Late yesterday, the Iowa House passed SF 220 by a vote of 87-7. This followed passage of the bill in the Iowa Senate on February 18, 2019, by a vote of 48-0. The bill now goes to Governor Reynolds for an expected signature.
Once enacted, the bill would retroactively expand the 2018 enhanced Section 179 deduction ($70,000) and reduction limitation ($280,000) to apply to S corporations, C corporations, financial institutions, and LLCs and partnerships taxed as corporations. These groups are currently subject to a $25,000 deduction and a $200,000 reduction limitation.
The bill only applies to the 2018 tax year because all entities and individuals are subject to a $100,000 Section 179 deduction limit with a $400,000 reduction limitation for 2019. In 2020, Iowa law is scheduled to fully couple with federal law for the Section 179 deduction.
The bill addresses what appears to have been legislative oversight in last year's Iowa tax reform legislation, particularly with respect to the distinction between S corporations and partnerships. We are anticipating Governor Reynolds will sign the bill shortly. We will keep you posted so you can get those returns filed!
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