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H0165...............................................by REVENUE AND TAXATION
INCOME TAX - Amends existing law to reduce the length of time from eighteen
months to twelve months that real property must be held for capital gains
purposes for purposes of the state income tax.
02/11 House intro - 1st rdg - to printing
02/14 Rpt prt - to Rev/Tax
02/28 Rpt out - rec d/p - to 2nd rdg
03/01 2nd rdg - to 3rd rdg
03/07 3rd rdg - PASSED - 62-4-4
AYES -- Anderson, Andrus, Barraclough, Barrett, Bastian, Bayer,
Bedke, Bell, Bilbao, Black, Block, Boe, Bolz, Bradford, Chadderdon,
Clark, Collins, Crow, Deal, Denney, Edmunson, Ellsworth, Eskridge,
Field(18), Field(23), Garrett, Hart, Harwood, Henbest, Henderson,
Jaquet, Jones, Kemp, Loertscher, Martinez, Mathews, McGeachin,
McKague, Miller, Moyle, Nielsen, Nonini, Pasley-Stuart, Raybould,
Ring, Roberts, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie,
Snodgrass, Trail, Wills, Mr. Speaker
NAYS -- LeFavour, Mitchell, Pence, Ringo
Absent and excused -- Cannon, Lake, Stevenson, Wood
Floor Sponsor - Moyle
Title apvd - to Senate
03/08 Senate intro - 1st rdg - to Loc Gov
03/14 Rpt out - rec d/p - to 2nd rdg
03/15 2nd rdg - to 3rd rdg
03/21 3rd rdg - PASSED - 31-0-3, 1 vacancy
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Compton, Corder, Darrington, Davis, Gannon,
Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst, Little,
Lodge, Marley, McGee, McKenzie, Pearce, Richardson, Schroeder,
Stegner, Stennett, Sweet, Williams
NAYS -- None
Absent and excused -- Coiner, Malepeai, Werk, (District 21 seat
vacant)
Floor Sponsors - Stennett & Little
Title apvd - to House
03/22 To enrol
03/23 Rpt enrol - Sp signed
03/24 Pres signed - To Governor
03/30 Governor signed
Session Law Chapter 208
Effective: 01/01/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 165
BY REVENUE AND TAXATION COMMITTEE
1 AN ACT
2 RELATING TO CAPITAL GAINS AND THE STATE INCOME TAX; AMENDING SECTION 63-3022H,
3 IDAHO CODE, TO REDUCE THE LENGTH OF TIME REAL PROPERTY MUST BE HELD TO
4 QUALIFY FOR CAPITAL GAINS TREATMENT FOR STATE INCOME TAX PURPOSES;
5 DECLARING 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 capital gain net income in determining taxable income, eighty percent
11 (80%) in taxable year 2001 and sixty percent (60%) in taxable years thereafter
12 of the capital gain net income from the sale or exchange of qualified property
13 shall be a deduction in determining Idaho taxable income.
14 (2) The deduction provided in this section is limited to the amount of
15 the capital gain net income from all property included in taxable income.
16 Gains treated as ordinary income by the Internal Revenue Code do not qualify
17 for the deduction allowed in this section. The deduction otherwise allowable
18 under this section shall be reduced by the amount of any federal capital gains
19 deduction relating to such property, but not below zero.
20 (3) As used in this section "qualified property" means the following
21 property having an Idaho situs at the time of sale:
22 (a) Real property held at least eighteen twelve (182) 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 (e) Timber grown in Idaho and held at least twenty-four (24) months;
35 (f) 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 Inter-
37 nal Revenue Code shall apply, except that the holding period shall not
38 include the holding period of property given up in an exchange, when such
39 property would not have constituted qualified property under this section
40 without regard to meeting the holding period.
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 or a capital
4 gain from property acquired as a beneficiary of an estate, no deduction shall
5 be allowed under this section unless the holding period required in subsec-
6 tion (3) of this section was satisfied by the decedent, the estate, or the
7 beneficiary, or a combination thereof.
8 (6) If an individual reports a capital gain from a trust or a capital
9 gain from property acquired as a beneficiary of a trust, no deduction shall be
10 allowed under this section unless the holding period required in subsection
11 (3) of this section was satisfied by the grantor, the trust, or the benefi-
12 ciary, 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, 2005.
STATEMENT OF PURPOSE
RS 14632
This measure would shorten the holding period required for Real
Estate transactions from eighteen(18) months to twelve(12) months
to qualify for long-term Capital Gains taxation. This proposal
would bring Idaho into Federal Internal Revenue Service
compliance for tax treatment of long term capital gains.
FISCAL IMPACT
Negative $500,000 to the General fund.
ontact
Name: Sen. Clint Stennett
Sen. Brad Little
Rep. Wendy Jaquet
Rep. Mike Moyle
Rep. Lawrence Denney
Phone: 332-1351
STATEMENT OF PURPOSE/FISCAL NOTE H 165