House File 102 - Introduced
HOUSE FILE
BY COMMITTEE ON WAYS AND MEANS
(SUCCESSOR TO HF 23)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to state income taxes by authorizing individuals,
2 corporations, and financial institutions to elect to take the
3 additional first=year depreciation allowance and to allow the
4 additional first=year depreciation allowance and the increased
5 expensing allowance which were deductible for a tax year for
6 which a tax return was filed prior to a certain date to be
7 deducted on the return filed for the subsequent tax year and
8 including an effective date provision and a retroactive
9 applicability date provision.
10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
11 TLSB 1394HV 81
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PAG LIN
1 1 Section 1. Section 422.7, subsection 39, paragraph b, Code
1 2 2005, is amended to read as follows:
1 3 b. The A taxpayer may elect to apply the additional first=
1 4 year depreciation allowance authorized in section 168(k)(4) of
1 5 the Internal Revenue Code, as enacted by Pub. L. No. 108=27,
1 6 shall apply in computing net income for state tax purposes,
1 7 for qualified property acquired after May 5, 2003, and before
1 8 January 1, 2005. If the taxpayer elects to take the
1 9 additional first=year depreciation allowance authorized in
1 10 section 168(k)(4) of the Internal Revenue Code for state tax
1 11 purposes, the deduction may be taken on amended state tax
1 12 returns, if necessary. If the taxpayer does not elect to take
1 13 the additional first=year depreciation allowance authorized in
1 14 section 168(k)(4) of the Internal Revenue Code for state tax
1 15 purposes, the following adjustment shall be made:
1 16 (1) Add the total amount of depreciation taken on all
1 17 property for which the election under section 168(k)(4) of the
1 18 Internal Revenue Code was made for the tax year.
1 19 (2) Subtract an amount equal to depreciation allowed on
1 20 such property for the tax year using the modified accelerated
1 21 cost recovery system depreciation method applicable under
1 22 section 168 of the Internal Revenue Code without regard to
1 23 section 168(k)(4).
1 24 (3) Any other adjustments to gains or losses to reflect
1 25 the adjustments made in subparagraphs (1) and (2) pursuant to
1 26 rules adopted by the director.
1 27 Sec. 2. Section 422.35, subsection 19, paragraph b, Code
1 28 2005, is amended to read as follows:
1 29 b. The A taxpayer may elect to apply the additional first=
1 30 year depreciation allowance authorized in section 168(k)(4) of
1 31 the Internal Revenue Code, as enacted by Pub. L. No. 108=27,
1 32 shall apply in computing net income for state tax purposes,
1 33 for qualified property acquired after May 5, 2003, and before
1 34 January 1, 2005. If the taxpayer elects to take the
1 35 additional first=year depreciation allowance authorized in
2 1 section 168(k)(4) of the Internal Revenue Code for state tax
2 2 purposes, the deduction may be taken on amended state tax
2 3 returns, if necessary. If the taxpayer does not elect to take
2 4 the additional first=year depreciation allowance authorized in
2 5 section 168(k)(4) of the Internal Revenue Code for state tax
2 6 purposes, the following adjustment shall be made:
2 7 (1) Add the total amount of depreciation taken on all
2 8 property for which the election under section 168(k)(4) of the
2 9 Internal Revenue Code was made for the tax year.
2 10 (2) Subtract an amount equal to depreciation allowed on
2 11 such property for the tax year using the modified accelerated
2 12 cost recovery system depreciation method applicable under
2 13 section 168 of the Internal Revenue Code without regard to
2 14 section 168(k)(4).
2 15 (3) Any other adjustments to gains or losses to reflect
2 16 the adjustments made in subparagraphs (1) and (2) pursuant to
2 17 rules adopted by the director.
2 18 Sec. 3. SPECIAL FILING PROVISIONS. Adjustments to federal
2 19 adjusted gross income for individuals and federal taxable
2 20 income for corporations made on previous tax returns filed
2 21 prior to the effective date of this section of this Act may be
2 22 required. These adjustments relate to the disallowance of
2 23 both the additional fifty percent first=year depreciation
2 24 allowance authorized in section 168(k) of the Internal Revenue
2 25 Code for assets acquired after May 5, 2003, and before January
2 26 1, 2005, and the increase in the expensing allowance
2 27 authorized in section 179(b) of the Internal Revenue Code for
2 28 tax periods beginning on or after January 1, 2003. In lieu of
2 29 filing an amended tax return, taxpayers may make these
2 30 adjustments, pursuant to rules adopted by the director of
2 31 revenue, on the next return filed subsequent to the effective
2 32 date of this section of this Act.
2 33 Sec. 4. EFFECTIVE AND RETROACTIVE APPLICABILITY DATES.
2 34 This Act, being deemed of immediate importance, takes effect
2 35 upon enactment. Sections 1 and 2 of this Act apply
3 1 retroactively to tax years ending after May 5, 2003.
3 2 EXPLANATION
3 3 This bill allows a taxpayer to elect to take the additional
3 4 first=year (bonus) depreciation allowance in computing the
3 5 individual, corporate, and franchise taxes and specifies the
3 6 adjustments to be made in determining net or taxable income if
3 7 such election is not made. This provision is retroactive to
3 8 tax years ending after May 5, 2003.
3 9 The bill allows a taxpayer that was eligible, under the
3 10 individual or corporate income tax, for the additional first=
3 11 year (bonus) depreciation allowance or the increased expensing
3 12 allowance for a tax year for which an income tax return for
3 13 that tax year was filed prior to the effective date of the
3 14 provision of the bill, to elect, in lieu of filing an amended
3 15 return, to take the bonus depreciation allowance or increased
3 16 expensing allowance in the taxpayer's subsequent tax year.
3 17 The amount of the deduction and any other adjustment as a
3 18 result of this deduction is to be computed pursuant to rules
3 19 adopted by the director of revenue.
3 20 The bill takes effect upon enactment.
3 21 LSB 1394HV 81
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