision of this code, 361 such additions and subtractions shall be permitted to change a 362 taxpayer’s net operating loss for Florida tax purposes. 363 (2) For purposes of this section, a taxpayer’s taxable 364 income for the taxable year means taxable income as defined in 365 s. 63 of the Internal Revenue Code and properly reportable for 366 federal income tax purposes for the taxable year, but subject to 367 the limitations set forth in paragraph (1)(b) with respect to 368 the deductions provided by ss. 172 (relating to net operating 369 losses), 170(d)(2) (relating to excess charitable 370 contributions), 404(a)(1)(D) (relating to excess pension trust 371 contributions), 404(a)(3)(A) and (B) (to the extent relating to 372 excess stock bonus and profit-sharing trust contributions), and 373 1212 (relating to capital losses) of the Internal Revenue Code, 374 except that, subject to the same limitations, the term: 375 (a) “Taxable income,” in the case of a life insurance 376 company subject to the tax imposed by s. 801 of the Internal 377 Revenue Code, means life insurance company taxable income; 378 however, for purposes of this code, the total of any amounts 379 subject to tax under s. 815(a)(2) of the Internal Revenue Code 380 pursuant to s. 801(c) of the Internal Revenue Code shall not 381 exceed, cumulatively, the total of any amounts determined under 382 s. 815(c)(2) of the Internal Revenue Code of 1954, as amended, 383 from January 1, 1972, to December 31, 1983; 384 (b) “Taxable income,” in the case of an insurance company 385 subject to the tax imposed by s. 831(b) of the Internal Revenue 386 Code, means taxable investment income; 387 (c) “Taxable income,” in the case of an insurance company 388 subject to the tax imposed by s. 831(a) of the Internal Revenue 389 Code, means insurance company taxable income; 390 (d) “Taxable income,” in the case of a regulated investment 391 company subject to the tax imposed by s. 852 of the Internal 392 Revenue Code, means investment company taxable income; 393 (e) “Taxable income,” in the case of a real estate 394 investment trust subject to the tax imposed by s. 857 of the 395 Internal Revenue Code, means the income subject to tax, computed 396 as provided in s. 857 of the Internal Revenue Code; 397 (f) “Taxable income,” in the case of a corporation which is 398 a member of an affiliated group of corporations filing a 399 consolidated income tax return for the taxable year for federal 400 income tax purposes, means taxable income of such corporation 401 for federal income tax purposes as if such corporation had filed 402 a separate federal income tax return for the taxable year and 403 each preceding taxable year for which it was a member of an 404 affiliated group, unless a consolidated return for the taxpayer405and others is required or elected under s. 220.131; 406 (g) “Taxable income,” in the case of a cooperative 407 corporation or association, means the taxable income of such 408 organization determined in accordance with the provisions of ss. 409 1381-1388 of the Internal Revenue Code; 410 (h) “Taxable income,” in the case of an organization which 411 is exempt from the federal income tax by reason of s. 501(a) of 412 the Internal Revenue Code, means its unrelated business taxable 413 income as determined under s. 512 of the Internal Revenue Code; 414 (i) “Taxable income,” in the case of a corporation for 415 which there is in effect for the taxable year an election under 416 s. 1362(a) of the Internal Revenue Code, means the amounts 417 subject to tax under s. 1374 or s. 1375 of the Internal Revenue 418 Code for each taxable year; 419 (j) “Taxable income,” in the case of a limited liability 420 company, other than a limited liability company classified as a 421 partnership for federal income tax purposes, as defined in and 422 organized pursuant to chapter 605 or qualified to do business in 423 this state as a foreign limited liability company or other than 424 a similar limited liability company classified as a partnership 425 for federal income tax purposes and created as an artificial 426 entity pursuant to the statutes of the United States or any 427 other state, territory, possession, or jurisdiction, if such 428 limited liability company or similar entity is taxable as a 429 corporation for federal income tax purposes, means taxable 430 income determined as if such limited liability company were 431 required to file or had filed a federal corporate income tax 432 return under the Internal