Text: HSB00707 Text: HSB00709 Text: HSB00700 - HSB00799 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.5, subsection 1, paragraph j, 1 2 subparagraph (2), unnumbered paragraph 1, Code 2001, is 1 3 amended to read as follows: 1 4 The tax imposed upon the taxable income of a resident 1 5 shareholder in an S corporation which has in effect for the 1 6 tax year an election under subchapter S of the Internal 1 7 Revenue Code or of a resident member of a limited liability 1 8 company which has elected to have its income taxed directly to 1 9 the member and carries on business within and without the 1 10 state may be computed by reducing the amount determined 1 11 pursuant to paragraphs "a" through "i" by the amounts of 1 12 nonrefundable credits under this division and by multiplying 1 13 this resulting amount by a fraction of which the resident's 1 14 net income allocated to Iowa, as determined in section 422.8, 1 15 subsection 2, paragraph "b", is the numerator and the 1 16 resident's total net income computed under section 422.7 is 1 17 the denominator. If a resident shareholder or resident member 1 18 has elected to take advantage of this subparagraph, and for 1 19 the next tax year elects not to take advantage of this 1 20 subparagraph, the resident shareholder or resident member 1 21 shall not reelect to take advantage of this subparagraph for 1 22 the three tax years immediately following the first tax year 1 23 for which the shareholder or member elected not to take 1 24 advantage of this subparagraph, unless the director consents 1 25 to the reelection. This subparagraph also applies to 1 26 individuals who are residents of Iowa for less than the entire 1 27 tax year. 1 28 Sec. 2. Section 422.5, subsection 1, paragraph k, 1 29 unnumbered paragraph 4, Code 2001, is amended to read as 1 30 follows: 1 31 In the case of a resident, including a resident estate or 1 32 trust, the state's apportioned share of the state alternative 1 33 minimum tax is one hundred percent of the state alternative 1 34 minimum tax computed in this subsection. In the case of a 1 35 resident or part-year resident shareholder in an S corporation 2 1 which has in effect for the tax year an election under 2 2 subchapter S of the Internal Revenue Code or of a resident or 2 3 part-year resident member of a limited liability company which 2 4 has elected to have its income taxed directly to the member 2 5 and carries on business within and without the state, a 2 6 nonresident, including a nonresident estate or trust, or an 2 7 individual, estate, or trust that is domiciled in the state 2 8 for less than the entire tax year, the state's apportioned 2 9 share of the state alternative minimum tax is the amount of 2 10 tax computed under this subsection, reduced by the applicable 2 11 credits in sections 422.10 through 422.12 and this result 2 12 multiplied by a fraction with a numerator of the sum of state 2 13 net income allocated to Iowa as determined in section 422.8, 2 14 subsection 2, paragraph "a" or "b" as applicable, plus tax 2 15 preference items, adjustments, and losses under subparagraph 2 16 (1) attributable to Iowa and with a denominator of the sum of 2 17 total net income computed under section 422.7 plus all tax 2 18 preference items, adjustments, and losses under subparagraph 2 19 (1). In computing this fraction, those items excludable under 2 20 subparagraph (1) shall not be used in computing the tax 2 21 preference items. Married taxpayers electing to file separate 2 22 returns or separately on a combined return must allocate the 2 23 minimum tax computed in this subsection in the proportion that 2 24 each spouse's respective preference items, adjustments, and 2 25 losses under subparagraph (1) bear to the combined preference 2 26 items, adjustments, and losses under subparagraph (1) of both 2 27 spouses. 2 28 Sec. 3. Section 422.8, subsection 2, paragraph b, Code 2 29 2001, is amended to read as follows: 2 30 b. A resident's income allocable to Iowa is the income 2 31 determined under section 422.7 reduced by items of income and 2 32 expenses from an S corporation or limited liability company 2 33 that carries on business within and without the state when 2 34 those items of income and expenses pass directly to the 2 35 shareholders or members under provisions of the Internal 3 1 Revenue Code. These items of income and expenses are 3 2 increased by the greater of the following: 3 3 (1) The net income or loss of the S corporation or limited 3 4 liability company which is fairly and equitably attributable 3 5 to this state under section 422.33, subsections 2 and 3. 3 6 (2) Any cash or the value of property distributions which 3 7 are made only to the extent that they are paid from income 3 8 upon which Iowa income tax has not been paid, as determined 3 9 under rules of the director, reduced byfifty percent ofthe 3 10 amount of any of these distributions that are made to enable 3 11 the shareholder or member to pay federal income tax on items 3 12 of income, loss, and expenses from the S corporation or 3 13 limited liability company. 3 14 Sec. 4. Section 422.8, subsection 6, Code 2001, is amended 3 15 to read as follows: 3 16 6. If the resident or part-year resident is a shareholder 3 17 of an S corporation which has in effect an election under 3 18 subchapter S of the Internal Revenue Code or is a member of a 3 19 limited liability company which has elected to have its income 3 20 taxed directly to its members, subsections 1 and 3 do not 3 21 apply to any income taxes paid to another state or foreign 3 22 country on the income from the S corporation which has in 3 23 effect an election under subchapter S of the Internal Revenue 3 24 Code or from the limited liability company which has elected 3 25 to have its income taxed directly to its members. 3 26 Sec. 5. APPLICABILITY PROVISION. This Act applies 3 27 retroactively to January 1, 2002, for tax years beginning on 3 28 or after that date. 3 29 EXPLANATION 3 30 This bill provides that in determining the income of a 3 31 resident member of a limited liability company that elects to 3 32 have the income taxed directly to the member, the income shall 3 33 be apportioned based upon corporate income taxation rules. 3 34 The income is not taxable until actually received by the 3 35 member. Present law taxes all the member's share of the 4 1 income of the limited liability company whether distributed to 4 2 the member or not. 4 3 The bill applies retroactively to January 1, 2002, for tax 4 4 years beginning on or after that date. 4 5 LSB 6595HC 79 4 6 mg/cls/14
Text: HSB00707 Text: HSB00709 Text: HSB00700 - HSB00799 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
© 2002 Cornell College and League of Women Voters of Iowa
Comments about this site or page?
webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.
Last update: Tue Mar 5 03:35:52 CST 2002
URL: /DOCS/GA/79GA/Legislation/HSB/00700/HSB00708/020304.html
jhf