2005 Idaho Code - 63-3022H — DEDUCTION OF CAPITAL GAINS

                                  TITLE  63
                             REVENUE AND TAXATION
                                  CHAPTER 30
                                  INCOME TAX
    63-3022H.  DEDUCTION OF CAPITAL GAINS. (1) If an individual taxpayer
reports capital gain net income in determining taxable income, eighty percent
(80%) in taxable year 2001 and sixty percent (60%) in taxable years thereafter
of the capital gain net income from the sale or exchange of qualified property
shall be a deduction in determining Idaho taxable income.
    (2)  The deduction provided in this section is limited to the amount of
the capital gain net income from all property included in taxable income.
Gains treated as ordinary income by the Internal Revenue Code do not qualify
for the deduction allowed in this section. The deduction otherwise allowable
under this section shall be reduced by the amount of any federal capital gains
deduction relating to such property, but not below zero.
    (3)  As used in this section "qualified property" means the following
property having an Idaho situs at the time of sale:
    (a)  Real property held at least twelve (12) months;
    (b)  Tangible personal property used in Idaho for at least twelve (12)
    months by a revenue-producing enterprise;
    (c)  Cattle or horses held for breeding, draft, dairy or sporting purposes
    for at least twenty-four (24) months if more than one-half (1/2) of the
    taxpayer's gross income (as defined in section 61(a) of the Internal
    Revenue Code) for the taxable year is from farming or ranching operations
    in Idaho;
    (d)  Breeding livestock other than cattle or horses held at least twelve
    (12) months if more than one-half (1/2) of the taxpayer's gross income (as
    defined in section 61(a) of the Internal Revenue Code) for the taxable
    year is from farming or ranching operations in Idaho;
    (e)  Timber grown in Idaho and held at least twenty-four (24) months;
    (f)  In determining the period for which property subject to this section
    has been held by a taxpayer, the provisions of section 1223 of the
    Internal Revenue Code shall apply, except that the holding period shall
    not include the holding period of property given up in an exchange, when
    such property would not have constituted qualified property under this
    section without regard to meeting the holding period.
    (4)  If an individual reports a capital gain from qualified property from
an S corporation or a partnership, a deduction shall be allowed under this
section only to the extent the individual held his interest in the income of
the S corporation or the partnership for the time required by subsection (3)
of this section for the property sold.
    (5)  If an individual reports a capital gain from an estate or a capital
gain from property acquired as a beneficiary of an estate, no deduction shall
be allowed under  this section unless the holding period required in
subsection (3) of this section was satisfied by the decedent, the estate, or
the beneficiary, or a combination thereof.
    (6)  If an individual reports a capital gain from a trust or a capital
gain from property acquired as a beneficiary of a trust, no deduction shall be
allowed under this section unless the holding period required in subsection
(3) of this section was satisfied by the grantor, the trust, or the
beneficiary, or a combination thereof.
    (7)  As used in this section "revenue-producing enterprise" means:
    (a)  The production, assembly, fabrication, manufacture, or processing of
    any agricultural, mineral or manufactured product;
    (b)  The storage, warehousing, distribution, or sale at wholesale of any
    products of agriculture, mining or manufacturing;
    (c)  The feeding of livestock at a feedlot;
    (d)  The operation of laboratories or other facilities for scientific,
    agricultural, animal husbandry, or industrial research, development, or
    testing.