S.F. 209 DIVISION I 1 INTERNAL REVENUE CODE REFERENCES 2 Section 1. Section 422.3, subsection 5, Code 2011, is 3 amended to read as follows: 4 5. “Internal Revenue Code” means the Internal Revenue Code 5 of 1954, prior to the date of its redesignation as the Internal 6 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 7 the Internal Revenue Code of 1986 as amended to and including 8 January 1, 2008 2011 . 9 Sec. 2. Section 422.7, subsection 29A, Code 2011, is amended 10 by striking the subsection. 11 Sec. 3. Section 422.9, subsection 2, paragraph i, Code 2011, 12 is amended to read as follows: 13 i. The deduction for state sales and use taxes is allowable 14 only if the taxpayer elected to deduct the state sales and use 15 taxes in lieu of state income taxes under section 164 of the 16 Internal Revenue Code. A deduction for state sales and use 17 taxes is not allowed if the taxpayer has taken the deduction 18 for state income taxes or claimed the standard deduction under 19 section 63 of the Internal Revenue Code. This paragraph 20 applies to taxable years beginning after December 31, 2003, and 21 before January 1, 2006 2008, and to taxable years beginning 22 after December 31, 2009, and before January 1, 2012 . 23 Sec. 4. Section 422.32, subsection 7, Code 2011, is amended 24 to read as follows: 25 7. “Internal Revenue Code” means the Internal Revenue Code 26 of 1954, prior to the date of its redesignation as the Internal 27 Revenue Code of 1986 by the Tax Reform Act of 1986, or means 28 the Internal Revenue Code of 1986 as amended to and including 29 January 1, 2008 2011 . 30 Sec. 5. EFFECTIVE UPON ENACTMENT. This division of this 31 Act, being deemed of immediate importance, takes effect upon 32 enactment. 33 Sec. 6. RETROACTIVE APPLICABILITY. The following provision 34 or provisions of this division of this Act apply retroactively 35 -1- LSB 1237SV (2) 84 tw/sc 1/ 24

S.F. 209 to January 1, 2010, for tax years beginning on or after that 1 date: 2 1. The section of this Act amending section 422.3. 3 2. The section of this Act amending section 422.32. 4 Sec. 7. RETROACTIVE APPLICABILITY. The following provision 5 or provisions of this division of this Act apply retroactively 6 to January 1, 2011, for tax years beginning on or after that 7 date: 8 1. The section of this Act amending section 422.7, 9 subsection 29A. 10 Sec. 8. RETROACTIVE APPLICABILITY. The following provision 11 or provisions of this division of this Act apply retroactively 12 to tax years beginning on or after January 1, 2006, but before 13 January 1, 2008, and to tax years beginning on or after January 14 1, 2010, but before January 1, 2012: 15 1. The section of this Act amending section 422.9. 16 DIVISION II 17 RESEARCH ACTIVITIES CREDIT 18 Sec. 9. Section 15.335, subsection 4, Code 2011, is amended 19 to read as follows: 20 4. a. In lieu of the credit amount computed in subsection 21 2 , an eligible business may elect to compute the credit amount 22 for qualified research expenses incurred in this state in a 23 manner consistent with the alternative incremental simplified 24 credit described in section 41(c)(4) 41(c)(5) of the Internal 25 Revenue Code. The taxpayer may make this election regardless 26 of the method used for the taxpayer’s federal income tax. The 27 election made under this paragraph is for the tax year and the 28 taxpayer may use another or the same method for any subsequent 29 year. 30 b. For purposes of the alternate credit computation 31 method in paragraph “a” , the credit percentages applicable to 32 qualified research expenses described in clauses (i), (ii), 33 and (iii) of section 41(c)(4)(A) 41(c)(5)(A) and clause (ii) 34 of section 41(c)(5)(B) of the Internal Revenue Code are as 35 -2- LSB 1237SV (2) 84 tw/sc 2/ 24

S.F. 209 follows: 1 (1) In the case of an eligible business whose gross revenues 2 do not exceed twenty million dollars per year, the credit 3 percentages are two and fifty-four hundredths percent, three 4 and thirty-eight hundredths percent, and four and twenty-three 5 hundredths seven percent and three percent, respectively. 6 (2) In the case of an eligible business whose gross revenues 7 exceed twenty million dollars per year, the credit percentages 8 are seventy-six hundredths percent, one and two hundredths 9 percent, and one and twenty-seven hundredths two and one-tenth 10 percent and nine-tenths percent, respectively. 11 Sec. 10. Section 15.335, subsection 7, Code 2011, is amended 12 to read as follows: 13 7. a. For purposes of this section , “base amount” , “basic 14 research payment” , and “qualified research expense” mean the 15 same as defined for the federal credit for increasing research 16 activities under section 41 of the Internal Revenue Code, 17 except that for the alternative incremental simplified credit 18 such amounts are for research conducted within this state. 19 b. For purposes of this section , “Internal Revenue Code” 20 means the Internal Revenue Code in effect on January 1, 2009 21 2011 . 22 Sec. 11. Section 15A.9, subsection 8, paragraphs b, c, and 23 e, Code 2011, are amended to read as follows: 24 b. In lieu of the credit amount computed in paragraph “a” , 25 subparagraph (1), subparagraph division (a), a business may 26 elect to compute the credit amount for qualified research 27 expenses incurred in this state within the zone in a manner 28 consistent with the alternative incremental simplified credit 29 described in section 41(c)(4) 41(c)(5) of the Internal Revenue 30 Code. The taxpayer may make this election regardless of 31 the method used for the taxpayer’s federal income tax. The 32 election made under this paragraph is for the tax year and the 33 taxpayer may use another or the same method for any subsequent 34 year. 35 -3- LSB 1237SV (2) 84 tw/sc 3/ 24

