Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 304 - Adjustments to Computed Tax and Tax Credits › Rule 701-304.54 - Historic Preservation and Cultural and Entertainment District Tax Credit for Projects Registered on or After July 1, 2014, and Before August 15, 2016

Current through Register Vol. 47, No. 3, July 24, 2024
For projects registered before August 15, 2016, the
				  department of cultural affairs is authorized by the general assembly to award
				  tax credits for a percentage of the qualified rehabilitation expenditures on a
				  qualified rehabilitation project as described in the historic preservation and
				  cultural and entertainment district tax credit program, Iowa Code chapter 404A.
				  The program is administered by the department of cultural affairs with the
				  assistance of the department of revenue. The general assembly has mandated that
				  the department of cultural affairs and the department of revenue adopt rules to
				  jointly administer Iowa Code chapter 404A. In general, the department of
				  cultural affairs is responsible for evaluating whether projects comply with the
				  prescribed standards for rehabilitation while the department of revenue is
				  responsible for evaluating whether projects comply with the tax aspects of the
				  program.
2014 Iowa Acts, House File 2453, amended the historic
				  preservation and cultural and entertainment district tax credit program
				  effective July 1, 2014. The department of revenue's provisions for projects
				  with Part 2 applications approved and tax credits reserved prior to July 1,
				  2014, are found in rule
				  701-42.19 (404A,422). The
				  department of revenue's provisions for projects registered on or after July 1,
				  2014, and before August 15, 2016, are found in this rule. The department of
				  cultural affairs' rules related to this program may be found at 223-Chapter
				  48.
2016 Iowa Acts, House File 2443, amended the program and
				  transferred primary responsibility for its administration to the economic
				  development authority effective August 15, 2016. Effective August 15, 2016, the
				  program is administered by the economic development authority with the
				  assistance of the department of cultural affairs and the department of revenue.
				  The department of revenue's provisions for projects registered on or after
				  August 15, 2016, are found in rule
				  701-42.55 (404A,422). The
				  economic development authority's rules related to the program may be found at
				  261-Chapter 49. When adopted, the department of cultural affairs' rules related
				  to the program will be found in 223-Chapter 48.
Notwithstanding anything contained herein to the contrary,
				  the department of cultural affairs shall not reserve tax credits under 2013
				  Iowa Code chapter 404A as amended by 2013 Iowa Acts, chapter 112, section 1,
				  for applicants that do not have an approved Part 2 application and a tax credit
				  reservation on or before June 30, 2014. Projects with approved Part 2
				  applications and provisional tax credit reservations on or before June 30,
				  2014, shall be governed by 2013 Iowa Code chapter 404A as amended by 2013 Iowa
				  Acts, chapter 112, section 1; by 223-Chapter 48, Division I; and by rule
				  701-42.19 (404A,422). Projects
				  registered on or after July 1, 2014, but before August 15, 2016, shall be
				  governed by 2014 Iowa Code chapter 404A as amended by 2014 Iowa Acts, House
				  File 2453; by 223-Chapter 48, Division II; and by this rule. Projects
				  registered on or after August 15, 2016, shall be governed by 2016 Iowa Code
				  chapter 404A as amended by 2016 Iowa Acts, House File 2443; by 261-Chapter 49;
				  and by rule 701-42.55 (404A,422).
(1)
Application, registration, and
				agreement for the historic preservation and cultural and entertainment district
				tax credit.
Taxpayers that want to claim an income tax credit for
				completing a qualified rehabilitation project must submit an application for
				approval of the project. The application forms and instructions for the
				historic preservation and cultural and entertainment district tax credit are
				available on the department of cultural affairs' website. Once a project is
				registered, the taxpayer must enter into an agreement with the department of
				cultural affairs to be eligible for the credit.
(2)
Computation of the amount of the
				historic preservation and cultural and entertainment district tax
				credit.
The amount of the historic preservation and cultural and
				entertainment district tax credit is a maximum of 25 percent of the qualified
				rehabilitation expenditures verified by the department of cultural affairs and
				the department of revenue following project completion, up to the amount
				specified in the agreement between the taxpayer and the department of cultural
				affairs.
(3)
Qualified
				rehabilitation expenditures.
"Qualified rehabilitation expenditures"
				means the same as defined in rule
				223-48.22 (404A) of the
				historical division of the department of cultural affairs. In general, the
				department of cultural affairs evaluates whether expenditures comply with the
				prescribed standards for rehabilitation while the department of revenue
				evaluates whether expenditures comply with the tax requirements to be
				considered qualified rehabilitation expenditures, including whether the
				expenditures are in accordance with the requirements of Internal Revenue Code
				Section 47 and its related regulations.
a.
Type of property and services eligible.
In accordance with
				Iowa Code section 404A.1(6), the
				types of property and services claimed for the state tax credit must be
				"qualified rehabilitation expenditures" in accordance with Internal Revenue
				Code Section 47. Notwithstanding the foregoing sentence, expenditures incurred
				by an eligible taxpayer that is a nonprofit organization as defined in Iowa
				Code section 404A.1(4) 
				shall be considered "qualified rehabilitation expenditures" if they are for
				"structural components," as that term is defined in Treasury Regulation §1.48 -1(e)(2), and for amounts
				incurred for architectural and engineering fees, site survey fees, legal
				expenses, insurance premiums, development fees and other construction-related
				costs.
b.
Effect of
				financing sources on eligibility of expenditures.
Qualified
				rehabilitation expenditures do not include expenditures financed by federal,
				state, or local government grants or forgivable loans unless otherwise allowed
				under Section 47 of the Internal Revenue Code. For an eligible taxpayer that is
				a nonprofit organization as defined in Iowa Code section
				404A.1(4)  that
				is not eligible for the federal rehabilitation credit, or another person that
				is not eligible for the federal rehabilitation credit, expenditures financed
				with federal, state, or local government grants or forgivable loans are not
				qualified rehabilitation expenditures.