Print
Senate File 220 - IntroducedA Bill ForAn Act 1relating to the increased expensing allowance deduction
2by corporations, financial institutions, and partnerships
3and limited liability companies taxed as corporations, and
4including effective date and retroactive applicability
5provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.35, subsections 14 and 15, Code 2019,
2are amended to read as follows:
314. a. The Notwithstanding any other provision of the
4law to the contrary, the increased expensing allowance under
5section 179 of the Internal Revenue Code, as amended by Pub.L.
6No.115-97, §13101, applies in computing net income for state
7tax purposes for tax years beginning on or after January 1,
82019 2018, subject to the limitations in this subsection for
9tax years beginning on or after January 1, 2019, but before
10 prior to January 1, 2020.
11b. If the taxpayer has taken the increased expensing
12allowance under section 179 of the Internal Revenue Code,
13as amended by Pub.L. No.115-97, §13101, for purposes of
14computing federal taxable income for tax years beginning on or
15after January 1, 2019 2018, but before January 1, 2020, then
16the taxpayer shall make the following adjustments to federal
17taxable income when computing net income for state tax purposes
18for the same tax year:
19(1) Add the total amount of expense deduction taken on
20section 179 property allowable for federal tax purposes under
21section 179 of the Internal Revenue Code, as amended by Pub.
22L. No.115-97, §13101.
23(2) (a) Subtract For tax years beginning on or after
24January 1, 2018, but before January 1, 2019, subtract the
25amount of expense deduction on section 179 property allowable
26for federal tax purposes under section 179 of the Internal
27Revenue Code, as amended by Pub.L. No.115-97, §13101, not
28to exceed seventy thousand dollars. The subtraction in this
29subparagraph division shall be reduced, but not below zero,
30by the amount by which the total cost of section 179 property
31placed in service by the taxpayer during the tax year exceeds
32two hundred eighty thousand dollars.
33(b) For the tax years beginning on or after January 1,
342019, but before January 1, 2020, subtractthe amount of
35expense deduction on section 179 property allowable for federal
-1-1tax purposes under section 179 of the Internal Revenue Code,
2as amended by Pub.L. No.115-97, §13101, not to exceed one
3hundred thousand dollars. The subtraction in this subparagraph
4shall be reduced, but not below zero, by the amount by which
5the total cost of section 179 property placed in service by
6the taxpayer during the tax year exceeds four hundred thousand
7dollars.
8(3) Any other adjustments to gains or losses necessary to
9reflect adjustments made in subparagraphs (1) and (2).
10c. The director shall adopt rules pursuant to chapter 17A
11to administer this subsection.
1215. a. For tax years beginning on or after January 1,
132019 2018, but before January 1, 2020, a taxpayer may elect to
14take advantage of this subsection in lieu of subsection 14,
15but only if the taxpayer’s total expensing allowance deduction
16for federal tax purposes under section 179 of the Internal
17Revenue Code, as amended by Pub.L. No.115-97, §13101, that
18is allocated to the taxpayer from one or more partnerships or
19limited liability companies electing to have the income taxed
20directly to the owners exceeds seventy thousand dollars for a
21tax year beginning during the 2018 calendar year, or exceeds
22 one hundred thousand dollars for the tax year beginning during
23the 2019 calendar year, and would, except as provided in this
24subsection, be limited for purposes of computing net income for
25state tax purposes pursuant to subsection 14.
26b. A taxpayer who elects to take advantage of this
27subsection shall make the following adjustments to federal
28taxable income when computing net income for state tax
29purposes:
30(1) Add the total amount of section 179 expense deduction
31allocated to the taxpayer from all partnerships or limited
32liability companies electing to have the income taxed directly
33to the owners, to the extent the allocated amount was allowed
34as a deduction to the taxpayer for federal tax purposes for the
35tax year under section 179 of the Internal Revenue Code, as
-2-1amended by Pub.L. No.115-97, §13101.