S.F. 209 c. For purposes of the alternate credit computation 1 method in paragraph “b” , the credit percentages applicable to 2 qualified research expenses described in clauses (i), (ii), and 3 (iii) of section 41(c)(4)(A) 41(c)(5)(A) and clause (ii) of 4 section 41(c)(5)(B) of the Internal Revenue Code are three and 5 thirty hundredths percent, four and forty hundredths percent, 6 and five and fifty hundredths percent, respectively as follows: 7 (1) In the case of an eligible business whose gross revenues 8 do not exceed twenty million dollars per year, the credit 9 percentages are seven percent and three percent, respectively. 10 (2) In the case of an eligible business whose gross revenues 11 exceed twenty million dollars per year, the credit percentages 12 are two and one-tenths percent and nine-tenths percent, 13 respectively . 14 e. (1) For the purposes of this subsection , “base amount” , 15 “basic research payment” , and “qualified research expense” mean 16 the same as defined for the federal credit for increasing 17 research activities under section 41 of the Internal Revenue 18 Code, except that for the alternative incremental simplified 19 credit such amounts are for research conducted within this 20 state within the zone. 21 (2) For purposes of this subsection , “Internal Revenue Code” 22 means the Internal Revenue Code in effect on January 1, 2009 23 2011 . 24 Sec. 12. Section 422.10, subsection 1, paragraphs b and c, 25 Code 2011, are amended to read as follows: 26 b. In lieu of the credit amount computed in paragraph “a” , 27 subparagraph (1), subparagraph division (a), a taxpayer may 28 elect to compute the credit amount for qualified research 29 expenses incurred in this state in a manner consistent with the 30 alternative incremental simplified credit described in section 31 41(c)(4) 41(c)(5) of the Internal Revenue Code. The taxpayer 32 may make this election regardless of the method used for the 33 taxpayer’s federal income tax. The election made under this 34 paragraph is for the tax year and the taxpayer may use another 35 -4- LSB 1237SV (2) 84 tw/sc 4/ 24

S.F. 209 or the same method for any subsequent year. 1 c. For purposes of the alternate credit computation 2 method in paragraph “b” , the credit percentages applicable 3 to qualified research expenses described in clauses (i), 4 (ii), and (iii) of section 41(c)(4)(A) 41(c)(5)(A) and clause 5 (ii) of section 41(c)(5)(B) of the Internal Revenue Code 6 are one and sixty-five hundredths percent, two and twenty 7 hundredths percent, and two and seventy-five hundredths four 8 and fifty-five hundredths percent and one and ninety-five 9 hundredths percent, respectively. 10 Sec. 13. Section 422.10, subsection 3, Code 2011, is amended 11 to read as follows: 12 3. a. For purposes of this section , “base amount” , “basic 13 research payment” , and “qualified research expense” mean the 14 same as defined for the federal credit for increasing research 15 activities under section 41 of the Internal Revenue Code, 16 except that for the alternative incremental simplified credit 17 such amounts are for research conducted within this state. 18 b. For purposes of this section , “Internal Revenue Code” 19 means the Internal Revenue Code in effect on January 1, 2009 20 2011 . 21 Sec. 14. Section 422.33, subsection 5, paragraphs b, c, and 22 d, Code 2011, are amended to read as follows: 23 b. In lieu of the credit amount computed in paragraph 24 “a” , subparagraph (1), a corporation may elect to compute the 25 credit amount for qualified research expenses incurred in this 26 state in a manner consistent with the alternative incremental 27 simplified credit described in section 41(c)(4) 41(c)(5) of the 28 Internal Revenue Code. The taxpayer may make this election 29 regardless of the method used for the taxpayer’s federal income 30 tax. The election made under this paragraph is for the tax 31 year and the taxpayer may use another or the same method for 32 any subsequent year. 33 c. For purposes of the alternate credit computation 34 method in paragraph “b” , the credit percentages applicable 35 -5- LSB 1237SV (2) 84 tw/sc 5/ 24

S.F. 209 to qualified research expenses described in clauses (i), 1 (ii), and (iii) of section 41(c)(4)(A) 41(c)(5)(A) and clause 2 (ii) of section 41(c)(5)(B) of the Internal Revenue Code 3 are one and sixty-five hundredths percent, two and twenty 4 hundredths percent, and two and seventy-five hundredths four 5 and fifty-five hundredths percent and one and ninety-five 6 hundredths percent, respectively. 7 d. (1) For purposes of this subsection , “base amount” , 8 “basic research payment” , and “qualified research expense” mean 9 the same as defined for the federal credit for increasing 10 research activities under section 41 of the Internal Revenue 11 Code, except that for the alternative incremental simplified 12 credit such amounts are for research conducted within this 13 state. 14 (2) For purposes of this subsection , “Internal Revenue Code” 15 means the Internal Revenue Code in effect on January 1, 2009 16 2011 . 17 Sec. 15. EFFECTIVE UPON ENACTMENT. This division of this 18 Act, being deemed of immediate importance, takes effect upon 19 enactment. 20 Sec. 16. RETROACTIVE APPLICABILITY. The following 21 provision or provisions of this division of this Act apply 22 retroactively to July 1, 2010, for tax credits awarded on or 23 after that date: 24 1. The section of this Act amending section 15.335, 25 subsection 4. 26 2. The section of this Act amending section 15A.9. 27 Sec. 17. RETROACTIVE APPLICABILITY. The following 28 provision or provisions of this division of this Act apply 29 retroactively to January 1, 2010, for tax years beginning on 30 or after that date: 31 1. The section of this Act amending section 15.335, 32 subsection 7. 33 2. The section of this Act amending section 422.10, 34 subsection 1. 35 -6- LSB 1237SV (2) 84 tw/sc 6/ 24

