House File 2436 - Introduced HOUSE FILE 2436 BY HALL A BILL FOR An Act exempting from the inheritance tax a certain amount of 1 property passing to brothers, sisters, uncles, aunts, first 2 cousins, nieces, and nephews and including applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5740HH (3) 84 mm/sc

H.F. 2436 Section 1. Section 450.9, Code 2011, is amended to read as 1 follows: 2 450.9 Individual exemptions. 3 1. In computing the tax on the net estate, the entire 4 amount of property, interest in property, and income 5 passing to the surviving spouse, and parents, grandparents, 6 great-grandparents, and other lineal ascendants, children 7 including legally adopted children and biological children 8 entitled to inherit under the laws of this state, stepchildren, 9 and grandchildren, great-grandchildren, and other lineal 10 descendants are exempt from tax. 11 2. In computing the tax on the net estate, the first one 12 million dollars in the aggregate of property, interest in 13 property, and income passing to brothers, sisters, uncles, 14 aunts, first cousins, nieces, and nephews, is exempt from tax. 15 If the entire amount of property, interest in property, and 16 income passing to all persons listed in this subsection exceeds 17 one million dollars, the exemption shall be apportioned among 18 the persons according to each person’s proportionate share of 19 the entire amount of property, interest in property, and income 20 passing to all persons listed in this subsection. 21 Sec. 2. Section 450.10, subsection 1, unnumbered paragraph 22 1, Code Supplement 2011, is amended to read as follows: 23 When the property or any interest in property, or income from 24 property, taxable under the provisions of this chapter , passes 25 to the brother or sister , in excess of the amounts exempted by 26 operation of subsection 7, the son-in-law, or daughter-in-law, 27 the rate of tax imposed on the individual share so passing 28 shall be as follows: 29 Sec. 3. Section 450.10, subsection 2, unnumbered paragraph 30 1, Code Supplement 2011, is amended to read as follows: 31 When the property or interest in property or income from 32 property, taxable under this chapter , passes to a person not 33 included in subsections 1 and 6 , or to a person included in 34 subsection 7, other than a brother or sister, in excess of the 35 -1- LSB 5740HH (3) 84 mm/sc 1/ 3

H.F. 2436 amounts exempted by operation of that subsection, the rate of 1 tax imposed on the individual share so passing shall be as 2 follows: 3 Sec. 4. Section 450.10, subsection 5, Code Supplement 2011, 4 is amended to read as follows: 5 5. When the property or any interest in property, or income 6 from property, taxable under this chapter , passes to any person 7 included under subsection 1 , there shall be credited to the tax 8 imposed on the individual share so passing an amount equal to 9 the tax imposed in this state on the decedent on any property, 10 real, personal or mixed, or the proportionate share thereof on 11 property passing to the person taxed hereunder, which can be 12 identified as having been received by the decedent as a share 13 in the estate of any person who died within two years prior 14 to the death of the decedent, or which can be identified as 15 having been acquired by the decedent in exchange for property 16 so received. The credit shall not be applicable to taxes on 17 property of the decedent which was not acquired from the prior 18 estate , or taxes on property of the decedent otherwise exempt 19 from taxation under subsection 7 . 20 Sec. 5. Section 450.10, Code Supplement 2011, is amended by 21 adding the following new subsection: 22 NEW SUBSECTION . 7. The first one million dollars in the 23 aggregate of property, interest in property, or income passing 24 to brothers, sisters, uncles, aunts, first cousins, nieces, 25 and nephews, is not taxable under this section. If the entire 26 amount of property, interest in property, and income passing 27 to all persons listed in this subsection exceeds one million 28 dollars, the exemption shall be apportioned among the persons 29 according to each person’s proportionate share of the entire 30 amount of property, interest in property, and income passing to 31 all persons listed in this subsection. 32 Sec. 6. APPLICABILITY. This Act applies to estates of 33 decedents dying on or after July 1, 2012. 34 EXPLANATION 35 -2- LSB 5740HH (3) 84 mm/sc 2/ 3

H.F. 2436 This bill exempts the first $1 million in the aggregate of 1 property passing to brothers, sisters, uncles, aunts, first 2 cousins, nieces, and nephews, from the inheritance tax. If the 3 total property passing to these persons exceeds $1 million, the 4 exemption is apportioned among the persons according to their 5 proportionate share of the property. 6 The bill also provides that the credit for prior inheritance 7 tax paid by the decedent on property passing to a brother, 8 sister, son-in-law, or daughter-in-law, shall not be applicable 9 to the amounts passing to a brother or sister that are 10 otherwise exempted from tax in the bill. 11 The bill applies to estates of decedents dying on or after 12 July 1, 2012. 13 -3- LSB 5740HH (3) 84 mm/sc 3/ 3