41-159: IA 100E Capital Gain Deduction - Business 41-159 (2025)
Iowa · Iowa DOR · Used for tax years 2025
The 2025 IA 100E is used to calculate the Iowa capital gain deduction for a business installment sale that occurred before January 1, 2023. It reports the gain received during the current tax year, details of the business and property sold, and material participation information.
Who files this form
Use the 2025 IA 100E to support an Iowa capital gain deduction claimed 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 Iowa Individual Income Tax Return.
- Complete a separate IA 100E for each business sale.
- Complete all applicable parts each year of a qualifying installment sale, following the form’s skip instructions.
- If spouses file separately, each spouse must complete an IA 100E for the deduction claimed based on that spouse’s ownership percentage.
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 in 2025, excluding interest.
- Business details: Legal and DBA names, location address at the time of sale, business activities, and organization type.
- Ownership records: Documents supporting acquisition and sale dates, the holding period, your ownership percentage, how you acquired the property, and the names of other owners.
- Asset and buyer details: A description of assets sold, fair market values requested on the form, buyer names, and each buyer’s relationship to you.
- Material participation records, when required: Records supporting the tests claimed and a detailed description of your activities and the years you performed them.
Include a separate statement if the fair market value of assets sold differs from their actual sale price. Separate statements are also required when claiming material participation Test 4 or Test 7.
How to file
Complete IA 100E and include it with your IA 1040 Iowa Individual Income Tax Return. Use a separate IA 100E for each business sale.
Follow the eligibility questions and stop wherever the form says the sale is not eligible. If eligible, enter the capital gain deduction from Part I, line 2e on Part IV, line 4, and include it on IA 1040 Schedule 1, line 16.
The supplied text does not give a mailing address or e-filing instructions.
Common mistakes
- Including interest in installment capital gain. The instructions say not to include interest received.
- 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. The instructions warn that most such gains do not qualify. Follow the asset-sale treatment questions in Part II.
- Including inventory value without checking the rule. Do not include merchandise or inventory value unless its sale generated a capital gain.
- Leaving out owners of a pass-through entity. If the gain flowed through a partnership, S corporation, LLC, estate, or trust, report all owners of that entity.
- Relying on records created long after the work. The instructions warn that these records generally cannot establish material participation.
- Including nonrecaptured losses in the deduction. The instructions say these are treated as ordinary income and are not eligible for the deduction.
Questions people ask
Can I use the 2025 IA 100E for a business sale that happened in 2025?
No. This form is only for qualifying installment sales that occurred before January 1, 2023.
Do I need a new form each year I receive installment payments?
Yes. Complete the form each year of a qualifying installment sale, including all applicable parts and following the form’s skip instructions.
How much of the business must have been sold?
Part II, line 13 must be at least 90.0%. Calculate that percentage by dividing line 11 by line 12 and rounding to the nearest one tenth of one percent. If it is below 90.0%, the form says the sale is not eligible.
What if the buyers are my children or grandchildren?
Part IV asks whether all buyers are your lineal descendants. These include legally adopted children, biological children, stepchildren, grandchildren, and great-grandchildren. If yes, the form directs you to skip to Part IV, line 4.
Can the Iowa Department of Revenue ask for more information?
Yes. The deduction is subject to review, and the Department may request additional information to verify that you qualify.