FIRSTREGULARSESSION
HOUSECOMMITTEESUBSTITUTEFOR
HOUSEBILLNOS.594&508
103RDGENERALASSEMBLY
1683H.02C JOSEPHENGLER,ChiefClerk
ANACT
Torepealsection143.121,RSMo,andtoenactinlieuthereofonenewsectionrelatingtoan
incometaxdeductionforcapitalgains.
BeitenactedbytheGeneralAssemblyofthestateofMissouri,asfollows:
SectionA.Section143.121,RSMo,isrepealedandonenewsectionenactedinlieu
2thereof,tobeknownassection143.121,toreadasfollows:
143.121.1.TheMissouriadjustedgrossincomeofaresidentindividualshallbethe
2taxpayer'sfederaladjustedgrossincomesubjecttothemodificationsinthissection.
3 2.Thereshallbeaddedtothetaxpayer'sfederaladjustedgrossincome:
4 (1)Theamountofanyfederalincometaxrefundreceivedforaprioryearwhich
5resultedinaMissouriincometaxbenefit.Theamountaddedpursuanttothissubdivision
6shallnotincludeanyamountofafederalincometaxrefundattributabletoataxcredit
7reducingataxpayer'sfederaltaxliabilitypursuanttoPublicLaw116-136or116-260,enacted
8bythe116thUnitedStatesCongress,forthetaxyearbeginningonorafterJanuary1,2020,
9andendingonorbeforeDecember31,2020,anddeductedfromMissouriadjustedgross
10incomepursuanttosection143.171.Theamountaddedunderthissubdivisionshallalsonot
11includeanyamountofafederalincometaxrefundattributabletoataxcreditreducinga
12taxpayer'sfederaltaxliabilityunderanyotherfederallawthatprovidesdirecteconomic
13impactpaymentstotaxpayerstomitigatefinancialchallengesrelatedtotheCOVID-19
14pandemic,anddeductedfromMissouriadjustedgrossincomeundersection143.171;
15 (2)Interestoncertaingovernmentalobligationsexcludedfromfederalgrossincome
16by26U.S.C.Section103oftheInternalRevenueCode,asamended.Theprevioussentence
17shallnotapplytointerestonobligationsofthestateofMissourioranyofitspolitical
18subdivisionsorauthoritiesandshallnotapplytotheinterestdescribedinsubdivision(1)of
EXPLANATION—Matterenclosedinbold-facedbrackets[thus] intheabovebillisnotenactedandis
intendedtobeomittedfromthelaw.Matterinbold-facetypeintheabovebillisproposedlanguage. 19subsection3ofthissection.Theamountaddedpursuanttothissubdivisionshallbereduced
20bytheamountsapplicabletosuchinterestthatwouldhavebeendeductibleincomputingthe
21taxableincomeofthetaxpayerexceptonlyfortheapplicationof26U.S.C.Section265ofthe
22InternalRevenueCode,asamended.Thereductionshallonlybemadeifitisatleastfive
23hundreddollars;
24 (3)Theamountofanydeductionthatisincludedinthecomputationoffederal
25taxableincomepursuantto26U.S.C.Section168oftheInternalRevenueCodeasamended
26bytheJobCreationandWorkerAssistanceActof2002totheextenttheamountdeducted
27relatestopropertypurchasedonorafterJuly1,2002,butbeforeJuly1,2003,andtothe
28extenttheamountdeductedexceedstheamountthatwouldhavebeendeductiblepursuantto
2926U.S.C.Section168oftheInternalRevenueCodeof1986asineffectonJanuary1,2002;
30 (4)Theamountofanydeductionthatisincludedinthecomputationoffederal
31taxableincomefornetoperatinglossallowedby26U.S.C.Section172oftheInternal
32RevenueCodeof1986,asamended,otherthanthedeductionallowedby26U.S.C.Section
33172(b)(1)(G)and26U.S.C.Section172(i)oftheInternalRevenueCodeof1986,as
34amended,foranetoperatinglossthetaxpayerclaimsinthetaxyearinwhichthenet
35operatinglossoccurredorcarriesforwardforaperiodofmorethantwentyyearsandcarries
36backwardformorethantwoyears.Anyamountofnetoperatinglosstakenagainstfederal
37taxableincomebutdisallowedforMissouriincometaxpurposespursuanttothissubdivision
38afterJune18,2002,maybecarriedforwardandtakenagainstanyincomeontheMissouri
39incometaxreturnforaperiodofnotmorethantwentyyearsfromtheyearoftheinitialloss;
40and
41 (5)FornonresidentindividualsinalltaxableyearsendingonorafterDecember31,
422006,theamountofanypropertytaxespaidtoanotherstateorapoliticalsubdivisionof
43anotherstateforwhichadeductionwasallowedonsuchnonresident'sfederalreturninthe
44taxableyearunlesssuchstate,politicalsubdivisionofastate,ortheDistrictofColumbia
45allowsasubtractionfromincomeforpropertytaxespaidtothisstateforpurposesof
46calculatingincomefortheincometaxforsuchstate,politicalsubdivisionofastate,orthe
47DistrictofColumbia;
48 (6)ForalltaxyearsbeginningonorafterJanuary1,2018,anyinterestexpensepaid
49oraccruedinaprevioustaxableyear,butallowedasadeductionunder26U.S.C.Section
50163,asamended,inthecurrenttaxableyearbyreasonofthecarryforwardofdisallowed
51businessinterestprovisionsof26U.S.C.Section163(j),asamended.Forthepurposesofthis
52subdivision,aninterestexpenseisconsideredpaidoraccruedonlyinthefirsttaxableyearthe
53deductionwouldhavebeenallowableunder26U.S.C.Section163,asamended,ifthe
54limitationunder26U.S.C.Section163(j),asamended,didnotexist.