Revenue Code; 433 (k) “Taxable income,” in the case of a taxpayer liable for 434 the alternative minimum tax as defined in s. 55 of the Internal 435 Revenue Code, means the alternative minimum taxable income as 436 defined in s. 55(b)(2) of the Internal Revenue Code, less the 437 exemption amount computed under s. 55(d) of the Internal Revenue 438 Code. A taxpayer is not liable for the alternative minimum tax 439 unless the taxpayer’s federal tax return, or related federal 440 consolidated tax return, if included in a consolidated return 441 for federal tax purposes, reflect a liability on the return 442 filed for the alternative minimum tax as defined in s. 55(b)(2) 443 of the Internal Revenue Code; 444 (l) “Taxable income,” in the case of a taxpayer whose 445 taxable income is not otherwise defined in this subsection, 446 means the sum of amounts to which a tax rate specified in s. 11 447 of the Internal Revenue Code plus the amount to which a tax rate 448 specified in s. 1201(a)(2) of the Internal Revenue Code are 449 applied for federal income tax purposes. 450 Section 3. Section 220.131, Florida Statutes, is repealed. 451 Section 4. Section 220.136, Florida Statutes, is created to 452 read: 453 220.136 Determination of the members of a water’s edge 454 group.— 455 (1) A corporation having 50 percent or more of its 456 outstanding voting stock directly or indirectly owned or 457 controlled by a water’s edge group is presumed to be a member of 458 the water’s edge group. A corporation having less than 50 459 percent of its outstanding voting stock directly or indirectly 460 owned or controlled by a water’s edge group is a member of the 461 water’s edge group if the business activities of the corporation 462 show that the corporation is a member of the water’s edge group. 463 All of the income of a corporation that is a member of a water’s 464 edge group is presumed to be unitary. For purposes of this 465 subsection, the attribution rules of 26 U.S.C. s. 318 must be 466 used to determine whether voting stock is indirectly owned. 467 (2)(a) A corporation that conducts business outside the 468 United States is not a member of a water’s edge group if 80 469 percent or more of the corporation’s property and payroll, as 470 determined by the apportionment factors described in ss. 220.15 471 and 220.1363, may be assigned to locations outside of the United 472 States. However, such corporations that are incorporated in a 473 tax haven may be a member of a water’s edge group pursuant to 474 subsection (1). This subsection does not exempt a corporation 475 that is not a member of a water’s edge group from this chapter. 476 (b) As used in this subsection, the term “United States” 477 means the 50 states, the District of Columbia, and Puerto Rico. 478 (c) The apportionment factors described in ss. 220.1363 and 479 220.15 must be used to determine whether a special industry 480 corporation has engaged in a sufficient amount of activities 481 outside of the United States to exclude it from treatment as a 482 member of a water’s edge group. 483 Section 5. Section 220.1363, Florida Statutes, is created 484 to read: 485 220.1363 Water’s edge groups; special requirements.— 486 (1) For purposes of this section, the term “water’s edge 487 reporting method” is a method to determine the taxable business 488 profits of a group of entities conducting a unitary business. 489 Under this method, the net income of the entities must be added 490 together, along with the additions and subtractions under s. 491 220.13, and apportioned to this state as a single taxpayer under 492 ss. 220.15 and 220.151. However, each special industry member 493 included in a water’s edge group return, which would otherwise 494 be permitted to use a special method of apportionment under s. 495 220.151, shall convert its single-factor apportionment to a 496 three-factor apportionment of property, payroll, and sales. The 497 special industry member shall calculate the denominator of its 498 property, payroll, and sales factors in the same manner as those 499 denominators are calculated by members that are not special 500 industry members. The numerator of its sales, property, and 501 payroll factors is the product of the denominator of each factor 502 multiplied by the premiums or revenue-miles-factor ratio 503 otherwise applicable under s. 220.151. 