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H0069...........................................................by MR. SPEAKER
Requested by: Office of the State Treasurer
COLLEGE SAVINGS PROGRAM - Amends existing law to provide that, for state
income tax purposes, the amount of a nonqualified withdrawal from a college
savings account, less any amount of such nonqualified withdrawal included in
the individual's federal gross income, would be added in computing Idaho
taxable income.
01/06 House intro - 1st rdg - to printing
Rpt prt - to Rev/Tax
01/16 Rpt out - rec d/p - to 2nd rdg
01/17 2nd rdg - to 3rd rdg
01/20 3rd rdg - PASSED - 67-0-3
AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Black, Block, Boe,
Bolz, Bradford, Campbell, Cannon, Clark, Collins, Crow, Cuddy, Denney,
Douglas, Eberle, Edmunson, Ellsworth, Eskridge, Field(18), Field(23),
Gagner, Garrett, Harwood, Henbest, Jaquet, Jones, Kellogg, Kulczyk,
Lake, Langford, Langhorst, Martinez, McGeachin, McKague, Meyer, Miller,
Mitchell, Moyle, Nacarrato, Nielsen, Raybould, Ridinger, Ring, Ringo,
Roberts, Robison, Rydalch, Sali, Sayler, Schaefer(Schumacher), Shepherd,
Shirley, Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson,
Tilman, Trail, Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Bell, Bieter, Deal
Floor Sponsor - Denney
Title apvd - to Senate
01/21 Senate intro - 1st rdg - to Loc Gov
01/30 Rpt out - rec d/p - to 2nd rdg
01/31 2nd rdg - to 3rd rdg
02/03 3rd rdg - PASSED - 32-0-3
AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett, Burtenshaw,
Calabretta, Cameron, Compton, Darrington, Davis, Gannon, Geddes, Goedde,
Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai, Marley,
McKenzie, McWilliams, Noh, Pearce, Richardson, Schroeder, Stegner,
Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Noble, Sorensen, Stennett
Floor Sponsor - Malepeai
Title apvd - to House
02/04 To enrol
02/05 Rpt enrol - Sp signed
02/06 Pres signed
02/07 To Governor
02/10 Governor signed
Session Law Chapter 6
Effective: 01/01/03
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-seventh Legislature First Regular Session - 2003IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 69 BY MR. SPEAKER Requested by: Office of the State Treasurer 1 AN ACT 2 RELATING TO THE IDAHO COLLEGE SAVINGS PROGRAM; AMENDING SECTION 63-3022, IDAHO 3 CODE, TO PROVIDE THAT FOR STATE INCOME TAX PURPOSES, THE AMOUNT OF A 4 NONQUALIFIED WITHDRAWAL FROM AN INDIVIDUAL TRUST ACCOUNT OR SAVINGS 5 ACCOUNT ESTABLISHED PURSUANT TO CHAPTER 54, TITLE 33, IDAHO CODE, LESS ANY 6 AMOUNT OF SUCH NONQUALIFIED WITHDRAWAL INCLUDED IN THE INDIVIDUAL'S FED- 7 ERAL GROSS INCOME PURSUANT TO 26 U.S.C. SECTION 529 WOULD BE ADDED IN COM- 8 PUTING IDAHO TAXABLE INCOME; DECLARING AN EMERGENCY AND PROVIDING RETROAC- 9 TIVE APPLICATION. 10 Be It Enacted by the Legislature of the State of Idaho: 11 SECTION 1. That Section 63-3022, Idaho Code, be, and the same is hereby 12 amended to read as follows: 13 63-3022. ADJUSTMENTS TO TAXABLE INCOME. The additions and subtractions 14 set forth in this section, and in sections 63-3022A through 63-3022M, Idaho 15 Code, are to be applied to the extent allowed in computing Idaho taxable 16 income: 17 (a) Add any state and local taxes, as defined in section 164 of the 18 Internal Revenue Code and, measured by net income, paid or accrued during the 19 taxable year adjusted for state or local tax refunds used in arriving at tax- 20 able income. 21 (b) Add the net operating loss deduction used in arriving at taxable 22 income. 23 (c) (1) A net operating loss for any taxable year commencing on and after 24 January 1, 2000, shall be a net operating loss carryback not to exceed a 25 total of one hundred thousand dollars ($100,000) to the two (2) immedi- 26 ately preceding taxable years. Any portion of the net operating loss not 27 subtracted in the two (2) preceding years may be subtracted in the next 28 twenty (20) years succeeding the taxable year in which the loss arises in 29 order until exhausted. The sum of the deductions may not exceed the amount 30 of the net operating loss deduction incurred. At the election of the tax- 31 payer, the two (2) year carryback may be foregone and the loss subtracted 32 from income received in taxable years arising in the next twenty (20) 33 years succeeding the taxable year in which the loss arises in order until 34 exhausted. The election shall be made as under section 172(b)(3) of the 35 Internal Revenue Code. An election under this subsection must be in the 36 manner prescribed in the rules of the state tax commission and once made 37 is irrevocable for the year in which it is made. The term "income" as used 38 in this subsection (c) means Idaho taxable income as defined in this chap- 39 ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code. 40 (2) Net operating losses incurred by a corporation during a year in which 41 such corporation did not transact business in Idaho or was not included in 42 a group of corporations combined under subsection (t) of section 63-3027, 43 Idaho Code, may not be subtracted. However, if at least one (1) corpora- 2 1 tion within a group of corporations combined under subsection (t) of sec- 2 tion 63-3027, Idaho Code, was transacting business in Idaho during the 3 taxable year in which the loss was incurred, then the net operating loss 4 may be subtracted. Net operating losses incurred by a person, other than a 5 corporation, in activities not taxable by Idaho may not be subtracted. 6 (d) In the case of a corporation, add the amount deducted under the pro- 7 visions of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue 8 Code (relating to dividends received by corporations) as limited by section 9 246(b)(1) of said code. 10 (e) In the case of a corporation, subtract an amount determined under 11 section 78 of the Internal Revenue Code to be taxable as dividends. 