S.F. 209 3. The section of this Act amending section 422.10, 1 subsection 3. 2 4. The section of this Act amending section 422.33. 3 DIVISION III 4 BONUS DEPRECIATION 5 Sec. 18. Section 422.5, subsection 2, paragraph b, 6 subparagraph (1), Code 2011, is amended to read as follows: 7 (1) Add items of tax preference included in federal 8 alternative minimum taxable income under section 57, except 9 subsections (a)(1), (a)(2), and (a)(5), of the Internal Revenue 10 Code, make the adjustments included in federal alternative 11 minimum taxable income under section 56, except subsections 12 (a)(4), (b)(1)(C)(iii), and (d), of the Internal Revenue Code, 13 and add losses as required by section 58 of the Internal 14 Revenue Code. To the extent that any preference or adjustment 15 is determined by an individual’s federal adjusted gross income, 16 the individual’s federal adjusted gross income is computed in 17 accordance with section 422.7, subsection subsections 39 , 39A, 18 39B, and 53 . In the case of an estate or trust, the items of 19 tax preference, adjustments, and losses shall be apportioned 20 between the estate or trust and the beneficiaries in accordance 21 with rules prescribed by the director. 22 Sec. 19. Section 422.7, Code 2011, is amended by adding the 23 following new subsections: 24 NEW SUBSECTION . 39A. The additional first-year 25 depreciation allowance authorized in section 168(k) of the 26 Internal Revenue Code, as enacted by Pub. L. No. 110-185, 27 section 103, Pub. L. No. 111-5, section 1201, Pub. L. No. 28 111-240, section 2022, and Pub. L. No. 111-312, section 401, 29 does not apply in computing net income for state tax purposes 30 for tax years beginning before January 1, 2011. If the 31 taxpayer has taken the additional first-year depreciation 32 allowance for purposes of computing federal adjusted gross 33 income, then the taxpayer shall make the following adjustments 34 to federal adjusted gross income when computing net income for 35 -7- LSB 1237SV (2) 84 tw/sc 7/ 24

S.F. 209 state tax purposes: 1 a. Add the total amount of depreciation taken under section 2 168(k) of the Internal Revenue Code for the tax year. 3 b. Subtract the amount of depreciation allowable under the 4 modified accelerated cost recovery system described in section 5 168 of the Internal Revenue Code and calculated without regard 6 to section 168(k). 7 c. Any other adjustments to gains or losses necessary to 8 reflect the adjustments made in paragraphs “a” and “b” . The 9 director shall adopt rules for the administration of this 10 paragraph. 11 NEW SUBSECTION . 39B. The additional first-year 12 depreciation allowance authorized in section 168(n) of the 13 Internal Revenue Code, as enacted by Pub. L. No. 110-343, 14 section 710, does not apply in computing net income for 15 state tax purposes for tax years beginning before January 1, 16 2011. If the taxpayer has taken the additional first-year 17 depreciation allowance for purposes of computing federal 18 adjusted gross income, then the taxpayer shall make the 19 following adjustments to federal adjusted gross income when 20 computing net income for state tax purposes: 21 a. Add the total amount of depreciation taken under section 22 168(n) of the Internal Revenue Code for the tax year. 23 b. Subtract the amount of depreciation allowable under the 24 modified accelerated cost recovery system described in section 25 168 of the Internal Revenue Code and calculated without regard 26 to section 168(n). 27 c. Any other adjustments to gains or losses necessary to 28 reflect the adjustments made in paragraphs “a” and “b” . The 29 director shall adopt rules for the administration of this 30 paragraph. 31 Sec. 20. Section 422.7, subsection 53, Code 2011, is amended 32 to read as follows: 33 53. A taxpayer is not allowed to take the increased 34 expensing allowance under section 179 of the Internal Revenue 35 -8- LSB 1237SV (2) 84 tw/sc 8/ 24

