General Assembly: 78 (1999 Regular GA) - Chapter 95 - Internal Revenue Code references and income tax provisions


Published: 1999-05-06

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CH.94 LAWS OF THE SEVENTY-EIGHTH G.A., 1999 SESSION 142

§ 1396a(r)(2), a maximum of ten thousand dollars of available resources shall be disre- garded and any additional resources held in a retirement account, in a medical savings account, or in any other account approved under rules adopted by the department shall also be disregarded. Individuals eligible for assistance under this paragraph, whose individual income exceeds one hundred fifty percent of the official poverty line published by the federal office of management and budget for an individual, shall pay a premium. The amount of the premium shall be based on a sliding fee schedule adopted by rule of the department and shall be based on a percentage of the individual's income. The maximum premium payable by an individual whose income exceeds one hundred fifty percent of the official poverty line shall be commensurate with premiums charged for private group health insurance in this state. This paragraph shall be implemented no later than March 1, 2000.

Approved April30, 1999

CHAPTER95 INTERNAL REVENUE CODE REFERENCES AND INCOME TAX PROVISIONS

S.F. 230

AN ACT updating the Iowa Code references to the Internal Revenue Code, extending the loss carryback period for farm net operating losses, providing certain tax credits to estates and trusts, providing a franchise tax credit to certain taxpayers, and providing an effective date and a retroactive applicability date.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. Section 15.335, unnumbered paragraph 1, Code 1999, is amended to read as follows:

An eligible business may claim a corporate tax credit for increasing research activities in this state during the period the eligible business is participating in the program. The credit equals six and one-half percent of the state's apportioned share of the qualifying expendi- tures for increasing research activities. The state's apportioned share of the qualifying expenditures for increasing research activities is a percent equal to the ratio of qualified research expenditures in this state to total qualified research expenditures. The credit al- lowed in this section is in addition to the credit authorized in section 422.33, subsection 5. If the eligible business is a partnership, subchapter S corporation, limited liability company, or estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. The amount claimed by the individual shall be based upon the pro rata share of the individual's earnings of the partnership, subchapter S corporation, limited liability company, or estate or trust. For purposes of this section, "qualifying expen- ditures for increasing research activities" means the qualifying expenditures as defined for the federal credit for increasing research activities which would be allowable under section 41 of the Internal Revenue Code in effect on January 1, .}9g8 .l.aill!.

Sec. 2. Section 15A.9, subsection 8, unnumbered paragraph 2, Code 1999, is amended to read as follows:

For the purposes of this section, "qualifying expenditures for increasing research activi- ties" means the qualifying expenditures as defined for the federal credit for increasing re- search activities which would be allowable under section 41 of the Internal Revenue Code in

143 LAWS OF THE SEVENTY-EIGHTH G.A., 1999 SESSION CH.95

effect on January 1, +9981999. The credit authorized in this subsection is in lieu of the credit authorized in section 422.33, subsection 5.

Sec. 3. Section 422.3, subsection 4, Code 1999, is amended to read as follows: 4. "Internal Revenue Code" means the Internal Revenue Code of 1954, prior to the date of

its redesignation as the Internal Revenue Code of 1986 by the Tax Reform Act of 1986, or means the Internal Revenue Code of 1986 as amended to and including January 1, +998 .l.illill, whichever is applicable.

Sec. 4. Section 422.6, unnumbered paragraph 1, Code 1999, is amended to read as follows:

The tax imposed by section 422.5 less the credits allowed under sections 15.333. 15.335. 15E.193A. 422.10, 422.11. 422.11A, and 422.11B, and the personal exemption credit allowed under section 422.12 apply to and are a charge against estates and trusts with respect to their taxable income, and the rates are the same as those applicable to individuals. The fiduciary shall make the return of income for the estate or trust for which the fiduciary acts, whether the income is taxable to the estate or trust or to the beneficiaries. However, for tax years ending after August 5, 1997, if the trust is a qualified pre need funeral trust as set forth in section 685 of the Internal Revenue Code and the trustee has elected the special tax treatment under section 685 of the Internal Revenue Code, neither the trust nor the benefi- ciary is subject to Iowa income tax on income accruing to the trust.

