Iowa Administrative Code › Agency 701 - Revenue Department › Title VI - Corporation Income Tax › Chapter 502 - Determination of Net Income › Rule 701-502.25 - 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
				that is an Iowa-based business may exclude, to the extent included in federal
				taxable 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
				  701-52.34 (15,422). An
				  Iowa-based business is a business whose commercial domicile as defined in Iowa
				  Code section 422.32(3)  is
				  in Iowa.
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 701-52.34 (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 corporation which is domiciled in Iowa. If this same
				  corporation receives income that is a qualified expenditure for purposes of the
				  film qualified expenditure tax credit, the corporation cannot exclude this
				  income on the Iowa corporation income tax return because the corporation has
				  claimed the film qualified expenditure tax credit.
(2)
Projects registered on or after
				July 1, 2009.
For tax years beginning on or after July 1, 2009, a
				taxpayer that is an Iowa-based business 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
				  corporation 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
				53.25(2), the taxpayer may continue to exclude $2,500 of income on the Iowa
				corporation 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
				  422.35 as amended by 2012 Iowa
				  Acts, House File 2337, section 35.