Fillable Form Ia 128 - Iowa Research Activities Tax Credit

IA 128 Research Activities Tax Credit Instructions

Form IA 128 is used if the taxpayer elects to claim

organizations are one trade or business. The credit

the regular Research Activities Tax Credit. Form IA

calculated for the group must then be shared among

128S is used only if the taxpayer elects to claim the

the members of the group on the basis of each

Alternative Simplified Research Activities Tax Credit.

member’s proportionate contribution to the increase

The taxpayer may elect to use this method

in research expenses. Adjustments for Certain

regardless of the method used in computing the

Acquisitions and Dispositions

federal research credit. This option is for Iowa

If a major portion of a trade or business is acquired

purposes and is effective only for the current tax

or disposed of, adjustments must be made to

year. The taxpayer is not required to use this method

research expenses for the period before or after the

in computing the Research Activities Tax Credit for

acquisition or disposition.

subsequent years.

Research expenses qualified for the Iowa Research

Short Tax Year

Activities Tax Credit are based on the rules

For any short tax year, qualified research

governing the federal research tax credit, see section

expenses are annualized.

41(c) of the Internal Revenue Code (IRC).

Apportionment of Credit

Any credit in excess of tax liability can be refunded or

The credit calculated on lines 1 through 30 by a

credited to tax liability for the following year.

partnership, LLC, S corporation, estate, or trust is

apportioned to the members. The pass-through

Innovative Renewable Energy Generation

entity must file the IA 128 with its return and show

Effective July 1, 2009, research activities under the

on Schedule K-1, or on an attachment to Schedule

High Quality Jobs Program or under the Enterprise

K-1, the credit for each member and instruct the

Zone

Program

include

the

development

and

members to report the apportioned credit on line 32 of

deployment costs of innovative renewable energy

form IA 128 and include it with their tax returns.

generation components manufactured or assembled

If the taxpayer earns a credit by conducting research

in Iowa. This cannot include components with more

and is a member of a business that has passed

than 200 megawatts of installed effective nameplate

through a credit to the taxpayer, calculate the credit

capacity. These costs are not eligible for the federal

on form IA 128, lines 1 through 31. Also enter the

research credit. A separate form IA 128 must be

pass-through credit on line 32.

completed to account for these costs, which can be

included on lines 5 and 21 of the separate form IA

Supplemental Research Activities Credit

128. The amount of the additional credit relating to

Businesses with tax incentive contracts under the

these costs is not eligible for the Supplemental

High Quality Jobs Program or the Enterprise Zone

Research Activities Tax Credit.

Program can be awarded a Supplemental Research

Activities

Tax

Credit

the

Iowa

Economic

Example: An eligible business with gross receipts of

less than $20 million computes an Iowa Research

Development

Authority

(IEDA).

The

maximum

supplemental credit claim is provided in the contract

Activities Tax Credit of $50,000, excluding any costs

along with the tax credit certificate number. For

relating to innovative renewable energy generation

awards issued by the IEDA prior to July 1, 2010, the

components. When the costs relating to innovative

renewable energy generation components are

amount of the supplemental credit cannot exceed the

credit amount shown on line 30. For awards made by

included on lines 5 and 21, the Iowa credit is

the IEDA on or after July 1, 2010, the supplemental

$75,000. The business is allowed a supplemental

credit cannot exceed 10% of line 29 for businesses

credit of $76,923 under the original claim, which

would result in an Iowa credit of $126,923. This can

with gross receipts of $20 million or less. The

supplemental credit cannot exceed 3% of line 29 for

be added to the additional credit relating to the

businesses with gross receipts exceeding $20 million.

innovative renewable energy generation components

of $25,000, resulting in a total Iowa Research

If the Supplemental Research Activities Tax Credit is

Activities Tax Credit of $151,923.

earned

pass-through

entity,

report

the

Trades or Businesses under Common Control

supplemental credit separately on Schedule

K-1 and

the certificate number. Instruct members to report their

For a group of trades or businesses under common

credit on line 33 of form IA 128 and include it with

control (whether or not incorporated), the Research

their tax returns.

Activities Tax Credit is figured as if all the

41-128b (07/28/14)

Form Ia 128 - Iowa Research Activities Tax Credit - 2014 Page 2

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