Bill Text: IA SSB3206 | 2013-2014 | 85th General Assembly | Introduced
Bill Title: A study bill for an act relating to the exclusion from the computation of net income for the individual income tax of net capital gains from the sale of a business and including retroactive applicability provisions.
Spectrum: Unknown
Status: (N/A - Dead) 2014-03-10 - In Ways and Means [SSB3206 Detail]
Download: Iowa-2013-SSB3206-Introduced.html
Senate
Study
Bill
3206
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
BOLKCOM)
A
BILL
FOR
An
Act
relating
to
the
exclusion
from
the
computation
of
net
1
income
for
the
individual
income
tax
of
net
capital
gains
2
from
the
sale
of
a
business
and
including
retroactive
3
applicability
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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_____
Section
1.
Section
422.7,
subsection
21,
paragraph
a,
Code
1
2014,
is
amended
to
read
as
follows:
2
a.
(1)
(a)
Net
capital
gain
from
the
sale
of
a
business
or
3
from
the
sale
of
real
property
used
in
a
business
,
in
which
the
4
taxpayer
materially
participated
for
a
minimum
of
ten
years
,
5
as
defined
in
section
469(h)
of
the
Internal
Revenue
Code,
and
6
which
has
been
held
for
a
minimum
of
ten
years
,
or
from
the
7
sale
of
a
business,
as
defined
in
section
423.1
,
in
which
the
8
taxpayer
materially
participated
for
ten
years,
as
defined
in
9
section
469(h)
of
the
Internal
Revenue
Code,
and
which
has
been
10
held
for
a
minimum
of
ten
years.
The
sale
of
a
business
means
11
the
sale
of
all
or
substantially
all
of
the
tangible
personal
12
property
or
service
of
the
business
.
13
(b)
However,
where
the
business
is
sold
If
the
sale
of
the
14
business
in
subparagraph
division
(a)
is
made
to
individuals
15
who
are
all
lineal
descendants
of
the
taxpayer,
the
taxpayer
16
does
not
have
to
have
materially
participated
in
the
business
17
in
order
for
the
net
capital
gain
from
the
sale
to
be
excluded
18
from
taxation.
19
(2)
However,
in
In
lieu
of
the
net
capital
gain
deduction
20
in
this
paragraph
and
paragraphs
“b”
,
“c”
,
and
“d”
,
where
the
21
business
is
sold
if
the
sale
of
the
business
in
subparagraph
22
(1)
is
made
to
individuals
who
are
all
lineal
descendants
of
23
the
taxpayer,
the
amount
of
capital
gain
from
each
capital
24
asset
may
be
subtracted
in
determining
net
income.
25
(2)
(3)
For
purposes
of
this
paragraph,
unless
the
context
26
otherwise
requires:
27
(a)
“Business”
means
the
same
as
defined
in
section
423.1.
28
(b)
“lineal
“Lineal
descendant”
means
children
of
the
29
taxpayer,
including
legally
adopted
children
and
biological
30
children,
stepchildren,
grandchildren,
great-grandchildren,
and
31
any
other
lineal
descendants
of
the
taxpayer.
32
(c)
“Materially
participated”
means
the
same
as
defined
in
33
section
469(h)
of
the
Internal
Revenue
Code.
34
(d)
“Sale
of
a
business”
means
the
sale
of
all
or
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substantially
all
of
the
tangible
personal
property
or
service
1
of
the
business,
or
the
sale
of
all
or
substantially
all
of
the
2
stock
or
equity
interest
in
the
business,
whether
the
business
3
is
held
as
a
sole
proprietorship,
corporation,
partnership,
4
joint
venture,
trust,
limited
liability
company,
or
another
5
business
entity.
6
Sec.
2.
RETROACTIVE
APPLICABILITY.
This
Act
applies
7
retroactively
to
January
1,
2014,
for
tax
years
beginning
on
8
or
after
that
date.
9
EXPLANATION
10
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
11
the
explanation’s
substance
by
the
members
of
the
general
assembly.
12
This
bill
relates
to
the
taxation
of
net
capital
gains
from
13
the
sale
of
a
business.
14
This
state
provides
an
exclusion
from
the
computation
of
net
15
income
for
the
individual
income
tax
of
any
net
capital
gains
16
realized
from
the
sale
of
a
business
if
the
taxpayer
held
the
17
business
for
at
least
10
years
and
materially
participated
in
18
the
business
for
at
least
10
years.
19
Under
current
law,
“sale
of
a
business”
is
defined
as
the
20
sale
of
all
or
substantially
all
of
the
tangible
personal
21
property
or
service
of
the
business.
The
bill
modifies
the
22
definition
to
include
the
sale
of
all
or
substantially
all
of
a
23
stock
or
equity
interest
in
the
business,
whether
the
business
24
is
held
as
a
sole
proprietorship,
corporation,
partnership,
25
joint
venture,
trust,
limited
liability
company,
or
another
26
business
entity.
27
The
bill
applies
retroactively
to
January
1,
2014,
for
tax
28
years
beginning
on
or
after
that
date.
29
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