2020 IA 1120S Income Tax Return for S Corporations 

Who Must File                                         shareholder  with the IA Schedule K-1 that 
Every S corporation doing business in Iowa,           identifies the jurisdiction and the  shareholder’s 
deriving income from sources  within Iowa, or         pro-rata share of the income, tax liability, and tax 
which is domiciled in Iowa, must file an Iowa S       paid in that jurisdiction. A shareholder will not be 
corporation return.  S corporations, interest         permitted to claim an out-of-state tax credit on the 
charge domestic international sales corporations,     IA 130 for that income tax unless the shareholder 
and foreign sales corporations should file an IA      receives that supplemental schedule from the S 
1120S. If the S corporation is a financial            corporation and submits a copy with the IA 1040. 
institution, it must also file an IA 1120F. Note: A 
                                                      If the S corporation is itself an owner of another 
non-Iowa  S corporation should not file only 
                                                      pass-through entity that paid entity-level income 
because one or more of its shareholders are Iowa 
                                                      tax to another state, local jurisdiction, or foreign 
residents or because the S corporation is 
                                                      country on income also subject to tax in Iowa, and 
registered with the Iowa Secretary of State. 
                                                      the S corporation receives a schedule from that 
When and Where to File                                pass-through entity identifying the jurisdiction and 
The IA 1120S is due on or before the last day of      the S corporation’s pro-rata share of the income, 
the fourth  month after the close of the  taxable     income tax liability, and income tax paid in that 
year. If you owe tax on built-in gains or passive     jurisdiction, the S corporation may in turn report 
investment income  per line 11, Part III,  an         that income tax to its  shareholders  on a 
automatic extension of up to six months to file will  supplemental schedule with the shareholder’s IA 
be granted only if at  least 90% of the  total tax    Schedule K-1. The supplemental schedule must 
liability is paid by the due date of the return. The  identify the jurisdiction and pass-through entity 
6 month extension also applies to all filers with     that paid the income tax, and the shareholder’s 
zero balance due.                                     pro-rata share of that income, income tax liability, 
Mail returns to: Corporation Return Processing,       and income tax paid. The S corporation may not 
Iowa Department of  Revenue, PO Box 10468,            report this  tax to its  shareholders  as described 
Des Moines IA 50306-0468.                             above if the S corporation does not receive the 
                                                      appropriate schedule from the other  pass-
Composite Filing                                      through entity. The S corporation should keep the 
An S corporation may file an Iowa composite           schedule it received from the other pass-through 
individual income tax return and pay any tax due      entity because the Department may request it of 
on behalf  of nonresident shareholders. See IA        the resident  shareholder  in order to prove the 
1040C for further information.                        credit claimed on  the IA 130. The  resident 
Iowa Resident Out-of-State Tax Credit                 shareholder is responsible for providing
2020 Iowa Acts, House File 2641, Division XVII,       documentation of the out-of-state tax paid by a 
modified the Iowa Out-of-State Tax Credit for tax     pass-through entity at the Department’s request. 
years beginning on or after January 1, 2020, to       Example: Partnership X earns $2,000 of income 
allow Iowa residents to claim the credit for certain  in State A, which imposes an entity-level income 
entity-level income taxes paid by a pass-through      tax directly on  the partnership. Partnership X 
entity (partnership, S corporation, fiduciary) to     pays $100 of income tax to State A. Partnership 
another state, local jurisdiction, or foreign country X is owned 50% by Y,  an S corporation,  and 
on income also subject to tax in Iowa, but only if    provides a schedule to Y indicating that Y’s pro-
the  shareholder  receives a supplemental             rata share of the income taxed by State  A is 
schedule from the S corporation reporting certain     $1,000, and Y’s pro-rata share of the income tax 
information. If the S corporation paid entity-level   imposed by and paid to State A is $50. Y is owned 
income tax (including composite return income         50% by individual  Z, a resident of Iowa. Y 
tax) to another state, local jurisdiction, or foreign provides a schedule to individual Z indicating that 
country on the distributive share of the              Z’s pro-rata share of Partnership X’s  income 
shareholder’s income also subject to tax in Iowa,     taxed by State A is $500, and Z’s pro-rata share 
provide a supplemental schedule  to the               of Partnership X’s  income tax imposed by and 

