Text: HSB00636 Text: HSB00638 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 DIVISION I 1 2 CAPITAL GAINS 1 3 Section 1. Section 422.7, subsection 21, unnumbered 1 4 paragraph 1, Code Supplement 1997, is amended to read as 1 5 follows: 1 6 Subtractforty-five percent ofthe net capital gain from 1 7 the following: 1 8 Sec. 2. Section 422.7, subsection 21, paragraph a, Code 1 9 Supplement 1997, is amended to read as follows: 1 10 a. Net capital gain from the sale of real property used in 1 11 a business, in which the taxpayer materially participated for 1 12 ten years, as defined in section 469(h) of the Internal 1 13 Revenue Code, and which has been held for a minimum of ten 1 14 years, or from the sale of a business, as defined in section 1 15 422.42, in which the taxpayer was employed or in which the 1 16 taxpayer materially participated for ten years, as defined in 1 17 section 469(h) of the Internal Revenue Code, and which has 1 18 been held for a minimum of ten years. The sale of a business 1 19 means the sale of all or substantially all of the tangible 1 20 personal property or service of the business. 1 21 However, where the business is sold to individuals who are 1 22 all lineal descendants of the taxpayer, the taxpayer does not 1 23 have to have materially participated in the business in order 1 24 for the net capital gain from the sale to be excluded from 1 25 taxation. 1 26 However, in lieu of the net capital gain deduction in this 1 27 paragraph and paragraphs "b", "c", and "d", where the business 1 28 is sold to individuals who are all lineal descendants of the 1 29 taxpayer, the amount of capital gain from each capital asset 1 30 may be subtracted in determining net income. 1 31 For purposes of this paragraph, "lineal descendant" means 1 32 children of the taxpayer, including legally adopted children 1 33 and biological children, stepchildren, grandchildren, great- 1 34 grandchildren, and any other lineal descendants of the 1 35 taxpayer. 2 1 Sec. 3. Section 422.7, subsection 21, unnumbered paragraph 2 2 2, Code Supplement 1997, is amended by striking the unnumbered 2 3 paragraph and inserting in lieu thereof the following: 2 4 However, to the extent otherwise allowed, the deduction 2 5 provided in this subsection is not allowed for purposes of 2 6 computation of a net operating loss in section 422.9, 2 7 subsection 3, and in computing the income for the taxable year 2 8 or years for which a net operating loss is deducted. 2 9 Sec. 4. EFFECTIVE AND APPLICABILITY DATES. This division 2 10 of this Act, being deemed of immediate importance, takes 2 11 effect upon enactment and applies retroactively to January 1, 2 12 1998, for tax years beginning on or after that date. 2 13 DIVISION II 2 14 PENSION INCOME EXCLUSION 2 15 Sec. 5. Section 422.7, subsection 34, Code Supplement 2 16 1997, is amended to read as follows: 2 17 34. For a person who is disabled, or is fifty-five years 2 18 of age or older, or is the surviving spouse of an individual 2 19 or a survivor having an insurable interest in an individual 2 20 who would have qualified for the exemption under this 2 21 subsection for the tax year, subtract, to the extent included, 2 22 the total amount of a governmental or other pension or 2 23 retirement pay, including, but not limited to, defined benefit 2 24 or defined contribution plans, annuities, individual 2 25 retirement accounts, plans maintained or contributed to by an 2 26 employer, or maintained or contributed to by a self-employed 2 27 person as an employer, and deferred compensation plans or any 2 28 earnings attributable to the deferred compensation plans, up 2 29 to a maximum ofthreefive thousand dollars for a person who 2 30 files a separate state income tax return and up to a maximum 2 31 ofsixten thousand dollars for a husband and wife who file a 2 32 joint state income tax return. However, a surviving spouse 2 33 who is not disabled or fifty-five years of age or older can 2 34 only exclude the amount of pension or retirement pay received 2 35 as a result of the death of the other spouse. 3 1 Sec. 6. This division of this Act, being deemed of 3 2 immediate importance, takes effect upon enactment and applies 3 3 retroactively to January 1, 1998, for tax years beginning on 3 4 or after that date. 3 5 DIVISION III 3 6 PERSONAL EXEMPTION CREDIT 3 7 Sec. 7. Section 422.12, subsection 1, paragraphs a and b, 3 8 Code 1997, is amended to read as follows: 3 9 a. For an estate or trust, a single individual, or a 3 10 married person filing a separate return,twentyforty dollars. 3 11 b. For a head of household, or a husband and wife filing a 3 12 joint return,fortyeighty dollars. 