S.F. 209 Code, as amended by Pub. L. No. 110-185 111-5, section 1202 , in 1 computing adjusted gross income for state tax purposes for tax 2 years beginning before January 1, 2011 . 3 Sec. 21. Section 422.9, subsection 2, paragraph h, Code 4 2011, is amended to read as follows: 5 h. For purposes of calculating the deductions in this 6 subsection that are authorized under the Internal Revenue Code, 7 and to the extent that any of such deductions is determined by 8 an individual’s federal adjusted gross income, the individual’s 9 federal adjusted gross income is computed in accordance with 10 section 422.7, subsection subsections 39 , 39A, 39B, and 53 . 11 Sec. 22. Section 422.35, Code 2011, is amended by adding the 12 following new subsections: 13 NEW SUBSECTION . 19A. The additional first-year 14 depreciation allowance authorized in section 168(k) of the 15 Internal Revenue Code, as enacted by Pub. L. No. 110-185, 16 section 103, Pub. L. No. 111-5, section 1201, Pub. L. No. 17 111-240, section 2022, and Pub. L. No. 111-312, section 401, 18 does not apply in computing net income for state tax purposes 19 for tax years beginning before January 1, 2011. If the 20 taxpayer has taken the additional first-year depreciation 21 allowance for purposes of computing federal taxable income, 22 then the taxpayer shall make the following adjustments to 23 federal taxable income when computing net income for state tax 24 purposes: 25 a. Add the total amount of depreciation taken under section 26 168(k) of the Internal Revenue Code for the tax year. 27 b. Subtract the amount of depreciation allowable under the 28 modified accelerated cost recovery system described in section 29 168 of the Internal Revenue Code and calculated without regard 30 to section 168(k). 31 c. Any other adjustments to gains or losses necessary to 32 reflect the adjustments made in paragraphs “a” and “b” . The 33 director shall adopt rules for the administration of this 34 paragraph. 35 -9- LSB 1237SV (2) 84 tw/sc 9/ 24

S.F. 209 NEW SUBSECTION . 19B. The additional first-year 1 depreciation allowance authorized in section 168(n) of the 2 Internal Revenue Code, as enacted by Pub. L. No. 110-343, 3 section 710, does not apply in computing net income for 4 state tax purposes for tax years beginning before January 1, 5 2011. If the taxpayer has taken the additional first-year 6 depreciation allowance for purposes of computing federal 7 taxable income, then the taxpayer shall make the following 8 adjustments to federal taxable income when computing net income 9 for state tax purposes: 10 a. Add the total amount of depreciation taken under section 11 168(n) of the Internal Revenue Code for the tax year. 12 b. Subtract the amount of depreciation allowable under the 13 modified accelerated cost recovery system described in section 14 168 of the Internal Revenue Code and calculated without regard 15 to section 168(n). 16 c. Any other adjustments to gains or losses necessary to 17 reflect the adjustments made in paragraphs “a” and “b” . The 18 director shall adopt rules for the administration of this 19 paragraph. 20 Sec. 23. Section 422.35, subsection 24, Code 2011, is 21 amended to read as follows: 22 24. A taxpayer is not allowed to take the increased 23 expensing allowance under section 179 of the Internal Revenue 24 Code, as amended by Pub. L. No. 110-185 111-5, section 1202 , in 25 computing taxable income for state tax purposes for tax years 26 beginning before January 1, 2011 . 27 Sec. 24. EFFECTIVE UPON ENACTMENT. This division of this 28 Act, being deemed of immediate importance, takes effect upon 29 enactment. 30 Sec. 25. RETROACTIVE APPLICABILITY. The following 31 provision or provisions of this division of this Act apply 32 retroactively to January 1, 2008, for tax years ending on or 33 after that date: 34 1. The section of this Act amending section 422.5. 35 -10- LSB 1237SV (2) 84 tw/sc 10/ 24

S.F. 209 2. The section of this Act enacting section 422.7, new 1 subsections 39A and 39B. 2 3. The section of this Act amending section 422.9. 3 4. The section of this Act enacting section 422.35, new 4 subsections 19A and 19B. 5 Sec. 26. RETROACTIVE APPLICABILITY. The following 6 provision or provisions of this division of this Act apply 7 retroactively to January 1, 2009, for tax years beginning on or 8 after that date, and before January 1, 2010: 9 1. The section of this Act amending section 422.7, 10 subsection 53. 11 2. The section of this Act amending section 422.35, 12 subsection 24. 13 DIVISION IV 14 EARNED INCOME TAX CREDIT 15 Sec. 27. Section 422.12B, subsection 1, Code 2011, is 16 amended to read as follows: 17 1. The taxes imposed under this division less the credits 18 allowed under section 422.12 shall be reduced by an earned 19 income credit equal to seven ten percent of the federal earned 20 income credit provided in section 32 of the Internal Revenue 21 Code. Any credit in excess of the tax liability is refundable. 22 Sec. 28. RETROACTIVE APPLICABILITY. This division of this 23 Act applies retroactively to January 1, 2011, for tax years 24 beginning on or after that date. 25 DIVISION V 26 SUPPLEMENTAL APPROPRIATIONS 27 Sec. 29. DEPARTMENT OF EDUCATION —— COMMUNITY 28 COLLEGES. After applying the reductions made pursuant to 2010 29 Iowa Acts, chapter 1193, section 27, to the appropriations made 30 for the following designated purposes, there is appropriated 31 from the general fund of the state to the department of 32 education for the fiscal year beginning July 1, 2010, and 33 ending June 30, 2011, the following amounts, or so much thereof 34 as is necessary, to supplement the appropriations made for the 35 -11- LSB 1237SV (2) 84 tw/sc 11/ 24

