Iowa Administrative Code

combined group net income should then be adjusted by this combined group federal net operating loss deduction, if any, subject to the adjustments in numbered paragraph 602.33(5)“b”(2)“2.” (2) The following adjustments are required for pre-2023 federal and Iowa losses: 1. Add back…

shall mean federal taxable income, before deduction for net operating losses, as properly computed under the Internal Revenue Code, and shall include the adjustments in rules 701—602.2(422) to 701—602.13(422). The remaining provisions of this rule and rules 701—602.14(422) to 701…

before tax periods beginning on or after January 1, 2020. 602.10(1) In general. Public Law 115-97, Section 13303, repealed the deferral of gain or loss from exchanges of like-kind personal property for federal purposes under Section 1031 of the Internal Revenue Code. This federal…

acquired prior to January 1, 1934, the basis as of January 1, 1934, for determining capital or other gains or losses is the higher of cost, adjusted for depreciation allowed or allowable to January 1, 1934, or fair market value as of that date. City National Bank of Clinton v. Io…

deduction for 50 percent of federal income taxes paid or accrued is not allowed. Cash-basis taxpayers are not allowed a deduction for 50 percent of federal income taxes paid during a tax year beginning on or after January 1, 1980, which represent the preceding year’s tax or addit…

be applicable under the method of filing are permissible deductions for federal corporation income tax purposes, but not for purposes of determining Iowa net income. To the extent taxes were deducted in the determination of federal taxable income, they shall be added to federal t…

basis and for the same accounting period as the taxpayer’s return for federal corporation income tax purposes. Permission to change accounting methods or accounting periods for franchise tax purposes is not required provided the taxpayer furnishes the department with a copy of th…

financial institutions to file consolidated Iowa franchise tax returns with another financial institution or another corporation as defined in Iowa Code section 422.32. In the absence of any statutory authority for allowing consolidated Iowa franchise tax returns, separate Iowa f…

operating loss deduction” or any other deductions are computed for federal tax purposes under, or have the same meaning as provided by, the Internal Revenue Code, the department will use applicable rulings and regulations that have been duly promulgated by the Commissioner of Int…

beginning on or after January 1, 2010, a taxpayer who claims an endow Iowa tax credit in accordance with rule 701—601.13(15E,422) cannot claim a deduction for charitable contributions under Section 170 of the Internal Revenue Code for the amount of the contribution for which the …

602.18(1) For tax years beginning on or after July 1, 1992, speculative shell buildings constructed or reconstructed after that date may be depreciated as 15-year property under the accelerated cost of recovery system of the Internal Revenue Code. If the taxpayer has deducted dep…

after January 1, 1992, and before January 1, 2005, corporations may claim a deduction for 60 percent of the amount of the registration fee paid for a multipurpose vehicle under Iowa Code section 321.124, subsection 3, paragraph “h.” In order to qualify for this deduction, no part…

or allowable for Iowa franchise tax purposes to the same extent they are allowed or allowable for federal corporation income tax purposes, provided the following adjustments are made: 602.2(1) Additions to income. a. Refunds of federal income taxes due to net operating loss, capi…

back, to the extent included, any deduction for that portion of the taxpayer’s expenses computed under this rule that is allocable to an investment in an investment subsidiary. 602.20(1) Definitions. “Affiliate” means a corporation, trust, estate, association, or similar organiza…

beginning on or after January 1, 1997, a financial institution as defined in Section 581 of the Internal Revenue Code which has in effect an election under Subchapter S of the Internal Revenue Code must compute an amount of income as if the financial institution were subject to f…

savings plan trust. To the extent that the contribution was not deductible for federal income tax purposes, any gift, grant, or donation to the endowment fund of the Iowa educational savings plan trust may be deducted for Iowa franchise tax purposes. The contribution must be made…

Iowa franchise tax purposes. See rule 701—602.24(422) for the section 179 limitations imposed under the Iowa franchise tax. (2) Treasury Regulation §1.168(i)-6 prescribes rules related to the calculation of depreciation for certain assets involved in a like-kind exchange, but a t…

602.24(1) In general. Iowa taxpayers that elect to expense certain depreciable business assets in the year the assets were placed in service under Section 179 of the Internal Revenue Code must also expense those same assets for Iowa income tax purposes in that year. However, for …

institutions (as defined in 701—subrule 600.1(2)) for the privilege of doing business within the state. The tax is measured by net income. For financial institutions subject to the tax, the tax is levied and collected only on income which may accrue or be recognized to the financ…

602.26(1) The classification of income by the labels customarily given, such as interest, dividends, rents, and royalties, is of no aid in determining whether that income is business or nonbusiness income. Interest, dividends, rents and royalties shall be apportioned as business …

rule, a capital gain or loss shall mean the sale price or value at the time of disposal of an asset less the adjusted basis, whether reportable as short-term or long-term capital gain or ordinary income for federal income tax purposes. 602.27(1) Gain or loss from the sale, exchan…

income attributable to this state, as determined by use of the apportionment fraction, shall be added to the nonapportionable income allocable to this state. 602.28(1) Receipts derived from transactions and activities in the regular course of trade or business which produce busin…

the allocation and apportionment method as prescribed by rule 701—602.28(422) in the taxpayer’s case results in an injustice, the taxpayer may petition the department for permission to determine the taxable net income, both allocable and apportionable, to the state on some other …

tax purposes to the same extent they are allowed or allowable for federal corporation income tax purposes. Capital loss carrybacks shall be treated as an adjustment to federal taxable income to arrive at net income. For capital losses occurring in tax years beginning on or after …

602.30(1) Broadband infrastructure grant exemption, generally. For tax years beginning on or after January 1, 2019, certain qualifying communications service providers may subtract, to the extent included in income, the amount of qualifying government grants used to install broad…

