Iowa Form IA 1120S/K-1 Instructions

Form IA 1120S/K-1 Instructions
IA 1120S Instructions, 42-005
2023 IA 1120S Iowa Income Tax Return of S Corporation
Instructions
What’s New for Tax Year 2023
• S corporations may make a Pass-Through
Entity Tax (PTET) election to be subject to tax
at the entity level. See the instructions below for
Part 6 for more information.
• S corporations that make a PTET election for a
tax year beginning after May 10, 2023, are
subject to the requirement to make estimated
payments.
• A new Schedule C has been added to report
payments made by the S corporation for the tax
year.
• The Business Activity Ratio (BAR) schedule has
been re-lettered as Schedule E. All S corporations
are required to complete Schedule E, even if all
of its business is conducted in Iowa. Several
new lines (1a-1h) have been added to Schedule
E. These new lines break out, by income type,
the gross receipts line that appeared on this
schedule in prior years.
• Taxpayers now have the ability on this return to
authorize an individual to receive information
about this return. See the instructions below for
Third Party Disclosure Designee for more
information.
• The person who signs this return on behalf of
the taxpayer must now attest that they have
authority to act on behalf of the taxpayer in tax
matters. This attestation will give the signer full
authority to interact with the Department on
behalf of the taxpayer without the need to file an
additional Representative Certification form.
See the instructions below for Authorized Signer
for more information.
• Due to legislative changes that took effect
January 1, 2023, several adjustments that were
previously required or allowed on Schedule A
have been repealed. These lines have been
removed from the schedule and reserved for
future use. See the instructions below for
Schedule A for more information.
Who Must File
Every S corporation doing business in Iowa or
deriving income or loss from real, tangible, or
intangible property located or having a situs in Iowa
must file an Iowa Income Tax Return for S
Corporation, IA 1120S. The IA 1120S must also be
used by interest charge domestic international
sales corporations and foreign sales corporations.
If the S corporation is a financial institution, it must
also file an IA 1120F.

tax.iowa.gov
Note: Only S corporations with activity (income or
loss) from Iowa sources as described above, or which
have a commercial domicile in Iowa, are required to
file. An S corporation should not file if its only
connection to Iowa is because one or more shareholders are Iowa residents.
What Must be Filed
To be considered a complete return and not subject
to late filing penalties, all of the following must be
timely filed with the Department:
• An annual Iowa Income Tax Return for S
corporation (IA 1120S) including all required
schedules and attachments.
• An IA 1120S Schedule K-1 for each person who
was a shareholder at any time during the taxable
year.
• A copy of the federal S corporation 1120-S
return and all supporting schedules, not
including federal Schedules K-1.
Time and Place for Filing
The Iowa S corporation return must be filed on or
before the last day of the fourth month following
the close of the S corporation’s tax year. For
calendar year filers, the due date is April 30, 2024.
If the S corporation is required to file a short period
return consisting of fewer than 12 months, the Iowa
short period return is due 45 days after the due
date of the federal short period return. Every S
corporation that owes no tax and does not file by
the original due date automatically receives a 6month extension of time to file after the original due
date, provided the return is filed within that 6month period. No extension request form is
required. If the S corporation is making the PTET
election (see Part 6 below) or owes tax on built-in
gains or passive investment income (see Part 5
below), a 6-month automatic extension will be
granted only if at least 90% of that total tax liability
is paid by the original due date of the return. Latefiled returns are subject to penalty. For more
information, see the instructions for Part 8, lines 47
and 48 below.
Mandatory Electronic Filing
For tax years ending on or after December 31,
2022, an S corporation must file its annual return
with the Department electronically using the
federal modernized e-file system (MeF) if it meets
any one of the following conditions for the tax year:

42-005a (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 2
• The S corporation has $250,000 or more in
total gross receipts.
• The S corporation is required to provide 10 or
more IA 1120S Schedules K-1 to
shareholders.
• The S corporation is reporting $25,000 or more
in Iowa tax credits on Schedule B of its Iowa S
corporation return.
See Iowa Administrative Code rule 701—8.7 for
definitions and other important information about
the electronic filing requirement.
All S corporations are encouraged to file
electronically. If an S corporation return is subject
to the electronic filing requirement, but it is filed in
another manner, it is not considered a valid return
unless the Department provides an exception to
the electronic filing requirement.
Mail paper returns to:
Corporation Tax Return Processing
Iowa Department of Revenue
PO Box 10468
Hoover State Office Building
Des Moines Iowa 50306-046
OTHER IMPORTANT INFORMATION
Conformity with the Internal Revenue Code
(IRC)
For tax years beginning on or after January 1,
2020, Iowa has adopted rolling conformity,
meaning the state will automatically conform to
any changes made to the IRC, except as
specified by Iowa law.
Composite Filing
Iowa Code section 422.16B imposes composite
return filing and tax remittance obligations on S
corporations for tax years beginning on or after
January 1, 2022.
An S corporation with
nonresident shareholders is required to file an IA
PTE-C Iowa Composite Return and remit Iowa
income or franchise tax on behalf of its
nonresident shareholders, unless the S
corporation makes a timely PTET election for the
same tax year or meets one of the composite
return filing exemptions described in Iowa
Administrative Code rule 701–405.5(1). A
nonresident shareholder is any shareholder who
is a nonresident individual; an estate or trust
without a situs in Iowa; or a corporation,
partnership, or other business entity without a

