REPORT TITLE:
Income Tax; Exclusion 


DESCRIPTION:
Excludes from gross income amounts received from the commercial
exploitation of federally-protected intellectual property
developed within the State by its owners.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO INCOME TAX.
 


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 235-7, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (a) to read as follows:
 
 3      "(a)  There shall be excluded from gross income, adjusted
 
 4 gross income, and taxable income:
 
 5      (1)  Income not subject to taxation by the State under the
 
 6           Constitution and laws of the United States;
 
 7      (2)  Rights, benefits, and other income exempted from
 
 8           taxation by section 88-91, having to do with the state
 
 9           retirement system, and the rights, benefits, and other
 
10           income, comparable to the rights, benefits, and other
 
11           income exempted by section 88-91, under any other
 
12           public retirement system;
 
13      (3)  Any compensation received in the form of a pension for
 
14           past services;
 
15      (4)  Compensation paid to a patient affected with Hansen's
 
16           disease employed by the State or the United States in
 
17           any hospital, settlement, or place for the treatment of
 
18           Hansen's disease;
 
19      (5)  Except as otherwise expressly provided, payments made
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           by the United States or this State, under an act of
 
 2           Congress or a law of this State, which by express
 
 3           provision or administrative regulation or
 
 4           interpretation are exempt from both the normal and
 
 5           surtaxes of the United States, even though not so
 
 6           exempted by the Internal Revenue Code itself;
 
 7      (6)  Any income expressly exempted or excluded from the
 
 8           measure of the tax imposed by this chapter by any other
 
 9           law of the State, it being the intent of this chapter
 
10           not to repeal or supersede any such express exemption
 
11           or exclusion;
 
12      (7)  The first $1,750 received by each member of the reserve
 
13           components of the Army, Navy, Air Force, Marine Corps,
 
14           or Coast Guard of the United States of America, and the
 
15           Hawaii national guard as compensation for performance
 
16           of duty;
 
17      (8)  Income derived from the operation of ships or aircraft
 
18           if the income is exempt under the Internal Revenue Code
 
19           pursuant to the provisions of an income tax treaty or
 
20           agreement entered into by and between the United States
 
21           and a foreign country, provided that the tax laws of
 
22           the local governments of that country reciprocally
 
23           exempt from the application of all of their net income
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           taxes, the income derived from the operation of ships
 
 2           or aircraft which are documented or registered under
 
 3           the laws of the United States;
 
 4      (9)  The value of legal services provided by a prepaid legal
 
 5           service plan to a taxpayer, the taxpayer's spouse, and
 
 6           the taxpayer's dependents;
 
 7     (10)  Amounts paid, directly or indirectly, by a prepaid
 
 8           legal service plan to a taxpayer as payment or
 
 9           reimbursement for the provision of legal services to
 
10           the taxpayer, the taxpayer's spouse, and the taxpayer's
 
11           dependents;
 
12     (11)  Contributions by an employer to a prepaid legal service
 
13           plan for compensation (through insurance or otherwise)
 
14           to the employer's employees for the costs of legal
 
15           services incurred by the employer's employees, their
 
16           spouses, and their dependents; [and]
 
17     (12)  Amounts received in the form of a monthly surcharge by
 
18           a utility acting on behalf of an affected utility under
 
19           section 269-16.3 shall not be gross income, adjusted
 
20           gross income, or taxable income for the acting utility
 
21           under this chapter.  Any amounts retained by the acting
 
22           utility for collection or other costs shall not be
 
23           included in this exemption[.]; and
 

 
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 1     (13)  Amounts received attributable to the commercial
 
 2           exploitation of patented or copyrighted intellectual
 
 3           property developed and created primarily in the State
 
 4           by the owner, inventor, or creator of the patented or
 
 5           copyrighted intellectual property."
 
 6      SECTION 2.  Statutory material to be repealed is bracketed.
 
 7 New statutory material is underscored.
 
 8      SECTION 3.  This Act, upon its approval, shall apply to
 
 9 taxable years beginning after December 31, 1998.
 
10 
 
11                           INTRODUCED BY:  _______________________