S.F. 209 following designated purposes: 1 1. MERGED AREA I —— NORTHEAST IOWA COMMUNITY COLLEGE 2 For general state financial aid for merged area I, in 3 2010 Iowa Acts, chapter 1183, section 6, subsection 19, and 4 reflecting a corrective addition of $4,474 in the overall 5 amount appropriated for the merged area’s general state 6 financial aid for the fiscal year: 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 298,883 8 2. MERGED AREA II —— NORTH IOWA AREA COMMUNITY COLLEGE 9 For general state financial aid for merged area II, in 10 2010 Iowa Acts, chapter 1183, section 6, subsection 20, and 11 reflecting a corrective reduction of $28,512 in the overall 12 amount appropriated for the merged area’s general state 13 financial aid for the fiscal year: 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 286,545 15 3. MERGED AREA III —— IOWA LAKES COMMUNITY COLLEGE 16 For general state financial aid for merged area III, in 17 2010 Iowa Acts, chapter 1183, section 6, subsection 21, and 18 reflecting a corrective reduction of $32,233 in the overall 19 amount appropriated for the merged area’s general state 20 financial aid for the fiscal year: 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 257,873 22 4. MERGED AREA IV —— NORTHWEST COMMUNITY COLLEGE 23 For general state financial aid for merged area IV, in 24 2010 Iowa Acts, chapter 1183, section 6, subsection 22, and 25 reflecting a corrective reduction of $13,939 in the overall 26 amount appropriated for the merged area’s general state 27 financial aid for the fiscal year: 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 128,526 29 5. MERGED AREA V —— IOWA CENTRAL COMMUNITY COLLEGE 30 For general state financial aid for merged area V, in 31 2010 Iowa Acts, chapter 1183, section 6, subsection 23, and 32 reflecting a corrective addition of $18,745 in the overall 33 amount appropriated for the merged area’s general state 34 financial aid for the fiscal year: 35 -12- LSB 1237SV (2) 84 tw/sc 12/ 24

S.F. 209 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 344,251 1 6. MERGED AREA VI — IOWA VALLEY COMMUNITY COLLEGE DISTRICT 2 For general state financial aid for merged area VI, in 3 2010 Iowa Acts, chapter 1183, section 6, subsection 24, and 4 reflecting a corrective reduction of $25,507 in the overall 5 amount appropriated for the merged area’s general state 6 financial aid for the fiscal year: 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 251,942 8 7. MERGED AREA VII —— HAWKEYE COMMUNITY COLLEGE 9 For general state financial aid for merged area VII, in 10 2010 Iowa Acts, chapter 1183, section 6, subsection 25, and 11 reflecting a corrective reduction of $11,837 in the overall 12 amount appropriated for the merged area’s general state 13 financial aid for the fiscal year: 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 401,298 15 8. MERGED AREA IX —— EASTERN IOWA COMMUNITY COLLEGE 16 For general state financial aid for merged area IX, in 17 2010 Iowa Acts, chapter 1183, section 6, subsection 26, and 18 reflecting a corrective reduction of $4,921 in the overall 19 amount appropriated for the merged area’s general state 20 financial aid for the fiscal year: 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 508,961 22 9. MERGED AREA X —— KIRKWOOD COMMUNITY COLLEGE 23 For general state financial aid for merged area X, in 24 2010 Iowa Acts, chapter 1183, section 6, subsection 27, and 25 reflecting a corrective addition of $55,034 in the overall 26 amount appropriated for the merged area’s general state 27 financial aid for the fiscal year: 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 959,044 29 10. MERGED AREA XI —— DES MOINES AREA COMMUNITY COLLEGE 30 For general state financial aid for merged area XI, in 31 2010 Iowa Acts, chapter 1183, section 6, subsection 28, and 32 reflecting a corrective addition of $106,395 in the overall 33 amount appropriated for the merged area’s general state 34 financial aid for the fiscal year: 35 -13- LSB 1237SV (2) 84 tw/sc 13/ 24

S.F. 209 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,016,636 1 11. MERGED AREA XII —— WESTERN IOWA TECH COMMUNITY COLLEGE 2 For general state financial aid for merged area XII, in 3 2010 Iowa Acts, chapter 1183, section 6, subsection 29, and 4 reflecting a corrective reduction of $8,974 in the overall 5 amount appropriated for the merged area’s general state 6 financial aid for the fiscal year: 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 328,413 8 12. MERGED AREA XIII —— IOWA WESTERN COMMUNITY COLLEGE 9 For general state financial aid for merged area XIII, in 10 2010 Iowa Acts, chapter 1183, section 6, subsection 30, and 11 reflecting a corrective addition of $9,196 in the overall 12 amount appropriated for the merged area’s general state 13 financial aid for the fiscal year: 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 355,950 15 13. MERGED AREA XIV —— SOUTHWESTERN COMMUNITY COLLEGE 16 For general state financial aid for merged area XIV, in 17 2010 Iowa Acts, chapter 1183, section 6, subsection 31, and 18 reflecting a corrective reduction of $12,340 in the overall 19 amount appropriated for the merged area’s general state 20 financial aid for the fiscal year: 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 132,279 22 14. MERGED AREA XV —— INDIAN HILLS COMMUNITY COLLEGE 23 For general state financial aid for merged area XV, in 24 2010 Iowa Acts, chapter 1183, section 6, subsection 32, and 25 reflecting a corrective reduction of $43,717 in the overall 26 amount appropriated for the merged area’s general state 27 financial aid for the fiscal year: 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 409,622 29 15. MERGED AREA XVI —— SOUTHEASTERN COMMUNITY COLLEGE 30 For general state financial aid for merged area XVI, in 31 2010 Iowa Acts, chapter 1183, section 6, subsection 33, and 32 reflecting a corrective reduction of $11,864 in the overall 33 amount appropriated for the merged area’s general state 34 financial aid for the fiscal year: 35 -14- LSB 1237SV (2) 84 tw/sc 14/ 24

