SF 211 (LSB 1807XS (3) 86)

SENATE FILE 211

BY  ZAUN, SHIPLEY, FEENSTRA, CHELGREN, BEHN, WHITVER, ROZENBOOM, SINCLAIR, and SCHULTZ

A BILL FOR

An Act creating an exemption from the computation of the state individual income tax of net capital gains from the sale of an equity investment in a qualified Iowa business and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  57.  a.  Subtract, to the extent included, the net capital gains from the sale of an equity investment in a qualified Iowa business.
   b.  In order to be eligible for the deduction in paragraph “a”, the taxpayer must be a resident of this state.
   c.  For purposes of this subsection:
   (1)  “Equity investment” means an equity interest in a business which equity interest was received in exchange for a capital contribution or payment in the form of cash, real property, or tangible personal property.
   (2)  “Qualified Iowa business” means a business whose commercial domicile, as defined in section 422.32, is in this state, and includes a sole proprietorship, joint venture, partnership, limited liability company, corporation, association, or any other business entity operated for profit.
    Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2015, for tax years beginning on or after that date.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill creates an exemption from the computation of net income for the individual income tax of net capital gains from the sale of an equity investment in a qualified Iowa business. “Equity investment” is defined as an equity interest in a business that was received in exchange for a capital contribution or payment in the form of cash, real property, or tangible personal property. “Qualified Iowa business” is defined as any business operated for profit whose commercial domicile is in Iowa. In order to be eligible for this exemption a taxpayer must be a resident of Iowa.
   The bill applies retroactively to January 1, 2015, for tax years beginning on or after that date.