Form Ia 128s - Alternative Simplified Research Activities Tax Credit - 2016 Page 2
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32016 IA 128S Alternative Simplified Research Activities Tax Credit Instructions
Form IA 128S is used only if the taxpayer elects to
the increase in research expenses.
claim the Alternative Simplified Research Activities
Adjustments
for
Certain
Acquisitions
and
Tax Credit. Form IA 128 should be used if the
Dispositions
regular Research Activities Tax Credit is claimed.
If a major portion of a trade or business is acquired
The taxpayer may elect to use this alternative
or disposed of, adjustments must be made to
method regardless of the method used in computing
research expenses for the period before or after the
the federal research credit. The taxpayer is not
acquisition or disposition.
required to use this alternative method in computing
Short Tax Year
the Research Activities Tax Credit for subsequent
For any short tax year, qualified research expenses
years.
are annualized.
Research expenses qualified for the Iowa Research
Apportionment of Tax Credit
Activities Tax Credit are based on the rules
The tax credit calculated on lines 1 through 23 by a
governing the federal research tax credit; see
partnership, LLC, S corporation, estate, or trust is
Section 41 of the Internal Revenue Code (IRC). The
apportioned to the members. The pass-through
Iowa credit equals 4.55% of increased research
entity must file the IA 128S with its return. On
expenses plus 6.5% of increased basic research
Schedule K-1 or on an attachment to Schedule K-1,
expenses in Iowa. Any tax credit in excess of tax
report the tax credit for each member and instruct
liability can be refunded or credited to tax liability for
members to report the apportioned tax credit on line
the following year.
25 of form IA 128S and include it with their tax
Innovative Renewable Energy Generation
returns.
Effective July 1,
2009, eligible research
activities
If the taxpayer earns a tax credit by conducting
under the High Quality Jobs Program or under the
research and is a member of a business that has
Enterprise Zone Program include the development
passed-through a tax credit to the taxpayer, calculate
and deployment costs of innovative renewable
the tax credit on form IA 128S, lines 1 through 23.
energy generation components manufactured or
Also enter the pass-through tax credit on line 25.
assembled in Iowa. This cannot include components
Report each separately on the IA 148 Tax Credits
with more than 200 megawatts of installed effective
Schedule.
nameplate capacity. These costs are not eligible for
Supplemental Research Activities Tax Credit
the federal research tax credit. A separate form IA
Businesses with tax incentive contracts under the
128S must be completed to account for these costs,
High Quality Jobs Program or the Enterprise Zone
which can be included on line 14 of the separate
Program can be awarded a Supplemental Research
form. The amount of the additional tax credit relating
Activities Tax Credit by the Iowa Economic
to these costs is not eligible for the Supplemental
Development
Authority
(IEDA).
The
maximum
Alternative Simplified
Research Activities Tax Credit.
eligible supplemental tax credit is provided in the
Example: An eligible business with annual gross
contract along with the tax credit certificate number.
receipts of $20 million or less earns an Iowa
For awards made by IEDA prior to July 1, 2010, the
Alternative Simplified Research Activities Tax Credit
supplemental tax credit cannot exceed the amount
of $50,000, excluding any costs relating to
shown on line 23. For awards made on or after July
innovative
renewable
energy
generation
1, 2010, the maximum supplemental tax credit is
components.
The
business
is
allowed
a
calculated by multiplying line 21 by 7% or line 18 by
supplemental tax credit of $76,923, which would
3% for businesses with annual gross receipts of $20
result in an Iowa tax credit of $126,923. The Iowa
million or less (as reported on line 8) plus 10% of line
tax credit related to innovative renewable energy
11. For businesses with annual gross receipts
generation components is $25,000. This can be
exceeding $20 million, the maximum supplemental
added to the regular and supplemental tax credit,
tax credit is calculated by multiplying line 21 by 2.1%
resulting in a total Iowa Alternative Simplified
or line 18 by 0.9%, plus 3% of line 11.
Research Activities Tax Credit of $151,923.
If the Supplemental Research Activities Tax Credit is
Trades or Businesses under Common Control
earned by a pass-through entity, report the
For a group of trades or businesses under common
supplemental tax credit separately on Schedule K-1,
control (whether or not incorporated), the Iowa
including the tax credit certificate number. Instruct
Alternative Simplified Research Activities Tax Credit is
members to report the apportioned supplemental tax
calculated as if all the organizations are one trade or
credit on line 26 of form IA 128S and include it with
business. The tax credit calculated for the group must
their tax returns.
be shared among the members of the group on the
basis of each member’s proportionate contribution to
41-124b (06/12/16)
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