N.H. Rev. Stat. § 77-A:1

Current through Chapter 381 of the 2024 Legislative Session

Section 77-A:1 - Definitions

When appearing in this chapter:

I. "Business organization" means any enterprise, whether corporation, partnership, limited liability company, proprietorship, association, business trust, real estate trust or other form of organization; organized for gain or profit, carrying on any business activity within the state, except such enterprises as are expressly made exempt from income taxation under the United States Internal Revenue Code as defined in RSA 77-A:1, XX. Each enterprise under this definition shall be subject to taxation under RSA 77-A:2 as a separate entity, unless specifically authorized by this chapter to be treated otherwise, such as, but not limited to, combined reporting. Trusts or foundations treated as grantor trusts under section 671 of the United States Internal Revenue Code shall be included in the return of their owners, and such owners shall be subject to the tax thereon to the extent such owners would be considered a business organization hereunder notwithstanding the existence of the trust or foundation. The use of consolidated returns as defined in the United States Internal Revenue Code as defined in RSA 77-A:1, XX is not permitted. Notwithstanding any other provision of this paragraph, an enterprise shall not be characterized as a business organization and shall be excluded from taxation at the entity level if it elects to be treated as a qualified investment company as defined in RSA 77-A:1, XXI or if it elects to be treated as a qualified regenerative manufacturing company as defined in RSA 77-A:1, XXX. A partnership, limited liability company, estate, trust, or foundation except grantor trusts pursuant to section 671 of the United States Internal Revenue Code, "S" corporation, real estate investment trust, or any other such entity, other than an organization electing to be treated as a qualified investment company as defined in RSA 77-A:1, XXI whose net income is reportable by the true owners either directly or indirectly, or an organization electing to be treated as a qualified regenerative manufacturing company as defined in RSA 77-A:1, XXX, shall be subject to tax at the entity level, and no part of such earnings or loss shall be included in the calculation of the gross business profits of the owners of such entity.

II."Commissioner'' means the commissioner of revenue administration.

III."Gross business profits'' means:

(a) In the case of a corporation, except "S'' corporations, or any other business organization required to make and file a United States corporation income tax return, or in the case of a corporation which does not make and file a separate United States corporation income tax return for itself because it is a member of an affiliated group pursuant to the provisions of chapter 6 of the United States Internal Revenue Code as defined in RSA 77-A:1, XX, the amount of taxable income as would be determinable under the provisions of the United States Internal Revenue Code as defined in RSA 77-A:1, XX before the application of any net operating loss deduction, special deductions shown on line 29 of the federal corporate income tax return, or any other special deductions allowable only to a certain class of corporate taxpayer.

(b) In the case of "S'' corporations or any other business organizations required to make and file an "S'' corporation return, the net profit from all business activity determined in accordance with rules adopted by the department of revenue administration under RSA 541-A.

(c) In the case of a partnership or any other business organization required to make and file a United States partnership return of income, the amount of ordinary income as would be determinable under the provisions of the United States Internal Revenue Code as defined in RSA 77-A:1, XX increased by the amounts shown as payments to partners on the federal partnership return of income, the net amount of any gains from the sale of partnership assets, items of income specifically allocated to partners and decreased by any deductions specifically allocated to partners or losses on the sale of partnership assets.

(d) In the case of a proprietorship, the amount of net profit or loss from a business, profession, rental, or farming activities as would be determinable under the provisions of the United States Internal Revenue Code as defined in RSA 77-A:1, XX adjusted by the amount of any gains or losses from the sale of assets held or used in business activity.

(e) In the case of a trust, estate, or any other business organization engaging in business activity, the amount of net profit from such business activity and the net amount of any gains from the sale of assets held for use in business activity.

(f) In the case of any business organization which is part of a water's edge combined group and which does not make or file a United States income tax return or schedule under subparagraphs (a)-(d), the amount of net income as would be determinable under the provisions of the United States Internal Revenue Code as defined in RSA 77-A:1, XX and applied within the concepts of RSA 77-A for such business organizations.

IV. "Taxable business profits" means gross business profits adjusted by the additions and deductions provided in RSA 77-A:4 except net operating loss carryover as defined in RSA 77-A:4, XIII, and then adjusted by the method of apportionment provided in RSA 77-A:3, and then further adjusted by net operating loss carryover as defined in RSA 77-A:4, XIII.

V."Taxable period'' means the calendar year or fiscal year which the taxpayer uses for United States income tax purposes, or that part of a year for which a return is made.

