2006 Legislation
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HOUSE BILL NO. 441 – Internal Revenue Code, reference

HOUSE BILL NO. 441

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Bill Status



H0441...............................................by REVENUE AND TAXATION
INTERNAL REVENUE CODE - Amends existing law to update references to the
Internal Revenue Code; and to disallow the federal income tax deduction for
qualified production income activity for state income tax purposes.
                                                                        
01/23    House intro - 1st rdg - to printing
01/24    Rpt prt - to Rev/Tax

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-eighth Legislature                   Second Regular Session - 2006
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 441
                                                                        
                             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  63-3022O,  IDAHO
  4        CODE,  TO  DISALLOW THE FEDERAL INCOME TAX DEDUCTION FOR QUALIFIED PRODUC-
  5        TION INCOME ACTIVITY; DECLARING AN  EMERGENCY  AND  PROVIDING  RETROACTIVE
  6        APPLICATION.
                                                                        
  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, 20056.
 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 63-3022O, Idaho Code, be, and the same is hereby
 18    amended to read as follows:
                                                                        
 19        63-3022O.  ADJUSTMENT -- PROPERTY ACQUIRED AFTER  SEPTEMBER  10,  2001  --
 20    EXPENSES  OF  ELEMENTARY  AND SECONDARY TEACHERS -- SMALL BUSINESS EXPENSES --
 21    QUALIFIED PRODUCTION ACTIVITY INCOME DEDUCTION -- LIMITATIONS  ON  ASSESSMENTS
 22    AND REFUNDS. (1) For taxable years commencing on and after January 1, 2001, in
 23    computing Idaho taxable income:
 24        (1a)  The adjusted basis of depreciable property, depreciation and capital
 25        gains  and  losses  shall  be computed without regard to subsection (k) of
 26        section 168 of the Internal Revenue Code; and
 27        (2b)  No deduction shall be allowed relating to expenses of elementary and
 28        secondary teachers otherwise allowable under section  62(a)(2)(D)  of  the
 29        Internal Revenue Code.; and
 30        (2)  For taxable years commencing on and after January 1, 2006, in comput-
 31    ing  Idaho  taxable income no deduction shall be allowed relating to qualified
 32    production activity income allowable under section 199 of the Internal Revenue
 33    Code.
 34        (3)  When, in regard to property subject to  this  section,  the  adjusted
 35    basis  of  depreciable  property,  depreciation  and  capital gains and losses
 36    resulting from the provisions of this section (as previously reported  by  the
 37    taxpayer  or as adjusted by the state tax commission) are subject to change or
 38    adjustment by the taxpayer or by the state tax commission, a claim for  refund
 39    or  notice  of deficiency determination for amounts resulting from the changes
 40    shall be made within the greater of the time provided in sections 63-3068  and
 41    63-3072,  Idaho  Code, or the useful life of the property to which the adjust-
                                                                        
                                           2
                                                                        
  1    ment relates.
                                                                        
  2        SECTION 3.  An emergency existing  therefor,  which  emergency  is  hereby
  3    declared to exist, this act shall be in full force and effect on and after its
  4    passage and approval, and retroactively to January 1, 2006.

Statement of Purpose / Fiscal Impact


                      STATEMENT OF PURPOSE
                                
                            RS 15357

     This is the annual bill to update references to the Internal
Revenue Code (IRC).  It conforms the Idaho income tax to changes
made to the IRC after January 1, 2005, including the American
Jobs Creation Act.  However, for taxable years beginning on and
after January 1, 2006, the bill disallows any deduction for
qualified production activity income otherwise allowed by the IRC
as a deduction on a federal return.  Taxpayers entitled to the
deduction for taxable years beginning during 2005, are
unaffected.


                          FISCAL NOTE

     Section 1.  No fiscal impact to section 1.

     Section 2.  Three million dollar increase to the general
                 fund.




CONTACT
Name:     Dan John
Agency:   State Tax Commission
Phone:    334-7530

STATEMENT OF PURPOSE/FISCAL NOTE                              H 441