2(2) From the amount added in subparagraph (1), do the
3following:
4(a) For tax years beginning on or after January 1, 2018,
5but before January 1, 2019, subtract the first seventy thousand
6dollars of expensing allowance deduction on section 179
7property.
8(b) For tax years beginning on or after January 1, 2019,
9but before January 1, 2020,subtract the first one hundred
10thousand dollars of expensing allowance deduction on section
11179 property.
12(3) The remaining amount, equal to the difference between
13the amount added in subparagraph (1), and the amount subtracted
14in subparagraph (2), may be deducted by the taxpayer but such
15deduction shall be amortized equally over five tax years
16beginning in the following tax year.
17(4) Any other adjustments to gains or losses necessary to
18reflect adjustments made in subparagraphs (1) through (3).
19c. A taxpayer who elects to take advantage of this
20subsection shall not take the increased expensing allowance
21under section 179 of the Internal Revenue Code, as amended
22by Pub.L.No.115-97, §13101, for any section 179 property
23placed in service by the taxpayer in computing taxable income
24for state tax purposes. If the taxpayer has taken any such
25deduction for purposes of computing federal taxable income,
26the taxpayer shall make the following adjustments to federal
27taxable income when computing net income for state tax
28purposes:
29(1) Add the total amount of expense deduction for federal
30tax purposes taken on section 179 property placed in service by
31the taxpayer under section 179 of the Internal Revenue Code, as
32amended by Pub.L.No.115-97, §13101.
33(2) Subtract the amount of depreciation allowable on such
34property under the modified accelerated cost recovery system
35described in section 168 of the Internal Revenue Code, without
-3-1regard to section 168(k) of the Internal Revenue Code. The
2taxpayer shall continue to take depreciation on the applicable
3property in future tax years to the extent allowed under the
4modified accelerated cost recovery system described in section
5168 of the Internal Revenue Code, without regard to section
6168(k) of the Internal Revenue Code.
7(3) Any other adjustments to gains or losses necessary to
8reflect the adjustments made in subparagraphs (1) and (2).
9d. The election made under this subsection is for one tax
10year and the taxpayer may elect or not elect to take advantage
11of this subsection in any subsequent tax year. However, not
12electing to take advantage of this subsection in a subsequent
13tax year shall not affect the taxpayer’s ability to claim the
14tax deduction under paragraph “b”, subparagraph (3), that
15originated from a previous tax year.
16d. e. The director shall adopt rules pursuant to chapter
1717A to administer this subsection.
18 Sec. 2. EFFECTIVE DATE. This Act, being deemed of immediate
19importance, takes effect upon enactment.
20 Sec. 3. RETROACTIVE APPLICABILITY. This Act applies
21retroactively to January 1, 2018, for tax years beginning on
22or after that date.
23EXPLANATION
24The inclusion of this explanation does not constitute agreement with
25the explanation’s substance by the members of the general assembly.
26This bill relates to the increased expensing allowance
27deduction (section 179 of the Internal Revenue Code) when
28computing net income by corporations, financial institutions,
29and partnerships and limited liability companies taxed as
30corporations.
31The bill expands the increased expensing allowance deduction
32on section 179 property available for individual state income
33tax purposes to include corporations, financial institutions,
34and partnerships and limited liability companies taxed as
35corporations. The bill allows such a corporation, financial
-4-1institution, partnership, and limited liability company, in tax
2year 2018, to qualify for the increased expensing allowance
3deduction on section 179 property for purposes of computing
4net income, but limits the maximum deduction and investment
5limitation to $70,000 and $280,000, respectively. Currently,
6for tax year 2018, the maximum expensing allowance deduction
7and investment limitations on section 179 property for such
8entities is limited to $25,000 and $200,000, respectively.
9The bill takes effect upon enactment, and applies
10retroactively to January 1, 2018, for tax years beginning on
11or after that date.
