Iowa Administrative Code › Agency 701 - Revenue Department › Title IV - Individual Income Tax › Chapter 305 - Assessments and Refunds › Rule 701-305.8 - Livestock Production Credit Refunds for Corporate Taxpayers and Individual Taxpayers

Current through Register Vol. 47, No. 3, July 24, 2024
For tax years beginning on or after January 1, 1996,
				  corporate and individual taxpayers who own certain livestock, who have
				  livestock production operations in Iowa in the tax year, and who meet certain
				  qualifications are eligible for a livestock production credit refund. The
				  amount of a livestock production credit refund is determined by adding together
				  for each head of livestock in the taxpayer's operation the product of 10 cents
				  for each corn equivalent deemed to have been consumed by that animal in the
				  taxpayer's operation in the tax year. For tax years beginning on or after
				  January 1, 1998, only qualified taxpayers that have cow-calf livestock
				  operations described in paragraph
"o"
of subrule 43.8(2) will
				  be eligible for the livestock production refunds, notwithstanding the other
				  types of livestock operations mentioned in this rule. Note that the livestock
				  production credit refund is also available to taxpayers who meet the
				  qualifications described in subrule 43.8(1) and operate certain types of
				  poultry operations in this state and own the poultry in the operations. The
				  amounts of the livestock production credit refunds for these taxpayers are
				  determined on the basis of 10 cents for each corn equivalent deemed to have
				  been consumed by the chickens or the turkeys in the taxpayers' poultry
				  operations in the tax year. However, the amount of livestock production credit
				  refund may not exceed $3,000 per livestock or poultry operation for a tax year.
				  In addition, the amount of livestock production credit refund per taxpayer for
				  a tax year may not exceed $3,000. Therefore, if a particular taxpayer is
				  involved in a cow-calf beef operation, a sheep-ewe flock operation, and a
				  farrow-to-finish hog operation, the maximum livestock production credit refund
				  for this taxpayer may not exceed $3,000.
General references in this rule to livestock, livestock
				  production, and livestock production operations also apply to poultry, poultry
				  production, and poultry production operations.
In the case of married taxpayers, each of the spouses may be
				  eligible for a livestock production refund of up to $3,000 if each of the
				  spouses was involved in a livestock production operation independently from the
				  other spouse and independently from other taxpayers in the tax year. If both
				  spouses are involved in the same livestock operation, the maximum refund from
				  that operation is $3,000 which may be allocated between the individuals in the
				  ratio of each spouse's ownership interest in the operation. If a livestock
				  production operation is conducted by a partnership, limited liability company,
				  subchapter S corporation, estate, or a trust, the livestock production credit
				  refund from the entity is to be allocated to the owners of the entity in the
				  same ratio as earnings are allocated to the owners. In situations where a
				  livestock production operation is conducted partly within and partly without
				  Iowa, only the livestock production activity in Iowa during the tax year will
				  be considered for purposes of the livestock credit refund. The livestock
				  production refund amounts for these taxpayers is to be allocated on the basis
				  of sales of Iowa livestock which qualify taxpayers for the livestock production
				  refund to total sales of livestock which qualify taxpayers for the refund.
				  However, the refunds from any operations may not exceed $3,000. The following
				  subrules outline how the livestock production credit refund program is to be
				  administered by the department of revenue:
(1)
Qualifications for the livestock
				production credit refunds.
For tax years beginning on or after January
				1, 1997, individual and corporate taxpayers will be eligible for the livestock
				production credit refund if the taxpayer's federal taxable income is $99,600 or
				less. In the case of married taxpayers, their combined federal taxable income
				must be considered to determine if they are eligible for the credit.
For each tax year beginning after 1997, the federal taxable
				  income specified previously in this subrule shall be multiplied by the
				  cumulative index factor for that tax year to calculate the federal taxable
				  income that will be used to determine whether a taxpayer is eligible for the
				  livestock production refund that is authorized for that tax year. "Cumulative
				  index factor" means the product of the annual index factor for the 1997
				  calendar year and all annual index factors for subsequent calendar years. The
				  annual index factor equals the annual inflation factor for that calendar year
				  as computed in Iowa Code section
				  422.4 for purposes of indexation
				  of the tax rates for individual income tax.
(2)
Definitions related to the
				livestock production credit refunds.
The following definitions explain
				livestock and poultry for purposes of this rule. The definitions also describe
				the various types of livestock operations of taxpayers which may qualify the
				taxpayers for the livestock production credit refunds and specify how the
				refunds are to be computed for the various types of livestock operations:
a. For the purposes of this rule, the term
				"livestock" means domestic bovine animals which will be referred to as bulls,
				heifers, cattle, calves, or cows in this rule, domestic ovine animals which
				will be referred to as sheep, lambs, rams, or ewes, or domestic swine which
				will be referred to as hogs or pigs. That is, for purposes of this rule,
				"livestock" includes only those farm animals which may qualify their owners for
				the livestock production credit refund. "Livestock" does not include horses,
				goats, donkeys, mules, oxen, furbearing mammals, other mammals, or other
				classes of animals, although some of these animals or species may be considered
				to be "livestock" in other contexts or situations.
b. For purposes of this rule the term
				"poultry" means only domestic chickens and domestic turkeys as only these types
				of birds may qualify their owners for the livestock production credit refunds.
