S.F. 244 DIVISION I 1 FORMER AGRICULTURAL ASSETS TRANSFER TAX CREDIT 2 Section 1. TRANSFER. 3 1. a. For any tax year commencing in calendar years 4 2008 through 2012, for which an agricultural assets transfer 5 tax credit under former section 175.37, as described in this 6 division of this Act, was first issued, awarded, or allowed 7 to a taxpayer because the taxpayer executed an agricultural 8 assets transfer agreement with a qualified beginning farmer, 9 the taxpayer may transfer such tax credit to the qualified 10 beginning farmer. The tax credit shall equal the amount of tax 11 credit that would otherwise remain eligible to be credited to 12 the future tax liability of the taxpayer. 13 b. A taxpayer who has already claimed the tax credit 14 and surrendered the agricultural assets transfer tax credit 15 certificate to the department of revenue, but who is intending 16 to transfer the remaining carryforward tax credit amount to 17 a qualified beginning farmer, shall apply to the department 18 for a substitute tax credit certificate in the manner and form 19 prescribed by the department. 20 2. a. Within ninety days of the transfer, the qualified 21 beginning farmer shall submit the transferred tax credit 22 certificate as provided in former section 175.37, or the 23 transferred substitute tax credit certificate, as provided 24 in subsection 1, to the department of revenue along with a 25 statement containing the qualified beginning farmer’s name, tax 26 identification number, and address, the denomination that each 27 replacement tax credit certificate is to carry, and any other 28 information required by the department. 29 b. Within thirty days of receiving the transferred tax 30 credit certificate and the qualified beginning farmer’s 31 statement as provided in paragraph “a”, the department 32 of revenue shall issue one or more replacement tax credit 33 certificates to the qualified beginning farmer. Each 34 replacement tax credit certificate shall contain the same type 35 -1- LSB 1092XS (8) 86 da/rj 1/ 13

S.F. 244 of information required for the original tax credit certificate 1 and shall have the same expiration date that appeared on the 2 transferred tax credit certificate. 3 3. A tax credit shall not be claimed by a qualified 4 beginning farmer until a replacement tax credit certificate 5 identifying the qualified beginning farmer as the proper holder 6 has been issued. The qualified beginning farmer may use the 7 amount of the tax credit transferred against the taxes imposed 8 in chapter 422, divisions II and III, for any future tax year 9 the taxpayer could have claimed the tax credit under former 10 section 175.37. Any consideration received for the transfer of 11 the tax credit shall not be included as income under chapter 12 422, divisions II and III. Any consideration paid for the 13 transfer of the tax credit shall not be deducted from income 14 under chapter 422, divisions II and III. 15 Sec. 2. APPLICABILITY. This division of this Act applies 16 to section 175.37 as enacted in 2006 Iowa Acts, chapter 1161, 17 section 2, including any subsequent amendments to that section, 18 notwithstanding any of the following: 19 1. The repeal of any amendments to section 175.37 as 20 provided in 2013 Iowa Acts, chapter 125, section 25, subsection 21 1. 22 2. The directive to strike future amendments to the section, 23 as provided in 2013 Iowa Acts, chapter 125, section 25, 24 subsection 3. 25 3. The repeal of chapter 175 as provided in 2014 Iowa Acts, 26 chapter 1080, section 112. 27 Sec. 3. EFFECTIVE UPON ENACTMENT. This division of this 28 Act, being deemed of immediate importance, takes effect upon 29 enactment. 30 Sec. 4. RETROACTIVE APPLICABILITY. For purposes of 31 allowing the transfer to qualified beginning farmers of 32 agricultural assets transfer tax credits, this division of this 33 Act applies retroactively to such tax credits first issued, 34 awarded, or allowed for any tax year commencing in calendar 35 -2- LSB 1092XS (8) 86 da/rj 2/ 13

