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Form 42-021 - Iowa Corporation Schedule H - Computation Of Federal Tax Refund/deduction Page 2

Schedule H Instructions

This schedule must be used when the corporation files as part of a consolidated group for federal purposes.

Use extra pages if necessary to list all companies included in the consolidated federal return. List in

column A the federal taxable income after the net operating loss and special deductions or in column B the

federal taxable loss for each company computed as if a separate federal corporation income tax return was

filed. Normally, this would be from the federal 1120, line 30.

The allowed federal tax deduction is 50% of the federal income taxes paid or accrued. The deduction

should be computed using one of the following methods.

Note: Federal environmental tax paid should be included in total federal income taxes paid or accrued for

purposes of using the following computations.

ACCRUAL BASIS taxpayers should determine the total tax shown on page 1 of federal form 1120 and use

the formula shown below.

CASH BASIS taxpayers should compute the sum of federal taxes paid during the current tax period and

federal motor fuel tax credits applied against the tax liability for the current tax period, less any federal

refunds received during the current tax period using the formula shown below on each period producing

payments or refunds.

Separate Company

Total Tax

Federal Taxable Income

Federal Tax

X 50%

Reported on the

Deduction

Consolidated

Sum of All Positive Income Producing

Federal Return

Companies Included in the

Consolidated Taxable Income

Statements

If your company files a consolidated Iowa return, the numerator in the above equation is the sum of

the incomes of the profit companies included in the consolidated Iowa return. This formula is

referred to as “revenue producers formula.”

Complete lines 46 through 50 of Schedule H as follows:

Line 46: Show federal taxable income of the profit company(s) reported on this Iowa return.

Line 47: Enter the total from line 43, column A.

Line 48: Enter federal tax from the federal 1120.

Line 50: Divide line 46 by line 47 and multiply the result by line 48 and by 50%. Enter on IA

1120, line 5.

If the federal consolidated return reports a net operating loss which is carried back, the federal

refund is computed substituting loss companies in place of taxable income companies in the above

formula. This formula is known as the “loss producers formula.”

The federal refund is reported on IA 1120, line 2, in the loss year.

42-021b (06/03/09)

Form 42-021 - Iowa Corporation Schedule H - Computation Of Federal Tax Refund/deduction Page 2