12 (f) Subtract the amount of any income received or accrued during the tax- 13 able year which is exempt from taxation by this state, under the provisions of 14 any other law of this state or a law of the United States, if not previously 15 subtracted in arriving at taxable income. 16 (g) For the purpose of determining the Idaho taxable income of the bene- 17 ficiary of a trust or of an estate: 18 (1) Distributable net income as defined for federal tax purposes shall be 19 corrected for the other adjustments required by this section. 20 (2) Net operating losses attributable to a beneficiary of a trust or 21 estate under section 642 of the Internal Revenue Code shall be a deduction 22 for the beneficiary to the extent that income from the trust or estate 23 would be attributable to this state under the provisions of this chapter. 24 (h) In the case of an individual who is on active duty as a full-time 25 officer, enlistee or draftee, with the armed forces of the United States, 26 which full-time duty is or will be continuous and uninterrupted for one hun- 27 dred twenty (120) consecutive days or more, deduct compensation paid by the 28 armed forces of the United States for services performed outside this state. 29 The deduction is allowed only to the extent such income is included in taxable 30 income, and provided that appropriate adjustments shall be made in determining 31 the deductions and exemptions allowed pursuant to section 63-3026A(4), Idaho 32 Code. 33 (i) In the case of a corporation, including any corporation included in a 34 group of corporations combined under subsection (t) of section 63-3027, Idaho 35 Code, add any capital loss deducted which loss was incurred during any year in 36 which such corporation did not transact business in Idaho. However, do not add 37 any capital loss deducted if a corporation, including any corporation in a 38 group of corporations combined under subsection (t) of section 63-3027, Idaho 39 Code, was transacting business in Idaho during the taxable year in which the 40 loss was incurred. In the case of persons, other than corporations, add any 41 capital loss deducted which was incurred in activities not taxable by Idaho at 42 the time such loss was incurred. In computing the income taxable to an S cor- 43 poration or partnership under this section, deduction shall not be allowed for 44 a carryover or carryback of a net operating loss provided for in subsection 45 (c) of this section or a capital loss provided for in section 1212 of the 46 Internal Revenue Code. 47 (j) In the case of an individual, there shall be allowed as a deduction 48 from gross income either (1) or (2) at the option of the taxpayer: 49 (1) The standard deduction as defined in section 63, Internal Revenue 50 Code. 51 (2) Itemized deductions as defined in section 63 of the Internal Revenue 52 Code except state or local taxes measured by net income and as defined in 53 section 164 of the Internal Revenue Code. 54 (k) Add the taxable amount of any lump sum distribution excluded from 55 gross income for federal income tax purposes under the ten (10) year averaging 3 1 method. The taxable amount will include the ordinary income portion and the 2 amount eligible for the capital gain election. 3 (l) Deduct any amounts included in gross income under the provisions of 4 section 86 of the Internal Revenue Code relating to certain social security 5 and railroad benefits. 6 (m) In the case of a self-employed individual, deduct the actual cost of 7 premiums paid to secure worker's compensation insurance for coverage in Idaho, 8 if such cost has not been deducted in arriving at taxable income. 9 (n) In the case of an individual, deduct the amount contributed to a col- 10 lege savings program pursuant to chapter 54, title 33, Idaho Code, but not 11 more than four thousand dollars ($4,000) per tax year. If the contribution is 12 made on or before April 15, 2001, it may be deducted for tax year 2000 and an 13 individual can make another contribution and claim the deduction according to 14 the limits provided in this subsection during 2001 for tax year 2001, as long 15 as the contribution is made on or before December 31, 2001. 16 (o) In the case of an individual, add the amount of a nonqualified with- 17 drawal from an individual trust account or savings account established pursu- 18 ant to chapter 54, title 33, Idaho Code, less any amount of such nonqualified 19 withdrawal included in the individual's federal gross income pursuant to 26 20 U.S.C. section 529. 21 SECTION 2. An emergency existing therefor, which emergency is hereby 22 declared to exist, this act shall be in full force and effect on and after its 23 passage and approval, and retroactively to January 1, 2003.
STATEMENT OF PURPOSE
RS 12337
This bill is necessary to clarify that a taxpayer will not be taxed
twice when a nonqualified withdrawal is made from the Idaho College
Savings Program (Idaho Code 33-5401, et. seq.). The Program
provides, pursuant to Idaho Code 63-3022(n) for a state tax
deduction for contributions made to accounts established in the
Program. Idaho Code 63-3022(o) provides that non-qualified
withdrawals from the Program must be recaptured in the taxpayer's
income to offset the tax deduction taken when the contribution was
made. Because of the interaction of the federal and state income
tax forms, this provision causes gains on nonqualified withdrawals
to be included twice in the taxpayer's state reportable income.
The proposed amendment to Idaho Code 63-3022(o) will provide that
a taxpayer may exclude that portion of a nonqualified withdrawal
that has already been included in his federal taxable income.
FISCAL IMPACT
None
CONTACT
Name: Judy Comstock
Agency: Treasurer's Office
Phone: 334-3200
Statement of Purpose/Fiscal Impact H 6