P.R. Laws tit. 13, § 30119
(a) Personal services. — If at least eighty percent (80%) of the total compensation for personal services covering a period of thirty-six (36) calendar months or more, from the beginning to the completion of such services, is received or accrued in one (1) taxable year by an individual, the tax attributable to any part thereof which is included in the gross income of any individual shall not be greater than the aggregate of the taxes attributable to such part had it been included in the gross income of the individual, ratably over that part of the period which precedes the date of such receipt or accrual.
(b) Artistic works or inventions. — For purposes of this subsection, the term “artistic work or invention”, in the case of an individual, means a literary, musical, or artistic composition of such individual or a patent or copyright covering an invention of or a literary, musical, or artistic composition of such individual, the work by which such individual covered a period of thirty-six (36) calendar months or more from the beginning to the completion of such composition or invention. If, in the taxable year, the gross income of any individual from a particular artistic work or invention by him/her is not less than eighty percent (80%) of the gross income in respect of such artistic work or invention in the taxable year plus the gross income therefrom in previous taxable years and the twelve (12) months immediately succeeding the close of the taxable year, the tax attributable to the part of such gross income of the taxable year which is not taxable as a gain from the sale or exchange of a capital asset held for more than six (6) months shall not be greater than the aggregate of the taxes attributable to such part had it been received ratably over that part of the period preceding the close of the taxable year but not more than thirty-six (36) calendar months.
(c) Fractional parts of a month. — For purposes of this section, a fractional part of a month shall be disregarded unless it amounts to more than half a month, in which case it shall be considered as a month.
(d) Back pay. —
(1) In general. — If the amount of the back pay received or accrued by an individual during the taxable year exceeds fifteen percent (15%) of the gross income of the individual for such year, the part of the tax attributable to the inclusion of such back pay in gross income for the taxable year shall not be greater than the aggregate of the increases in the taxes which would have resulted from the inclusion of the respective portions of such back pay in gross income for the taxable years to which such portions are respectively attributable, as determined under regulations prescribed by the Secretary.
(2) Definition of back pay. — For purposes of this subsection, “back pay” means:
(A) Remuneration, including wages, salaries, retirement pay, and other similar compensation, which is received or accrued during the taxable year by an employee for services performed prior to the taxable year for his/her employer and which would have been paid prior to the taxable year except for the intervention of one of the following events:
(i) Bankruptcy or receivership of the employer;
(ii) dispute as to the liability of the employer to pay such remuneration, which is determined after the commencement of court proceedings;
(iii) if the employer is the Government of Puerto Rico, the United States, a state, a territory, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any of the foregoing, lack of funds appropriated to pay such remuneration, or
(iv) any other event determined to be similar in nature under regulations prescribed by the Secretary;
(B) wages or salaries which are received or accrued during the taxable year by an employee for services performed prior to the taxable year for his/her employer and which constitute retroactive wage or salary increases ordered, recommended, or approved by any federal or Government of Puerto Rico agency, and made retroactive to any period prior to the taxable year, and
(C) payments which are received or accrued during the taxable year as the result of an alleged violation by an employer of any law of Government of Puerto Rico or the federal government relating to labor standards or practices, and which are determined under regulations prescribed by the Secretary to be attributable to a prior taxable year.
(3) Amounts not includible in gross income under this part shall not constitute “back pay”.
History —Jan. 31, 2011, No. 1, § 1032.09, retroactive to Jan. 1, 2011.