S.F. 244 years 2008 through 2012, for transfer to qualified beginning 1 farmers for tax years beginning on or after January 1, 2015. 2 DIVISION II 3 FORMER CUSTOM FARMING CONTRACT TAX CREDIT 4 Sec. 5. TRANSFER. 5 1. a. For any tax year commencing in calendar year 2013 6 or 2014, for which a custom farming contract tax credit under 7 former section 175.38, as described in this division of this 8 Act, was first issued, awarded, or allowed to a taxpayer 9 because the taxpayer executed a custom farming contract with a 10 qualified beginning farmer, the taxpayer may transfer such tax 11 credit to the qualified beginning farmer. The tax credit shall 12 equal the tax credit that would otherwise remain eligible to be 13 credited to the future tax liability of the taxpayer. 14 b. A taxpayer who has already claimed the tax credit 15 and surrendered the custom farming contract tax credit 16 certificate to the department of revenue, but who is intending 17 to transfer the remaining carryforward tax credit amount to 18 a qualified beginning farmer, shall apply to the department 19 for a substitute tax credit certificate in the manner and form 20 prescribed by the department. 21 2. a. Within ninety days of the transfer, the qualified 22 beginning farmer shall submit the transferred tax credit 23 certificate as provided in former section 175.38, or the 24 transferred substitute tax credit certificate as provided 25 in subsection 1, to the department of revenue along with a 26 statement containing the qualified beginning farmer’s name, tax 27 identification number, and address, the denomination that each 28 replacement tax credit certificate is to carry, and any other 29 information required by the department. 30 b. Within thirty days of receiving the transferred tax 31 credit certificate and the qualified beginning farmer’s 32 statement as provided in paragraph “a”, the department 33 of revenue shall issue one or more replacement tax credit 34 certificates to the qualified beginning farmer. Each 35 -3- LSB 1092XS (8) 86 da/rj 3/ 13

S.F. 244 replacement tax credit certificate shall contain the same type 1 of information required for the original tax credit certificate 2 and shall have the same expiration date that appeared on the 3 transferred tax credit certificate. 4 3. A tax credit shall not be claimed by a qualified 5 beginning farmer until a replacement tax credit certificate 6 identifying the qualified beginning farmer as the proper holder 7 has been issued. The qualified beginning farmer may use the 8 amount of the tax credit transferred against the taxes imposed 9 in chapter 422, divisions II and III, for any future tax year 10 the taxpayer could have claimed the tax credit under former 11 section 175.38. Any consideration received for the transfer of 12 the tax credit shall not be included as income under chapter 13 422, divisions II and III. Any consideration paid for the 14 transfer of the tax credit shall not be deducted from income 15 under chapter 422, divisions II and III. 16 Sec. 6. APPLICABILITY. This division of this Act applies 17 to section 175.38 as enacted in 2013 Iowa Acts, chapter 18 125, section 18, including any subsequent amendments to that 19 section, notwithstanding any of the following: 20 1. The repeal of section 175.38 as provided in 2013 Iowa 21 Acts, chapter 125, section 25, subsection 2. 22 2. The directive to strike future amendments to section 23 175.38, as provided in 2013 Iowa Acts, chapter 125, section 25, 24 subsection 3. 25 3. The repeal of chapter 175 as provided in 2014 Iowa Acts, 26 chapter 1080, section 112. 27 Sec. 7. EFFECTIVE UPON ENACTMENT. This division of this 28 Act, being deemed of immediate importance, takes effect upon 29 enactment. 30 Sec. 8. RETROACTIVE APPLICABILITY. For purposes of 31 allowing the transfer to qualified beginning farmers of custom 32 farming contract tax credits, this division of this Act applies 33 retroactively to such tax credits first issued, awarded, or 34 allowed for any tax year commencing in calendar years 2013 35 -4- LSB 1092XS (8) 86 da/rj 4/ 13