				"Poultry" does not include ducks, geese, wild turkeys, emus, ostriches, or
				other fowl or birds, although some of these species may be considered to be
				poultry in other contexts or situations.
c. For purposes of this rule, the term
				"farrow-to-finish" hog operations comprises those hog production operations
				where the majority of the hogs sold from the operation are from animals
				farrowed and raised in the operation which are sold at a prime market weight of
				200 pounds or more.
In order to compute the livestock production credit refund
				  amounts for the "farrow-to-finish" hog production operations, the corn
				  equivalent factor of 13 per animal sold, or $1.30, is multiplied by the number
				  of hogs sold at prime market weight in the tax year which were farrowed and
				  raised in the operation. No corn equivalent credits are given for hogs sold at
				  the prime market weight which have been in the operation less than three months
				  on the date of sale. In the "farrow-to-finish" operations, hogs sold at a
				  weight that is less than the prime market weight also are considered for
				  purposes of computing the livestock production credit refund for the operation,
				  but only at the corn equivalent factor of 2.6 or $.26 per pig sold.
In "farrow-to-finish" hog operations, if any pigs are
				  purchased at the feeder pig weight of less than 60 pounds and are sold at prime
				  market weight (200 pounds or more), see paragraph
"e"
in this
				  subrule for the corn equivalent factor which applies to these
				  transactions.
d. For
				purposes of this rule, the term "farrow-to-feeder-pig" hog operations includes
				those operations where essentially all the pigs farrowed in the operation are
				sold at an average weight of less than 60 pounds per pig, or at "feeder pig"
				weight.
The potential livestock production credit refunds for these
				  operations are computed by multiplying the corn equivalent factor of 2.6 or
				  $.26 times the number of pigs sold at the "feeder pig" weight from these
				  operations in the tax year. However, the corn equivalent factor of 13 or $1.30
				  per animal sold can be used for hogs sold at the prime market weight (200
				  pounds or more) from these operations for those animals where there is
				  documentation that the hogs were born and raised in the operation or that the
				  hogs were in the operation for a minimum of three months at the time the hogs
				  were sold.
e. The term
				"finishing feeder pigs" hog operations comprises those operations where the
				majority of the hogs in this operation are purchased when these animals weighed
				less than 60 pounds or at the "feeder pig" weight and the animals are sold at
				the time the animals are at the prime market weight of 200 pounds or more per
				hog. The potential livestock production credit refunds for these operations are
				computed by multiplying the corn equivalent factor of 10.4 or $1.04 times the
				number of animals sold in the year at the prime market weight. However, only
				those animals that were in the operation for a minimum of three months at the
				time the hogs were sold at prime market weight can be considered for purposes
				of the livestock production credit refund. Corn equivalent factor credits of
				2.6 or $.26 are given for animals which are purchased at the "feeder pig"
				weight of less than 60 pounds and were in the operation for a minimum of three
				months when the hogs were sold at a weight which is less than the prime market
				weight of 200 pounds or more per hog.
f. For purposes of this rule, the term "layer
				poultry operations" includes operations where the eggs produced by the chickens
				in the operation are sold for human consumption. The livestock production
				credit refunds for these operations are computed on the basis of the average
				number of chickens in the operation in the tax year multiplied by the corn
				equivalent factor of .88 or $.088. The average number of chickens in the
				operation in the tax year is the aggregate of the number of chickens in the
				operation on the first day in the tax year that the operation was in production
				and the number of chickens in the operation on the last day of the tax year in
				which the operation was in production divided by 2.
However, in a situation where the operation was started or
				  was shut down sometime during the tax year, the livestock refund amount
				  otherwise computed must be reduced by 8.33 percent for each month in the tax
				  year in which the operation was not in production. Thus, in the case where the
				  computed livestock refund amount was $2,000 and the operation was in production
				  for only nine months of the tax year, the adjusted refund amount would be
				  $1,500 ($2,000 x .0833 x (3) = $500). ($2,000 - 500 = $1,500)
g. For purposes of this rule, the term
				"turkey production operations" means operations involved in raising domestic
				turkeys for sale for human consumption and where the turkeys are sold at a
				prime market weight. The prime market weight for male or tom turkeys is between
				30 and 35 pounds. The prime market weight for hen turkeys is between 22 and 25
				pounds. The livestock production credit refund for this type of operation is
				computed by multiplying the number of turkeys sold in the tax year at the prime
				market weight times the corn equivalent factor of 1.5 or $.15. However, only
				those turkeys that were in the operation for a minimum of three months on the
				date the turkeys were sold may be considered for purposes of computing the
				livestock production credit for the turkey operation.
h. For purposes of this rule, the term
				"broiler poultry operations" means poultry production operations whereby the
				chickens raised in the operations are sold for human consumption at a prime
				market weight or broiler weight between 3 pounds and 6 pounds depending on the
				breed or breeds of chickens. The livestock production credit refund for this
				type of operation is computed by multiplying the number of chickens sold in the
				tax year at broiler weight by the corn equivalent factor of .15 or $.015.
