HOUSE OF REPRESENTATIVES

H.B. NO.

284

TWENTY-SIXTH LEGISLATURE, 2011

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO AGRICULTURE.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  The purpose of this Act is to establish an income tax exclusion for small farmers.

     SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

     "§235-     Exclusion for small farmers.  (a)  For the purpose of this section:

     "Agricultural product" has the same meaning as used in section 237-5.

     "Small farmer" means a sole proprietor, corporation, partnership, S corporation, estate, or trust that:

     (1)  Engages in the production of agricultural products on land owned or leased by the sole proprietor, corporation, partnership, S corporation, estate, or trust; and

     (2)  Earns in a taxable year not more than:

         (A)  $500,000 from the sale of agricultural products produced on the land owned or leased by the taxpayer or from tours of the agricultural operation conducted on that land; and

         (B)  $250,000 in gross income from activities other than those described in subparagraph (A).

     (b)  There shall be excluded from a small farmer's gross income, adjusted gross income, and taxable income in a taxable year the lesser of the following:

     (1)  The amount earned in that taxable year by the small farmer from the sale of agricultural products produced on land owned or leased by the small farmer or from tours of the agricultural operation conducted on that land; or

     (2)  $50,000.

     (c)  If a small farmer is a partnership, S corporation, estate, or trust, the exclusion shall be distributed among the partners, shareholders, or beneficiaries, as applicable, by agreement of the partnership, S corporation, estate, or trust.

     If a spouse files a separate return, each spouse shall be entitled to the exclusion that would have applied had the spouses filed a joint return.

     In no instance shall the total excluded amount distributed to or claimed in a taxable year by all taxpayers that comprise a "small farmer" exceed the lesser of the amounts under subsection (b)(1) or (b)(2).

     (d)  A small farmer and any taxpayer that comprises the small farmer shall not be entitled to the exclusion if, in that taxable year, the small farmer receives an important agricultural land qualified agricultural cost tax credit under section 235-110.93 for qualified costs incurred on the small farmer's land.

     (e)  The director of taxation shall prepare any forms necessary to implement and administer this section and may require a taxpayer to furnish necessary information to justify the validity of the exclusion under this section that is claimed by the taxpayer.

     The director may adopt rules in accordance with chapter 91 for the purpose of this section."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2010.

 

INTRODUCED BY:

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Report Title:

Small Farmer; Income Tax Exclusion

 

Description:

Establishes an exclusion from the gross income, adjusted gross income, and taxable income of a small farmer.  Specifies that the exclusion is the lesser of (1) the amount earned from the sale of agricultural products produced on land of the small farmer or tours of the agricultural operation on the land or (2) $50,000.

 

 

 

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