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 701-501.5 - Minimum Tax

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
				Reserved.
(2) For tax years
				beginning after 1997, a small business corporation or a new corporation for its
				first year of existence, which through the operation of Internal Revenue Code
				Section 55(e) is exempt from the federal alternative minimum tax, is not
				subject to Iowa alternative minimum tax. A small business corporation may apply
				any alternative minimum tax credit carryforward to the extent of its regular
				corporation income tax liability.
For tax years beginning on or after January 1, 1987, the
				  minimum tax is imposed only to the extent that it exceeds the taxpayer's
				  regular tax liability computed under Iowa Code section
				  422.33(1). The
				  minimum tax rate is 60 percent of the maximum corporate tax rate rounded to the
				  nearest one-tenth of 1 percent or 7.2 percent. Minimum taxable income is
				  computed as follows:
State taxable income as adjusted by Iowa Code section
				  422.35
Plus:
Tax preference items, adjustments and losses added
							 back
Less:
Allocable income including allocable preference items
							 and adjustments under Section 56 of the Internal Revenue Code including
							 adjusted current earnings related to allocable income including the allocable
							 preference items Subtotal
Times:
Apportionment percentage Result
Plus:
Income allocable to Iowa including allocable
							 preference items and adjustments under Section 56 of the Internal Revenue Code
							 including adjusted current earnings related to allocable income including the
							 allocable preference items
Less:
Iowa alternative tax net operating less deduction
							 $40,000 exemption amount
Equals:
Iowa alternative minimum taxable income
For tax years beginning on or after January 1, 1987, the
				  items of tax preference are the same items of tax preference under Section 57
				  except for Subsections (a)(1) and (a)(5) of the Internal Revenue Code used to
				  compute federal alternative minimum taxable income. The adjustments to state
				  taxable income are those adjustments required by Section 56 except for
				  Subsections (a)(4) and (d) of the Internal Revenue Code used to compute federal
				  alternative minimum taxable income. In making the adjustment under Section
				  56(c)(1) of the Internal Revenue Code, interest and dividends from federal
				  securities net of amortization of any discount or premium shall be subtracted.
				  For tax years beginning on or after January 1, 1988, in making the adjustment
				  under Section 56(c)(1) of the Internal Revenue Code, interest and dividends
				  from state and other political subdivisions and from regulated investment
				  companies exempt from federal income tax under the Internal Revenue Code shall
				  be subtracted net of amortization of any discount or premium. In making the
				  adjustment for adjusted current earnings, subtract Foreign Sales Company (FSC)
				  dividend income and Puerto Rican dividend income computed under Internal
				  Revenue Code Section 936 to the extent they are included in the federal
				  computation of adjusted current earnings. Losses to be added are those losses
				  required to be added by Section 58 of the Internal Revenue Code in computing
				  federal alternative minimum taxable income.
a. Tax preference items are:
1. Intangible drilling costs;
2. Incentive stock options;
3. Reserves for losses on bad debts of
				financial institutions;
4.
				Appreciated property charitable deductions;
5. Accelerated depreciation or amortization
				on certain property placed in service before January 1, 1987.