Text: HSB00504 Text: HSB00506 Text: HSB00500 - HSB00599 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Section 1. Section 422.7, Code Supplement 2001, is amended
1 2 by adding the following new subsection:
1 3 NEW SUBSECTION. 38. a. Subtract the amount of any equity
1 4 investment in a venture capital fund during the tax year.
1 5 b. For purposes of calculating capital gains or losses on
1 6 the investment for which a deduction has been taken, the basis
1 7 of the investment shall be reduced by the amount of the
1 8 deduction claimed.
1 9 c. For purposes of this subsection, "venture capital fund"
1 10 means a private seed and venture capital partnership or
1 11 entity.
1 12 d. (1) In order for the taxpayer to claim the benefits of
1 13 the deduction for the equity investment in a venture capital
1 14 fund under this subsection, the taxpayer must completely fill
1 15 out the tax return, determine the taxpayer's income tax
1 16 liability without the benefit of this subsection, and pay the
1 17 amount of tax owed. The taxpayer shall recompute the
1 18 taxpayer's income tax liability, by applying the provisions of
1 19 this subsection on a special return. This special return
1 20 shall be filed under rules of the director and constitutes a
1 21 claim for refund of the difference between the amount of tax
1 22 the taxpayer paid as determined without the application of the
1 23 provisions of this subsection and the amount of tax determined
1 24 with the application of the provisions of this subsection.
1 25 (2) This subsection shall not affect the amount of the
1 26 taxpayer's checkoff to the Iowa election campaign fund under
1 27 section 56.18, the checkoff for the state fish and game
1 28 protection fund in section 456A.16, the credits from tax
1 29 provided in sections 422.10, 422.11A, and 422.12 and the
1 30 allocation of these credits between spouses if the taxpayers
1 31 filed separate returns or separately on combined returns.
1 32 (3) For any tax year, the aggregate amount of refund
1 33 claims that shall be paid pursuant to this subsection and
1 34 section 422.35, subsection 19 shall not exceed two million
1 35 dollars. If, for a tax year, the aggregate amount of refund
2 1 claims filed pursuant to this subsection and section 422.35,
2 2 subsection 19 exceeds two million dollars, each claim for
2 3 refund shall be paid on a pro rata basis so that the aggregate
2 4 amount of refund claims paid does not exceed two million
2 5 dollars. In the case where refund claims are not paid in
2 6 full, the amount of the refund to which the taxpayer is
2 7 entitled under this subsection and section 422.35, subsection
2 8 19 is the pro rata amount that was paid and the taxpayer is
2 9 not entitled to a refund of the unpaid portion and is not
2 10 entitled to carry that amount forward or backward to another
2 11 tax year. Taxpayers shall not use refunds as estimated
2 12 payments for the succeeding tax year. Taxpayers whose tax
2 13 years begin on January 1 must file their refund claims by
2 14 October 31 of the calendar year following the end of their tax
2 15 years to be eligible for refunds. Taxpayers whose tax years
2 16 begin on a date other than January 1 must file their refund
2 17 claims by the end of the tenth month following the end of
2 18 their tax years to be eligible. The department shall
2 19 determine on February 1 of the second succeeding calendar year
2 20 if the total amount of claims for refund exceeds two million
2 21 dollars for the tax year. Notwithstanding any other
2 22 provision, interest shall not be due on any refund claims that
2 23 are paid by the last day of February of the second succeeding
2 24 calendar year. If the claim is not payable on February 1 of
2 25 the second succeeding calendar year, because the taxpayer is a
2 26 fiscal year filer, the claim shall be considered a claim for
2 27 the following tax year.
2 28 Sec. 2. Section 422.35, Code Supplement 2001, is amended
2 29 by adding the following new subsection:
2 30 NEW SUBSECTION. 19. a. Subtract the amount of any equity
2 31 investment in a venture capital fund during the tax year.
2 32 b. For purposes of calculating capital gains or losses on
2 33 the investment for which a deduction has been taken, the basis
2 34 of the investment shall be reduced by the amount of the
2 35 deduction claimed.
3 1 c. For purposes of this subsection, "venture capital fund"
3 2 means a private seed and venture capital partnership or
3 3 entity.
