HRS § 235-4 — Income taxes by the State; residents, nonresidents, corporations, estates, and trusts


§235-4 Income taxes by the State;
residents, nonresidents, corporations, estates, and trusts. (a)
Residents. The tax imposed by this chapter applies to the entire income of a
resident, computed without regard to source in the State.
(b) Nonresidents. In the case of a
nonresident, the tax applies to the income received or derived from property
owned, personal services performed, trade, or business carried on, and any and
every other source in the State.
In the case of a nonresident spouse filing a
joint return with a resident spouse, the tax applies to the entire income of
the nonresident spouse computed without regard to source in the State.
(c) Change of status. Except where a joint
return is filed, when the status of a taxpayer changes during the taxable year
from resident to nonresident, or from nonresident to resident, the tax imposed
by this chapter applies to the entire income earned during the period of
residence in the manner provided in subsection (a) of this section and during
the period of nonresidence the tax shall apply upon the income received or
derived as a nonresident in the manner provided in subsection (b) of this section;
provided that if it cannot be determined whether income was received or derived
during the period of residence or during the period of nonresidence, there
shall be attributed to the State such portion of the income as is determined by
applying to such income for the whole taxable year the ratio which the period
of residence in the State bears to the whole taxable year, unless the taxpayer
shows to the satisfaction of the department of taxation that the result is to
attribute to the state income, dependent upon residence, received or derived
during the period of nonresidence, in which event the amount of income as to
which such showing is made shall be excluded.
The apportionment of income provided by this
subsection shall not apply where one spouse is a resident of this State and a
joint return is filed with the nonresident spouse in which event the tax shall
be computed on their aggregate income in the manner provided in section 235-52
without regard to source in the State. Where, however, both spouses change
their status from resident to nonresident or from nonresident to resident,
their income shall be apportioned in the manner provided in this subsection.
(d) A corporation, foreign or domestic, is
taxable upon the income received or derived from property owned, trade or
business carried on, and any and every other source in the State. In addition
thereto a domestic corporation is taxable upon its income from property owned,
trade or business carried on, and any and every other source outside the State,
unless subjected to income tax thereon in any other jurisdiction. Subjection
to federal tax does not constitute subjection to income tax in another jurisdiction.
"Corporation" includes any professional corporation incorporated
pursuant to chapter 415A or 416.
(e)(1) The income of a resident estate or trust shall be
computed without regard to source in the State. The income of a nonresident
estate or trust shall be that received or derived from sources in the State.
(2) A beneficiary of an estate or trust, or person
treated as the owner of any portion of a trust, who is taxable upon income
thereof under the Internal Revenue Code, shall be taxed thereon as herein
provided, irrespective of the taxability of the estate or trust or whether it
is required to make a fiduciary return under this chapter. If all such income
consists of income which would be taxable under this chapter if received
directly by the beneficiary or person, the beneficiary or person shall be taxed
upon all of it. If some of it consists of income which would not be taxable if
received directly by the beneficiary or person, then unless the trust
instrument provides otherwise the income of each such beneficiary or person
shall be conclusively presumed to have been received or derived out of each
class of income of the estate or trust, and the beneficiary or person shall be
taxed upon such part of it as would be taxable if received directly by the
beneficiary or person.
(3) Each estate or trust shall include in its return
all of the information necessary to determine the taxability of the income of
the estate or trust, regardless of source. Only in the case of a nonresident
estate or trust of which all the beneficiaries are nonresidents and no part of
which is treated as owned by a resident shall the return be confined to income
from sources in the State. This paragraph shall not cause income to be taxed
to an estate or trust that otherwise would not have been so taxed.