EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted
and is intended to be omitted in the law.
SECOND REGULAR SESSION
SENATE BILL NO. 872
102ND GENERAL ASSEMBLY
INTRODUCED BY SENATOR ESLINGER.
3392S.02I KRISTINA MARTIN, Secretary
AN ACT
To repeal section 143.121, RSMo, and to enact in lieu thereof one new section relating to a tax
deduction for broadband grant moneys.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Section 143.121, RSMo, is repealed and one new 1
section enacted in lieu thereof, to be known as section 143.121, 2
to read as follows:3
143.121. 1. The Missouri adjusted gross income of a 1
resident individual shall be the taxpayer's federal adjusted 2
gross income subject to the modifications in this section. 3
2. There shall be added to the taxpayer's federal 4
adjusted gross income: 5
(1) The amount of any federal income tax refund 6
received for a prior year which resulted in a Missouri 7
income tax benefit. The amount added pursuant to this 8
subdivision shall not include any amount of a federal income 9
tax refund attributable to a tax cre dit reducing a 10
taxpayer's federal tax liability pursuant to Public Law 116 - 11
136 or 116-260, enacted by the 116th United States Congress, 12
for the tax year beginning on or after January 1, 2020, and 13
ending on or before December 31, 2020, and deducted from 14
Missouri adjusted gross income pursuant to section 143.171. 15
The amount added under this subdivision shall also not 16
include any amount of a federal income tax refund 17
attributable to a tax credit reducing a taxpayer's federal 18 SB 872 2
tax liability under any o ther federal law that provides 19
direct economic impact payments to taxpayers to mitigate 20
financial challenges related to the COVID -19 pandemic, and 21
deducted from Missouri adjusted gross income under section 22
143.171; 23
(2) Interest on certain governm ental obligations 24
excluded from federal gross income by 26 U.S.C. Section 103 25
of the Internal Revenue Code, as amended. The previous 26
sentence shall not apply to interest on obligations of the 27
state of Missouri or any of its political subdivisions or 28
authorities and shall not apply to the interest described in 29
subdivision (1) of subsection 3 of this section. The amount 30
added pursuant to this subdivision shall be reduced by the 31
amounts applicable to such interest that would have been 32
deductible in computing the taxable income of the taxpayer 33
except only for the application of 26 U.S.C. Section 265 of 34
the Internal Revenue Code, as amended. The reduction shall 35
only be made if it is at least five hundred dollars; 36
(3) The amount of any deducti on that is included in 37
the computation of federal taxable income pursuant to 26 38
U.S.C. Section 168 of the Internal Revenue Code as amended 39
by the Job Creation and Worker Assistance Act of 2002 to the 40
extent the amount deducted relates to property purch ased on 41
or after July 1, 2002, but before July 1, 2003, and to the 42
extent the amount deducted exceeds the amount that would 43
have been deductible pursuant to 26 U.S.C. Section 168 of 44
the Internal Revenue Code of 1986 as in effect on January 1, 45
2002; 46
(4) The amount of any deduction that is included in 47
the computation of federal taxable income for net operating 48
loss allowed by 26 U.S.C. Section 172 of the Internal 49
Revenue Code of 1986, as amended, other than the deduction 50 SB 872 3
allowed by 26 U.S.C. Se ction 172(b)(1)(G) and 26 U.S.C. 51
Section 172(i) of the Internal Revenue Code of 1986, as 52
amended, for a net operating loss the taxpayer claims in the 53
tax year in which the net operating loss occurred or carries 54
forward for a period of more than twenty years and carries 55
backward for more than two years. Any amount of net 56
operating loss taken against federal taxable income but 57
disallowed for Missouri income tax purposes pursuant to this 58
subdivision after June 18, 2002, may be carried forward and 59
taken against any income on the Missouri income tax return 60
for a period of not more than twenty years from the year of 61
the initial loss; and 62
(5) For nonresident individuals in all taxable years 63
ending on or after December 31, 2006, the amount of any 64
property taxes paid to another state or a political 65
subdivision of another state for which a deduction was 66
allowed on such nonresident's federal return in the taxable 67
year unless such state, political subdivision of a state, or 68
the District of Columbi a allows a subtraction from income 69
for property taxes paid to this state for purposes of 70
calculating income for the income tax for such state, 71
political subdivision of a state, or the District of 72
Columbia; 73
(6) For all tax years beginning on or af ter January 1, 74
2018, any interest expense paid or accrued in a previous 75
taxable year, but allowed as a deduction under 26 U.S.C. 76
Section 163, as amended, in the current taxable year by 77
reason of the carryforward of disallowed business interest 78
provisions of 26 U.S.C. Section 163(j), as amended. For the 79
purposes of this subdivision, an interest expense is 80
considered paid or accrued only in the first taxable year 81
the deduction would have been allowable under 26 U.S.C. 82 SB 872 4
Section 163, as amended, if the limitation under 26 U.S.C. 83
