Text: HF02442 Text: HF02444 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Section 1. Section 422.7, Code Supplement 2001, is amended
1 2 by adding the following new subsection:
1 3 NEW SUBSECTION. 38. a. If the adjusted gross income
1 4 includes income from a small business operated by the
1 5 taxpayer, an additional deduction shall be allowed in
1 6 computing the income from the small business equal to ten
1 7 thousand dollars or the amount of the income, whichever is
1 8 less.
1 9 b. An individual may claim the additional deduction for a
1 10 small business which is a partnership, limited liability
1 11 company, S corporation, estate, or trust electing to have the
1 12 income taxed directly to the individual. The amount of the
1 13 additional deduction for the individual shall be based upon
1 14 the pro rata share of the individual's earnings of the
1 15 partnership, limited liability company, S corporation, estate,
1 16 or trust.
1 17 c. For purposes of this subsection, "small business" means
1 18 any enterprise which is located in this state, which is
1 19 operated for profit under a single management, and which has
1 20 either fewer than twenty full-time equivalent employees or an
1 21 annual income of less than three million dollars computed as
1 22 the average of the three preceding tax years.
1 23 Sec. 2. NEW SECTION. 422.11F FIRST EMPLOYEE TAX CREDIT.
1 24 1. The taxes imposed under this division, less the credits
1 25 allowed under sections 422.12 and 422.12B, shall be reduced by
1 26 a first employee tax credit. A small business that hires
1 27 during the tax year its first full-time employee is entitled
1 28 to the credit based upon the wages paid to the full-time
1 29 employee. However, if the full-time employee is hired to
1 30 replace part-time employees, the credit shall be based upon
1 31 the wages paid the full-time employee minus the wages paid the
1 32 employees that were replaced. The amount of the tax credit
1 33 equals eight percent of the wages upon which the tax credit is
1 34 based.
1 35 2. An individual may claim the tax credit allowed a
2 1 partnership, limited liability company, S corporation, estate,
2 2 or trust electing to have the income taxed directly to the
2 3 individual. The amount claimed by the individual shall be
2 4 based upon the pro rata share of the individual's earnings of
2 5 a partnership, limited liability company, S corporation,
2 6 estate, or trust.
2 7 3. Any credit in excess of the taxpayer's tax liability
2 8 shall be refunded. In lieu of claiming a refund, the taxpayer
2 9 may elect to have the overpayment shown on the taxpayer's
2 10 final, completed return credited to the tax liability for the
2 11 following tax year.
2 12 4. For purposes of this subsection, "small business" means
2 13 any enterprise which is located in this state, which is
2 14 operated for profit under a single management, and which has
2 15 an annual income of less than three million dollars computed
2 16 as the average of the three preceding tax years.
2 17 Sec. 3. Section 422.33, Code Supplement 2001, is amended
2 18 by adding the following new subsection:
2 19 NEW SUBSECTION. 12. a. The taxes imposed under this
2 20 division shall be reduced by a first employee tax credit. A
2 21 small business that hires during the tax year its first full-
2 22 time employee is entitled to the credit based upon the wages
2 23 paid to the full-time employee. However, if the full-time
2 24 employee is hired to replace part-time employees, the credit
2 25 shall be based upon the wages paid the full-time employee
2 26 minus the wages paid to the employees that were replaced. The
2 27 amount of the tax credit equals eight percent of the wages
2 28 upon which the tax credit is based.
2 29 b. Any credit in excess of the taxpayer's tax liability
2 30 shall be refunded. In lieu of claiming a refund, the taxpayer
2 31 may elect to have the overpayment shown on the taxpayer's
2 32 final, completed return credited to the tax liability for the
2 33 following tax year.
2 34 c. For purposes of this subsection, "small business" means
2 35 any enterprise which is located in this state, which is
3 1 operated for profit under a single management, and which has
3 2 an annual income of less than three million dollars computed
3 3 as the average of the three preceding tax years.
3 4 Sec. 4. Section 422.35, Code Supplement 2001, is amended
3 5 by adding the following new subsection:
3 6 NEW SUBSECTION. 19. a. If the taxable income includes
3 7 income from a small business operated by the taxpayer,
3 8 subtract an additional deduction in computing the income from
3 9 the small business equal to ten thousand dollars or the amount
3 10 of the income, whichever is less.
3 11 b. For purposes of this subsection, "small business" means
3 12 either fewer than twenty full-time equivalent employees or any
3 13 enterprise which is located in this state, which is operated
3 14 for profit under a single management, and which has either
3 15 fewer than twenty full-time equivalent employees or an annual
3 16 income of less than three million dollars computed as the
3 17 average of the three preceding tax years.
3 18 Sec. 5. EFFECTIVE AND APPLICABILITY DATE. This Act, being
3 19 deemed of immediate importance, takes effect upon enactment
3 20 and applies retroactively to January 1, 2002, for tax years
3 21 beginning on or after that date.
3 22 EXPLANATION
3 23 This bill provides that for individual and corporate income
3 24 tax purposes if the taxpayer has income from a small business,
3 25 the income is recomputed by deducting from it up to $10,000.
3 26 A "small business" is one that is operated for profit by the
3 27 taxpayer under single management with either 20 or fewer full-
3 28 time equivalent employees or an annual income of less than $3
3 29 million computed as the average of the three preceding tax
3 30 years.
3 31 The bill also provides for an individual and corporate
3 32 income tax credit equal to 8 percent of the wages paid in the
3 33 tax year to the first full-time employee hired by a small
3 34 business in the tax year. If the full-time employee is hired
3 35 to replace part-time employees, the credit is equal to 8
4 1 percent of the wages of the full-time employee minus the wages
4 2 of the part-time employees. The credit is refundable. "Small
4 3 business" is a business operated for profit by the taxpayer
4 4 under single management with annual income of less than $3
4 5 million computed as the average of the three preceding tax
4 6 years.
4 7 The bill takes effect upon enactment and applies
4 8 retroactively to January 1, 2002, for tax years beginning on
4 9 or after that date.
4 10 LSB 5848HH 79
4 11 mg/pj/5
Text: HF02442 Text: HF02444 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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