S.F. 2193 Section 1. Section 422.7, Code Supplement 2011, is amended 1 by adding the following new subsection: 2 NEW SUBSECTION . 57. a. Subtract, to the extent included, 3 the net capital gains from the sale of an equity investment in 4 a qualified Iowa business. 5 b. In order to be eligible for the deduction in paragraph 6 “a” , the taxpayer must be a resident of this state. 7 c. For purposes of this subsection: 8 (1) “Equity investment” means an equity interest in a 9 business which equity interest was received in exchange for 10 a capital contribution or payment in the form of cash, real 11 property, or tangible personal property. 12 (2) “Qualified Iowa business” means a business whose 13 commercial domicile, as defined in section 422.32, is 14 in this state, and includes a sole proprietorship, joint 15 venture, partnership, limited liability company, corporation, 16 association, or any other business entity operated for profit. 17 Sec. 2. RETROACTIVE APPLICABILITY. This division of this 18 Act applies retroactively to January 1, 2012, for tax years 19 beginning on or after that date. 20 EXPLANATION 21 This bill creates an exemption from the computation of 22 net income for the individual income tax of net capital 23 gains from the sale of an equity investment in a qualified 24 Iowa business. “Equity investment” is defined as an equity 25 interest in a business that was received in exchange for a 26 capital contribution or payment in the form of cash, real 27 property, or tangible personal property. “Qualified Iowa 28 business” is defined as any business operated for profit whose 29 commercial domicile is in Iowa. In order to be eligible for 30 this exemption a taxpayer must be a resident of Iowa. 31 The bill applies retroactively to January 1, 2012, for tax 32 years beginning on or after that date. 33 -1- LSB 5908XS (2) 84 mm/sc 1/ 1