Text: HSB00533 Text: HSB00535 Text: HSB00500 - HSB00599 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.7, subsection 21, unnumbered 1 2 paragraph 1, Code Supplement 1997, is amended to read as 1 3 follows: 1 4 Subtractforty-five percent ofthe net capital gain from 1 5 the following: 1 6 Sec. 2. Section 422.7, subsection 21, paragraph a, Code 1 7 Supplement 1997, is amended to read as follows: 1 8 a. Net capital gain from the sale of real property used in 1 9 a business, in which the taxpayer materially participated for 1 10 ten years, as defined in section 469(h) of the Internal 1 11 Revenue Code, and which has been held for a minimum of ten 1 12 years, or from the sale of a business, as defined in section 1 13 422.42, in which the taxpayer was employed or in which the 1 14 taxpayer materially participated for ten years, as defined in 1 15 section 469(h) of the Internal Revenue Code, and which has 1 16 been held for a minimum of ten years. The sale of a business 1 17 means the sale of all or substantially all of the tangible 1 18 personal property or service of the business. 1 19 However, where the business is sold to individuals who are 1 20 all lineal descendants of the taxpayer, the taxpayer does not 1 21 have to have materially participated in the business in order 1 22 for the net capital gain from the sale to be excluded from 1 23 taxation. 1 24 However, in lieu of the net capital gain deduction in this 1 25 paragraph and paragraphs "b", "c", and "d", where the business 1 26 is sold to individuals who are all lineal descendants of the 1 27 taxpayer, the amount of capital gain from each capital asset 1 28 may be subtracted in determining net income. 1 29 For purposes of this paragraph, "lineal descendant" means 1 30 children of the taxpayer, including legally adopted children 1 31 and biological children, stepchildren, grandchildren, great- 1 32 grandchildren, and any other lineal descendants of the 1 33 taxpayer. 1 34 Sec. 3. Section 422.7, subsection 21, unnumbered paragraph 1 35 2, Code Supplement 1997, is amended by striking the unnumbered 2 1 paragraph and inserting in lieu thereof the following: 2 2 However, to the extent otherwise allowed, the deduction 2 3 provided in this subsection is not allowed for purposes of 2 4 computation of a net operating loss in section 422.9, 2 5 subsection 3, and in computing the income for the taxable year 2 6 or years for which a net operating loss is deducted. 2 7 Sec. 4. EFFECTIVE AND APPLICABILITY DATES. 2 8 1. Sections 1 through 3 of this Act apply retroactively to 2 9 January 1, 1998, for tax years beginning on or after that 2 10 date. 2 11 2. This Act, being deemed of immediate importance, takes 2 12 effect upon enactment. 2 13 EXPLANATION 2 14 This bill eliminates the taxation for individual income tax 2 15 purposes of certain qualifying capital gains, including gains 2 16 from the sale of certain livestock and timber, and business 2 17 real property. Present law allows only a 45 percent 2 18 deduction. The bill also eliminates the material 2 19 participation requirement from sales of businesses to lineal 2 20 descendants for purposes of the taxation of capital gains from 2 21 these sales. 2 22 The bill provides for complete exemption from the state 2 23 individual income tax of capital gains from each capital asset 2 24 when it is part of a sale of the taxpayer's business if the 2 25 sale is made to a lineal descendant of the taxpayer. 2 26 The capital gains deduction provisions of the bill apply 2 27 retroactively to January 1, 1998, for tax years beginning on 2 28 or after that date. 2 29 The bill takes effect upon enactment. 2 30 LSB 3785HC 77 2 31 mg/cf/24
Text: HSB00533 Text: HSB00535 Text: HSB00500 - HSB00599 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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