				However, only chickens that are in the broiler operation for a minimum of six
				weeks before the chickens are sold at broiler weight may be considered for
				purposes of computing the livestock production credit for these
				operations.
i. Reserved.
j. For purposes of this rule, "stocker cattle
				operations" are beef cattle operations where essentially all cattle in the
				operations are purchased as calves, raised in the operation at least two
				months, and the cattle are sold in a range from 700 to 900 pounds per head
				which is deemed to be the "stocker weight." Cattle in the operation that were
				sold at a weight of less than 700 pounds may not be counted for purposes of
				computing the livestock production credit refund for the operation. The
				livestock production credit refunds for these operations is computed on the
				basis of the number of cattle sold in the year at the stocker weight times the
				corn equivalent factor of 41.5 or $4.15 per head. Cattle sold in the tax year
				must be reported on a first-in, first-out basis unless records of the taxpayer
				can support a different order of sale of the animals. If this operation
				includes calves that were raised on the farm where they were born, these calves
				qualify for the corn equivalent factor of 41.5 or $4.15 per head if the calves
				were unsold at the end of the tax year and the calves were in the operation for
				a minimum of two months after the calves were weaned.
k. For purposes of this rule, "beef feedlot
				operations" include those beef cattle operations whereby the cattle are
				purchased as calves approximately 60 days from the time the calves were weaned
				or at a "stocker weight" and are sold at a feedlot weight of 900 pounds or more
				after a three-month period when the animals were on a high concentrate diet.
				Note that any animals which are purchased for the operation and are maintained
				in the herd for less than four months at the time of sale do not qualify the
				taxpayer for the livestock production credit refund of $7.50 per head of cattle
				sold. The livestock production credit refund for these operations is computed
				by multiplying the number of cattle sold in the year at the feedlot weight
				times the corn equivalent amount of 75 or $7.50 per animal. However, if any
				cattle in the operation are sold at the "stocker" weight of at least 700 pounds
				but less than 900 pounds, these animals may be counted for the livestock
				production credit refund at a corn equivalent amount of 41.5 or $4.15 per head
				of cattle sold to the extent the cattle were in the operation for two months or
				more at the time of sale. If any cattle in the operation in the tax year were
				sold at a weight of less than 700 pounds, the sales of these cattle may not be
				counted for the livestock production credit refund. Cattle sold in the tax year
				must be reported on a first-in, first-out basis unless records of the taxpayer
				can support a different order of sale of the cattle.
l. For purposes of this rule, "dairy cattle
				operations" includes those cattle operations where the primary purpose of the
				operations is the production of milk and milk products for human consumption.
The livestock production credit refund is computed by
				  multiplying the aggregate of the number of milking cows in lactation on
				  December 31 of the tax year and the number of cows bred to calve within 60 days
				  of December 31 and the number of breeding bulls in inventory on December 31
				  times the corn equivalent number of 350 or $35 per cow. However, cattle that
				  were purchased in the period between July 1 and December 31 of the calendar
				  year may not be considered for purposes of computation of the livestock
				  production credit for the dairy operation. In the case of a "dairy cattle
				  operation" which started or ceased production in the tax year, the livestock
				  production credit refund otherwise computed must be reduced by 8.33 percent for
				  each month in the tax year in which the livestock operation was not in
				  production. Heifers in the operation are not counted for purposes of the credit
				  until the animals are bred to calve.
m. For purposes of this rule, "ewe flock
				sheep operations" are sheep operations whereby the majority of the sheep and
				lambs sold from the operation were born and raised in the operation. The
				livestock production credit refunds for these operations are computed by
				multiplying the number of ewes and rams in inventory on December 31 of the tax
				year times the corn equivalent factor of 20.5 or $2.05 per ewe or ram. Any ewes
				or rams purchased within three months before December 31 of the tax year may
				not be considered for purposes of computing the livestock production credit for
				the operation. In addition, lambs sold in the tax year from the operation may
				be counted for the production credit refund at 4.1 corn equivalents or $.41 for
				each lamb sold to the extent the lambs were in the operation for a minimum of
				three months prior to the date of sale.
n. For purposes of this rule, "sheep feedlot
				operations" are sheep production operations where lambs born and raised in the
				operation are sold after the lambs have been in the operation for a minimum of
				three months prior to the date of sale. The livestock production credit refunds
				are computed by multiplying the number of lambs sold in the tax year times the
				corn equivalent factor of 4.1 or $.41.
o. For the purposes of this rule and for tax
				years beginning on or after January 1, 1998, "cow-calf operations" means those
				livestock cattle production operations that include bred cows, bred heifers,
				and breeding bulls. The livestock production credit refunds for cow-calf
				operations are determined only on the number of bred cows, bred heifers, and
				breeding bulls in inventory of the operations on December 31 of the tax year
				times the corn equivalent factor of 111.5 or $11.15. However, only those bred
				cows, bred heifers, and breeding bulls in inventory on December 31 which were
				also in inventory on July 1 of the same calendar year may be counted for
				purposes of computing the livestock production refunds.