AN ACT relating to a tax deduction for theft losses.

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AN ACT relating to a tax deduction for theft losses. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 141.019 is amended to read as follows: 3
In the case of taxpayers other than corporations: 4
(1) Adjusted gross income shall be calculated by subtracting from the gross income of 5
those taxpayers the deductions allowed individuals by Se ction 62 of the Internal 6
Revenue Code and adjusting as follows: 7
(a) Exclude income that is exempt from state taxation by the Kentucky 8
Constitution and the Constitution and statutory laws of the United States; 9
(b) Exclude income from supplemental annuities provided by the Railroad 10
Retirement Act of 1937 as amended and which are subject to federal income 11
tax by Pub. L. No. 89-699; 12
(c) Include interest income derived from obligations of sister states and political 13
subdivisions thereof; 14
(d) Exclude employee pension contributions picked up as provided for in KRS 15
6.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610, 16
and 161.540 upon a ruling by the Internal Revenue Service or the federal 17
courts that these contributions shall not be included as gross income until such 18
time as the contributions are distributed or made available to the employee; 19
(e) Exclude Social Security and railroad retirement benefits subject to federal 20
income tax; 21
(f) Exclude any money received because of a settlement or judgment in a lawsuit 22
brought against a manufacturer or distributor of "Agent Orange" for damages 23
resulting from exposure to Agent Orange by a member or veteran of the 24
Armed Forces of the United States or any dependent of such person who 25
served in Vietnam; 26
(g) 1. a. For taxable years beginning after December 31, 2005, but before 27
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January 1, 2018, exclude up to forty-one thousand one hundred ten 1
dollars ($41,110) of total distributions from pension plans, annuity 2
contracts, profit -sharing plans, retirement plans, or employee 3
savings plans; and 4
b. For taxable years beginning on or after January 1, 2018, exclude 5
up to thirty -one thousand one hundred ten dollars ($31,110) of 6
total distributions from pension plans, annuity cont racts, profit -7
sharing plans, retirement plans, or employee savings plans. 8
2. As used in this paragraph: 9
a. "Annuity contract" has the same meaning as set forth in Section 10
1035 of the Internal Revenue Code; 11
b. "Distributions" includes but is not limited to any lump -sum 12
distribution from pension or profit -sharing plans qualifying for the 13
income tax averaging provisions of Section 402 of the Internal 14
Revenue Code; any distribution from an individual retirement 15
account as defined in Section 408 of the Internal Revenue Code; 16
and any disability pension distribution; and 17
c. "Pension plans, profit-sharing plans, retirement plans, or employee 18
savings plans" means any trust or other entity created or organized 19
under a written retirement plan and forming part of a stoc k bonus, 20
pension, or profit-sharing plan of a public or private employer for 21
the exclusive benefit of employees or their beneficiaries and 22
includes plans qualified or unqualified under Section 401 of the 23
Internal Revenue Code and individual retirement acco unts as 24
defined in Section 408 of the Internal Revenue Code; 25
(h) 1. a. Exclude the portion of the distributive share of a shareholder's net 26
income from an S corporation subject to the franchise tax imposed 27
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under KRS 136.505 or the capital stock tax imposed under KRS 1
136.300; and 2
b. Exclude the portion of the distributive share of a shareholder's net 3
income from an S corporation related to a qualified subchapter S 4
subsidiary subject to the franchise tax imposed under KRS 5
136.505 or the capital stock tax imposed under KRS 136.300. 6
2. The shareholder's basis of stock held in an S corporation where the S 7
corporation or its qualified subchapter S subsidiary is subject to the 8
franchise tax imposed under KRS 136.505 or the capital stock tax 9
imposed under KRS 136.30 0 shall be the same as the basis for federal 10
income tax purposes; 11