Section 163(j), as amended, did not exist. 84
3. There shall be subtracted from the taxpayer's 85
federal adjusted gross income the following amounts to the 86
extent included in federal adjusted gross income: 87
(1) Interest received on deposits held at a federal 88
reserve bank or interest or dividends on obligations of the 89
United States and its territories and possessions or of any 90
authority, commission or instrumentality of the United 91
States to the extent exempt from Miss ouri income taxes 92
pursuant to the laws of the United States. The amount 93
subtracted pursuant to this subdivision shall be reduced by 94
any interest on indebtedness incurred to carry the described 95
obligations or securities and by any expenses incurred in 96
the production of interest or dividend income described in 97
this subdivision. The reduction in the previous sentence 98
shall only apply to the extent that such expenses including 99
amortizable bond premiums are deducted in determining the 100
taxpayer's federal adjusted gross income or included in the 101
taxpayer's Missouri itemized deduction. The reduction shall 102
only be made if the expenses total at least five hundred 103
dollars; 104
(2) The portion of any gain, from the sale or other 105
disposition of property having a higher adjusted basis to 106
the taxpayer for Missouri income tax purposes than for 107
federal income tax purposes on December 31, 1972, that does 108
not exceed such difference in basis. If a gain is 109
considered a long-term capital gain for federal inc ome tax 110
purposes, the modification shall be limited to one -half of 111
such portion of the gain; 112
(3) The amount necessary to prevent the taxation 113
pursuant to this chapter of any annuity or other amount of 114 SB 872 5
income or gain which was properly included in income or gain 115
and was taxed pursuant to the laws of Missouri for a taxable 116
year prior to January 1, 1973, to the taxpayer, or to a 117
decedent by reason of whose death the taxpayer acquired the 118
right to receive the income or gain, or to a trust or estat e 119
from which the taxpayer received the income or gain; 120
(4) Accumulation distributions received by a taxpayer 121
as a beneficiary of a trust to the extent that the same are 122
included in federal adjusted gross income; 123
(5) The amount of any state i ncome tax refund for a 124
prior year which was included in the federal adjusted gross 125
income; 126
(6) The portion of capital gain specified in section 127
135.357 that would otherwise be included in federal adjusted 128
gross income; 129
(7) The amount that would have been deducted in the 130
computation of federal taxable income pursuant to 26 U.S.C. 131
Section 168 of the Internal Revenue Code as in effect on 132
January 1, 2002, to the extent that amount relates to 133
property purchased on or after July 1, 2002, but b efore July 134
1, 2003, and to the extent that amount exceeds the amount 135
actually deducted pursuant to 26 U.S.C. Section 168 of the 136
Internal Revenue Code as amended by the Job Creation and 137
Worker Assistance Act of 2002; 138
(8) For all tax years beginnin g on or after January 1, 139
2005, the amount of any income received for military service 140
while the taxpayer serves in a combat zone which is included 141
in federal adjusted gross income and not otherwise excluded 142
therefrom. As used in this section, "combat zone" means any 143
area which the President of the United States by Executive 144
Order designates as an area in which Armed Forces of the 145
United States are or have engaged in combat. Service is 146 SB 872 6
performed in a combat zone only if performed on or after the 147
date designated by the President by Executive Order as the 148
date of the commencing of combat activities in such zone, 149
and on or before the date designated by the President by 150
Executive Order as the date of the termination of combatant 151
activities in such zone; 152
(9) For all tax years ending on or after July 1, 2002, 153
with respect to qualified property that is sold or otherwise 154
disposed of during a taxable year by a taxpayer and for 155
which an additional modification was made under subdivision 156
(3) of subsection 2 of this section, the amount by which 157
additional modification made under subdivision (3) of 158
subsection 2 of this section on qualified property has not 159
been recovered through the additional subtractions provided 160
in subdivision (7) of this sub section; 161
(10) For all tax years beginning on or after January 162
1, 2014, the amount of any income received as payment from 163
any program which provides compensation to agricultural 164
producers who have suffered a loss as the result of a 165
disaster or emergency, including the: 166
(a) Livestock Forage Disaster Program; 167
(b) Livestock Indemnity Program; 168
(c) Emergency Assistance for Livestock, Honeybees, and 169
Farm-Raised Fish; 170
(d) Emergency Conservation Program; 171
(e) Noninsured Crop Disaster Assistance Program; 172
(f) Pasture, Rangeland, Forage Pilot Insurance Program; 173
(g) Annual Forage Pilot Program; 174
(h) Livestock Risk Protection Insurance Plan; 175
(i) Livestock Gross Margin Insurance Plan; 176
(11) For all tax years beginning on or after January 177