3 13 Sec. 8. This division of this Act applies retroactively to 3 14 January 1, 1998, for tax years beginning on or after that 3 15 date. 3 16 DIVISION IV 3 17 TUITION TAX CREDIT 3 18 Sec. 9. Section 422.12, subsection 2, Code 1997, is 3 19 amended to read as follows: 3 20 2. A tuition credit equal totentwenty-five percent of 3 21 the first one thousand dollars which the taxpayer has paid to 3 22 others for each dependent in grades kindergarten through 3 23 twelve, for tuition and textbooks of each dependent in 3 24 attending an elementary or secondary school situated in Iowa, 3 25 which school is accredited or approved under section 256.11, 3 26 which is not operated for profit, and which adheres to the 3 27 provisions of the federal Civil Rights Act of 1964 and chapter 3 28 216. As used in this subsection, "textbooks" means books and 3 29 other instructional materials and equipment used in elementary 3 30 and secondary schools in teaching only those subjects legally 3 31 and commonly taught in public elementary and secondary schools 3 32 in this state and does not include instructional books and 3 33 materials used in the teaching of religious tenets, doctrines, 3 34 or worship, the purpose of which is to inculcate those tenets, 3 35 doctrines, or worship, and does not include. "Textbooks" 4 1 includes books or materials used for extracurricular 4 2 activities including sporting events, musical or dramatic 4 3 events, speech activities, driver's education, or programs of 4 4 a similar nature. Notwithstanding any other provision, all 4 5 other credits allowed under this section and section 422.12B 4 6 shall be deducted before the tuition credit under this 4 7 subsection. The department, when conducting an audit of a 4 8 taxpayer's return, shall also audit the tuition tax credit 4 9 portion of the tax return. 4 10 As used in this subsection, "tuition" means any charges for 4 11 the expenses of personnel, buildings, equipment and materials 4 12 other than textbooks, and other expenses of elementary or 4 13 secondary schools which relate to the teaching only of those 4 14 subjects legally and commonly taught in public elementary and 4 15 secondary schools in this state and which do not relate to the 4 16 teaching of religious tenets, doctrines, or worship, the 4 17 purpose of which is to inculcate those tenets, doctrines, or 4 18 worship, and which do not. "Tuition" includes those expenses 4 19 which relate to extracurricular activities including sporting 4 20 events, musical or dramatic events, speech activities, 4 21 driver's education, or programs of a similar nature. 4 22 Sec. 10. This division of this Act applies retroactively 4 23 to January 1, 1998, for tax years beginning on or after that 4 24 date. 4 25 DIVISION V 4 26 EXEMPTION FOR PRIVATELY OWNED OR OPERATED 4 27 HOSPITALS 4 28 Sec. 11. Section 422.45, Code 1997, is amended by adding 4 29 the following new subsection: 4 30 NEW SUBSECTION. 52. The gross receipts from the sale or 4 31 rental of tangible personal property or from services 4 32 performed, rendered, or furnished to a privately owned or 4 33 operated hospital. 4 34 DIVISION VI 4 35 HOMESTEAD CREDIT, RENT REIMBURSEMENT, AND 5 1 MOBILE HOME TAX CREDIT 5 2 Sec. 12. Section 425.23, subsection 1, Code 1997, is 5 3 amended to read as follows: 5 4 1. a. The tentative credit or reimbursement for a 5 5 claimant described in section 425.17, subsection 2, paragraph 5 6 "a" and paragraph "b" if no appropriation is made to the fund 5 7 created in section 425.40 shall be determined in accordance 5 8 with the following schedule: 5 9 Percent of property taxes 5 10 due or rent constituting 5 11 property taxes paid 5 12 If the household allowed as a credit or 5 13 income is: reimbursement: 5 14$ 0 – 5,999.99................100%5 156,000 – 6,999.99................ 855 167,000 – 7,999.99................ 705 178,000 – 9,999.99................ 505 1810,000 – 11,999.99................ 355 1912,000 – 13,999.99................ 255 20 $ 0 – 8,499.99 100% 5 21 8,500 – 9,499.99 85 5 22 9,500 – 10,499.99 70 5 23 10,500 – 12,499.99 50 5 24 12,500 – 14,499.99 35 5 25 14,500 – 16,499.99 25 5 26 b. If moneys have been appropriated to the fund created in 5 27 section 425.40, the tentative credit or reimbursement for a 5 28 claimant described in section 425.17, subsection 2, paragraph 5 29 "b", shall be determined as follows: 5 30 (1) If the amount appropriated under section 425.40 plus 5 31 any supplemental appropriation made for a fiscal year for 5 32 purposes of this lettered paragraph is at least twenty-seven 5 33 million dollars, the tentative credit or reimbursement shall 5 34 be determined in accordance with the following schedule: 5 35 Percent of property taxes 6 1 due or rent constituting 6 2 property taxes paid 6 3 If the household allowed as a credit or 6 4 income is: reimbursement: 6 5$ 0 – 5,999.99................100%6 66,000 – 6,999.99................ 856 77,000 – 7,999.99................ 706 88,000 – 9,999.99................ 506 910,000 – 11,999.99................ 