504 (2) All members of a water’s edge group must use the 505 water’s edge reporting method, under which: 506 (a) Adjusted federal income, for purposes of s. 220.12, 507 means the sum of adjusted federal income of all members of the 508 water’s edge group as determined for a concurrent taxable year. 509 (b) The numerators and denominators of the apportionment 510 factors must be calculated for all members of the water’s edge 511 group combined. 512 (c) Intercompany sales transactions between members of the 513 water’s edge group are not included in the numerator or 514 denominator of the sales factor under ss. 220.15 and 220.151, 515 regardless of whether indicia of a sale exist. 516 (d) For sales of intangibles, including, but not limited 517 to, accounts receivable, notes, bonds, and stock, which are made 518 to entities outside the group, only the net proceeds are 519 included in the numerator and denominator of the sales factor. 520 (e) Sales that are not allocated or apportioned to any 521 taxing jurisdiction, otherwise known as “nowhere sales,” may not 522 be included in the numerator or denominator of the sales factor. 523 (f) The income attributable to the Florida activities of a 524 corporation that is exempt from taxation under the Interstate 525 Income Act of 1959, Pub. L. No. 86-272, is excluded from the 526 apportionment factor numerators in the calculation of corporate 527 income tax, even if another member of the water’s edge group has 528 nexus with this state and is subject to tax. 529 530 As used in this subsection, the term “sale” includes, but is not 531 limited to, loans, payments for the use of intangibles, 532 dividends, and management fees. 533 (3)(a) If a parent corporation is a member of the water’s 534 edge group and has nexus with this state, a single water’s edge 535 group return must be filed in the name and under the federal 536 employer identification number of the parent corporation. If the 537 water’s edge group does not have a parent corporation, if the 538 parent corporation is not a member of the water’s edge group, or 539 if the parent corporation does not have nexus with this state, 540 then the members of the water’s edge group must choose a member 541 subject to the tax imposed by this chapter to file the return. 542 The members of the water’s edge group may not choose another 543 member to file a corporate income tax return in subsequent years 544 unless the filing member does not maintain nexus with this state 545 or does not remain a member of the water’s edge group. The 546 return must be signed by an authorized officer of the filing 547 member as the agent for the water’s edge group. 548 (b) If members of a water’s edge group have different 549 taxable years, the taxable year of a majority of the members of 550 the water’s edge group is the taxable year of the water’s edge 551 group. If the taxable years of a majority of the members of a 552 water’s edge group do not correspond, the taxable year of the 553 member that must file the return for the water’s edge group is 554 the taxable year of the water’s edge group. 555 (c)1. A member of a water’s edge group having a taxable 556 year that does not correspond to the taxable year of the water’s 557 edge group shall determine its income for inclusion on the tax 558 return for the water’s edge group. The member shall use: 559 a. The precise amount of taxable income received during the 560 months corresponding to the taxable year of the water’s edge 561 group, if the precise amount can be readily determined from the 562 member’s books and records. 563 b. The taxable income of the member converted to conform to 564 the taxable year of the water’s edge group on the basis of the 565 number of months falling within the taxable year of the water’s 566 edge group. For example, if the taxable year of the water’s edge 567 group is a calendar year and a member operates on a fiscal year 568 ending on April 30, the income of the member must include 8/12 569 of the income from the current taxable year and 4/12 of the 570 income from the preceding taxable year. This method to determine 571 the income of a member may be used only if the return can be 572 timely filed after the end of the taxable year of the water’s 573 edge group. 574 c. The taxable income of the member during its taxable year 575 that ends within the taxable year of the water’s edge group. 576 2. The method of determining the income of a member of a 577 water’s edge group whose taxable year does not correspond to the 578 taxable year of the water’s edge group may not change as long as 579 the member remains a member of the water’s edge group. The 580 apportionment factors for the member must be applied to the 581 income of the member for the taxable year of the water’s edge 582 group. 