Iowa Administrative Code › Agency 701 - Revenue Department › Title VII - Franchise Tax › Chapter 601 - Filing Returns, Payment of Tax, Penalty and Interest, and Tax Credits › Rule 701-601.5 - 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, that
				is a financial institution, for its first year of existence, that 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 that is a financial institution may apply any
				alternative minimum tax credit carryforward to the extent of its regular Iowa
				franchise 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
				  422.63. The minimum tax rate is
				  60 percent of the maximum franchise tax rate rounded to the nearest one-tenth
				  of 1 percent or 3 percent. Minimum taxable income is computed as
				  follows:
State taxable income as adjusted by Iowa Code
							 sections 422.35 and
							 422.61(4)
Plus:
Tax preference items, adjustments and losses added
							 back
Less:
Allocable income including allocable preference
							 items
Subtotal
Times:
Apportionment percentage
Result
Plus:
Income allocable to Iowa including allocable
							 preference items
Less:
Iowa alternative tax net operating loss deduction
							 $40,000 exemption amount
Equals:
Iowa alternative minimum taxable income
For taxable 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), (c)(1), (d), and (g) of the Internal Revenue Code used to
				  compute federal alternative minimum taxable income computed without adjustments
				  and the $40,000 exemption. The state alternative tax net operating loss
				  deduction shall be substituted for the amounts in Section 56(g)(1)(B) of the
				  Internal Revenue Code. 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. 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.