41-160: IA 100F Capital Gain Deduction - ESOP 41-160 (2024)
Iowa · Iowa DOR · Used for tax years 2024
The 2024 IA 100F supports an Iowa capital gain deduction for qualifying installment sales of employer securities to a qualified Iowa Employee Stock Ownership Plan (ESOP) that occurred before January 1, 2023. It reports sale details, ownership information, and capital gain receive
Who files this form
Use the 2024 IA 100F to support an Iowa capital gain deduction for a qualifying installment sale of employer securities to a qualified Iowa Employee Stock Ownership Plan (ESOP). This form is only for sales that occurred before January 1, 2023.
The sale must meet these requirements:
- The securities sold were Iowa corporation stock. An Iowa corporation has its commercial domicile in Iowa. An LLC does not count as an Iowa corporation for this deduction.
- Upon completion of the sale, the qualified Iowa ESOP owned at least 30% of all outstanding employer securities issued by the corporation.
Complete a separate IA 100F for each sale and complete all parts each year of a qualifying installment sale. Spouses filing separately must each complete a form for the deduction claimed based on their ownership percentage.
What you'll need
Have the following information ready to complete the form:
- Name(s) and Social Security number.
- Date of the first installment and expected date of the final installment.
- Total capital gain over the life of the installment sale, total capital gain deduction claimed in prior years, and capital gain received during tax year 2024, excluding interest.
- Name of the Iowa corporation and the qualifying Iowa ESOP.
- Whether the ESOP owned at least 30% of the corporation’s outstanding employer securities after the sale.
- Your ownership percentage at the time of sale and the names of all owners. If the gain flowed through an entity, all owners of that entity must be reported.
Include the completed IA 100F with your IA 1040. The Department of Revenue may request additional information to verify eligibility.
How to file
Complete all parts of IA 100F and include it with your IA 1040 to support the deduction. Use a separate IA 100F for each qualifying sale.
On Part III, line 6, enter 50% of the capital gain reported on Part I, line 2e. Include that deduction on IA 1040 Schedule 1, line 16.
Common mistakes
- Using this form for an ineligible sale. Stop if the sale occurred on or after January 1, 2023, was not an installment sale, did not involve Iowa corporation stock, or did not meet the ESOP’s 30% ownership requirement.
- Treating an LLC as an Iowa corporation. An LLC does not qualify as an Iowa corporation for this deduction.
- Including interest. Do not include interest received in the installment-sale capital gain amounts.
- Leaving out forms or parts. Include IA 100F with the IA 1040, use a separate form for each sale, and complete all parts each year of a qualifying installment sale.
- Reporting the wrong ownership percentage. Round to the nearest one tenth of one percent. If you are not the sole owner, the percentage must be greater than 0% and less than 100%.
- Omitting owners of a pass-through entity. If the gain flowed through a partnership, S corporation, LLC, estate, or trust, report all owners of the entity.
- Including ineligible amounts in the deduction. The deduction applies to net capital gain. The instructions state that nonrecaptured losses are treated as ordinary income and are not eligible.
Questions people ask
How much is the deduction?
The deduction is 50% of the taxpayer’s capital gain reported on Part I, line 2e. Enter it on Part III, line 6, and include it on IA 1040 Schedule 1, line 16. The deduction applies to net capital gain.
Do I need to complete this form every year?
Yes. Complete all parts each year of a qualifying installment sale. Use a separate IA 100F for each sale to a qualified Iowa ESOP.
How do married owners answer the sole-owner question?
If you file jointly and both spouses are the only owners, check “Yes” on Part III, line 2. If you file separately and both spouses are owners, check “No.” Each spouse must complete a separate IA 100F and report their own ownership percentage on line 3.
Can the Department ask for more information?
Yes. The Iowa Department of Revenue reviews the deduction and may request additional information to verify that you qualify.