A capital gain occurs when you sell or exchange a capital asset for more than the basis. A capital gain can be short-term (one year or less) or long-term (more than one year), and you must report it on your income tax return.
A capital loss occurs when you sell or exchange a capital asset for less than the basis. Idaho allows a capital gains deduction for qualifying property located in Idaho.
- Form CG, Idaho Capital Gains Deduction
Gains from the sale of the following Idaho property qualify for the capital gains deduction:
- Real property held for at least 12 months and sold on or after January 1, 2005. Real property sold before January 1, 2005, must have been held for at least 18 months. For purposes of this deduction, "real property" means "land and other tangible property permanently upon or affixed to the land."
- Tangible personal property used in a revenue-producing enterprise and held for at least 12 months. A revenue-producing enterprise means:
- Producing, assembling, fabricating, manufacturing, or processing any agricultural, mineral, or manufactured product;
- Storing, warehousing, distributing, or selling at wholesale any products of agriculture, mining, or manufacturing;
- Feeding livestock at a feedlot;
- Operating laboratories or other facilities for scientific, agricultural, animal husbandry, or industrial research (developmental or testing).
- Cattle and horses held for at least 24 months, and other livestock used for breeding held for at least 12 months, if the owner received more than one-half of his gross income in the year of sale from farming or ranching in Idaho.
- Timber grown in Idaho and held for at least 24 months.
NOTE: To determine if the holding period is met for property sold in an installment sale, you must look to the holding period requirements in effect for the year the property was sold. (For more information, see Income Tax Administrative Rule 171.05c, Holding Periods. Installment Sales.)
Gains from the sale of the following don't qualify for the deduction:
- Real or tangible personal property not having an Idaho situs
- Tangible personal property not used by a revenue-producing enterprise
- Intangible property. Some examples of intangible property include, but are not limited to:
- Stocks and bonds;
- Easements and rights of way, including agricultural, forest, historic, or open-space easements;
- Grazing permits;
- Leasehold interests, regardless of term;
- Water, mineral, hunting and fishing, renewable energy, and land surface rights;
- Conservation easements;
- Scenic easements;
- Interests in a partnership, LLC, or S corporation.
Idaho allows a deduction of up to 60% of the capital gain net income from the sale or exchange of qualifying Idaho property. For tax year 2001 only, the deduction was increased to 80% of the qualifying capital gain net income. You must complete Form CG to compute your Idaho capital gains deduction.
- Income Tax Law Chapter 63-3022H: Deduction of Capital Gains
- Income Tax Rule 170 Idaho Capital Gains Deduction - In General [PDF]
- Income Tax Rule 171 Idaho Capital Gains Deduction - Qualified Property [PDF]
- Income Tax Rule 172 Idaho Capital Gains Deduction - Revenue-Producing Enterprise [PDF]
- Income Tax Rule 173 Idaho Capital Gains Deduction - Pass-Through Entities [PDF]
- Any proposed or temporary rules can be seen through this page.