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House Journal: Page 2158: Wednesday, May 1, 1996

officials to join the general assembly in providing property tax
relief to the fullest extent possible by reducing property tax
levies in proportion to increased reimbursement from the state. 
However, the general assembly recognizes that the most efficient
method of achieving property tax relief is through a locally
determined strategy based upon the fiscal needs of the local
government.  This section applies to the 1996-1997 fiscal year
only.
Sec. 12.  This division of this Act takes effect July 1, 1996,
and applies to homestead, military service, and elderly or
disabled tax credit and rent reimbursement claims payable in
fiscal years beginning on or after July 1, 1996.  
DIVISION IV
SUBCHAPTER S CORPORATIONS
Sec. 13.  Section 422.4, Code 1995, is amended by adding the
following new subsection:
NEW SUBSECTION.  17A.  The term "value-added corporation"
means a corporation that purchases, receives, or holds personal
property of any description and which adds to its value by a
process of manufacturing, construction, processing, or combining
of different materials, and shall specifically include the
economic activity identified in divisions C and D of the
standard industrial classification codes appearing in 13 C.F.R.
ch. 1(1-1-94 edition), with a view to selling the finished
product for gain or profit.  A corporation engaged in more than
one business activity is a value-added corporation if more than
fifty percent of its gross receipts, figured on a three-year
annual average, or such shorter period as the corporation shall
have been in existence, are from the processes previously
identified.
Sec. 14.  Section 422.5, subsection 1, paragraph j, Code 1995,
is amended to read as follows:
j.  (1)  The tax imposed upon the taxable income of a
nonresident shall be computed by reducing the amount determined
pursuant to paragraphs "a" through "i" by the amounts of
nonrefundable credits under this division and by multiplying
this resulting amount by a fraction of which the nonresident's
net income allocated to Iowa, as determined in section 422.8,
subsection 2, paragraph "a", is the numerator and the
nonresident's total net income computed under section 422.7 is
the denominator.  This provision also applies to individuals who
are residents of Iowa for less than the entire tax year.
(2)  The tax imposed upon the taxable income of a resident
shareholder in a value-added corporation which has in effect for
the tax year an election under subchapter S of the Internal
Revenue Code and carries on business within and without the
state may be computed by reducing the amount determined pursuant
to paragraphs "a" through "i" by the amounts of nonrefundable
credits under this division and by multiplying this resulting
amount by a fraction of which the resident's net income
allocated to Iowa, as determined in section 422.8, subsection 2,
paragraph "b", is the numerator and the resident's total net
income computed under section 422.7 is the denominator.  This
paragraph also applies to individuals who are residents of Iowa
for less than the entire tax year.
(a)  In order for a resident shareholder in a value-added
corporation which has in effect for the tax year an election
under subchapter S of the Internal Revenue Code and carries on
business within and without the state, to claim the benefits of
apportionment of income of the value-added corporation, the
taxpayer must completely fill out the return, determine the
taxpayer's income tax liability without the

Iowa General Assembly

Index: House Journal (76th General Assembly: Session 2)

© 1996 Cornell College and League of Women Voters of Iowa

Comments? hjourn@legis.iowa.gov.

Last update: Tue Jun 25 15:30:03 CDT 1996
URL: /DOCS/GA/76GA/Session.2/HJournal/02100/02158.html
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