commercial domicile in Iowa. For more
information, see the instructions for Part 3 below
and the IA PTE-C Iowa Composite Return. The
IA 1040C has been discontinued for any S
corporation tax year that begins on or after
January 1, 2022.
Disregarded Entities
An S corporation that owns 100% of an entity that
is disregarded as a separate entity for federal
income tax purposes must report the activities of
that disregarded entity on its Iowa S corporation
return, and must include an IA Schedule DE Iowa
Disregarded Entity Schedule with its return.
Iowa Resident Out-of-State Tax Credit
Iowa Code section 422.8 and Iowa Administrative
Code rule 701—304.6 allow Iowa residents to
claim the Iowa Out-of-State Tax Credit for certain
entity-level income taxes paid by an S corporation
to another state, local jurisdiction, or foreign
country on income also subject to tax in Iowa only
if the resident shareholder receives a qualifying
supplemental schedule from the S corporation
reporting certain information. If the S corporation
paid entity-level income tax (including composite
return income tax, but not including withholding
tax) to another qualifying jurisdiction on the
distributive share of the resident shareholder’s
income also subject to tax in Iowa, the S
corporation
must
provide
a
qualifying
supplemental schedule identifying the jurisdiction
to which the income tax was paid, the passthrough entity that paid the income tax, and the
shareholder’s pro-rata share of the income, tax
liability, and tax paid in that jurisdiction. A
shareholder will not be permitted to claim an Outof-State Tax Credit on the IA 130 for that income
tax unless the shareholder receives that
qualifying supplemental schedule from the S
corporation and submits a copy with the IA 1040.
If the S corporation is itself an owner of another
pass-through entity that paid entity-level income
tax to another qualifying jurisdiction on income
also subject to tax in Iowa, and the S corporation
receives a qualifying supplemental schedule from
that pass-through entity, the S corporation may in
turn report that income tax to its shareholders on
a qualifying supplemental schedule with the
shareholder’s IA Schedule K-1. When reporting
this other pass-through entity’s income tax to its
shareholders, the S corporation must reduce the
42-005b (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 3
below.
income tax by the amount of any credit available
from that other jurisdiction to the S corporation
S corporations may also receive composite
related to the income tax payment. The S
credits from another pass-through entity for Iowa
corporation may not report this tax to its
income tax paid on behalf of the S corporation, or
shareholders as described above if the S
PTET credits for entity-level Iowa income tax paid
corporation does not receive the qualifying
by the pass-through entity. These credits are not
supplemental schedule from the other passreported on Schedule B and allocated to
through entity.
shareholders, but instead must be claimed by the
The S corporation should keep the schedule it
received from the other pass-through entity
because the Department may request it of the
resident shareholder in order to prove the credit
claimed on the IA 130. The resident shareholder
is responsible for providing documentation of the
out-of-state tax paid by a pass-through entity at
the Department’s request

Example: Partnership X earns $2,000 of income in
State A, which imposes an entity-level income tax
directly on the partnership. Partnership X pays
$100 of income tax to State A. Partnership X is
owned 50% by S corporation Y, and provides a
schedule to S corporation Y indicating that Y’s prorata share of the income taxed by State A is
$1,000, and Y’s pro-rata share of the income tax
imposed by and paid to State A is $50. S
corporation Y does not receive a credit in State A
for its share of the tax paid by Partnership X. S
corporation Y is owned 50% by individual Z, a
resident of Iowa. S corporation Y provides a
schedule to individual Z indicating that Z’s pro-rata
share of Partnership X’s income taxed by State A
is $500, and Z’s pro-rata share of Partnership X’s
income tax imposed by and paid to State A is $25.
Individual Z may use the income and tax amounts
reported on that schedule in completing Z’s IA 130
Iowa Out-of-State Tax Credit Schedule, provided
that the $500 of income identified on the schedule
is also reported on individual Z’s IA 1040 return
and is taxed by Iowa.
Tax Credits
S corporations may earn various tax credits or
receive tax credits passed through to them from
another pass-through entity. These tax credits
must be reported on Schedule B of the IA 1120S
and are then allocated to shareholders on the IA
Schedule K-1. Shareholders cannot claim these
allocated tax credits until the S corporation has
filed an S corporation return that properly reports
the available tax credits on Schedule B. For more
information, see the instructions for Schedule B

S corporation on Part 8, line 43 of this return, or
on the IA PTE-C.