583 (4)(a) A water’s edge group return must include a 584 computational schedule that: 585 1. Combines the federal income of all members of the 586 water’s edge group; 587 2. Shows all intercompany eliminations; 588 3. Shows Florida additions and subtractions under s. 589 220.13; and 590 4. Shows the calculation of the combined apportionment 591 factors. 592 (b) In addition to its return, a water’s edge group shall 593 also file a domestic disclosure spreadsheet. The spreadsheet 594 must fully disclose: 595 1. The income reported to each state; 596 2. The state tax liability; 597 3. The method used for apportioning or allocating income to 598 the various states; and 599 4. Other information required by department rule in order 600 to determine the proper amount of tax due to each state and to 601 identify the water’s edge group. 602 (5) The department may adopt rules and forms to administer 603 this section. The Legislature intends to grant the department 604 extensive authority to adopt rules and forms describing and 605 defining principles for determining the existence of a water’s 606 edge business, definitions of common control, methods of 607 reporting, and related forms, principles, and other definitions. 608 Section 6. Section 220.14, Florida Statutes, is amended to 609 read: 610 220.14 Exemption.— 611 (1) In computing a taxpayer’s liability for tax under this 612 code, there shall be exempt from the tax $50,000 of net income 613 as defined in s. 220.12 or such lesser amount as will, without 614 increasing the taxpayer’s federal income tax liability, provide 615 the state with an amount under this code which is equal to the 616 maximum federal income tax credit which may be available from 617 time to time under federal law. 618 (2) In the case of a taxable year for a period of less than 619 12 months, the exemption allowed by this section mustshallbe 620 prorated on the basis of the number of days in such year to 365 621 days, or, in a leap year, 366 days. 622 (3) Only one exemption shall be allowed to taxpayers filing 623 a water’s edge groupconsolidatedreturn under this code. 624 (4) Notwithstanding any other provision of this code, not 625 more than one exemption under this section may be allowed to the 626 Florida members of a controlled group of corporations, as 627 defined in s. 1563 of the Internal Revenue Code with respect to 628 taxable years ending on or after December 31, 1970, filing 629 separate returns under this code. The exemption described in 630 this section shall be divided equally among such Florida members 631 of the group,unless all of such members consent, at such time 632 and in such manner as the department shall by regulation 633 prescribe, to an apportionment plan providing for an unequal 634 allocation of such exemption. 635 Section 7. Paragraph (c) of subsection (5) of section 636 220.15, Florida Statutes, is amended to read: 637 220.15 Apportionment of adjusted federal income.— 638 (5) The sales factor is a fraction the numerator of which 639 is the total sales of the taxpayer in this state during the 640 taxable year or period and the denominator of which is the total 641 sales of the taxpayer everywhere during the taxable year or 642 period. 643 (c) Sales of a financial organization, including, but not 644 limited to, banking and savings institutions, investment 645 companies, real estate investment trusts, and brokerage 646 companies, occur in this state if derived from: 647 1. Fees, commissions, or other compensation for financial 648 services rendered within this state; 649 2. Gross profits from trading in stocks, bonds, or other 650 securities managed within this state; 651 3. Interest received within this state, other than interest 652 from loans secured by mortgages, deeds of trust, or other liens 653 upon real or tangible personal property located without this 654 state, and dividends received within this state; 655 4. Interest charged to customers at places of business 656 maintained within this state for carrying debit balances of 657 margin accounts, without deduction of any costs incurred in 658 carrying such accounts; 659 5. Interest, fees, commissions, or other charges or gains 660 from loans secured by mortgages, deeds of trust, or other liens 661 upon real or tangible personal property located in this state or 662 from installment sale agreements originally executed by a 663 taxpayer or the taxpayer’s agent to sell real or tangible 664 personal property located in this state; 665 6. Rents from real or tangible personal property located in 666 this state; or 667 7. Any other gross income, including other interest, 668 resulting from the operation as a financial organization within 669 this state. 