Iowa Admin. Code r. 261-116.1

Current through Register Vol. 47, No. 11, November 27, 2024

Rule 261-116.1 - Tax credit for investments in certified innovation funds

(1)Tax credit allowed. For tax years beginning on or after January 1, 2011, a taxpayer may claim a tax credit for a portion of the taxpayer's equity investment in a certified innovation fund. The tax credit may be claimed against the taxpayer's tax liability for any of the following taxes:

a. The personal net income tax imposed under Iowa Code chapter 422, division II.

b. The business tax on corporations imposed under Iowa Code chapter 422, division III.

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

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

e. The tax on moneys and credits imposed under Iowa Code section 533329..

(2)Treatment of pass-through entities. If the taxpayer that is entitled to an investment tax credit for an investment in an innovation fund is a pass-through entity electing to have its income taxed directly to its individual owners, such as a partnership, limited liability company, S corporation, estate or trust, the pass-through entity shall allocate the allowable credit to each of the individual owners of the entity on the basis of each owner's pro-rata share of the earnings of the entity, and the individual owners may claim their respective credits on their individual income tax returns.

(3)Credits for certain investments disallowed. A taxpayer shall not claim an investment tax credit for an investment in an innovation fund if the taxpayer is a venture capital investment fund allocation manager for the Iowa fund of funds described in Iowa Code section 15E65., an investor that receives a tax credit for the same investment in a community-based seed capital fund as described in Iowa Code section 15E45., or an investor that receives a tax credit for the same investment in a qualifying business as described in Iowa Code section 15E44..

(4)Cash investments required. The taxpayer's equity investment must be made in the form of cash to purchase equity in an innovation fund.

(5)Amount of credit. For tax years beginning and investments made on or after January 1, 2011, and before January 1,2013, the taxpayer may claim a tax credit in an amount equal to 20 percent of the taxpayer's equity investment in a certified innovation fund. For tax years beginning and investments made on or after January 1, 2013, the taxpayer may claim a tax credit in an amount equal to 25 percent of the taxpayer's equity investment in a certified innovation fund.

Iowa Admin. Code r. 261-116.1

ARC 0009C, IAB 2/8/12, effective 3/14/12; ARC 1098C, IAB 10/16/2013, effective 10/1/2013