HI HB2890

Imposes income tax on lessors who receive capital improvements made by lessees to real property upon lease termination.

Creates new section 235- in Hawaii Revised Statutes to tax the value of leasehold improvements surrendered by lessees to lessors at the end of a lease.

Authorizes the Department of Taxation to adopt rules under chapter 91 to implement the leasehold improvement tax provision.

Exempts Internal Revenue Code section 109 (improvements by lessee on lessor's property) from Hawaii income tax treatment, instead applying the new state leasehold improvement tax.

Takes effect upon approval and applies to taxable years beginning after December 31, 2009.