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Senate Study Bill 2011

Bill Text

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    Subtract forty-five percent of the 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.  Section 422.45, Code Supplement 1997, is amended
  2  8 by adding the following new subsection:
  2  9    NEW SUBSECTION.  52.  The gross receipts from charges paid
  2 10 to a provider for access to on-line computer services.  For
  2 11 purposes of this subsection, "on-line computer service" means
  2 12 a service that provides or enables computer access by multiple
  2 13 users to the internet or to other information made available
  2 14 through a computer server.
  2 15    Sec. 5.  EFFECTIVE AND APPLICABILITY DATES.
  2 16    1.  Sections 1 through 3 of this Act apply retroactively to
  2 17 January 1, 1998, for tax years beginning on or after that
  2 18 date.
  2 19    2.  Section 4 of this Act applies to charges billed to
  2 20 users on or after July 1, 1998.
  2 21    3.  This Act, being deemed of immediate importance, takes
  2 22 effect upon enactment.  
  2 23                           EXPLANATION
  2 24    This bill eliminates the taxation for individual income tax
  2 25 purposes of certain qualifying capital gains, including gains
  2 26 from the sale of certain livestock and timber, and business
  2 27 real property.  Present law allows only a 45 percent
  2 28 deduction.  The bill also eliminates the material
  2 29 participation requirement from sales of businesses to lineal
  2 30 descendants for purposes of the taxation of capital gains from
  2 31 these sales.
  2 32    The bill provides for complete exemption from the state
  2 33 individual income tax of capital gains from each capital asset
  2 34 when it is part of a sale of the taxpayer's business if the
  2 35 sale is made to a lineal descendant of the taxpayer.
  3  1    The bill exempts from the state sales, services, and use
  3  2 tax charges paid to a provider for access to internet or other
  3  3 on-line computer services.
  3  4    The capital gains deduction provisions of the bill apply
  3  5 retroactively to January 1, 1998, for tax years beginning on
  3  6 or after that date.
  3  7    The sales and use tax exemption applies to charges billed
  3  8 to the user on or after July 1, 1998.
  3  9    The bill takes effect upon enactment.  
  3 10 LSB 3408XL 77
  3 11 mg/cf/24
     

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