Amended Returns
If an amended federal return was filed, or if other
errors are discovered on the Iowa return, the
taxpayer must file an amended Iowa S
corporation return, IA 1120S, check the
“Amended Return” box and include the IA 102
Amended Return Schedule, as well as the other
required supporting documentation. If the S
corporation was required to file its original return
electronically, the S corporation’s amended Iowa
return for the same tax year must be filed
electronically.
Federal Centralized Partnership Audit Regime
For tax years 2018 and forward, the IRS makes
audit adjustments and generally collects taxes at
the partnership level for partnerships subject to
the federal centralized partnership audit regime.
If the S corporation was a direct or indirect partner
in a partnership that is audited by the IRS
resulting in adjustments that affect Iowa tax
liability, the S corporation must follow certain
procedures and timelines for reporting those
adjustments to Iowa, even if the S corporation or
shareholders were not responsible for filing a
federal amended return or paying additional
federal tax. Similar procedures and timelines also
apply to an affected partnership and its direct and
indirect partners for amendments to returns
requested on a centralized administrative
adjustment request (AAR). For more information,
see tax.iowa.gov/reporting-federal-income-taxchanges-iowa and Iowa Code section 422.25A.
Iowa Pass-Through Entity Audits
For tax year 2020 and forward, any audit of an S
corporation by the Department will be conducted
solely at the S corporation level through the
entity’s Iowa pass-through representative. If an S
corporation is audited by the Department
resulting in adjustments to Iowa tax liability, the S
corporation and its owners must follow certain
42-005c (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 4
Part 2: Pass-Through Representative (PTR)
procedures and timelines for reporting the
adjustments to Iowa and paying any resulting
Enter the required information about the person
the S corporation is appointing as its Iowa passIowa tax. For more information, see Iowa Code
through representative (PTR) for the tax year.
sections 422.25B and 422.25C. These provisions
may be applied to a tax year prior to 2020 if the
An S corporation is required to have an Iowa PTR
Department, the pass-through entity, and the
for each tax year. There can be only one Iowa
pass-through entity owners agree.
PTR for each tax year.
For Additional Information
Contact Taxpayer Services at 515-281-3114
or 800-367-3388 8 a.m. - 4:30 p.m. CT or
email [email protected]

COMPLETING THE RETURN
Calendar Year or Fiscal Year
Enter tax period beginning and ending dates as
MM/DD/YYYY. The Iowa S corporation return
must be made on the same period basis as the S
corporation accounts are required to be kept for
federal tax purposes, even if shareholders report
their income on a different year basis.
Part 1: Corporation Name and Address
• If the S corporation has a Federal Employer
Identification Number (FEIN), it must be
entered here. If the S corporation has applied
for but not yet received a number, enter
“applied” and inform the Department of the
number once it is obtained. For information on
obtaining an FEIN, contact the Internal
Revenue Service (IRS) at 800-829-4933.
• Enter the county number of the main Iowa
location. S corporations without a physical
location in Iowa should enter 00. A list of county
numbers can be found on the Department
website (tax.iowa.gov).
• Enter
the
North
American
Industry
Classification System (NAICS) Code for the
specific industry group corresponding to the S
corporation’s primary business activity.
• Enter a one or two word description of the S
corporation’s principal activity.
• Enter the total number of shareholders, total
number of Iowa resident shareholders, and total
number of Iowa nonresident shareholders. A
resident shareholder is any shareholder who is a
resident individual; an estate or trust with a situs
in Iowa; or a business entity with a commercial
domicile in Iowa. Include a corresponding IA
Schedule K-1 for each person who was a
shareholder at any time during the tax year.

An S corporation may appoint any qualifying
person, including itself or a different entity, to be
its Iowa PTR. If the S corporation appoints itself
or another entity as its Iowa PTR, the S
corporation is required to appoint a designated
individual as the sole individual to act on behalf of
the entity PTR.
An Iowa PTR has the sole authority to act on
behalf of the S corporation for the purpose of
Iowa amended income tax returns, audits,
examinations, and appeals. The S corporation
and its shareholders are bound by the actions of
the Iowa PTR. If the S corporation desires to
change its Iowa PTR for the tax year at a later
date, it must use the IA 8979 Iowa Pass-through
Representative Appointment form, not an
amended Iowa S corporation return.
Part 3: Corporation Information
Check the type of return and type of entity that is
filing this return.
Corporation Activities—Answer the questions
about the corporation’s activities.
Composite Return Requirement—Answer the
three questions about the S corporation’s
nonresident shareholders. If the answer is “No” to
all three questions, the S corporation is not
required to file an IA PTE-C Iowa Composite
Return in addition to the IA 1120S. If the answer
is “Yes” to either question “i” or “ii”, the S
corporation is required to file an IA PTE-C and
pay any composite tax due on behalf of its
nonresident shareholders, unless the S
corporation is making a PTET election for the
same tax year or satisfies one of the composite
return filing exemptions described in Iowa
Administrative Code rule 701–405.5(1). If the
answer is “Yes” to question “iii”, the S
corporation’s composite credit may be claimed on
either the IA PTE-C return, or on this IA 1120S
return. See the IA PTE-C for further information.

