2005 Legislation
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HOUSE BILL NO. 165 – Real property sale/capital gain/tax


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Bill Status

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
    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

Bill Text

  ]]]]              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
  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
  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 / Fiscal Impact

                       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. 

Name:  Sen. Clint Stennett
       Sen. Brad Little
       Rep. Wendy Jaquet
       Rep. Mike Moyle
       Rep. Lawrence Denney
Phone: 332-1351