Sec. 301.6362-3 Qualified resident tax which is a percentage of Federal tax.
(a) In general. A tax meets the requirements of section 6362(c) and this section only if:
(1) The tax is imposed as a single specified percentage of the excess of the taxes imposed by chapter 1 over the sum of the credits allowable under part IV of subchapter A of chapter 1 (other than the credits allowable under sections 31 and 39), and
(2) The amount of the tax is decreased by the amount of the decrease in such liability which would result from excluding from the taxpayer's gross income an amount equal to the amount of interest on obligations of the United States which was included in his gross income for the taxable year.
(b) Permitted adjustments. A tax which otherwise meets the requirements of paragraph (a) of this section shall not be deemed to fail to meet such requirements solely because it provides for one or more of the following three adjustments:
(1) The amount of a taxpayer's liability for tax is increased by the amount of the increase in such liability which would result from including in such taxpayer's gross income all of the following:
(i) An amount equal to the amount of his net State income tax deduction, as defined in paragraph (a) of section 301.6362-4, for the taxable year,
(ii) An amount equal to the amount of his net tax-exempt income, as defined in paragraph (b) of section 301.6362-4, for the taxable year, and
(iii) If a credit is allowed against the tax under paragraph (b)(3) of this section for sales tax imposed by the State or a political subdivision thereof, an amount equal to the amount of his deduction under section 164(a)(4) for such sales tax.
(2) A credit meeting the requirements of paragraph (c) of section 301.6362-4 is allowed against the tax for the income tax of another State or a political subdivision thereof.
(3) A credit is allowed against the tax for all or a portion of any general sales tax imposed by the State or a political subdivision thereof with respect to sales either to the taxpayer or to one or more of his dependents.
(c) Method of making adjustments. Except as specifically provided in paragraphs (a)(2) and (b)(1) of this section and in paragraph (c)(2) of section 301.6362-4, no account shall be taken of any reduction or increase in the Federal adjusted gross income which would result from the exclusion from, or inclusion in, gross income of the items which are the subject of the adjustments provided in those paragraphs. Thus, for example, when for purposes of the calculation the taxpayer's Federal income tax liability is adjusted to reflect the exclusion from gross income of interest on obligations of the United States, no change shall be made in the amount of the taxpayer's deduction for medical expenses, or in the amount of his charitable contribution base, even though such amounts would ordinarily depend upon the amount of adjusted gross income. Also, when calculating the adjusted Federal tax liability to which the rate of the State tax is to be applied, no adjustment shall be made in the amount of any credit against Federal tax to which a taxpayer is entitled.
[Adopted by T.D. 6119, 20 FR 28, Jan. 4, 1955. Revised at 32 FR 15241, Nov. 3, 1967. Further revised by T.D. 7577, 43 FR 59366, Dec. 20, 1978]