1, 2020, the limit on the amount of business interest expense that a taxpayer may deduct in a taxable year under Internal Revenue Code (IRC) Section 163(j) does not apply for Iowa purposes. This rule provides information on how taxpayers must calculate and report their business i…

602.32(1) Definitions. For purposes of this rule: “Administering agency” means the economic development authority, the Iowa finance authority, or the department of agriculture and land stewardship. “Grant recipient” means a person who applies for and is issued a qualifying COVID-…

1, 2025, financial institutions that own or control investment subsidiaries may elect to file combined Iowa franchise tax returns with those investment subsidiaries. 602.33(1) Definitions. “Affiliate” means the same as defined in subrule 602.20(1). “Unitary business,” for purpose…

periods beginning before January 1, 2009, has both a net operating loss and a capital loss carryback to a prior tax year, the capital loss shall be carried back first and then the net operating loss offset against any remaining income. This rule is intended to implement Iowa Code…

received from corporations owned or sponsored by the federal government, or interest derived from obligations of the United States and its possessions, agencies and instrumentalities become a part of the taxable income. Examples of these types of obligations are bonds issued by t…

political subdivisions. Interest and dividends from foreign securities and securities of states and their political subdivisions including Iowa shall be included in taxable income for periods beginning on or after January 1, 1980. For tax periods beginning on or after January 1, …

determining federal taxable income for sale-leaseback agreements taken as a result of the application of Section 168(f)(8) of the Internal Revenue Code shall be added in determining Iowa taxable income to the extent such deductions cannot be taken under provisions of Sections 162…

individuals. For tax years beginning on or after January 1, 1984, a taxpayer which is considered to be a small business corporation, as defined by subrule 602.8(2), is allowed a deduction for 50 percent of the first 12 months of wages paid or accrued during the tax years for work…

opportunity tax credit as provided in Section 51 of the Internal Revenue Code, the amount of credit allowable shall be a deduction from Iowa taxable income to the extent the credit increased federal taxable income. This rule is intended to implement Iowa Code sections 422.35 and …

603.1(1) Notice of adjustment. An employee of the department, designated by the director to examine returns and make audits, who discovers discrepancies in returns or learns that the income of the taxpayer may not have been listed, in whole or in part, or that no return was filed…

agreement is reached, and the taxpayer does not pay the amount determined to be correct, a notice of assessment shall be sent to the taxpayer by mail. If the period in which the correct amount of tax can be determined is nearly at an end, either a notice of assessment, without co…

taxpayer deposits or payments for tax in excess of amounts legally due. 603.3(1) A claim for refund of franchise tax may be made on a form obtainable from the department. Claims for refund should not be mailed in the same envelope or attached to the return. In the case of a claim…

[Filed 4/28/78, Notice 3/22/78—published 5/17/78, effective 6/22/78] [Filed 12/7/79, Notice 10/31/79—published 12/26/79, effective 1/30/80] [Filed 2/10/84, Notice 1/4/84—published 2/29/84, effective 4/5/84] [Filed 7/27/84, Notice 6/20/84—published 8/15/84, effective 9/19/84] [Fil…

604.1(1) General rule. Every corporate taxpayer subject to the franchise tax on financial institutions shall pay estimated tax if the amount of tax payable, less credits, can reasonably be expected to be more than $1000 for the calendar or fiscal year. The amount of estimated tax…

604.2(1) Time for filing. a. General rule. The date for filing the first estimated tax payment is on or before the last day of the fourth month of the tax year. The estimated tax form is to be filed with the Franchise Estimate Processing, P.O. Box 10413, Des Moines, Iowa 50306. b…

604.3(1) Short taxable year. A financial institution having a taxable year of less than 12 months shall pay estimated tax if anticipating an Iowa tax liability of more than $1,000 for that short taxable year. a. Short taxable year where a new financial institution first commences…

will receive by mail a preaddressed reporting form. Blank reporting forms are available from the department for those making an estimate for the first time, or when the preaddressed form is misplaced or lost. This rule is intended to implement Iowa Code section 422.21. [Editorial…

604.5(1) Underpayment penalty. a. A penalty is imposed for underpayment of the estimated tax by the taxpayer. This underpayment penalty is imposed whether or not there was reasonable cause for the underpayment. The Iowa penalty for underpayment of estimated tax is computed on For…

604.6(1) Refund of overpayment of estimated tax. Any overpayment of estimated tax, at the taxpayer’s election, of $5 or more will be refunded with interest without a claim for refund being filed. If the overpayment is less than $5, it will be refunded only if the taxpayer files a…

procedure Act and aid in the effective and efficient administration and enforcement of the laws of this state and other activities of the department. These rules govern the practice, procedure, and conduct of the informal proceedings, contested case proceedings, and certain other…

encouraged to utilize the informal procedures described in this rule to reach a resolution between the parties without the necessity of initiating contested case proceedings. That resolution may be the granting of the appeal in full or in part, the denial of the appeal in full or…

7.11(1) Appeals filed after expiration of statutory deadline. Appeals that are not filed by the applicable statutory deadline shall be dismissed by the director or the director’s designee in accordance with the procedure outlined in paragraph 7.11(1)“a.” a. Procedures for motions…

“g,” a taxpayer may make a written demand for a contested case proceeding after a period of six months from the filing of a proper appeal. Demands made prior to six months will be treated as premature and must be resubmitted six months or later from the filing of the appeal. Upon…

informal proceedings as described in rule 701—7.12(17A,421), the department shall file an answer to the appeal with the clerk. Subject to the limitations in rule 701—7.12(17A,421), the department will file an answer within 30 days of receipt of written demand for a contested case…