House File 658
HOUSE FILE
BY ALONS, HUSEMAN, HAHN, ROBERTS,
LALK, DE BOEF, TYMESON, HORBACH,
S. OLSON, MANTERNACH, KURTENBACH,
KRAMER, PAULSEN, DENNIS, and
BAUDLER
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the deduction of the capital gain from the
2 sale of capital investments made in or by certain businesses
3 and including an applicability date provision.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 1690HH 80
6 mg/pj/5
PAG LIN
1 1 Section 1. Section 422.7, Code 2003, is amended by adding
1 2 the following new subsection:
1 3 NEW SUBSECTION. 39. Subtract the capital gain from the
1 4 following:
1 5 a. The sale of an equity investment in a business if all
1 6 of the following requirements are met:
1 7 (1) The equity investment is held for a period of thirty=
1 8 six months or more from the date of acquisition.
1 9 (2) A credit is not claimed on the investment under
1 10 section 15E.66, 422.11F, or 422.11G.
1 11 (3) The deduction under this paragraph "a" is in lieu of
1 12 any deduction under section 1202 of the Internal Revenue Code.
1 13 b. If the adjusted gross income includes income or loss
1 14 from a business operated by the taxpayer, the sale of a
1 15 building, land, or machinery and equipment used in the
1 16 operation of the business if the building, land, or machinery
1 17 and equipment are held for a period of thirty=six months or
1 18 more from the date of acquisition.
1 19 An individual may claim the capital gain deduction of a
1 20 partnership, S corporation, limited liability company, estate,
1 21 or trust electing to have the income taxed directly to the
1 22 individual. The amount claimed by the individual shall be
1 23 based upon the pro rata share of the individual's earnings of
1 24 a partnership, S corporation, limited liability company,
1 25 estate, or trust.
1 26 Sec. 2. Section 422.35, Code 2003, is amended by adding
1 27 the following new subsection:
1 28 NEW SUBSECTION. 19. Subtract the capital gain from the
1 29 following:
1 30 a. The sale of an equity investment in a business if all
1 31 of the following requirements are met:
1 32 (1) The equity investment is held for a period of thirty=
1 33 six months or more from the date of acquisition.
1 34 (2) A credit is not claimed on the investment under
1 35 subsection 12 or 13 or section 15E.66.
2 1 b. The sale of a building, land, or machinery and
2 2 equipment used in the operation of the business if the
2 3 building, land, or machinery and equipment are held for a
2 4 period of thirty=six months or more from the date of
2 5 acquisition.
2 6 Sec. 3. APPLICABILITY DATE. This Act applies to capital
2 7 investments made in or by businesses on or after January 1,
2 8 2003, for tax years ending after that date.
2 9 EXPLANATION
2 10 This bill provides for the deduction of capital gains from
2 11 the sale of equity investments in businesses and from the sale
2 12 of buildings, land, or machinery and equipment of business if
2 13 certain requirements are met. These requirements are that the
2 14 equity investment or the building, land, or machinery and
2 15 equipment are held for at least three years; and no credit or
2 16 other deduction for the capital investment or gain is allowed.
2 17 The bill applies to capital investments made in or by
2 18 businesses on or after January 1, 2003, for tax years ending
2 19 after that date.
2 20 LSB 1690HH 80
2 21 mg/pj/5.2