Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 302 - Determination of Net Income › Rule 701-302.70 - Exclusion of Income From Sale, Rental or Furnishing of Tangible Personal Property or Services Directly Related to Production of Film, Television or Video Projects

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Projects registered on or after January 1, 2007, but before July 1,
				2009.
For tax years beginning on or after January 1, 2007, a taxpayer
				who is a resident of Iowa may exclude, to the extent included in federal
				adjusted gross income, income received from the sale, rental or furnishing of
				tangible personal property or services directly related to the production of
				film, television, or video projects that are registered with the film office of
				the Iowa department of economic development.
Income which can be excluded on the Iowa return must meet the
				  criteria of a qualified expenditure for purposes of the film qualified
				  expenditure tax credit as set forth in rule
				  701-42.37 (15,422). See rule
				  701-38.17 (422) for the
				  determination of Iowa residency.
However, if a taxpayer claims this income tax exclusion, the
				  same taxpayer cannot also claim the film qualified expenditure tax credit as
				  described in rule 701-42.37 (15,422). In addition,
				  any taxpayer who claims this income tax exclusion cannot have an equity
				  interest in a business which received a film qualified expenditure tax credit.
				  Finally, any taxpayer who claims this income tax exclusion cannot participate
				  in the management of the business which received the film qualified expenditure
				  tax credit.
EXAMPLE: A production company which registers with the film
				  office for a project is a limited liability company with three members, all of
				  whom are Iowa residents. If any of the three members receives income that is a
				  qualified expenditure for purposes of the film qualified expenditure tax
				  credit, such member(s) cannot exclude this income on the Iowa income tax return
				  because the member(s) has an equity interest in the business which received the
				  credit.
(2)
Projects registered on or after July 1, 2009.
For tax years
				beginning on or after July 1, 2009, a taxpayer who is a resident of Iowa may
				exclude no more than 25 percent of the income received from the sale, rental or
				furnishing of tangible personal property or services directly related to the
				production of film, television, or video projects that are registered with the
				film office of the Iowa department of economic development in the year in which
				the qualified expenditure occurred. A reduction of 25 percent of the income is
				allowed to be excluded for the three subsequent tax years.
EXAMPLE: An Iowa taxpayer received $10,000 in income in the
				  2010 tax year related to qualified film expenditures for a project registered
				  on February 1, 2010. The $10,000 was reported as income on taxpayer's 2010
				  federal tax return. Taxpayer may exclude $2,500 of income on the Iowa
				  individual income tax return for each of the tax years 2010-2013.
(3)
Repeal of
				exclusion.
The exclusion of income from the sale, rental or furnishing
				of tangible personal property or services directly related to production of
				film, television or video projects is repealed for tax years beginning on or
				after January 1, 2012. However, the exclusion is still available if the
				contract or agreement related to a film project was entered into on or before
				May 25, 2012. Assuming the same facts as those in the example in subrule
				40.70(2), the taxpayer can continue to exclude $2,500 of income on the Iowa
				individual income tax return for the 2012 and 2013 tax years since the contract
				or agreement was entered into on or before May 25, 2012.
This rule is intended to implement 2012 Iowa Acts, House File
				  2337, sections 38 to 40, and Iowa Code section
				  422.7 as amended by 2012 Iowa
				  Acts, House File 2337, section 33.