Modification of income for purposes of determining tax-exempt status of certain mutual or cooperative telephone or electric companies under Section 301 of the Act
The provision modifies the definition of income used to determine the tax-exempt status of a mutual or cooperative telephone or electric company to exclude certain government grants, contributions, and assistance. Specifically, the provision excludes from income (1) grants, contributions, and assistance provided under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or by local, state, or regional governmental entities for disasters or emergencies; and (2) certain grants or contributions provided by a government entity for electric, communications, broadband, internet, or other utility facilities or services.
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For Iowa purposes in tax years 2018 and 2019, in determining whether at least 85% of their income consists of amounts collected from members for the sole purpose of meeting losses and expenses, mutual or cooperative telephone or electric companies must take into account income from grants provided pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act or similar state, local or regional grants, and income from grants by government entities for purposes substantially related to providing, restoring, or relocating electric, communication, broadband, internet, or other utility facilities or services, even though such grants are not treated as income in making this determination for federal purposes.
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This may mean that some mutual or cooperative telephone or electric companies receiving these grants will be subject to Iowa income taxes in 2018 and 2019, even though they qualify as non-profit corporations for federal tax purposes for those years.