356 1012,000 – 13,999.99................ 256 11 $ 0 – 8,499.99 100% 6 12 8,500 – 9,499.99 85 6 13 9,500 – 10,499.99 70 6 14 10,500 – 12,499.99 50 6 15 12,500 – 14,499.99 35 6 16 14,500 – 16,499.99 25 6 17 (2) If the amount appropriated under section 425.40 plus 6 18 any supplemental appropriation made for a fiscal year for 6 19 purposes of this lettered paragraph is less than twenty-seven 6 20 million dollars the tentative credit or reimbursement shall be 6 21 determined in accordance with the following schedule: 6 22 Percent of property taxes 6 23 due or rent constituting 6 24 property taxes paid 6 25 If the household allowed as a credit or 6 26 income is: reimbursement: 6 27$ 0 – 5,999.99................ 50%6 286,000 – 6,999.99................ 426 297,000 – 7,999.99................ 356 308,000 – 9,999.99................ 256 3110,000 – 11,999.99................ 176 3212,000 – 13,999.99................ 126 33 $ 0 – 8,499.99 50% 6 34 8,500 – 9,499.99 42 6 35 9,500 – 10,499.99 35 7 1 10,500 – 12,499.99 25 7 2 12,500 – 14,499.99 17 7 3 14,500 – 16,499.99 12 7 4 Sec. 13. Section 425.23, subsection 3, paragraph a, Code 7 5 1997, is amended to read as follows: 7 6 a. A person who is eligible to file a claim for credit for 7 7 property taxes due and who has a household income ofsixeight 7 8 thousand five hundred dollars or less and who has an unpaid 7 9 special assessment levied against the homestead may file a 7 10 claim for a special assessment credit with the county 7 11 treasurer. The department shall provide to the respective 7 12 treasurers the forms necessary for the administration of this 7 13 subsection. The claim shall be filed not later than September 7 14 30 of each year. Upon the filing of the claim, interest for 7 15 late payment shall not accrue against the amount of the unpaid 7 16 special assessment due and payable. The claim filed by the 7 17 claimant constitutes a claim for credit of an amount equal to 7 18 the actual amount due upon the unpaid special assessment, plus 7 19 interest, payable during the fiscal year for which the claim 7 20 is filed against the homestead of the claimant. However, 7 21 where the claimant is an individual described in section 7 22 425.17, subsection 2, paragraph "b", and the tentative credit 7 23 is determined according to the schedule insection 425.23,7 24 subsection 1, paragraph "b", subparagraph (2), of this 7 25 section, the claim filed constitutes a claim for credit of an 7 26 amount equal to one-half of the actual amount due and payable 7 27 during the fiscal year. The treasurer shall certify to the 7 28 director of revenue and finance not later than October 15 of 7 29 each year the total amount of dollars due for claims allowed. 7 30 The amount of reimbursement due each county shall be paid by 7 31 the director of revenue and finance by November 15 of each 7 32 year, drawn upon warrants payable to the respective treasurer. 7 33 There is appropriated annually from the general fund of the 7 34 state to the department of revenue and finance an amount 7 35 sufficient to carry out the provisions of this subsection. 8 1 The treasurer shall credit any moneys received from the 8 2 department against the amount of the unpaid special assessment 8 3 due and payable on the homestead of the claimant. 8 4 Sec. 14. Section 425.23, Code 1997, is amended by adding 8 5 the following new subsection: 8 6 NEW SUBSECTION. 4. a. For the base year beginning in the 8 7 1999 calendar year and for each subsequent base year, the 8 8 dollar amounts set forth in subsections 1 and 3 shall be 8 9 multiplied by the cumulative adjustment factor for that base 8 10 year. "Cumulative adjustment factor" means the product of the 8 11 annual adjustment factor for the 1998 base year and all annual 8 12 adjustment factors for subsequent base years. The cumulative 8 13 adjustment factor applies to the base year beginning in the 8 14 calendar year for which the latest annual adjustment factor 8 15 has been determined. 8 16 b. The annual adjustment factor for the 1998 base year is 8 17 one hundred percent. For each subsequent base year, the 8 18 annual adjustment factor equals the annual inflation factor 8 19 for the calendar year, in which the base year begins, as 8 20 computed in section 422.4 for purposes of the individual 8 21 income tax. 8 22 Sec. 15. Section 435.22, subsection 2, Code 1997, is 8 23 amended to read as follows: 8 24 2. If the owner of the home is an Iowa resident, has 8 25 attained the age of twenty-three years on or before December 8 26 31 of the base year, and has an income when included with that 8 27 of a spouse which is less thansixeight thousand five hundred 8 28 dollars per year, the annual tax shall not be imposed on the 8 29 home. If the income issixeight thousand five hundred 8 30 dollars or more but less thanfourteensixteen thousand five 8 31 hundred dollars, the