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Iowa Capital Gains Deduction

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Question
How much is the Iowa capital gains deduction?

Answer

Iowa Capital Gain Deduction - for certain business/farm assets ONLY. Gains on the sale of stocks or bonds do not qualify for the capital gain deduction.

This is a deduction of qualifying net capital gain realized in 2016. Note: Line 23 can be more than the net total reported on Schedule D. Unrelated losses are not to be included in the computation of the deduction. An example of an unrelated loss is the sale of common stock at a loss.

The Iowa capital gain deduction is subject to review by the Iowa Department of Revenue (Department). The deduction must be reported on one of six forms:

  • To claim a deduction for capital gains from the qualifying sale of cattle, horses, or breeding livestock, complete the IA 100A.
  • To claim a deduction for capital gains from the qualifying sale of real property used in a farm business, complete the IA 100B.
  • To claim a deduction for capital gains from the qualifying sale of real property used in a non-farm business, complete the IA 100C.
  • To claim a deduction for capital gains from the qualifying sale of timber, complete the IA 100D.
  • To claim a deduction for capital gains from the qualifying sale of a business, complete the IA 100E.
  • To claim a deduction for capital gains from the qualifying sale of employer securities to a qualified Iowa employee stock ownership plan (ESOP), complete the IA 100F.

This completed form must be included with the IA 1040 to support the Iowa capital gain deduction. The Department will use this form to verify that the taxpayer qualifies for the deduction. The Department may request additional information if needed.

Complete a separate IA 100B-100F for each distinct property sale, although multiple livestock sales can, in some instances, be reported on one IA 100A (see IA 100A instructions). Complete the applicable form each year of a qualifying installment sale. Complete the applicable form even if the gain was passed-through from a separate entity.

The sale of assets by a C corporation does not qualify for the Iowa capital gain deduction. However, the gain from a corporate liquidation under Internal Revenue Code (IRC) section 331 may qualify for the Iowa capital gain deduction.

For taxpayers filing separately on the same return, each spouse must complete the appropriate IA 100 form for the Iowa capital gain deduction claimed based on the spouse’s ownership share in the property.


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Article Details
Views: 1266 Created on: Jun 15, 2013
Date updated: Dec 17, 2018
Posted in: States, Iowa

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