                                                                                 42-005a  (10/13/2020) 

paid to State A is $25. Individual Z may use the       the partnership level for partnerships subject to 
income and tax  amounts reported on that               the federal centralized partnership audit regime. 
schedule in completing Z’s IA 130 Iowa Out-of-         If  the S corporation was a direct or indirect 
State Tax Credit Schedule, provided that the           partner in a partnership that is audited by the IRS 
$500 of income identified on the schedule is also      resulting  in  adjustments that  affect Iowa tax 
reported on individual Z’s IA 1040 return and is       liability, the  S  corporation must follow  certain 
taxed by Iowa.                                         procedures and  timelines  for reporting those 
                                                       adjustments to Iowa, even if the S corporation or 
Fuel Tax Credit 
                                                       shareholders  were  not responsible for  filing a 
If the S corporation does not have a fuel tax 
                                                       federal amended return or paying  additional 
refund permit or has canceled its refund permit 
                                                       federal tax.  Similar  procedures and timelines 
within the first 30 days of the year, a Fuel Tax 
                                                       also apply  to an affected partnership and its 
Credit may be claimed by each shareholder on 
                                                       direct and indirect partners for amendments to 
his or her individual income tax return. If a Fuel 
                                                       returns requested on       a    centralized
Tax Credit is claimed, complete the IA 4136 and 
                                                       administrative adjustment request (AAR).  For 
include it with the IA 1120S. Each shareholder’s 
                                                       more  information, see the IA 102  Amended 
portion is recorded in Part III of the shareholder’s 
                                                       Return Schedule, the IA 103 Pass-through 
IA Schedule K-1. 
                                                       Election  to Pay Return and Voucher, and  the 
Other Tax Credits                                      instructions below for the IA 1120S, line 11. See 
Shareholders may qualify for various tax credits       also Iowa Code § 422.25A.  
passed through to them by the S corporation. The 
                                                       Iowa Pass-through Entity Audits 
S corporation must  complete the appropriate 
                                                       For tax year 2020 and forward, any audit of a 
form(s), where applicable, to compute these 
                                                       pass-through entity (partnership, S corporation, 
credits (for example: IA 128, IA 137) and include 
                                                       fiduciary) by the Department will be conducted 
them with the IA 1120S. The S corporation is not 
                                                       solely at  the pass-through entity  level through 
required  to  complete  an  IA  148  Tax Credits 
                                                       the  entity’s state representative. If  a pass-
Schedule.  Each  shareholder’s  portion  of  Iowa 
                                                       through entity is audited by  the Department 
tax  credits  must  be  recorded  in Part  III of the 
                                                       resulting in adjustments to Iowa tax liability, the 
shareholder’s IA Schedule K-1, including 
                                                       pass-through entity and its owners must follow 
certificate numbers. Shareholders must complete 
                                                       certain  procedures and timelines for reporting 
an IA 148 Tax Credits Schedule to claim credits, 
                                                       the adjustments to Iowa and paying any resulting 
reporting the S corporation in Part IV as the pass-
                                                       Iowa tax. For more information, see the IA 102 
through entity. 
                                                       Amended Return  Schedule, the IA  103 Pass-
Amended Returns                                        through Election  to  Pay Return and Voucher, 
If  an  amended  federal  return  was  filed,  the     and the instructions below for the IA 1120S, line 
taxpayer must file an amended Iowa return and          11. See also Iowa Code § 422.25B and 422.25C. 
include the IA 102 Amended Return Schedule.            These provisions may be applied to a tax year 
Use the IA 1120S to file and check the “Amended        prior to 2020 if the Department, the pass-through 
Return” box. The IA 1120S cannot be used for           entity, and  the pass-through entity owners 
sales tax or withholding credits/refunds.              agree. 

