SB 1371 — income tax; subtraction; retirement distribution

Fifty-seventhSenate LegislatureEngrossed Appropriationsincome Firsttax; Regular Session S.B.

1371subtraction; PROPOSED HOUSE OF REPRESENTATIVES AMENDMENTS TO S.B.

1371retirement (Referencedistribution toState of Arizona Senate engrossedFifty-seventh bill)Legislature AmendmentFirst instructionRegular key:Session SENATE BILL 1371 AN ACT AMENDING SECTION 43-1022, ARIZONA REVISED STATUTES;

[GREENRELATING UNDERLININGTO ININDIVIDUAL BRACKETS]INCOME indicatesTAX. text added to statute or previously enacted session law.

[Green(TEXT underliningOF inBILL brackets]BEGINS indicatesON textNEXT addedPAGE) to- newi session- lawS.B. or text restoring existing law.

[GREEN1371 STRIKEOUTBe INit BRACKETS]enacted indicatesby newthe textLegislature removedof fromthe statuteState orof previouslyArizona: enacted session law.

[Green strikeout in brackets] indicates text removed from existing statute, previously enacted session law or new session law.

<<Green carets>> indicate a section added to the bill.

<<Green strikeout in carets>> indicates a section removed from the bill.

The bill as proposed to be amended is reprinted as follows:

Interest income received on obligations of the United States, minus any interest on indebtedness, or other related expenses, and Housededucted Amendmentsin arriving at Arizona gross income, that were incurred or continued to S.B.purchase or carry such obligations.

1371 deducted in arriving at Arizona gross income, that were incurred or continued to purchase or carry such obligations.

The amount of exploration expenses that is determined pursuant to section 617 of the internal revenue code, that has been deferred in a taxable year ending before January 1, 1990 and for which a subtraction has not- previously1 been- made.S.B.

1371 not previously been made.

The subtraction under this paragraph may be taken for the costs that are described in this paragraph and that are incurred in -prior 2years, -but Housethe Amendmentssubtraction tomay S.B.be taken only in the year during which the final adoption order is granted.

1371 prior years, but the subtraction may be taken only in the year during which the final adoption order is granted.

(b) In taxable years beginning from and after December 31, 2012 through December 31, 2013, an amount determined in the year the asset was placed in service based on the calculation in subdivision (a) of this paragraph.- 2 - S.B.

1371 paragraph.

(c) In taxable years beginning from and after December 31, 2013 through December 31, 2015, an amount equal to the depreciation allowable pursuant to section 167(a) of the internal revenue code for the taxable -year 3as -computed Houseas Amendmentsif the additional allowance for depreciation had been ten percent of the amount allowed pursuant to S.B.section 168(k) of the internal revenue code.

1371 year as computed as if the additional allowance for depreciation had been ten percent of the amount allowed pursuant to section 168(k) of the internal revenue code.

The portion of the net operating loss carryforward that would have been allowed as a deduction in the current year pursuant to section 172- of3 the- internalS.B. revenue code if the election described in section 172(b)(1)(H) of the internal revenue code had not been made in the year of the loss that exceeds the actual net operating loss carryforward that was deducted in arriving at federal adjusted gross income.

This1371 subtraction172 -of 4the -internal Houserevenue Amendmentscode toif S.B.the election described in section 172(b)(1)(H) of the internal revenue code had not been made in the year of the loss that exceeds the actual net operating loss carryforward that was deducted in arriving at federal adjusted gross income.

1371This subtraction only applies to taxpayers who made an election under section 172(b)(1)(H) of the internal revenue code as amended by section 1211 of the American recovery and reinvestment act of 2009 (P.L.

-(a) 5"Legal -tender" Housemeans Amendmentsa medium of exchange, including specie, that is authorized by the United States Constitution or Congress to S.B.pay debts, public charges, taxes and dues.

1371- (a)4 "Legal- tender"S.B. means a medium of exchange, including specie, that is authorized by the United States Constitution or Congress to pay debts, public charges, taxes and dues.

1371 (b) "Specie" means coins having precious metal content.

-(a) 6"Airdrop" -means Housethe Amendmentsreceipt of virtual currency through a means of distribution of virtual currency to S.B.the distributed ledger addresses of multiple taxpayers.

1371 (a) "Airdrop" means the receipt of virtual currency through a means of distribution of virtual currency to the distributed ledger addresses of multiple taxpayers.

31.- 5 - S.B.

