How do I calculate the Iowa Beginning Farmer Tax Credit?
For tax years beginning on or after January 1, 2019, a beginning farmer tax credit is available for established farmers who lease agricultural assets to beginning farmers. The tax credit is available to the established farmer against individual and corporation income tax.
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, and that meets certain requirements listed in Iowa Code section 16.79A, and in administrative rules adopted by the Iowa Finance Authority. The taxpayer and the beginning farmer must meet certain qualifications listed in Iowa Code section 16.79, and in administrative rules adopted by the Iowa Finance Authority.
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 the agreement using the formula established in administrative rule by the Iowa Finance Authority. If the agreement is made on a flexible basis, the tax credit equals the same 5/15 percent calculation and an additional calculation may be made to the extent the rent payment is adjusted after taking into account all risk-sharing factors provided in the agreement. The Iowa Finance Authority will establish criteria for commonly used risk-sharing factors and adjustment limits.
Applications and tax credit awards are reviewed by the Agricultural Development Board. Tax credit certificates issued by the Iowa Agricultural Development Division of the Iowa Finance Authority pursuant to a tax credit award include the tax credit certificate number. Any tax credit in excess of tax liability 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 individual's 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, tax credits claimed for the year during which the termination occurs will be disallowed and 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, and that meets certain requirements listed in Iowa Code section 16.79A, and in administrative rules adopted by the Iowa Finance Authority. The taxpayer and the beginning farmer must meet certain qualifications listed in Iowa Code section 16.79, and in administrative rules adopted by the Iowa Finance Authority.
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 the agreement using the formula established in administrative rule by the Iowa Finance Authority. If the agreement is made on a flexible basis, the tax credit equals the same 5/15 percent calculation and an additional calculation may be made to the extent the rent payment is adjusted after taking into account all risk-sharing factors provided in the agreement. The Iowa Finance Authority will establish criteria for commonly used risk-sharing factors and adjustment limits.
Applications and tax credit awards are reviewed by the Agricultural Development Board. Tax credit certificates issued by the Iowa Agricultural Development Division of the Iowa Finance Authority pursuant to a tax credit award include the tax credit certificate number. Any tax credit in excess of tax liability 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 individual's 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, tax credits claimed for the year during which the termination occurs will be disallowed and recaptured by the Department of Revenue.
