41-159: IA 100E Capital Gain Deduction - Business 41-159 (2024)
Iowa · Iowa DOR · Used for tax years 2024
The 2024 IA 100E is used to report an Iowa capital gain deduction for a business installment sale that occurred before January 1, 2023. It records the gain received, details of the business and property sold, ownership, and material participation, and calculates the deduction to
Who files this form
Use the 2024 IA 100E to support an Iowa capital gain deduction for a qualifying installment sale of a business that occurred before January 1, 2023. This form is not for sales occurring on or after that date or for sales that are not installment sales.
- Include the completed form with your IA 1040.
- Complete a separate IA 100E for each business sale.
- Complete all parts each year of a qualifying installment sale.
- If spouses file separately, each spouse must complete an IA 100E for the deduction claimed based on that spouse’s ownership percentage.
The sale must also meet the form’s eligibility requirements. The Iowa Department of Revenue may review the deduction and request additional information.
What you'll need
Have these records and details available to complete the form:
- Installment sale information: first installment date, expected final installment date, total capital gain over the sale’s life, deductions claimed in prior years, and capital gain received in 2024.
- Business information: legal and DBA names, location address at the time of sale, activities, and organization type.
- Ownership records: acquisition and sale dates, holding period, ownership percentages, how the property was acquired, and names of owners and buyers.
- Asset information: descriptions and fair market values of the business assets. Include a separate statement if the fair market value of assets sold differs from their actual sale price.
- Material participation records, when applicable: documentation supporting the tests claimed, with detailed duties and the years those duties were performed. Test 4 and Test 7 require separate explanatory statements.
If your ownership period was less than 10 years, provide the explanation requested for how you met the holding-period requirement under IRC section 1223.
How to file
Complete all parts of IA 100E and include it with your IA 1040. Use a separate form for each business sale.
Enter the qualifying capital gain amount from Part I, line 2e on Part IV, line 4, and include that deduction on IA 1040 Schedule 1, line 16.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Including interest in capital gain. Do not include interest received when reporting installment sale capital gain in Part I.
- Using a PO Box for the business address. Enter the business’s location address at the time of sale.
- Assuming a stock or ownership-interest sale qualifies. Most do not. The form requires the sale to have been treated as a sale or acquisition of assets for federal income tax purposes.
- Ignoring the 90.0% test. If the share of the business sold on Part II, line 13 is below 90.0%, the form says the sale is not eligible.
- Including inventory value without checking the rule. Do not include merchandise or inventory value unless its sale generated a capital gain.
- Relying on records created long after the activity. The instructions warn that these records generally cannot establish material participation.
- Treating nonrecaptured losses as eligible gain. The instructions state that these losses are treated as ordinary income and are not eligible for the deduction.
Questions people ask
Can I use the 2024 IA 100E for a business sale that occurred in 2024?
No. This form is only for qualifying installment sales that occurred before January 1, 2023.
Do I need to complete the form again for later installments?
Yes. Complete all parts each year of a qualifying installment sale, and use a separate IA 100E for each business sale.
How do married owners answer the sole-owner question?
If you file jointly and you and your spouse are the only owners, check “Yes” in Part III, line 3. If you file separately and both spouses are owners, check “No.” Each spouse must complete a form and report their separate ownership percentage on line 4.
What if I sold the business to my children or grandchildren?
Part IV, line 1 asks whether all buyers are your lineal descendants. These include legally adopted children, biological children, stepchildren, grandchildren, and great-grandchildren. If the answer is “Yes,” the form directs you to skip to Part IV, line 4.
Can the Department ask for more information?
Yes. The Iowa Department of Revenue uses the form to verify eligibility and may request additional information.