2001 Legislation
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HOUSE BILL NO. 173 – Income tax/intangble persnl proprty

HOUSE BILL NO. 173

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Daily Data Tracking History



H0173...............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law to include intangible personal property
held at least twelve months under the definition of qualifying property for
capital gains treatment under Idaho income tax law.
                                                                        
02/07    House intro - 1st rdg - to printing
02/08    Rpt prt - to Rev/Tax

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  First Regular Session - 2001
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 173
                                                                        
                             BY REVENUE AND TAXATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO INCOME TAXATION; AMENDING SECTION 63-3022H, IDAHO CODE, TO INCLUDE
  3        INTANGIBLE PERSONAL PROPERTY HELD AT LEAST TWELVE MONTHS UNDER THE DEFINI-
  4        TION OF QUALIFYING PROPERTY AND TO MAKE TECHNICAL  CORRECTIONS;  DECLARING
  5        AN EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
                                                                        
  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 iInternal  rRevenue  cCode  do
 16    not 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 least eighteen (18) months;
 22        (b)  Tangible  personal  property  used  in Idaho for at least twelve (12)
 23        months by a revenue-producing enterprise;
 24        (c)  Cattle or horses held for breeding, draft, dairy or sporting purposes
 25        for at least twenty-four (24) months if more than one-half  (1/2)  of  the
 26        taxpayer's  gross  income  (as  defined  in section 61(a) of the iInternal
 27        rRevenue cCode) for the taxable year is from farming  or  ranching  opera-
 28        tions in Idaho;
 29        (d)  Breeding  livestock  other than cattle or horses held at least twelve
 30        (12) months if more than one-half (1/2) of the taxpayer's gross income (as
 31        defined in section 61(a) of the iInternal rRevenue cCode) for the  taxable
 32        year is from farming or ranching operations in Idaho;
 33        (e)  Timber grown in Idaho and held at least twenty-four (24) months;
 34        (f)  Intangible personal property held at least twelve (12) months;
 35        (g)  In  determining the period for which property subject to this section
 36        has been held by a  taxpayer,  the  provisions  of  section  1223  of  the
 37        iInternal  rRevenue cCode shall apply, except that when the holding period
 38        includes any period during which the taxpayer held property other than the
 39        property sold, all property held during the holding  period  must  qualify
 40        under this section.
 41        (4)  If  an individual reports a capital gain from qualified property from
 42    an S corporation or a partnership, a deduction shall  be  allowed  under  this
 43    section  only  to the extent the individual held his interest in the income of
                                                                        
                                           2
                                                                        
  1    the S corporation or the partnership for the time required by  subsection  (3)
  2    of this section for the property sold.
  3        (5)  If  an individual reports a capital gain from an estate, no deduction
  4    shall be allowed under this section unless the holding period required in sub-
  5    section (3) of  this section was satisfied by the decedent, the estate, or the
  6    beneficiary, or a combination thereof.
  7        (6)  If an individual reports a capital gain from a  trust,  no  deduction
  8    shall be allowed under this section unless the holding period required in sub-
  9    section  (3)  of  this section was satisfied by the grantor, the trust, or the
 10    beneficiary, or a combination thereof.
 11        (7)  As used in this section "revenue-producing enterprise" means:
 12        (a)  The production, assembly, fabrication, manufacture, or processing  of
 13        any agricultural, mineral or manufactured product;
 14        (b)  The  storage,  warehousing, distribution, or sale at wholesale of any
 15        products of agriculture, mining or manufacturing;
 16        (c)  The feeding of livestock at a feedlot;
 17        (d)  The operation of laboratories or  other  facilities  for  scientific,
 18        agricultural,  animal  husbandry,  or industrial research, development, or
 19        testing.
                                                                        
 20        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
 21    declared to exist, this act shall be in full force and effect on and after its
 22    passage and approval, and retroactively to January 1, 2001.

Statement of Purpose / Fiscal Impact


                       STATEMENT OF PURPOSE

                            RS 10778
                                
The purpose of this legislation is to make the capital gains tax
fairer. Current law does not allow gains from the sale of stocks and
other intangibles to qualify for the capital gains exclusion. This
legislation will convert Idaho s definition to the federal definition.




                         FISCAL IMPACT
                                
                                
                                
The estimated fiscal cost is $20 million



















Contact
      Name: Rep. Jim Clark
      Phone:     332 1000
      Name: Senator Grant Ipsen
      Phone:     332 1326


STATEMENT OF PURPOSE/FISCAL NOTE                                H 17