An Act To Provide a Capital Gains Tax Exemption for the Sale of a Business or Unimproved Property for a Taxpayer 50 Years of Age or Older
Maine Legislature, Session 122, LD 0782
Committee: Taxation
Sponsors: SCHATZ, CLARK, PILON, SA VIELLO, THOMPSON
Amends: 36 MRSA §5122

Legislative Document 
No. 782 
H.P.559 
House of Representatives, February 15, 2005 
An Act To Provide a Capital Gains Tax Exemption for the Sale of a 
Business or Unimproved Property for a Taxpayer 50 Years of Age 
or Older 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative SCHATZ of Blue Hill. 
IJ'/~ 1?? 7l!P£~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: CLARK of Millinocket, PILON of Saco, SA VIELLO of 
Wilton, THOMPSON of China. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec.!. 36 MRSA §5122, sub-§2, ,Q, as corrected by RR 2003, c. 
1, §38, is amended to read: 
J2 
Q. 
A fraction of any 
taxpayer 
to 
federal 
subsection 1, paragraph 
amount previously added 
adjusted 
gross 
income 
N. 
back by the 
pursuant 
to 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to 
all other 
property, 
for 
the 
taxable year 
immediately following the taxable year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 50" 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year during the recovery period, the fraction 
is 
equal 
to 
95% 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the Code, 
the 
term "recovery period" means 
the 
recovery 
period that would have been applicable to the property had 
Section 179 not been applied; aHa 
Sec. 2. 36 MRS A §5122, sub-§2, ,T, as amended by PL 2003, c. 
705, §12 and affected by §14, is further amended to read: 
T. 
For income tax years beginning on or after January 1, 
2002 and before January 1, 
2004, 
an amount equal to the 
total premiums spent for long-term care insurance policies 
certified under Title 24-A, section 5075-A as long as the 
amount subtracted is reduced by the long-term care premiums 
claimed as an itemized deduction pursuant to section 5125. 
For income tax years beginning on or after January 1, 2004, 
an amount equal to the total premiums spent for qualified 
long-term care 
insurance contracts certified under Title 
24-A, section 5075-A, as long as the amount subtracted is 
G 
reduced by any amount claimed as a deduction for federal 
income tax purposes in accordance with the Code, 
Section 
162(1) 
and by the long-term care premiums 
claimed as 
an 
itemized deduction pursuant to section 5125T; and 
Sec. 3. 36 MRSA §5122, sub-§2, 1fU is enacted to read: 
U. 
For income tax years beginning on or after January 1, 
2006, 
an amount equal to the total capital gains realized 
from 
the sale of 
a 
business or 
the sale of unimproved 
property as long as at least one taxpayer listed on the 
income tax return is 50 years of age or older on December 
31st of the tax-year. 
The amount subtracted pursuant to 
this paragraph must be reduced by any amount claimed as a 
deduction 
for 
federal 
income 
tax 
purposes. 
The 
total 
aggregate amount subtracted pursuant to this paragraph may 
not exceed $500,000 per taxpayer. 
SUMMARY 
This bill exempts 
from the individual income tax capital 
gains associated with the sale of a business or unimproved real 
or personal property if the taxpayer is 
years of age or 
older. 
It 
also 
establishes 
a 
lifetime 
exemption 
limit 
of 
$500,000 per taxpayer.