42-005d (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 5
in gains tax, except for certain installment sales
Part 4: S Corporation Distributive Items for
made during tax years 2016-2018 when Iowa
Iowa Tax Purposes.
used a 10-year recognition period. For more
Lines 1-12: For each line, enter the amount from
information on these installment sales, see
the corresponding line of the S corporation’s
tax.iowa.gov/built in-gains-tax-on-s-corp.
federal 1120-S return.
Line 14. Enter the separately stated section 179
deduction from the S corporation’s federal 1120S, Schedule K.
Line 15: Enter the sum of the other separately
stated deductions from the S corporation’s
federal 1120-S return, Schedule K, line 12.
However, do not include any amount that is only
informational and not available as a current-year
deduction to the shareholder.
Line 18: Additions to S corporation income may
be required under Iowa law. Enter the total
Additions from IA 1120S, Schedule A, line 16.
Line 19: Reductions to S corporation income may
be allowed under Iowa law. Enter the total
Reductions from IA 1120S, Schedule A, line 16.
Line 22: If the S corporation has nonbusiness
income, complete Schedule D. Enter the amount
from Schedule D, line 17, on this line.
Line 24: Enter the S corporation’s Business
Activity Ratio (BAR) from the IA 1120S, Schedule
E, line 13.
Line 26: Enter the S corporation’s nonbusiness
income allocated to Iowa from the Schedule D,
line 8.
Part 5: Built-In Gains or Passive Investment
Income Tax
S corporations that are subject to federal tax on
built-in gains under Internal Revenue Code (IRC)
section 1374 or passive investment income under
IRC section 1375 are subject to Iowa corporation
income tax on this income to the extent received
from business carried on in this state or from
sources in this state.
Line 28: The starting point for computing the
Iowa tax on built-in gains income is the amount of
built-in gains income (including built-in gain
carryforward amounts) calculated for federal tax
purposes after considering the federal income
limitation. Enter the S corporation’s net
recognized built-in gains from its federal 1120-S
return, Schedule D.
Iowa is conformed to the federal 5-year
recognition period for determining the Iowa built-

Line 29: The starting point for computing the
Iowa tax on passive investment income is the
amount of excess net passive income calculated
for federal tax purposes after considering the
federal income limitation. Enter the S
corporation’s excess net passive income from its
federal 1120-S return, line 23a.
Line 33: Any remaining Iowa net operating loss
(NOL) carryforward arising from a tax year ending
prior to January 1, 2023 for which the corporation
was a C corporation is allowed as a deduction
against the built-in gains and excess passive
investment income to the extent the Iowa NOL
carryforward period has not expired. Enter any
remaining Iowa NOL carryforward amount on this
line, and include a schedule documenting the
corporation’s entitlement to such Iowa NOL.
For purposes of determining the amount of any
remaining Iowa NOL which may be carried
forward to any future tax years, the amount of the
net recognized built-in gain or excess net passive
investment income is treated as taxable income.
Line 34: Subtract line 33 from line 32. If the result
is less than zero, enter zero. This is the
corporation’s built-in gains and passive
investment income subject to Iowa tax.
Line 35: The amount of Iowa taxable built-in
gains and passive investment income computed
on line 34 is subject to Iowa tax at the same rates
as C corporation income (5.5%, 8.4%).
$100,000 or less, multiply by 5.5%.
Over $100,000, multiply by 8.4% and subtract
$2,900.
If you are using this form to file for a short tax year
that began in 2024, use the 2024 corporate
income tax rates.
Line 36: Any Iowa tax credit carryforward under
Iowa Code section 422.33 arising in a taxable year
for which the corporation was a C corporation is
allowed against the gross tax on Iowa built-in gain
and passive investment income computed on line
35, to the extent the Iowa tax credit’s carryforward
period has not expired. Enter any remaining Iowa
42-005e (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 6
Part 7: Audit Election to Pay
tax credit carryforward on this line, and include a
Line 41: If you are filing an amended return to
schedule
documenting
the
corporation’s
report changes from a federal centralized
entitlement to such Iowa tax credit.
partnership audit or an Iowa pass-through entity
Line 37: Subtract line 36 from line 35. If the result
audit, and you are making an irrevocable election
is less than zero, enter zero. This is the
to pay the tax, penalty, and interest resulting from
corporation’s net Iowa tax on Iowa built-in gain and
that audit on behalf of your shareholders, check
passive investment income.
the box above line 41 and complete the IA 103
Part 6: Pass-Through Entity Tax (PTET)
Pass-Through Audit Election to Pay Schedule.
Election
Report the tax from the IA 103, line 26 on this line.
If you are electing or have already elected to be
Include the IA 103 with your amended return.
subject to the entity level tax for this tax year
When an election to pay on your shareholders’
pursuant to Iowa Code section 422.16C, check
behalf is made, do not issue amended IA 1120S
the box. This election is irrevocable and must be
Schedules K-1 to your shareholders, but instead
made by the due date for filing your return,
notify the shareholder of all of the following in a
including extensions. The election is valid only for
separate letter or schedule: (1) identify the
this tax year.
shareholder’s distributive share of the audit
Line 38: Multiply the amount on Part 4, line 27
adjustments, (2) notify the shareholder that you
by 6% (.06). However, if you are using this return
have elected to pay the resulting Iowa tax,
to make a PTET election for a short tax year that
penalty, and interest on their behalf, and (3) notify
began in 2024, multiply the amount on Part 4, line
the shareholder that the shareholder shall not
27 by 5.7% (.057).
claim any deduction, credit, or refund for the
Line 39: A financial institution subject to the Iowa
amount paid by the S corporation, and the
franchise tax that is organized as a pass-through
shareholder may not include the amount paid on
entity is eligible to claim a franchise tax credit
the shareholder’s Iowa return in any manner.
against the Iowa PTET. Enter the amount from
S corporations may also make estimated
your 2023 IA 1120F, line 14. If zero or less, enter
payments of expected Iowa tax resulting from a
zero. The entity must file and pay its franchise tax
pending Internal Revenue Service (IRS) audit. A
liability in order to claim this franchise tax credit
federal audit estimate payment must be made
against its Iowa PTET.
through GovConnect.Iowa.gov.
Line 40: Subtract line 39 from line 38. If zero or
Part 8: Total Tax, Penalty, and Interest Due
less, enter zero. This is the S corporation’s net
Iowa PTET due.
Line 43: Enter the amount of composite and
Note about Iowa PTET credits. The S
PTET credits received. Do not enter any credits
corporation’s net Iowa PTET calculated on this
that have been or will be claimed on an IA PTEline 40 is used to determine the total refundable
C or IA 1120F. Include the IA Schedule CC with
Iowa PTET credits available to shareholders, but
your return.
the amount must be reduced by the applicable
Line 44: Enter the amount of payments from
percentage before it is reported to shareholders
Schedule C, line 4.
on the Iowa Schedules K-1. The total available
Iowa PTET credits equal the S corporation’s net
Line 46: If payment is received after the payment
Iowa PTET from line 40 x 94% (.94). However, if
due date, interest accrues on the unpaid tax at a
you are using this return to make a PTET election
rate prescribed by law from the payment due date
for a short tax year that began in 2024, the total
until payment is received. Any portion of a month
available PTET credits equal the S corporation’s
is considered a full month in calculating interest
net Iowa PTET from line 40 x 94.3% (.943). This
due on unpaid tax.
total available PTET credit amount is reported on
Line 47: Enter your late payment penalties
IA 1120S, Schedule K, line 19, column (d), and
associated with the unpaid tax due. Pursuant to
then allocated to each shareholder on the
Iowa law under the audit election to pay, penalties
Schedule K-1 in the same ratio that the S
on the amount due by the S corporation will be
corporation’s taxable income is allocated to the
computed from the due date of the S
shareholder.
corporation’s original return without extension,
42-005f (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 7
section 421.27. Complete and submit a Penalty
and shall be imposed as if the S corporation was
Waiver Request form (78-629) to request a
required to pay tax or show tax due on the original
penalty be waived.
return. S corporations subject to built-in gains or
passive investment income tax, or who make the
S corporations that do not owe Iowa tax on builtPTET election may be subject to the failure to
in gains or passive investment income on line 37,
timely pay penalty. The S corporation may be
and that did not make the PTET election in Part
subject to the following penalties:
6, but that file their IA 1120S return after the due
Failure to Timely Pay the Tax Due: A penalty of
5% must be added to the unpaid tax if less than
90% of the correct amount of tax was paid by the
original due date of the return. Multiply the unpaid
tax due by 5% (.05) and enter that amount on line
47. This penalty is in addition to any penalty for
failure to timely file, as described below on line
48.
Audit or Examination Deficiency: A penalty of
5% will be added to the unpaid tax if the
Department discovers an underpayment during
an audit or examination. This penalty is in lieu of
the failure to timely pay penalty described above,
but is in addition to any penalty for failure to timely
file described below on line 48.
Fraud: A penalty of 75% will be added to the
unpaid tax for fraudulent claims or willful failure to
file a return.
Waivers: Penalties can be waived under limited
circumstances, as described in Iowa Code
section 421.27. Complete and submit a Penalty
Waiver Request form (78-629) to request a
penalty be waived.
Line 48: If the S corporation files its IA 1120S
return after the due date, including extensions,
and owes Iowa tax on built-in gains or passive
investment income on line 35 or Iowa PTET on
line 40, it may be subject to the following
penalties:
Failure to Timely File a Return: If the IA 1120S
return is filed after the original due date of the
return and less than 90% of the correct amount of
Iowa tax was paid by the original due date,
multiply the unpaid Iowa tax by 5% (.05) and
enter that amount on line 48. This penalty is in
addition to any penalty for failure to timely pay the
tax due.
Fraud: A penalty of 75% will be added to the
unpaid tax for fraudulent claims or willful failure to
file a return.
Waivers: Penalties can be waived under limited
circumstances, as described in Iowa Code

