41-147: IA 147 Franchise Tax Credit 41-147 (2024)
Iowa · Iowa DOR · Used for tax years 2024
The 2024 IA 147 calculates the Iowa Franchise Tax Credit for qualifying shareholders of a financial institution taxed as an S corporation. It compares the income tax on the shareholder’s share of the institution’s income with the shareholder’s share of its net franchise tax liabi
Who files this form
IA 147 is used to claim the Iowa Franchise Tax Credit. You may qualify if you are a shareholder of a financial institution, as defined in Internal Revenue Code section 581, that elects federal S corporation treatment so its income is taxed directly to shareholders.
Eligible shareholders may be:
- Individuals filing IA 1040.
- Fiduciaries filing IA 1041.
- Entities subject to Iowa corporation income tax filing IA 1120.
To claim the credit, the financial institution must provide the required information from its 1120F and 1120S with your IA 1120S Schedule K-1. File a separate IA 147 for each Franchise Tax Credit received.
What you'll need
Have these forms and details ready:
- Your 2024 IA 1040, IA 1041, or IA 1120.
- Your IA 1120S Schedule K-1 with the required information from the financial institution’s 1120F and 1120S, including IA 1120S, Part 4, line 21, and IA 1120F, line 14.
- Your ownership percentage in the S corporation.
- Your name and SSN or FEIN, plus the financial institution’s name and FEIN.
- The appropriate 2024 tax rate schedule or percentage for your return type.
- The 2024 IA 148 Tax Credits Schedule, which must be completed.
How to file
Include IA 147 with your IA 1040, IA 1041, or IA 1120.
On the 2024 IA 148 Tax Credits Schedule:
- Enter the credit from IA 147, line 14, in Part I, column D.
- Use tax credit code 04 in column A and leave column B blank.
- Report each Franchise Tax Credit on a separate line in Part I, and complete a separate IA 147 for each credit.
- Include the financial institution’s name in Part IV, column M, and its FEIN in column N.
- Enter any credit exceeding your tax liability as expired in column G.
Common mistakes
- Claiming the credit without the required information. You are not eligible if the financial institution did not provide the required information with your IA 1120S Schedule K-1.
- Skipping IA 148. The Tax Credits Schedule must be completed.
- Carrying forward excess credit. Credit exceeding your tax liability cannot be carried forward. Enter it as expired in IA 148, column G.
- Combining multiple credits. File a separate IA 147 for each Franchise Tax Credit and report each on a separate line in IA 148, Part I.
- Leaving IA 147 out of your return. Include it with your IA 1040, IA 1041, or IA 1120.
Questions people ask
How much credit can I claim?
The credit is the smaller of the income tax you owe on your share of the financial institution’s income or your share of the franchise tax paid by the institution. Enter the smaller of IA 147, line 12 or line 13, on line 14.
How do I calculate my share of the institution’s income?
Multiply your ownership percentage by the institution’s total income as modified for Iowa tax purposes, reported on IA 1120S, Part 4, line 21. Enter the result on IA 147, line 2.
What if the institution did not provide the required information with my Schedule K-1?
You are not eligible to claim the Franchise Tax Credit if the required information was not provided with your IA 1120S Schedule K-1.
Can I carry unused credit forward?
No. Any credit exceeding your tax liability cannot be carried forward and must be entered as expired in column G of IA 148.