-5-jm/jh
2by corporations, financial institutions, and partnerships
3and limited liability companies taxed as corporations, and
4including effective date and retroactive applicability
5provisions.
6BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 422.35, subsections 14 and 15, Code 2019,
2are amended to read as follows:
314. a. The Notwithstanding any other provision of the
4law to the contrary, the increased expensing allowance under
5section 179 of the Internal Revenue Code, as amended by Pub.L.
6No.115-97, §13101, applies in computing net income for state
7tax purposes for tax years beginning on or after January 1,
82019 2018, subject to the limitations in this subsection for
9tax years beginning on or after January 1, 2019, but before
10 prior to January 1, 2020.
11b. If the taxpayer has taken the increased expensing
12allowance under section 179 of the Internal Revenue Code,
13as amended by Pub.L. No.115-97, §13101, for purposes of
14computing federal taxable income for tax years beginning on or
15after January 1, 2019 2018, but before January 1, 2020, then
16the taxpayer shall make the following adjustments to federal
17taxable income when computing net income for state tax purposes
18for the same tax year:
19(1) Add the total amount of expense deduction taken on
20section 179 property allowable for federal tax purposes under
21section 179 of the Internal Revenue Code, as amended by Pub.
22L. No.115-97, §13101.
23(2) (a) Subtract For tax years beginning on or after
24January 1, 2018, but before January 1, 2019, subtract the
25amount of expense deduction on section 179 property allowable
26for federal tax purposes under section 179 of the Internal
27Revenue Code, as amended by Pub.L. No.115-97, §13101, not
28to exceed seventy thousand dollars. The subtraction in this
29subparagraph division shall be reduced, but not below zero,
30by the amount by which the total cost of section 179 property
31placed in service by the taxpayer during the tax year exceeds
32two hundred eighty thousand dollars.
33(b) For the tax years beginning on or after January 1,
342019, but before January 1, 2020, subtractthe amount of
35expense deduction on section 179 property allowable for federal
-1-1tax purposes under section 179 of the Internal Revenue Code,
2as amended by Pub.L. No.115-97, §13101, not to exceed one
3hundred thousand dollars. The subtraction in this subparagraph
4shall be reduced, but not below zero, by the amount by which
5the total cost of section 179 property placed in service by
6the taxpayer during the tax year exceeds four hundred thousand
7dollars.
8(3) Any other adjustments to gains or losses necessary to
9reflect adjustments made in subparagraphs (1) and (2).
10c. The director shall adopt rules pursuant to chapter 17A
11to administer this subsection.
1215. a. For tax years beginning on or after January 1,
132019 2018, but before January 1, 2020, a taxpayer may elect to
14take advantage of this subsection in lieu of subsection 14,
15but only if the taxpayer’s total expensing allowance deduction
16for federal tax purposes under section 179 of the Internal
17Revenue Code, as amended by Pub.L. No.115-97, §13101, that
18is allocated to the taxpayer from one or more partnerships or
19limited liability companies electing to have the income taxed
20directly to the owners exceeds seventy thousand dollars for a
21tax year beginning during the 2018 calendar year, or exceeds
22 one hundred thousand dollars for the tax year beginning during
23the 2019 calendar year, and would, except as provided in this
24subsection, be limited for purposes of computing net income for
25state tax purposes pursuant to subsection 14.
26b. A taxpayer who elects to take advantage of this
27subsection shall make the following adjustments to federal
28taxable income when computing net income for state tax
29purposes:
30(1) Add the total amount of section 179 expense deduction
31allocated to the taxpayer from all partnerships or limited
32liability companies electing to have the income taxed directly
33to the owners, to the extent the allocated amount was allowed
34as a deduction to the taxpayer for federal tax purposes for the
35tax year under section 179 of the Internal Revenue Code, as
-2-1amended by Pub.L. No.115-97, §13101.
