Hawaii updates Code conformity

Hawaii’s Internal Revenue Code (Code) tie-in date moves to February 9, 2018, for tax years beginning after 2017. The prior Code conformity date was December 31, 2016, for tax years beginning after 2016. The date change applies to corporate and personal income taxes. However, the state decouples from many federal provisions.

Inoperative provisions. The Code provisions that do not apply for Hawaii purposes include:

  • Code Sec. 67(g), suspending miscellaneous itemized deductions;
  • Code Sec. 68(f), temporarily repealing the overall limitation on itemized deductions;
  • Code Sec. 132(f)(8), suspending the qualified bicycle commuting reimbursements exclusion; and
  • Code Sec. 217(k), suspending moving expense deductions.

Hawaii also does not adopt the Tax Cuts and Jobs Act changes made to Code Sec. 274. The federal law eliminates business expense deductions for most entertainment costs and commuting benefits after 2017. It also eliminates business expense deductions for some employer-provided meals after 2025.

Partnerships. Hawaii generally conforms to Code Secs. 6221, 6222, 6223, 6225, and 6226, relating to partnership audits. Partnerships that elect under Code Sec. 6221(b) to opt out of the new rules for federal purposes must make the same election for state purposes.

The state also generally adopts the definitions and special rules for partnerships in Code Sec. 6241. However, it does not adopt the definitions in:

  • Code Sec. 6241(1) — partnership;
  • Code Sec. 6241(3) — return due date; and
  • Code Sec. 6241(5) — partnerships having principal place of business outside United States. (Act. 27 (S.B. 2821), Laws 2018, applicable as noted above.)

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