HF 2437 (LSB 5555YH (5) 85)

HOUSE FILE 2437

BY  SALMON, FISHER, HEARTSILL, KAUFMANN, SHEETS, LANDON, DEYOE, and SCHULTZ

A BILL FOR

An Act exempting from the inheritance tax the entire amount of property, interest in property, and income passing to a natural person, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 450.1, subsection 1, paragraph e, Code 2014, is amended by striking the paragraph.
    Sec. 2.  Section 450.7, subsection 1, paragraph a, Code 2014, is amended to read as follows:
   a.  The share of the estate 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 a natural person is excluded from taxation under this chapter.
    Sec. 3.  Section 450.9, Code 2014, is amended to read as follows:
   450.9  Individual exemptions Exemption.

   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 a natural person is exempt from tax.
    Sec. 4.  Section 450.10, subsections 1, 2, 5, and 6, Code 2014, are amended by striking the subsections.
    Sec. 5.  Section 450.22, subsection 2, Code 2014, is amended by striking the subsection.
    Sec. 6.  Section 450.22, subsection 3, Code 2014, is amended to read as follows:
   3.  a.  However, this This section does not apply and a return is not required to be filed, even though real estate is involved, if the estate does not have a federal estate tax filing obligation and if all the estate’s assets are described in any of the following categories:
   (1)  Assets held in joint tenancy with right of survivorship between husband and wife alone.
   (2)  a.  Assets held in joint tenancy with right of survivorship solely between the decedent and individuals listed in section 450.9 as individuals that are entirely exempt from Iowa inheritance tax a natural person.
   (3)  b.  Assets passing by beneficiary designation, pursuant to a trust intended to pass the decedent’s property at death or through any other nonprobate transfer solely to individuals listed in section 450.9 as individuals that are entirely exempt from Iowa inheritance tax natural persons.
   b.  This subsection does not apply to interests in an asset or assets that pass to both an individual listed in section 450.9 and to that individual’s spouse.
    Sec. 7.  Section 450.53, subsection 1, paragraph b, Code 2014, is amended to read as follows:
   b.  Notwithstanding paragraph “a”, an inheritance tax return is not required to be filed if the estate does not have a federal estate tax filing obligation and if all the estate or trust assets pass solely to individuals listed in section 450.9 as individuals that are entirely exempt from Iowa inheritance tax natural persons. This paragraph is not applicable if interests in the asset pass to both an individual listed in section 450.9 and to that individual’s spouse.
    Sec. 8.  APPLICABILITY.  This Act applies to estates of decedents dying on or after July 1, 2014.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to the exemption from the Iowa inheritance tax of the shares of the estate passing to certain persons. Under current law, the entire amount of property, interest in property, and income passing to the surviving spouse or the lineal ascendants and descendants of the decedent are exempt from the inheritance tax. The bill exempts the entire amount of property, interest in property, and income passing to any natural person from the inheritance tax.
   The bill also makes several conforming changes relating to the exemption from the requirement to file an inheritance tax return to provide that a return need not be filed if the estate does not have a federal estate tax filing obligation and all assets pass solely to natural persons.
   The bill applies to estates of decedents dying on or after July 1, 2014.