Federal Centralized Partnership           Audit        For Additional Information 
Regime                                                 Contact Taxpayer  Services  at 515-281-3114 or 
For tax years 2018 and forward, the IRS makes          800-367-3388  8 a.m.  -  4:30  p.m. CT  or  email 
audit adjustments and generally collects taxes at      idr@iowa.gov.

                                     Completing the Return

Fiscal  year or short period filers: Enter the         Part I: Corporation Name and Address 
beginning and ending dates here. Calendar year         Enter the business code number provided by the 
filers may leave this section blank.                   Internal Revenue Service (IRS) for the specific 
                                                       industry  group  corresponding  to  the S 

                                                                                  42-005b  (10/13/2020) 

corporation’s primary business activity available    dividends from foreign securities, from securities 
on the IRS website (irs.gov).                        of state and other political subdivisions, and from 
                                                     regulated investment companies  exempt  from 
Enter the Iowa county number of the commercial 
                                                     federal income tax. (Iowa Code § 422.35(2); Iowa 
domicile or principal place of business. Enter 00 
                                                     Admin Code Rs. 701-53.6) 
if  the  S  corporation does  not  have  a  physical 
location in Iowa. A list of county numbers can be    Line 3: Other Additions   – Enter the total amount 
found    on      the     Department’s   website      of other  additions to S corporation income 
(tax.iowa.gov).                                      required under Iowa law.  Include a schedule 
                                                     describing the type and amount of each 
Enter the state S corporation representative and 
                                                     addition. If the S corporation is also a member 
phone number. This is the person the S 
                                                     of  another pass-through entity,  enter  the  S 
corporation  is     appointing     as the    state
                                                     corporation’s  distributive  share of Iowa additions 
representative  for purposes of Iowa Code  § 
                                                     furnished  by the other  pass-through entity. 
422.25B. 
                                                     Consult the following forms and worksheets: 
Enter the total number of shareholders. If this is a •  IA 4562A—Section 179 expensing and bonus 
first or final return, check all boxes that apply to  depreciation adjustments 
the S corporation. If you checked “other,” enter a   •  IA 8824 Like-Kind Exchange Worksheet. For 
short one or two word description.                    tax years 2020 or later, this worksheet should 
                                                      only be  used to compute related party 
Part III: Modification of Corporation Income 
This schedule is to document those modifications      transactions and federal installment sale gains 
or  adjustments  to  federal  1120S  Schedule K       related to like-kind exchanges of personal 
income that are required by Iowa Code section         property completed prior to tax year 2020. 
                                                     •
422.35  and       chapter   53     of   the  Iowa       IA 101 Nonconformity Adjustments 
Administrative Code, in order to show the total      •  IA 163 Interest Expense Adjustment 
modified net income from the S corporation.          Line 5: 50% of Federal Tax –   Enter  50%  of 
                                                     federal  income  tax  paid  or  accrued,  including 
Conformity  with the Internal  Revenue Code 
(IRC)—  For tax years beginning on or  after         federal  tax  paid on  built-in  gains  or  passive 
January 1, 2020,  Iowa has adopted rolling           investment income. (Iowa Code § 422.35(4); Iowa 
conformity, meaning the state will automatically     Admin Code Rs. 701-53.12) 
conform to any changes made to the IRC, except       Line 6: Federal Securities Interest –   Enter the 
as specified by Iowa law.                            amount of interest and dividends from  federal 
                                                     securities as shown on the federal return. (Iowa 
Paycheck Protection Program  (PPP)—PPP 
                                                     Code  § 422.35(1); Iowa  Admin Code  Rs.  701-
loans  that are forgiven and properly excluded 
                                                     53.5) 
from gross income for federal purposes will also 
qualify for  exclusion from income for  Iowa tax     Line 7: Other Reductions   – Enter total amount of 
purposes.  For tax years beginning on or after       other reductions to S corporation income required 
January 1, 2020, Iowa fully conforms  to the         or allowed under  Iowa law.  Include a  schedule 
relevant     tax  provisions   of  the  federal      describing  the  type and amount of each 
Consolidated Appropriations Act, 2021 (P.L. 116-     reduction. If the S corporation is also a member 
260) including the provisions allowing certain       of another pass-through entity, enter on this line 
deductions for business expenses paid using          the S corporation’s distributive share of the Iowa 
these loans.                                         reductions  furnished by  the  other pass-through 
                                                     entity.  Examples of  Iowa reductions include the 
Line 1: Federal Net Income – Net together items 
                                                     following: 
of income or loss on the federal 1120S Schedule 
                                                     •  Federal Work Opportunity Tax Credit, Employer 
K  and  those  deductions  on  the  federal  1120S 
                                                      Social Security Credit for Tips, or Alcohol and 
Schedule K  that do  not  qualify  as  itemized 
                                                      Cellulosic  Biofuel Credit, to the extent such 
deductions. Enter that net figure on this line. 
                                                      credits increased federal S corporation income. 
Line 2:  Interest and Dividends Exempt from           (Iowa Code § 422.35(5), (7), (17); Iowa Admin 
Federal Tax – Enter the amount of interest and        Code Rs. 701-53.10, 53.20)
                                                                                        42-005c  (1/29/2021) 

