Text: HF02557 Text: HF02559 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 15.335, Code Supplement 1999, is 1 2 amended to read as follows: 1 3 15.335 RESEARCH ACTIVITIES CREDIT. 1 4 1. An eligible business may claim a corporate tax credit 1 5 for increasing research activities in this state during the 1 6 period the eligible business is participating in the program. 1 7 a. The credit equalssix and one-half percent of the1 8state's apportioned share of the qualifying expenditures for1 9increasing research activities.the sum of the following: 1 10 (1) Six and one-half percent of the excess of qualified 1 11 research expenses during the tax year over the base amount for 1 12 the tax year based upon the state's apportioned share of the 1 13 qualifying expenditures for increasing research activities. 1 14 (2) Six and one-half percent of the basic research 1 15 payments determined under section 41(e)(1)(A) of the Internal 1 16 Revenue Code during the tax year based upon the state's 1 17 apportioned share of the qualifying expenditures for 1 18 increasing research activities. 1 19 The state's apportioned share of the qualifying 1 20 expenditures for increasing research activities is a percent 1 21 equal to the ratio of qualified research expenditures in this 1 22 state to total qualified research expenditures. 1 23 b. In lieu of the credit amount computed in paragraph "a", 1 24 subparagraph (1), an eligible business may elect to compute 1 25 the credit amount for qualified research expenses incurred in 1 26 this state in a manner consistent with the alternative 1 27 incremental credit described in section 41(c)(4) of the 1 28 Internal Revenue Code. The taxpayer may make this election 1 29 regardless of the method used for the taxpayer's federal 1 30 income tax. The election made under this paragraph is for the 1 31 tax year and the taxpayer may use another or the same method 1 32 for any subsequent year. 1 33 c. For purposes of the alternate credit computation method 1 34 in paragraph "b", the same credit percentages applicable to 1 35 qualified research expenses described in clauses (i), (ii), 2 1 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code 2 2 shall be used. 2 3 2. The credit allowed in this section is in addition to 2 4 the credit authorized in section 422.33, subsection 5, and 2 5 section 422.10. However, if the alternative credit 2 6 computation method is used in section 422.33, subsection 5, or 2 7 section 422.10, the credit allowed in this section shall also 2 8 be computed using that method. 2 9 3. If the eligible business is a partnership,subchapterS 2 10 corporation, limited liability company, or estate or trust 2 11 electing to have the income taxed directly to the individual, 2 12 an individual may claim the tax credit allowed. The amount 2 13 claimed by the individual shall be based upon the pro rata 2 14 share of the individual's earnings of the partnership, 2 15subchapterS corporation, limited liability company, or estate 2 16 or trust. 2 17 4. For purposes of this section,"qualifying expenditures2 18for increasing research activities" means the qualifying2 19expenditures"base amount", "basic research payment", and 2 20 "qualified research expense" mean the same as defined for the 2 21 federal credit for increasing research activitieswhich would2 22be allowableunder section 41 of the Internal Revenue Codein2 23effect on January 1, 1999, except that for the alternative 2 24 incremental credit such amounts are for research conducted 2 25 within this state. For purposes of this section, "Internal 2 26 Revenue Code" means the Internal Revenue Code in effect on 2 27 January 1, 2000. 2 28 5. Any credit in excess of the tax liability for the 2 29 taxable year shall be refunded with interest computed under 2 30 section 422.25. In lieu of claiming a refund, a taxpayer may 2 31 elect to have the overpayment shown on its final, completed 2 32 return credited to the tax liability for the following year. 2 33 Sec. 2. Section 15A.9, subsection 8, Code Supplement 1999, 2 34 is amended to read as follows: 2 35 8. CORPORATE TAX RESEARCH CREDIT. A corporate tax credit 3 1 shall be available to the primary business or a supporting 3 2 business for increasing research activities in this state 3 3 within the zone. 3 4 a. The credit equalsthirteen percent of the state's3 5apportioned share of the qualifying expenditures for3 6increasing research activities.the sum of the following: 3 7 (1) Thirteen percent of the excess of qualified research 3 8 expenses during the tax year over the base amount for the tax 3 9 year based upon the state's apportioned share of the 3 10 qualifying expenditures for increasing research activities. 3 11 (2) Thirteen percent of the basic research payments 3 12 determined under section 41(e)(1)(A) of the Internal Revenue 3 13 Code during the tax year based upon the state's apportioned 3 14 share of the qualifying expenditures for increasing research 3 15 activities. 