HAR § 18-235-92 — SUBCHAPTER 4 CORPORATION INCOME TAX §18-235-71 Tax on corporations; rates; credit of shareholder of regulated investment company

(a) (Reserved) (b) Federal Treasury regulations relating to the Internal Revenue Code provisions of regulated investment companies shall apply and the imposition of tax and deductions for dividends paid shall be as provided under section 235-71, HRS. (c) Undistributed capital gains of a regulated investment company. Section 235-71, HRS, provides that a shareholder of a regulated investment company is allowed a credit equal to the amount of tax imposed on capital gains which are includable in the shareholder’s income tax return under section 852(b)(3)(D), IRC, (taxation of regulated investment companies and their shareholders) limited to the amount of tax paid by the regulated investment company at the state capital gain rate to the State. The credit shall be applied against the shareholder’s tax liability as determined under chapter 235, HRS. Any excess amount shall be applied or refunded to the shareholder pursuant to section 235- 110, HRS. (d) Real estate investment trust; in general. (1) Federal Treasury regulations relating to Internal Revenue Code provisions on real estate investment trusts shall apply and the imposition of tax and deductions for dividends paid shall be as provided under section 235-71, HRS. (2) Real estate investment trust; penalties. In addition to any other penalty provided by law, the assessable penalties with respect to liability for tax of real estate investment trusts shall be as provided under section 235-71, HRS and as follows: (A) The interest and penalty are determined based on the amount of adjustment, but only to the extent that the deficiency dividend deduction is allowed; and (B) The nondeductible penalty is equal to the amount of interest for which the trust is liable on account of such adjustment. The total penalty, however, is limited to one-half the amount of the deficiency dividend deduction.