3 4 d. (1) In order for the taxpayer to claim the benefits of
3 5 the deduction for the equity investment in a venture capital
3 6 fund under this subsection, the taxpayer must completely fill
3 7 out the tax return, determine the taxpayer's income tax
3 8 liability without the benefit of this subsection, and pay the
3 9 amount of tax owed. The taxpayer shall recompute the
3 10 taxpayer's income tax liability, by applying the provisions of
3 11 this subsection on a special return. This special return
3 12 shall be filed under rules of the director and constitutes a
3 13 claim for refund of the difference between the amount of tax
3 14 the taxpayer paid as determined without the application of the
3 15 provisions of this subsection and the amount of tax determined
3 16 with the application of the provisions of this subsection.
3 17 (2) This subsection shall not affect the amount of the
3 18 credits from tax provided in section 422.33, subsections 5 and
3 19 6, and the allocation of these credits between corporations if
3 20 the taxpayers filed separate returns or consolidated returns.
3 21 (3) For any tax year, the aggregate amount of refund
3 22 claims that shall be paid pursuant to this subsection and
3 23 section 422.7, subsection 38, shall not exceed two million
3 24 dollars. If, for a tax year, the aggregate amount of refund
3 25 claims filed pursuant to this subsection and section 422.7,
3 26 subsection 38, exceeds two million dollars, each claim for
3 27 refund shall be paid on a pro rata basis so that the aggregate
3 28 amount of refund claims paid does not exceed two million
3 29 dollars. In the case where refund claims are not paid in
3 30 full, the amount of the refund to which the taxpayer is
3 31 entitled under this subsection and section 422.7, subsection
3 32 38, is the pro rata amount that was paid and the taxpayer is
3 33 not entitled to a refund of the unpaid portion and is not
3 34 entitled to carry that amount forward or backward to another
3 35 tax year. Taxpayers shall not use refunds as estimated
4 1 payments for the succeeding tax year. Taxpayers whose tax
4 2 years begin on January 1 must file their refund claims by
4 3 October 31 of the calendar year following the end of their tax
4 4 years to be eligible for refunds. Taxpayers whose tax years
4 5 begin on a date other than January 1 must file their refund
4 6 claims by the end of the tenth month following the end of
4 7 their tax years to be eligible. The department shall
4 8 determine on February 1 of the second succeeding calendar year
4 9 if the total amount of claims for refund exceeds two million
4 10 dollars for the tax year. Notwithstanding any other
4 11 provision, interest shall not be due on any refund claims that
4 12 are paid by the last day of February of the second succeeding
4 13 calendar year. If the claim is not payable on February 1 of
4 14 the second succeeding calendar year, because the taxpayer is a
4 15 fiscal year filer, the claim shall be considered a claim for
4 16 the following tax year.
4 17 Sec. 3. EFFECTIVE AND APPLICABILITY DATE. This Act, being
4 18 deemed of immediate importance, takes effect upon enactment
4 19 and applies retroactively to January 1, 2002, for tax years
4 20 beginning on or after that date.
4 21 EXPLANATION
4 22 This bill allows an income tax deduction in determining the
4 23 net income of individuals and corporate taxpayers. The bill
4 24 provides that the deduction shall be for the amount of any
4 25 equity investment in a venture capital fund during the tax
4 26 year. The bill provides that, for purposes of calculating
4 27 capital gains or losses on the investment for which a
4 28 deduction has been taken, the basis of the investment shall be
4 29 reduced by the amount of the deduction claimed. The bill
4 30 provides that the taxpayer shall file a return with tax
4 31 liability determined without deduction for the equity
4 32 investment in a venture capital fund and a special return with
4 33 tax liability determined with the deduction for the equity
4 34 investment in a venture capital fund. The reduction in tax
4 35 liability will be treated as a claim for refund of the amount
5 1 of the reduction. However, not more than $2 million in tax
5 2 refunds may be allowed for any tax year. If more refunds are
5 3 claimed, then each refund claim is payable at a pro rata
5 4 amount, which is the final amount of the taxpayer's actual
5 5 refund.
5 6 The bill takes effect upon enactment and applies
5 7 retroactively to January 1, 2002, for tax years beginning on
5 8 or after that date.
5 9 LSB 5445HC 79
5 10 tm/sh/8
Text: HSB00504 Text: HSB00506 Text: HSB00500 - HSB00599 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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