S.F. 153 Section 1. Section 422.7, Code 2017, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 51. 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 Act applies 18 retroactively to January 1, 2017, for tax years beginning on 19 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 This bill creates an exemption from the computation of net 24 income for the individual income tax of net capital gains 25 from the sale of an equity investment in a qualified Iowa 26 business. “Equity investment” is defined as an equity interest 27 in a business that was received in exchange for a capital 28 contribution or payment in the form of cash, real property, 29 or tangible personal property. “Qualified Iowa business” is 30 defined as any business operated for profit whose commercial 31 domicile is in Iowa. In order to be eligible for the exemption 32 a taxpayer must be a resident of Iowa. 33 The bill applies retroactively to January 1, 2017, for tax 34 years beginning on or after that date. 35 -1- LSB 1599XS (2) 87 mm/sc 1/ 1