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H0484...............................................by REVENUE AND TAXATION
INCOME TAX - DEDUCTIONS - Repeals and amends existing law relating to state
income tax to delete deductions for contributions to medical assistance
accounts and personal health care services, to delete the deductions for
weatherization and conservation expenses and to delete the provision
requiring individual taxpayers to indicate on their tax forms the school
district in which they reside.
01/20 House intro - 1st rdg - to printing
01/21 Rpt prt - to Rev/Tax
02/03 Rpt out - rec d/p - to 2nd rdg
02/04 2nd rdg - to 3rd rdg
02/05 3rd rdg - PASSED - 69-0-1
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Bivens,
Black(15), Black(23), Boe, Bruneel, Callister, Campbell, Chase,
Clark, Crane, Crow, Cuddy, Deal, Denney, Ellsworth, Field(13),
Field(20), Gagner, Geddes, Gould, Hadley, Hansen, Henbest, Hornbeck,
Jaquet, Jones(9), Jones(22), Jones(20), Judd, Kellogg, Kempton,
Kendell, Kjellander, Kunz, Lake, Linford, Loertscher, Mader, Marley,
McKague, Meyer, Miller, Mortensen, Pischner, Pomeroy, Reynolds,
Richman, Ridinger, Robison, Sali, Schaefer, Stevenson, Stoicheff,
Stone, Stubbs, Taylor, Tilman, Tippets, Trail, Watson, Wheeler, Wood,
Zimmermann, Mr Speaker
NAYS -- None
Absent and excused -- Newcomb
Floor Sponsor - Chase
Title apvd - to Senate
02/06 Senate intro - 1st rdg - to Loc Gov
02/12 Rpt out - rec d/p - to 2nd rdg
02/13 2nd rdg - to 3rd rdg
02/20 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hansen,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stennett,
Sweeney, Thorne, Wheeler, Whitworth
NAYS--None
Absent and excused--Twiggs
Floor Sponsor - Geddes
Title apvd - to House
02/23 To enrol
02/24 Rpt enrol - Sp signed
02/25 Pres signed
02/26 To Governor
02/27 Governor signed
Session Law Chapter 20
Effective: 01/01/98
H0484|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 484 BY REVENUE AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO INCOME TAXES; AMENDING SECTION 63-3022, IDAHO CODE, TO DELETE PRO- 3 VISIONS RELATING TO DEDUCTIONS FOR CONTRIBUTIONS TO MEDICAL ASSISTANCE 4 ACCOUNTS AND PERSONAL HEALTH CARE SERVICES; REPEALING SECTIONS 63-3022F 5 AND 63-3089, IDAHO CODE; DECLARING AN EMERGENCY AND PROVIDING A RETROAC- 6 TIVE EFFECTIVE DATE. 7 Be It Enacted by the Legislature of the State of Idaho: 8 SECTION 1. That Section 63-3022, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 63-3022. ADJUSTMENTS TO TAXABLE INCOME. The additions and subtractions 11 set forth in this section, and in sections 63-3022A through 63-3022L, Idaho 12 Code, are to be applied to the extent allowed in computing Idaho taxable 13 income: 14 (a) Add interest and dividends received or accrued during the taxable 15 year from foreign securities and from securities issued by states and other 16 political subdivisions, other than those issued by the state of Idaho, its 17 cities and political subdivisions, exempt from federal income tax under the 18 Internal Revenue Code, less applicable amortization. 19 (1) In the case of a corporation whose income is taxable under this chap- 20 ter, no deduction shall be allowed for interest on indebtedness incurred 21 or continued to purchase after January 1, 1983, or to carry obligations 22 acquired after January 1, 1983, the interest of which is wholly exempt 23 from the taxes imposed under this chapter. The amount of interest on 24 indebtedness thus incurred or continued shall be an amount which bears the 25 same ratio to the aggregate amount allowable (determined without regard to 26 this section) to the taxpayer as a deduction for interest for the taxable 27 year as the taxpayer's average adjusted basis of the obligations mentioned 28 in the preceding sentence bears to such average adjusted basis for all 29 assets of the taxpayer, or, at the option of the taxpayer, an amount which 30 bears the same ratio to the aggregate amount allowable (determined without 31 regard to this section) to the taxpayer as a deduction for interest for 32 the taxable year as the taxpayer's interest income from the obligations 33 mentioned in the preceding sentence bears to the taxpayer's total income 34 for the taxable year. 35 (2) In the case of a corporation whose Idaho taxable income is computed 36 pursuant to section 63-3027, Idaho Code, the interest expense deductible 37 shall be an amount equal to interest and dividend income subject to 38 apportionment, plus the amount, if any, by which the balance of interest 39 expense exceeds interest and dividend income not subject to apportionment. 