date, including extensions, are subject to a late
filing penalty. For more information, see Iowa
Code
section
421.27(1)(b)
and
Iowa
Administrative Code rule 701—10.6(2). If you are
filing your return late and do not owe Iowa tax on
built-in gains or passive investment income (line
37) and did not make the PTET election, use the
worksheet below to compute your imputed tax
liability late filing penalty. Enter the result from
line 6 of the worksheet on line 48.
Imputed late filing penalty worksheet
1. Iowa-source S corporation distributive items
from Part 4, line 27 ................. 1. _________
2. Imputed Iowa tax for penalty purposes
(multiply line 1 by 6% (.06)).... 2. _________
3. Iowa tax credits from
Schedule B............................. 3. _________
4. Imputed Iowa tax liability for penalty purposes.
Subtract line 3 from line 2.
If less than $0, enter $0.......... 4. _________
5. Multiply line 4 by 5% (.05). Enter the lesser
of that amount or $25,000 ...... 5. _________
6. Late filing penalty. Enter the greater of line 5
or $200 ................................... 6. _________
Line 49: If the S corporation owes Iowa tax on
built-in gains or passive investment income, or
made the PTET election for a tax year that began
after May 10, 2023, use the IA 2220 to determine
if the correct amount of estimated tax was paid by
the due date. Enter any underpayment of
estimated tax penalty on this line, and include the
IA 2220 with the return