•  Additional  deduction  for wages  paid to new            income tax on this income to the extent received 
   employees who qualify as  persons with                   from  business  carried  on  in  this  state  or from 
   disabilities or as ex-offenders.  (Iowa Code §           sources in this state. 
   422.35(6), (6A); Iowa  Admin Code Rs.  701-
                                                            The starting point for computing the Iowa tax on 
   53.11) 
                                                            built-in gains or passive investment income is the 
•  To the extent included in the S corporation’s            amount of built-in gains or passive investment 
   taxable income on line 1 of the IA 1120S, the            income subject  to  federal  tax  after  considering 
   amount of any  financial assistance  grant               the federal income limitation. 
   provided to an eligible small business by the 
                                                            For tax years beginning on or after January 1, 
   Iowa Economic Development Authority under 
                                                            2019, Iowa will use a 5-year recognition period for 
   the Iowa small business relief grant program 
                                                            the built-in gain tax (except for certain installment 
   created during calendar year 2020 to provide 
                                                            sales), which is the  same as  federal law as 
   financial   assistance     to eligible     small
                                                            modified by Public Law 114-113 (PATH Act). 
   businesses  economically  impacted by the 
   COVID-19 pandemic.                                       For tax years beginning on or after January 1, 
•  To the extent included in the S corporation’s            2016, but prior to January 1, 2019, Iowa was 
   taxable income on line 1 of the IA 1120S, the            generally not conformed to the federal PATH Act 
   amount of a  federal, state, or local grant              and therefore used a 10-year recognition period, 
   provided to  a  communications service                   so S corporations that realized a built-in gain after 
   provider during the tax year, if the grant was           the 5-year federal recognition period but within the 
   used to install broadband service in targeted            10-year Iowa recognition period were subject to 
   service areas at or above the download and               the built-in gains tax for Iowa purposes. 
   upload speeds.                                           For  tax  years  beginning  on  or  after  January  1, 
Also consult the following forms and worksheets:            2014,  no  adjustment  is  made  to the preceding 
•  IA 4562A—Section 179 expensing and bonus                 amounts for 50% of federal income tax  and/or 
   depreciation adjustments                                 Iowa  corporation income  tax  deducted  in 
•  IA 8824 Like-Kind Exchange Worksheet. For                computing  the  federal  built-in  gains  tax.  The 
   tax years 2020 or later, this worksheet should           allocation  and  apportionment  rules  of Iowa 
   only be  used to compute related party                   Administrative Code Chapter 701-54 apply if the 
   transactions and federal installment sale gains          S corporation is carrying on business within and 
   related to like-kind exchanges of personal               without the State of Iowa. 
   property completed prior to tax year 2020. 
                                                            Any net operating loss carryforward arising in a 
•  IA 101 Nonconformity Adjustments 
                                                            taxable year for which the corporation was a C 
•  IA 163 Interest Expense Adjustment 
                                                            corporation is allowed as a deduction against the 
•  IA    163A  Interest   Expense      Carryover            net recognized  built-in  gains  or  passive 
   Adjustment                                               investment  income  of  the  S  corporation  for the 
Line 9: Net Modifications –   Subtract line 8 from          taxable  year.  For  purposes  of  determining  the 
line  4.  This  can  result  in  either  a  positive  or  a amount of any such loss which may be carried to 
negative amount.                                            any of the 15 subsequent taxable years (20 years 
Line 11: Include on this line the S corporation’s           for  tax  years beginning  after  August  5,  1997) 
tax on built-in gains or passive  investment                after  the  year  of  the  net  operating loss,  the 
income, and the tax resulting from an election to           amount of the net recognized built-in  gain  or 
pay following an audit. See below for a description         passive investment income is treated as taxable 
of both.                                                    income.  The  amount  of  Iowa  taxable  built-in 
                                                            gains or passive investment income is subject to 
Tax on Built-in Gains or Passive Investment 
                                                            tax  at  the  same  rates  as  C corporation  income 
Income – S corporations that are subject to tax 
                                                            (6%, 8%, 10%, 12%). 
on  built-in  gains  under  section 1374  of  the 
Internal  Revenue  Code  or  passive  investment            Under $25,000, multiply by 6%. 
income  under  section  1375  of  the  Internal             $25,000 to $100,000, multiply by 8% and subtract 
Revenue Code are subject to Iowa corporation                $500.
                                                                                               42-005d  (10/02/2020) 