Sec. 5. Section 422.9, subsection 3, paragraph b, Code 1999, is amended to read as follows:

b. The Iowa net operating loss remaining after being carried back as required in para- graph "a" of this subseetion or "d" or if not required to be carried back shall be carried forward twenty taxable years.

Sec. 6. Section 422.9, subsection 3, Code 1999, is amended by adding the following new paragraph:

NEW PARAGRAPH. d. Notwithstanding paragraph "a", for a taxpayer who is engaged in the trade or business of farming as defined in section 263A(e) (4) of the Internal Revenue Code and has a loss from farming as defined in section 1 72 (b) (1) (F) of the Internal Revenue Code including modifications prescribed by rule by the director, the Iowa loss from the trade or business of farming is a net operating loss which may be carried back five taxable years prior to the taxable year of the loss.

Sec. 7. Section 422.10, unnumbered paragraph 1, Code 1999, is amended to read as follows:

The taxes imposed under this division shall be reduced by a state tax credit for increasing research activities in this state. For individuals, the credit equals six and one-half percent of the state's apportioned share of the qualifying expenditures for increasing research activi- ties. The state's apportioned share of the qualifying expenditures for increasing research activities is a percent equal to the ratio of qualified research expenditures in this state to total qualified research expenditures. For purposes of this section, an individual may claim a research credit for qualifying research expenditures incurred by a partnership, subchapter S corporation, estate, or trust electing to have the income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual's earnings of a partnership, subchapter S corporation, estate, or trust. For purposes of this section, "qualifying expenditures for increasing research activities" means the qualifying expenditures as defined for the federal credit for increasing research activities which would be allowable under section 41 of the Internal Revenue Code in effect on January 1, +998 lJllill,

Sec. 8. Section 422.33, subsection 5, unnumbered paragraph 1, Code 1999, is amended to read as follows:

CH.95 LAWS OF THE SEVEN1Y-EIGHTH G.A., 1999 SESSION 144

The taxes imposed under this division shall be reduced by a state tax credit for increasing research activities in this state equal to six and one-half percent of the state's apportioned share of the qualifying expenditures for increasing research activities. The state's appor- tioned share of the qualifying expenditures for increasing research activities is a percent equal to the ratio of qualified research expenditures in this state to the total qualified re- search expenditures. For purposes of this subsection, "qualifying expenditures for increas- ing research activities" means the qualifying expenditures as defined for the federal credit for increasing research activities which would be allowable under section 41 of the Internal Revenue Code in effect on January 1, l-998lllill!.

Sec. 9. Section 422.33, Code 1999, is amended by adding the following new subsection: NEW SUBSECTION. 9. The taxes imposed under this division shall be reduced by a

franchise tax credit. A taxpayer who is a shareholder in a financial institution, as defined in section 581 of the Internal Revenue Code, which has in effect for the tax year an election under subchapter S of the Internal Revenue Code shall compute the amount of the tax credit by recomputing the amount of tax under this division by reducing the taxable income of the taxpayer by the taxpayer's pro rata share of the items of income and expense of the financial institution. This recomputed tax shall be subtracted from the tax computed under this division and the resulting amount, which shall not exceed the taxpayer's pro rata share of franchise tax paid by the financial institution, is the amount of the franchise tax credit allowed.

Sec. 10. Section 422.35, subsection 11, paragraph b, Code 1999, is amended to read as follows:

b. The Iowa net operating loss remaining after being carried back as required in para- graph "a" of this subseetioR or "f' or if not required to be carried back shall be carried forward twenty taxable years.

Sec. 11. Section 422.35, subsection 11, Code 1999, is amended by adding the following new paragraph:

NEW PARAGRAPH. f. Notwithstanding paragraph "a", for a taxpayer who is engaged in the trade or business of farming as defined in section 263A(e) (4) of the Internal Revenue Code and has a loss from farming as defined in section 172 (b) (1) (F) of the Internal Revenue Code including modifications prescribed by rule by the director, the Iowa loss from the trade or business of farming is a net operating loss which may be carried back five taxable years prior to the taxable year of the loss.

Sec. 12. This Act applies retroactively to January 1, 1998, for tax years beginning on or after that date.

Sec. 13. This Act, being deemed of immediate importance, takes effect upon enactment.

Approved May 6, 1999