S.F. 209 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 248,098 1 16. For distribution to community colleges to supplement 2 faculty salaries, in 2010 Iowa Acts, chapter 1183, section 8: 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,415 4 Sec. 30. DEPARTMENT OF CORRECTIONS. After applying the 5 reductions made pursuant to 2010 Iowa Acts, chapter 1193, 6 section 27, and any transfers made pursuant to 2010 Iowa Acts, 7 chapter 1193, section 28, to the appropriations made for the 8 following designated purposes, there is appropriated from the 9 general fund of the state to the department of corrections 10 for the fiscal year beginning July 1, 2010, and ending June 11 30, 2011, the following amounts, or so much thereof as is 12 necessary, to supplement the appropriations made for the 13 following designated purposes: 14 1. For the operation of adult correctional institutions in 15 2010 Iowa Acts, chapter 1190, section 3, subsection 1, to be 16 allocated as follows: 17 a. For the operation of the Fort Madison correctional 18 facility in 2010 Iowa Acts, chapter 1190, section 3, subsection 19 1, paragraph “a”: 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,920,083 21 b. For the operation of the Anamosa correctional facility 22 in 2010 Iowa Acts, chapter 1190, section 3, subsection 1, 23 paragraph “b”: 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,293,060 25 c. For the operation of the Oakdale correctional facility 26 in 2010 Iowa Acts, chapter 1190, section 3, subsection 1, 27 paragraph “c”: 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,385,141 29 d. For the operation of the Newton correctional facility 30 in 2010 Iowa Acts, chapter 1190, section 3, subsection 1, 31 paragraph “d”: 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,101,460 33 e. For the operation of the Mount Pleasant correctional 34 facility in 2010 Iowa Acts, chapter 1190, section 3, subsection 35 -15- LSB 1237SV (2) 84 tw/sc 15/ 24

S.F. 209 1, paragraph “e”: 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,359,865 2 f. For the operation of the Rockwell City correctional 3 facility in 2010 Iowa Acts, chapter 1190, section 3, subsection 4 1, paragraph “f”: 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 412,008 6 g. For the operation of the Clarinda correctional facility 7 in 2010 Iowa Acts, chapter 1190, section 3, subsection 1, 8 paragraph “g”: 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,180,617 10 h. For the operation of the Mitchellville correctional 11 facility in 2010 Iowa Acts, chapter 1190, section 3, subsection 12 1, paragraph “h”: 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 504,674 14 i. For the operation of the Fort Dodge correctional facility 15 in 2010 Iowa Acts, chapter 1190, section 3, subsection 1, 16 paragraph “i”: 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,162,060 18 2. For general administration in 2010 Iowa Acts, chapter 19 1190, section 4: 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110,202 21 3. For the judicial district departments of correctional 22 services in 2010 Iowa Acts, chapter 1190, section 5, subsection 23 1, to be allocated as follows: 24 a. For the first judicial district department of 25 correctional services in 2010 Iowa Acts, chapter 1190, section 26 5, subsection 1, paragraph “a”: 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 393,353 28 b. For the second judicial district department of 29 correctional services in 2010 Iowa Acts, chapter 1190, section 30 5, subsection 1, paragraph “b”: 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 360,912 32 c. For the third judicial district department of 33 correctional services in 2010 Iowa Acts, chapter 1190, section 34 5, subsection 1, paragraph “c”: 35 -16- LSB 1237SV (2) 84 tw/sc 16/ 24

S.F. 209 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 221,793 1 d. For the fourth judicial district department of 2 correctional services in 2010 Iowa Acts, chapter 1190, section 3 5, subsection 1, paragraph “d”: 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 169,067 5 e. For the fifth judicial district department of 6 correctional services in 2010 Iowa Acts, chapter 1190, section 7 5, subsection 1, paragraph “e”: 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 723,637 9 f. For the sixth judicial district department of 10 correctional services in 2010 Iowa Acts, chapter 1190, section 11 5, subsection 1, paragraph “f”: 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 460,329 13 g. For the seventh judicial district department of 14 correctional services in 2010 Iowa Acts, chapter 1190, section 15 5, subsection 1, paragraph “g”: 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 265,431 17 h. For the eighth judicial district department of 18 correctional services in 2010 Iowa Acts, chapter 1190, section 19 5, subsection 1, paragraph “h”: 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 177,991 21 Sec. 31. STATE PUBLIC DEFENDER. After applying the 22 reductions made pursuant to 2010 Iowa Acts, chapter 1193, 23 section 27, to the appropriations made for the following 24 designated purposes, there is appropriated from the general 25 fund of the state to the office of the state public defender of 26 the department of inspections and appeals for the fiscal year 27 beginning July 1, 2010, and ending June 30, 2011, the following 28 amounts, or so much thereof as is necessary, to supplement the 29 appropriations made for the following designated purposes: 30 1. For the office of the state public defender, in 2010 Iowa 31 Acts, chapter 1190, section 10, subsection 1: 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,551,500 33 2. For the fees of court-appointed attorneys for indigent 34 adults and juveniles, in accordance with section 232.141 and 35 -17- LSB 1237SV (2) 84 tw/sc 17/ 24

