As used in this part:

1. (1) “Affected business entity” means a business entity in which members that hold more than fifty percent (50%) of the voting rights in the business entity elect on an annual basis before the due date or extended due date of the business entity’s income tax return to be taxed under the Elective Pass-Through Entity Tax Act, Arkansas Code § 26-65-101 et seq.;
2. (2) “Applicable basis adjustments” means any increase or decrease to an affected business entity’s basis in its property as a result of income, gain, loss, distribution, disposition, or transfer necessary to calculate the cost of or investment in such property;

3. (3) “Business entity” means an entity, including without limitation a general partnership, limited partnership, limited liability company with one (1) or more members, or for federal income tax purposes, a Subchapter S corporation that, whether privately owned or publicly traded, is:

   1. (A) Engaged in a business for profit; and
   2. (B) Required to file a return under the Arkansas income tax law;

4. (4) “Member” means a:

   1. (A) Shareholder of a Subchapter S corporation;
   2. (B) Partner in a general partnership, limited partnership, or limited liability partnership; and
   3. (C) Member of a limited liability company;
5. (5) “Net operating loss” means the same as defined in Arkansas Code § 26-51-427;
6. (6) “Nonresident” means the same as defined in Arkansas Code § 26-51-102;
7. (7) “Pass-through entity tax” means the tax imposed by the Elective Pass-Through Entity Tax Act;
8. (8) “Pro rata interest” means a member’s percentage of allocation of the profits of an affected business entity;
9. (9) “Resident” means the same as defined in Arkansas Code § 26-51-102;
10. (10) “Secretary” means the Secretary of the Department of Finance and Administration or his or her designees;

11. (11)

    1. (A) “Substantially similar tax” means a tax that is levied on the aggregate taxable income of each of the persons that have an ownership interest in an entity that is engaged in business for profit.
    2. (B) The Department of Finance and Administration will annually publish a nonexhaustive list of states that have enacted a substantially similar tax on its website prior to February 1 of each year.
    3. (C) The final such list will be published in February 2026 unless the Secretary of the Department of Finance and Administration, in his or her sole discretion, decides to publish the list in one (1) or more subsequent years.
    4. (D) Any changes in law that affect the levy, collection, implementation, administration, remittance, or calculation of a substantially similar tax could result in that tax being treated as not substantially similar, regardless of its inclusion in the annual list of substantially similar taxes.
    5. (E) The fact that a tax is not included on the annual list is not conclusive to the determination of whether the tax is a substantially similar tax; and
12. (12) “Taxable year” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which taxable income is computed.

Codification Notes: This section as promulgated prior to codification into the Code of Arkansas Rules provided as follows: "Authority. Ark. Code Ann. § 26-65-102; Ark. Code Ann. § 26-65-105."