[FOR1371 A31. TAXPAYER WHO IS SIXTY-SEVEN YEARS OF AGE OR OLDER DURING THE TAXABLE YEAR,] TO THE EXTENT NOT ALREADY EXCLUDED FROM ARIZONA GROSS INCOME PURSUANT TO THIS SECTION OR THE INTERNAL REVENUE CODE, THE AMOUNT OF ANY DISTRIBUTIONS FROM A RETIREMENT ACCOUNT [SUBJECT TO THE FOLLOWING:

(a) FOR TAXABLEA YEARSTAXPAYER BEGINNINGWHO FROMIS ANDSIXTY-SEVEN AFTERYEARS DECEMBEROF 31,AGE 2024OR THROUGHOLDER DECEMBERDURING 31,THE 2025,TAXABLE YEAR, TO THE TAXPAYEREXTENT MUSTNOT BEALREADY SEVENTY-ONEEXCLUDED YEARSFROM OFARIZONA AGEGROSS INCOME PURSUANT TO THIS SECTION OR OLDERTHE DURINGINTERNAL REVENUE CODE, THE TAXABLEAMOUNT YEAR.OF ANY DISTRIBUTIONS FROM A RETIREMENT ACCOUNT.

(b)THE FORTOTAL TAXABLEAMOUNT YEARSSUBTRACTED BEGINNINGUNDER FROMTHIS ANDPARAGRAPH AFTERMAY DECEMBERNOT 31,EXCEED 2025AN THROUGHAMOUNT DECEMBERTHAT 31,IS 2026,EQUAL TO THE TAXPAYEROPTIONAL MUSTSTANDARD BEDEDUCTION SEVENTYALLOWED YEARSIN OFSECTION AGE43-1041, ORSUBSECTION OLDERA DURINGAS THEADJUSTED TAXABLEFOR YEAR.INFLATION PURSUANT TO SECTION 43-1041, SUBSECTION H.

(c) FOR TAXABLE YEARS BEGINNING FROM AND AFTER DECEMBER 31, 2026 THROUGH DECEMBER 31, 2027, THE TAXPAYERPURPOSES MUST BE SIXTY-NINE YEARS OF AGETHIS ORPARAGRAPH, OLDER"RETIREMENT DURINGACCOUNT" THEINCLUDES: TAXABLE YEAR.

(d)(a) FORA TAXABLEQUALIFIED YEARSRETIREMENT BEGINNINGPLAN FROMUNDER ANDSECTIONS AFTER401, DECEMBER403 31,AND 2027457 THROUGH DECEMBER 31, 2028, THE TAXPAYER MUST BE SIXTY-EIGHT YEARS OF AGE OR OLDER DURING THE TAXABLEINTERNAL YEAR.REVENUE CODE.

(e)(b) FORAN TAXABLEINDIVIDUAL YEARSRETIREMENT BEGINNINGACCOUNT FROMUNDER ANDSECTION AFTER408 DECEMBEROF 31,THE 2028,INTERNAL THEREVENUE TAXPAYERCODE, MUSTINCLUDING BEA SIXTY-SEVENSIMPLIFIED YEARSEMPLOYEE PENSION AS DEFINED IN SECTION 408(k) OF AGETHE ORINTERNAL OLDERREVENUE DURINGCODE AND A SIMPLE RETIREMENT ACCOUNT AS DEFINED IN SECTION 408(p) OF THE TAXABLEINTERNAL YEAR].REVENUE CODE.

[(f)]Sec. THE TOTAL AMOUNT SUBTRACTED UNDER THIS PARAGRAPH MAY NOT EXCEED AN AMOUNT THAT IS EQUAL TO THE OPTIONAL STANDARD DEDUCTION ALLOWED IN SECTION 43-1041, SUBSECTION A AS ADJUSTED FOR INFLATION PURSUANT TO SECTION 43-1041, SUBSECTION H.

[(g)] FOR THE PURPOSES OF THIS PARAGRAPH, "RETIREMENT ACCOUNT" INCLUDES:

[(a)] [(i)] A QUALIFIED RETIREMENT PLAN UNDER SECTIONS 401, 403 AND 457 OF THE INTERNAL REVENUE CODE.

- 7 - House Amendments to S.B.

1371 [(b)] [(ii)] AN INDIVIDUAL RETIREMENT ACCOUNT UNDER SECTION 408 OF THE INTERNAL REVENUE CODE, INCLUDING A SIMPLIFIED EMPLOYEE PENSION AS DEFINED IN SECTION 408(k) OF THE INTERNAL REVENUE CODE AND A SIMPLE RETIREMENT ACCOUNT AS DEFINED IN SECTION 408(p) OF THE INTERNAL REVENUE CODE.