Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 302 - Determination of Net Income › Rule 701-302.88 - Net Income From a Farm Tenancy Agreement Covering Real Property

Current through Register Vol. 47, No. 3, July 24, 2024
An eligible individual may elect to exclude net income from a
				  farm tenancy agreement covering real property held by the individual for ten or
				  more years from the computation of net income, if the eligible individual
				  materially participated in a farming business for ten or more years.
(1)
Definitions.
Unless
				otherwise indicated in this rule or required by the context, all words and
				phrases used in this rule that are defined under Iowa Code section
				422.7(14) 
				shall have the same meaning as provided to them under that Iowa Code section.
"Disabled individual"
means an individual
				  who is receiving benefits as a result of retirement from employment or
				  self-employment due to disability. In addition, a person is considered to be a
				  disabled individual if the individual is determined to be disabled in
				  accordance with criteria established by the Social Security Administration or
				  other federal or state governmental agency.
"Held"
shall be determined with reference to
				  the holding period provisions of Section 1223 of the Internal Revenue Code and
				  the federal regulations pursuant thereto.
(2)
Material participation.
Material participation for the purposes of this rule is determined pursuant to
				subrule 302.87(2) and the definition of "materially participated" in Iowa Code
				section 422.7(14). An
				eligible individual meets the material participation requirements if the
				individual materially participated in a farming business for ten years or more
				in the aggregate. When determining whether an eligible individual has stopped
				materially participating, the material participation test in subparagraph
				302.87(2)
"e"
(5) and the material participation of a spouse
				shall not apply.
(3)
Lifetime election.
An eligible individual may make a single
				lifetime election on a form prescribed by the department to exclude net income
				pursuant to a farm tenancy agreement covering real property. If an eligible
				individual makes the election described in this subrule, the eligible
				individual is not eligible to make an election to exclude the capital gain from
				the sale of real property used in a farming business or certain livestock under
				Iowa Code section 422.7(13)  and
				rule 701-302.87(422) or claim the beginning farmer tax credit under Iowa Code
				section 422.11E in the same tax year or
				any subsequent tax year. The election is irrevocable once made.
a.
Beginning farmer tax
				credit.
A retired farmer shall not utilize an unclaimed amount of a
				beginning farmer tax credit in the same tax year the retired farmer is making
				an election described in this subrule or in subrule 302.87(3) or in any
				subsequent tax year.
b.
Surviving spouses.
A surviving spouse of a deceased eligible
				individual may make the election described in this subrule or the election
				described in subrule 302.87(3) subject to the provisions of subrule 302.87(3).
				For purposes of this subrule, "retired farmer" as used in subrule 302.87(3) has
				the same meaning as "eligible individual."
c.
Joint owners.
An eligible
				individual may exclude income pursuant to the election described in this
				subrule or the election described in subrule 302.87(3) to the extent of the
				eligible individual's ownership interest in the real property subject to the
				provisions of subrule 302.87(3). For purposes of this subrule, "retired farmer"
				as used in subrule 302.87(3) has the same meaning as "eligible
				individual."