1, 2018, any interest expense paid or accrued in the current 178 SB 872 7
taxable year, but not deducted as a result of the limitation 179
imposed under 26 U.S.C. Section 163(j), as amended. For the 180
purposes of this subdivision, an int erest expense is 181
considered paid or accrued only in the first taxable year 182
the deduction would have been allowable under 26 U.S.C. 183
Section 163, as amended, if the limitation under 26 U.S.C. 184
Section 163(j), as amended, did not exist; 185
(12) One hundred percent of any retirement benefits 186
received by any taxpayer as a result of the taxpayer's 187
service in the Armed Forces of the United States, including 188
reserve components and the National Guard of this state, as 189
defined in 32 U.S.C. Sections 101(3) a nd 109, and any other 190
military force organized under the laws of this state; and 191
(13) For all tax years beginning on or after January 192
1, 2022, one hundred percent of any federal , state, or local 193
grant moneys received [for the purpose of providing or 194
expanding access to broadband internet to areas of the state 195
deemed to be lacking such access ] by the taxpayer if the 196
grant money was disbursed for the express purpose of 197
providing or expanding access to broadband internet to areas 198
of the state deemed to be lacking such access . 199
4. There shall be added to or subtracted from the 200
taxpayer's federal adjusted gross income the taxpayer's 201
share of the Missouri fiduciary adjustment provided in 202
section 143.351. 203
5. There shall be added to or su btracted from the 204
taxpayer's federal adjusted gross income the modifications 205
provided in section 143.411. 206
6. In addition to the modifications to a taxpayer's 207
federal adjusted gross income in this section, to calculate 208
Missouri adjusted gross inco me there shall be subtracted 209
from the taxpayer's federal adjusted gross income any gain 210 SB 872 8
recognized pursuant to 26 U.S.C. Section 1033 of the 211
Internal Revenue Code of 1986, as amended, arising from 212
compulsory or involuntary conversion of property as a r esult 213
of condemnation or the imminence thereof. 214
7. (1) As used in this subsection, "qualified health 215
insurance premium" means the amount paid during the tax year 216
by such taxpayer for any insurance policy primarily 217
providing health care coverage for the taxpayer, the 218
taxpayer's spouse, or the taxpayer's dependents. 219
(2) In addition to the subtractions in subsection 3 of 220
this section, one hundred percent of the amount of qualified 221
health insurance premiums shall be subtracted from the 222
taxpayer's federal adjusted gross income to the extent the 223
amount paid for such premiums is included in federal taxable 224
income. The taxpayer shall provide the department of 225
revenue with proof of the amount of qualified health 226
insurance premiums paid. 227
8. (1) Beginning January 1, 2014, in addition to the 228
subtractions provided in this section, one hundred percent 229
of the cost incurred by a taxpayer for a home energy audit 230
conducted by an entity certified by the department of 231
natural resources under section 640.153 or the 232
implementation of any energy efficiency recommendations made 233
in such an audit shall be subtracted from the taxpayer's 234
federal adjusted gross income to the extent the amount paid 235
for any such activity is included in federal taxabl e 236
income. The taxpayer shall provide the department of 237
revenue with a summary of any recommendations made in a 238
qualified home energy audit, the name and certification 239
number of the qualified home energy auditor who conducted 240
the audit, and proof of t he amount paid for any activities 241
under this subsection for which a deduction is claimed. The 242 SB 872 9
taxpayer shall also provide a copy of the summary of any 243
recommendations made in a qualified home energy audit to the 244
department of natural resources. 245
(2) At no time shall a deduction claimed under this 246
subsection by an individual taxpayer or taxpayers filing 247
combined returns exceed one thousand dollars per year for 248
individual taxpayers or cumulatively exceed two thousand 249
dollars per year for taxpaye rs filing combined returns. 250
(3) Any deduction claimed under this subsection shall 251
be claimed for the tax year in which the qualified home 252
energy audit was conducted or in which the implementation of 253
the energy efficiency recommendations occurred. If 254
implementation of the energy efficiency recommendations 255
occurred during more than one year, the deduction may be 256
claimed in more than one year, subject to the limitations 257
provided under subdivision (2) of this subsection. 258
(4) A deduction shall not be claimed for any otherwise 259
eligible activity under this subsection if such activity 260
qualified for and received any rebate or other incentive 261
through a state-sponsored energy program or through an 262
electric corporation, gas corporation, electric cooperative, 263
or municipally owned utility. 264
9. The provisions of subsection 8 of this section 265
shall expire on December 31, 2020. 266
10. (1) As used in this subsection, the following 267
terms mean: 268
(a) "Beginning farmer", a taxpayer who: 269
a. Has filed at least one but not more than ten 270