HCSHBs594&508 2 55 3.Thereshallbesubtractedfromthetaxpayer'sfederaladjustedgrossincomethe
56followingamountstotheextentincludedinfederaladjustedgrossincome:
57 (1)Interestreceivedondepositsheldatafederalreservebankorinterestordividends
58onobligationsoftheUnitedStatesanditsterritoriesandpossessionsorofanyauthority,
59commissionorinstrumentalityoftheUnitedStatestotheextentexemptfromMissouri
60incometaxespursuanttothelawsoftheUnitedStates.Theamountsubtractedpursuantto
61thissubdivisionshallbereducedbyanyinterestonindebtednessincurredtocarrythe
62describedobligationsorsecuritiesandbyanyexpensesincurredintheproductionofinterest
63ordividendincomedescribedinthissubdivision.Thereductionintheprevioussentence
64shallonlyapplytotheextentthatsuchexpensesincludingamortizablebondpremiumsare
65deductedindeterminingthetaxpayer'sfederaladjustedgrossincomeorincludedinthe
66taxpayer'sMissouriitemizeddeduction.Thereductionshallonlybemadeiftheexpenses
67totalatleastfivehundreddollars;
68 (2)Theportionofanygain,fromthesaleorotherdispositionofpropertyhavinga
69higheradjustedbasistothetaxpayerforMissouriincometaxpurposesthanforfederal
70incometaxpurposesonDecember31,1972,thatdoesnotexceedsuchdifferenceinbasis.If
71againisconsideredalong-termcapitalgainforfederalincometaxpurposes,themodification
72shallbelimitedtoone-halfofsuchportionofthegain;
73 (3)Theamountnecessarytopreventthetaxationpursuanttothischapterofany
74annuityorotheramountofincomeorgainwhichwasproperlyincludedinincomeorgainand
75wastaxedpursuanttothelawsofMissouriforataxableyearpriortoJanuary1,1973,tothe
76taxpayer,ortoadecedentbyreasonofwhosedeaththetaxpayeracquiredtherighttoreceive
77theincomeorgain,ortoatrustorestatefromwhichthetaxpayerreceivedtheincomeor
78gain;
79 (4)Accumulationdistributionsreceivedbyataxpayerasabeneficiaryofatrusttothe
80extentthatthesameareincludedinfederaladjustedgrossincome;
81 (5)Theamountofanystateincometaxrefundforaprioryearwhichwasincludedin
82thefederaladjustedgrossincome;
83 (6)Theportionofcapitalgainspecifiedinsection135.357thatwouldotherwisebe
84includedinfederaladjustedgrossincome;
85 (7)Theamountthatwouldhavebeendeductedinthecomputationoffederaltaxable
86incomepursuantto26U.S.C.Section168oftheInternalRevenueCodeasineffecton
87January1,2002,totheextentthatamountrelatestopropertypurchasedonorafterJuly1,
882002,butbeforeJuly1,2003,andtotheextentthatamountexceedstheamountactually
89deductedpursuantto26U.S.C.Section168oftheInternalRevenueCodeasamendedbythe
90JobCreationandWorkerAssistanceActof2002;
HCSHBs594&508 3 91 (8)ForalltaxyearsbeginningonorafterJanuary1,2005,theamountofanyincome
92receivedformilitaryservicewhilethetaxpayerservesinacombatzonewhichisincludedin
93federaladjustedgrossincomeandnototherwiseexcludedtherefrom.Asusedinthissection,
94"combatzone"meansanyareawhichthePresidentoftheUnitedStatesbyExecutiveOrder
95designatesasanareainwhichArmedForcesoftheUnitedStatesareorhaveengagedin
96combat.Serviceisperformedinacombatzoneonlyifperformedonorafterthedate
97designatedbythePresidentbyExecutiveOrderasthedateofthecommencingofcombat
