United States

Idaho: Conformity Bill Heads to Governor

Feb 12, 2018
From KPMG TaxWatch

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Idaho House Bill 355, which has been sent to Governor Butch Otter for signature, would update Idaho’s conformity to the Internal Revenue Code. Idaho generally updates its references to the Code each year. This year, of course, the conformity bill is much more significant because of federal tax reform. For tax years beginning on or after January 1, 2017, House Bill 355 would define the Internal Revenue Code to mean the Internal Revenue Code of 1986 as amended and in effect on December 21, 2017. This was the day before H.R. 1, the Tax Cuts and Jobs Act, was signed into law. However, Internal Revenue Code sections 965 and 213, are applied as in effect on December 31, 2017 (post-tax reform). IRC section 213 provides an individual deduction for medical care. IRC section 965 is the provision of the federal tax law that governs the mandatory repatriation of post-1986 earnings and profits (E&P). Under section 965(a), deferred E&P of each deferred income corporation will be allocated to each U.S. shareholder on a pro rata basis based on relative ownership. Deferred amounts to be included in each shareholder’s income will be subject to a deduction under section 965(c) so that the effective federal rate on the deferred income will be lower. House Bill 355 also requires that corporations add back amounts deducted under section 965, as well as any other special deductions. So, in sum, House Bill 355 would appear to adopt the mandatory repatriation provisions effective retroactively to January 1, 2017 and would require corporations to add back the amount deducted under section 965(c). Please stay tuned to TWIST for more updates on state conformity.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.