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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 eighteentwelve (1 82) 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