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54. OTHER IOWA CREDITS. Enter
the total of the credits listed:
a. Economic Development Region Revolving Fund Tax Credit: An economic development region revolving fund tax credit is available for individual income tax.
An economic development region shall consist of no less then three counties, unless two contiguous counties have a combined population of at least 300,000. These economic development regions must establish a focused economic development effort that will include a regional development plan relating to areas such as advanced manufacturing, life sciences and biotechnology, insurance or financial services, and information solutions. These regions may create a revolving fund.
A tax credit equal to 20% of the contribution made to an economic development region revolving fund is available for individual income, corporation income tax. If the contribution is made by a partnership, limited liability company, S corporation, estate or trust, the tax credit is claimed by an individual based on the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation or estate or trust. Any tax credit in excess of the tax liability can be carried forward for the following ten years or until depleted, whichever is the earlier. The tax credit cannot be carried back to a year prior to when a contribution was made, and the credit is not transferable.
The total amount of tax credits authorized during a fiscal year cannot exceed $2 million. Any credit amount less than $2 million that is unused in a fiscal year can be carried forward to the succeeding fiscal year.
The Iowa Department of Economic Development is responsible for administering and authorizing these tax credits.
b. Endow Iowa Tax Credit: The Endow Iowa Tax Credit is equal to 20% of a taxpayer’s endowment gift to a qualified community foundation. The gift must be for a permanent endowment fund established to benefit a charitable cause in Iowa. The Iowa Department of Economic Development is responsible for registering and authorizing the tax credits, and controlling the distribution of these tax credits.
The total amount of tax credits authorized cannot exceed $2 million in a certain year, and the maximum amount of tax credits granted to a single taxpayer cannot exceed $100,000. Any tax credit in excess of the taxpayer’s tax liability can be carried forward for the following five years or until depleted, whichever occurs first. The Endow Iowa Tax Credit cannot be authorized after December 31, 2008. The tax credit is not transferable.
An individual can claim the credit for a gift made by a partnership, limited liability company, S corporation, estate, or trust electing to have the income taxed to the individual, based on the pro rata share of earnings from the pass-through entity.
c. Franchise Tax Credit: If a financial institution as defined in Section 581 of the Internal Revenue Code elects to file as an S corporation for Federal income tax purposes and therefore have its income taxed directly to the shareholders, those shareholders qualify for a Franchise Tax Credit.
This worksheet will help you calculate the credit. You do not need to send it with your return, but keep it with your tax records.
d. Investment Tax Credits: Attach documentation proving eligibility.
- Iowa Investment Tax Credit
An investment tax credit of 10% of the purchase price of real property including any buildings and structures located on the real property, cost of machinery and equipment and the cost of improvements to real property is available to an eligible business. An eligible business must be approved by the Iowa Department of Economic Development under the New Jobs and Income Program, New Capital Investment Program, Enterprise Zone Program, or the High Quality Job Creation Program. Any credit in excess of the tax liability can be carried forward seven years or until used, whichever comes first. If you are a partner, shareholder, member, or beneficiary in a partnership, Corporation, Limited Liability Company, estate or trust, you may claim the investment tax credit for the qualifying entity. The amount of the credit to you is based on your pro rata share of the individuals earnings of the qualifying entity.
If, however, the eligible business sells, disposes of, razes, otherwise renders unusable all or a part of the land, buildings, or other existing structures within five years of purchase, the investment tax credit must be recaptured in the year that all or a part of the property is sold, disposed of, razed, otherwise rendered unusable. The percentage of investment credit that is recaptured is from 100% if the property is sold, disposed of, razed, otherwise rendered unusable in the first year to 20% if the property is sold, disposed of, razed, otherwise rendered unusable in the fifth year.
- Eligible Housing Business Credit
An eligible housing business may claim an income tax credit up to a maximum of 10% of the new investment which is directly related to the building or rehabilitating of homes in an enterprise zone. The credit is based on a maximum of $140,000 for each single-family home or for each unit of a multiple dwelling.
This credit was established in HF 2538 of the 1998 General Assembly.
For more information on enterprise zone benefits, contact the Iowa Department of Economic Development.
- Eligible Development Business Credit
An eligible development business may claim a tax credit of 10% of the new investment that is directly related to the construction, expansion or rehabilitation of building space to be used for manufacturing, processing, cold storage, distribution or office facilities. The tax credit may be claimed in the tax year in which the construction, expansion or rehabilitation is completed. The investment credit can reduce the individual income, corporation income, franchise or insurance premiums tax. The Eligible Development Business Program was repented effective March 17, 2004. Businesses approved by the Iowa Department of Economic Development prior to March 17, 2004 are still eligible for these tax credits.
More detailed information is available in the Iowa Department of Revenue 2001 Legislative Summary.
e. Minimum Tax Carry Forward Credit: You may be eligible for this credit if you paid Iowa minimum tax in 1987 or following years based on tax preferences and adjustments other than the appreciated property charitable deduction tax preference. Compute on form IA 8801 and attach to the IA 1040.
f. New Jobs Credit: If you started a new business or increased employment of your existing business by 10% and your business had a 260E agreement with a vocational school or area community college, you may qualify for the New Jobs Credit. This credit includes the training of existing employees. Compute this credit on form IA 133 and attach to your return.
g. S Corp Apportionment Credit: Iowa resident shareholders of all S corporations doing business outside Iowa may be eligible for this credit. The credit is based on the ratio of the greater of the portion of S Corporation income attributable to Iowa sources, or the portion of any distributions made from income on which Iowa income tax has not been paid, to total income. Complete form IA 134 and attach to the IA 1040.
h. Venture Capital Credit: A tax credit is available for investments made in 2002 to a qualifying business, community-based seed capital fund, or a venture capital fund certified by the Iowa Capital Investment Board. The tax credit certificate issued by the Iowa Capital Investment Board must be attached to the Iowa return.