88 Net income from a farm tenancy agreement covering real property. 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. 302.88(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. 302.88(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. 302.88(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.” Revenue[701] IAC 2/5/25 Ch 302, p.85 302.88(4) Amount of exclusion. An eligible individual that has made the election described in subrule 302.88(3) may exclude the amount of net income received from a farm tenancy agreement covering real property. An eligible individual may exclude net income from any qualifying farm tenancy agreement covering real property if the holding period requirements are met with respect to the real property in question, including agreements that are entered into after the single lifetime election is made. The amount of the exclusion cannot exceed the fair profits which would normally arise from a farm tenancy agreement between two parties operating at arm’s length. This rule is intended to implement Iowa Code section 422.7(14). [ARC 7102C, IAB 10/18/23, effective 11/22/23] [Filed 12/12/74] [Filed 12/10/76, Notice 9/22/76—published 12/29/76, effective 2/2/77] [Filed 10/14/77, Notice 9/7/77—published 11/2/77, effective 12/7/77] [Filed 9/18/78, Notice 7/26/78—published 10/18/78, effective 11/22/78] [Filed 12/7/79, Notice 10/31/79—published 12/26/79, effective 1/30/80] [Filed emergency 7/17/80—published 8/6/80, effective 7/17/80] [Filed 12/5/80, Notice 10/29/80—published 12/24/80, effective 1/28/81] [Filed 11/20/81, Notice 10/14/81—published 12/9/81, effective 1/13/82] [Filed 10/22/82, Notice 9/15/82—published 11/10/82, effective 12/15/82] [Filed 12/3/82, Notice 10/27/82—published 12/22/82, effective 1/26/83] [Filed 3/23/84, Notice 2/15/84—published 4/11/84, effective 5/16/84] [Filed 7/27/84, Notice 6/20/84—published 8/15/84, effective 9/19/84]◊ [Filed 8/10/84, Notice 7/4/84—published 8/29/84, effective 10/3/84] [Filed 1/25/85, Notice 12/19/84—published 2/13/85, effective 3/20/85] [Filed 5/3/85, Notice 3/27/85—published 5/22/85, effective 6/26/85] [Filed 5/31/85, Notice 4/24/85—published 6/19/85, effective 7/24/85] [Filed 9/6/85, Notice 7/31/85—published 9/25/85, effective 10/30/85] [Filed 8/22/86, Notice 7/16/86—published 9/10/86, effective 10/15/86] [Filed 10/3/86, Notice 8/27/86—published 10/22/86, effective 11/26/86] [Filed emergency 11/14/86—published 12/17/86, effective 11/14/86] [Filed emergency 12/23/87—published 1/13/88, effective 12/23/87] [Filed 1/7/88, Notice 12/2/87—published 1/27/88, effective 3/2/88] [Filed 2/19/88, Notice 1/13/88—published 3/9/88, effective 4/13/88] [Filed 9/18/88, Notice 7/13/88—published 9/7/88, effective 10/12/88] [Filed 1/4/89, Notice 11/30/88—published 1/25/89, effective 3/1/89] [Filed 9/29/89, Notice 8/23/89—published 10/18/89, effective 11/22/89] [Filed 1/19/90, Notice 12/13/89—published 2/7/90, effective 3/14/90] [Filed 8/30/90, Notice 7/25/90—published 9/19/90, effective 10/24/90] [Filed 11/7/91, Notice 10/2/91—published 11/27/91, effective 1/1/92]◊ [Filed 1/17/92, Notice 12/11/91—published 2/5/92, effective 3/11/92]◊ [Filed emergency 5/8/92—published 5/27/92, effective 5/8/92] [Filed 9/11/92, Notice 8/5/92—published 9/30/92, effective 11/4/92] [Filed 10/9/92, Notice 9/2/92—published 10/28/92, effective 12/2/92] [Filed 6/4/93, Notice 2/17/93—published 6/23/93, effective 7/28/93] [Filed emergency 7/15/93—published 8/4/93, effective 7/15/93] [Filed 9/10/93, Notice 8/4/93—published 9/29/93, effective 11/3/93] [Filed emergency 10/22/93—published 11/10/93, effective 10/22/93] [Filed 12/17/93, Notice 11/10/93—published 1/5/94, effective 2/9/94] [Filed 5/20/94, Notice 4/13/94—published 6/8/94, effective 7/13/94] [Filed 9/23/94, Notice 8/17/94—published 10/12/94, effective 11/16/94] [Filed 1/12/95, Notice 12/7/94—published 2/1/95, effective 3/8/95] [Filed 7/14/95, Notice 6/7/95—published 8/2/95, effective 9/6/95] Revenue[701] Ch 302, p.86 IAC 2/5/25 [Filed 1/12/96, Notice 12/6/95—published 1/31/96, effective 3/6/96] [Filed 7/25/96, Notice 6/19/96—published 8/14/96, effective 9/19/96] [Filed 8/23/96, Notice 7/17/96—published 9/11/96, effective 10/16/96] [Filed 5/30/97, Notice 4/23/97—published 6/18/97, effective 7/23/97] [Filed 9/19/97, Notice 8/13/97—published 10/8/97, effective 11/12/97]◊ [Filed 2/20/98, Notice 1/14/98—published 3/11/98, effective 4/15/98]◊ [Filed 5/15/98, Notice 4/8/98—published 6/3/98, effective 7/8/98] [Filed 10/2/98, Notice 8/26/98—published 10/21/98, effective 11/25/98] [Filed emergency 1/8/99 after Notice 12/2/98—published 1/27/99, effective 1/8/99] [Filed 9/17/99, Notice 8/11/99—published 10/6/99, effective 11/10/99] [Filed 12/23/99, Notice 11/17/99—published 1/12/00, effective 2/16/00] [Filed 2/3/00, Notice 12/29/99—published 2/23/00, effective 3/29/00] [Filed 1/5/01, Notice 11/29/00—published 1/24/01, effective 2/28/01] [Filed 3/15/02, Notice 1/23/02—published 4/3/02, effective 5/8/02] [Filed 10/11/02, Notice 9/4/02—published 10/30/02, effective 12/4/02] [Filed 9/26/03, Notice 8/20/03—published 10/15/03, effective 11/19/03] [Filed 11/6/03, Notice 10/1/03—published 11/26/03, effective 12/31/03] [Filed 1/30/04, Notice 12/24/03—published 2/18/04, effective 3/24/04]◊ [Filed 8/12/04, Notice 7/7/04—published 9/1/04, effective 10/6/04] [Filed emergency 9/24/04—published 10/13/04, effective 9/24/04] [Filed 10/22/04, Notice 9/15/04—published 11/10/04, effective 12/15/04] [Filed 11/4/04, Notice 9/29/04—published 11/24/04, effective 12/29/04] [Filed emergency 2/25/05—published 3/16/05, effective 2/25/05] [Filed 9/22/05, Notice 8/3/05—published 10/12/05, effective 11/16/05] [Filed 7/28/06, Notice 6/21/06—published 8/16/06, effective 9/20/06] [Filed 11/1/06, Notice 8/16/06—published 11/22/06, effective 12/27/06] [Filed 12/13/06, Notice 11/8/06—published 1/3/07, effective 2/7/07] [Filed 1/11/07, Notice 12/6/06—published 1/31/07, effective 3/7/07] [Filed 6/27/07, Notice 5/23/07—published 7/18/07, effective 8/22/07] [Filed 10/5/07, Notice 8/15/07—published 10/24/07, effective 11/28/07] [Filed 10/5/07, Notice 8/29/07—published 10/24/07, effective 11/28/07] [Filed 3/7/08, Notice 1/30/08—published 3/26/08, effective 4/30/08] [Filed 10/31/08, Notice 9/24/08—published 11/19/08, effective 12/24/08] [Filed