Bill Text: HI HB35 | 2016 | Regular Session | Introduced
Bill Title: Taxation; Employee Benefits; Deduction
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2015-12-17 - Carried over to 2016 Regular Session. [HB35 Detail]
Download: Hawaii-2016-HB35-Introduced.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
35 |
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TWENTY-EIGHTH LEGISLATURE, 2015 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to taxation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-2.4, Hawaii Revised Statutes, is amended to read as follows:
"§235-2.4 Operation of certain Internal Revenue Code provisions; sections 63 to 530. (a) Section 63 (with respect to taxable income defined) of the Internal Revenue Code shall be operative for the purposes of this chapter, subject to the following:
(1) Section 63(c)(1)(B) (relating to the additional standard deduction), 63(c)(1)(C) (relating to the real property tax deduction), 63(c)(1)(D) (relating to the disaster loss deduction), 63(c)(1)(E) (relating to the motor vehicle sales tax deduction), 63(c)(4) (relating to inflation adjustments), 63(c)(7) (defining the real property tax deduction), 63(c)(8) (defining the disaster loss deduction), 63(c)(9) (defining the motor vehicle sales tax deduction), and 63(f) (relating to additional amounts for the aged or blind) of the Internal Revenue Code shall not be operative for purposes of this chapter;
(2) Section 63(c)(2) (relating to the basic standard deduction) of the Internal Revenue Code shall be operative, except that the standard deduction amounts provided therein shall instead mean:
(A) $4,400 in the case of:
(i) A joint return as provided by section 235-93; or
(ii) A surviving spouse (as defined in section 2(a) of the Internal Revenue Code);
(B) $3,212 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);
(C) $2,200 in the case of an individual who is not married and who is not a surviving spouse or head of household; or
(D) $2,200 in the case of a married individual filing a separate return;
(3) Section 63(c)(5) (limiting the basic standard deduction in the case of certain dependents) of the Internal Revenue Code shall be operative, except that the limitation shall be the greater of $500 or the individual's earned income; and
(4) The standard deduction amount for nonresidents shall be calculated pursuant to section 235-5.
(b) Section 68 (with respect to the overall limitation on itemized deductions) of the Internal Revenue Code shall be operative; provided that the thresholds shall be those that were operative for federal tax year 2009.
(c) Section 72 (with respect to annuities; certain proceeds of endowment and life insurance contracts) of the Internal Revenue Code shall be operative for purposes of this chapter and be interpreted with due regard to section 235-7(a), except that the ten per cent additional tax on early distributions from retirement plans in section 72(t) shall not be operative for purposes of this chapter.
(d) Section 85 (with respect to unemployment compensation) of the Internal Revenue Code shall be operative for purposes of this chapter, except that section 85(c) shall not be operative for purposes of this chapter.
(e) Section 108 (with respect to income from discharge of indebtedness) of the Internal Revenue Code shall be operative for purposes of this chapter, except that section 108(i) (relating to deferral and ratable inclusion of income arising from business indebtedness discharged by the reacquisition of a debt instrument) shall not be operative for purposes of this chapter.
(f) Section 121 (with respect to exclusion of gain from sale of principal residence) of the Internal Revenue Code shall be operative for purposes of this chapter, except that for the election under section 121(f), a reference to section 1034 treatment means a reference to section 235-2.4(s) in effect for taxable year 1997.
(g) Section 132 (with respect to certain fringe benefits) of the Internal Revenue Code shall be operative for purposes of this chapter, except that the provision in section 132(f)(2) that equalizes the dollar amounts for sections 132(f)(2)(A) and (B) shall not be operative and except that section 132(n) shall not apply to United States Department of Defense Homeowners Assistance Program payments authorized by the American Recovery and Reinvestment Act of 2009.
(h) Section 162 (with respect to trade or business expenses) of the Internal Revenue Code shall be operative for purposes of this chapter, except that, for taxable years beginning after December 31, 2015, no deduction shall be allowed for the provision of employee benefits to the extent that the value of the benefits provided to an employee exceeds an amount calculated by multiplying the State's median household income for the taxable year by fifty.
[(h)] (i) Section 163 (with respect to interest) of the
Internal Revenue Code shall be operative for the purposes of this chapter,
except that provisions in section 163(d)(4)(B) (defining net investment income
to exclude dividends), section 163(e)(5)(F) (suspension of applicable
high-yield discount obligation (AHYDO) rules) and section 163(i)(1) as it
applies to debt instruments issued after January 1, 2010, (defining AHYDO)
shall not be operative for the purposes of this chapter.
