Form Ia 128s - Iowa Alternative Simplified Research Activities Tax Credit - 2014 Page 2
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3IA 128S Alternative Simplified Research Activities Tax Credit Instructions
Form IA 128S is used only if the taxpayer elects to
as if all the organizations are one trade or business.
claim the Alternative Simplified Research Activities
The credit figured for the group must then be shared
among the members of the group on the basis of each
Tax Credit. Form IA 128 should be used if the regular
member’s proportionate contribution to the increase in
Research Activities Tax Credit is claimed. The
research expenses.
taxpayer may elect to use this alternative method
regardless of the method used in computing the
Adjustments
for
Certain
Acquisitions
and
federal research credit. This option is for Iowa
Dispositions
purposes and is effective only for the current tax
If a major portion of a trade or business is acquired
year. The taxpayer is not required to use this
or disposed of, adjustments must be made to
alternative method in computing the Research
research expenses for the period before or after the
Activities Tax Credit for subsequent years.
acquisition or disposition.
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
expenses are annualized.
Section 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 9 through 24 by a
credited to tax liability for the following year.
partnership, LLC, S corporation, estate, or trust is
Innovative Renewable Energy Generation
apportioned to the members. The pass-through
Effective July 1, 2009, research activities under the
entity must file the IA 128S with its return and show
High Quality Jobs Program or under the Enterprise
on Schedule K-1, or on an attachment to Schedule
Zone
Program
include
the
development
and
K-1, the credit for each member. Instruct members to
deployment costs of innovative renewable energy
report the apportioned credit on line 26 of form IA
generation components manufactured or assembled
128S and include it with their tax returns.
in Iowa. This cannot include components with more
If the taxpayer earns a credit by conducting research
than 200 megawatts of installed effective nameplate
and is a member of a business that has passed-
capacity. These costs are not eligible for the federal
through a credit to the taxpayer, calculate the credit
research credit. A separate form IA 128S must be
on form IA 128S, lines 9 through 24. Also enter the
completed to account for these costs, which can be
pass-through credit on line 26.
included on line 15 of the separate form IA 128S. The
Supplemental Research Activities Credit
amount of the additional credit relating to these costs
Businesses with tax incentive contracts under the
is not eligible for the Supplemental Alternative
High Quality Jobs Program or the Enterprise Zone
Simplified Research Activities Tax Credit.
Program can be awarded a Supplemental Research
Example: An eligible business with gross receipts of
Activities
Tax
Credit
by
the
Iowa
Economic
less than $20 million computes an Iowa Alternative
Development
Authority
(IEDA).
The
maximum
Simplified Research Activities Tax Credit of $50,000,
supplemental credit claim is provided in the contract
excluding any costs relating to innovative renewable
along with the tax credit certificate number. For
energy generation components. When the costs
awards made by the IEDA prior to July 1, 2010, the
relating to innovative renewable energy generation
amount of the supplemental credit cannot exceed the
components are included on line 15, the Iowa credit
credit amount shown on line 24. For awards made on
is $75,000. The business is allowed a supplemental
or after July 1, 2010, for businesses with gross
credit of $76,923 under the original claim, which
receipts of $20 million or less the maximum
would result in an Iowa credit of $126,923. This can
supplemental credit is calculated by multiplying line 22
be added to the additional credit relating to the
by 7%, or line 19 by 3%. For businesses with gross
innovative renewable energy generation components
receipts
exceeding
$20
million,
the
maximum
of $25,000, resulting in a total Iowa Alternative
supplemental credit is calculated by multiplying line 22
Simplified
Research
Activities
Tax
Credit
of
by 2.1%, or line 19 by 0.9%.
$151,923.
Trades or Businesses under Common Control
If the Supplemental Research Activities Tax Credit is
For a group of trades or businesses under common
earned
by
a
pass-through
entity,
report
the
control (whether or not incorporated), the Alternative
supplemental credit separately on Schedule
K-1,
Simplified Research Activities Tax Credit is calculated
including the certificate number. Instruct members
41-124b (07/04/14)
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