S.F. 209 chapter 815, in 2010 Iowa Acts, chapter 1190, section 10, 1 subsection 2: 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,000,000 3 Sec. 32. DEPARTMENT OF PUBLIC SAFETY. After applying the 4 reductions made pursuant to 2010 Iowa Acts, chapter 1193, 5 section 27, and any transfers made pursuant to 2010 Iowa Acts, 6 chapter 1193, section 28, to the appropriations made for the 7 following designated purposes, there is appropriated from 8 the general fund of the state to the department of public 9 safety for the fiscal year beginning July 1, 2010, and ending 10 June 30, 2011, the following amounts, or so much thereof as 11 is necessary, to supplement the appropriations made for the 12 following designated purposes: 13 1. For the department’s administrative functions in 2010 14 Iowa Acts, chapter 1190, section 14, subsection 1: 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 275,000 16 2. For the division of criminal investigation in 2010 Iowa 17 Acts, chapter 1190, section 14, subsection 2: 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 325,000 19 3. For the division of narcotics enforcement in 2010 Iowa 20 Acts, chapter 1190, section 14, subsection 4, paragraph “a”: 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 225,000 22 4. For the division of state fire marshal in 2010 Iowa Acts, 23 chapter 1190, section 14, subsection 5: 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 130,000 25 5. For the division of state patrol in 2010 Iowa Acts, 26 chapter 1190, section 14, subsection 6: 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000 28 Sec. 33. DEPARTMENT OF PUBLIC HEALTH. After applying the 29 reductions made pursuant to 2010 Iowa Acts, chapter 1193, 30 section 27, and any transfers made pursuant to 2010 Iowa Acts, 31 chapter 1193, section 28, to the appropriations made for the 32 following designated purposes, there is appropriated from 33 the general fund of the state to the department of public 34 health for the fiscal year beginning July 1, 2010, and ending 35 -18- LSB 1237SV (2) 84 tw/sc 18/ 24

S.F. 209 June 30, 2011, the following amounts, or so much thereof as 1 is necessary, to supplement the appropriations made for the 2 following designated purposes: 3 1. For addictive disorders, in 2010 Iowa Acts, chapter 1192, 4 section 2, subsection 1: 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 675,896 6 2. For healthy children and families, in 2010 Iowa Acts, 7 chapter 1192, section 2, subsection 2: 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68,192 9 3. For community capacity, in 2010 Iowa Acts, chapter 1192, 10 section 2, subsection 4: 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,275 12 4. For healthy aging, in 2010 Iowa Acts, chapter 1192, 13 section 2, subsection 5: 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 403,500 15 5. For infectious diseases, in 2010 Iowa Acts, chapter 1192, 16 section 2, subsection 7: 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,688 18 Sec. 34. DEPARTMENT OF HUMAN SERVICES —— 19 APPROPRIATIONS. After applying the reductions made pursuant 20 to 2010 Iowa Acts, chapter 1193, section 27, and any transfers 21 made pursuant to 2010 Iowa Acts, chapter 1193, section 28, to 22 the appropriations made for the following designated purposes, 23 there is appropriated from the general fund of the state to the 24 department of human services for the fiscal year beginning July 25 1, 2010, and ending June 30, 2011, the following amounts, or so 26 much thereof as is necessary, to supplement the appropriations 27 made for the following designated purposes: 28 1. For the state mental health institute at Cherokee, 29 in 2010 Iowa Acts, chapter 1192, section 24, subsection 1, 30 paragraph “a”: 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 784,607 32 2. For the state mental health institute at Clarinda, 33 in 2010 Iowa Acts, chapter 1192, section 24, subsection 1, 34 paragraph “b”: 35 -19- LSB 1237SV (2) 84 tw/sc 19/ 24

S.F. 209 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 623,793 1 3. For the state mental health institute at Independence, 2 in 2010 Iowa Acts, chapter 1192, section 24, subsection 1, 3 paragraph “c”: 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,235,916 5 Sec. 35. EFFECTIVE UPON ENACTMENT. This division of this 6 Act, being deemed of immediate importance, takes effect upon 7 enactment. 8 DIVISION VI 9 CORRECTIVE PROVISIONS 10 Sec. 36. 2010 Iowa Acts, chapter 1193, section 199, is 11 amended to read as follows: 12 SEC. 199. TERRACE HILL —— GENERAL FUND —— DEPARTMENT OF 13 ADMINISTRATIVE SERVICES. There is appropriated from the 14 general fund of the state to the department of administrative 15 services for the fiscal year beginning July 1, 2009 2010 , 16 and ending June 30, 2010 2011 , the following amount, or so 17 much thereof as is necessary, to be used for the purposes 18 designated: 19 For salaries, support, maintenance, and miscellaneous 20 purposes necessary for the operation of Terrace Hill, and for 21 not more than the following full-time equivalent positions: 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 263,329 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FTEs 6.38 24 Sec. 37. EFFECTIVE UPON ENACTMENT AND RETROACTIVE 25 APPLICABILITY. This division of this Act, being deemed 26 of immediate importance, takes effect upon enactment. The 27 provision amending 2010 Iowa Acts, chapter 1193, section 199, 28 applies retroactively to April 29, 2010. 29 EXPLANATION 30 This bill updates Iowa Code references to the Internal 31 Revenue Code, provides for changes to the Iowa research 32 activities credit, and decouples from certain federal 33 depreciation provisions. 34 Division I of the bill updates references in Code sections 35 -20- LSB 1237SV (2) 84 tw/sc 20/ 24