S.F. 244 through 2017, for transfer to qualified beginning farmers for 1 tax years beginning on or after January 1, 2015. 2 DIVISION III 3 CURRENT VERSION OF THE AGRICULTURAL ASSETS TRANSFER TAX CREDIT 4 TO BE REPLACED 5 Sec. 9. Section 16.80, subsection 6, Code 2015, is amended 6 to read as follows: 7 6. A tax credit in excess of the taxpayer’s liability 8 for the tax year may be credited to the tax liability for 9 the following ten tax years or until depleted, whichever is 10 earlier. A tax credit shall not be carried back to a tax year 11 prior to the tax year in which the taxpayer redeems the tax 12 credit. A tax credit shall not be transferable to any other 13 person other than the taxpayer’s estate or trust upon the 14 taxpayer’s death. 15 Sec. 10. Section 16.80, Code 2015, is amended by adding the 16 following new subsection: 17 NEW SUBSECTION . 6A. A tax credit shall not be transferable 18 to any person other than one of the following: 19 a. The taxpayer’s estate or trust upon the taxpayer’s death. 20 b. The qualified beginning farmer who is the other party 21 to the agricultural assets transfer agreement. The tax credit 22 shall equal the amount of the tax credit that would otherwise 23 remain eligible to be credited to the future tax liability of 24 the taxpayer. 25 (1) (a) A taxpayer who has already claimed the tax credit 26 and surrendered the agricultural assets transfer tax credit 27 certificate to the department of revenue, but who is intending 28 to transfer the remaining carryforward tax credit amount to 29 a qualified beginning farmer, shall apply to the department 30 for a substitute tax credit certificate in the manner and form 31 prescribed by the department. 32 (b) Subparagraph division (a) does not apply if the 33 department provides for the transfer of the tax credit by 34 another method including by recording the transfer information 35 -5- LSB 1092XS (8) 86 da/rj 5/ 13

S.F. 244 on the original tax certificate. 1 (2) (a) Within ninety days of the transfer, the qualified 2 beginning farmer shall submit the transferred tax credit 3 certificate, or the transferred substitute tax credit 4 certificate as provided in subparagraph (1), to the department 5 of revenue along with a statement containing the qualified 6 beginning farmer’s name, tax identification number, and 7 address, the denomination that each replacement tax credit 8 certificate is to carry, and any other information required by 9 the department. 10 (b) Within thirty days of receiving the transferred tax 11 credit certificate and the qualified beginning farmer’s 12 statement as provided in subparagraph division (a), the 13 department of revenue shall issue one or more replacement 14 tax credit certificates to the qualified beginning farmer. 15 Each replacement tax credit certificate shall contain the 16 information required for the original tax credit certificate 17 and shall have the same expiration date that appeared on the 18 transferred tax credit certificate. 19 (3) A tax credit shall not be claimed by a qualified 20 beginning farmer until a replacement tax credit certificate 21 identifying the qualified beginning farmer as the proper 22 holder has been issued. The qualified beginning farmer may 23 use the amount of the tax credit transferred against the taxes 24 imposed in chapter 422, divisions II and III, for any future 25 tax year the taxpayer could have claimed the tax credit. Any 26 consideration received for the transfer of the tax credit shall 27 not be included as income under chapter 422, divisions II and 28 III. Any consideration paid for the transfer of the tax credit 29 shall not be deducted from income under chapter 422, divisions 30 II and III. 31 Sec. 11. APPLICABILITY. This division of this Act applies 32 to section 16.80 as enacted in 2014 Iowa Acts, chapter 1080, 33 section 60, as amended in 2014 Iowa Acts, chapter 1112, section 34 8, and as amended in this division of this Act, for any tax year 35 -6- LSB 1092XS (8) 86 da/rj 6/ 13

