Bill Text: IA SF627 | 2019-2020 | 88th General Assembly | Introduced
Bill Title: A bill for an act relating to taking a capital gain deduction for the sale of real property used in a farming business. (Formerly SF 192.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2019-04-25 - Withdrawn. S.J. 1122. [SF627 Detail]
Download: Iowa-2019-SF627-Introduced.html
Senate
File
627
-
Introduced
SENATE
FILE
627
BY
COMMITTEE
ON
WAYS
AND
MEANS
(SUCCESSOR
TO
SF
192)
A
BILL
FOR
An
Act
relating
to
taking
a
capital
gain
deduction
for
the
sale
1
of
real
property
used
in
a
farming
business.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
TLSB
1794SV
(2)
88
jm/jh
S.F.
627
Section
1.
2018
Iowa
Acts,
chapter
1161,
section
113,
is
1
amended
by
striking
the
section
and
inserting
in
lieu
thereof
2
the
following:
3
SEC.
113.
Section
422.7,
subsection
21,
Code
2018,
is
4
amended
by
striking
the
subsection
and
inserting
in
lieu
5
thereof
the
following:
6
21.
a.
For
purposes
of
this
subsection
:
7
(1)
“Farming
business”
means
the
production,
care,
growing,
8
harvesting,
preservation,
handling,
or
storage
of
crops
9
or
forest
or
fruit
trees;
the
production,
care,
feeding,
10
management,
and
housing
of
livestock;
or
horticulture,
all
for
11
intended
profit.
12
(2)
“Held”
shall
be
determined
with
reference
to
the
holding
13
period
provisions
of
section
1223
of
the
Internal
Revenue
Code
14
and
the
federal
regulations
pursuant
thereto.
15
(3)
“Livestock”
means
the
same
as
defined
in
section
717.1.
16
(4)
“Materially
participated”
means
the
same
as
“material
17
participation”
in
section
469(h)
of
the
Internal
Revenue
Code.
18
(5)
(a)
“Real
property
used
in
a
farming
business”
means
19
all
tracts
of
land
and
the
improvements
and
structures
located
20
on
them
which
are
in
good
faith
used
primarily
for
a
farming
21
business.
Buildings
which
are
primarily
used
or
intended
for
22
human
habitation
are
deemed
to
be
used
in
a
farming
business
23
when
the
building
is
located
on
or
adjacent
to
the
parcel
24
used
in
the
farming
business.
Land
and
the
nonresidential
25
improvements
and
structures
located
on
it
shall
be
considered
26
to
be
used
primarily
in
a
farming
business
include
but
are
27
not
limited
to
land,
improvements
or
structures
used
for
the
28
storage
or
maintenance
of
farm
machinery
or
equipment,
for
the
29
drying,
storage,
handling,
or
preservation
of
agricultural
30
crops,
or
for
the
storage
of
farm
inputs,
feed,
or
manure.
31
Real
property
used
in
a
farming
business
shall
also
include
32
woodland,
wasteland,
pastureland,
and
idled
land
used
for
the
33
conservation
of
natural
resources
including
soil
and
water.
34
(b)
Real
property
classified
as
agricultural
property
for
35
-1-
LSB
1794SV
(2)
88
jm/jh
1/
4
S.F.
627
Iowa
property
tax
purposes,
except
real
property
described
1
in
section
441.21,
subsection
12,
paragraph
“a”
or
“b”
,
2
shall
be
presumed
to
be
real
property
used
in
a
farming
3
business.
This
presumption
is
rebuttable
by
the
department
by
4
a
preponderance
of
evidence
that
the
real
property
did
not
meet
5
the
requirements
of
subparagraph
division
(a).
6
(6)
“Relative”
means
a
person
that
satisfies
one
or
more
of
7
the
following
conditions:
8
(a)
The
individual
is
related
to
the
taxpayer
by
9
consanguinity
or
affinity
within
the
second
degree
as
10
determined
by
common
law.
11
(b)
The
individual
is
a
lineal
descendent
of
the
taxpayer.
12
For
purposes
of
this
subparagraph
division,
“lineal
descendent”
13
means
children
of
the
taxpayer,
including
legally
adopted
14
children
and
biological
children,
stepchildren,
grandchildren,
15
great-grandchildren,
and
any
other
lineal
descendent
of
the
16
taxpayer.
