HI HB2186

Disallows the dividends paid deduction for Real Estate Investment Trusts (REITs) for taxable years beginning after December 31, 2013.

For taxable years before January 1, 2014, the deduction for dividends paid remains limited to dividends attributable to income taxable under Hawaii law.

Adds Internal Revenue Code section 857(b)(2)(B) to the list of provisions not operative for Hawaii tax purposes, making it non-operative for REITs operating in Hawaii.

REITs remain subject to Hawaii's corporate tax rates of 4.4% to 6.4% on taxable income calculated under sections 857 and 858 of the Internal Revenue Code with Hawaii adjustments.

Effective for taxable years beginning after December 31, 2014.