S.F. 244 commencing in calendar years 2015 through 2017, notwithstanding 1 any of the following: 2 1. The amendment striking section 16.80 as provided in 2014 3 Iowa Acts, chapter 1080, section 122. 4 2. The directive to strike future amendments to section 5 16.80, as provided in 2014 Iowa Acts, chapter 1080, section 6 123. 7 Sec. 12. EFFECTIVE UPON ENACTMENT. This division of this 8 Act, being deemed of immediate importance, takes effect upon 9 enactment. 10 Sec. 13. RETROACTIVE APPLICABILITY. This division of this 11 Act applies retroactively to January 1, 2015, for tax years 12 beginning on or after that date. 13 DIVISION IV 14 CURRENT VERSION OF THE CUSTOM FARMING CONTRACT TAX CREDIT 15 Sec. 14. Section 16.81, subsection 9, Code 2015, is amended 16 to read as follows: 17 9. A custom farming contract tax credit in excess of the 18 taxpayer’s liability for the tax year may be credited to 19 the tax liability for the following ten tax years or until 20 depleted, whichever is earlier. A tax credit shall not be 21 carried back to a tax year prior to the tax year in which the 22 taxpayer redeems the tax credit. A tax credit shall not be 23 transferable to any other person other than the taxpayer’s 24 estate or trust upon the taxpayer’s death. 25 Sec. 15. Section 16.81, Code 2015, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 9A. A tax credit shall not be transferable 28 to any person other than one of the following: 29 a. The taxpayer’s estate or trust upon the taxpayer’s death. 30 b. The qualified beginning farmer who is the other party to 31 the custom farming contract. The tax credit shall equal the 32 amount of the tax credit that would otherwise remain eligible 33 to be credited to the future tax liability of the taxpayer. 34 (1) (a) A taxpayer who has already claimed the tax 35 -7- LSB 1092XS (8) 86 da/rj 7/ 13

S.F. 244 credit and surrendered the custom farming contract tax credit 1 certificate to the department of revenue, but who is intending 2 to transfer the remaining carryforward tax credit amount to 3 a qualified beginning farmer, shall apply to the department 4 for a substitute tax credit certificate in the manner and form 5 prescribed by the department. 6 (b) Subparagraph division (a) does not apply if the 7 department provides for the transfer of the tax credit by 8 another method including by recording the transfer on the 9 original tax credit certificate. 10 (2) (a) Within ninety days of the transfer, the qualified 11 beginning farmer shall submit the transferred tax credit 12 certificate, or the transferred substitute tax credit 13 certificate as provided in subparagraph (1), to the department 14 of revenue along with a statement containing the qualified 15 beginning farmer’s name, tax identification number, and 16 address, the denomination that each replacement tax credit 17 certificate is to carry, and any other information required by 18 the department. 19 (b) Within thirty days of receiving the transferred tax 20 credit certificate and the qualified beginning farmer’s 21 statement as provided in subparagraph division (a), the 22 department of revenue shall issue one or more replacement tax 23 credit certificates to the qualified beginning farmer. Each 24 replacement tax credit certificate shall contain the same type 25 of information required for the original tax credit certificate 26 and shall have the same expiration date that appeared on the 27 transferred tax credit certificate. 28 (3) A tax credit shall not be claimed by a qualified 29 beginning farmer until a replacement tax credit certificate 30 identifying the qualified beginning farmer as the proper 31 holder has been issued. The qualified beginning farmer may 32 use the amount of the tax credit transferred against the taxes 33 imposed in chapter 422, divisions II and III, for any future 34 tax year the taxpayer could have claimed the tax credit. Any 35 -8- LSB 1092XS (8) 86 da/rj 8/ 13

