House
File
318
-
Introduced
HOUSE
FILE
318
BY
ALONS
,
CHAMBERS
,
WATTS
,
SHAW
,
LUKAN
,
WAGNER
,
DRAKE
,
RAYHONS
,
DE
BOEF
,
PEARSON
,
VAN
ENGELENHOVEN
,
RASMUSSEN
,
and
IVERSON
A
BILL
FOR
An
Act
excluding
from
the
computation
of
net
income
the
net
1
capital
gain
from
the
sale
of
certain
business
property
and
2
including
retroactive
applicability
provisions.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
TLSB
1678YH
(8)
84
tw/sc
H.F.
318
Section
1.
Section
422.7,
subsection
21,
paragraph
a,
Code
1
2011,
is
amended
to
read
as
follows:
2
a.
(1)
Net
capital
gain
from
the
sale
of
real
property
or
3
equipment
used
in
a
business,
in
which
the
taxpayer
materially
4
participated
for
ten
three
years,
as
defined
in
section
469(h)
5
of
the
Internal
Revenue
Code,
and
which
has
been
held
for
a
6
minimum
of
ten
three
years,
or
from
the
sale
of
a
business,
7
as
defined
in
section
423.1
,
in
which
the
taxpayer
materially
8
participated
for
ten
three
years,
as
defined
in
section
469(h)
9
of
the
Internal
Revenue
Code,
and
which
has
been
held
for
a
10
minimum
of
ten
three
years.
The
sale
of
a
business
means
the
11
sale
of
all
or
substantially
all
of
the
tangible
personal
12
property
or
service
of
the
business.
13
(a)
However,
where
the
business
is
sold
to
individuals
who
14
are
all
lineal
descendants
of
the
taxpayer,
the
taxpayer
does
15
not
have
to
have
materially
participated
in
the
business
in
16
order
for
the
net
capital
gain
from
the
sale
to
be
excluded
17
from
taxation.
18
(b)
However,
in
lieu
of
the
net
capital
gain
deduction
19
in
this
paragraph
and
paragraphs
“b”
,
“c”
,
and
“d”
,
where
the
20
business
is
sold
to
individuals
who
are
all
lineal
descendants
21
of
the
taxpayer,
the
amount
of
capital
gain
from
each
capital
22
asset
may
be
subtracted
in
determining
net
income.
23
(2)
For
purposes
of
this
paragraph
“a”
,
“lineal
descendant”
24
means
children
of
the
taxpayer,
including
legally
adopted
25
children
and
biological
children,
stepchildren,
grandchildren,
26
great-grandchildren,
and
any
other
lineal
descendants
of
the
27
taxpayer.
28
Sec.
2.
RETROACTIVE
APPLICABILITY.
This
Act
applies
29
retroactively
to
January
1,
2011,
for
assets
acquired,
and
for
30
tax
years
beginning,
on
or
after
that
date.
31
EXPLANATION
32
Current
law
provides
an
exclusion
from
the
computation
33
of
net
income
for
the
net
capital
gain
from
the
sale
of
34
real
property
used
in
a
business
if
the
taxpayer
materially
35
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1678YH
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2
H.F.
318
participated
in
the
business
for
10
years
and
if
the
property
1
is
held
for
10
years
or
more.
2
This
bill
applies
the
exclusion
to
the
sale
of
business
3
equipment
as
well
as
real
property
and
reduces
the
required
4
holding
and
participation
periods
for
such
property
to
three
5
years.
6
The
bill
applies
retroactively
to
January
1,
2011,
for
7
assets
acquired
and
for
tax
years
beginning
on
or
after
that
8
date.
9
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(8)
84
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2