VI."Gross business income'' means all income for federal income tax purposes from whatever source derived in the conduct of business activity, including but not limited to gross proceeds from sales, compensation for rendering services, gross proceeds realized from trading in stocks, bonds, or other evidences of indebtedness, gross proceeds realized from sale of assets used in trade or business, interest, discount, gross rents, royalties, fees, commissions, dividends, without any deduction on account of the cost of property sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense paid or accrued and without any deduction on account of losses.

VII."Prescribed Filing Date'' means the original statutory due date, or approved extended due date.

VIII."Prescribed Payment Date'' means the original statutory due date.

IX."Qualified charitable contributions'' means a charitable contribution of tangible personal property as defined in section 1221(1) of the United States Internal Revenue Code as defined in RSA 77-A:1, XX, but only if all of the following conditions are met:

(a) The contribution is either to an educational organization which is described in section 170(b)(1)(A)(ii) of the United States Internal Revenue Code as defined in RSA 77-A:1, XX or to an institution of higher education as defined in section 3304(f) of the United States Internal Revenue Code as defined in RSA 77-A:1, XX or to both an educational organization and an institution of higher education as defined in this subparagraph.

(b) The contribution is made not later than one year after the date the manufacture or purchase of the property is substantially completed.

(c) The original use of the property is by the donee.

(d) The property is a computer, scientific equipment, or apparatus, all of the use of which by the donee is directly for the education of students in the state of New Hampshire.

(e) The property is not transferred by the donee in exchange for money, other property, or services.

(f) The taxpayer receives from the donee a written statement representing that its use and disposition of the property shall be in accordance with these provisions.

(g) The contribution is made between July 1, 1983, and June 30, 1984.

X."Qualified research contribution'' means a charitable contribution by a taxpayer of tangible personal property as defined in section 1221(1) of the United States Internal Revenue Code as defined in RSA 77-A:1, XX, but only if all of the following conditions are met:

(b) The contribution is made not later than 2 years after the date the manufacture or purchase of the property is substantially completed.

(c) The original use of the property is by the donee.

(d) The property is scientific equipment or apparatus, substantially all of the use of which by the donee is for research or experimentation, or for research training in physical or biological sciences for students.

(e) The property is not transferred by the donee in exchange for money, other property, or services.

(f) The taxpayer receives from the donee a written statement representing that its use and disposition of the property shall be in accordance with these provisions.

(g) [Repealed by 2016 amendment.]

XI."Business asset'' means any tangible or intangible property, whether real or personal, previously used, currently used, or available for use in any business activity.

XII."Business activity'' means a substantial economic presence evidenced by a purposeful direction of business toward the state examined in light of the frequency, quantity, and systematic nature of a business organization's economic contacts with the state. "Business activity'' includes, but is not limited to, a group of actions performed by a business organization for the purpose of earning income or profit from such actions and includes every operation which forms a part of, or a step in, the process of earning income or profit from such group of actions. The actions ordinarily include, but are not limited to, the employment of business assets, the receipt of money, property, or other items of value and the incurring or payment of expenses. Notwithstanding any other provision of this paragraph, a holder of an ownership interest in a qualified investment company as defined in RSA 77-A:1, XXI, shall not be deemed to be carrying on any business activity within this state due solely to its holding an ownership interest in such qualified investment company.

XIII."Combined net income'' means the revenues less expenses as would be determinable under the provisions of the Internal Revenue Code as defined in RSA 77-A:1, XX and applied within the concepts of RSA 77-A for all business organizations conducting a unitary business regardless of whether such business organizations are required to file a federal income tax return.

XIV."Unitary business'' means one or more related business organizations engaged in business activity both within and without this state among which there exists a unity of ownership, operation, and use; or an interdependence in their functions.

XV."Water's edge combined group'' means a group of business organizations as defined in RSA 77-A:1, I operating a unitary business, except for overseas business organizations, as defined in paragraph XIX; provided, however, 80/20 business organizations shall only be excluded from the definition of "water's edge combined group'' if the following criteria are met:

(a) The taxpayer certifies that transactions conducted between such business organizations and other members of the group are on a comparable basis to transactions between other business organizations owned or controlled by the taxpayer and any members of the water's edge combined group; and

(b) The taxpayer agrees to report to the commissioner any adjustments as finally determined by the United States Internal Revenue Service with respect to such transactions between any related business organizations as may have a bearing on the comparability of transactions referred to in subparagraph (a). These adjustments shall be made to the 80/20 business organizations so that a comparable basis shall be maintained for New Hampshire tax purposes. Such report shall be made in the manner and within the time limits as provided in RSA 77-A:10. Nothing in this paragraph shall exclude from taxation any business organization carrying on business activity within the state.