2(2) From the amount added in subparagraph (1), do the
3following:
4(a) For tax years beginning on or after January 1, 2018,
5but before January 1, 2019, subtract the first seventy thousand
6dollars of expensing allowance deduction on section 179
7property.
8(b) For tax years beginning on or after January 1, 2019,
9but before January 1, 2020,subtract the first one hundred
10thousand dollars of expensing allowance deduction on section
11179 property.
12(3) The remaining amount, equal to the difference between
13the amount added in subparagraph (1), and the amount subtracted
14in subparagraph (2), may be deducted by the taxpayer but such
15deduction shall be amortized equally over five tax years
16beginning in the following tax year.
17(4) Any other adjustments to gains or losses necessary to
18reflect adjustments made in subparagraphs (1) through (3).
19c. A taxpayer who elects to take advantage of this
20subsection shall not take the increased expensing allowance
21under section 179 of the Internal Revenue Code, as amended
22by Pub.L.No.115-97, §13101, for any section 179 property
23placed in service by the taxpayer in computing taxable income
24for state tax purposes. If the taxpayer has taken any such
25deduction for purposes of computing federal taxable income,
26the taxpayer shall make the following adjustments to federal
27taxable income when computing net income for state tax
28purposes:
29(1) Add the total amount of expense deduction for federal
30tax purposes taken on section 179 property placed in service by
31the taxpayer under section 179 of the Internal Revenue Code, as
32amended by Pub.L.No.115-97, §13101.
33(2) Subtract the amount of depreciation allowable on such
34property under the modified accelerated cost recovery system
35described in section 168 of the Internal Revenue Code, without
-3-1regard to section 168(k) of the Internal Revenue Code. The
2taxpayer shall continue to take depreciation on the applicable
3property in future tax years to the extent allowed under the
4modified accelerated cost recovery system described in section
5168 of the Internal Revenue Code, without regard to section
6168(k) of the Internal Revenue Code.
7(3) Any other adjustments to gains or losses necessary to
8reflect the adjustments made in subparagraphs (1) and (2).
9d. The election made under this subsection is for one tax
10year and the taxpayer may elect or not elect to take advantage
11of this subsection in any subsequent tax year. However, not
12electing to take advantage of this subsection in a subsequent
13tax year shall not affect the taxpayer’s ability to claim the
14tax deduction under paragraph “b”, subparagraph (3), that
15originated from a previous tax year.
16d. e. The director shall adopt rules pursuant to chapter
1717A to administer this subsection.
18 Sec. 2. EFFECTIVE DATE. This Act, being deemed of immediate
19importance, takes effect upon enactment.
20 Sec. 3. RETROACTIVE APPLICABILITY. This Act applies
21retroactively to January 1, 2018, for tax years beginning on
22or after that date.
23EXPLANATION
24The inclusion of this explanation does not constitute agreement with
25the explanation’s substance by the members of the general assembly.
26This bill relates to the increased expensing allowance
27deduction (section 179 of the Internal Revenue Code) when
28computing net income by corporations, financial institutions,
29and partnerships and limited liability companies taxed as
30corporations.
31The bill expands the increased expensing allowance deduction
32on section 179 property available for individual state income
33tax purposes to include corporations, financial institutions,
34and partnerships and limited liability companies taxed as
35corporations. The bill allows such a corporation, financial
-4-1institution, partnership, and limited liability company, in tax
2year 2018, to qualify for the increased expensing allowance
3deduction on section 179 property for purposes of computing
4net income, but limits the maximum deduction and investment
5limitation to $70,000 and $280,000, respectively. Currently,
6for tax year 2018, the maximum expensing allowance deduction
7and investment limitations on section 179 property for such
8entities is limited to $25,000 and $200,000, respectively.
9The bill takes effect upon enactment, and applies
10retroactively to January 1, 2018, for tax years beginning on
11or after that date.
-5-jm/jh