A.R.S. tit. 43 ch. 1 — Arizona Revised Statutes Title 43 Chapter 1 — Definitions And General Provisions

43-101. Title This title shall be known and may be cited as the Arizona income tax act of 1978. 43-102. Declaration of intent A. It is the intent of the legislature by the adoption of this title to accomplish the following objectives: 1. To adopt the provisions of the federal internal revenue code relating to the measurement of adjusted gross income for individuals, to the end that adjusted gross income reported each taxable year by an individual to the internal revenue service shall be the identical sum reported to this state, subject only to modifications contained in this title. 2. To adopt the provisions of the federal internal revenue code relating to the measurement of taxable income for corporations, trusts, estates and partnerships, to the end that taxable income reported each taxable year by a corporation, trust, estate or partnership to the internal revenue service shall be the identical sum reported to this state, subject only to modifications contained in this title. 3. To achieve the results in paragraphs 1 and 2 by the application of the various provisions of the federal internal revenue code relating to the definitions of income, exceptions, deductions, accounting methods, taxation of individuals, corporations, trusts, estates and partnerships, basis and other pertinent provisions relating to gross income as defined, resulting in an amount called adjusted gross income for individuals and taxable income for corporations, trusts, estates and partnerships in the internal revenue code. 4. To impose on each resident of this state a tax measured by taxable income wherever derived. 5. To impose on each nonresident and each corporation with a business situs in this state a tax measured by taxable income which is the result of activity within or derived from sources within this state. B. Nothing contained in this title shall be construed to require a taxpayer to include an item of income or permit a taxpayer to deduct an expense item more than once in computing Arizona taxable income. 43-103. Effective date The provisions of this act shall apply only to taxable years beginning after December 31, 1978. 43-104. Definitions In this title, unless the context otherwise requires: 1. "Assessment" includes a proposed additional assessment. 2. "Board" means the state board of tax appeals or, if applicable, a division of the state board. 3. "Corporation" means a corporation, joint stock company, bank, insurance company, business trust or so-called "Massachusetts trust", investment company or building and loan association and any other association whether incorporated or unincorporated. 4. "Department" means the department of revenue, the director or the director's authorized delegate, as the context requires. 5. "Director" means the director of the department of revenue. 6. "Fiduciary" means a guardian, trustee, personal representative, executor, administrator, receiver or conservator, whether individual or corporate, or any person acting in any fiduciary capacity for any person, estate or trust. 7. "Fiscal year" means an accounting period of twelve months ending on the last day of any month other than December. 8. "Foreign country" means any jurisdiction other than one embraced within the United States. 9. "Income derived from or attributable to sources within this state" includes income from tangible or intangible property located or having a situs in this state and income from any activities carried on in this state, regardless of whether carried on in intrastate, interstate or foreign commerce. 10. "Income tax act of 1954" means this title, as enacted by Laws 1954, chapter 65, as amended. 11. "Income year" means "taxable year". 12. "Individual" means a natural person. 13. "Military or naval forces of the United States" includes the army, the navy, the air force, the marine corps, the coast guard, the army nurse corps, female, the women's army auxiliary corps, the navy nurse corps, female, and the women's reserve branch of the naval reserve, and all auxiliary branches of service. 14. "Nonresident" means every individual other than a resident. 15. "Paid or incurred" and "paid or accrued" shall be construed according to the method of accounting on the basis of which the taxable income is computed under this title. 16. "Partner" means a member of a partnership. 17. "Partnership" includes a syndicate, group, pool, joint venture or other unincorporated organization, through or by means of which any business, financial operation or venture is carried on and that is not, within the meaning of this title, a trust, estate or corporation. 18. "Person" includes individuals, fiduciaries, partnerships and corporations. 19. "Resident" includes: (a) Every individual who is in this state for other than a temporary or transitory purpose. (b) Every individual who is domiciled in this state and who is outside the state for a temporary or transitory purpose. Any individual who is a resident of this state continues to be a resident even though temporarily absent from the state. (c) Every individual who spends in the aggregate more than nine months of the taxable year within this state shall be presumed to be a resident. The presumption may be overcome by competent evidence that the individual is in this state for a temporary or transitory purpose. 