Effective 01 Jan 2019, see footnote

143.022. Deduction for business income — business income defined — increase in percentage of subtraction, when. — 1. As used in this section, "business income" means the income greater than zero arising from transactions in the regular course of all of a taxpayer's trade or business and shall be limited to the Missouri source net profit from the combination of the following:

(1) The total combined profit as properly reported to the Internal Revenue Service on each Schedule C, or its successor form, filed; and

(2) The total partnership and S corporation income or loss properly reported to the Internal Revenue Service on Part II of Schedule E, or its successor form.

2. In addition to all other modifications allowed by law, there shall be subtracted from the federal adjusted gross income of an individual taxpayer a percentage of such individual's business income, to the extent that such amounts are included in federal adjusted gross income when determining such individual's Missouri adjusted gross income.

3. In the case of an S corporation described in section 143.471 or a partnership computing the deduction allowed under subsection 2 of this section, taxpayers described in subdivision (1) or (2) of this subsection shall be allowed such deduction apportioned in proportion to their share of ownership of the business as reported on the taxpayer's Schedule K-1, or its successor form, for the tax period for which such deduction is being claimed when determining the Missouri adjusted gross income of:

(1) The shareholders of an S corporation as described in section 143.471;

(2) The partners in a partnership.

4. The percentage to be subtracted under subsection 2 of this section shall be increased over a period of years. Each increase in the percentage shall be by five percent and no more than one increase shall occur in a calendar year. The maximum percentage that may be subtracted is twenty percent of business income. Any increase in the percentage that may be subtracted shall take effect on January first of a calendar year and such percentage shall continue in effect until the next percentage increase occurs. An increase shall only apply to tax years that begin on or after the increase takes effect.

5. An increase in the percentage that may be subtracted under subsection 2 of this section shall only occur if the amount of net general revenue collected in the previous fiscal year exceeds the highest amount of net general revenue collected in any of the three fiscal years prior to such fiscal year by at least one hundred fifty million dollars.

6. The first year that a taxpayer may make the subtraction under subsection 2 of this section is 2017, provided that the provisions of subsection 5 of this section are met. If the provisions of subsection 5 of this section are met, the percentage that may be subtracted in 2017 is five percent.

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(L. 2014 S.B. 509 & 496, A.L. 2018 H.B. 2540)

Effective 1-01-19