House Study Bill 546 HOUSE FILE BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON PAULSEN) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to the holding period for purposes of certain 2 capital assets under the individual income tax and including 3 effective and applicability date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5204YC 81 6 mg/sh/8 PAG LIN 1 1 Section 1. Section 422.7, subsection 21, Code Supplement 1 2 2005, is amended by adding the following new unnumbered 1 3 paragraph: 1 4 NEW UNNUMBERED PARAGRAPH. For purposes of this subsection, 1 5 the term "held" shall be determined with reference to the 1 6 holding period provisions of section 1223 of the Internal 1 7 Revenue Code and the federal regulations adopted pursuant 1 8 thereto. 1 9 Sec. 2. APPLICABILITY DATE PROVISIONS. This Act, being 1 10 deemed of immediate importance, takes effect upon enactment 1 11 and applies to all of the following: 1 12 1. Sales made on or after the effective date of this Act. 1 13 2. Determining the holding period for sales made on or 1 14 after the effective date of this Act. 1 15 3. Tax years ending on or after the effective date of this 1 16 Act. 1 17 EXPLANATION 1 18 This bill requires that the computation of the holding 1 19 period for purposes of the capital gains deduction under the 1 20 state individual income tax be determined with reference to 1 21 the federal holding period provisions of section 1223 of the 1 22 Internal Revenue Code. These provisions, in some cases, do 1 23 not limit the holding period to actual ownership. 1 24 The bill takes effect upon enactment and applies to sales 1 25 made on or after the effective date of the bill and during tax 1 26 years ending on or after the effective date of the bill. 1 27 LSB 5204YC 81 1 28 mg:rj/sh/8