Iowa Clarifies §199A Treatment, Adopts Like-Kind Exchange Calculation

Iowa has enacted legislation:

  • clarifying that the IRC Sec. 199A deduction applies to IRC Sec. 199A(a) and 199A(g), retroactive to January 1, 2019;
  • updating the bank franchise tax Internal Revenue Code conformity to the IRC of 1954, or the IRC of 1986 as amended and in effect on December 21, 2017, retroactive to January 1, 2019;
  • repealing the franchise tax alternative minimum tax after 2020;
  • clarifying the treatment of like-kind exchanges; and
  • amending the school tuition organization tax credit, targeted jobs withholding credit, research activities tax credit, adoption tax credit, geothermal heat pump tax credit.

Like-Kind Exchanges

For corporate and franchise tax purposes, the rules for nonrecognition of gain or loss from like-kind exchanges for the 2019 tax year are:

  • those of IRC Sec. 1031 as amended up to March 24, 2018, for exchanges of real property held for productive use or investment; and
  • those of IRC Sec. 1031 as amended up to December 21, 2017, for exchanges of other than real property held for productive use or investment, with certain adjustments.

The changes apply retroactive to January 1, 2019 and before 2020.

H.F. 779, Laws 2019, effective July 1, 2019 and as noted

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