670 671In computing the amounts under this paragraph, any amount672received by a member of an affiliated group (determined under s.6731504(a) of the Internal Revenue Code, but without reference to674whether any such corporation is an “includable corporation”675under s. 1504(b) of the Internal Revenue Code) from another676member of such group shall be included only to the extent such677amount exceeds expenses of the recipient directly related678thereto.679 Section 8. Paragraph (f) of subsection (1) of section 680 220.183, Florida Statutes, is amended to read: 681 220.183 Community contribution tax credit.— 682 (1) AUTHORIZATION TO GRANT COMMUNITY CONTRIBUTION TAX 683 CREDITS; LIMITATIONS ON INDIVIDUAL CREDITS AND PROGRAM 684 SPENDING.— 685(f) A taxpayer who files a Florida consolidated return as a686member of an affiliated group pursuant to s. 220.131(1) may be687allowed the credit on a consolidated return basis.688 Section 9. Paragraphs (b), (c), and (d) of subsection (2) 689 of section 220.1845, Florida Statutes, are amended to read: 690 220.1845 Contaminated site rehabilitation tax credit.— 691 (2) AUTHORIZATION FOR TAX CREDIT; LIMITATIONS.— 692 (b) A tax credit applicant, or multiple tax credit 693 applicants working jointly to clean up a single site, may not be 694 granted more than $500,000 per year in tax credits for each site 695 voluntarily rehabilitated. Multiple tax credit applicants shall 696 be granted tax credits in the same proportion as their 697 contribution to payment of cleanup costs. Subject to the same 698 conditions and limitations as provided in this section, a 699 municipality, county, or other tax credit applicant which 700 voluntarily rehabilitates a site may receive not more than 701 $500,000 per year in tax credits which it can subsequently 702 transfer subject tothe provisions inparagraph (f)(g). 703 (c) If the credit granted under this section is not fully 704 used in any one year because of insufficient tax liability on 705 the part of the corporation, the unused amount may be carried 706 forward for up to 5 years. The carryover credit may be used in a 707 subsequent year if the tax imposed by this chapter for that year 708 exceeds the credit for which the corporation is eligible in that 709 year after applying the other credits and unused carryovers in 710 the order provided by s. 220.02(8). If during the 5-year period 711 the credit is transferred, in whole or in part, pursuant to 712 paragraph (f)(g), each transferee has 5 years after the date of 713 transfer to use its credit. 714(d) A taxpayer that files a consolidated return in this715state as a member of an affiliated group under s. 220.131(1) may716be allowed the credit on a consolidated return basis up to the717amount of tax imposed upon the consolidated group.718 Section 10. Subsection (2) of section 220.1875, Florida 719 Statutes, is amended to read: 720 220.1875 Credit for contributions to eligible nonprofit 721 scholarship-funding organizations.— 722(2) A taxpayer who files a Florida consolidated return as a723member of an affiliated group pursuant to s. 220.131(1) may be724allowed the credit on a consolidated return basis; however, the725total credit taken by the affiliated group is subject to the726limitation established under subsection (1).727 Section 11. Paragraphs (a) and (c) of subsection (3) of 728 section 220.191, Florida Statutes, are amended to read: 729 220.191 Capital investment tax credit.— 730 (3)(a) Notwithstanding subsection (2), an annual credit 731 against the tax imposed by this chapter shall be granted to a 732 qualifying business which establishes a qualifying project 733 pursuant to subparagraph (1)(g)3., in an amount equal to the 734 lesser of $15 million or 5 percent of the eligible capital costs 735 made in connection with a qualifying project, for a period not 736 to exceed 20 years beginning with the commencement of operations 737 of the project. The tax credit shall be granted against the 738 corporate income tax liability of the qualifying businessand as739further provided in paragraph (c). The total tax credit provided 740 pursuant to this subsection shall be equal to no more than 100 741 percent of the eligible capital costs of the qualifying project. 