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HOUSE BILL NO. 10
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H0010...............................................by REVENUE AND TAXATION
INTERNAL REVENUE CODE - Amends existing law to update references to the
"Internal Revenue Code"; and to provide that the amount of general sales
tax included in federal itemized deductions be added back when calculating
01/19 House intro - 1st rdg - to printing
01/20 Rpt prt - to 2nd rdg
01/21 2nd rdg - to 3rd rdg
01/24 3rd rdg - PASSED - 70-0-0
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Cannon,
Chadderdon, Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth,
Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henbest,
Henderson, Jaquet, Jones, Kemp, Lake, LeFavour, Loertscher, Martinez,
Mathews, McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen,
Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche,
Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
Skippen, Smith(30), Smith(24), Smylie, Snodgrass, Stevenson, Trail,
Wills, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- None
Floor Sponsor - Field(18)
Title apvd - to Senate
01/25 Senate intro - 1st rdg - to Loc Gov
02/09 Rpt out - rec d/p - to 2nd rdg
02/10 2nd rdg - to 3rd rdg
02/11 3rd rdg - PASSED - 32-0-3
AYES -- Brandt, Broadsword, Bunderson, Burkett, Burtenshaw, Coiner,
Compton, Corder, Darrington, Davis, Gannon, Geddes, Goedde, Hill,
Jorgenson, Kelly, Keough, Langhorst, Little, Lodge, Marley, McGee,
McKenzie, Noble, Pearce, Richardson, Schroeder, Stegner, Stennett,
Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Andreason, Cameron, Malepeai
Floor Sponsor - Hill
Title apvd - to House
02/14 To enrol
02/15 Rpt enrol - Sp signed
02/16 Pres signed
02/17 To Governor
02/18 Governor signed
Session Law Chapter 14
Effective: 01/07/05 Section 1;
01/01/05 All others
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 10
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO INCOME TAXES; AMENDING SECTION 63-3004, IDAHO CODE, TO UPDATE REF-
3 ERENCES TO THE INTERNAL REVENUE CODE; AMENDING SECTION 63-3022, IDAHO
4 CODE, TO PROVIDE THAT THE AMOUNT OF GENERAL SALES TAX INCLUDED IN FEDERAL
5 ITEMIZED DEDUCTIONS BE ADDED BACK WHEN CALCULATING STATE DEDUCTIONS;
6 DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE EFFECTIVE DATES.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Section 63-3004, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 63-3004. INTERNAL REVENUE CODE. (a) The term "Internal Revenue Code"
11 means the Internal Revenue Code of 1986 of the United States, as amended, and
12 in effect on the first day of January, 200 45.
13 (b) Provisions of the Internal Revenue Code amended, deleted, or added
14 prior to the effective date of the latest amendment to this section shall be
15 applicable for Idaho income tax purposes on the effective date provided for
16 such amendments, deletions, or additions, including retroactive provisions.
17 SECTION 2. That Section 63-3022, Idaho Code, be, and the same is hereby
18 amended to read as follows:
19 63-3022. ADJUSTMENTS TO TAXABLE INCOME. The additions and subtractions
20 set forth in this section, and in sections 63-3022A through 63-3022Q, Idaho
21 Code, are to be applied to the extent allowed in computing Idaho taxable
23 (a) Add any state and local taxes, as defined in section 164 of the
24 Internal Revenue Code and, measured by net income, paid or accrued during the
25 taxable year adjusted for state or local tax refunds used in arriving at tax-
26 able income.
27 (b) Add the net operating loss deduction used in arriving at taxable
29 (c) (1) A net operating loss for any taxable year commencing on and after
30 January 1, 2000, shall be a net operating loss carryback not to exceed a
31 total of one hundred thousand dollars ($100,000) to the two (2) immedi-
32 ately preceding taxable years. Any portion of the net operating loss not
33 subtracted in the two (2) preceding years may be subtracted in the next
34 twenty (20) years succeeding the taxable year in which the loss arises in
35 order until exhausted. The sum of the deductions may not exceed the amount
36 of the net operating loss deduction incurred. At the election of the tax-
37 payer, the two (2) year carryback may be foregone and the loss subtracted
38 from income received in taxable years arising in the next twenty (20)
39 years succeeding the taxable year in which the loss arises in order until
40 exhausted. The election shall be made as under section 172(b)(3) of the
41 Internal Revenue Code. An election under this subsection must be in the
1 manner prescribed in the rules of the state tax commission and once made
2 is irrevocable for the year in which it is made. The term "income" as used
3 in this subsection (c) means Idaho taxable income as defined in this chap-
4 ter as modified by section 63-3021(b)(2), (3) and (4), Idaho Code.
5 (2) Net operating losses incurred by a corporation during a year in which
6 such corporation did not transact business in Idaho or was not included in
7 a group of corporations combined under subsection (t) of section 63-3027,
8 Idaho Code, may not be subtracted. However, if at least one (1) corpora-
9 tion within a group of corporations combined under subsection (t) of sec-
10 tion 63-3027, Idaho Code, was transacting business in Idaho during the
11 taxable year in which the loss was incurred, then the net operating loss
12 may be subtracted. Net operating losses incurred by a person, other than a
13 corporation, in activities not taxable by Idaho may not be subtracted.
