Bill
Bill > SF19
IA SF19
A bill for an act relating to the farm tenancy net income exclusion available against the individual income tax, and including effective date and retroactive applicability provisions.
summary
Introduced
01/14/2025
01/14/2025
In Committee
01/14/2025
01/14/2025
Crossed Over
Passed
Dead
Introduced Session
91st General Assembly
Bill Summary
Current law excludes from the individual income tax a retired farmer’s total net income received pursuant to a farm tenancy agreement covering real property held by the retired farmer for 10 or more years, if the farmer materially participated in a farming business for 10 or more years. Under current law, net income from a farm tenancy agreement earned by an entity taxed as a partnership for federal tax purposes, an S corporation, or a trust or estate is not eligible for the farm tenancy lease income exclusion. This bill allows the net income from a farm tenancy agreement earned, received, or reported by an entity taxed as a disregarded entity, partnership for federal tax purposes, an S corporation, a trust, or estate to be eligible for the farm tenancy lease income exclusion in the same manner as if the net income received pursuant to a farm tenancy passes directly from the farm tenant to the eligible individual rather than passing to the eligible individual through an entity taxed as a disregarded entity, a partnership, an S corporation, a trust, or an estate. The bill allows net income accruing to a grantor trust or to a business entity that is a disregarded entity to be deemed to have been distributed to its sole owner to the extent the sole owner of such disregarded entity or trust has the right to withdraw or compel distribution of such net income. The bill takes effect upon enactment and applies retroactively to tax years beginning on or after January 1, 2024.
AI Summary
This bill expands a tax benefit for retired farmers by modifying the existing farm tenancy net income exclusion. Currently, retired farmers who have owned farmland for at least 10 years and materially participated in farming for 10 or more years can exclude certain farm tenancy income from individual income tax. The bill broadens this exclusion to include net income earned through various business entities like partnerships, S corporations, trusts, and estates, which were previously ineligible. Specifically, the bill allows net income from farm tenancy agreements to be treated as if it were received directly by the eligible farmer, even when it passes through these different types of business entities. Additionally, for grantor trusts or disregarded entities, the net income will be considered distributed to the sole owner if they have the right to withdraw or demand distribution of the income. The bill takes effect immediately upon enactment and applies retroactively to tax years beginning on or after January 1, 2024, providing a potentially significant tax benefit for retired farmers who receive farm tenancy income through various business structures.
Committee Categories
Budget and Finance
Sponsors (1)
Last Action
Subcommittee: Dawson, Dotzler, and Rowley. S.J. 125. (on 01/22/2025)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=SF19 |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/SF19.html |
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