PDF document

- 1 -

2020 IA 100C
Iowa Capital Gain Deduction – Real Property Used in a Non-Farm Business
tax.iowa.gov

Name(s) ___________________________________________ SSN ___________________________

Part I: Sale of Real Property Used in a Non-Farm Business
1. Business name ________________________________________________________________
2. Activity of the business __________________________________________________________
____________________________________________________________________________
3. Check the business organization type (check only one)
Partnership ☐ S Corporation ☐
Sole Proprietorship ☐ C Corporation ☐
LLC ☐ Other ☐(Explain: __________________________ )
4. Real property address or legal description (also include a general location description) ________
____________________________________________________________________________
____________________________________________________________________________
5. Ownership period
a. Date acquired ........................................... 5a. ______________
b. Date sold ................................................... 5b. ______________
6. Length of holding period ................................... Years 6a. ________ Months 6b. ____________
7. If the taxpayer did not own the property for at least 10 years, explain how the taxpayer held the
property for at least 10 years under IRC section 1223.
___________________________________________________________________________
____________________________________________________________________________

Part II: Details of Property Sold
1. Is the capital gain from a C corporation?
No ☐ ... Continue to Part II, line 3.
Yes ☐... Continue to Part II, line 2.

2. Was the capital gain recognized under IRC 331 or IRC 338?
No ☐ ... Sale is not eligible for Iowa capital gain deduction. Stop.
Yes ☐... Continue to Part II, line 3.

3. Are you the sole owner of this property? Married filers, see instructions.
No ☐ ... Continue to Part II, line 4.
Yes ☐... Enter 100% on Part II, line 4.

4. Enter taxpayer’s ownership percentage of the total property sold to three
decimal places (for example 65.2%) ................................................................. 4. _____________ %
5. Provide all other owner name(s) ____________________________________________________
______________________________________________________________________________
______________________________________________________________________________

41-157a (08/31/2020)

- 2 -

Enlarge image

2020 IA 100C, page 2

6. How did the taxpayer acquire the property? (check all that apply)
Inheritance ☐ Like-kind (IRC 1031) Exchange ☐
Purchase ☐ Involuntary Conversion ☐
Gift ☐ Other ☐(Explain): _________________________
7. Provide all purchaser name(s) ______________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
8. Is the capital gain from an installment sale?
No ☐ ... Continue to Part III, line 1.
Yes ☐... Enter the property installment sale information:

a. Start date ........................................................ 8a. _____________
b. End date ......................................................... 8b. _____________
c. Total capital gain to be received by taxpayer
over the life of the installment sale ................. 8c. $ ____________
d. Capital gain received by the taxpayer in tax year 2020 .................. 8d. $ _____________

Part III: Material Participation in a Business
1. Describe in detail the business use of this property ___________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
2. Was the property rented to a business in which you have or had an ownership interest?
No ☐ .. Continue to Part III, line 3.
Yes ☐.. Please explain your participation in the rental business, excluding tenant business
activity. Please note that participation associated with the tenant business does not
count towards participation in the rental business.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

3. Check the box for each applicable material participation test for which the taxpayer has
documentation. Check all that apply. If none of these apply, stop, the sale is not eligible for the
Iowa Capital Gain Deduction. Please note that participation associated with the tenant business
does not count towards participation in the rental business.
3a. Test 1: Taxpayer participated in the business for more than 500 hours in the year. ...... ☐

3b. Test 2: Taxpayer’s participation in the business constituted substantially all
participation in the business in the year. ........................................................................ ☐

41-157c (08/31/2020)

- 3 -

Enlarge image

2020 IA 100C, page 3

3c. Test 3: Taxpayer participated in the business more than 100 hours in the year,
and no other person participated in the business more. ................................................ ☐

3d. Test 4: Taxpayer participated in the business that sold the property and at least
one other business, excluding rental businesses, in the tax year, if for each year claimed:

• Taxpayer participated in all such businesses more than 500 hours total; and
• Taxpayer participated more than 100 hours in each such business; and
• Taxpayer’s participation in each such business does not satisfy any other test. ....... ☐