14 (d) In the case of a corporation, add the amount deducted under the pro-
15 visions of sections 243(a) and (c), 244, 245 and 246A of the Internal Revenue
16 Code (relating to dividends received by corporations) as limited by section
17 246(b)(1) of said code.
18 (e) In the case of a corporation, subtract an amount determined under
19 section 78 of the Internal Revenue Code to be taxable as dividends.
20 (f) Subtract the amount of any income received or accrued during the tax-
21 able year which is exempt from taxation by this state, under the provisions of
22 any other law of this state or a law of the United States, if not previously
23 subtracted in arriving at taxable income.
24 (g) For the purpose of determining the Idaho taxable income of the bene-
25 ficiary of a trust or of an estate:
26 (1) Distributable net income as defined for federal tax purposes shall be
27 corrected for the other adjustments required by this section.
28 (2) Net operating losses attributable to a beneficiary of a trust or
29 estate under section 642 of the Internal Revenue Code shall be a deduction
30 for the beneficiary to the extent that income from the trust or estate
31 would be attributable to this state under the provisions of this chapter.
32 (h) In the case of an individual who is on active duty as a full-time
33 officer, enlistee or draftee, with the armed forces of the United States,
34 which full-time duty is or will be continuous and uninterrupted for one hun-
35 dred twenty (120) consecutive days or more, deduct compensation paid by the
36 armed forces of the United States for services performed outside this state.
37 The deduction is allowed only to the extent such income is included in taxable
38 income, and provided that appropriate adjustments shall be made in determining
39 the deductions and exemptions allowed pursuant to section 63-3026A(4), Idaho
41 (i) In the case of a corporation, including any corporation included in a
42 group of corporations combined under subsection (t) of section 63-3027, Idaho
43 Code, add any capital loss deducted which loss was incurred during any year in
44 which such corporation did not transact business in Idaho. However, do not add
45 any capital loss deducted if a corporation, including any corporation in a
46 group of corporations combined under subsection (t) of section 63-3027, Idaho
47 Code, was transacting business in Idaho during the taxable year in which the
48 loss was incurred. In the case of persons, other than corporations, add any
49 capital loss deducted which was incurred in activities not taxable by Idaho at
50 the time such loss was incurred. In computing the income taxable to an S cor-
51 poration or partnership under this section, deduction shall not be allowed for
52 a carryover or carryback of a net operating loss provided for in subsection
53 (c) of this section or a capital loss provided for in section 1212 of the
54 Internal Revenue Code.
55 (j) In the case of an individual, there shall be allowed as a deduction
1 from gross income either (1) or (2) at the option of the taxpayer:
2 (1) The standard deduction as defined in section 63, Internal Revenue
4 (2) Itemized deductions as defined in section 63 of the Internal Revenue
5 Code except state or local taxes measured by net income and general sales
6 taxes as either is defined in section 164 of the Internal Revenue Code.
7 (k) Add the taxable amount of any lump sum distribution excluded from
8 gross income for federal income tax purposes under the ten (10) year averaging
9 method. The taxable amount will include the ordinary income portion and the
10 amount eligible for the capital gain election.
11 (l) Deduct any amounts included in gross income under the provisions of
12 section 86 of the Internal Revenue Code relating to certain social security
13 and railroad benefits.
14 (m) In the case of a self-employed individual, deduct the actual cost of
15 premiums paid to secure worker's compensation insurance for coverage in Idaho,
16 if such cost has not been deducted in arriving at taxable income.
17 (n) In the case of an individual, deduct the amount contributed to a col-
18 lege savings program pursuant to chapter 54, title 33, Idaho Code, but not
19 more than four thousand dollars ($4,000) per tax year. If the contribution is
20 made on or before April 15, 2001, it may be deducted for tax year 2000 and an
21 individual can make another contribution and claim the deduction according to
22 the limits provided in this subsection during 2001 for tax year 2001, as long
23 as the contribution is made on or before December 31, 2001.
24 (o) In the case of an individual, add the amount of a nonqualified with-
25 drawal from an individual trust account or savings account established pursu-
26 ant to chapter 54, title 33, Idaho Code, less any amount of such nonqualified
27 withdrawal included in the individual's federal gross income pursuant to sec-
28 tion 529 of the Internal Revenue Code.
29 SECTION 3. An emergency existing therefor, which emergency is hereby
30 declared to exist, this act shall be in full force and effect on and after its
31 passage and approval, and retroactively to January 1, 2005, except to the
32 extent that Section 1 may apply to Public Law 109-001 for which purpose the
33 effective date of this act shall be January 7, 2005.
STATEMENT OF PURPOSE
This is the annual bill to update references to the Internal
Revenue Code (IRC).
It also conforms the Idaho income tax to changes made to the
1. The federal "American Jobs Creation Act of 2004" (AJCA) and
requires that any deduction for general state sales taxes allowed
by the AJCA, like state income taxes, be added back when
computing state taxable income.
2. Public Law 109-001 which allows taxpayers to deduct in 2004
charitable contributions made in January 2005 for the relief of
victims in areas affected by the December 26, 2004, Indian Ocean
The bill will be effective on and after January 1, 2005.
FY 2005 Increases income tax revenue $1.1 million.
FY 2006 Decreases income tax revenue $0.8 million.
Name: Dan John/Ted Spangler
Agency: State Tax Commission
STATEMENT OF PURPOSE/FISCAL NOTE H 10