41-186: IA 100J Capital Gain Deduction - Capital Stock Election 41-186 (2024)
Iowa · Iowa DOR · Used for tax years 2024
The 2024 IA 100J documents the Iowa capital stock election and calculates the capital gain deduction for sales or exchanges of qualifying stock. It reports stock sales, employment and ownership details, and a deduction equal to 66% of the net capital gain.
Who files this form
Use the 2024 IA 100J to support an Iowa capital gain deduction claimed for sales or exchanges of qualifying capital stock. Include the completed form with your IA 1040 and complete the entire form each year you have a qualifying sale.
This form is for taxpayers making, or who have previously made, the single, lifetime capital stock election. If you previously made the election, the stock must be issued by the same corporation you elected.
The stock must have been acquired in one of the ways listed on line 9:
- By the employee-owner from or through the employer on account of employment.
- Through a gift from the taxpayer’s spouse during the spouse’s lifetime.
- From a trust established by the taxpayer’s spouse for the taxpayer’s benefit.
The form also checks employment, corporate and shareholder requirements. For the required 10-year period before the initial sale or exchange, the issuing corporation must have employed people in Iowa, had at least five shareholders, and had at least two shareholders or shareholder groups who are not related.
If both spouses independently qualify, each must complete a separate IA 100J for their respective sales or exchanges.
What you'll need
Have the following information ready to complete the form:
- Your name and Social Security number.
- The issuing corporation’s name as it existed when the first share was issued, and your prior election information, if applicable.
- The corporation or corporations where the employee-owner worked when the stock was acquired, plus each separate term of employment.
- The date the first share was acquired on account of employment and the date of the initial sale or exchange.
- How you acquired the stock. If it came through your spouse or a spouse-established trust, you will also need your spouse’s name, Social Security number and the requested marriage information.
- Information confirming the corporation’s Iowa employment and shareholder history. You may need to contact the corporation to verify it.
- A description, sale or disposition date, and gain or loss for each sale or exchange during 2024.
The Department may request additional information when reviewing the deduction.
How to file
Include the completed IA 100J with your IA 1040. Complete the entire form, following its directions about which lines to complete and when to stop.
On line 15, use a separate row for each sale or exchange of the elected stock during 2024. Total Column C, then multiply that total by 66% (.66). Enter the deduction on line 16 and include it on IA 1040 Schedule 1, line 16.
The supplied text does not provide a mailing address or e-filing directions.
Common mistakes
- Trying to change the election. Once made, the election cannot be revoked, and you cannot elect to exclude gain from another stock.
- Using a noncorporate employer. Employees of noncorporate entities, such as LLCs, are not allowed this deduction, even if the parent company is a corporation.
- Using the wrong acquisition date on line 7. Report when the stock was first acquired on account of employment, not when a stock right, warrant, option or debt security was issued.
- Treating a formation contribution as employment stock. Stock acquired at formation in exchange for a capital contribution is not acquired on account of employment.
- Combining multiple sales into one row. Complete a separate line 15 row for each sale or exchange.
- Leaving parts of the form incomplete. The instructions require the entire form each year of a qualifying sale, subject to the form’s skip and stop directions.
Questions people ask
How much is the deduction for 2024?
The deduction is 66% of the total on line 15, Column C. The instructions specify that the deduction applies to net capital gain.
Can I revoke the election or choose another stock later?
No. The election cannot be revoked. Checking yes on line 2 declares your intent to exclude capital gains from stock issued by the named corporation within the next fifteen years. After an election, subsequent qualifying sales must involve stock issued by that same corporation.
Can stock received from my spouse qualify?
Line 9 allows stock received through a gift during your spouse’s lifetime or through a trust your spouse established for your benefit. You must provide the spouse information on lines 10–11. Line 11 requires that you were married to that spouse on the date of the spouse’s death or the initial sale or exchange. The other qualification requirements still apply.
What if I sold the same corporate stock over several tax years?
On line 8, report the first date any of that stock was sold or exchanged. On line 15, report each sale or exchange during the current tax year.