HSB 173

, as an individual, partnership, family farm corporation, or family farm limited liability company). The taxpayer must not have been at fault for terminating a prior agreement in which the taxpayer was able to claim a tax credit. _____ corporation, or family farm limited liability company. In addition, the farmer must be a resident of this state; have sufficient education, training, or experience in farming; have access to adequate working capital and production items; and not own more than a percent ownership interest in an agricultural asset included in the agreement. BEGINNING FARMER TAX CREDIT. The tax credit is calculated based on the type of rent payment arrangement agreed to by the parties, which is either on a cash basis in which a fixed payment is made or a commodity share basis in which the taxpayer takes a percentage of the crop or livestock produced., crop yield). For an agreement which includes a rent payable on a cash basis, the tax credit amount equals percent of the gross amount paid to the taxpayer under the agreement. For an agreement which includes rent payable on a commodity share basis, the tax credit amount equals percent of the amount paid to the eligible taxpayer from crops or livestock sold under the agreement. In the case of a flexible arrangement in which some risk is shared between the parties, the tax credit amount equals percent of the amount paid to the taxpayer as a percentage of the gross value of the commodity. A tax credit cannot exceed $50,000 in any tax year. APPLICATIONS AND CERTIFICATES. The board is required to review and approve applications for the tax credit. As part of this process the division must calculate the amount of the tax credit that may be awarded to that applicant. The division must approve all applications on a first-come, first-served basis and issue tax credit certificates to approved taxpayers. IFA is allowed to issue up to $12 million in tax credit certificates each tax year, an increase from $6 million under the agricultural assets transfer tax credit. _____ AND CERTIFICATIONS. The bill provides that any approved application for the agricultural asset transfer tax credit is deemed an approved application under the beginning farmer tax credit program. APPLICABILITY OF PRIOR TAX CREDITS —— CONTINUANCE OF CARRYOVER PROVISIONS. The bill allows a taxpayer who claimed a tax credit under the former version of the beginning farmer tax credit (the agricultural assets transfer tax credit and an associated, now repealed custom farming contract tax credit) may continue to carry over the respective tax credits for the remaining years or the depletion of the tax credit. BACKGROUND. The agricultural assets transfer tax credit was first established in 2006 (2006 Iowa Acts, chapter 1161) and has been subsequently amended. Another form of a tax credit assisting beginning farmers, referred to as the custom farming contract tax credit, was established in 2013 (2013 Iowa Acts, chapter 125). Both tax credits were under the beginning farmer tax credit program and administered by the agricultural development board (board) acting as the agricultural development authority and subject to a limit of $12 million. The program was transferred to IFA (2013 Iowa Acts, chapter 100, and 2014 Iowa Acts, chapter 1080). Amendments to the agricultural assets transfer tax credit and the custom farming contract tax credit were repealed on December 31, 2017 (2013 Iowa Acts, chapter 125), except for a provision which extended the tax credit carryover from to years. The funding limit was restored to its present $6 million limit. EFFECTIVE AND RETROACTIVE APPLICABILITY. The bill takes effect upon enactment and applies retroactively to January 1, 2019, to tax years beginning on or after that date.