98activitiesinsuchzone,andonorbeforethedatedesignatedbythePresidentbyExecutive
99Orderasthedateoftheterminationofcombatantactivitiesinsuchzone;
100 (9)ForalltaxyearsendingonorafterJuly1,2002,withrespecttoqualifiedproperty
101thatissoldorotherwisedisposedofduringataxableyearbyataxpayerandforwhichan
102additionalmodificationwasmadeundersubdivision(3)ofsubsection2ofthissection,the
103amountbywhichadditionalmodificationmadeundersubdivision(3)ofsubsection2ofthis
104sectiononqualifiedpropertyhasnotbeenrecoveredthroughtheadditionalsubtractions
105providedinsubdivision(7)ofthissubsection;
106 (10)ForalltaxyearsbeginningonorafterJanuary1,2014,theamountofany
107incomereceivedaspaymentfromanyprogramwhichprovidescompensationtoagricultural
108producerswhohavesufferedalossastheresultofadisasteroremergency,includingthe:
109 (a)LivestockForageDisasterProgram;
110 (b)LivestockIndemnityProgram;
111 (c)EmergencyAssistanceforLivestock,Honeybees,andFarm-RaisedFish;
112 (d)EmergencyConservationProgram;
113 (e)NoninsuredCropDisasterAssistanceProgram;
114 (f)Pasture,Rangeland,ForagePilotInsuranceProgram;
115 (g)AnnualForagePilotProgram;
116 (h)LivestockRiskProtectionInsurancePlan;
117 (i)LivestockGrossMarginInsurancePlan;
118 (11)ForalltaxyearsbeginningonorafterJanuary1,2018,anyinterestexpensepaid
119oraccruedinthecurrenttaxableyear,butnotdeductedasaresultofthelimitationimposed
120under26U.S.C.Section163(j),asamended.Forthepurposesofthissubdivision,aninterest
121expenseisconsideredpaidoraccruedonlyinthefirsttaxableyearthedeductionwouldhave
122beenallowableunder26U.S.C.Section163,asamended,ifthelimitationunder26U.S.C.
123Section163(j),asamended,didnotexist;
124 (12)Onehundredpercentofanyretirementbenefitsreceivedbyanytaxpayerasa
125resultofthetaxpayer'sserviceintheArmedForcesoftheUnitedStates,includingreserve
126componentsandtheNationalGuardofthisstate,asdefinedin32U.S.C.Sections101(3)and
127109,andanyothermilitaryforceorganizedunderthelawsofthisstate;[and]
HCSHBs594&508 4 128 (13)ForalltaxyearsbeginningonorafterJanuary1,2022,onehundredpercentof
129anyfederal,state,orlocalgrantmoneysreceivedbythetaxpayerifthegrantmoneywas
130disbursedfortheexpresspurposeofprovidingorexpandingaccesstobroadbandinternetto
131areasofthestatedeemedtobelackingsuchaccess; and
132 (14)ForalltaxyearsbeginningonorafterJanuary1,2025,onehundred
133percentofallincomereportedasacapitalgainforfederalincometaxpurposes.
134 4.Thereshallbeaddedtoorsubtractedfromthetaxpayer'sfederaladjustedgross
135incomethetaxpayer'sshareoftheMissourifiduciaryadjustmentprovidedinsection143.351.
136 5.Thereshallbeaddedtoorsubtractedfromthetaxpayer'sfederaladjustedgross
137incomethemodificationsprovidedinsection143.411.
138 6.Inadditiontothemodificationstoataxpayer'sfederaladjustedgrossincomeinthis
139section,tocalculateMissouriadjustedgrossincomethereshallbesubtractedfromthe
140taxpayer'sfederaladjustedgrossincomeanygainrecognizedpursuantto26U.S.C.Section
1411033oftheInternalRevenueCodeof1986,asamended,arisingfromcompulsoryor
142involuntaryconversionofpropertyasaresultofcondemnationortheimminencethereof.
