SENATE FILE 2133

BY  WHITVER

A BILL FOR

An Act providing an exclusion from the computation of net income for the individual state income tax of qualifying gains receiving capital treatment and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 422.7, subsection 21, Code Supplement 2011, is amended by striking the subsection and inserting in lieu thereof the following:
   21.
  a.  Subtract, to the extent not otherwise excluded, qualifying gains receiving capital treatment. For purposes of this subsection, “qualifying gains receiving capital treatment” means the amount of net capital gains, as defined in section 1222(11) of the Internal Revenue Code, included in the taxpayer’s federal adjusted gross income.
   b.  To the extent otherwise allowed, the deduction provided in this subsection is not allowed for purposes of computation of a net operating loss in section 422.9, subsection 3, and in computing the income for the taxable year or years for which a net operating loss is deducted.
    Sec. 2.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to January 1, 2012, for tax years beginning on or after that date.
EXPLANATION
   This bill excludes qualifying gains receiving capital treatment from the individual state income tax. “Qualifying gains receiving capital treatment” is defined as the amount of net capital gains, as defined in section 1222(11) of the Internal Revenue Code, included in the taxpayer’s federal adjusted gross income.
   Net capital gains is defined in the Internal Revenue Code as the excess of a taxpayer’s gains from the sales of long-term capital assets over the losses from such sales, minus the excess of losses from the sales of short-term capital assets over the gains from such sales.
   The exclusion does not apply for purposes of computing a taxpayer’s net operating loss or for purposes of computing income for the taxable year in which a net operating loss is deducted.
   The bill applies retroactively to January 1, 2012, for tax years beginning on or after that date.