HSB 708

35(21) directs corporate taxpayers to treat the taxpayer’s net GILTI amount as a foreign dividend for Iowa income tax purposes, meaning the taxpayer qualifies for the same dividends received deduction that applies to subpart F income and other foreign dividends. BUSINESS INTEREST EXPENSE DEDUCTION. The federal Tax Cuts and Jobs Act (TCJA) created a new limitation on the deduction of business interest expense for tax years beginning on or after January 1, 2018. Currently, the state couples with federal law limiting the deduction of business interest expense for tax years beginning on or after January 1, 2019. The bill decouples, for Iowa individual and corporate income tax purposes, from the federal limitation on deduction of business interest expenses for tax years beginning on or after January 1, 2019. The decoupling from the federal limitation on deduction of business interest expense does not apply during any tax year in which the additional first-year depreciation allowance authorized in section 168(k) of the Internal Revenue Code (bonus depreciation) applies in computing net income for state tax purposes. _____ any amount of interest expense paid or accrued in a previous taxable year in the current taxable year by reason of the carryforward of disallowed business interest provisions of section 163(j)(2) of the Internal Revenue Code, if either of the following apply: the interest expense was originally paid or accrued during a tax year in which there was a decoupling from the federal limitation on business expense, or the interest expense was originally paid or accrued during a tax year in which the taxpayer was not required to file an Iowa return. EFFECTIVE DATE AND APPLICABILITY. The bill takes effect upon enactment, and applies retroactively to January 1, 2019, for tax years beginning on or after that date.