House File 2382
HOUSE FILE
BY COMMITTEE ON ECONOMIC GROWTH
(SUCCESSOR TO HSB 529)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing income tax credits for equity investments in
2 businesses that are primarily engaged in the business of the
3 production of value=added agricultural products and including
4 a retroactive applicability date provision.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
6 TLSB 5691HV 80
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PAG LIN
1 1 Section 1. NEW SECTION. 422.11J EQUITY INVESTMENT TAX
1 2 CREDIT == VALUE=ADDED AGRICULTURAL PRODUCTS.
1 3 1. The taxes imposed under this division, less the credits
1 4 allowed under sections 422.12 and 422.12B, shall be reduced by
1 5 an equity investment tax credit equal to fifty percent, in the
1 6 manner specified in subsection 2, of the amount of an equity
1 7 investment in a business which primarily involves the
1 8 production of value=added agricultural products and whose
1 9 principal business operations are located in the state. The
1 10 taxpayer shall not take a credit under this section if a
1 11 credit is taken under section 422.11F or any other provision
1 12 of the Code for the same investment.
1 13 2. The amount of the tax credit shall be claimed over five
1 14 tax years as follows:
1 15 a. Ten percent of the amount of the equity investment for
1 16 the third tax year following the tax year in which the
1 17 investment is made.
1 18 b. Ten percent of the amount of the equity investment for
1 19 each of the four tax years following the tax year for which
1 20 the credit was first claimed under paragraph "a".
1 21 An equity investment shall be deemed to have been made on
1 22 the same date as the date of acquisition of the equity
1 23 interest as determined under the Internal Revenue Code.
1 24 3. Any credit in excess of the taxpayer's liability for
1 25 the tax year may be credited to the tax liability for the
1 26 following five tax years or until depleted, whichever is
1 27 earlier.
1 28 4. An individual may claim an equity investment tax credit
1 29 allowed a partnership, limited liability company, S
1 30 corporation, estate, or trust electing to have the income
1 31 taxed directly to the individual. The amount claimed by the
1 32 individual shall be based upon the pro rata share of the
1 33 individual's earnings of the partnership, limited liability
1 34 company, S corporation, estate, or trust.
1 35 Sec. 2. Section 422.33, Code Supplement 2003, is amended
2 1 by adding the following new subsection:
2 2 NEW SUBSECTION. 16. a. The taxes imposed under this
2 3 division shall be reduced by an equity investment tax credit
2 4 equal to fifty percent, in the manner specified in paragraph
2 5 "b", of the amount of an equity investment in a business which
2 6 primarily involves the production of value=added agricultural
2 7 products and whose principal business operations are located
2 8 in the state. The taxpayer shall not take a credit under this
2 9 subsection if a credit is taken under subsection 12 or any
2 10 other provision of the Code for the same investment.
2 11 b. The amount of the tax credit shall be claimed over five
2 12 tax years as follows:
2 13 (1) Ten percent of the amount of the equity investment for
2 14 the third tax year following the tax year in which the
2 15 investment is made.
2 16 (2) Ten percent of the amount of the equity investment for
2 17 each of the four tax years following the tax year for which
2 18 the credit was first claimed under subparagraph (1).
2 19 An equity investment shall be deemed to have been made on
2 20 the same date as the date of acquisition of the equity
2 21 interest as determined under the Internal Revenue Code.
2 22 c. Any credit in excess of the taxpayer's liability for
2 23 the tax year may be credited to the tax liability for the
2 24 following five tax years or until depleted, whichever is
2 25 earlier.
2 26 Sec. 3. RETROACTIVE APPLICABILITY DATE. This Act applies
2 27 retroactively to January 1, 2004, for tax years beginning on
2 28 or after that date.
2 29 EXPLANATION
2 30 This bill provides for an individual and corporate tax
2 31 credit for equity investments made in a business that
2 32 primarily involves the production of value=added agricultural
2 33 products and whose principal business operations are located
2 34 in the state. The amount of the credit equals 50 percent of
2 35 the investment, which must be taken over five tax years. The
3 1 tax credit equals 10 percent for each tax year beginning with
3 2 the third tax year following the tax year in which the
3 3 investment is made. The credit is nonrefundable, but any
3 4 excess credit may be carried forward for up to five tax years.
3 5 If the taxpayer claims this credit, the taxpayer shall not
3 6 claim a credit under any other provision of the Code for the
3 7 same investment.
3 8 The bill applies retroactively to January 1, 2004, for tax
3 9 years beginning on or after that date.
3 10 LSB 5691HV 80
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