House File 2240

                                       HOUSE FILE       
                                       BY  SHOULTZ


    Passed House,  Date               Passed Senate, Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to the Iowa estate tax and including an
  2    applicability date provision.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  4 TLSB 6007HH 80
  5 mg/pj/5

PAG LIN

  1  1    Section 1.  Section 451.1, subsections 1 and 2, Code 2003,
  1  2 are amended by striking the subsections and inserting in lieu
  1  3 thereof the following:
  1  4    1.  "Federal estate tax" or "federal estate tax Act" means
  1  5 the tax imposed by the federal estate tax pursuant to sections
  1  6 2001 through 2210 of the Internal Revenue Code.
  1  7    Sec. 2.  Section 451.1, subsection 4, Code 2003, is amended
  1  8 to read as follows:
  1  9    4.  For estates of decedents dying prior to January 1,
  1 10 2010, "Internal Revenue Code" means the same as defined in
  1 11 section 422.3, unless otherwise provided.  For estates of
  1 12 decedents dying after December 31, 2009, "Internal Revenue
  1 13 Code" means the Internal Revenue Code in effect on December
  1 14 31, 2009, unless otherwise provided.
  1 15    Sec. 3.  Section 451.2, unnumbered paragraph 1, Code 2003,
  1 16 is amended to read as follows:
  1 17    An For decedents dying on or after January 1, 2004, an
  1 18 amount equal to the federal estate tax credit for state death
  1 19 taxes as allowed in the Internal Revenue Code, in effect on
  1 20 January 1, 2004, is imposed upon every transfer of the net
  1 21 estate of every decedent, being a resident of, or owning
  1 22 property in this state.
  1 23    Sec. 4.  Section 451.3, Code 2003, is amended to read as
  1 24 follows:
  1 25    451.3  GROSS AND NET ESTATE.
  1 26    The gross estate shall be the same as finally determined
  1 27 for federal estate tax and the net estate shall be the gross
  1 28 estate less deductions as permitted by federal law, in
  1 29 arriving at the net taxable federal estate, all determined as
  1 30 provided in the Internal Revenue Code.  However, for estates
  1 31 of decedents dying on or after January 1, 2005, the gross and
  1 32 net estates shall be computed without any deduction for state
  1 33 death taxes.
  1 34    Sec. 5.  Section 451.13, Code 2003, is repealed.
  1 35    Sec. 6.  APPLICABILITY DATE.  This Act applies
  2  1 retroactively to estates of decedents dying on or after
  2  2 January 1, 2004.
  2  3                           EXPLANATION
  2  4    Under present law, the Iowa estate tax is equal to the
  2  5 amount of federal credit for state death taxes that may be
  2  6 taken in computing federal estate tax liability minus any
  2  7 amount of Iowa death taxes paid.  However, the federal credit
  2  8 for state death taxes is being replaced by a deduction thus
  2  9 eliminating Iowa's estate tax.  This bill maintains Iowa's
  2 10 estate tax by making the tax equal to the amount of federal
  2 11 credit that was available under the federal estate tax as of
  2 12 January 1, 2004.  The bill also provides that when the federal
  2 13 estate tax is to be repealed, the computations of the federal
  2 14 gross and net estates for purposes of computing the federal
  2 15 credit and hence Iowa's estate tax shall be the same as
  2 16 provided under the federal estate tax prior to its repeal.
  2 17    The bill applies retroactively to estates of decedents
  2 18 dying on or after January 1, 2004.
  2 19 LSB 6007HH 80
  2 20 mg/pj/5