North Carolina HB 554: Revenue Laws Technical Changes/Bipartisan Budget Act of 2015 Changes/Peer-to-Peer Tax Parity.

Bill Text

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 554

Short Title: Rev Laws Tech Chngs/BBA Chngs/P2P Tax Parity. (Public)
Sponsors: Representatives Howard, Setzer, and N. Jackson (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Finance, if favorable, Rules, Calendar, and Operations of the House
March 31, 2025
*H554-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE VARIOUS TECHNICAL, CLARIFYING, AND ADMINISTRATIVE 2
CHANGES TO THE REVENUE LAWS; TO CONFORM TO THE FEDERAL SYSTEM 3
FOR AUDITING PARTNERSHIPS BY IMPOSING TAX AT THE PARTNERSHIP 4
LEVEL FOR FEDERAL CHANGES AND BY AUTHORIZING REFUNDS FOR 5
FEDERAL CHANGES; AND TO PROVIDE TAX PARITY FOR SHORT-TERM CAR 6
RENTALS BY EXPANDING ALTERNATE HIGHWAY USE TAX TO INCLUDE 7
PEER-TO-PEER RENTALS. 8
The General Assembly of North Carolina enacts: 9
10
PART I. PERSONAL INCOME TAX CHANGES 11
SECTION 1.1.(a) G.S. 105-153.5 reads as rewritten: 12
"§ 105-153.5. Modifications to adjusted gross income. 13
... 14
(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may 15
deduct from the taxpayer's adjusted gross income any of the following items that are included in 16
the taxpayer's adjusted gross income: 17
... 18
(17) The amount by which the aggregate amount of losses or deductions of an S 19
Corporation taken into account by a shareholder under G.S. 105-131.1(b) do 20
not exceed the combined adjusted bases, determined in accordance with 21
G.S. 105-131.3, of the shareholder in the stock and indebtedness of the S 22
Corporation. 23
(c) Additions. – In calculating North Carolina taxable income, a taxpayer must add to the 24
taxpayer's adjusted gross income any of the following items that are not included in the taxpayer's 25
adjusted gross income: 26
... 27
(8) The amount by which the aggregate amount of losses or deductions of an S 28
Corporation taken into account by a shareholder under G.S. 105-131.1(b) 29
exceed the combined adjusted bases, determined in accordance with 30
G.S. 105-131.3, of the shareholder in the stock and indebtedness of the S 31
Corporation. 32
...." 33
SECTION 1.1.(b) This section is effective for taxable years beginning on or after 34
January 1, 2025. 35

General Assembly Of North Carolina Session 2025
Page 2 House Bill 554-First Edition
SECTION 1.2.(a) G.S. 105-153.5A reads as rewritten: 1
"§ 105-153.5A. Net operating loss provisions. 2
... 3
(g) Limitation. – The provisions of this section apply only to individuals, estates, and 4
trusts." 5
SECTION 1.2.(b) G.S. 105-153.5A(a) reads as rewritten: 6
"(a) State Net Operating Loss. – A taxpayer's State net operating loss for a taxable year is 7
the amount by which business deductions for the year exceed gross income for the year as 8
determined under the Code adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6. The 9
amount of a taxpayer's State net operating loss must also be determined in accordance with the 10
following modifications: 11
(1) No State net operating loss deduction shall be allowed. 12
(2) The amount deductible on account of losses from sales or exchanges of capital 13
assets shall not exceed the amount includable on account of gains from sales 14
or exchanges of capital assets. 15
(3) The exclusion provided by Code section 1202 shall not be allowed. 16
(4) No deduction shall be allowed under G.S. 105-153.5(a1) for the child 17
deduction. 18
(5) The deductions which are not attributable to a taxpayer's trade or business 19
shall be allowed only to the extent of the amount of the gross income not 20
derived from such trade or business. 21
(6) Any deduction under Code section 199A shall not be allowed. 22
(7) The amount of the taxpayer's excess business loss, as defined under the 23
provisions of section 461(l) of the Code, shall be fully allowed as a State net 24
operating loss." 25
SECTION 1.2.(c) Subsection (a) of this section is effective when the Part becomes 26
law and applies retroactively to taxable years beginning on or after January 1, 2022. Subsection 27
(b) of this section is effective for taxable years beginning on or after January 1, 2025. The 28
remainder of this section is effective when the Part becomes law. 29
SECTION 1.3.(a) G.S. 105-160.2 reads as rewritten: 30
"§ 105-160.2. Imposition of tax. 31
(a) Scope. – The tax imposed by this Part applies to the taxable income of estates and 32
trusts as determined under the provisions of the Code except as otherwise provided in this Part. 33
The taxable income of an estate or trust is the same as taxable income for such an estate or trust 34
under the provisions of the Code, adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6, 35
except that the adjustments provided in G.S. 105-153.5 and G.S. 105-153.6 are apportioned 36
between the estate or trust and the beneficiaries based on the distributions made during the 37
taxable year. G.S. 105-153.6. 38
(b) Tax Base. – The tax is computed on the amount of the