3 16 The state's apportioned share of the qualifying 3 17 expenditures for increasing research activities is a percent 3 18 equal to the ratio of qualified research expenditures in this 3 19 state within the zone to total qualified research 3 20 expenditures. 3 21 b. In lieu of the credit amount computed in paragraph "a", 3 22 subparagraph (1), a business may elect to compute the credit 3 23 amount for qualified research expenses incurred in this state 3 24 within the zone in a manner consistent with the alternative 3 25 incremental credit described in section 41(c)(4) of the 3 26 Internal Revenue Code. The taxpayer may make this election 3 27 regardless of the method used for the taxpayer's federal 3 28 income tax. The election made under this paragraph is for the 3 29 tax year and the taxpayer may use another or the same method 3 30 for any subsequent year. 3 31 c. For purposes of the alternate credit computation method 3 32 in paragraph "b", double the credit percentages applicable to 3 33 qualified research expenses described in clauses (i), (ii), 3 34 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code 3 35 shall be used. 4 1 d. Any credit in excess of the tax liability for the tax 4 2 year shall be refunded with interest computed under section 4 3 422.25. In lieu of claiming a refund, the primary business or 4 4 a supporting business may elect to have the overpayment shown 4 5 on its final return credited to its tax liability for the 4 6 following tax year. 4 7 e. For the purposes of thissection, "qualifying4 8expenditures for increasing research activities" means the4 9qualifying expendituressubsection, "base amount", "basic 4 10 research payment", and "qualified research expense" mean the 4 11 same as defined for the federal credit for increasing research 4 12 activitieswhich would be allowableunder section 41 of the 4 13 Internal Revenue Codein effect on January 1, 1999, except 4 14 that for the alternative incremental credit such amounts are 4 15 for research conducted within this state within the zone. For 4 16 purposes of this subsection, "Internal Revenue Code" means the 4 17 Internal Revenue Code in effect on January 1, 2000. 4 18 f. The credit authorized in this subsection is in lieu of 4 19 the credit authorized in section 422.33, subsection 5 and 4 20 section 422.10. 4 21 Sec. 3. Section 422.10, Code Supplement 1999, is amended 4 22 to read as follows: 4 23 422.10 RESEARCH ACTIVITIES CREDIT. 4 24 1. The taxes imposed under this division shall be reduced 4 25 by a state tax credit for increasing research activities in 4 26 this state. 4 27 a. For individuals, the credit equalssix and one-half4 28percent of the state's apportioned share of the qualifying4 29expenditures for increasing research activities.the sum of 4 30 the following: 4 31 (1) Six and one-half percent of the excess of qualified 4 32 research expenses during the tax year over the base amount for 4 33 the tax year based upon the state's apportioned share of the 4 34 qualifying expenditures for increasing research activities. 4 35 (2) Six and one-half percent of the basic research 5 1 payments determined under section 41(e)(1)(A) of the Internal 5 2 Revenue Code during the tax year based upon the state's 5 3 apportioned share of the qualifying expenditures for 5 4 increasing research activities. 5 5 The state's apportioned share of the qualifying 5 6 expenditures for increasing research activities is a percent 5 7 equal to the ratio of qualified research expenditures in this 5 8 state to total qualified research expenditures. 5 9 b. In lieu of the credit amount computed in paragraph "a", 5 10 subparagraph (1), a taxpayer may elect to compute the credit 5 11 amount for qualified research expenses incurred in this state 5 12 in a manner consistent with the alternative incremental credit 5 13 described in section 41(c)(4) of the Internal Revenue Code. 5 14 The taxpayer may make this election regardless of the method 5 15 used for the taxpayer's federal income tax. The election made 5 16 under this paragraph is for the tax year and the taxpayer may 5 17 use another or the same method for any subsequent year. 5 18 c. For purposes of the alternate credit computation method 5 19 in paragraph "b", the same credit percentages applicable to 5 20 qualified research expenses described in clauses (i), (ii), 5 21 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code 5 22 shall be used. 5 23 2. For purposes of this section, an individual may claim a 5 24 research creditfor qualifying research expendituresincurred 5 25 by a partnership,subchapterS corporation, limited liability 5 26 company, estate, or trust electing to have the income taxed 5 27 directly to the individual. The amount claimed by the 5 28 individual shall be based upon the pro rata share of the 5 29 individual's earnings of a partnership,subchapterS 5 30 corporation, limited liability company, estate, or trust. 