3e. Test 5: Taxpayer materially participated in the business for five of the 10
years immediately prior to the year claimed. ................................................................. ☐

3f. Test 6: Taxpayer materially participated in a personal service activity for at
least three years (may be outside the 10 years prior to the sale). .................................. ☐

3g. Test 7: Taxpayer participated in the business more than 100 hours in the
year and, based on all facts and circumstances, the participation was
regular, continuous, and substantial. ............................................................................. ☐

4. Describe in detail the daily, weekly, monthly, and annual duties of the taxpayer in the business
associated with this property during the 10 years immediately prior to the sale. Include the
years the taxpayer performed each duty. Please note that participation associated with the
tenant business does not count towards participation in the rental business.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
5. Iowa capital gain deduction. If the taxpayer meets the holding period
qualifications and material participation qualifications, enter the taxpayer’s
amount of capital gain deduction here and include on IA 1040 line 23. ....... 5. $ ______________

41-157c (08/31/2020)

- 4 -

Enlarge image

2020 IA 100C Instructions, page 4

Instructions for 2020 IA 100C – Iowa Capital Gain Deduction for the
Sale of Real Property Used in a Non-Farm Business
The Iowa capital gain deduction is subject to Line 4. Enter the address of the real property
review by the Iowa Department of Revenue. sold, or enter the legal description of the real
The Department will use this form to verify that property if no address is available. If providing
the taxpayer(s) qualifies for the deduction. The a legal description, also provide a general
Department may request additional information description of the property location in relation
if needed. to a major road or town.
This completed form must be included with the Line 5. Enter the acquisition date and sale
IA 1040 to support the Iowa capital gain date for the real property sold, as indicated in
deduction claimed for the sale of real property supporting documentation.
used in a non-farm business. Complete a
Line 6. Enter the length of the holding period in
separate IA 100C for each distinct property
years and months.
sale. The entire form must be completed each
year of a qualifying installment sale. Line 7. If the ownership period indicated in
Part I, line 5 is less than 10 years, explain why
For taxpayers filing separately on the same
the ownership period differs from the holding
return, each spouse must complete an IA 100C
period entered in Part I, line 6. Real property
for the Iowa capital gain deduction claimed
used in a non-farm business must be held, as
based on the spouse’s ownership percentage
defined using Internal Revenue Code (IRC)
in the property.
section 1223, for at least 10 years to qualify for
Flowcharts to assist in determining if a gain the Iowa capital gain deduction. For example,
qualifies are also available in the expanded the real property sold may have been acquired
instructions online. For more information on the in a like-kind exchange or an involuntary
Iowa capital gain deduction, see the conversion, and the holding period of the real
instructions below and Iowa Administrative property sold plus the previously-held property
Code rule 701—40.38. may be at least 10 years.
Part I: Sale of Real Property Used in a Non- Part II: Details of Property Sold
Farm Business
Line 1. Check the box to indicate whether the
Line 1. Enter the name(s) of the business that capital gain is from a C corporation.
used the real property sold. Include all legal
Line 2. Indicate whether the C corporation
names and trade names used. If the business
capital gain was from the liquidation of assets
was a sole proprietorship with no separate
which are recognized as a sale of assets
legal or trade name, enter the taxpayer’s
under IRC section 331 or from certain stock
name. Note: Do not enter the name(s) of any
sales which are treated as an acquisition of
lessee business that paid rent for the real
assets under IRC section 338.
property; instead, enter the name(s) of the
lessor business that received rent payments. Line 3. If married filing jointly and both spouses
are the only owners, check yes. If married filing
Line 2. Enter the primary activities of the
separately and both spouses are owners, check
business identified in Part I, line 1. Do not
no; each spouse must complete an IA 100C and
include the activities of any lessee businesses
indicate on line 3 the separate ownership
that rented the real property.
percentage of that spouse.
Line 3. Check the box to indicate how the
Line 4. Enter the taxpayer’s ownership
business identified in Part I, line 1 was
percentage of the property sold at the time of
organized on the date of the sale. If “Other,”
the sale to three decimal places (for example:
explain how the business was legally
50.0%; 33.3%). If not the sole owner, the
organized. “Rental” is not a legal business
taxpayer’s ownership percentage must be less
organization type.
than 100% and greater than 0%.

