HRS § 235-2.3 — Conformance to the federal Internal Revenue Code; general application


§235-2.3
Conformance to the federal Internal Revenue Code; general application. (a)
For all taxable years beginning after December 31, 2024, as used in this
chapter, except as provided in this section and sections 235-2.35, 235-2.4, and
235-2.45, "Internal Revenue Code" means subtitle A, chapter 1, of the
federal Internal Revenue Code of 1986, as amended as of December 31, 2024, as
it applies to the determination of gross income, adjusted gross income,
ordinary income and loss, and taxable income, except those provisions of the
Internal Revenue Code which, pursuant to this chapter, do not apply or are
otherwise limited in application.
Sections 9672(1) (relating to tax treatment of
targeted EIDL advances) and 9673(1) (relating to tax treatment of restaurant
revitalization grants) of Public Law 117-2 shall be operative for purposes of
this chapter. No amount received under section 9601 (relating to 2021 recovery
rebates to individuals) of Public Law 117-2 shall be included in gross income
for purposes of this chapter.
Sections 276(b)(1) (relating to subsequent
paycheck protection program loans), 277 (relating to emergency financial aid
grants), 278(b)(1) (relating to emergency EIDL grants and targeted EIDL
advances), 278(c)(1) (relating to subsidy for certain loan payments), and
278(d)(1) (relating to grants for shuttered venue operators) of Division N of
Public Law 116-260 shall be operative for purposes of this chapter. Sections
213 (relating to modification of limitations on charitable contributions) and
214 (relating to temporary special rules for health and dependent care flexible
spending arrangements) of Division EE of Public Law 116-260 shall be operative
for purposes of this chapter. Sections 301, 302, and 304 (relating to disaster
tax relief) of Division EE of Public Law 116-260 shall be operative for
purposes of this chapter. No amount received under section 272 (relating to
additional 2020 recovery rebates for individuals) of Division N of Public Law
116-260 shall be included in gross income for purposes of this chapter.
Sections 1106(i) (relating to exclusion of loan
forgiveness from gross income), 2202(b) (relating to loans from retirement
plans), and 2205 (relating to charitable contributions) of Public Law 116-136
shall be operative for purposes of this chapter. No amount received under
section 2201 (relating to recovery rebates) of Public Law 116-136 shall be
included in gross income for purposes of this chapter.
Section 2202(a) (relating to tax-favored
withdrawals from retirement plans) of Public Law 116-136 shall be operative for
purposes of this chapter and shall apply to taxable years beginning after
December 31, 2019.
Prior law shall continue to be used to
determine:
(1) The basis of property, if a taxpayer first
determined the basis of property in a taxable year to which prior law applies;
and
(2) Gross income, adjusted gross income, ordinary
income and loss, and taxable income for a taxable year to which prior law
applies.
(b) The following Internal Revenue Code
subchapters, parts of subchapters, sections, subsections, and parts of
subsections shall not be operative for the purposes of this chapter, unless
otherwise provided:
(1) Subchapter A (sections 1 to 59A) (with respect to
determination of tax liability), except section 1(h)(2) (relating to net
capital gain reduced by the amount taken into account as investment income),
except sections 2(a), 2(b), and 2(c) (with respect to the definition of
"surviving spouse" and "head of household"), except section
41 (with respect to the credit for increasing research activities), except
section 42 (with respect to low-income housing credit), except sections 47 and
48, as amended, as of December 31, 1984 (with respect to certain depreciable
tangible personal property), and except section 48(d)(3), as amended, as of
February 17, 2009 (with respect to the treatment of United States Department of
Treasury grants made under section 1603 of the American Recovery and
Reinvestment Tax Act of 2009). For treatment, see sections 235-110.91,
235-110.7, and 235-110.8;
(2) Section 78 (with respect to dividends received
from certain foreign corporations by domestic corporations choosing foreign tax
credit);
(3) Section 86 (with respect to social security and
tier 1 railroad retirement benefits);
(4) Section 91 (with respect to certain foreign
branch losses transferred to specified 10-percent owned foreign corporations);
(5) Section 103 (with respect to interest on state
and local bonds). For treatment, see section 235-7(b);
(6) Section 114 (with respect to extraterritorial
income). For treatment, any transaction as specified in the transitional rule
for 2005 and 2006 as specified in the American Jobs Creation Act of 2004
section 101(d) and any transaction that has occurred pursuant to a binding
contract as specified in the American Jobs Creation Act of 2004 section 101(f)
are inoperative;
