STAND. COM. REP. NO. 914

Honolulu, Hawaii

, 2005

RE: S.B. No. 834

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 834, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONFORMITY OF THE HAWAII INCOME TAX LAW TO THE INTERNAL REVENUE CODE,"

begs leave to report as follows:

The purpose of this measure is to conform Hawaii's income tax law to the federal Internal Revenue Code for taxable years beginning after December 31, 2004.

This bill:

(1) Makes operative for chapter 235, the provisions of Public Law 109-001 that accelerates the income tax benefits for charitable cash contributions made to victims of the Indian Ocean tsunami which applies to section 170 of the Internal Revenue Code;

(2) Conforms chapter 235, Hawaii Revised Statutes, relating to the federal Working Families Tax Relief Act of 2004, specifically to provisions related to the definitions of "surviving spouse" and "head of household";

(3) Exempts Hawaii tax law from Section 199, relating to the United States production activities deduction; and

(4) Extends the Hawaii tax law exemption from section 179 (with respect to the election to expense certain depreciable business assets) maximum deduction (section 179(b)(1)) and qualifying investment amounts (section 179(b)(2)) from 2006 to 2008.

Your Committee has amended the bill by exempting the following sections of the Internal Revenue Code from chapter 235, Hawaii Revised Statutes:

(1) Section 179B, relating to expensing of capital costs incurred in complying with environmental protection agency sulphur regulations; and

(2) Section 181, relating to special rules for certain film and television productions.

Your Committee has also added provisions that:

(1) Clarify the application of the provision relating to net income gain reduced by investment income as section 1(h)(2), not section 1(h)(3), Internal Revenue Code;

(2) Clarify that section 114, Internal Revenue Code, refers to extraterritorial income resulting from any transaction that has occurred pursuant to a binding contract as specified in the American Jobs Creation Act of 2004;

(3) Clarify the reference to subchapter Q of the Internal Revenue Code to include sections 1311 to 1359; and

(4) Makes operative for chapter 235, section 6103(i)(3)(C) and 6103(i)(7), relating to disclosures of information to federal and state authorities for purposes of investigating terrorist incidents, threats, or activities.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 834, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 834, S.D. 2.

 

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

BRIAN T. TANIGUCHI, Chair