ARC 7761B (Notice ARC 7632B, IAB 3/11/09), IAB 5/6/09, effective 6/10/09] [Filed ARC 8356B (Notice ARC 8223B, IAB 10/7/09), IAB 12/2/09, effective 1/6/10] [Filed ARC 8589B (Notice ARC 8430B, IAB 12/30/09), IAB 3/10/10, effective 4/14/10] [Filed ARC 8605B (Notice ARC 8481B, IAB 1/13/10), IAB 3/10/10, effective 4/14/10] [Filed ARC 8702B (Notice ARC 8512B, IAB 2/10/10), IAB 4/21/10, effective 5/26/10] [Filed ARC 9103B (Notice ARC 8944B, IAB 7/28/10), IAB 9/22/10, effective 10/27/10] [Filed ARC 9821B (Notice ARC 9741B, IAB 9/7/11), IAB 11/2/11, effective 12/7/11] [Filed ARC 9822B (Notice ARC 9739B, IAB 9/7/11), IAB 11/2/11, effective 12/7/11] [Filed ARC 9820B (Notice ARC 9740B, IAB 9/7/11), IAB 11/2/11, effective 12/7/11] [Filed ARC 0073C (Notice ARC 0005C, IAB 2/8/12), IAB 4/4/12, effective 5/9/12] [Filed ARC 0251C (Notice ARC 0145C, IAB 5/30/12), IAB 8/8/12, effective 9/12/12] [Filed ARC 0337C (Notice ARC 0232C, IAB 7/25/12), IAB 9/19/12, effective 10/24/12] [Filed ARC 0398C (Notice ARC 0292C, IAB 8/22/12), IAB 10/17/12, effective 11/21/12] [Filed ARC 1101C (Notice ARC 0976C, IAB 8/21/13), IAB 10/16/13, effective 11/20/13] [Filed ARC 1137C (Notice ARC 1002C, IAB 9/4/13), IAB 10/30/13, effective 12/4/13] [Filed ARC 1303C (Notice ARC 1231C, IAB 12/11/13), IAB 2/5/14, effective 3/12/14] [Filed ARC 1665C (Notice ARC 1590C, IAB 8/20/14), IAB 10/15/14, effective 11/19/14] Revenue[701] IAC 2/5/25 Ch 302, p.87 ◊ [Filed ARC 2691C (Notice ARC 2617C, IAB 7/6/16), IAB 8/31/16, effective 10/5/16] [Filed ARC 3085C (Notice ARC 2942C, IAB 2/15/17), IAB 5/24/17, effective 6/28/17] [Filed ARC 3664C (Notice ARC 3542C, IAB 1/3/18), IAB 2/28/18, effective 4/4/18] [Filed ARC 3770C (Notice ARC 3657C, IAB 2/28/18), IAB 4/25/18, effective 5/30/18] [Filed ARC 4142C (Notice ARC 4022C, IAB 9/26/18), IAB 11/21/18, effective 12/26/18] [Filed ARC 4309C (Notice ARC 4176C, IAB 12/19/18), IAB 2/13/19, effective 3/20/19] [Filed ARC 4516C (Notice ARC 4408C, IAB 4/24/19), IAB 6/19/19, effective 7/24/19] [Filed ARC 4517C (Notice ARC 4406C, IAB 4/24/19), IAB 6/19/19, effective 7/24/19] [Filed ARC 4614C (Notice ARC 4500C, IAB 6/19/19), IAB 8/14/19, effective 9/18/19] [Filed ARC 5606C (Amended Notice ARC 5503C, IAB 3/10/21; Notice ARC 5399C, IAB 1/27/21), IAB 5/5/21, effective 6/9/21] [Filed ARC 5673C (Notice ARC 5553C, IAB 4/7/21), IAB 6/2/21, effective 7/7/21] [Filed ARC 5733C (Notice ARC 5612C, IAB 5/5/21), IAB 6/30/21, effective 8/4/21] [Filed Emergency ARC 5817C, IAB 8/11/21, effective 7/13/21] [Filed ARC 5915C (Notice ARC 5790C, IAB 7/28/21), IAB 9/22/21, effective 10/27/21] [Editorial change: IAC Supplement 11/2/22] [Filed ARC 6900C (Notice ARC 6746C, IAB 12/14/22), IAB 2/22/23, effective 3/29/23] [Filed ARC 6902C (Notice ARC 6700C, IAB 11/30/22), IAB 2/22/23, effective 3/29/23] [Editorial change: IAC Supplement 10/18/23] [Filed ARC 7102C (Notice ARC 7050C, IAB 7/26/23), IAB 10/18/23, effective 11/22/23] [Filed ARC 7103C (Notice ARC 7051C, IAB 7/26/23), IAB 11/1/23, effective 12/6/23] [Filed ARC 7502C (Notice ARC 7109C, IAB 11/1/23), IAB 1/10/24, effective 2/14/24] Two or more ARCs Revenue[701] Ch 302, p.88 IAC 2/5/25