Text: S03335 Text: S03337 Text: S03300 - S03399 Text: S Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Amend Senate File 466 as follows:
1 2 #1. Page 23, by inserting after line 29 the
1 3 following:
1 4 "DIVISION V
1 5 SUBCHAPTER S CORPORATIONS
1 6 Sec. . Section 422.5, subsection 1, paragraph
1 7 j, Code 1995, is amended by adding the following new
1 8 unnumbered paragraph:
1 9 NEW UNNUMBERED PARAGRAPH. The tax imposed upon the
1 10 taxable income of a resident shareholder in a
1 11 corporation which has in effect for the tax year an
1 12 election under subchapter S of the Internal Revenue
1 13 Code and carries on business within and without the
1 14 state shall be computed by reducing the amount
1 15 determined pursuant to paragraphs "a" through "i" by
1 16 the amounts of nonrefundable credits under this
1 17 division and by multiplying this resulting amount by a
1 18 fraction of which the resident's net income allocated
1 19 to Iowa, as determined in section 422.8, subsection 2,
1 20 paragraph "b", is the numerator and the resident's
1 21 total net income computed under section 422.7 is the
1 22 denominator. This paragraph also applies to
1 23 individuals who are residents of Iowa for less than
1 24 the entire tax year.
1 25 Sec. . Section 422.5, subsection 1, paragraph
1 26 k, unnumbered paragraph 4, Code 1995, is amended to
1 27 read as follows:
1 28 In the case of a resident, including a resident
1 29 estate or trust, the state's apportioned share of the
1 30 state alternative minimum tax is one hundred percent
1 31 of the state alternative minimum tax computed in this
1 32 subsection. In the case of a resident or part year
1 33 resident shareholder in a corporation which has in
1 34 effect for the tax year an election under subchapter S
1 35 of the Internal Revenue Code and carries on business
1 36 within and without the state, a nonresident, including
1 37 a nonresident estate or trust, or an individual,
1 38 estate, or trust that is domiciled in the state for
1 39 less than the entire tax year, the state's apportioned
1 40 share of the state alternative minimum tax is the
1 41 amount of tax computed under this subsection, reduced
1 42 by the applicable credits in sections 422.10 through
1 43 422.12 and this result multiplied by a fraction with a
1 44 numerator of the sum of state net income allocated to
1 45 Iowa as determined in section 422.8, subsection 2,
1 46 paragraph "a" or "b" as applicable, plus tax
1 47 preference items, adjustments, and losses under
1 48 subparagraph (1) attributable to Iowa and with a
1 49 denominator of the sum of total net income computed
1 50 under section 422.7 plus all tax preference items,
2 1 adjustments, and losses under subparagraph (1). In
2 2 computing this fraction, those items excludable under
2 3 subparagraph (1) shall not be used in computing the
2 4 tax preference items. Married taxpayers electing to
2 5 file separate returns or separately on a combined
2 6 return must allocate the minimum tax computed in this
2 7 subsection in the proportion that each spouse's
2 8 respective preference items, adjustments, and losses
2 9 under subparagraph (1) bear to the combined preference
2 10 items, adjustments, and losses under subparagraph (1)
2 11 of both spouses.
2 12 Sec. . Section 422.8, subsection 2, Code 1995,
2 13 is amended to read as follows:
2 14 2. a. Nonresident's net income allocated to Iowa
2 15 is the net income, or portion thereof, which is
2 16 derived from a business, trade, profession, or
2 17 occupation carried on within this state or income from
2 18 any property, trust, estate, or other source within
2 19 Iowa. However, income derived from a business, trade,
2 20 profession, or occupation carried on within this state
2 21 and income from any property, trust, estate, or other
2 22 source within Iowa shall not include distributions
2 23 from pensions, including defined benefit or defined
2 24 contribution plans, annuities, individual retirement
2 25 accounts, and deferred compensation plans or any
2 26 earnings attributable thereto so long as the
2 27 distribution is directly related to an individual's
2 28 documented retirement and received while the
2 29 individual is a nonresident of this state. If a
2 30 business, trade, profession, or occupation is carried
2 31 on partly within and partly without the state, only
2 32 the portion of the net income which is fairly and
2 33 equitably attributable to that part of the business,
2 34 trade, profession, or occupation carried on within the
2 35 state is allocated to Iowa for purposes of section
2 36 422.5, subsection 1, paragraph "j", and section 422.13
2 37 and income from any property, trust, estate, or other
2 38 source partly within and partly without the state is
2 39 allocated to Iowa in the same manner, except that
2 40 annuities, interest on bank deposits and interest-
2 41 bearing obligations, and dividends are allocated to
2 42 Iowa only to the extent to which they are derived from
2 43 a business, trade, profession, or occupation carried
2 44 on within the state.
2 45 b. A resident's income allocable to Iowa is the
2 46 income determined under section 422.7 reduced by items
2 47 of income and expenses from a subchapter S corporation
2 48 which pass directly to the shareholders under
2 49 provisions of the Internal Revenue Code and increased
2 50 by the greater of the following:
3 1 (1) The net income or loss of the corporation
3 2 which is fairly and equitably attributable to this
3 3 state under section 422.33, subsections 2 and 3.
3 4 (2) The taxpayer's pro rata share of an amount
3 5 deemed distributed to shareholders which when added to
3 6 the salaries, wages, or other compensation for
3 7 services performed by all shareholders will equal ten
3 8 percent of the net income of the corporation computed
3 9 in accordance with section 422.35 and considering
3 10 items of income and expense which pass directly to the
3 11 shareholders under provisions of the Internal Revenue
3 12 Code before deduction of shareholder's salaries,
3 13 wages, or other compensation for services performed.
3 14 (3) Any cash or the value of any property
3 15 distributions made to the extent they are paid from
3 16 income upon which Iowa income tax has not been paid as
3 17 determined under rules of the director.
3 18 Sec. . Section 422.8, Code 1995, is amended by
3 19 adding the following new subsection:
3 20 NEW SUBSECTION. 6. If the resident or part year
3 21 resident is a shareholder of a corporation which has
3 22 in effect an election under subchapter S of the
3 23 Internal Revenue Code, subsections 1 and 3 do not
3 24 apply to any income taxes paid to another state or
3 25 foreign country on the income from the corporation
3 26 which has in effect an election under subchapter S of
3 27 the Internal Revenue Code.
3 28 Sec. . This division of this Act, being deemed
3 29 of immediate importance, takes effect upon enactment
3 30 and applies retroactively to January 1, 1995, for tax
3 31 years beginning on or after that date."
3 32 #2. Title page, line 1, by inserting after the
3 33 word "tax," the following: "including treatment of
3 34 income from subchapter S corporations,".
3 35
3 36
3 37
3 38 WAYNE BENNETT
3 39 SF 466.1
3 40 mg/cc/26
Text: S03335 Text: S03337 Text: S03300 - S03399 Text: S Index Bills and Amendments: General Index Bill History: General Index
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