[(i)] (j)
Section 164 (with respect to taxes) of the Internal Revenue Code shall be
operative for the purposes of this chapter, except that:
(1) Section 164(a)(6) and (b)(6) shall not be operative for the purposes of this chapter;
(2) The deductions under section 164(a)(3) and (b)(5) shall not be operative for corporate taxpayers and shall be operative only for the following individual taxpayers:
(A) A taxpayer filing a single return or a married person filing separately with a federal adjusted gross income of less than $100,000;
(B) A taxpayer filing as a head of household with a federal adjusted gross income of less than $150,000; and
(C) A taxpayer filing a joint return or as a surviving spouse with a federal adjusted gross income of less than $200,000; and
(3) Section 164(a)(3) shall not be operative for any amounts for which the credit under section 235-55 has been claimed.
[(j)] (k) Section 165 (with respect to losses) of the Internal
Revenue Code shall be operative for purposes of this chapter, except that the
amount prescribed by sections 165(h)(1) (relating to the limitation per
casualty) of the Internal Revenue Code shall be a $100 limitation per casualty,
and section 165(h)(3)(A) and (B) (both of which relate to special rules for
personal casualty gains and losses in federally declared disasters) of the
Internal Revenue Code shall not be operative for the purposes of this chapter.
Section 165 as operative for this chapter shall also apply to losses sustained
from the sale of stocks or other interests issued through the exercise of the
stock options or warrants granted by a qualified high technology business as
defined in section 235-7.3.
[(k)] (l) Section 168 (with respect to the accelerated cost
recovery system) of the Internal Revenue Code shall be operative for purposes
of this chapter, except that sections 168(j) (relating to property on Indian
reservations), 168(k) (relating to the special allowance for certain property
acquired during the period specified therein), 168(m) (relating to the special allowance
for certain reuse and recycling property), and 168(n) (relating to the special
allowance for qualified disaster assistance property) of the Internal Revenue
Code shall not be operative for purposes of this chapter.
[(l)] (m) Section 172 (with respect to net operating loss
deductions) of the Internal Revenue Code shall be operative for purposes of
this chapter, as further provided in section 235-7(d), except that section
172(b)(1)(J) and (j) (both of which relate to qualified disaster losses) of the
Internal Revenue Code shall not be operative for purposes of this chapter.
[(m)] (n) Section 179 (with respect to the election to expense
certain depreciable business assets) of the Internal Revenue Code shall be
operative for purposes of this chapter, except as provided in this subsection:
(1) The aggregate cost provided in section 179(b)(1) which may be taken into account under section 179(a) for any taxable year shall not exceed $25,000;
(2) The amount at which the reduction in limitation provided in section 179(b)(2) begins shall exceed $200,000 for any taxable year; and
(3) The following shall not be operative for purposes of this chapter:
(A) Defining section 179 property to include computer software in section 179(d)(1);
(B) Inflation adjustments in section 179(b)(5);
(C) Irrevocable election in section 179(c)(2); and
(D) Special rules for qualified disaster assistance property in section 179(e).
[(n)] (o) Section 198A (with respect to the expensing of
qualified disaster assistances expenses) of the Internal Revenue Code shall not
be operative for purposes of this chapter.
[(o)] (p) Section 219 (with respect to retirement savings) of
the Internal Revenue Code shall be operative for the purpose of this chapter.
For the purpose of computing the limitation on the deduction for active
participants in certain pension plans for state income tax purposes, adjusted
gross income as used in section 219 as operative for this chapter means federal
adjusted gross income.
[(p)] (q) Section 220 (with respect to medical savings
accounts) of the Internal Revenue Code shall be operative for the purpose of
this chapter, but only with respect to medical services accounts that have been
approved by the Secretary of the Treasury of the United States.
[(q)] (r) Section 265 (with respect to expenses and interest
relating to tax-exempt income) of the Internal Revenue Code shall be operative
for purposes of this chapter; except that section 265(b)(3)(G) and (7) shall
not be operative and section 265 shall not apply to expenses for royalties and
other income derived from any patents, copyrights, and trade secrets by an
individual or a qualified high technology business as defined in section
235-7.3. Such expenses shall be deductible.
[(r)] (s) Section 382 (with respect to limitation on net
operating loss carryforwards and certain built-in losses following ownership
change) of the Internal Revenue Code shall be operative for the purposes of
this chapter, except that section 382(n) shall not be operative for purposes of
this chapter.
[(s)] (t) Section 408A (with respect to Roth Individual
Retirement Accounts) of the Internal Revenue Code shall be operative for the
purposes of this chapter, except that section 408A(d)(3)(A)(iii) shall not be
operative for purposes of this chapter. For the purposes of determining the
aggregate amount of contributions to a Roth Individual Retirement Account or
qualified rollover contribution to a Roth Individual Retirement Account from an
individual retirement plan other than a Roth Individual Retirement Account,
adjusted gross income as used in section 408A as operative for this chapter
means federal adjusted gross income.