S.F. 244 consideration received for the transfer of the tax credit shall 1 not be included as income under chapter 422, divisions II and 2 III. Any consideration paid for the transfer of the tax credit 3 shall not be deducted from income under chapter 422, divisions 4 II and III. 5 Sec. 16. APPLICABILITY. This division of this Act applies 6 to section 16.81 as enacted in 2014 Iowa Acts, chapter 1080, 7 section 61, as amended in 2014 Iowa Acts, chapter 1112, 8 section 17, and as amended in this division of this Act, for 9 any tax year commencing in calendar years 2015 through 2017, 10 notwithstanding the repeal of section 16.81 as provided in 2014 11 Iowa Acts, chapter 1080, section 120. 12 Sec. 17. EFFECTIVE UPON ENACTMENT. This division of this 13 Act, being deemed of immediate importance, takes effect upon 14 enactment. 15 Sec. 18. RETROACTIVE APPLICABILITY. This division of this 16 Act applies retroactively to January 1, 2015, for tax years 17 beginning on or after that date. 18 DIVISION V 19 FUTURE VERSION OF CURRENT VERSION OF THE AGRICULTURAL ASSETS 20 TRANSFER TAX CREDIT 21 Sec. 19. Section 16.80, subsection 7, as amended by 2014 22 Iowa Acts, chapter 1080, section 122, as amended by 2014 Iowa 23 Acts, chapter 1112, section 14, is amended to read as follows: 24 7. A tax credit in excess of the taxpayer’s liability 25 for the tax year may be credited to the tax liability for 26 the following ten tax years or until depleted, whichever is 27 earlier. A tax credit shall not be carried back to a tax year 28 prior to the tax year in which the taxpayer redeems the tax 29 credit. A tax credit shall not be transferable to any other 30 person other than the taxpayer’s estate or trust upon the 31 taxpayer’s death. 32 Sec. 20. Section 16.80, as amended by 2014 Iowa Acts, 33 chapter 1080, section 122, as amended by 2014 Iowa Acts, 34 chapter 1112, section 14, is amended by adding the following 35 -9- LSB 1092XS (8) 86 da/rj 9/ 13

S.F. 244 new subsection: 1 NEW SUBSECTION . 7A. A tax credit shall not be transferable 2 to any person other than one of the following: 3 a. The taxpayer’s estate or trust upon the taxpayer’s death. 4 b. The qualified beginning farmer who is the other party 5 to the agricultural assets transfer agreement. The tax credit 6 shall equal the tax credit that would otherwise remain eligible 7 to be credited to the future liability of the taxpayer. 8 (1) (a) A taxpayer who has already claimed the tax credit 9 and surrendered the agricultural assets transfer tax credit 10 certificate to the department of revenue, but who is intending 11 to transfer the remaining carryforward tax credit amount to 12 a qualified beginning farmer, shall apply to the department 13 for a substitute tax credit certificate in the manner and form 14 prescribed by the department. 15 (b) Subparagraph division (a) does not apply if the 16 department provides for the transfer of the tax credit by 17 another method, including by recording the transfer information 18 on the original tax certificate. 19 (2) (a) Within ninety days of the transfer, the qualified 20 beginning farmer shall submit the transferred tax credit 21 certificate, or the transferred substitute tax credit 22 certificate as provided in subparagraph (1), to the department 23 of revenue along with a statement containing the qualified 24 beginning farmer’s name, tax identification number, and 25 address, the denomination that each replacement tax credit 26 certificate is to carry, and any other information required by 27 the department. 28 (b) Within thirty days of receiving the transferred tax 29 credit certificate and the qualified beginning farmer’s 30 statement as provided in subparagraph division (a), the 31 department of revenue shall issue one or more replacement tax 32 credit certificates to the qualified beginning farmer. Each 33 replacement tax credit certificate shall contain the same type 34 of information required for the original tax credit certificate 35 -10- LSB 1092XS (8) 86 da/rj 10/ 13