Line 50: Payment options include payment
through
Modernized
eFile
(MeF),
GovConnect.Iowa.gov, or payment by check. Go
to the Department’s website for electronic
payment options. Do not send cash. Submit a
voucher if making a payment by check. Vouchers
are available on GovConnect.Iowa.gov.
42-005g (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 8
the IA 4562A and IA 4562B. Include the IA 4562A
Line 52: Enter the amount of overpayment to be
and IA 4562B with your return.
credited to the next tax period. This credit can
only be changed after the due date of the return
Line 7: Tax exempt interest and dividends – Add
if the change is requested by the last day of the
as an addition the amount of interest and dividends
next tax year.
from foreign securities and from securities of state
Line 53: If you would like your refund directly
deposited complete lines 53a, 53b, and 53c,
otherwise a paper check will be issued. Do not
input your direct deposit information if you have
an amount due on line 50.
53a—Input your financial institution’s routing
number. The routing number for an account must
be nine digits.
53b—Check either checking or savings to
indicate which type of account the refund will be
deposited into.
53c—Input your account number. The account
number for an account may have up to 17 digits.
The entire refund amount will be deposited into
this one account. The account the refund will be
issued to must be located in the United States.
Schedule A –Additions and Reductions
Schedule A is used to document those modifications
or adjustments to net federal Schedule K
income/loss (IA 1120S, Part 4, line 17) that are
required by Iowa Code section 422.35 and Iowa
Administrative Code 701—chapter 502 to the extent
applicable to S corporations. Additions to Iowa
income are reported in the “Additions” column, and
reductions to Iowa income are reported in the
“Reductions” column. All entries on Schedule A
must be reported as positive amounts.
Line 4: Interest expense adjustments from IA
163 – Enter any addition or reduction to income
from the interest expense adjustment from IA
163, line 6. Include the IA 163 with your return.
Line 5: Qualifying Iowa COVID-19 grants –
Subtract as a reduction any qualifying Iowa
COVID-19 grant meeting the requirements of
Iowa Administrative Code rule 701—502.30, to
the extent such grant was included in the S
corporation’s total federal Schedule K income
reported on Part 4, line 13 of this return.
Line 6: Expensing/depreciation adjustments
from IA 4562A/B – IRC section 179 expensing
and depreciation allowed on the Iowa return may
differ from amounts allowed on the federal return.
Enter any addition or reduction to income from

and other political subdivisions that are exempt
from federal income tax but not exempt from Iowa
income tax. Exclude interest received from certain
Iowa bonds, which are listed in Iowa Administrative
Code rule 701—302.3. See also Iowa
Administrative Code rule 701—502.6.
Line 11: Federal securities interest and
dividends – Subtract as a reduction the total
interest received from federal securities such as
U.S. Treasury bonds, notes, bills, and savings
bonds included in federal S corporation income.
Do not include interest on federal refunds. See
Iowa Administrative Code rules 701—302.2 and
701—502.5.
Line 12: Nonconformity adjustments from IA
101 – Certain current-year adjustments may be
required because of Iowa’s nonconformity with
federal law in tax years 2018 and 2019. Enter any
addition or reduction to income from the IA 101.
Include the IA 101 with your return.
Line 13: Charitable contribution adjustment
from Iowa credit – When an S corporation earns
certain Iowa tax credits for making a charitable
contribution, Iowa law prohibits a tax deduction
related to that charitable contribution. Add as an
addition any charitable contribution made by the
S corporation and reported to its shareholders to
the extent the charitable contribution relates to
any of the following Iowa tax credits: the Iowa
School Tuition Organization Tax Credit; the Iowa
Charitable Conservation Contribution Tax Credit;
the Endow Iowa Tax Credit; the Iowa Hoover
Presidential Library Tax Credit; the Iowa Farm to
Food Donation Tax Credit.
Line 14: All-source PTE modifications from
Iowa K-1s – If the S corporation is also a member
of another pass-through entity (PTE) such as a
partnership, estate, or trust, report the S
corporation’s distributive share of all-source Iowa
modifications furnished to the S corporation on its
Iowa K-1. Report the Iowa modification as an
Addition or a Reduction, as appropriate.
Line 15: Other – Report any other adjustment to
net federal Schedule K income/loss required
42-005h (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 9
under Iowa law. A detailed schedule describing
• 05 Nonrefundable Historic Preservation Tax
the type and amount must be included.
Credit (include certificate number)
Adjustments entered on this line may include, but
• 06 Housing Investment Tax Credit (include
are not limited to, the following:
certificate number)
• 07 Investment Tax Credit (include certificate
• A reduction for wages paid to new employees
number)
who qualify as persons with disabilities or as
• 08 New Jobs Tax Credit (include certificate
ex-offenders. Iowa Code section 422.35(3), (4);
number) (include IA 133 with return)
Iowa Administrative Code rule 701—502.11.
• 10 Renewable Energy Tax Credit (include
• To the extent included in the S corporation’s net
certificate number)
federal schedule K income, subtract as a
• 12 School Tuition Organization Tax Credit
reduction the amount of a federal, state, or local
(include certificate number)
grant provided to a communications service
• 13 Venture Capital – Fund of Funds Tax Credit
provider during the tax year, if the grant
(include certificate number)
was used to install broadband service in
•
14
Angel Investor Tax Credit FKA Venture
targeted service areas at or above the
Capital – Qualifying Business (include
download and upload speeds.
certificate number) (for amounts reported to
• Adjustments to the S corporation’s net federal
taxpayers other than individuals, estates, or
Schedule K income/loss made by the Iowa
trusts)
Department of Revenue during an Iowa pass• 16 Wind Energy Production Tax Credit (include
through audit, to the extent they are not
certificate number)
accounted for elsewhere on the Schedule A. If
• 17 Agricultural Assets Transfer Tax Credit
more than one adjustment is required, report
(include certificate number)
each adjustment separately.
• 17 Beginning Farmer Tax Credit (include
Do not include on line 15 any adjustment related
certificate number)
to the individual Iowa capital gain deduction (see
• 20 Charitable Conservation Contribution Tax
Iowa Administrative Code rule 701—302.87). If
Credit (include federal form 8283 with return)
you need to provide information to your
• 21 Redevelopment Tax Credit (include
shareholders about this individual shareholdercertificate number)
level adjustment, do so on a supplemental
•
22 Solar Energy System Tax Credit (include
schedule with the Iowa Schedule K-1.
certificate number)
Schedule B – Iowa Tax Credits Reported to
• 25 Innovation Fund Tax Credit (include
Shareholders
certificate number)
Enter on Schedule B all the Iowa tax credits
• 26 Farm to Food Donation Tax Credit (include
earned or received by the S corporation in the
IA 178 with return)
current tax year that are being reported to the
• 27 Workforce Housing Investment Tax Credit
shareholders on the 2023 IA 1120S Schedules K(include certificate number)
1. Do not include composite credits, PTET credits,
• 29 Hoover Presidential Library Tax Credit
or credits for prior payments. The total amount of
(include certificate number)
each Iowa tax credit reported on Schedule B must
• 30 Employer Child Care Tax Credit (include
equal the aggregate amounts reported to your
certificate number and IA 8882 with return)
shareholders on the IA Schedules K-1, Part IV.
• 46 Nonrefundable Third Party Developer Tax
Report tax credits earned by the S corporation
Credit (include certificate number)
separately from tax credits received by the S
• 47 Nonrefundable Third Party Developer Tax
corporation from another pass-through entity.
Credit for racks, shelving, and conveyor
Include the tax credit certificate number if
equipment (include certificate number)
applicable. Use the following Iowa tax credit
• 52 Biodiesel Blended Fuel Tax Credit (include
codes:
IA 8864 with return)
• 55 E85 Gasoline Promotion Tax Credit
• 03 Endow Iowa Tax Credit (include certificate
(include IA 135 with return)
number)
42-005i (11/03/2023)

