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House File 761 - IntroducedA Bill ForAn Act 1relating to inheritance taxes, by providing for an
2exemption, and including applicability provisions.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 450.10, Code 2019, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 7. Agricultural land, or any associated
4farmstead, including a dwelling or other structure, which is
5part of a farming operation passing to a farm hand is not
6taxable under this section, if for each of the ten years prior
7to the year in which the decedent died, all of the following
8applied:
9a. The agricultural land was an eligible tract that was
10or could have qualified for the family farm tax credit under
11chapter 425A.
12b. The decedent held a legal or equitable interest in the
13agricultural land and, for each of those ten years, filed a
14schedule F as part of a form 1040 or form 1041 in accordance
15with regulations of the United States internal revenue service.
16c. The farming operation was undertaken for profit in which
17revenue was received by any of the following sources:
18(1) The sale of one or more commodities as defined in
19section 579B.1 that were produced on the agricultural land,
20including any activities incidental to production, or the sale
21of products processed from the commodities, if the products
22were processed on the agricultural land.
23(2) Payments received from the lease of the agricultural
24land enrolled in the conservation reserve program as described
25in 7 C.F.R. pt.1410.
26d. The farm hand received internal revenue service form W-2
27wage and tax statements for performing agricultural labor on
28the agricultural land as part of the farming operation, and
29for each of those ten years, the farm hand worked more than
30one thousand two hundred hours in performing such agricultural
31labor. As used in this paragraph, “agricultural labor” means
32carrying out on a regular, continuous, and substantial basis,
33physical labor including any related day-to-day management
34decisions directly related to the farming operation.
35 Sec. 2. APPLICABILITY DATE. This Act applies to estates of
-1-1decedents dying on or after July 1, 2019.
2EXPLANATION
3The inclusion of this explanation does not constitute agreement with
4the explanation’s substance by the members of the general assembly.
5This bill amends Iowa’s inheritance tax law in which
6property owned by a person who has died (any part of the
7decedent’s estate) and passing to an heir or beneficiary,
8regardless of whether the decedent made a will, is taxed
9at a progressively higher rate based on the value of the
10property. Several exemptions from the Iowa inheritance law
11apply, including property passing to a surviving spouse or
12certain other family members (e.g., children or grandchildren).
13The bill creates a similar exemption for agricultural land,
14including any associated farmstead, which passes to a farm
15hand subject to several eligibility requirements for each of
16the previous 10 years. The agricultural land must have been
17eligible for the family farm tax credit, the decedent must
18have filed a schedule F as part of a federal tax return, the
19agricultural land must have been part of an ongoing farming
20operation, and the farm hand must have received a wage or
21salary for performing agricultural labor on the agricultural
22land.
23The bill applies to estates of decedents dying on or after
24July 1, 2019.
-2-da/rn
2exemption, and including applicability provisions.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 450.10, Code 2019, is amended by adding
2the following new subsection:
3 NEW SUBSECTION. 7. Agricultural land, or any associated
4farmstead, including a dwelling or other structure, which is
5part of a farming operation passing to a farm hand is not
6taxable under this section, if for each of the ten years prior
7to the year in which the decedent died, all of the following
8applied:
9a. The agricultural land was an eligible tract that was
10or could have qualified for the family farm tax credit under
11chapter 425A.
12b. The decedent held a legal or equitable interest in the
13agricultural land and, for each of those ten years, filed a
14schedule F as part of a form 1040 or form 1041 in accordance
15with regulations of the United States internal revenue service.
16c. The farming operation was undertaken for profit in which
17revenue was received by any of the following sources:
18(1) The sale of one or more commodities as defined in
19section 579B.1 that were produced on the agricultural land,
20including any activities incidental to production, or the sale
21of products processed from the commodities, if the products
22were processed on the agricultural land.
23(2) Payments received from the lease of the agricultural
24land enrolled in the conservation reserve program as described
25in 7 C.F.R. pt.1410.
26d. The farm hand received internal revenue service form W-2
27wage and tax statements for performing agricultural labor on
28the agricultural land as part of the farming operation, and
29for each of those ten years, the farm hand worked more than
30one thousand two hundred hours in performing such agricultural
31labor. As used in this paragraph, “agricultural labor” means
32carrying out on a regular, continuous, and substantial basis,
33physical labor including any related day-to-day management
34decisions directly related to the farming operation.
35 Sec. 2. APPLICABILITY DATE. This Act applies to estates of
-1-1decedents dying on or after July 1, 2019.
2EXPLANATION
3The inclusion of this explanation does not constitute agreement with
4the explanation’s substance by the members of the general assembly.
5This bill amends Iowa’s inheritance tax law in which
6property owned by a person who has died (any part of the
7decedent’s estate) and passing to an heir or beneficiary,
8regardless of whether the decedent made a will, is taxed
9at a progressively higher rate based on the value of the
10property. Several exemptions from the Iowa inheritance law
11apply, including property passing to a surviving spouse or
12certain other family members (e.g., children or grandchildren).
13The bill creates a similar exemption for agricultural land,
14including any associated farmstead, which passes to a farm
15hand subject to several eligibility requirements for each of
16the previous 10 years. The agricultural land must have been
17eligible for the family farm tax credit, the decedent must
18have filed a schedule F as part of a federal tax return, the
19agricultural land must have been part of an ongoing farming
20operation, and the farm hand must have received a wage or
21salary for performing agricultural labor on the agricultural
22land.
23The bill applies to estates of decedents dying on or after
24July 1, 2019.
-2-da/rn