41-186: IA 100J Capital Gain Deduction - Capital Stock Election 41-186 (2025)
Iowa · Iowa DOR · Used for tax years 2025
The 2025 IA 100J documents a single, lifetime capital stock election and supports an Iowa capital gain deduction for sales or exchanges of qualifying stock. It reports the corporation, employment and stock acquisition details, sales or exchanges, and the deduction claimed.
Who files this form
Use the 2025 IA 100J to support an Iowa capital gain deduction for sales or exchanges of qualifying capital stock if you are making, or previously made, the single lifetime capital stock election.
- Include the completed form with your IA 1040 Iowa Individual Income Tax Return.
- Complete the entire form each year you have a qualifying sale, including all parts.
- If both spouses independently qualify, each spouse must complete a separate IA 100J for their own sales or exchanges of elected stock.
This form is only for taxpayers making or using this election. If you previously elected a corporation’s stock, only subsequent sales or exchanges of stock issued by that same corporation may qualify.
What you'll need
Have the following information ready to complete IA 100J:
- Your name and Social Security number.
- The issuing corporation’s name as it existed when the first share was issued, and information about any previous election.
- The corporation where the employee-owner worked when acquiring the stock, plus each separate term of employment.
- The date the first share was acquired on account of employment and the date the stock was first sold or exchanged.
- How you acquired the stock. If it came through a spouse’s gift or trust, you will also need the spouse’s name, Social Security number, and the marital-status information requested on line 11.
- Information about the corporation’s Iowa employment and shareholders for lines 12–14. You may need to contact the corporation to verify it.
- A description, sale or disposal date, and gain or loss for each sale or exchange in 2025.
The Department may request additional information to verify the deduction.
How to file
Include the completed IA 100J with your IA 1040 Iowa Individual Income Tax Return (41-001).
- Complete the corporation, election, employment, and stock-acquisition information, following the form’s directions about which line to complete next.
- Answer the qualification questions. Stop where the form tells you the stock does not qualify.
- On line 15, use a separate row for each sale or exchange of elected stock in 2025.
- Enter the total of line 15, column C, on line 16. Include that amount on IA 1040 Schedule 1, line 16.
The supplied text does not give a mailing address or e-file directions.
Common mistakes
- Leaving parts incomplete. Complete the entire form each year of a qualifying sale, including all parts.
- Using one form for two independently qualifying spouses. Each spouse must complete their own IA 100J.
- Reporting an option date instead of a stock-acquisition date. Line 7 asks when the stock was first acquired on account of employment, not when a stock right, warrant, option, or debt security was issued.
- Treating a capital contribution as employment-based acquisition. Stock acquired at formation in exchange for a capital contribution is not acquired on account of employment.
- Combining multiple sales into one row. Use a separate line 15 row for each sale or exchange.
- Overlooking losses when calculating the deduction. The instructions state that the deduction applies to net capital gain from a sale.
Questions people ask
Can I revoke the election or choose another corporation’s stock later?
No. Once made, the election cannot be revoked, and you cannot elect to exclude gain from another stock. Checking yes on line 2 declares your intent to exclude capital gains from sales or exchanges of the identified corporation’s stock within the next fifteen years.
Can stock received from my spouse qualify?
Line 9 allows stock acquired through a lifetime gift from your spouse or a trust your spouse established for your benefit. You must provide the spouse information on lines 10–11 and satisfy the marriage requirement on line 11 and the other qualification questions.
Can an employee of an LLC claim this deduction?
No. The employer must be a corporation. Employees of noncorporate entities, such as LLCs, are not allowed this deduction, even if the parent company is a corporation.
What corporation requirements do lines 12–14 check?
Before the initial sale or exchange, the issuing corporation must have employed people in Iowa for at least 10 years. It must also have had at least five shareholders and at least two unrelated shareholders or groups of shareholders for the preceding 10 years. A “No” answer to any of these questions means the stock does not qualify.
Can the Department review my deduction?
Yes. The Iowa Department of Revenue uses this form to verify eligibility and may request additional information or further examine the deduction.