Instructions For Form Ia 1120 - Iowa Corporation Income Tax Long Form

13. Foreign dividend income exclusion: Complete Schedule B.

16. Add lines 2 through 8 and lines 10 through 15 as applicable

The foreign dividend exclusion , including subpart F income,

and enter the sum.

follows the same criteria as IRC section 243 does for domestic

Schedule B-Foreign Dividend Exclusion

dividends. If the percentage of ownership is less than 20%,

See instructions for line 13, Schedule A.

then 70% of the dividend income is excluded. If the

percentage of ownership is equal to or greater than 20%, but

Schedule C1-Credits

less than 80%, then 80% of the foreign dividend income is

Enter all applicable amounts on the lines specified. Include

excluded. If the percentage of ownership is 80% or greater,

motor fuel credit, nonrefundable credits, and other refundable

then 100% of the foreign dividend income is excluded.

credits. Attach schedule IA 4136 and schedule IA 148.

Foreign dividend gross-up is excluded at 100%. These

amounts are shown on federal form 1120 Schedule C, lines

Schedule C2-Payments

13 - 15.

Enter all applicable amounts on the lines specified. For line 1,

14. Enter the amount of interest and dividends from federal

Schedule C2, enter the dates estimated tax payments were paid.

securities included in federal income. Do not include interest

Note: Care should be taken to correctly distinguish between

on federal refunds. Attach a schedule showing a breakdown

credits and payments. For example, credit from prior period

of federal security interest by payer.

overpayment should be listed as a payment on Schedule C2.

15. Enter any amounts not specifically identified above. A detailed

Additional Information

schedule must be attached or these amounts may not be

Complete all applicable statements and questions.

allowed. If adjusting an amount from a partnership or LLC,

include a reconciliation of federal income to income reported

Enter the FEIN or PTIN for the preparer’s identification.

on the Iowa partnership return. The difference should be

specifically identified to indicate the Iowa adjustment being

made.

Instructions for Page Three

Column D 50% of Applicable Federal Income Tax: Enter

Schedule D - Nonbusiness Income

50% of the applicable federal income tax. Do not enter negative

If corporate business is entirely within Iowa,

amounts. The effective tax rate equals line 5, page 1, divided

do NOT complete Schedule D.

by line 1, page 1, of form IA 1120. Multiply column C by this

The classification of income by the labels customarily given

tax rate to determine your entry for column D. The total amount

them, such as interest, dividends, rents, and royalties, is of no

is limited to the federal tax deduction shown on line 5, page 1.

aid in determining whether that income is business or

Column E Net Income: Subtract column D from column C

nonbusiness income.

and enter the difference.

Please provide all documentation to the substantial authority

Line 8: Add lines 1 through 7 of column E. Enter this amount on

showing why the income should be allocated as nonbusiness

line 13 of the IA 1120, page 1.

income.

Line 16: Add lines 9 through 15.

Line 17: Add lines 8 and 16. Enter this amount on line 9 of the

Instructions

IA 1120, page 1.

When referring to the columns designated below, enter the

amounts on lines 1 through 8 if the corporation’s commercial

Schedule E - Business Activity Ratio

domicile is Iowa. Enter amounts on lines 9 through 16 if the

If your business activity is 100% Iowa, you do not need to

corporation’s commercial domicile is outside Iowa. However,

complete Schedule E.

rent, royalty, and capital or ordinary gain income from real or

Complete all applicable lines. All figures are net of amounts

tangible personal property is allocated to the situs of the

used in Iowa Schedule D. Dividends are net of special

property producing the income. Also, see Iowa Rule 54.2(3)

deductions and the Iowa foreign dividend exclusion.

for attribution of income from intangibles.

Business income means income which arises from the

Column A Gross Income: Enter the amount of income on the

corporation’s unitary trade or business, a part of which is

appropriate line. If an entry is made on line 6 or 14, please

conducted within Iowa. Business income must be apportioned

attach federal Schedule D. If an entry is made on line 1, do

to Iowa by means of the business activity ratio. Investment

not include any amounts previously deducted on line 13 of Iowa

income may, at the taxpayer’s election, be included in the

Schedule A relating to foreign dividends.

computation of the business activity ratio. On the return, the

Column B Related Expense: Enter directly-related expenses

taxpayer elects whether to include investment income which

and indirectly-related interest expenses on the appropriate line.

was determined to be business income in the computation of

Attach detailed schedules showing the computation of the

its business activity ratio for that and all subsequent years.

related expense.

Consequently, the subsequent year’s total investment income

which is determined to be business income is included in the

Column C Subtotal: Subtract column B from column A and

numerator as follows:

enter the difference.

(1) Accounts receivable interest is to be included in the numerator

to the extent allocable to Iowa.

42-002e (09/24/12)

Instructions For Form Ia 1120 - Iowa Corporation Income Tax Long Form - 2012 Page 5

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