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 701-501.28 - High Quality Job Creation Program

Current through Register Vol. 47, No. 3, July 24, 2024
Effective for tax periods ending on or after July 1, 2005,
				  for programs approved on or after July 1, 2005, but before July 1, 2009, a
				  business which qualifies under the high quality job creation program is
				  eligible to receive tax credits. The high quality job creation program replaces
				  the new jobs and income program and the new capital investment program. An
				  eligible business under the high quality job creation program must be approved
				  by the Iowa department of economic development and meet the qualifications of
				  Iowa Code section 15.329. The administrative rules
				  for the high quality job creation program for the Iowa department of economic
				  development may be found at 261-Chapter 68.
The high quality job creation program was repealed on July 1,
				  2009, and has been replaced with the high quality jobs program. See rule
				  701-52.40 (15) for information
				  on the investment tax credit and additional research activities credit under
				  the high quality jobs program. Any investment tax credit and additional
				  research activities credit earned by businesses approved under the high quality
				  job creation program prior to July 1, 2009, remains valid and can be claimed on
				  tax returns filed after July 1, 2009.
(1)
Research activities
				credit.
An eligible business approved under the high quality job
				creation program is eligible for an additional research activities credit as
				subrule described in 52.7(4).
Research activities allowable for the Iowa research
				  activities credit include expenses related to the development and deployment of
				  innovative renewable energy generation components manufactured or assembled in
				  Iowa; such expenses related to the development and deployment of innovative
				  renewable energy generation components are not eligible for the federal credit
				  for increasing research activities. For purposes of this subrule, innovative
				  renewable energy generation components do not include components with more than
				  200 megawatts in installed effective nameplate capacity. The research
				  activities credit related to renewable energy generation components under the
				  high quality job creation program and the enterprise zone program shall not
				  exceed $1 million in the aggregate.
These expenses related to the development and deployment of
				  innovative renewable energy generation components are applicable only to the
				  additional research activities credit set forth in this subrule and are not
				  applicable to the research activities credit set forth in subrule 52.7(3). The
				  research activities credit is subject to the threshold amounts of qualifying
				  investment set forth in Iowa department of economic development 261-subrule
				  68.4(7).
(2)
Investment tax credit.
a.
General rule.
An eligible business can claim an investment tax
				credit equal to a percentage of the new investment directly related to new jobs
				created by the location or expansion of an eligible business. The percentage is
				equal to the amount provided in Iowa department of economic development
				261-subrule 68.4(7). New investment directly related to new jobs created by the
				location or expansion of an eligible business includes the following:
(1) The cost of machinery and equipment, as
				defined in Iowa Code section
				427A.1(1),
				paragraphs
"e"
and
"j,"
purchased for use in
				the operation of the eligible business. The purchase price shall be depreciated
				in accordance with generally accepted accounting principles.
(2) The purchase price of real property and
				any buildings and structures located on the real property.
(3) The cost of improvements made to real
				property which is used in the operation of the eligible business.
In addition, certain lease payments made by eligible
				  businesses to a third-party developer will be considered to be new investment
				  for purposes of computing the investment tax credit. The eligible business
				  shall enter into a lease agreement with the third-party developer for a minimum
				  of five years. The investment tax credit is based on the annual base rent paid
				  to a third-party developer by the eligible business for a period not to exceed
				  ten years. The total costs of the annual base rent payments for the ten-year
				  period cannot exceed the cost of the land and the third-party developer's cost
				  to build or renovate the building used by the eligible business. The annual
				  base rent is defined as the total lease payment less taxes, insurance and
				  operating and maintenance expenses.
The investment tax credit can be claimed in the tax year in
				  which the qualifying assets are placed in service. The investment tax credit
				  will be amortized over a five-year period. Any credit in excess of the tax
				  liability for the tax period may be carried forward seven years or until used,
				  whichever is the earlier.
EXAMPLE: An eligible business which files tax returns on a
				  calendar-year basis earned $100,000 of investment tax credits for new
				  investment made in 2006. The business can claim $20,000 of investment tax
				  credits for each of the years from 2006 through 2010. The $20,000 of investment
				  tax credit that can be claimed in 2006 can be carried forward to the 2007-2013
				  tax years if the entire credit cannot be claimed on the 2006 return. Similarly,
				  the $20,000 investment tax credit that can be claimed in 2007 can be carried
				  forward to the 2008-2014 tax years if the entire credit cannot be claimed on
				  the 2007 return.
If the business is a partnership, S corporation, limited
				  liability company, cooperative organized under Iowa Code chapter 501 and filing
				  as a partnership for federal tax purposes, or estate or trust electing to have
				  the income taxed directly to an individual, an individual may claim the credit.
				  The amount of the credit claimed by an individual must be based on the
				  individual's pro rata share of the individual's earnings of the partnership, S
				  corporation, limited liability company, cooperative organized under Iowa Code
				  chapter 501 and filing as a partnership for federal tax purposes, or estate or
				  trust electing to have the income taxed directly to an individual.
EXAMPLE: An eligible business which files tax returns on a
				  calendar-year basis was awarded $500,000 in investment tax credits in December
				  2008. The credits were amortized over a five-year period, with $100,000 of
				  investment tax credits being available for the fiscal years ending June 30,
				  2009, through June 30, 2013. This equates to the investment tax credit being
				  available for the 2008-2012 calendar year returns since the due date of these
				  returns range from April 30, 2009, through April 30, 2013, which falls within
				  the fiscal years ending June 30, 2009, through June 30, 2013. The eligible
				  business placed the qualifying assets in service during the 2010 calendar year.
				  The eligible business can claim $300,000 of investment tax credit for 2010,
				  $100,000 of investment tax credit for 2011 and $100,000 of investment tax
				  credit for 2012. Of the $300,000 claimed for the 2010 tax year, $100,000 can be
				  carried forward until the 2015 tax year, $100,000 can be carried forward to the
				  2016 tax year, and $100,000 can be carried forward to the 2017 tax year. The
				  seven-year carryforward period is determined by the amortization schedule, not
				  the initial year in which the investment tax credit can be claimed on an Iowa
				  tax return.