143 7.(1)Asusedinthissubsection,"qualifiedhealthinsurancepremium"meansthe
144amountpaidduringthetaxyearbysuchtaxpayerforanyinsurancepolicyprimarily
145providinghealthcarecoverageforthetaxpayer,thetaxpayer'sspouse,orthetaxpayer's
146dependents.
147 (2)Inadditiontothesubtractionsinsubsection3ofthissection,onehundredpercent
148oftheamountofqualifiedhealthinsurancepremiumsshallbesubtractedfromthetaxpayer's
149federaladjustedgrossincometotheextenttheamountpaidforsuchpremiumsisincludedin
150federaltaxableincome.Thetaxpayershallprovidethedepartmentofrevenuewithproofof
151theamountofqualifiedhealthinsurancepremiumspaid.
152 8.(1)BeginningJanuary1,2014,inadditiontothesubtractionsprovidedinthis
153section,onehundredpercentofthecostincurredbyataxpayerforahomeenergyaudit
154conductedbyanentitycertifiedbythedepartmentofnaturalresourcesundersection640.153
155ortheimplementationofanyenergyefficiencyrecommendationsmadeinsuchanauditshall
156besubtractedfromthetaxpayer'sfederaladjustedgrossincometotheextenttheamountpaid
157foranysuchactivityisincludedinfederaltaxableincome.Thetaxpayershallprovidethe
158departmentofrevenuewithasummaryofanyrecommendationsmadeinaqualifiedhome
159energyaudit,thenameandcertificationnumberofthequalifiedhomeenergyauditorwho
160conductedtheaudit,andproofoftheamountpaidforanyactivitiesunderthissubsectionfor
161whichadeductionisclaimed.Thetaxpayershallalsoprovideacopyofthesummaryofany
162recommendationsmadeinaqualifiedhomeenergyaudittothedepartmentofnatural
163resources.
HCSHBs594&508 5 164 (2)Atnotimeshalladeductionclaimedunderthissubsectionbyanindividual
165taxpayerortaxpayersfilingcombinedreturnsexceedonethousanddollarsperyearfor
166individualtaxpayersorcumulativelyexceedtwothousanddollarsperyearfortaxpayers
167filingcombinedreturns.
168 (3)Anydeductionclaimedunderthissubsectionshallbeclaimedforthetaxyearin
169whichthequalifiedhomeenergyauditwasconductedorinwhichtheimplementationofthe
170energyefficiencyrecommendationsoccurred.Ifimplementationoftheenergyefficiency
171recommendationsoccurredduringmorethanoneyear,thedeductionmaybeclaimedinmore
172thanoneyear,subjecttothelimitationsprovidedundersubdivision(2)ofthissubsection.
173 (4)Adeductionshallnotbeclaimedforanyotherwiseeligibleactivityunderthis
174subsectionifsuchactivityqualifiedforandreceivedanyrebateorotherincentivethrougha
175state-sponsoredenergyprogramorthroughanelectriccorporation,gascorporation,electric
176cooperative,ormunicipallyownedutility.
177 9.Theprovisionsofsubsection8ofthissectionshallexpireonDecember31,2020.
178 10.(1)Asusedinthissubsection,thefollowingtermsmean:
179 (a)"Beginningfarmer",ataxpayerwho:
180 a.HasfiledatleastonebutnotmorethantenInternalRevenueServiceScheduleF
181(Form1040)ProfitorLossFromFarmingformssinceturningeighteenyearsofage;
182 b.IsapprovedforabeginningfarmerloanthroughtheUSDAFarmServiceAgency
183BeginningFarmerdirectorguaranteedloanprogram;
184 c.Hasafarmingoperationthatisdeterminedbythedepartmentofagriculturetobe
185newproductionagriculturebutistheprincipaloperatorofafarmandhassubstantialfarming
186knowledge;or
187 d.Hasbeendeterminedbythedepartmentofagriculturetobeaqualifiedfamily
188member;
189 (b)"Farmowner",anindividualwhoownsfarmlandanddisposesoforrelinquishes
190useofallorsomeportionofsuchfarmlandasfollows:
191 a.Asaletoabeginningfarmer;
192 b.Aleaseorrentalagreementnotexceedingtenyearswithabeginningfarmer;or
193 c.Acrop-sharearrangementnotexceedingtenyearswithabeginningfarmer;
194 (c)"Qualifiedfamilymember",anindividualwhoisrelatedtoafarmownerwithin
195thefourthdegreebyblood,marriage,oradoptionandwhoispurchasingorleasingorisina
196crop-sharearrangementforlandfromalloraportionofsuchfarmowner'sfarmingoperation.
