Text: HF00556 Text: HF00558 Text: HF00500 - HF00599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Section 1. Section 422.61, subsection 2, Code 1995, is
1 2 amended by adding the following new paragraph:
1 3 NEW PARAGRAPH. f. A deduction shall not be allowed for
1 4 that portion of the taxpayer's expenses computed under this
1 5 paragraph which is allocable to an investment in an investment
1 6 subsidiary. The portion of the taxpayer's expenses which is
1 7 allocable to an investment in an investment subsidiary is an
1 8 amount which bears the same ratio to the taxpayer's expenses
1 9 as the taxpayer's average adjusted basis, as computed pursuant
1 10 to section 1016 of the Internal Revenue Code, of investment in
1 11 that investment subsidiary bears to the average adjusted basis
1 12 for all assets of the taxpayer. The portion of the taxpayer's
1 13 expenses that is computed and disallowed under this paragraph
1 14 shall be added.
1 15 Sec. 2. Section 422.61, Code 1995, is amended by adding
1 16 the following new subsection:
1 17 NEW SUBSECTION. 1A. "Investment subsidiary" means an
1 18 entity that is owned, capitalized, and utilized by a financial
1 19 institution with one of its purposes being to make, hold, and
1 20 manage, for and on behalf of the financial institution,
1 21 investments in securities which the financial institution
1 22 would be permitted by applicable law to make for its own
1 23 account.
1 24 Sec. 3. This Act, being deemed of immediate importance,
1 25 takes effect upon enactment and applies retroactively to
1 26 January 1, 1995, for tax years beginning on or after that
1 27 date.
1 28 EXPLANATION
1 29 The bill amends the franchise tax to disallow the expenses
1 30 related to investments in investment subsidiaries of financial
1 31 institutions. To counteract the loss of franchise tax revenue
1 32 caused by financial institutions setting up subsidiaries and
1 33 transferring interest-producing assets to them, the bill
1 34 disallows the deduction of a pro rata portion of all expenses.
1 35 The expenses are disallowed in the ratio of the investment in
2 1 investment subsidiaries to total assets.
2 2 The bill is retroactive to January 1, 1995, for tax years
2 3 beginning on or after that date.
2 4 LSB 2628HV 76
2 5 mg/cf/24
Text: HF00556 Text: HF00558 Text: HF00500 - HF00599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
Iowa General Assembly
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