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HOUSE BILL NO. 441
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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
]]]] 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
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 56.
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
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-
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
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
Section 1. No fiscal impact to section 1.
Section 2. Three million dollar increase to the general
Name: Dan John
Agency: State Tax Commission
STATEMENT OF PURPOSE/FISCAL NOTE H 441