SB 764

Generally, for taxable years beginning after December 31, 2017, this bill adopts,

for state income and franchise tax purposes, certain provisions of the Internal

Revenue Code that apply to individuals and were adopted as part of the federal Tax

Cuts and Jobs Act that was enacted in December 2017.

The provisions in this bill relate to the following provisions of the federal act:

1. The recharacterization of individual retirement accounts as Roth IRAs, and

vice versa. Under the federal changes, recharacterization may not be used to unwind

a conversion of a traditional IRA to a Roth IRA.

2. Retirement plan offsets. Under the federal act, the period during which

retirement plan loan offsets may be rolled over into another retirement plan on a

tax-free basis is extended.

3. The deductibility of travel expenses incurred by a member of Congress. For

taxable years beginning after December 21, 2017, the federal act prohibits a member

of Congress from deducting living expenses paid or incurred while away from home

as an ordinary and necessary expense.

4. The discharge of certain student loan indebtedness. Under federal law, the

forgiveness of student loans is not considered taxable income if the student works for

a specified period in certain professions for certain employers. The federal act

extends this exclusion to student loan discharges resulting from the student's death

or permanent and total disability. Under federal law, this provision sunsets and does

not apply to taxable years beginning after December 31, 2025.

5. Allowing certain distributions from a qualified tuition program, commonly

known as a 529 account, to be used for tuition expenses to enroll in or attend an

elementary or secondary public, private, or religious school. Currently, this state's

529 college savings program allows distributions to be used only for qualified higher

education expenses as defined under federal law.

Also under the bill, the current law subtract modification for certain amounts

paid by an individual for tuition expenses for his or her dependent pupil to attend

an eligible elementary or secondary school may not be claimed if the source of the

payment is a 529 account.

Under current law, for purposes of computing depletion for income and

franchise tax purposes, the Internal Revenue Code means the federal Internal

Revenue Code in effect for the year in which the property subject to depletion is

placed in service. This bill modifies current law to clarify that it applies to the

property subject to depletion regardless of when the property is placed in service.

The bill also creates a sales and use tax exemption for property, items, and

services purchased by an entity that is tax-exempt under the Internal Revenue Code

and that is organized for the exclusive purpose of holding title to property, collecting

income from that property, and turning over the entire amount of that income, less

expenses, to an entity that is also exempt from state sales and use taxes under an