$100,000  to  $250,000,  multiply  by  10%  and        Part IV: Business Activity Ratio (BAR) 
subtract $2,500.                                       If an S corporation is doing business wholly 
                                                       within Iowa, skip lines 1-12 and enter 100.00 on 
Over  $250,000,  multiply  by  12%  and  subtract 
                                                       line 13. 
$7,500. 
                                                       If the S corporation is doing business both within 
Except for estimated and other advance tax 
                                                       and without Iowa, complete all applicable lines. 
payments, and any credit carryforward under 
Iowa Code section 422.33 arising in a taxable          Dividends are net of special deductions. 
year for  which the corporation was a C                Business  income means income which arises 
corporation, no credits are allowed against the        from  the S corporation’s unitary trade or 
built-in gains or passive  investment income tax.      business, a part  of  which is conducted within 
For more information on the Iowa built-in gains        Iowa. Business income must be apportioned to 
tax, visit tax.iowa.gov.  Pay  online  on the          Iowa by means of the BAR. Investment income 
Department’s  website (tax.iowa.gov),  or make         may at the taxpayer’s election be included in the 
checks payable to Iowa Department of Revenue.          computation of the BAR. The taxpayer will have 
                                                       elected whether to include investment income in 
Tax Resulting from Election to Pay Following 
                                                       the computation of the BAR for that and all 
Audit—Under certain circumstances,  an  S 
                                                       subsequent years. Consequently, that year and 
corporation may elect to pay on its shareholders’ 
                                                       for subsequent years total investment income 
behalf the Iowa tax, penalty, and interest resulting 
                                                       which is determined to be business income will 
from a federal centralized partnership audit or an 
                                                       be included in the numerator as follows  (see 
Iowa pass-through entity audit. The election  and 
                                                       Iowa  Admin Code Rs.  701-54.2(3) for 
the payment calculation are made on the IA 103 
                                                       clarification): 
Pass-through Election to Pay Return and Voucher. 
                                                       •  Accounts  receivable interest is to be 
If you are making an election to pay on the IA 103 
                                                             included in the numerator to the extent 
related to the  audit  adjustments reported on this 
                                                             allocable to Iowa. 
return, report on this line the total amount of tax, 
                                                       •  All investment income that is business 
penalty, and interest you calculated and paid with 
                                                             income, including capital gains or losses, 
your IA  103. When  an election  to pay on  your 
                                                             must be included in the computation of the 
shareholders’ behalf is made,  do not  issue 
                                                             BAR if the investment income is derived 
amended  IA  1120S Schedule K-1s to your 
                                                             from intangible property that has become 
shareholders, but instead notify the shareholder of 
                                                             an integral part of some business activity 
all of the following in a separate letter or schedule: 
                                                             occurring regularly in or outside of Iowa. 
(1) identify the shareholder’s distributive share of 
                                                       •  Capital and ordinary gains or losses or 
the audit  adjustments,  (2) notify the shareholder 
                                                             rent and royalties from real property must 
that you  have  elected to  pay the resulting tax, 
                                                             be included in the numerator if the 
penalty, and interest on their behalf, and (3) notify 
                                                             property is located in Iowa. 
the shareholder that the shareholder shall not claim 
                                                       •
any deduction, credit, or refund for the amount paid         Other     investment   income     including
by the S corporation, and the shareholder may not            interest,  net dividends, capital and 
include the amount paid on the shareholder’s Iowa            ordinary gains, and royalties from 
                                                             intangibles  must be included in the 
return in any manner. 
                                                             numerator if the commercial domicile is in 
Refund Requests                                              Iowa. 
If a refund is due because estimated payments 
                                                       For a taxpayer first  apportioning income, the 
exceed the tax due, you must request a refund by 
                                                       inclusion of investment income determined to be 
separate letter. Send to Iowa Department of 
                                                       business income in the BAR of that year’s initial 
Revenue, PO Box 10456, Des Moines IA 50306-
                                                       return will  be binding on all subsequent years’ 
0456.
                                                       returns. The election to include business 
                                                       investment income in the BAR can later be 
                                                       changed only with permission of the Director of 
                                                       the Iowa Department of Revenue. 

