(dissenting). I respectfully dissent. Subsection 30(1) of the Income Tax Act (ita), MCL 206.1 et seq.-, MSA 7.557(101) et seq., defines “taxable income” as “adjusted gross income as defined in the internal revenue code [26 USC 1 et seq.],” subject to further adjustment by specified additions and subtractions. See MCL 206.30(2)-(4); MSA 7.557(130)(2)-(4). I agree with the prior Eleribaas panel’s interpretation of ita § 30.
We believe that the ita necessarily provides that taxable income will not include oil and gas production expenses, which are a proper deduction in arriving at federal adjusted gross income. Because plaintiffs were entitled to the deductions when calculating their federal adjusted gross income *377and because the ita does not provide that the expenses associated with oil and gas production must be added back into federal adjusted gross income when calculating taxable income for Michigan, we would hold that the trial court correctly allowed the deductions. [Elenbaas v Dep’t of Treasury, 231 Mich App 801, 807 (1998).]
The severance tax act (STA), MCL 205.301 et seq., MSA 7.351 et seq., was enacted in 1929. 1929 PA 48. The Legislature subsequently enacted the ITA in 1967. 1967 PA 281. The Legislature is presumed to have knowledge of existing law when enacting new law or amending an existing law. Stevens v Inland Waters, Inc, 220 Mich App 212, 219; 559 NW2d 61 (1996). While the Legislature could have enacted a provision within the ITA requiring the addition of expenses attributable to income exempt from taxation, to date it has chosen not to do so. Because subsection 30(1) is clear and unambiguous, judicial interpretation requiring an addition for expenses attributable to income exempt from taxation is not permitted. Bauer v Dep’t of Treasury, 203 Mich App 97, 100; 512 NW2d 42 (1993).
Although the ITA does not contain a general rule that no deduction may be taken for expenses attributable to income that is exempt from taxation, the Internal Revenue Code (IRC) does include such a provision. 26 USC 265(a)(1). In Cook v Dep’t of Treasury, 229 Mich App 653; 583 NW2d 696 (1998), the Court relied on subsection 2(3) of the ita, MCL 206.2(3); MSA 7.557(102)(3), which states that the Legislature intended “that the income subject to tax [under the ita] be the same as taxable income as defined” within the IRC, as support for its conclusion that expenses allocable to the production of oil and *378gas revenues cannot be deducted when calculating a net operating loss (nol). Oil and gas proceeds are subject to federal income taxation; thus, a deduction may be taken for expenses related to the generation of those proceeds. 26 USC 265(a)(1); Cook, supra at 658. While gross oil and gas proceeds are excluded from taxation under the ita, Bauer, supra at 100-101, they are taxed under the sta. Sta § 15, MCL 205.315; MSA 7.365. The severance tax is paid in lieu of income tax. However, no provision in the sta allows for the deduction of production expenses before payment of the severance tax. Under the result reached by the majority, gross oil and gas proceeds are taxed according to the sta, but neither the sta nor the ita permits a deduction for production expenses. The majority’s conclusion that expenses related to oil and gas production cannot be deducted in calculating an NOL for the purpose of determining income subject to taxation under the ita thus does not result in equal treatment of income as contemplated by ITA subsection 2(3).
Because federal adjusted gross income consists of gross income less deductions, including a deduction for ordinary and necessary business expenses, 26 USC 62(a)(1), 162(a), and because Michigan taxable income constitutes federal adjusted gross income subject to further specified adjustments, ita subsection 30(1), expenses incurred in the production of oil and gas should be deductible when calculating an nol for purposes of determining Michigan taxable income. No provision in either the STA or the ita precludes the deduction of expenses related to oil and gas production when calculating an NOL. None of the clear and unambiguous language of ita subsection 30(1) con*379templates the addition of oil and gas expenses into federal adjusted gross income. Therefore, the majority’s interpretation of subsection 30(1) in a maimer that incorporates 26 USC 265(a)(1), which is not otherwise a part of the ITA, is inappropriate. Lorencz v Ford Motor Co, 439 Mich 370, 379; 483 NW2d 844 (1992) (When a statute is clear and unambiguous, judicial construction or interpretation is unnecessary and therefore precluded.). The Elenbaas resolution of the issue of the deductibility of oil and gas production expenses more closely achieves the stated goal of ITA subsection 2(3) — oil and gas proceeds are taxed, albeit under the sta rather than under the ita, and a corresponding deduction for the expenses related to oil and gas production is allowed under the ITA. The virtue of the prior Elenbaas opinion’s interpretation is that it better comports with the language of the ITA.
I would affirm the prior Elenbaas opinion in its entirety.
Saad, J., concurred.