41-185: IA 100H Capital Gain Deduction - Nonretired Farmer 41-185 (2024)
Iowa · Iowa DOR · Used for tax years 2024
The 2024 IA 100H is used to claim Iowa’s capital gain deduction for the sale of real property used in a farming business. It reports property and sale details, ownership, farming participation, and the deduction amount to include on IA 1040 Schedule 1.
Who files this form
Use the 2024 IA 100H if you want to claim Iowa’s capital gain deduction for the sale of real property used in a farming business. Include the completed form with your IA 1040 to support the deduction.
- Use IA 100H only for sales occurring on or after January 1, 2023.
- For installments from sales that began before January 1, 2023, use IA 100B instead.
- Retired farmers making the lifetime election to exclude qualifying capital gains should use IA 100G instead.
- Capital gain from a C corporation is not eligible for this deduction.
Complete a separate IA 100H for each property sale. For a qualifying installment sale, complete the entire form each year.
What you'll need
Have these records and details available to complete the applicable parts of the form:
- The property address or legal description, county, location description, and total acres sold.
- Supporting documents showing the acquisition and sale dates, plus an explanation of the holding period if required.
- Records for the 10 years immediately before the sale showing land managers, whether they were paid, acreage by use, and the specific federal forms or schedules used to report income from the land.
- Records supporting your farming activities and the material participation tests you claim.
- Your ownership percentage, all owners’ and buyers’ names, buyers’ relationships to you, and how you acquired the property.
- For an installment sale, the first and expected final installment dates, total capital gain, and capital gain received in the current tax year.
If claiming Part II, line 6d or 6f, include the separate explanatory statement required for that test.
How to file
Include the completed IA 100H with your IA 1040. Use a separate IA 100H for each property sale.
Enter your capital gain deduction in Part III, line 7, and include it on IA 1040 Schedule 1, line 16.
For each year of a qualifying installment sale, complete the entire IA 100H, including all parts. The Department may request additional information to verify eligibility.
Common mistakes
- Acreage totals do not match. The acreage categories in Part II must add up to the total acres sold in Part I, line 2.
- Assuming cash rent establishes material participation. A farmer renting property for cash generally is not considered to materially participate. The landlord must show material participation.
- Relying on records created much later. Farming activities must be supported by records. Records prepared long after the activity are generally not acceptable.
- Counting a deceased owner’s activities. For inherited property, the decedent’s activities before death do not count toward your material participation.
- Including interest in installment-sale capital gain. Do not include interest received in Part III, line 6.
- Claiming amounts beyond eligible net capital gain. The deduction applies to net capital gain from a sale. Nonrecaptured losses treated as ordinary income are not eligible.
Questions people ask
What if I sold the property to a relative?
Check “Yes” in Part I, line 3, and continue to Part III, line 1. The instructions define qualifying relatives to include certain relatives by blood or marriage, lineal descendants, and entities in which a qualifying relative has an ownership or beneficiary interest.
Can the holding period differ from the time I owned the property?
Yes. Part I, line 6, asks for an explanation if you owned the property for less than 10 years but held it for at least 10 years under IRC section 1223. The instructions give like-kind exchanges and involuntary conversions as examples where a previously held property’s holding period may count.
How do married owners report their ownership percentage?
If filing jointly and both spouses are the only owners, enter 100%. If filing separately and both spouses are owners, each spouse must complete an IA 100H showing that spouse’s separate ownership percentage.
Can I claim more than one material participation test?
Yes. Check each applicable test for which you have documentation. The instructions for Part II, line 6, require at least one of its six tests to be met for each of the 10 years before the sale.