•
•
•
•
•
•
•
•

•
•
•

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 10
Schedule E – Business Activity Ratio (BAR)
56 Refundable Historic Preservation Tax
Complete all applicable lines, even if 100% of the
Credit (include certificate number)
S corporation’s business is conducted in Iowa. All
58 Research Activities Tax Credit (include IA
figures are net of amounts reported on Iowa
128 or IA 128S with return)
Schedule D.
59 Supplemental Research Activities Tax
Business income means income which arises from
Credit (include certificate number) (include IA
the S corporation’s trade or business, a part of
128 or IA 128S with return)
which is conducted within Iowa. Business income
62 Refundable Third Party Developer Tax
must be apportioned to Iowa by means of the BAR.
Credit (include certificate number)
64 Ethanol Promotion Tax Credit (only
The BAR must be computed to the nearest tenamounts received from a fiscal-year passthousandth of a percent. For example, 0.1234505
through entity from tax year 2020)
becomes 12.3451%.
65 E15 Plus Gasoline Promotion Tax Credit
Line 1a: Gross receipts from sale of tangible
(Include IA 138 with return)
personal property - Include all gross receipts
67 Refundable Redevelopment Tax Credit
after returns and allowances as reported on the
(include certificate number)
federal form 1120S from the sale of tangible
68 Angel Investor Tax Credit FKA Venture
personal property. See Iowa Administrative Code
Capital – Qualifying Business (include
rule 701—-503.5 for more information on
certificate number) (for amounts reported to
sourcing receipts from the manufacture or sale of
individuals, estates, or trusts)
tangible personal property.
69 Renewable Chemical Production Tax Credit
Line 1b: Gross receipts from performance of
(include certificate number)
services - Include all gross receipts after returns
97 Refundable Third Party Developer Tax
and allowances as reported on the federal form
Credit for racks, shelving, and conveyor
1120S from the performance of services. See
equipment (include certificate number)
Iowa Administrative Code rules 701—503.6(1),
4136 Iowa Fuel Tax Credit (include IA 4136
701—503.6(2), and 701—503.6(4) for more
with return)
information
on
sourcing
receipts
from