742 (c) The credit granted under this subsection may be used in 743 whole or in part by the qualifying businessor any corporation744that is either a member of that qualifying business’s affiliated745group of corporations, is a related entity taxable as a746cooperative under subchapter T of the Internal Revenue Code, or,747if the qualifying business is an entity taxable as a cooperative748under subchapter T of the Internal Revenue Code, is related to749the qualifying business. Any entity related to the qualifying750business may continue to file as a member of a Florida-nexus751consolidated group pursuant to a prior election made under s.752220.131(1), Florida Statutes (1985), even if the parent of the753group changes due to a direct or indirect acquisition of the754former common parent of the group. Any credit can be used by any755of the affiliated companies or related entities referenced in756this paragraph to the same extent as it could have been used by757the qualifying business. However, any such use shall not operate758to increase the amount of the credit or extend the period within759which the credit must be used. 760 Section 12. Subsection (2) of section 220.192, Florida 761 Statutes, is amended to read: 762 220.192 Renewable energy technologies investment tax 763 credit.— 764 (2) TAX CREDIT.—For tax years beginning on or after January 765 1, 2013, a credit against the tax imposed by this chapter shall 766 be granted in an amount equal to the eligible costs. Credits may 767 be used in tax years beginning January 1, 2013, and ending 768 December 31, 2016, after which the credit shall expire. If the 769 credit is not fully used in any one tax year because of 770 insufficient tax liability on the part of the corporation, the 771 unused amount may be carried forward and used in tax years 772 beginning January 1, 2013, and ending December 31, 2018, after 773 which the credit carryover expires and may not be used.A774taxpayer that files a consolidated return in this state as a775member of an affiliated group under s. 220.131(1) may be allowed776the credit on a consolidated return basis up to the amount of777tax imposed upon the consolidated group.Any eligible cost for 778 which a credit is claimed and which is deducted or otherwise 779 reduces federal taxable income shall be added back in computing 780 adjusted federal income under s. 220.13. 781 Section 13. Paragraphs (c) and (e) of subsection (3) of 782 section 220.193, Florida Statutes, are amended to read: 783 220.193 Florida renewable energy production credit.— 784 (3) An annual credit against the tax imposed by this 785 section shall be allowed to a taxpayer, based on the taxpayer’s 786 production and sale of electricity from a new or expanded 787 Florida renewable energy facility. For a new facility, the 788 credit shall be based on the taxpayer’s sale of the facility’s 789 entire electrical production. For an expanded facility, the 790 credit shall be based on the increases in the facility’s 791 electrical production that are achieved after May 1, 2012. 792 (c) If the amount of credits applied for each year exceeds 793 the amount authorized in paragraph (f)(g), the Department of 794 Agriculture and Consumer Services shall allocate credits to 795 qualified applicants based on the following priority: 796 1. An applicant who places a new facility in operation 797 after May 1, 2012, shall be allocated credits first, up to a 798 maximum of $250,000 each, with any remaining credits to be 799 granted pursuant to subparagraph 3., but if the claims for 800 credits under this subparagraph exceed the state fiscal year cap 801 in paragraph (f)(g), credits shall be allocated pursuant to 802 this subparagraph on a prorated basis based upon each 803 applicant’s qualified production and sales as a percentage of 804 total production and sales for all applicants in this category 805 for the fiscal year. 806 2. An applicant who does not qualify under subparagraph 1. 807 but who claims a credit of $50,000 or less shall be allocated 808 credits next, but if the claims for credits under this 809 subparagraph, combined with credits allocated in subparagraph 810 1., exceed the state fiscal year cap in paragraph (f)(g), 811 credits shall be allocated pursuant to this subparagraph on a 812 prorated basis based upon each applicant’s qualified production 813 and sales as a percentage of total qualified production and 814 sales for all applicants in this category for the fiscal year. 815 3. An applicant who does not qualify under subparagraph 1. 