NMSA 1978, § 7-2-2 — Definitions

For the purpose of the Income Tax Act and unless the context requires otherwise:

# A.

"adjusted gross income" means adjusted gross income as defined in Section 62
of the Internal Revenue Code, as that section may be amended or renumbered;

# B.

"base income":
(1) means, for estates and trusts, that part of the estate's or trust's income
defined as taxable income and upon which the federal income tax is calculated in the
Internal Revenue Code for income tax purposes plus:
(a) for taxable years beginning on or after January 1, 1991, the amount of the
net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code,
as that section may be amended or renumbered, and taken by the taxpayer for that
year; and
(b) for taxable years beginning on or after January 1, 2023, an amount equal
to the amount of credit claimed and allowed for that year pursuant to Section 7-3A-10
NMSA 1978 with respect to the distributed net income of a pass-through entity;
(2) means, for taxpayers other than estates or trusts, that part of the
taxpayer's income defined as adjusted gross income plus:
(a) for taxable years beginning on or after January 1, 1991, the amount of the
net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code,
as that section may be amended or renumbered, and taken by the taxpayer for that
year; and
(b) for taxable years beginning on or after January 1, 2023, an amount equal
to the amount of credit claimed and allowed for that year pursuant to Section 7-3A-10
NMSA 1978 with respect to the distributed net income of a pass-through entity;
(3) includes, for all taxpayers, any other income of the taxpayer not included
in adjusted gross income but upon which a federal tax is calculated pursuant to the
Internal Revenue Code for income tax purposes, except amounts for which a calculation
of tax is made pursuant to Section 55 of the Internal Revenue Code, as that section
may be amended or renumbered; "base income" also includes interest received on a
state or local bond;
(4) includes, for all taxpayers, an amount deducted pursuant to Section 7-2-
32 NMSA 1978 in a prior taxable year if:
(a) such amount is transferred to another qualified tuition program, as defined
in Section 529 of the Internal Revenue Code, not authorized in the Education Trust Act;
or
(b) a distribution or refund is made for any reason other than: 1) to pay for
federally allowable qualified higher education expenses, set out in Section 529 of the
Internal Revenue Code, including other expenses allowed pursuant to that section as
qualified expenses; or 2) upon the beneficiary's death, disability or receipt of a
scholarship; and
(5) excludes, for a taxpayer who conducts a lawful business pursuant to the
laws of the state, an amount equal to any expenditure that is eligible to be claimed as a
federal income tax deduction but is disallowed by Section 280E of the Internal Revenue
Code, as that section may be amended or renumbered;

# C.

"compensation" means wages, salaries, commissions and any other form of
remuneration paid to employees for personal services;

# D.

"department" means the taxation and revenue department, the secretary or any
employee of the department exercising authority lawfully delegated to that employee by
the secretary;

# E.

"fiduciary" means a guardian, trustee, executor, administrator, committee,
conservator, receiver, individual or corporation acting in any fiduciary capacity;

# F.

"filing status" means "married filing joint returns", "married filing separate
returns", "head of household", "surviving spouse" and "single", as those terms are
generally defined for federal tax purposes;

# G.

"fiscal year" means any accounting period of twelve months ending on the last
day of any month other than December;

# H.

"head of household" means "head of household" as generally defined for federal
income tax purposes;

# I.

"individual" means a natural person, an estate, a trust or a fiduciary acting for a
natural person, trust or estate;

# J.

"Internal Revenue Code" means the United States Internal Revenue Code of
1986, as amended;

# K.

"lump-sum amount" means, for the purpose of determining liability for federal
income tax, an amount that was not included in adjusted gross income but upon which
the five-year-averaging or the ten-year-averaging method of tax computation provided in
Section 402 of the Internal Revenue Code, as that section may be amended or
renumbered, was applied;

# L.

"modified gross income" means all income of the taxpayer and, if any, the
taxpayer's spouse and dependents, undiminished by losses and from whatever source,
including:
(1) compensation;
(2) net profit from business;
(3) gains from dealings in property;
(4) interest;
(5) net rents;
(6) royalties;
(7) dividends;
(8) alimony and separate maintenance payments;
(9) annuities;
(10) income from life insurance and endowment contracts;
(11) pensions;
(12) discharge of indebtedness;
(13) distributive share of partnership income;
(14) income in respect of a decedent;
(15) income from an interest in an estate or a trust;
(16) social security benefits;
(17) unemployment compensation benefits;
(18) workers' compensation benefits;
(19) public assistance and welfare benefits;
(20) cost-of-living allowances; and
(21) gifts;

# M.

"modified gross income" excludes:
(1) payments for hospital, dental, medical or drug expenses to or on behalf of
the taxpayer;
(2) the value of room and board provided by federal, state or local
governments or by private individuals or agencies based upon financial need and not as
a form of compensation;
(3) payments pursuant to a federal, state or local government program
directly or indirectly to a third party on behalf of the taxpayer when identified to a
particular use or invoice by the payer; or
(4) payments for credits and rebates pursuant to the Income Tax Act and
made for a credit pursuant to Section 7-3-9 NMSA 1978;

