How do I calculate the Iowa Agricultural Assets Transfer Tax Credit?
An Agricultural Assets Transfer Tax Credit is available for established farmers who lease agricultural assets to beginning farmers to claim against individual and corporation income tax. The agricultural asset transfer tax credit application must have been submitted to the Iowa Agricultural Development Division before May 21, 2019.
The tax credit is only allowed for agricultural assets that are subject to a lease or rental agreement for a term of at least two years, but not more than five years. The taxpayer must meet certain qualifications as established by rules adopted by the Iowa Finance Authority. The beginning farmer must meet the requirements listed in Iowa Code section 16.80 (2019).
The tax credit equals 5% of the amount paid to the taxpayer under a cash rent agreement or 15% of the crop share payments under an agreement in which the payment is exclusively made from the sale of crops or animals.
A tax credit certificate is issued by the Iowa Agricultural Development Division of the Iowa Finance Authority that includes the tax credit certificate number. Any tax credit in excess of tax liability, if awarded in tax year 2008 or later can be carried forward and applied against tax liability for the following ten years or until depleted, whichever is earlier. A tax credit is not transferable to any other person other than the taxpayer's estate or trust upon the taxpayer's death. If the tax credit is issued to a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity.
The lease or rental agreement may be terminated by either the taxpayer or the beginning farmer. If the Iowa Agricultural Development Division determines that the taxpayer is not at fault for the termination, the Division will not issue a tax credit certificate for subsequent years, but any prior tax credit certificates issued will be allowed. If the Division determines that the taxpayer is at fault for the termination, any prior tax credit certificates issued will be disallowed, and the tax credits can be recaptured by the Department of Revenue.
The tax credit is only allowed for agricultural assets that are subject to a lease or rental agreement for a term of at least two years, but not more than five years. The taxpayer must meet certain qualifications as established by rules adopted by the Iowa Finance Authority. The beginning farmer must meet the requirements listed in Iowa Code section 16.80 (2019).
The tax credit equals 5% of the amount paid to the taxpayer under a cash rent agreement or 15% of the crop share payments under an agreement in which the payment is exclusively made from the sale of crops or animals.
A tax credit certificate is issued by the Iowa Agricultural Development Division of the Iowa Finance Authority that includes the tax credit certificate number. Any tax credit in excess of tax liability, if awarded in tax year 2008 or later can be carried forward and applied against tax liability for the following ten years or until depleted, whichever is earlier. A tax credit is not transferable to any other person other than the taxpayer's estate or trust upon the taxpayer's death. If the tax credit is issued to a partnership, limited liability company, S corporation, estate, or trust, the tax credit shall be claimed by the individual based on the pro rata share of the income of the entity.
The lease or rental agreement may be terminated by either the taxpayer or the beginning farmer. If the Iowa Agricultural Development Division determines that the taxpayer is not at fault for the termination, the Division will not issue a tax credit certificate for subsequent years, but any prior tax credit certificates issued will be allowed. If the Division determines that the taxpayer is at fault for the termination, any prior tax credit certificates issued will be disallowed, and the tax credits can be recaptured by the Department of Revenue.
