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S1426......................................by LOCAL GOVERNMENT AND TAXATION
INCOME TAX - CAPITAL GAINS - Amends existing law to revise the holding
period to eighteen months for real property to qualify.
02/10 Senate intro - 1st rdg - to printing
02/11 Rpt prt - to Loc Gov
02/24 Rpt out - rec d/p - to 2nd rdg
02/25 2nd rdg - to 3rd rdg
03/03 3rd rdg - PASSED - 30-3-2
AYES--Andreason, Boatright, Branch, Burtenshaw, Cameron, Crow,
Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hansen,
Hawkins, Ingram, Ipsen, Keough, King, Lee, Parry, Richardson, Riggs,
Risch, Sandy, Schroeder, Stennett, Sweeney, Thorne, Wheeler,
Whitworth
NAYS--McLaughlin, Noh, Twiggs
Absent and excused--Bunderson, Sorensen
Floor Sponsor - Stennett
Title apvd - to House
03/04 House intro - 1st rdg - to Loc Gov
03/09 Rpt out - to Rev/Tax
03/17 Rpt out - rec d/p - to 2nd rdg
03/18 2nd rdg - to 3rd rdg
03/18 Rls susp - PASSED - 57-3-10
AYES -- Alltus, Barraclough, Bieter, Bivens, Black(15), Black(23),
Boe, Bruneel, Callister, Campbell, Chase, Clark, Cuddy, Deal, Denney,
Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hadley,
Henbest, Hornbeck, Jaquet, Jones(9), Jones(22), Jones(20), Judd,
Kellogg, Kempton, Kendell, Kjellander, Kunz, Lake, Linford,
Loertscher, Mader, Marley, McKague, Meyer, Mortensen, Pischner,
Pomeroy, Reynolds, Richman, Ridinger, Robison, Schaefer, Stone,
Stubbs, Taylor, Tilman, Watson, Wheeler, Zimmermann, Mr Speaker
NAYS -- Bell, Sali, Stoicheff
Absent and excused -- Barrett, Crane, Crow, Hansen, Miller, Newcomb,
Stevenson, Tippets, Trail, Wood
Floor Sponsor - Kellogg
Title apvd - to Senate
03/19 To enrol
03/20 Rpt enrol - Pres signed
03/23 Sp signed - to Governor
03/27 Governor signed
Session Law Chapter 414
Effective: 01/01/98
S1426|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE SENATE SENATE BILL NO. 1426 BY LOCAL GOVERNMENT AND TAXATION COMMITTEE 1 AN ACT 2 RELATING TO INCOME TAX TREATMENT OF CAPITAL GAINS; AMENDING SECTION 63-3022H, 3 IDAHO CODE, TO CHANGE THE HOLDING PERIOD REQUIREMENTS AND TO MAKE TECHNI- 4 CAL CORRECTIONS; DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICA- 5 TION. 6 Be It Enacted by the Legislature of the State of Idaho: 7 SECTION 1. That Section 63-3022H, Idaho Code, be, and the same is hereby 8 amended to read as follows: 9 63-3022H. DEDUCTION OF CAPITAL GAINS. (1) If an individual taxpayer 10 reports a net capital gain in determining taxable income, sixty percent (60%) 11 of the net capital gain from the sale or exchange of qualified property shall 12 be a deduction in determining taxable income. 13 (2) The deduction provided in this section is limited to the amount of 14 the net capital gain from all property included in federal taxable income. Net 15 capital gains treated as ordinary income by the internal revenue code do not 16 qualify for the deduction allowed in this section. The deduction otherwise 17 allowable under this section shall be reduced by the amount of any federal 18 capital gains deduction relating to such property, but not below zero. 19 (3) As used in this section "qualified property" means the following 20 property having an Idaho situs at the time of sale: 21 (a) Real property held at leastfive (5) yearseigh- 22 teen (18) months ; 23 (b) Tangible personal property used in Idaho for at least twelve (12) 24 months by a revenue-producing enterprise; 25 (c) Cattle or horses held for breeding, draft, dairy or sporting purposes 26 for at least twenty-four (24) months if more than one-half (1/2) of the 27 taxpayer's gross income (as defined in section 61(a) of the internal reve- 28 nue code) for the taxable year is from farming or ranching operations in 29 Idaho.; 30 (d) Breeding livestock other than cattle or horses held at least twelve 31 (12) months if more than one-half (1/2) of the taxpayer's gross income (as 32 defined in section 61(a) of the internal revenue code) for the taxable 33 year is from farming or ranching operations in Idaho.; 34 35 (e) Timber grown in Idaho and held at least twenty-four (24) months36.; 37 (f) In determining the period for which property subject to this section 38 has been held by a taxpayer, the provisions of section 1223 of the inter- 39 nal revenue code shall apply, except that when the holding period includes 40 any period during which the taxpayer held property other than the property 41 sold, all property held during the holding period must qualify under this 42 section. 43 (4) If an individual reports a capital gain from qualified property from 2 1 an S corporation or a partnership, a deduction shall be allowed under this 2 section only to the extent the individual held his interest in the income of 3 the S corporation or the partnership for the time required by subsection (3) 4 of this section for the property sold. 5 (5) If an individual reports a capital gain from an estate, no deduction 6 shall be allowed under this section unless the holding period required in sub- 7 section (3) of this section was satisfied by the decedent, the estate, or the 8 beneficiary, or a combination thereof. 9 (6) If an individual reports a capital gain from a trust, no deduction 10 shall be allowed under this section unless the holding period required in sub- 11 section (3) of this section was satisfied by the grantor, the trust, or the 12 beneficiary, or a combination thereof. 13 (7) As used in this section "revenue-producing enterprise" means: 14 (a) The production, assembly, fabrication, manufacture, or processing of 15 any agricultural, mineral or manufactured product; 16 (b) The storage, warehousing, distribution, or sale at wholesale of any 17 products of agriculture, mining or manufacturing; 18 (c) The feeding of livestock at a feedlot; 19 (d) The operation of laboratories or other facilities for scientific, 20 agricultural, animal husbandry, or industrial research, development, or 21 testing. 22 SECTION 2. An emergency existing therefor, which emergency is hereby 23 declared to exist, this act shall be in full force and effect on and after its 24 passage and approval, and retroactively to January 1, 1998.
STATEMENT OF PURPOSE
RS07676Cl
The purpose of this legislation is to bring Idaho's capital gains
tax law into conformance with federal law by lowering the holding
period for real estate from 5 years to 18 months.
FISCAL NOTE
The fiscal impact could potentially amount to $940,000. However,
the actual impact is unknown since there is no way of knowing how
much real estate will be impacted by this change.
CONTACT: Sen. Clint Stennett
332-1358
STATEMENT OF PURPOSE/ FISCAL NOTE
Bill No. S 1426
Reprinted by request of Senate Local Government & Taxation
Committee.
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