[(t)] (u) In administering
the provisions of sections 410 to 417 (with respect to special rules relating
to pensions, profit sharing, stock bonus plans, etc.), sections 418 to 418E
(with respect to special rules for multiemployer plans), and sections 419 and
419A (with respect to treatment of welfare benefit funds) of the Internal
Revenue Code, the department of taxation shall adopt rules under chapter 91
relating to the specific requirements under those sections and to other
administrative requirements under those sections as may be necessary for the
efficient administration of sections 410 to 419A.
In administering sections 401 to 419A (with respect to deferred compensation) of the Internal Revenue Code, Public Law 93-406, section 1017(i), shall be operative for the purposes of this chapter.
In administering section 402 (with respect to the taxability of beneficiary of employees' trust) of the Internal Revenue Code, the tax imposed on lump sum distributions by section 402(e) of the Internal Revenue Code shall be operative for the purposes of this chapter and the tax imposed therein is hereby imposed by this chapter at the rate determined under this chapter.
[(u)] (v) In
administering section 403 (with respect to taxation of employee annuities) of
the Internal Revenue Code, any funds that represent pre-tax employee deferrals
or contributions that are distributed from the annuity and used solely to
obtain retirement credits under the state employees' retirement system shall
not be treated as a rollover for purposes of section 403(b)(8)(A) of the
Internal Revenue Code, and those funds shall be subject to income tax under
this chapter.
[(v)] (w) Section 451 (which provides general rules for taxable
year of inclusion) of the Internal Revenue Code shall be operative, except that
the provisions of sections 451(i)(3) and 451(i)(6), as they relate to a
qualified electric utility, shall not be operative for purposes of this
chapter.
[(w)] (x) In
administering section 457 (with respect to compensation plans of state and
local governments and tax-exempt organizations) of the Internal Revenue Code,
any funds that represent pre-tax employee deferrals or contributions that are
distributed from the deferred compensation plan and used solely to obtain
retirement credits under the state employees' retirement system shall not be
treated as a rollover for purposes of section 457(e)(16)(A) of the Internal
Revenue Code and those funds shall be subject to income tax under this chapter.
[(x)] (y) Section 468B (with respect to special rules for
designated settlement funds) of the Internal Revenue Code shall be operative
for the purposes of this chapter and the tax imposed therein is hereby imposed
by this chapter at a rate equal to the maximum rate in effect for the taxable
year imposed on estates and trusts under section 235-51.
[(y)] (z) Section 469 (with respect to passive activities and
credits limited) of the Internal Revenue Code shall be operative for the
purposes of this chapter. For the purpose of computing the offset for rental
real estate activities for state income tax purposes, adjusted gross income as
used in section 469 as operative for this chapter means federal adjusted gross
income.
[(z)] (aa) Sections 512 to 514 (with respect to taxation of
business income of certain exempt organizations) of the Internal Revenue Code
shall be operative for the purposes of this chapter as provided in this
subsection.
"Unrelated business taxable income" means the same as in the Internal Revenue Code, except that in the computation thereof sections 235-3 to 235-5, and 235-7 (except subsection (c)), shall apply, and in the determination of the net operating loss deduction there shall not be taken into account any amount of income or deduction that is excluded in computing the unrelated business taxable income. Unrelated business taxable income shall not include any income from a legal service plan.
For a person described in section 401 or 501 of the Internal Revenue Code, as modified by section 235-2.3, the tax imposed by section 235-51 or 235-71 shall be imposed upon the person's unrelated business taxable income.
[(aa)] (bb) Section 521 (with respect to cooperatives) and
subchapter T (sections 1381 to 1388, with respect to cooperatives and their
patrons) of the Internal Revenue Code shall be operative for the purposes of
this chapter as to any cooperative fully meeting the requirements of section
421-23, except that Internal Revenue Code section 521 cooperatives need not be
organized in Hawaii.
[(bb)] (cc) Sections 527 (with respect to political
organizations) and 528 (with respect to certain homeowners associations) of the
Internal Revenue Code shall be operative for the purposes of this chapter and
the taxes imposed in each section are hereby imposed by this chapter at the
rates determined under section 235-71.
[(cc)] (dd) Section 529 (with respect to qualified tuition programs)
shall be operative for the purposes of this chapter, except that sections
529(c)(6) and 529(e)(3)(A)(iii) shall not be operative.
[(dd)] (ee) Section 530 (with respect to Coverdell education savings accounts) of the Internal Revenue Code shall be operative for the purposes of
this chapter. For the purpose of determining the maximum amount that a
contributor could make to an education individual retirement account for state
income tax purposes, modified adjusted gross income as used in section 530 as
operative for this chapter means federal modified adjusted gross income as
defined in section 530."
SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 3. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2015.
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INTRODUCED BY: |
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Report Title:
Taxation; Employee Benefits; Deduction
Description:
Limits the amount that an employer may deduct for benefits provided to an employee to 50 times the State's median household income.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
