HF 2436 (LSB 5740HH (3) 84)

HOUSE FILE 2436

BY  HALL

A BILL FOR

An Act  exempting from the inheritance tax a certain amount of property passing to brothers, sisters, uncles, aunts, first cousins, nieces, and nephews and including applicability provisions. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 450.9, Code 2011, is amended to read as follows:
   450.9  Individual exemptions.
   1.  In computing the tax on the net estate, the entire amount of property, interest in property, and income passing to the surviving spouse, and parents, grandparents, great-grandparents, and other lineal ascendants, children including legally adopted children and biological children entitled to inherit under the laws of this state, stepchildren, and grandchildren, great-grandchildren, and other lineal descendants are exempt from tax.
   2.  In computing the tax on the net estate, the first one million dollars in the aggregate of property, interest in property, and income passing to brothers, sisters, uncles, aunts, first cousins, nieces, and nephews, is exempt from tax. If the entire amount of property, interest in property, and income passing to all persons listed in this subsection exceeds one million dollars, the exemption shall be apportioned among the persons according to each person’s proportionate share of the entire amount of property, interest in property, and income passing to all persons listed in this subsection.
    Sec. 2.  Section 450.10, subsection 1, unnumbered paragraph 1, Code Supplement 2011, is amended to read as follows:
   When the property or any interest in property, or income from property, taxable under the provisions of this chapter, passes to the brother or sister,
 
in excess of the amounts exempted by operation of subsection 7, the son-in-law, or daughter-in-law, the rate of tax imposed on the individual share so passing shall be as follows:
    Sec. 3.  Section 450.10, subsection 2, unnumbered paragraph 1, Code Supplement 2011, is amended to read as follows:
   When the property or interest in property or income from property, taxable under this chapter, passes to a person not included in subsections 1 and 6,
 
or to a person included in subsection 7, other than a brother or sister, in excess of the amounts exempted by operation of that subsection, the rate of tax imposed on the individual share so passing shall be as follows:
    Sec. 4.  Section 450.10, subsection 5, Code Supplement 2011, is amended to read as follows:
   5.  When the property or any interest in property, or income from property, taxable under this chapter, passes to any person included under subsection 1, there shall be credited to the tax imposed on the individual share so passing an amount equal to the tax imposed in this state on the decedent on any property, real, personal or mixed, or the proportionate share thereof on property passing to the person taxed hereunder, which can be identified as having been received by the decedent as a share in the estate of any person who died within two years prior to the death of the decedent, or which can be identified as having been acquired by the decedent in exchange for property so received. The credit shall not be applicable to taxes on property of the decedent which was not acquired from the prior estate, or taxes on property of the decedent otherwise exempt from taxation under subsection 7.
    Sec. 5.  Section 450.10, Code Supplement 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  7.  The first one million dollars in the aggregate of property, interest in property, or income passing to brothers, sisters, uncles, aunts, first cousins, nieces, and nephews, is not taxable under this section. If the entire amount of property, interest in property, and income passing to all persons listed in this subsection exceeds one million dollars, the exemption shall be apportioned among the persons according to each person’s proportionate share of the entire amount of property, interest in property, and income passing to all persons listed in this subsection.
    Sec. 6.  APPLICABILITY.  This Act applies to estates of decedents dying on or after July 1, 2012.
EXPLANATION
   This bill exempts the first $1 million in the aggregate of property passing to brothers, sisters, uncles, aunts, first cousins, nieces, and nephews, from the inheritance tax. If the total property passing to these persons exceeds $1 million, the exemption is apportioned among the persons according to their proportionate share of the property.
   The bill also provides that the credit for prior inheritance tax paid by the decedent on property passing to a brother, sister, son-in-law, or daughter-in-law, shall not be applicable to the amounts passing to a brother or sister that are otherwise exempted from tax in the bill.
   The bill applies to estates of decedents dying on or after July 1, 2012.