LAC 61:I.1137. Exceptions to Taxable Year of Inclusion; Taxable Year Deductions Taken

A. Improperly Reported Item of Income. R.S. 47:287.442(A) does not relieve a taxpayer of the responsibility of filing a true and correct return and immediately correcting any errors which are discovered after the return is filed. If an error is discovered, it is the obligation of the taxpayer to file promptly an amended return reflecting the correct tax liability. The purpose of R.S. 47:287.442(A), so far as it deals with improperly reported items of income, is to preclude a taxpayer's being required to pay again on an item of income which has borne tax in full previously, even though for a period in which it was not properly reportable. An item of income will be deemed to have previously borne tax in full if the item, when multiplied by the lowest tax rate applicable to the taxpayer, results in a tax not less than the amount of tax actually paid on the return. If the item has not previously borne tax in full, R.S. 47:287.442(A) is not applicable to that portion of the item which has not previously borne tax. That portion, which shall be the difference between the item of income and the taxable balance of net income, shall be reported as income during the year it was properly reportable. B. Example: The ABC Corporation, by mistake, reported on its 1982 income tax return an item of accrued interest in the amount of $5,000 which was properly reportable in 1983. It paid the Louisiana income tax shown to be due on the return. The company never discovered its error. In 1987, the secretary discovers the error. The return for 1982 shows the following. Accrued interest | $ | 5,000 Income from operations | 20,000 Total income | $ | 25,000 Less total authorized deductions | $ | 21,000 Taxable income | $ | 4,000 Tax per return | $ | 160 Computation to determine if item has borne tax in full: Amount improperly reported | $ | 5,000 Tax at lowest rate of taxpayer | $ | 200 Tax paid | 160 Amount of tax unpaid | $ | 40 Computation of portion of item to be reported in 1983: Improperly reported item | $ | 5,000 Taxable balance of net income in 1982 | 4,000 Portion of item to be reported | $ | 1,000