Iowa Admin. Code r. 261-115.1

Current through Register Vol. 47, No. 5, September 4, 2024

Rule 261-115.1 - Tax credits for investments in qualifying businesses

Tax credits for investments in qualifying businesses may be claimed as provided in this rule and any applicable rules of the department of revenue.

(1)Tax credits allowed only after a certain date. A taxpayer may claim a tax credit under this rule for equity investments in certain qualifying businesses. Only equity investments made on or after January 1, 2011, qualify for a tax credit under this rule. Equity investments made before that date must be claimed under 123-Chapter 2.

(2)Investments in qualifying businesses.

a. A taxpayer may claim a tax credit under this subrule for a portion of the taxpayer's equity investment in a qualifying business if that investment was made on or after January 1, 2011.

b. The tax credit may be claimed against the taxpayer's tax liability for any of the following taxes:

(1) The personal net income tax imposed under Iowa Code chapter 422, division II.

(2) The business tax on corporations imposed under Iowa Code chapter 422, division III.

(3) The franchise tax on financial institutions imposed under Iowa Code chapter 422, division V.

(4) The tax on the gross premiums of insurance companies imposed under Iowa Code chapter 432.

(5) The tax on moneys and credits imposed under Iowa Code section 533.329.

c. Investments made in qualifying businesses on or after January 1, 2011, and before July 2, 2015, are governed by 2015 Iowa Code sections 15E.41 to 15E.46, 422.11F, 422.33, 422.60, 432.12C, and 533.329.

d. Investments made in qualifying businesses on or after July 2, 2015, are governed by 2016 Iowa Code sections 15E.41 to 15E.46, 422.11F, 422.33, 422.60, 432.12C, and 533.329.

(3)Amount of tax credit that may be claimed by taxpayer.

a. In the case of investments made on or after July 2, 2015, the amount of tax credit available to a taxpayer under this rule is equal to 25 percent of the taxpayer's equity investment in a qualifying business.

b. In the case of investments made on or after July 2, 2015, the maximum amount of tax credit that may be issued per calendar year to a natural person and the person's spouse or dependent shall not exceed $100,000 combined. For purposes of this paragraph, a tax credit issued to a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual shall be deemed to be issued to the individual owners based upon the pro rata share of the individual's earnings from the entity. For purposes of this paragraph, "dependent" has the same meaning as provided by the Internal Revenue Code. Applications received by the authority that exceed the maximum amount of tax credits per calendar year to a natural person and the person's spouse or dependent will be denied by the board, regardless of whether the investment was otherwise eligible to receive atax credit award. Any application that can be partially approved without exceeding the maximum amount in this paragraph will be approved as to the portion less than the maximum amount and denied as to the portion greater than the maximum amount. For example, if an application is eligible for $50,000 of tax credits, but there is only $30,000 of the household maximum amount available, the application will be approved for $30,000 and denied for $20,000.

c. The maximum amount of tax credits that may be issued per calendar year for equity investments in any one qualifying business shall not exceed $500,000. Applications received by the authority that exceed the maximum amount of tax credits per calendar year in any one qualifying business will be denied by the board, regardless of whether the investment was otherwise eligible to receive a tax credit award. Any application that can be partially approved without exceeding the maximum amount in this paragraph will be approved as to the portion less than the maximum amount and denied as to the portion greater than the maximum amount. For example, if an application is eligible for $50,000 of tax credits, but there is only $30,000 of the business maximum amount available, the application will be approved for $30,000 and denied for $20,000.

(4)Claiming an investment tax credit. A taxpayer that makes an investment in a qualifying business and that otherwise meets the requirements of this chapter will receive a board-approved tax credit certificate from the authority. To claim the credit, the taxpayer must include the certificate with a tax return filed with the department of revenue. For more information on claiming the tax credit, see department of revenue rules 701-42.22 (15E,422), 701-52.21(15E,422), and 701-58.11 (15E,422).

Iowa Admin. Code r. 261-115.1

ARC 0009C, lAB 2/8/12, effective 3/14/12

Amended by IAB May 25, 2016/Volume XXXVIII, Number 24, effective 6/29/2016

Amended by IAB March 9, 2022/Volume XLIV, Number 18, effective 4/13/2022