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House Journal: Page 2160: Wednesday, May 1, 1996

puted under section 422.7 plus all tax preference items,
adjustments, and losses under subparagraph (1).  In computing
this fraction, those items excludable under subparagraph (1)
shall not be used in computing the tax preference items. Married
taxpayers electing to file separate returns or separately on a
combined return must allocate the minimum tax computed in this
subsection in the proportion that each spouse's respective
preference items, adjustments, and losses under subparagraph (1)
bear to the combined preference items, adjustments, and losses
under subparagraph (1) of both spouses.
Sec. 16.  Section 422.8, subsection 2, Code 1995, is amended to
read as follows:
2.  a.  Nonresident's net income allocated to Iowa is the
net income, or portion thereof of net income, which is
derived from a business, trade, profession, or occupation
carried on within this state or income from any property, trust,
estate, or other source within Iowa.  However, income derived
from a business, trade, profession, or occupation carried on
within this state and income from any property, trust, estate,
or other source within Iowa shall not include distributions from
pensions, including defined benefit or defined contribution
plans, annuities, individual retirement accounts, and deferred
compensation plans or any earnings attributable thereto so long
as the distribution is directly related to an individual's
documented retirement and received while the individual is a
nonresident of this state.  If a business, trade, profession, or
occupation is carried on partly within and partly without the
state, only the portion of the net income which is fairly and
equitably attributable to that part of the business, trade,
profession, or occupation carried on within the state is
allocated to Iowa for purposes of section 422.5, subsection 1,
paragraph "j", and section 422.13 and income from any property,
trust, estate, or other source partly within and partly without
the state is allocated to Iowa in the same manner, except that
annuities, interest on bank deposits and interest-bearing
obligations, and dividends are allocated to Iowa only to the
extent to which they are derived from a business, trade,
profession, or occupation carried on within the state.
b.  A resident's income allocable to Iowa is the income
determined under section 422.7 reduced by items of income and
expenses from a subchapter S corporation which is a value-added
corporation that carries on business within and without the
state when those items of income and expenses pass directly to
the shareholders under provisions of the Internal Revenue Code.
These items of income and expenses are increased by the greater
of the following:
(1)  The net income or loss of the corporation which is fairly
and equitably attributable to this state under section 422.33,
subsections 2 and 3.
(2)  Any cash or the value of property distributions which are
made only to the extent that they are paid from income upon
which Iowa income tax has not been paid, as determined under
rules of the director, reduced by fifty percent of the amount of
any of these distributions that are made to enable the
shareholder to pay federal income tax on items of income, loss,
and expenses from the corporation.
Sec. 17.  Section 422.8, Code 1995, is amended by adding the
following new subsection:
NEW SUBSECTION.  6.  If the resident or part-year resident
is a shareholder of a value-added corporation which has in
effect an election under subchapter S of the Internal Revenue
Code, subsections 1 and 3 do not apply to any income taxes paid
to another state or foreign country on the income from the
value-added corporation which has in effect an election under
subchapter S of the Internal Revenue Code.

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/02100/02160.html
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