(1) Every resident individual may elect under this section to subtract from federal adjusted gross income, or for trusts qualifying under subdivision (2)(c) of this section from taxable income, the extraordinary dividends paid on and the capital gain from the sale or exchange of capital stock of a corporation acquired by the individual (a) on account of employment by such corporation or (b) while employed by such corporation.

Terms Used In Nebraska Statutes 77-2715.09

  • Capital stock: means common or preferred stock, either voting or nonvoting. See Nebraska Statutes 77-2715.08
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Corporation: means all corporations and all other entities that are taxed as corporations under the Internal Revenue Code. See Nebraska Statutes 77-2734.04
  • Extraordinary dividend: means any dividend exceeding twenty percent of the fair market value of the stock on which it is paid as of the date the dividend is declared. See Nebraska Statutes 77-2715.08
  • Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
  • Inter vivos: Transfer of property from one living person to another living person.
  • Sale: means any transfer of title or possession or segregation in contemplation of transfer of title or possession, exchange, barter, lease, or rental, conditional or otherwise, in any manner or by any means, of property for a consideration or the provision of service for a consideration. See Nebraska Statutes 77-2701.33
  • Sales: means all gross receipts of the taxpayer, except:

    (a) Income from discharge of indebtedness. See Nebraska Statutes 77-2734.04

  • State: means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, and any foreign country or political subdivision thereof. See Nebraska Statutes 77-2734.04
  • Taxable income: means federal taxable income as adjusted and, if appropriate, as apportioned. See Nebraska Statutes 77-2734.04
  • Taxable year: means the period the corporate taxpayer used on its federal income tax return. See Nebraska Statutes 77-2734.04
  • Taxpayer: means any person subject to a tax imposed by sections 77-2701 to 77-2713. See Nebraska Statutes 77-2701.41
  • Year: shall mean calendar year. See Nebraska Statutes 49-801

(2)(a) Each individual shall be entitled to one election under subsection (1) of this section during his or her lifetime for the capital stock of one corporation.

(b) The election shall apply to subsequent extraordinary dividends paid and sales and exchanges in any taxable year if the dividend is received on, or the sale or exchange is of, capital stock in the same corporation and such capital stock was acquired as provided in subsection (1) of this section.

(c) After the individual makes an election, such election shall apply to extraordinary dividends paid on, and the sale or exchange of, capital stock of the corporation transferred by inter vivos gift from the individual to his or her spouse or issue or a trust for the benefit of the individual’s spouse or issue if such capital stock was acquired as provided in subsection (1) of this section. This subdivision shall apply, in the case of the spouse, only if the spouse was married to such individual on the date of the extraordinary dividend or sale or exchange or the date of death of the individual.

(d) If the individual dies without making an election, the surviving spouse or, if there is no surviving spouse, the oldest surviving issue may make the election for capital stock that would have qualified under subdivision (c) of this subsection.

(3) An election under subsection (1) of this section shall be made by including a written statement with the taxpayer‘s Nebraska income tax return or an amended return for the taxable year for which the election is made. The written statement shall identify the corporation that issued the stock and the grounds for the election under this section and shall state that the taxpayer elects to have this section apply.

Source

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