Iowa Administrative Code › Agency 701 - Revenue Department › Title VI - Corporation Income Tax › Chapter 501 - Filing Returns, Payment of Tax, Penalty and Interest, and Tax Credits › Rule 701-501.35 - Film Investment Tax Credit

Current through Register Vol. 47, No. 3, July 24, 2024
Effective for tax years beginning on or after January 1,
				  2007, a film investment tax credit is available for corporation income tax. The
				  tax credit cannot exceed 25 percent of the taxpayer's investment in a film,
				  television, or video project registered with the film office of the Iowa
				  department of economic development (IDED). The film office may negotiate the
				  amount of the tax credit. The administrative rules for the film investment tax
				  credit for IDED may be found at 261-Chapter 36.
(1)
Claiming the tax credit.
Upon completion of the project in Iowa and verification of the investment in
				the project, IDED will issue a tax credit certificate to the taxpayer. The
				certificate will list the taxpayer's name, address, and tax identification
				number; the date of project completion; the amount of the credit; the tax
				period for which the credit may be applied; and the type of tax for which the
				credit will be applied.
If the taxpayer is a partnership, limited liability company,
				  S corporation, or estate or trust requesting a credit for individual or
				  corporation income tax, the tax credit certificate will be issued to the
				  partners, members, shareholders or beneficiaries based on each partner's,
				  member's, shareholder's or beneficiary's pro rata share of earnings of the
				  partnership, limited liability company, S corporation, or estate or
				  trust.
To claim the tax credit, the taxpayer must include the tax
				  credit certificate with the tax return for the tax period set forth on the
				  certificate. Any tax credit in excess of the tax liability may be carried
				  forward for five years or until the tax credit is used, whichever is the
				  earlier. The tax credit cannot be carried back to a tax year prior to the year
				  in which the taxpayer claimed the tax credit. In addition, a taxpayer cannot
				  claim the film investment tax credit for qualified expenditures for which the
				  film expenditure tax credit set forth in rule
				  701-52.34 (15,422) is
				  claimed.
The total of all film investment tax credits for a particular
				  project cannot exceed 25 percent of the qualified expenditures as set forth in
				  subrule 52.34(1) for the particular project. If the amount of investment
				  exceeds the qualified expenditures, the tax credit will be allocated
				  proportionately. For example, if three investors each invested $100,000 in a
				  project but the qualified expenditures in Iowa only totaled $270,000, each
				  investor would receive a tax credit based on a $90,000 investment
				  amount.
(2)
Transfer of the film investment tax credit.
The film
				investment tax credit may be transferred no more than two times to any person
				or entity.
Within 90 days of transfer of the tax credit certificate, the
				  transferee must submit the transferred tax credit certificate to the department
				  of revenue, along with a statement which contains the transferee's name,
				  address and tax identification number and the amount of the tax credit being
				  transferred. Within 30 days of receiving the transferred tax credit certificate
				  and the statement from the transferee, the department of revenue will issue a
				  replacement tax credit certificate to the transferee. If the transferee is a
				  partnership, limited liability company, S corporation, or estate or trust
				  claiming the credit for individual or corporation income tax, the transferee
				  shall provide a list of the partners, members, shareholders or beneficiaries
				  and information on how the film investment tax credit should be divided among
				  the partners, members, shareholders or beneficiaries. The transferee shall also
				  provide the tax identification numbers and addresses of the partners, members,
				  shareholders or beneficiaries. The replacement tax credit certificate must
				  contain the same information as that on the original tax credit certificate and
				  must have the same effective taxable year as the original tax credit
				  certificate. The replacement tax credit certificate may reflect a different tax
				  type than the original tax credit certificate.
The transferee may use the amount of the tax credit for any
				  tax year for which the original transferor could have claimed the tax credit.
				  Any consideration received for the transfer of the tax credit certificate shall
				  not be included in Iowa taxable income for individual income, corporation
				  income or franchise tax purposes. Any consideration paid for the transfer of
				  the tax credit certificate shall not be deducted from Iowa taxable income for
				  individual income, corporation income or franchise tax purposes.
(3)
Repeal of film
				investment tax credit.
The film investment tax credit is repealed for
				tax years beginning on or after January 1, 2012. However, the credit is still
				available for tax years beginning prior to January 1, 2012, if the contract or
				agreement related to a film project 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
				  422.33 as amended by 2012 Iowa
				  Acts, House File 2337, section 34.