# N.

"net income" means, for estates and trusts, base income adjusted to exclude
amounts that the state is prohibited from taxing because of the laws or constitution of
this state or the United States and means, for taxpayers other than estates or trusts,
base income adjusted to exclude:
(1) an amount equal to the standard deduction allowed the taxpayer for the
taxpayer's taxable year by Section 63 of the Internal Revenue Code, as that section
may be amended or renumbered;
(2) an amount equal to the itemized deductions defined in Section 63 of the
Internal Revenue Code, as that section may be amended or renumbered, allowed the
taxpayer for the taxpayer's taxable year less the amount excluded pursuant to
Paragraph (1) of this subsection and less the amount of state and local income and
sales taxes included in the taxpayer's itemized deductions;
(3) an amount equal to the product of the exemption amount allowed for the
taxpayer's taxable year by Section 151 of the Internal Revenue Code, as that section
may be amended or renumbered, multiplied by the number of personal exemptions
allowed for federal income tax purposes;
(4) income from obligations of the United States of America less expenses
incurred to earn that income;
(5) other amounts that the state is prohibited from taxing because of the laws
or constitution of this state or the United States;
(6) for taxable years beginning on or after January 1, 2013, an amount equal
to the sum of any net operating loss carryover deductions to that year claimed and
allowed; provided that the amount of any net operating loss carryover may be excluded
only as follows:
(a) in the case of a timely filed return, in the taxable year immediately
following the taxable year for which the return is filed; or
(b) in the case of amended returns or original returns not timely filed, in the
first taxable year beginning after the date on which the return or amended return
establishing the net operating loss is filed; and
(c) in either case, if the net operating loss carryover exceeds the amount of
net income exclusive of the net operating loss carryover for the taxable year to which
the exclusion first applies, in the next nineteen succeeding taxable years in turn until the
net operating loss carryover is exhausted for any net operating loss carryover from a
taxable year beginning on or after January 1, 2013; in no event shall a net operating
loss carryover from a taxable year beginning: 1) prior to January 1, 2013 be excluded in
any taxable year after the fourth taxable year beginning after the taxable year to which
the exclusion first applies; and 2) on or after January 1, 2013 be excluded in any taxable
year after the nineteenth taxable year beginning after the taxable year to which the
exclusion first applies; and
(7) for taxable years beginning on or after January 1, 2011, an amount equal
to the amount included in adjusted gross income that represents a refund of state and
local income and sales taxes that were deducted for federal tax purposes in taxable
years beginning on or after January 1, 2010;

# O.

"net operating loss" means any net operating loss, as defined by Section 172(c)
of the Internal Revenue Code, as that section may be amended or renumbered, for a
taxable year as further increased by the income, if any, from obligations of the United
States for that year less related expenses;

# P.

"net operating loss carryover" means the amount, or any portion of the amount,
of a net operating loss for any taxable year that, pursuant to Paragraph (6) of
Subsection N of this section, may be excluded from base income;

# Q.

"nonresident" means every individual not a resident of this state;

# R.

"person" means any individual, estate, trust, receiver, cooperative association,
club, corporation, company, firm, partnership, limited liability company, joint venture,
syndicate or other association; "person" also means, to the extent permitted by law, any
federal, state or other governmental unit or subdivision or agency, department or
instrumentality thereof;

# S.

"resident" means an individual who is domiciled in this state during any part of
the taxable year or an individual who is physically present in this state for one hundred
eighty-five days or more during the taxable year; but any individual, other than someone
who was physically present in the state for one hundred eighty-five days or more during
the taxable year, who, on or before the last day of the taxable year, changed the
individual's place of abode to a place without this state with the bona fide intention of
continuing actually to abide permanently without this state is not a resident for the
purposes of the Income Tax Act for periods after that change of abode;

# T.

"secretary" means the secretary of taxation and revenue or the secretary's
delegate;

# U.

"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 or any
political subdivision of a foreign country;

# V.

"state or local bond" means a bond issued by a state other than New Mexico or
by a local government other than one of New Mexico's political subdivisions, the interest
from which is excluded from income for federal income tax purposes under Section 103
of the Internal Revenue Code, as that section may be amended or renumbered;

# W.

"surviving spouse" means "surviving spouse" as generally defined for federal
income tax purposes;

# X.

"taxable income" means net income less any lump-sum amount;

# Y.

"taxable year" means the calendar year or fiscal year upon the basis of which the
net income is computed under the Income Tax Act and includes, in the case of the
return made for a fractional part of a year under the provisions of the Income Tax Act,
the period for which the return is made; and

# Z.

"taxpayer" means any individual subject to the tax imposed by the Income Tax
Act.