(7) Section 120 (with respect to amounts received
under qualified group legal services plans). For treatment, see section
235-7(a)(9) to (11);
(8) Section 122 (with respect to certain reduced
uniformed services retirement pay). For treatment, see section 235-7(a)(3);
(9) Section 135 (with respect to income from United
States savings bonds used to pay higher education tuition and fees). For
treatment, see section 235-7(a)(1);
(10) Section 139C (with respect to COBRA premium
assistance);
(11) Subchapter B (sections 141 to 150) (with respect
to tax exemption requirements for state and local bonds);
(12) Section 151 (with respect to allowance of
deductions for personal exemptions). For treatment, see section 235-54;
(13) Section 179B (with respect to expensing of
capital costs incurred in complying with Environmental Protection Agency
sulphur regulations);
(14) Section 181 (with respect to special rules for
certain film and television productions);
(15) Section 196 (with respect to deduction for
certain unused investment credits);
(16) Section 199 (with respect to the U.S. production
activities deduction);
(17) Section 199A (with respect to qualified business
income);
(18) Section 222 (with respect to qualified tuition
and related expenses);
(19) Sections 241 to 247 (with respect to special
deductions for corporations). For treatment, see section 235-7(c);
(20) Section 250 (with respect to foreign-derived
intangible income and global intangible low-taxed income);
(21) Section 267A (with respect to certain related
party amounts paid or accrued in hybrid transactions or with hybrid entities);
(22) Section 280C (with respect to certain expenses
for which credits are allowable). For treatment, see section 235-110.91;
(23) Section 291 (with respect to special rules
relating to corporate preference items);
(24) Section 367 (with respect to foreign
corporations);
(25) Section 501(c)(12), (15), (16) (with respect to
exempt organizations); except that section 501(c)(12) shall be operative for
companies that provide potable water to residential communities that lack any
access to public utility water services;
(26) Section 515 (with respect to taxes of foreign
countries and possessions of the United States);
(27) Subchapter G (sections 531 to 565) (with respect
to corporations used to avoid income tax on shareholders);
(28) Subchapter H (sections 581 to 597) (with respect
to banking institutions), except section 584 (with respect to common trust
funds). For treatment, see chapter 241;
(29) Section 642(a) and (b) (with respect to special
rules for credits and deductions applicable to trusts). For treatment, see
sections 235-54(b) and 235-55;
(30) Section 646 (with respect to tax treatment of
electing Alaska Native settlement trusts);
(31) Section 668 (with respect to interest charge on
accumulation distributions from foreign trusts);
(32) Subchapter L (sections 801 to 848) (with respect
to insurance companies). For treatment, see sections 431:7-202 and 431:7-204;
(33) Section 853 (with respect to foreign tax credit
allowed to shareholders). For treatment, see section 235-55;
(34) Section 853A (with respect to credits from tax
credit bonds allowed to shareholders);
(35) Subchapter N (sections 861 to 999) (with respect
to tax based on income from sources within or without the United States),
except sections 985 to 989 (with respect to foreign currency transactions).
For treatment, see sections 235-4, 235-5, and 235-7(b), and 235-55;
(36) Section 1042(g) (with respect to sales of stock
in agricultural refiners and processors to eligible farm cooperatives);
(37) Section 1055 (with respect to redeemable ground
rents);
(38) Section 1057 (with respect to election to treat
transfer to foreign trust, etc., as taxable exchange);
(39) Sections 1291 to 1298 (with respect to treatment
of passive foreign investment companies);
(40) Subchapter Q (sections
1311 to 1351) (with respect to readjustment of tax between years and special
limitations), except for section 1341 (with respect to computation of tax where
taxpayer restores substantial amount held under claim of right);
(41) Subchapter R (sections 1352 to 1359) (with
respect to election to determine corporate tax on certain international
shipping activities using per ton rate);
(42) Subchapter U (sections 1391 to 1397F) (with
respect to designation and treatment of empowerment zones, enterprise
communities, and rural development investment areas). For treatment, see
chapter 209E;
(43) Subchapter W (sections 1400 to 1400C) (with
respect to District of Columbia enterprise zone);
(44) Section 1400O (with respect to education tax
benefits);
(45) Section 1400P (with respect to housing tax
benefits);
(46) Section 1400R (with respect to employment
relief);
(47) Section 1400T (with respect to special rules for
mortgage revenue bonds);
(48) Section 1400U-1 (with respect to allocation of
recovery zone bonds);
(49) Section 1400U-2 (with respect to recovery zone
economic development bonds); and
(50) Section 1400U-3 (with respect to recovery zone
facility bonds).