S.F. 209 422.3 and 422.32 to the Internal Revenue Code, making certain 1 federal income tax revisions enacted by Congress in 2008, 2 2009, and 2010 applicable for purposes of the corporate and 3 individual income taxes and the franchise tax. These revisions 4 only apply to tax years beginning on or after January 1, 2010, 5 and do not include tax years beginning after December 31, 2007, 6 and before January 1, 2010. 7 The division strikes Code section 422.7, subsection 29A, 8 which provided an exclusion from income of the value of health 9 care coverage of a nonqualified tax dependent up to the age 10 of 25. The federal Patient Protection and Affordable Care 11 Act, Pub. L. No. 111-148, provides for the exclusion from 12 income of the value of health care coverage of a nonqualified 13 tax dependent up to the age of 27, effective March 30, 2010. 14 Because the bill now couples Iowa with the Internal Revenue 15 Code with regard to this provision, Code section 422.7, 16 subsection 29A, is no longer necessary for tax years beginning 17 on or after January 1, 2011. This change applies retroactively 18 to that date. 19 Currently, in certain circumstances, Code section 20 422.9(2)(i) provides individuals a deduction from net income 21 (also known as a “below-the-line” deduction) for state sales 22 and use taxes in lieu of a deduction for income taxes. This 23 deduction was only available for taxable years beginning 24 after December 31, 2006, and before January 1, 2006. The 25 division extends this deduction to tax years beginning after 26 December 31, 2003, and before January 1, 2008, and to tax years 27 beginning after December 31, 2009, and before January 1, 2012. 28 Division II of the bill amends certain Code sections 29 relating to the state research activities tax credit for 30 individuals, corporations, corporations in economic development 31 areas, and corporations in quality jobs enterprise zones. The 32 division updates Iowa Code references to the Internal Revenue 33 Code for purposes of coupling with changes to the federal 34 research activities tax credit. 35 -21- LSB 1237SV (2) 84 tw/sc 21/ 24

S.F. 209 The division also makes certain changes relating to the 1 alternative incremental research tax credit. Because this tax 2 credit was repealed for federal tax purposes, the bill removes 3 references to it from the Iowa Code and replaces them with 4 an alternative simplified research tax credit for Iowa tax 5 purposes. The amendments to Code section 15.335, subsection 6 4, and Code section 15A.9 relate to this change and apply 7 retroactively to July 1, 2010, for tax credits awarded on or 8 after that date. 9 The division also makes certain changes in the calculation 10 of the additional research activities credit that depend on 11 whether an eligible business has $20 million or more in gross 12 revenues. These changes only apply to tax years beginning 13 on or after January 1, 2010, and do not include tax years 14 beginning after December 31, 2008, and before January 1, 2010. 15 Division III of the bill amends certain sections of 16 the individual and corporate income taxes relating to the 17 computation of net income for Iowa income tax purposes (also 18 known as “above-the-line” computation) by decoupling for tax 19 years beginning before January 1, 2011, from the federal 20 accelerated depreciation deductions enacted by Congress 21 as part of the Recovery Rebates and Economic Stimulus for 22 the American People Act of 2008, the American Recovery and 23 Reinvestment Act of 2009, the Small Business Jobs Act of 2010, 24 and the Tax Relief, Unemployment Insurance Authorization 25 and Job Creation Act of 2010. In addition, the division 26 decouples, for tax years beginning before January 1, 2011, from 27 the federal accelerated depreciation deductions for certain 28 disaster assistance property enacted by Congress as part of 29 the Emergency Economic Stabilization, Energy Improvement and 30 Extension, and Tax Extenders and AMT Relief Acts of 2008. 31 These changes are retroactive to January 1, 2008, for tax years 32 ending on or after that date. 33 The division also decouples, for Iowa tax purposes, from the 34 increased expensing allowance under section 179 of the Internal 35 -22- LSB 1237SV (2) 84 tw/sc 22/ 24

S.F. 209 Revenue Code enacted by Congress as part of the American 1 Recovery and Reinvestment Act of 2009 and makes a number of 2 conforming changes. The changes take effect for tax years 3 beginning on or after January 1, 2009, and before January 1, 4 2010. 5 Division IV of the bill increases the amount of the state 6 earned income tax credit from 7 percent to 10 percent of the 7 federal credit. The division applies retroactively to January 8 1, 2011, for tax years beginning on or after that date. 9 Division V of the bill supplements the amounts of 10 appropriations made to certain state agencies. Language is 11 included clarifying that the appropriations are made after 12 applying the appropriation reductions made pursuant to 2010 13 Iowa Acts, chapter 1193, section 27, and any transfer made 14 pursuant to 2010 Iowa Acts, chapter 1193, section 28. 15 Supplemental appropriations are made from the general 16 fund of the state to the department of education for the 17 community colleges in 2010 Iowa Acts, chapter 1183, section 18 6. The appropriation amounts reflect corrective additions and 19 reductions to the overall amounts appropriated for the fiscal 20 year. 21 Supplemental appropriations are made from the general fund 22 of the state for the justice system in 2010 Iowa Acts, chapter 23 1190, to the following departments and agencies: department 24 of corrections institutions and community-based corrections, 25 public defender, and public safety. 26 Supplemental appropriations are made from the general fund 27 of the state for health and human services programs in 2010 28 Iowa Acts, chapter 1192, as follows: department of public 29 health and department of human services. 30 The division takes effect upon enactment. 31 Division VI of the bill provides corrective provisions. 32 An appropriation made in 2010 Iowa Acts, chapter 1193, 33 commonly referred to as the standing appropriations bill, is 34 amended to correct the fiscal year in section 199. This fiscal 35 -23- LSB 1237SV (2) 84 tw/sc 23/ 24