                                                                                          42-005e  (10/13/2020) 

Part V: Information from Prior Period Iowa         the federal Schedule K-1) must be included with 
Return                                             this form. 
Enter the requested information from  the Iowa 
                                                   Signature 
1120S return for previous tax period. 
                                                   The corporation return must be signed by the 
Federal S Corporation Return                       president or other duly authorized officer. The 
A copy of the federal corporation return, 1120S,   return will not be considered valid unless this 
and all other supporting schedules, (not including requirement is met. 
                          Instructions for IA 1120S Schedule K-1

Shareholder’s Share of Income &                          change  or  an Iowa pass-through entity 
Deductions, & Modifications                              audit change and is electing to pay with an 
The Iowa 1120S Schedule K-1 shows each                   IA 103, do not reissue the K-1. Instead, 
shareholder’s share of modifications, all-source         the S corporation will need to send a letter 
income, Iowa apportioned income, and Iowa tax            to the  shareholder as described on the 
credits. You must provide complete information           instructions above for the IA 1120S, line 
for each shareholder in an acceptable format. IA         11. 
1120S and IA 1120S Schedule K-1 are provided       •  Check the appropriate box for the 
on our website.                                          shareholder’s entity type. 
                                                   •
Individual  shareholders: When completing  your       Enter      shareholder’s percentage          of
individual IA 1040, report the amounts shown on          ownership in the S corporation. Carry this 
the federal Schedule K-1. These amounts should           percentage to 6 decimal places if needed. 
match the IA Schedule K-1, column (a) items. In    •  Enter the S corporation’s Iowa receipts, as 
addition, individual  nonresident shareholders           reported on page 1, Part IV,  line 12, 
must use the apportioned amounts from column             column A of the IA 1120S*. 
(c)  when completing  the  IA  126, “Iowa          •  Enter the S corporation’s total receipts, as 
Nonresident and Part-year Resident Credit.” If           reported on page 1, Part IV,  line 12, 
the S corporation does business within and               column B of the IA 1120S*. 
without Iowa, the BAR in column (b) must be              * If BAR is 100%, enter  the Gross 
provided to each Iowa resident shareholder for           Receipts from line 1a, page 1 of the 
purposes  of computing the  S Corporation                federal 1120S. 
Apportionment Credit, IA 134, if they elect that   •  Enter the S corporation’s BAR from page 
option.                                                  1, Part IV, line 13 of the IA 1120S. 
                                                   •  Answer yes or no to the question of 
Part I: Corporation Information 
                                                         whether the S corporation is including 
Enter name and Federal Employer Identification 
                                                         additional attachments with the K-1. 
Number (FEIN)  of  S corporation on each IA 
Schedule K-1 form.                                 Part II: Shareholder’s Pro Rata Share Items 
                                                   Column (a), lines 1 through 14(f): 
Shareholder Information 
                                                   Enter the same amounts as shown on the federal 
 •  Enter name,  Social Security Number            Schedule K-1.  
  (SSN), or FEIN, and address of each 
                                                   Resident  shareholders complete column (a) 
  shareholder. In the case of a disregarded 
                                                   only. 
  entity, enter the applicable information of 
  the beneficial owner.                            Column (b), lines 1 through 14(f): 
 •  Check either the resident shareholder or       For nonresident shareholders only, enter the S 
  nonresident shareholder box, based on            corporation’s single factor Iowa Business Activity 
  the shareholder’s current address.               Ratio (BAR).  The BAR in column (b) must be 
 •  Check the amended box if the Schedule          applied equally to each line item in column (a); 
  K-1 is part of an amended 1120S return. If       no method of separate accounting is allowed. 
  the S corporation is  amending for a             Please contact the  Department  for more 
  federal centralized partnership audit            information on the  BAR for  investment S 
                                                   corporations. 
                                                                                    42-005f  (10/13/2020) 

