Senate File 2400 - Introduced SENATE FILE 2400 BY DRISCOLL A BILL FOR An Act excluding the net capital gain from the sale of certain 1 livestock from the computation of net income for purposes 2 of the individual income tax, and including retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5662XS (1) 90 jm/jh

S.F. 2400 Section 1. Section 422.7, Code 2024, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 44. a. For purposes of this subsection, 3 “held” shall be determined with reference to the holding period 4 provisions of section 1223 of the Internal Revenue Code and the 5 federal regulations pursuant thereto. 6 b. Subtract the net capital gain from the following: 7 (1) The sale of cattle or horses held by the taxpayer for 8 breeding, draft, dairy, or sporting purposes for a period 9 of twenty-four months or more from the date of acquisition, 10 but only if the taxpayer received more than one-half of the 11 taxpayer’s gross income from farming or ranching operations 12 during the tax year. 13 (2) The sale of breeding livestock, other than cattle or 14 horses, held by the taxpayer for a period of twelve months or 15 more from the date of acquisition, but only if the taxpayer 16 received more than one-half of the taxpayer’s gross income from 17 farming or ranching operations during the tax year. 18 c. A retired farmer as defined in subsection 13 is not 19 eligible for the exclusion in this subsection if taking the 20 exclusion allowed in subsection 13, paragraph “c” or “d” , in the 21 same tax year. 22 Sec. 2. RETROACTIVE APPLICABILITY. This Act applies 23 retroactively to January 1, 2024, for tax years beginning on 24 or after that date. 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanation’s substance by the members of the general assembly. 28 This bill excludes the net capital gain from the sale of 29 certain livestock from the computation of net income for 30 purposes of the individual income tax. 31 The bill allows a taxpayer to exclude the net capital gain 32 from the sale of cattle or horses if held by the taxpayer for 33 breeding, draft, dairy, or sporting purposes for more than 34 24 months, but only if the taxpayer received more than 50 35 -1- LSB 5662XS (1) 90 jm/jh 1/ 2

S.F. 2400 percent of the taxpayer’s gross income from farming or ranching 1 operations during the tax year. 2 The bill allows a taxpayer to exclude the net capital gain 3 from the sale of breeding livestock, other than cattle or 4 horses, held by the taxpayer for a period of 12 months or more 5 from the date of acquisition, but only if the taxpayer received 6 more than one-half of the taxpayer’s gross income from farming 7 or ranching operations during the tax year. 8 A retired farmer as defined in Code section 422.7(13) is 9 not eligible for the exclusion in the bill if taking a similar 10 exclusion allowed in Code section 422.7(13). 11 The bill applies retroactively to January 1, 2024, for tax 12 years beginning on or after that date. 13 -2- LSB 5662XS (1) 90 jm/jh 2/ 2