816 or subparagraph 2. and an applicant whose credits have not been 817 fully allocated under subparagraph 1. shall be allocated credits 818 next. If there is insufficient capacity within the amount 819 authorized for the state fiscal year in paragraph (f)(g), and 820 after allocations pursuant to subparagraphs 1. and 2., the 821 credits allocated under this subparagraph shall be prorated 822 based upon each applicant’s unallocated claims for qualified 823 production and sales as a percentage of total unallocated claims 824 for qualified production and sales of all applicants in this 825 category, up to a maximum of $1 million per taxpayer per state 826 fiscal year. If, after application of this $1 million cap, there 827 is excess capacity under the state fiscal year cap in paragraph 828 (f)(g)in any state fiscal year, that remaining capacity shall 829 be used to allocate additional credits with priority given in 830 the order set forth in this subparagraph and without regard to 831 the $1 million per taxpayer cap. 832(e) A taxpayer that files a consolidated return in this833state as a member of an affiliated group under s. 220.131(1) may834be allowed the credit on a consolidated return basis up to the835amount of tax imposed upon the consolidated group.836 Section 14. Section 220.51, Florida Statutes, is amended to 837 read: 838 220.51 AdoptionPromulgationof rules and regulations.—In 839 accordance with the Administrative Procedure Act, chapter 120, 840 the department is authorized to make, adoptpromulgate, and 841 enforce such reasonable rules and regulations, and to prescribe 842 such forms relating to the administration and enforcement ofthe843provisions ofthis code, as it may deem appropriate, including: 844 (1) Rules for initial implementation of this code and for 845 taxpayers’ transitional taxable years commencing before and 846 ending after January 1, 1972; and 847 (2) Rules or regulations to clarify whether certain groups, 848 organizations, or associations formed under the laws of this 849 state or any other state, country, or jurisdiction shall be 850 deemed “taxpayers” for the purposes of this code, in accordance 851 with the legislative declarations of intent in s. 220.02; and852(3) Regulations relating to consolidated reporting for853affiliated groups of corporations, in order to provide for an854equitable and just administration of this code with respect to855multicorporate taxpayers. 856 Section 15. Section 220.64, Florida Statutes, is amended to 857 read: 858 220.64 Other provisions applicable to franchise tax.—To the 859 extent that they are not manifestly incompatible withthe860provisions ofthis part, parts I, III, IV, V, VI, VIII, IX, and 861 X of this code and ss. 220.12, 220.13, 220.136, 220.1363, 862 220.15, and 220.16 apply to the franchise tax imposed by this 863 part. Under rules prescribed by the departmentin s. 220.131, a 864 consolidated return may be filed by any affiliated group of 865 corporations composed of one or more banks or savings 866 associations,its ortheir Florida parent corporations 867corporation, and any nonbank or nonsavings subsidiaries of such 868 parent corporationscorporation. 869 Section 16. Paragraph (f) of subsection (4) and paragraph 870 (a) of subsection (5) of section 288.1254, Florida Statutes, are 871 amended to read: 872 288.1254 Entertainment industry financial incentive 873 program.— 874 (4) TAX CREDIT ELIGIBILITY; TAX CREDIT AWARDS; QUEUES; 875 ELECTION AND DISTRIBUTION; CARRYFORWARD; CONSOLIDATED RETURNS; 876 PARTNERSHIP AND NONCORPORATE DISTRIBUTIONS; MERGERS AND 877 ACQUISITIONS.— 878(f)Consolidated returns.—A certified production company879that files a Florida consolidated return as a member of an880affiliated group under s. 220.131(1) may be allowed the credit881on a consolidated return basis up to the amount of the tax882imposed upon the consolidated group under chapter 220.883 (5) TRANSFER OF TAX CREDITS.— 884 (a) Authorization.—Upon application to the Office of Film 885 and Entertainment and approval by the department, a certified 886 production company, or a partner or member that has received a 887 distribution under paragraph (4)(f)(4)(g), may elect to 888 transfer, in whole or in part, any unused credit amount granted 889 under this section. An election to transfer any unused tax 890 credit amount under chapter 212 or chapter 220 must be made no 891 later than 5 years after the date the credit is awarded, after 892 which period the credit expires and may not be used. The 893 department shall notify the Department of Revenue of the 894 election and transfer. 