17
(c)
An
entity
in
which
an
individual
who
satisfies
the
18
conditions
of
either
subparagraph
division
(a)
or
(b)
has
a
19
legal
or
equitable
interest
as
an
owner,
member,
partner,
or
20
beneficiary.
21
b.
Subtract
the
net
capital
gain
from
the
sale
of
real
22
property
used
in
a
farming
business
if
one
of
the
following
23
conditions
are
satisfied:
24
(1)
The
taxpayer
has
materially
participated
in
a
farming
25
business
for
a
minimum
of
ten
years
and
has
held
the
real
26
property
used
in
a
farming
business
for
a
minimum
of
ten
years.
27
(2)
The
taxpayer
has
held
the
real
property
used
in
a
28
farming
business
which
is
sold
to
a
relative
of
the
taxpayer.
29
EXPLANATION
30
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
31
the
explanation’s
substance
by
the
members
of
the
general
assembly.
32
This
bill
modifies
the
capital
gain
deduction
for
the
sale
of
33
real
property
used
in
a
farming
business
enacted
in
2018
Iowa
34
Acts,
chapter
1161,
section
113.
The
capital
gain
deduction
35
-2-
LSB
1794SV
(2)
88
jm/jh
2/
4
S.F.
627
for
the
sale
of
real
property
used
in
a
farming
business
is
set
1
to
begin
in
tax
year
2023
or
in
a
later
tax
year,
contingent
2
upon
the
satisfaction
of
certain
net
general
fund
revenue
3
amount
and
growth
targets.
4
Currently,
the
capital
gain
deduction
for
the
sale
of
real
5
property
used
in
a
“farming
business”
set
to
go
into
effect
6
in
2023
or
a
later
tax
year
restricts
the
deduction
to
the
7
sale
of
“real
property
used
in
a
farming
business”,
provided
8
the
taxpayer
“materially
participated”
in
the
farming
business
9
for
at
least
10
years,
held
the
real
property
for
at
least
10
10
years,
and
sold
the
real
property
to
a
“relative”,
all
as
11
defined
in
2018
Iowa
Acts,
chapter
1161.
12
The
bill
modifies
the
restrictions
relating
to
the
deduction
13
for
the
sale
of
real
property
used
in
farming
business
by
14
permitting
the
taxpayer
to
take
the
deduction
if
one
of
the
15
following
apply:
the
taxpayer
“materially
participated”
in
16
the
farming
business
for
at
least
10
years
and
held
the
real
17
property
for
at
least
10
years;
or
the
taxpayer
sold
the
real
18
property
to
a
“relative”.
The
bill
expands
the
definition
of
19
“relative”
to
include
an
entity
in
which
a
relative
of
the
20
taxpayer
has
a
legal
or
equitable
interest
in
the
entity
as
an
21
owner,
member,
partner,
or
beneficiary.
22
The
bill
also
modifies
the
definitions
of
“farming
business”
23
and
“real
property
used
in
a
farming
business”.
The
bill
24
defines
“livestock”
to
mean
the
same
as
defined
in
Code
section
25
717.1,
which
is
used
in
the
definition
of
farming
business.
26
The
bill
strikes
provisions
related
to
restricting
the
27
capital
gain
deduction
for
the
sale
of
real
property
used
in
a
28
farming
business
if
the
relative
sells
or
transfers
the
real
29
property
used
in
a
farming
business
within
five
years
of
the
30
original
sale.
31
The
bill
also
strikes
a
provision
providing
that
to
the
32
extent
otherwise
allowed,
the
capital
gain
deduction
for
the
33
sale
of
real
property
used
in
a
“farming
business”
shall
not
be
34
allowed
for
purposes
of
computing
income
for
the
taxable
year
35
-3-
LSB
1794SV
(2)
88
jm/jh
3/
4
S.F.
627
or
years
for
which
a
net
operating
loss
is
deducted
under
the
1
Internal
Revenue
Code
or
under
Code
section
422.9
(deductions
2
from
net
income).
3
The
bill
does
not
change
the
future
effective
date
of
the
4
capital
gain
deduction
for
the
sale
of
real
property
used
in
a
5
farming
business.
6
-4-
LSB
1794SV
(2)
88
jm/jh
4/
4