Internal Revenue Service Schedule F (Form 1040) Profit or 271
Loss From Farming forms since turning eighteen years of age; 272 SB 872 10
b. Is approved for a beginning farmer loan through the 273
USDA Farm Service Agenc y Beginning Farmer direct or 274
guaranteed loan program; 275
c. Has a farming operation that is determined by the 276
department of agriculture to be new production agriculture 277
but is the principal operator of a farm and has substantial 278
farming knowledge; o r 279
d. Has been determined by the department of 280
agriculture to be a qualified family member; 281
(b) "Farm owner", an individual who owns farmland and 282
disposes of or relinquishes use of all or some portion of 283
such farmland as follows: 284
a. A sale to a beginning farmer; 285
b. A lease or rental agreement not exceeding ten years 286
with a beginning farmer; or 287
c. A crop-share arrangement not exceeding ten years 288
with a beginning farmer; 289
(c) "Qualified family member", an individual who is 290
related to a farm owner within the fourth degree by blood, 291
marriage, or adoption and who is purchasing or leasing or is 292
in a crop-share arrangement for land from all or a portion 293
of such farm owner's farming operation. 294
(2) (a) In addition to all other subtractions 295
authorized in this section, a taxpayer who is a farm owner 296
who sells all or a portion of such farmland to a beginning 297
farmer may subtract from such taxpayer's Missouri adjusted 298
gross income an amount to the extent included in fed eral 299
adjusted gross income as provided in this subdivision. 300
(b) Subject to the limitations in paragraph (c) of 301
this subdivision, the amount that may be subtracted shall be 302
equal to the portion of capital gains received from the sale 303 SB 872 11
of such farmland that such taxpayer receives in the tax year 304
for which such taxpayer subtracts such capital gain. 305
(c) A taxpayer may subtract the following amounts and 306
percentages per tax year in total capital gains received 307
from the sale of such farmland unde r this subdivision: 308
a. For the first two million dollars received, one 309
hundred percent; 310
b. For the next one million dollars received, eighty 311
percent; 312
c. For the next one million dollars received, sixty 313
percent; 314
d. For the next one million dollars received, forty 315
percent; and 316
e. For the next one million dollars received, twenty 317
percent. 318
(d) The department of revenue shall prepare an annual 319
report reviewing the costs and benefits and containing 320
statistical informatio n regarding the subtraction of capital 321
gains authorized under this subdivision for the previous tax 322
year including, but not limited to, the total amount of all 323
capital gains subtracted and the number of taxpayers 324
subtracting such capital gains. Such report shall be 325
submitted before February first of each year to the 326
committee on agriculture policy of the Missouri house of 327
representatives and the committee on agriculture, food 328
production and outdoor resources of the Missouri senate, or 329
the successor committees. 330
(3) (a) In addition to all other subtractions 331
authorized in this section, a taxpayer who is a farm owner 332
who enters a lease or rental agreement for all or a portion 333
of such farmland with a beginning farmer may subtract from 334
such taxpayer's Missouri adjusted gross income an amount to 335 SB 872 12
the extent included in federal adjusted gross income as 336
provided in this subdivision. 337
(b) Subject to the limitation in paragraph (c) of this 338
subdivision, the amount that may be subtracted shall be 339
equal to the portion of cash rent income received from the 340
lease or rental of such farmland that such taxpayer receives 341
in the tax year for which such taxpayer subtracts such 342
income. 343
(c) No taxpayer shall subtract more than twenty -five 344
thousand dollars per tax year in total cash rent income 345
received from the lease or rental of such farmland under 346
this subdivision. 347
(4) (a) In addition to all other subtractions 348
authorized in this section, a taxpayer who is a farm owner 349
who enters a crop-share arrangement on all or a portion of 350
such farmland with a beginning farmer may subtract from such 351
taxpayer's Missouri adjusted gross income an amount to the 352
extent included in federal adjusted gross income as provided 353
in this subdivision. 354
(b) Subject to the limitation in paragraph (c) of this 355
subdivision, the amount that may be subtracted shall be 356
equal to the portion of income received from the crop -share 357
arrangement on such farmland that such taxpayer receives in 358
the tax year for whic h such taxpayer subtracts such income. 359
(c) No taxpayer shall subtract more than twenty -five 360
thousand dollars per tax year in total income received from 361
the lease or rental of such farmland under this subdivision. 362
(5) The department of agricul ture shall, by rule, 363
establish a process to verify that a taxpayer is a beginning 364
farmer for purposes of this section and shall provide 365
verification to the beginning farmer and farm seller of such 366 SB 872 13
farmer's and seller's certification and qualification f or 367
the exemption provided in this subsection. 368