S.F. 244 and shall have the same expiration date that appeared on the 1 transferred tax credit certificate. 2 (3) A tax credit shall not be claimed by a qualified 3 beginning farmer until a replacement tax credit certificate 4 identifying the qualified beginning farmer as the proper 5 holder has been issued. The qualified beginning farmer may 6 use the amount of the tax credit transferred against the taxes 7 imposed in chapter 422, divisions II and III, for any future 8 tax year the taxpayer could have claimed the tax credit. Any 9 consideration received for the transfer of the tax credit shall 10 not be included as income under chapter 422, divisions II and 11 III. Any consideration paid for the transfer of the tax credit 12 shall not be deducted from income under chapter 422, divisions 13 II and III. 14 Sec. 21. EFFECTIVE UPON ENACTMENT. This division of this 15 Act, being deemed of immediate importance, takes effect January 16 1, 2018. 17 Sec. 22. FUTURE APPLICABILITY. This division of this Act 18 applies on and after January 1, 2018, for tax years beginning 19 on or after that date. 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 GENERAL. This bill provides that a taxpayer who 24 participates in the beginning farmer tax credit program 25 (program) may transfer any unexpended and nondepleted 26 portion of a tax credit to a qualified beginning farmer who 27 participates in the program. The program is administered by 28 the agricultural development division created within the Iowa 29 finance authority (authority). The purpose of the program 30 is to assist a qualified beginning farmer to acquire or use 31 agricultural assets (e.g., agricultural land or improvements) 32 from a taxpayer (owner). The qualified beginning farmer and 33 owner must be parties to either a lease or rental agreement 34 in which the beginning farmer pays an amount to the owner or 35 -11- LSB 1092XS (8) 86 da/rj 11/ 13

S.F. 244 a custom farming contract in which the owner pays an amount 1 to the beginning farmer. The tax credit equals a percentage 2 of that payment and allows the owner to carry forward the 3 tax credit amount for 10 years. Currently, the tax credit 4 cannot be transferred except to the owner’s estate or trust 5 upon death. The bill places a number of restrictions upon a 6 transfer to a qualified beginning farmer, including procedures 7 for being issued a replacement tax credit certificate to the 8 qualified beginning farmer. 9 APPLICABILITY TO DIFFERENT VERSIONS OF THE TAX CREDITS. 10 Under the bill, a taxpayer may transfer the agricultural 11 assets transfer tax credit first claimed under any of the 12 following: (1) former Code section 175.37 for a tax year 13 commencing in calendar years 2008 through 2012, (2) current 14 Code section 16.80 for a tax year commencing in calendar years 15 2015 through 2017, and (3) future Code section 16.80 for a 16 tax year commencing in calendar year 2018 and subsequent tax 17 years. A taxpayer may transfer the custom farming contract tax 18 credit first claimed under any of the following: (1) former 19 Code section 175.38 for a tax year commencing in calendar years 20 2013 and 2014 and (2) current Code section 16.81 for a tax year 21 commencing in calendar years 2015 through 2017. 22 BACKGROUND. Nine years ago, the general assembly enacted 23 2006 Iowa Acts, chapter 1161, creating the agricultural 24 assets transfer tax credit administered by the agricultural 25 development authority. Two years ago, the general assembly 26 enacted 2013 Iowa Acts, chapter 125, expanding the program, 27 including by adding the custom farming contract tax credit in 28 former Code section 175.38. However, the legislation provided 29 that the program was to be eliminated on December 31, 2017, 30 and the former version of the agricultural assets transfer 31 tax credit was to be restored. That same year, the general 32 assembly enacted 2013 Iowa Acts, chapter 100, providing that 33 the agricultural development authority was a division of the 34 Iowa finance authority. Last year, the general assembly 35 -12- LSB 1092XS (8) 86 da/rj 12/ 13

S.F. 244 enacted 2014 Iowa Acts, chapter 1080, which repealed Code 1 chapter 175 and enacted a number of its provisions as part 2 of reorganized Code chapter 16, including the program (Code 3 chapter 16, subchapter VIII, part 5, subpart B). The program, 4 including the tax credits, is still scheduled to be eliminated 5 on December 31, 2017, and at that time the former agricultural 6 assets transfer tax credit will be restored. Last year, the 7 general assembly also enacted 2014 Iowa Acts, chapter 1112, 8 extending from five to 10 years the period that a taxpayer 9 claiming a past, current, or future version of the tax credit 10 may carry it forward. 11 -13- LSB 1092XS (8) 86 da/rj 13/ 13