197 (2)(a)Inadditiontoallothersubtractionsauthorizedinthissection,ataxpayerwho
198isafarmownerwhosellsalloraportionofsuchfarmlandtoabeginningfarmermaysubtract
199fromsuchtaxpayer'sMissouriadjustedgrossincomeanamounttotheextentincludedin
200federaladjustedgrossincomeasprovidedinthissubdivision.
HCSHBs594&508 6 201 (b)Subjecttothelimitationsinparagraph(c)ofthissubdivision,theamountthatmay
202besubtractedshallbeequaltotheportionofcapitalgainsreceivedfromthesaleofsuch
203farmlandthatsuchtaxpayerreceivesinthetaxyearforwhichsuchtaxpayersubtractssuch
204capitalgain.
205 (c)Ataxpayermaysubtractthefollowingamountsandpercentagespertaxyearin
206totalcapitalgainsreceivedfromthesaleofsuchfarmlandunderthissubdivision:
207 a.Forthefirsttwomilliondollarsreceived,onehundredpercent;
208 b.Forthenextonemilliondollarsreceived,eightypercent;
209 c.Forthenextonemilliondollarsreceived,sixtypercent;
210 d.Forthenextonemilliondollarsreceived,fortypercent;and
211 e.Forthenextonemilliondollarsreceived,twentypercent.
212 (d)Thedepartmentofrevenueshallprepareanannualreportreviewingthecostsand
213benefitsandcontainingstatisticalinformationregardingthesubtractionofcapitalgains
214authorizedunderthissubdivisionfortheprevioustaxyearincluding,butnotlimitedto,the
215totalamountofallcapitalgainssubtractedandthenumberoftaxpayerssubtractingsuch
216capitalgains.SuchreportshallbesubmittedbeforeFebruaryfirstofeachyeartothe
217committeeonagriculturepolicyoftheMissourihouseofrepresentativesandthecommittee
218onagriculture,foodproductionandoutdoorresourcesoftheMissourisenate,orthesuccessor
219committees.
220 (3)(a)Inadditiontoallothersubtractionsauthorizedinthissection,ataxpayerwho
221isafarmownerwhoentersaleaseorrentalagreementforalloraportionofsuchfarmland
222withabeginningfarmermaysubtractfromsuchtaxpayer'sMissouriadjustedgrossincomean
223amounttotheextentincludedinfederaladjustedgrossincomeasprovidedinthis
224subdivision.
225 (b)Subjecttothelimitationinparagraph(c)ofthissubdivision,theamountthatmay
226besubtractedshallbeequaltotheportionofcashrentincomereceivedfromtheleaseor
227rentalofsuchfarmlandthatsuchtaxpayerreceivesinthetaxyearforwhichsuchtaxpayer
228subtractssuchincome.
229 (c)Notaxpayershallsubtractmorethantwenty-fivethousanddollarspertaxyearin
230totalcashrentincomereceivedfromtheleaseorrentalofsuchfarmlandunderthis
231subdivision.
232 (4)(a)Inadditiontoallothersubtractionsauthorizedinthissection,ataxpayerwho
233isafarmownerwhoentersacrop-sharearrangementonalloraportionofsuchfarmlandwith
234abeginningfarmermaysubtractfromsuchtaxpayer'sMissouriadjustedgrossincomean
235amounttotheextentincludedinfederaladjustedgrossincomeasprovidedinthis
236subdivision.
HCSHBs594&508 7 237 (b)Subjecttothelimitationinparagraph(c)ofthissubdivision,theamountthatmay
238besubtractedshallbeequaltotheportionofincomereceivedfromthecrop-share
239arrangementonsuchfarmlandthatsuchtaxpayerreceivesinthetaxyearforwhichsuch
240taxpayersubtractssuchincome.
241 (c)Notaxpayershallsubtractmorethantwenty-fivethousanddollarspertaxyearin
242totalincomereceivedfromtheleaseorrentalofsuchfarmlandunderthissubdivision.
243 (5)Thedepartmentofagricultureshall,byrule,establishaprocesstoverifythata
244taxpayerisabeginningfarmerforpurposesofthissectionandshallprovideverificationto
245thebeginningfarmerandfarmsellerofsuchfarmer'sandseller'scertificationand
246qualificationfortheexemptionprovidedinthissubsection.
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HCSHBs594&508 8