40 Interest expense not included in the preceding sentence shall be directly 41 offset against interest and dividend income not subject to apportionment. 42 This provision shall not apply to dividend income excluded pursuant to 43 section 63-3027C(c) and (e), Idaho Code. 2 1 (b) Add any state taxes, measured by net income, paid or accrued during 2 the taxable year adjusted for state tax refunds used in arriving at taxable 3 income. 4 (c) Add the net operating loss deduction used in arriving at taxable 5 income. 6 (d) (1) A net operating loss for any taxable year commencing on and after 7 January 1, 1990, shall be a net operating loss carryback not to exceed a 8 total of one hundred thousand dollars ($100,000) to the three (3) immedi- 9 ately preceding taxable years. Any portion of the net operating loss not 10 subtracted in the three (3) preceding years may be subtracted in the next 11 fifteen (15) years succeeding the taxable year in which the loss arises in 12 order until exhausted. The sum of the deductions may not exceed the amount 13 of the net operating loss deduction incurred. At the election of the tax- 14 payer, the three (3) year carryback may be foregone and the loss sub- 15 tracted from income received in taxable years arising in the next fifteen 16 (15) years succeeding the taxable year in which the loss arises in order 17 until exhausted. The election shall be made as under section 172(b)(3) of 18 the Internal Revenue Code. An election under this subsection must be in 19 the manner prescribed in the rules of the state tax commission and once 20 made is irrevocable for the year in which it is made. The term "income" as 21 used in this subsection (d) means Idaho taxable income as defined in this 22 chapter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code. 23 (2) Net operating losses incurred by a corporation during a year in which 24 such corporation did not transact business in Idaho may not be subtracted. 25 Net operating losses incurred by a person, other than a corporation, in 26 business activities not taxable by Idaho may not be subtracted. 27 (e) In the case of a corporation, add the amount deducted under the pro- 28 visions of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue 29 Code (relating to dividends received by corporations) as limited by section 30 246(b)(1) of said code. 31 (f) In the case of a corporation, subtract an amount determined under 32 section 78 of the Internal Revenue Code to be taxable as dividends. 33 (g) Subtract the amount of any income received or accrued during the tax- 34 able year which is exempt from taxation by this state, under the provisions of 35 any other law of this state or a law of the United States, if not previously 36 subtracted in arriving at taxable income. 37 (h) In the case of corporations and partnerships, add Idaho taxable 38 income of nonresident officers, directors, shareholders, partners or members 39 to the extent such income is attributed to the corporation or partnership in 40 section 63-3022L, Idaho Code. 41 (i) For the purpose of determining the Idaho taxable income of the bene- 42 ficiary of a trust or of an estate, distributable net income as defined for 43 federal tax purposes shall be corrected for the other adjustments required by 44 this section. In the event that a nonresident beneficiary of a trust or estate 45 fails to file an Idaho income tax return reporting all or any part of distrib- 46 utable net income taxable in Idaho or fails to pay any tax due thereon, the 47 trust or estate making the payment or distribution shall be taxable upon the 48 amount of such distribution or payment at the rates established by section 49 63-3024, Idaho Code. 50 (j) In the case of an individual who is on active duty as a full-time 51 officer, enlistee or draftee, with the armed forces of the United States, 52 which full-time duty is or will be continuous and uninterrupted for one hun- 53 dred twenty (120) consecutive days or more, deduct compensation paid by the 54 armed forces of the United States for services performed outside this state. 