41-157d (08/31/2020)

- 5 -

Enlarge image

2020 IA 100C Instructions, page 5

Line 5. Enter the names of all persons and claimed, excluding rental businesses. Note:
entities that owned the property at the time of The taxpayer must participate in each such
sale. If the capital gain flowed through to the business more than 100 hours but no more
taxpayer from a partnership, S corporation, than 500 hours for each year claimed.
limited liability company (LLC), estate, or trust,
Test 5: If claiming this test, the taxpayer must
all owners of the entity must be reported.
be able to show that, for each year claimed,
Line 6. Check all boxes that indicate how the the taxpayer materially participated under any
taxpayer acquired the property. If “Other”, of Tests 1 to 4 for five of the 10 years prior to
explain how the taxpayer acquired the property. the year claimed. If claiming this test, the
taxpayer must also report having satisfied at
Line 7. Enter the names of all persons and
least one of Tests 1 to 4.
entities that purchased the property.
Test 6: If claiming this test, enter at least three
Line 8. Check the box to indicate whether the
years in Part III, line 3. These three years may
capital gain comes from an installment sale. If
be before the 10 years prior to the sale. A
“Yes,” enter the date of the first installment, the
personal service activity involves the
expected date of the final installment, the total
performance of personal services in the fields
capital gain generated by the sale, and the
of health, law, engineering, actuarial science,
capital gain the taxpayer received during tax
architecture, accounting, performing arts,
year 2020. Do not include any interest
consulting, or any other trade or business in
received.
which capital is not a material income-
Part III: Material Participation in a Business producing factor.
Line 1. Describe in detail how the business Test 7: If claiming this test, include a separate
identified in Part I, line 1 used the real property statement explaining how, based on all facts
sold. and circumstances, the taxpayer materially
Line 2. Check the box to indicate if the participated in the business each year.
property was rented to a company in which the Line 4. Enter the taxpayer’s daily, weekly,
taxpayer has or had an ownership interest. If monthly, and yearly activities in the business
yes, explain participation in the rental business, identified in Part I, line 1 during the 10 years
excluding participation associated with the prior to the sale (if Test 6 is claimed in Part III,
tenant business activity. line 2, enter the activities for the relevant three-
Lines 3a-3g. The taxpayer must satisfy at least year period). The activities must verify the
one of these seven tests for material taxpayer satisfies the test(s) claimed in Part III,
participation for each of the 10 years prior to line 2. Describe the activities in detail, and
the sale; however, the taxpayer may instead include the year(s) the taxpayer performed the
satisfy Test 6 for at least three years. Check activities. Do not include activities performed
the box for each test claimed. More than one by any person other than the taxpayer, such as
test may be claimed. For more information on tenants and employees. The taxpayer’s
the tests for material participation, see the activities must be supported by records.
instructions below and Iowa Administrative Records prepared long after the activity
Code rule 701—40.38(1)“e”. generally cannot establish material
participation.
Tests 2 and 3: If claiming either of these tests,
the taxpayer must consider the activities of all Line 5. Enter the amount of the taxpayer’s
persons who participated in the business, capital gain deduction claimed. Note that the
including employees of the business and non- deduction applies to the net capital gain from a
employees who helped maintain the property sale. Any nonrecaptured losses are treated as
or otherwise participated in the business. ordinary income and are not eligible for the
Iowa capital gain deduction. The eligibility of
Test 4: If claiming this test, include a separate the Iowa capital gain deduction reported here
statement explaining the taxpayer’s activities may be subject to further examination by the
and hours of participation in all businesses Department.

41-157e (08/31/2020)

PDF file checksum: 4025128417

(Plugin #1/9.12/13.0)