41-157: IA 100C Capital Gain Deduction - Business Property 41-157 (2025)
Iowa · Iowa DOR · Used for tax years 2025
The 2025 IA 100C documents the Iowa capital gain deduction for real property used in a non-farm business. It reports installment sale gains, property ownership and holding periods, business use, and material participation, and lists the deduction to include on IA 1040 Schedule 1.
Who files this form
Use the 2025 IA 100C to support an Iowa capital gain deduction claimed for an eligible installment sale of real property used in a non-farm business. The installment sale must have occurred before January 1, 2023.
- Include the completed form with your IA 1040 Iowa Individual Income Tax Return.
- Complete a separate IA 100C for each distinct property sale and complete the entire form each year of a qualifying installment sale.
- If spouses file separately, each spouse must complete a form for the deduction claimed based on that spouse’s ownership percentage.
The property must have been held for at least 10 years under IRC section 1223. You must also satisfy at least one of the listed material participation tests for each of the 10 years before the sale, or satisfy Test 6 for at least three years.
What you'll need
Have the following information and supporting records available:
- Installment sale details: First installment date, expected final installment date, total capital gain over the sale’s life, deductions claimed in prior years, and capital gain received during 2025. Do not include interest.
- Business and property details: Business names, activities, legal organization type, and the property’s address or legal description and location.
- Ownership records: Supporting documentation showing acquisition and sale dates, the holding period, your ownership percentage, how you acquired the property, and all owner and buyer names.
- Participation records: Records supporting your activities, the years you performed them, and the material participation tests you claim.
If claiming Test 4, include a separate statement explaining your activities and participation hours in all businesses claimed, excluding rental businesses. If claiming Test 7, include a separate statement explaining how you materially participated each year based on all facts and circumstances.
The Department may request additional information.
How to file
Complete all four parts of IA 100C: sale details, business property information, property ownership details, and material participation information. Follow the form’s yes/no directions and stop if a response makes the sale ineligible.
Enter the deduction from Part I, line 2e on Part IV, line 5, and include it on IA 1040 Schedule 1, line 16.
Include the completed IA 100C with your IA 1040 Iowa Individual Income Tax Return. Use a separate form for each distinct property sale.
The supplied text does not provide a mailing address or e-file directions.
Common mistakes
- Using this form for an ineligible sale: IA 100C is only for installment sales occurring before January 1, 2023.
- Including interest: Do not include interest received in the installment sale capital gain amounts.
- Listing the tenant’s business instead of the rental business: For rental property, report the lessor business that received rent, not the lessee business that paid it. Do not include the lessee’s activities in Part II.
- Calling the organization type “rental”: Rental is not a legal business organization type.
- Counting the wrong participation: Tenant business activity does not count toward participation in the rental business. Do not include activities performed by tenants, employees, or other people. For inherited property, the decedent’s activities before death do not count toward your material participation.
- Relying on records created much later: Records prepared long after the activity generally cannot establish material participation.
- Claiming Test 5 without another required test: You must also report satisfying at least one of Tests 1 through 4.
Questions people ask
Can I use IA 100C for a sale that occurred on or after January 1, 2023?
No. The 2025 IA 100C is only for installment sales occurring before January 1, 2023.
Do I need to complete the form again each year?
Yes. Complete the entire form each year of a qualifying installment sale. Use a separate IA 100C for each distinct property sale.
How do married owners answer the sole-owner question?
If filing jointly and both spouses are the only owners, check “Yes” on Part III, line 3. If filing separately and both spouses are owners, check “No.” Each spouse must complete an IA 100C and report their separate ownership percentage on line 4.
What if I owned the property for less than 10 years?
Explain in Part II, line 7 how your holding period qualifies under IRC section 1223. The instructions give examples involving like-kind exchanges and involuntary conversions where the holding period includes previously held property. The qualifying holding period must be at least 10 years.
Can capital gain from a C corporation qualify?
The form requires the gain to have been recognized under IRC section 331 or 338. If it was not, the form directs you to stop because the sale is not eligible. If it was, continue through the remaining eligibility questions.