Text: S05457 Text: S05459 Text: S05400 - S05499 Text: S Index Bills and Amendments: General Index Bill History: General Index
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1 1 Amend Senate File 2449 as follows:
1 2 #1. By striking page 7, line 35, through page 15,
1 3 line 18, and inserting the following:
1 4 "Sec. . Section 422.5, subsection 1, paragraph
1 5 j, Code 1995, is amended by adding the following new
1 6 unnumbered paragraph:
1 7 NEW UNNUMBERED PARAGRAPH. The tax imposed upon the
1 8 taxable income of a resident shareholder in a
1 9 corporation which has in effect for the tax year an
1 10 election under subchapter S of the Internal Revenue
1 11 Code and carries on business within and without the
1 12 state shall be computed by reducing the amount
1 13 determined pursuant to paragraphs "a" through "i" by
1 14 the amounts of nonrefundable credits under this
1 15 division and by multiplying this resulting amount by a
1 16 fraction of which the resident's net income allocated
1 17 to Iowa, as determined in section 422.8, subsection 2,
1 18 paragraph "b", is the numerator and the resident's
1 19 total net income computed under section 422.7 is the
1 20 denominator. This paragraph also applies to
1 21 individuals who are residents of Iowa for less than
1 22 the entire tax year.
1 23 Sec. . Section 422.5, subsection 1, paragraph
1 24 k, unnumbered paragraph 4, Code 1995, is amended to
1 25 read as follows:
1 26 In the case of a resident, including a resident
1 27 estate or trust, the state's apportioned share of the
1 28 state alternative minimum tax is one hundred percent
1 29 of the state alternative minimum tax computed in this
1 30 subsection. In the case of a resident or part year
1 31 resident shareholder in a corporation which has in
1 32 effect for the tax year an election under subchapter S
1 33 of the Internal Revenue Code and carries on business
1 34 within and without the state, a nonresident, including
1 35 a nonresident estate or trust, or an individual,
1 36 estate, or trust that is domiciled in the state for
1 37 less than the entire tax year, the state's apportioned
1 38 share of the state alternative minimum tax is the
1 39 amount of tax computed under this subsection, reduced
1 40 by the applicable credits in sections 422.10 through
1 41 422.12 and this result multiplied by a fraction with a
1 42 numerator of the sum of state net income allocated to
1 43 Iowa as determined in section 422.8, subsection 2,
1 44 paragraph "a" or "b" as applicable, plus tax
1 45 preference items, adjustments, and losses under
1 46 subparagraph (1) attributable to Iowa and with a
1 47 denominator of the sum of total net income computed
1 48 under section 422.7 plus all tax preference items,
1 49 adjustments, and losses under subparagraph (1). In
1 50 computing this fraction, those items excludable under
2 1 subparagraph (1) shall not be used in computing the
2 2 tax preference items. Married taxpayers electing to
2 3 file separate returns or separately on a combined
2 4 return must allocate the minimum tax computed in this
2 5 subsection in the proportion that each spouse's
2 6 respective preference items, adjustments, and losses
2 7 under subparagraph (1) bear to the combined preference
2 8 items, adjustments, and losses under subparagraph (1)
2 9 of both spouses.
2 10 Sec. . Section 422.8, subsection 2, Code 1995,
2 11 is amended to read as follows:
2 12 2. a. Nonresident's net income allocated to Iowa
2 13 is the net income, or portion thereof, which is
2 14 derived from a business, trade, profession, or
2 15 occupation carried on within this state or income from
2 16 any property, trust, estate, or other source within
2 17 Iowa. However, income derived from a business, trade,
2 18 profession, or occupation carried on within this state
2 19 and income from any property, trust, estate, or other
2 20 source within Iowa shall not include distributions
2 21 from pensions, including defined benefit or defined
2 22 contribution plans, annuities, individual retirement
2 23 accounts, and deferred compensation plans or any
2 24 earnings attributable thereto so long as the
2 25 distribution is directly related to an individual's
2 26 documented retirement and received while the
2 27 individual is a nonresident of this state. If a
2 28 business, trade, profession, or occupation is carried
2 29 on partly within and partly without the state, only
2 30 the portion of the net income which is fairly and
2 31 equitably attributable to that part of the business,
2 32 trade, profession, or occupation carried on within the
2 33 state is allocated to Iowa for purposes of section
2 34 422.5, subsection 1, paragraph "j", and section 422.13
2 35 and income from any property, trust, estate, or other
2 36 source partly within and partly without the state is
2 37 allocated to Iowa in the same manner, except that
2 38 annuities, interest on bank deposits and interest-
2 39 bearing obligations, and dividends are allocated to
2 40 Iowa only to the extent to which they are derived from
2 41 a business, trade, profession, or occupation carried
2 42 on within the state.
2 43 b. A resident's income allocable to Iowa is the
2 44 income determined under section 422.7 reduced by items
2 45 of income and expenses from a subchapter S corporation
2 46 which pass directly to the shareholders under
2 47 provisions of the Internal Revenue Code and increased
2 48 by the greatest of the following:
2 49 (1) The net income or loss of the corporation
2 50 which is fairly and equitably attributable to this
3 1 state under section 422.33, subsections 2 and 3.
3 2 (2) The taxpayer's pro rata share of an amount
3 3 deemed distributed to shareholders which when added to
3 4 the salaries, wages, or other compensation for
3 5 services performed by all shareholders will equal ten
3 6 percent of the net income of the corporation computed
3 7 in accordance with section 422.35 and considering
3 8 items of income and expense which pass directly to the
3 9 shareholders under provisions of the Internal Revenue
3 10 Code before deduction of shareholder's salaries,
3 11 wages, or other compensation for services performed.
3 12 (3) Any cash or the value of any property
3 13 distributions made to the extent they are paid from
3 14 income upon which Iowa income tax has not been paid as
3 15 determined under rules of the director.
3 16 Sec. . Section 422.8, Code 1995, is amended by
3 17 adding the following new subsection:
3 18 NEW SUBSECTION. 6. If the resident or part year
3 19 resident is a shareholder of a corporation which has
3 20 in effect an election under subchapter S of the
3 21 Internal Revenue Code, subsections 1 and 3 do not
3 22 apply to any income taxes paid to another state or
3 23 foreign country on the income from the corporation
3 24 which has in effect an election under subchapter S of
3 25 the Internal Revenue Code.
3 26 Sec. . This division of this Act, being deemed
3 27 of immediate importance, takes effect upon enactment
3 28 and applies retroactively to January 1, 1996, for tax
3 29 years beginning on or after that date."
3 30
3 31
3 32
3 33 DONALD B. REDFERN
3 34 MAGGIE TINSMAN
3 35 ANDY MCKEAN
3 36 BRAD BANKS
3 37 WILMER RENSINK
3 38 ALLEN BORLAUG
3 39 WAYNE D. BENNETT
3 40 SF 2449.202 76
3 41 mg/jj
Text: S05457 Text: S05459 Text: S05400 - S05499 Text: S Index Bills and Amendments: General Index Bill History: General Index
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