(i) Exclude income received for services performed as a precinct worker for 12
election training or for working at election booths in state, county, and local 13
primaries or regular or special elections; 14
(j) Exclude any capital gains income attributable to property taken by eminent 15
domain; 16
(k) 1. Exclude all income from all sources for members of the Armed Forces 17
who are on active duty and who are killed in the line of duty, for the 18
year during wh ich the death occurred and the year prior to the year 19
during which the death occurred. 20
2. For the purposes of this paragraph, "all income from all sources" shall 21
include all federal and state death benefits payable to the estate or any 22
beneficiaries; 23
(l) Exclude all military pay received by members of the Armed Forces while on 24
active duty; 25
(m) 1. Include the amount deducted for depreciation under 26 U.S.C. sec. 167 26
or 168; and 27
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2. Exclude the amounts allowed by KRS 141.0101 for depreciation; 1
(n) Include the amount deducted under 26 U.S.C. sec. 199A; 2
(o) Ignore any change in the cost basis of the surviving spouse's share of property 3
owned by a Kentucky community property trust occurring for federal income 4
tax purposes as a result of the death of the predeceasing spouse; 5
(p) Allow the same treatment allowed under Pub. L. No. 116 -260, secs. 276 and 6
278, related to the tax treatment of forgiven covered loans, deductions 7
attributable to those loans, and tax attributes associated with those loans for 8
taxable years ending on or after March 27, 2020, but before January 1, 2022; 9
and 10
(q) For taxable years beginning on or after January 1, 2020, but before March 11, 11
2023, allow the same treatment of restaurant revitalization grants in 12
accordance with Pub. L. No. 117 -2, sec . 9673 and 15 U.S.C. sec. 9009c, 13
related to the tax treatment of the grants, deductions attributable to those 14
grants, and tax attributes associated with those grants; and 15
(2) Net income shall be calculated by subtracting from adjusted gross income all the 16
deductions allowed individuals by Chapter 1 of the Internal Revenue Code, as 17
modified by KRS 141.0101, except: 18
(a) Any deduction allowed by 26 U.S.C. sec. 164 for taxes; 19
(b) Any deduction allowed by 26 U.S.C. sec. 165 for losses, except: 20
1. Wagering losses allowed under Section 165(d) of the Internal Revenue 21
Code; and 22
2. Theft losses allowed under Section 165(e) of the Internal Revenue 23
Code; 24
(c) Any deduction allowed by 26 U.S.C. sec. 213 for medical care expenses; 25
(d) Any deduction allowed by 26 U.S.C. sec. 217 for moving expenses; 26
(e) Any deduction allowed by 26 U.S.C. sec. 67 for any other miscellaneous 27
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deduction; 1
(f) Any deduction allowed by the Internal Revenue Code for amo unts allowable 2
under KRS 140.090(1)(h) in calculating the value of the distributive shares of 3
the estate of a decedent, unless there is filed with the income return a 4
statement that the deduction has not been claimed under KRS 140.090(1)(h); 5
(g) Any deduct ion allowed by 26 U.S.C. sec. 151 for personal exemptions and 6
any other deductions in lieu thereof; 7
(h) Any deduction allowed for amounts paid to any club, organization, or 8
establishment which has been determined by the courts or an agency 9
established by t he General Assembly and charged with enforcing the civil 10
rights laws of the Commonwealth, not to afford full and equal membership 11
and full and equal enjoyment of its goods, services, facilities, privileges, 12
advantages, or accommodations to any person because of race, color, religion, 13
national origin, or sex, except nothing shall be construed to deny a deduction 14
for amounts paid to any religious or denominational club, group, or 15
establishment or any organization operated solely for charitable or educational 16
purposes which restricts membership to persons of the same religion or 17
denomination in order to promote the religious principles for which it is 18
established and maintained; and 19
(i) A taxpayer may elect to claim the standard deduction allowed by KRS 20
141.081 instead of itemized deductions allowed pursuant to 26 U.S.C. sec. 63 21
and as modified by this section. 22