Column (c), lines 1 through 14(f):                    Franchise Tax Credit 
For nonresident shareholders only, multiply the       If  the shareholder  is eligible to claim the 
amounts in column (a) by the percentage in            Franchise  Tax  Credit, you must include the 
column (b) and enter the product in column (c)        following information with the IA Schedule K-1 to 
for each line item. This  is the amount               allow shareholders to complete an IA 147. 
apportionable to Iowa.  Nonresidents:  These          •  The modified federal income from Part III, 
figures may be reportable on your IA 126               Line 10 of the 1120S 
nonresident schedule.                                 •  The financial institution’s total tax liability, 
Line 11(a): Enter the same amount as shown on          line 15 of the 1120F 
the federal Schedule K-1.                             •  The financial institution’s tax credit claims, 
                                                       line 16 of the 1120F 
Line 14(f): Include a schedule showing the name 
                                                      •
and amount for each item reported on line 14(f).         The shareholder’s ownership percentage 
Line 15(a): Enter the shareholder’s all-source        For all other credits, enter the tax credit name in 
modifications. This figure is equal to the S          the first column. For awarded credits, enter your 
corporation’s all-source modifications multiplied     certificate number in the second column. Enter 
by the shareholder’s ownership percentage.            the shareholder’s share of the current year 
                                                      amount in the third column. 
Individual shareholders: If this figure is a positive 
amount, report it on line 14 of your IA 1040. If this 
figure is a negative amount, report it on line 24 of 
your IA 1040. 
Line 15(b): For nonresident shareholders only, 
enter the Iowa BAR. 
Line 15(c): For nonresident shareholders only, 
multiply line 15(a) by the percentage on line 
15(b) and enter here. Nonresident shareholders: 
If this entry is a positive amount, also enter it on 
line 14 of your IA 126. If this entry is a negative 
amount, enter it on line 24 of your IA 126. 
Part III: Shareholder’s Portion of IA 
Credits/Withholding 
If the S corporation submitted Iowa withholding 
for the shareholder, enter it in the current year 
amount column on the first line of the schedule. 
If none, enter zero. 
If paying a  nonresident an Iowa nonwage 
payment, Iowa income tax must be withheld at a 
rate of 5% of  the  payment amount. The S 
corporation must  register with the Iowa 
Department of Revenue for withholding tax using 
the Iowa Business Tax  Registration  form. 
Nonresidents who prefer to  make an Iowa 
estimated payment  instead must file an Iowa 
Nonresident   Request       for  Release     from
Withholding form and submit the form with their 
first estimated payment prior to April 30, 2021. If 
an S corporation is filing an IA 1040C return on 
behalf of its nonresident shareholders no 
withholding or estimated payments are required. 

                                                                                  42-005g (10/13/2020)