895 Section 17. Subsections (9) and (10) of section 376.30781, 896 Florida Statutes, are amended to read: 897 376.30781 Tax credits for rehabilitation of drycleaning 898 solvent-contaminated sites and brownfield sites in designated 899 brownfield areas; application process; rulemaking authority; 900 revocation authority.— 901 (9) On or before May 1, the Department of Environmental 902 Protection shall inform each tax credit applicant that is 903 subject to the January 31 annual application deadline of the 904 applicant’s eligibility status and the amount of any tax credit 905 due. The department shall provide each eligible tax credit 906 applicant with a tax credit certificate that must be submitted 907 with its tax return to the Department of Revenue to claim the 908 tax credit or be transferred pursuant to s. 220.1845(2)(f)s.909220.1845(2)(g). The May 1 deadline for annual site 910 rehabilitation tax credit certificate awards shall not apply to 911 any tax credit application for which the department has issued a 912 notice of deficiency pursuant to subsection (8). The department 913 shall respond within 90 days after receiving a response from the 914 tax credit applicant to such a notice of deficiency. Credits may 915 not result in the payment of refunds if total credits exceed the 916 amount of tax owed. 917 (10) For solid waste removal, new health care facility or 918 health care provider, and affordable housing tax credit 919 applications, the Department of Environmental Protection shall 920 inform the applicant of the department’s determination within 90 921 days after the application is deemed complete. Each eligible tax 922 credit applicant shall be informed of the amount of its tax 923 credit and provided with a tax credit certificate that must be 924 submitted with its tax return to the Department of Revenue to 925 claim the tax credit or be transferred pursuant to s. 926 220.1845(2)(f)s. 220.1845(2)(g). Credits may not result in the 927 payment of refunds if total credits exceed the amount of tax 928 owed. 929 Section 18. Transitional rules.— 930 (1) For the first taxable year beginning on or after 931 January 1, 2020, a taxpayer that filed a Florida corporate 932 income tax return in the preceding taxable year and that is a 933 member of a water’s edge group shall compute its income together 934 with all members of its water’s edge group and file a combined 935 Florida corporate income tax return with all members of its 936 water’s edge group. 937 (2) An affiliated group of corporations which filed a 938 Florida consolidated corporate income tax return pursuant to an 939 election provided in former s. 220.131, Florida Statutes, shall 940 cease filing a Florida consolidated return for taxable years 941 beginning on or after January 1, 2020, and shall file a combined 942 Florida corporate income tax return with all members of its 943 water’s edge group. 944 (3) An affiliated group of corporations which filed a 945 Florida consolidated corporate income tax return pursuant to the 946 election in s. 220.131(1), Florida Statutes (1985), which 947 allowed the affiliated group to make an election within 90 days 948 after December 20, 1984, or upon filing the taxpayer’s first 949 return after December 20, 1984, whichever was later, shall cease 950 filing a Florida consolidated corporate income tax return using 951 that method for taxable years beginning on or after January 1, 952 2020, and shall file a combined Florida corporate income tax 953 return with all members of its water’s edge group. 954 (4) A taxpayer that is not a member of a water’s edge group 955 remains subject to chapter 220, Florida Statutes, and shall file 956 a separate Florida corporate income tax return as previously 957 required. 958 (5) For taxable years beginning on or after January 1, 959 2020, a tax return for a member of a water’s edge group must be 960 a combined Florida corporate income tax return that includes tax 961 information for all members of the water’s edge group. The tax 962 return must be filed by a member that has a nexus with this 963 state. 964 Section 19. Funds recaptured pursuant to this act must be 965 appropriated in the General Appropriations Act to the various 966 school districts to reduce the required local effort millage. 967 Section 20. This act shall take effect July 1, 2019.