Arkansas Code § 26-51-457 - Claim of Right

(a) Title 26 U.S.C. § 1341(a)(1)-(3) and (b)(2), as they existed on January 1, 2013, regarding the computation of income tax when a taxpayer restores a substantial amount held under a claim of right, is adopted for purposes of computing income tax liability under this chapter.

(b) (1) Title 26 U.S.C. § 1341(a)(4) and (5), (b)(1), and (b)(3)-(5), concerning the methods of calculating the deduction authorized under 26 U.S.C. § 1341 and special rules for net operating losses and capital losses, are not adopted.

(2) For the purpose of computing income tax when a taxpayer restores a substantial amount held under a claim of right under this section:

(A) The tax imposed under this chapter is calculated for the taxable year by allowing a deduction in the tax year the taxpayer restores the amount held under a claim of right; and

(B) Net operating losses and capital losses are calculated and deducted under §§ 26-51-427 and 26-51-815.

(c) The Director of the Department of Finance and Administration may promulgate rules to administer this section.

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Last modified: November 15, 2016