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House File 521

Partial Bill History

Bill Text

PAG LIN
  1  1    Section 1.  Section 9H.1, subsections 3, 3A, and 4, Code
  1  2 1995, are amended to read as follows:
  1  3    3.  "Authorized farm corporation" means a corporation other
  1  4 than a family farm corporation founded for the purpose of
  1  5 farming and the ownership of agricultural land in which:
  1  6    a.  The stockholders do not exceed twenty-five in number;
  1  7 and
  1  8    b.  The, if the stockholders are all natural persons, or
  1  9 persons acting in a fiduciary capacity for the benefit of
  1 10 natural persons or nonprofit corporations, or family farm
  1 11 entities, and either of the following applies:
  1 12    a.  The stockholders do not exceed twenty-five in number.
  1 13    b.  The stockholders holding more than fifty percent of the
  1 14 equity investment in the corporation are farmers who reside in
  1 15 this state.  Common stock shall be issued in two classes,
  1 16 voting and nonvoting.  Voting stock shall be issued to all
  1 17 farmers and nonvoting stock to all other stockholders.
  1 18 Nonvoting stock shall have all privileges of stock ownership
  1 19 except the right to vote.  At least once each year, the
  1 20 corporation shall require that each stockholder certify
  1 21 whether the stockholder is a farmer, and the corporation shall
  1 22 then redeem and reissue stock so that only those stockholders
  1 23 who have certified that they are farmers hold voting stock.
  1 24 The filing of a false certification with the corporation is
  1 25 punishable by a civil penalty not to exceed one thousand
  1 26 dollars.
  1 27    3A.  "Authorized limited liability company" means a limited
  1 28 liability company other than a family farm limited liability
  1 29 company founded for the purpose of farming and the ownership
  1 30 of agricultural land in which all of the following apply:
  1 31    a.  The members do not exceed twenty-five in number.
  1 32    b.  The, if the members are all natural persons, or persons
  1 33 acting in a fiduciary capacity for the benefit of natural
  1 34 persons or nonprofit corporations, or family farm entities,
  1 35 and either of the following applies:
  2  1    a.  The members do not exceed twenty-five in number.
  2  2    b.  The members holding more than fifty percent of the
  2  3 equity investment in the company are farmers who reside in
  2  4 this state.
  2  5    4.  "Authorized trust" means a trust other than a family
  2  6 trust in which:
  2  7    a.  The beneficiaries do not exceed twenty-five in number;
  2  8 and
  2  9    b.  The, if the beneficiaries are all natural persons, who
  2 10 are not acting as a trustee or in a similar capacity for a
  2 11 trust as defined in subsection 22 of this section, or persons
  2 12 acting in a fiduciary capacity, or nonprofit corporations; and
  2 13    c.  Its, or family farm entities, where the income of the
  2 14 trust is not exempt from taxation under the laws of either the
  2 15 United States or the state of Iowa; and either of the
  2 16 following applies:
  2 17    a.  The beneficiaries do not exceed twenty-five in number.
  2 18    b.  The beneficiaries holding more than fifty percent of
  2 19 the equity interest in the corpus of the trust are farmers who
  2 20 reside in this state.
  2 21    Sec. 2.  Section 9H.1, Code 1995, is amended by adding the
  2 22 following new subsections:
  2 23    NEW SUBSECTION.  8B.  "Family farm entity" means a family
  2 24 farm corporation, family farm limited liability company,
  2 25 family farm partnership, or family trust.
  2 26    NEW SUBSECTION.  10A.  "Farmer" means a person who is one
  2 27 of the following:
  2 28    a.  A person who regularly participates in physical labor
  2 29 or the day-to-day management of a farming operation and who
  2 30 files a schedule F as part of the person's annual form 1040
  2 31 filing with the United States internal revenue service.
  2 32    b.  A person who qualified under paragraph "a" for twenty
  2 33 or more years in the past.
  2 34    c.  A family farm entity.  
  2 35                           EXPLANATION
  3  1    Chapter 9H currently restricts persons eligible to hold
  3  2 agricultural land in this state.  Authorized farm
  3  3 corporations, authorized limited liability companies, and
  3  4 authorized trusts may hold up to 1,500 acres of agricultural
  3  5 land.  An authorized entity must be founded for purposes of
  3  6 farming and the ownership of agricultural land.  In addition,
  3  7 the stockholders, members, or beneficiaries must not exceed 25
  3  8 in number and all must be natural persons or persons acting in
  3  9 a fiduciary capacity for the natural persons or nonprofit
  3 10 corporations.
  3 11    This bill provides that an authorized entity may also be an
  3 12 entity in which more than 50 percent of the equity investment
  3 13 is held by stockholders, members, or beneficiaries, who are
  3 14 farmers who reside in the state.  In the case of an authorized
  3 15 farm corporation, the bill requires that common stock be
  3 16 issued in two classes, voting and nonvoting.  Voting stock
  3 17 must be issued to farmers and nonvoting stock to all other
  3 18 stockholders.  The bill provides for an annual certification
  3 19 by stockholders to verify whether they are farmers.  A person
  3 20 who falsifies a certification is subject to a civil penalty.
  3 21    The bill also provides that a stockholder, member, or
  3 22 beneficiary may be a family farm corporation, family farm
  3 23 limited liability company, family farm limited partnership, or
  3 24 a family farm trust.  The bill defines a farmer as a person
  3 25 who regularly participates in physical labor or management of
  3 26 the family operation and who files a schedule F as part of the
  3 27 person's annual form 1040 filing with the United States
  3 28 internal revenue service.  The bill also provides that a
  3 29 farmer includes a person who has qualified as a farmer under
  3 30 that definition for 20 or more years, or a family farm entity.  
  3 31 LSB 2575HV 76
  3 32 da/jj/8
     
Text: HF00520                           Text: HF00522
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