XVI."Water's edge method'' means the determination of taxable business profits for a group of business organizations conducting a unitary business by adding their combined net income, the additions and deductions provided in RSA 77-A:4 for the members of the group, and apportioning the result as provided in RSA 77-A:3.

XVII."Foreign dividends'' as used in RSA 77-A:3, II means dividends from overseas business organizations. For purposes of RSA 77-A:3, II(b), actual distributions from partnerships, limited liability companies, and "S'' corporations are dividends for purposes of this definition.

XVIII."Foreign property, payroll and sales'' as used in RSA 77-A:3, II means the property, payroll and sales data of overseas business organizations, and which have paid dividends to a member of the water's edge combined group.

XVIII-a "Foreign sales" as used in RSA 77-A:3, II means the sales data of overseas business organizations which have paid dividends to a member of the water's edge combined group.

XIX."Overseas business organizations'' means foreign incorporated business organizations and business organizations with 80 percent or more of the average of their payroll and property assignable to a location outside the 50 states and the District of Columbia.

XX."United States Internal Revenue Code'' means:

(a) The United States Internal Revenue Code without the rules, regulations, forms, and procedures of the United States Internal Revenue Service. The rules, regulations, forms and procedures of the United States Internal Revenue Service may, however, be used by the commissioner of revenue administration in formulating rules for adoption under RSA 541-A. This definition shall be operative unless and until a specific statutory exception to its adoption is provided in this chapter, or until the application of one of its provisions is held to violate the New Hampshire constitution.

(b) For all tax years beginning before January 1, 1987, the United States Internal Revenue Code (1954) as amended.

(c) For all tax years beginning after December 31, 1986, and tax years ending before January 1, 1988, the United States Internal Revenue Code of 1986 in effect on December 22, 1987.

(d) For all tax years beginning after December 31, 1987, and tax years ending before January 1, 1989, the United States Internal Revenue Code of 1986 in effect on November 10, 1988.

(e) For all tax years beginning after December 31, 1988, and tax years ending before January 1, 1991, the United States Internal Revenue Code of 1986 in effect on December 19, 1989.

(f) For all tax years beginning after December 31, 1990, and tax years ending before January 1, 1993, the United States Internal Revenue Code of 1986 in effect on November 5, 1990.

(g) For all tax years beginning after December 31, 1992, and tax years ending before January 1, 1995, the United States Internal Revenue Code of 1986, in effect on August 10, 1993.

(h) For all tax years beginning after December 31, 1994, and tax years ending before January 1, 1997, the United States Internal Revenue Code of 1986, in effect on December 31, 1994.

(i) For all tax years beginning after December 31, 1996, the United States Internal Revenue Code of 1986, in effect on December 31, 1996.

(j) For all tax years beginning after January 1, 1997, the United States Internal Revenue Code of 1986 in effect on December 31, 1997.

(k) For all tax years beginning after January 1, 1998, the United States Internal Revenue Code of 1986 in effect on December 31, 1998.

(l) For all tax years beginning after January 1, 2000, the United States Internal Revenue Code of 1986 in effect on December 31, 2000.

(m) For all taxable periods beginning on or after January 1, 2017, the United States Internal Revenue Code of 1986 in effect on December 31, 2015, subject to RSA 77-A:3-b.

(n) For all taxable periods beginning on or after January 1, 2018, the United States Internal Revenue Code of 1986 in effect on December 31, 2016, subject to RSA 77-A:3-b.

(o) For all taxable periods beginning on or after January 1, 2020, the United States Internal Revenue Code of 1986 in effect on December 31, 2018, subject to RSA 77-A:3-b.

XXI.

(a) "Qualified investment company" means:

(1) A regulated investment company as defined in section 851 of the United States Internal Revenue Code as defined in RSA 77-A:1, XX;

(2) An organization that is an investment company under the Investment Company Act of 1940 as amended;

(3) An organization that would be an investment company under the Investment Company Act of 1940, as amended, but for the exception from investment company status provided by section 3(c)(1) or 3(c)(7) of said Investment Company Act; or

(4) A qualified community development entity as defined in section 45D of the United States Internal Revenue Code, which entity is owned, controlled, or managed, directly or indirectly, by the business finance authority of the state of New Hampshire.

(b) A qualified investment company shall limit its activities to investment or other activities consistent with its organizational purpose and those incidental to or in support of such activities provided that any such exception from investment company status by reason of section 3(c)(7) is available only to issuers whose securities are owned by persons or organizations who are deemed under section 3(c)(7) or any order, regulation or interpretation thereunder not to require protection under the provisions of the Investment Company Act by reason of their size, nature, status, or sophistication. A business organization seeking qualified investment company status shall file an election pursuant to RSA 77-A:5-b.