5 31 3. For purposes of this section,"qualifying expenditures5 32for increasing research activities" means the qualifying5 33expenditures"base amount", "basic research payment", and 5 34 "qualified research expense" mean the same as defined for the 5 35 federal credit for increasing research activitieswhich would6 1be allowableunder section 41 of the Internal Revenue Codein6 2effect on January 1, 1999, except that for the alternative 6 3 incremental credit such amounts are for research conducted 6 4 within this state. For purposes of this section, "Internal 6 5 Revenue Code" means the Internal Revenue Code in effect on 6 6 January 1, 2000. 6 7 4. Any credit in excess of the tax liability imposed by 6 8 section 422.5 less the credits allowed under sections 422.11A, 6 9 422.12, and 422.12B for the taxable year shall be refunded 6 10 with interest computed under section 422.25. In lieu of 6 11 claiming a refund, a taxpayer may elect to have the 6 12 overpayment shown on the taxpayer's final, completed return 6 13 credited to the tax liability for the following taxable year. 6 14 Sec. 4. Section 422.33, subsection 5, Code Supplement 6 15 1999, is amended to read as follows: 6 16 5. a. The taxes imposed under this division shall be 6 17 reduced by a state tax credit for increasing research 6 18 activities in this state equal tosix and one-half percent of6 19the state's apportioned share of the qualifying expenditures6 20for increasing research activities.the sum of the following: 6 21 (1) Six and one-half percent of the excess of qualified 6 22 research expenses during the tax year over the base amount for 6 23 the tax year based upon the state's apportioned share of the 6 24 qualifying expenditures for increasing research activities. 6 25 (2) Six and one-half percent of the basic research 6 26 payments determined under section 41(e)(1)(A) of the Internal 6 27 Revenue Code during the tax year based upon the state's 6 28 apportioned share of the qualifying expenditures for 6 29 increasing research activities. 6 30 The state's apportioned share of the qualifying 6 31 expenditures for increasing research activities is a percent 6 32 equal to the ratio of qualified research expenditures in this 6 33 state to the total qualified research expenditures. 6 34 b. In lieu of the credit amount computed in paragraph "a", 6 35 subparagraph (1), a corporation may elect to compute the 7 1 credit amount for qualified research expenses incurred in this 7 2 state in a manner consistent with the alternative incremental 7 3 credit described in section 41(c)(4) of the Internal Revenue 7 4 Code. The taxpayer may make this election regardless of the 7 5 method used for the taxpayer's federal income tax. The 7 6 election made under this paragraph is for the tax year and the 7 7 taxpayer may use another or the same method for any subsequent 7 8 year. 7 9 c. For purposes of the alternate credit computation method 7 10 in paragraph "b", the same credit percentages applicable to 7 11 qualified research expenses described in clauses (i), (ii), 7 12 and (iii) of section 41(c)(4)(A) of the Internal Revenue Code 7 13 shall be used. 7 14 d. For purposes of this subsection,"qualifying7 15expenditures for increasing research activities" means the7 16qualifying expenditures"base amount", "basic research 7 17 payment", and "qualified research expense" mean the same as 7 18 defined for the federal credit for increasing research 7 19 activitieswhich would be allowableunder section 41 of the 7 20 Internal Revenue Codein effect on January 1, 1999, except 7 21 that for the alternative incremental credit such amounts are 7 22 for research conducted within this state. For purposes of 7 23 this subsection, "Internal Revenue Code" means the Internal 7 24 Revenue Code in effect on January 1, 2000. 7 25 e. Any credit in excess of the tax liability for the 7 26 taxable year shall be refunded with interest computed under 7 27 section 422.25. In lieu of claiming a refund, a taxpayer may 7 28 elect to have the overpayment shown on its final, completed 7 29 return credited to the tax liability for the following taxable 7 30 year. 7 31 Sec. 5. APPLICABILITY DATE. This Act applies 7 32 retroactively to January 1, 2000, for tax years beginning on 7 33 or after that date. 7 34 EXPLANATION 7 35 This bill expands the research activities credit for income 8 1 tax purposes for businesses under the new jobs and income 8 2 program, the quality jobs enterprise zone program, the 8 3 incentives for building in enterprise zones, the individual 8 4 income tax, and corporate income tax. The expansion provides 8 5 for an alternative method of computing the tax credit based 8 6 upon the federal approach using an incremental computation 8 7 method for measuring increased research activities. This 8 8 alternative method is in lieu of a portion of Iowa's present 8 9 computation approach. Therefore, the present Iowa law is 8 10 rewritten in a manner that coincides with the computation 8 11 under the federal income tax credit. 8 12 The bill applies retroactively to January 1, 2000, for tax 8 13 years beginning on or after that date. 8 14 LSB 5584HV 78 8 15 mg/cf/24
Text: HF02557 Text: HF02559 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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