20. "Small business taxpayer" means any individual taxpayer who reports on the taxpayer's federal income tax return any income that constitutes Arizona small business gross income as defined in section 43-1701. 21. "State" includes the states of the United States, the District of Columbia and the possessions of the United States. 22. "Tax" means the taxes imposed under this title. 23. "Taxable year" means: (a) The calendar year or the fiscal year, ending during such calendar year, on the basis of which the taxable income is computed under this title. (b) If no fiscal year has been established, the calendar year. (c) In the case of a return made for a fractional part of a year under this title or under rules prescribed by the department, the period for which the return is made. 24. "Taxpayer": (a) Means any person subject to a tax imposed by this title. (b) Does not include the United States, this state, counties, cities, towns, school districts or other political subdivisions or units of this state or the federal government. 25. "Trade or business" includes the performance of the functions of a public office. 26. "United States", when used in a geographical sense, includes the states, the District of Columbia and the possessions of the United States. 43-105. Internal revenue code; definition; application A. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2025, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2026, including those provisions that became effective during 2025 with the specific adoption of all retroactive effective dates, but excluding any changes to the code enacted after January 1, 2026. B. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2024 through December 31, 2025, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2025, including those provisions that became effective during 2024 with the specific adoption of all retroactive effective dates, and including those provisions of Public Law 119-21 that are retroactively effective during taxable years beginning from and after December 31, 2024 through December 31, 2025. C. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2023 through December 31, 2024, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2024, including those provisions that became effective during 2023 with the specific adoption of all retroactive effective dates, and including those provisions of Public Law 119-21 that are retroactively effective during taxable years beginning from and after December 31, 2023 through December 31, 2024. D. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2022 through December 31, 2023, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2023, including those provisions that became effective during 2022 with the specific adoption of all retroactive effective dates, and including those provisions of Public Law 119-21 that are retroactively effective during taxable years beginning from and after December 31, 2022 through December 31, 2023. E. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2021 through December 31, 2022, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2022, including those provisions that became effective during 2021 with the specific adoption of all retroactive effective dates, and including those provisions of the chips and science act of 2022 (P.L. 117-167), the inflation reduction act of 2022 (P.L. 117-169), the consolidated appropriations act, 2023 (P.L. 117-328) and Public Law 119-21 that are retroactively effective during taxable years beginning from and after December 31, 2021 through December 31, 2022. F. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2020 through December 31, 2021, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on March 11, 2021, including those provisions that became effective during 2020 with the specific adoption of all retroactive effective dates and including those provisions of the PPP extension act of 2021 (P.L. 117-6) and the infrastructure investment and jobs act (P.L. 117-58) that are retroactively effective during taxable years beginning from and after December 31, 2020 through December 31, 2021. G. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2019 through December 31, 2020, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2020, including those provisions that became effective during 2019 with the specific adoption of all retroactive effective dates, and including those provisions of the families first coronavirus response act (P.L. 116-127), the coronavirus aid, relief, and economic security act (P.L. 116-136), the paycheck protection program flexibility act of 2020 (P.L. 116-142), the consolidated appropriations act, 2021 (P.L. 116-260) and the American rescue plan act of 2021 (P.L. 117-2) that are retroactively effective during taxable years beginning from and after December 31, 2019 through December 31, 2020. H. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2018 through December 31, 2019, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2019, including those provisions that became effective during 2018 with the specific adoption of all retroactive effective dates, and including those provisions of the taxpayer first act (P.L. 116-25), the further consolidated appropriations act, 2020 (P.L. 116-94), the coronavirus aid, relief, and economic security act (P.L. 116-136) and the consolidated appropriations act, 2021 (P.L. 116-260) that are retroactively effective during taxable years beginning from and after December 31, 2018 through December 31, 2019. I. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2017 through December 31, 2018, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2018, including those provisions that became effective during 2017 with the specific adoption of all retroactive effective dates, and including those provisions of the bipartisan budget act of 2018 (P.L. 115-123), the consolidated appropriations act, 2018 (P.L. 115-141), the further consolidated appropriations act, 2020 (P.L. 116-94), the coronavirus aid, relief, and economic security act (P.L. 116-136) and the consolidated appropriations act, 2021 (P.L. 116-260) that are retroactively effective during taxable years beginning from and after December 31, 2017 through December 31, 2018. J. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2016 through December 31, 2017, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2017, including those provisions that became effective during 2016 with the specific adoption of all federal retroactive effective dates, and including those provisions of the disaster tax relief and airport and airway extension act of 2017 (P.L. 115-63), the tax cuts and jobs act (P.L. 115-97), the bipartisan budget act of 2018 (P.L. 115-123), the consolidated appropriations act, 2018 (P.L. 115-141), the further consolidated appropriations act, 2020 (P.L. 116-94) and the coronavirus aid, relief, and economic security act (P.L. 116-136) that are retroactively effective during taxable years beginning from and after December 31, 2016 through December 31, 2017. K. For the purposes of computing income tax pursuant to this title, for taxable years beginning from and after December 31, 2015 through December 31, 2016, "internal revenue code" means the United States internal revenue code of 1986, as amended, in effect on January 1, 2016, including those provisions that became effective during 2015 with the specific adoption of all federal retroactive effective dates, and including those provisions of the United States appreciation for olympians and paralympians act of 2016 (P.L. 114-239), the tax cuts and jobs act (P.L. 115-97), the consolidated appropriations act, 2018 (P.L. 115-141), the further consolidated appropriations act, 2020 (P.L. 116-94) and the coronavirus aid, relief, and economic security act (P.L. 116-136) that are retroactively effective during taxable years beginning from and after December 31, 2015 through December 31, 2016. 43-107. Nonconformity in application of internal revenue code; abatement of penalties and interest; definitions A. Notwithstanding sections 42-1123 and 42-1125, no interest or penalty may be assessed on a nonconformity deficiency if all of the following are true for a taxable year: 1. The taxpayer filed a return and paid the taxes due, relying on the department's published forms and instructions. 2. Conformity does not occur. 3. The department supplements its published forms and instructions related to nonconformity and requires the taxpayer to file an amended return. 4. By the extended due date of the next taxable year's return, the taxpayer amends its return to report the nonconformity deficiency and pays the additional tax in the manner prescribed by the department. B. Notwithstanding section 42-1123, the department shall not pay interest on refunds resulting from an amended return related to nonconformity unless the refund is paid more than sixty days after the due date set forth in subsection A, paragraph 4 of this section or filing date, whichever is later. C. For the purposes of this section: 1. "Conformity" means an amendment to section 43-105 that results in adoption of the definition of the internal revenue code for the taxable year. 2. "Nonconformity" means either: (a) Conformity plus another amendment to this title that does not conform to specific provisions of the internal revenue code as defined in section 43-105 for the taxable year. (b) No amendment to section 43-105 for the taxable year. 43-108. Subtraction from gross income; ordinary and necessary expenses; marijuana establishments and marijuana testing facilities; definitions (Caution: 1998 Prop. 105 applies) A. Notwithstanding any other law, in computing Arizona adjusted gross income or Arizona taxable income for a taxpayer, all ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business as a marijuana establishment, marijuana testing facility, or dual licensee that elects to operate on a for-profit basis pursuant to title 36, chapter 28.2 shall be subtracted from Arizona gross income to the extent not already excluded from Arizona gross income. B. For the purposes of this section, "dual licensee," "marijuana establishment," and "marijuana testing facility" have the same meanings prescribed in section 36-2850.