55 The deduction is allowed only to the extent such income is included in taxable 3 1 income, and provided that appropriate adjustments shall be made in determining 2 the deductions and exemptions allowed pursuant to section 63-3026A(4), Idaho 3 Code. 4 (k) In the case of a corporation, add any capital loss deducted which 5 loss was incurred during any year in which such corporation did not transact 6 business in Idaho. In the case of persons, other than corporations, add any 7 capital loss deducted which was incurred in business activities not taxable by 8 Idaho at the time such loss was incurred. In computing the income taxable to 9 an S corporation or partnership under this section, deduction shall not be 10 allowed for a carryover or carryback of a net operating loss provided for in 11 subsection (d) of this section or a capital loss provided for in section 1212 12 of the Internal Revenue Code. 13 (l) In the case of an individual, there shall be allowed as a deduction 14 from gross income either (1) or (2) at the option of the taxpayer: 15 (1)a.The standard deduction as defined in section 63, 16 Internal Revenue Code, plus contributions made to the state of17Idaho for credit to the medical assistance account, if such contribu-18tions were not previously subtracted in arriving at taxable income,19plus20b. Itemized expenditures of not to exceed one thousand dollars21($1,000) per cared for member incurred in providing personal care22services to or for an immediate member of the taxpayer's family; such23services may be provided either in the taxpayer's home or the family24member's home; personal care services shall be as defined in chapter2556, title 39, Idaho Code, but the cared for member need not be medic-26aid eligible for the purposes of this section only, if he substan-27tially meets all of the other requirements of chapter 56, title 39,28Idaho Code; in order for the deduction under this paragraph to be29allowed, the expenditures claimed must not have been reimbursed by30medicare, medicaid or private insurance, and such expenditures must31not have been previously subtracted in arriving at taxable income32. 33 (2)a.Itemized deductions as defined in section 63 of the 34 Internal Revenue Code except state income taxes as specified in sec- 35 tion 164 of the Internal Revenue Code, plus36b. Contributions made to the state of Idaho for credit to the medi-37cal assistance account, if such contributions were not previously38subtracted in arriving at taxable income, plus39c. Itemized expenditures of not to exceed one thousand dollars40($1,000) per cared for member incurred in providing personal care41services to or for an immediate member of the taxpayer's family; such42services may be provided either in the taxpayer's home or the family43member's home; personal care services shall be as defined in chapter4456, title 39, Idaho Code, but the cared for member need not be medic-45aid eligible for the purposes of this section only, if he substan-46tially meets all of the other requirements of chapter 56, title 39,47Idaho Code; in order for the deduction under this paragraph c. to be48allowed, the expenditures claimed must not have been reimbursed by49medicare, medicaid or private insurance, and such expenditures must50not have been previously subtracted in arriving at taxable income51. 52 (m)Deduct any amounts added to gross income under section 87 of53the Internal Revenue Code for tax credits allowable to the taxpayer under sec-54tion 40 of the Internal Revenue Code.55(n)Add the taxable amount of any lump sum distribution deducted 4 1 from gross income pursuant to section 402(d)(3) of the Internal Revenue Code. 2 The taxable amount will include the ordinary income portion and the amount 3 eligible for the capital gain election. 4 (on ) Deduct any amounts included in gross 5 income under the provisions of section 86 of the Internal Revenue Code relat- 6 ing to certain social security and railroad benefits. 7 (po ) In the case of a self-employed individual, 8 deduct the actual cost of premiums paid to secure worker's compensation insur- 9 ance for coverage in Idaho, if such cost has not been deducted in arriving at 10 taxable income. 11(q) Add the amount claimed as a credit under section 63-3029G,12Idaho Code, if previously deducted in arriving at taxable income.13 SECTION 2. That Sections 63-3022F and 63-3089, Idaho Code, be, and the 14 same are hereby repealed. 15 SECTION 3. An emergency existing therefor, which emergency is hereby 16 declared to exist, this act shall be in full force and effect on and after its 17 passage and approval, and retroactively to January 1, 1998.
STATEMENT OF PURPOSE
RS07347
This bill repeals the following little used sections of the Income Tax Act:
1. Deductions for contributions to medical assistance accounts and personal health care
services.
. Deductions for expenses incurred for participation in residential weatherization and
conservation programs administered by the Idaho Public Utilities Commission.
. Provision requiring individual taxpayers to designate the school district in which they reside.
4. Deduction for IRC Section 87 adjustments.
FISCAL IMPACT
Additional $5,000 to the General Fund.
CONTACT
Name: Dan John/Ted Spangler
Agency State Tax Commission
Phone: 334-7530
Statement of Purpose/Fiscal Impact
H 484