annual tax shall be computed as follows: 8 32 If the Household Annual Tax Per 8 33 Income is: Square Foot: 8 34$ 6,000 – 6,999.99 3.0 cents8 357,000 – 7,999.99 6.09 18,000 – 9,999.99 10.09 210,000 – 11,999.99 13.09 312,000 – 13,999.99 15.09 4 $ 8,500 – 9,499.99 3.0 cents 9 5 9,500 – 10,499.99 6.0 9 6 10,500 – 12,499.99 10.0 9 7 12,500 – 14,499.99 13.0 9 8 14,500 – 16,499.99 15.0 9 9 For purposes of this subsection "income" means income as 9 10 defined in section 425.17, subsection 7, and "base year" means 9 11 the calendar year preceding the year in which the claim for a 9 12 reduced rate of tax is filed. The home reduced rate of tax 9 13 shall only be allowed on the home in which the claimant is 9 14 residing at the time in which the claim for a reduced rate of 9 15 tax is filed. 9 16 Beginning with the 1998 base year, the income dollar 9 17 amounts set forth in this subsection shall be multiplied by 9 18 the cumulative adjustment factor for that base year as 9 19 determined in section 425.23, subsection 4. 9 20 Sec. 16. APPLICABILITY. This division of this Act applies 9 21 to claims for credit for property taxes due, claims for 9 22 reimbursement for rent constituting property taxes paid, and 9 23 claims for credit for mobile home taxes due filed on or after 9 24 January 1, 1999. 9 25 EXPLANATION 9 26 Division I of the bill eliminates the taxation for 9 27 individual income tax purposes of certain qualifying net 9 28 capital gains, including gains from the sale of certain 9 29 livestock and timber, and business real property. Present law 9 30 allows only a 45 percent deduction. The division also 9 31 eliminates the material participation requirement from sales 9 32 of businesses to lineal descendants for purposes of the 9 33 taxation of net capital gains from these sales. 9 34 The division provides for complete exemption from the state 9 35 individual income tax of capital gains from each capital asset 10 1 when it is part of a sale of the taxpayer's business if the 10 2 sale is made to a lineal descendant of the taxpayer. 10 3 This division takes effect upon enactment and applies 10 4 retroactively to January 1, 1998, for tax years beginning on 10 5 or after that date. 10 6 Division II of the bill increases from $3,000 to $5,000 for 10 7 separate filers and from $6,000 to $10,000 for joint filers 10 8 the exemption allowed under the individual income tax for 10 9 pension and deferred compensation income. The division takes 10 10 effect upon enactment and applies retroactively to January 1, 10 11 1998, for tax years beginning on or after that date. 10 12 Division III of the bill doubles the amounts of the 10 13 personal exemption credits for single filers, heads of 10 14 household, and joint filers under the state individual income 10 15 tax. The division applies retroactively to January 1, 1998, 10 16 for tax years beginning on or after that date. 10 17 Division IV of the bill increases the tuition and textbook 10 18 tax credit from 10 percent to 25 percent of the first $1,000 10 19 paid by the taxpayer for each dependent for tuition and 10 20 textbooks to attend an accredited elementary or secondary 10 21 school. The division also expands the definitions of 10 22 "tuition" and "textbooks" to include those expenses, 10 23 materials, or charges relating to extracurricular activities. 10 24 The credit is a nonrefundable credit that is applied against 10 25 the taxpayer's state individual income tax. 10 26 This division applies retroactively to January 1, 1998, for 10 27 tax years beginning on or after that date. 10 28 Division V of this bill exempts sales and services made to 10 29 privately owned or operated hospitals from the state sales and 10 30 use taxes. 10 31 Division VI of this bill changes present law which grants a 10 32 mobile home tax credit, additional homestead credit, and 10 33 reimbursement for rent constituting property taxes paid for 10 34 certain low-income persons based upon household incomes. 10 35 Under present law, the maximum credit and reimbursement is 11 1 granted to those with household incomes of $6,000 or less with 11 2 no credit or reimbursement granted to those with household 11 3 incomes of $14,000 or more. The division increases these 11 4 figures to $8,500 or less and $16,500 or more, respectively. 11 5 The division also adjusts these figures for inflation on an 11 6 annual basis. 11 7 The division applies to claims for credits or 11 8 reimbursements filed on or after January 1, 1999. 11 9 LSB 4210HC 77 11 10 mg/sc/14.1
Text: HSB00636 Text: HSB00638 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
© 1998 Cornell College and League of Women Voters of Iowa
Comments about this site or page?
webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.
Last update: Fri Feb 13 03:44:22 CST 1998
URL: /DOCS/GA/77GA/Legislation/HSB/00600/HSB00637/980212.html
jhf