XXII."Compensation'', for the purposes of RSA 77-A:5, VII, means all wages, salaries, fees, bonuses, commissions, or other items, including the following employee benefits: health, life and disability insurance and pensions, profit sharing and retirement benefits.

XXIII."Eligible employee'' means any individual employed by a business organization who, as of the last day of the applicable tax year:

(a) Has been employed by such business organization for at least 6 consecutive months;

(b) Has not been an eligible employee of such business organization or a substantially similar predecessor business organization for any prior taxable year; and

(c) Performs all but an incidental portion of services at a location or locations within the state. For the first taxable year in which the job creation tax credit allowed under RSA 77-A:5, VII, is effective, no employees employed on the first day of such taxable year shall be treated as eligible employees of such business organization for such first taxable year or any succeeding taxable year. For purposes of this paragraph, the commissioner is authorized to adopt rules pursuant to RSA 541-A to define the terms "substantially similar predecessor business organization'' and "incidental portion of services.''

XXIII-a. "Limited liability company" means a limited liability company formed under RSA 304-C or a foreign limited liability company as defined in RSA 304-C:9. In the case of a limited liability company required to make and file a United States partnership return of income, the provisions of this chapter shall be applied as though the limited liability company were a partnership and its members were partners.

XXIV-XXIX [Repealed.]

XXX.

(a) "Qualified regenerative manufacturing company" means any business organization which meets each of the following requirements at all times during the entire taxable year:

(1) It files with its return for the taxable year an election to be a qualified regenerative manufacturing company in accordance with RSA 77-A:5-c or has made such election for a previous taxable year; and

(2) At least 75 percent of its business activities over the course of the tax year meet the requirements for an active regenerative manufacturing business, or, in the case of a subsidiary located in New Hampshire, 75 percent of that subsidiary's business activities meet the requirements for an active regenerative manufacturing business.

(b) For purposes of this paragraph, the term "regenerative manufacturing" means any aspect of the manufacturing of blood, tissues, tissue constructs, and organs for the purpose of researching, diagnosing, treating, or curing any disease or injury, such as (1) cell collection, culture and scale-up, (2) biomaterial selection and scale-up, (3) tissue process automation and monitoring, (4) tissue maturing, and (5) tissue preservation and transport.

(c) For purposes of this paragraph, the term "active regenerative manufacturing business" means the conduct of any business activity the primary focus of which is any one or more of the following areas:

(1) Performing research relating to regenerative manufacturing;

(2) Performing regenerative manufacturing activities;

(3) Researching, developing, manufacturing, or supplying technical services in support of regenerative manufacturing, such as process engineering, automation, facility set-up, and distribution services;

(4) Researching, developing, manufacturing, or supplying technologies utilized in regenerative manufacturing, such as cellular and non-cellular source materials, tools, equipment, reagents, and other supplies; and

(5) Performing any activity necessary to bring a product created through regenerative manufacturing to market, including but not limited to seeking patents, regulatory approval, performing clinical trials, and sales.

RSA 77-A:1

Amended by 2022 , 241: 1, eff. 7/1/2022, app. to business organizations' tax years ending on or after 12/31/2022.

Amended by 2019 , 346: 429, eff. 1/1/2022.

Amended by 2019 , 346: 251, eff. 7/1/2019.

Amended by 2018 , 157: §§2, 4eff. 7/29/2018 and applicable for taxable periods beginning after 12/31/2017.

Amended by 2017 , 257: 49, eff. 10/1/2017.

Amended by 2017 , 156: 229, eff. 6/28/2017.

Amended by 2016 , 295: 1, §6eff. 6/21/2016.

Amended by 2012 , 232: 4, eff. 1/1/2013.

Amended by 2011 , 181: 2, eff. 6/14/2011.

1970, 5:1. 1971, 515:1, 2, 5. 1973, 544:11, VII; 579:2, 3. 1975, 503:2-4. 1977, 588:28. 1979, 446:1. 1981, 445:1-3. 1982, 42:91. 1983, 318:1, 2; 444:1. 1985, 414:6-9. 1986, 153:2, 3, 8. 1987, 407:1-4. 1988, 23:6. 1989, 50:15. 1991, 67:9-11; 354:6; 362:1. 1993, 313:9, 10; 350:5-7. 1994, 178:1; 326:4. 1995, 45:3. 1996, 154:1. 1997, 189:3. 1998, 105:2; 163:3, 4, 8, I. 1999, 163:2. 2001, 158:72, eff. Sept. 3, 2001. 2004, 143:2, 3, 8, III, eff. May 24, 2004. 2007, 263:127, eff. July 1, 2007. 2008, 2:1, 2, eff. April 22, 2008.