Schedule C- Payments

Line 1(a): Enter the total amount applied to your
2023 Iowa S corporation tax from your previous
IA 1120S Iowa Income Tax Return of S
Corporation.
Line 1(b)-(f): Enter the total amount of estimated
or other voucher payments made for tax year
2023 prior to the original due date of the IA 1120S
return. S corporations that owe more than $1,000
of net Iowa tax on built-in gains and passive
investment income (line 37) or net Iowa PTET
(line 40) are required to pay estimated tax.
Estimated tax payments are not required for tax
due pursuant to an election to pay on line 41. Visit
GovConnect.Iowa.gov to make estimated or
other payments or to print payment vouchers.
Note: S corporations that make the PTET
election for a tax year beginning on or before May
10, 2023 are not required to make estimated
payments on the PTET due.

performance of services.
Line 1c: Gross receipts from railroad,
trucking,
aviation,
or
other
aviation
activities - Include all gross receipts after returns
and allowances as reported on the federal form
1120S from the performance of railroad
operations, transportations operations of an
airline, truck and bus line companies, water
transportation companies, freight car and
equipment, oil, gasoline, gas or other pipeline
operations. See Iowa Administrative Code rules
701—503.7(1), 701—503.7(2), and 701—
503.7(3) for more information on sourcing
receipts from performance of transportation
activities.
Line
1d:
Gross
receipts
from
telecommunication services - Include all gross
receipts after returns and allowances as reported
on
the
federal
form
1120S
from
telecommunication operations.
See Iowa
Administrative Code rule 701—503.7(4) for more
information
on
sourcing
receipts
from
telecommunication services.
42-005j (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 11
regularly in or outside of Iowa. The investment
Line 1e: Gross receipts from radio and
income must be included in Column A (numerator)
television broadcasts - Include all gross
to the extent the intangible property which
receipts after returns and allowances as reported
produced that income is an integral part of some
on the federal form 1120S from radio and
business activity occurring regularly in Iowa.
television broadcasting operations. See Iowa
Code
section
422.33(2)(e)
and
Iowa
All other investment income that is business
Administrative Code rule 701—503.7(5) for more
income may, at the taxpayer’s election, be
information
on
sourcing
receipts
from
included in the computation of the BAR. On the
broadcasting operations.
return, the taxpayer elects whether to include
Line 1f: Gross receipts from printed and
investment income which is determined to be
electronic media - Include all gross receipts after
business income in the computation of the BAR
returns and allowances as reported on the federal
for that year and all subsequent years. If elected
form 11120S from printed and electronic media.
to be included, then for that year and for
See Iowa Administrative Code rule 701—
subsequent years total investment income which
503.7(6) for more information on sourcing
is determined to be business income will be
receipts from printed and electronic media.
Included in the numerator as follows (see Iowa
Line 1g: Gross receipts from utilities services
Administrative Code rule 701—503.2(3) for
- Include all gross receipts after returns and
clarification):
allowances as reported on the federal form 1120S
• Accounts receivable interest is to be included
from utilities services. See Iowa Administrative
in Column A (numerator) to the extent allocable
Code rule 701—503.7(7) and 701—503.7(8) for
to Iowa.
more information on sourcing receipts from
•
Capital and ordinary gains or losses, or rent
utilities services.
and royalties from tangible property or real
Line 1h: Gross receipts from financial
property must be included in Column A
activities - Include all gross receipts after returns
(numerator) for property located in Iowa.
and allowances as reported on the federal form
•
Other investment income including interest,
1120S from financial activities. See Iowa
dividends, capital and ordinary gains, and
Administrative Code rule 701—503.6(3) for more
royalties from intangibles must be included in
information on sourcing receipts from financial
Column A (numerator) if the commercial
activities.
domicile is in Iowa.
Line 10: Partnership gross receipts – When
For an S corporation first doing business in Iowa,
reporting
gross
receipts
from
another
the election to include or exclude eligible
partnership, include a schedule detailing the
investment income determined to be business
partnership name, partnership FEIN, share of
income in the BAR of that year’s initial return is
partnership Iowa receipts (Column A), and share
binding on all subsequent years’ returns. The
of partnership everywhere receipts (Column B)
election to include or exclude business
for each partnership reported on this line.
investment income in the BAR can later be
Line 11: Other – Include a schedule detailing the
changed only with permission of the Director of
type and amount of other income included on this line.
the Iowa Department of Revenue. See Iowa
Administrative Code rule 701—503.2 for
Apportionment
guidelines:
For
more
additional information about the election and the
information about allocation and apportionment
apportionment of investment income.
of Iowa income, see Iowa Code section 422.33(2)
and Iowa Administrative Code 701—Chapter
Iowa Schedule K – Distributive Share Items
503.
The Iowa Schedule K is a summary schedule of
all the shareholders’ shares of the S corporation’s
Investment business income: All investment
income, deductions, and Iowa adjustments, and
income that is business income, including capital
how those amounts are allocated and
gains or losses, must be included in the
apportioned within and without Iowa. The Iowa
computation of the BAR if the investment income is
Schedule K also provides a summary of the Iowa
derived from intangible property that has become
composite tax paid for nonresident shareholders
an integral part of some business activity occurring
42-005k (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 12
Third Party Disclosure Designee
with the S corporation’s IA PTE-C Iowa
If the taxpayer would like to designate an
Composite Return, or the Iowa PTET credits
individual to discuss this return with the
reportable to shareholders.
Department, complete this section with that
Column (a) Federal/All-source amount: In
individual’s information.
Column (a), lines 1-14 enter the amount from the
An individual listed in this section will be able to
corresponding line of the S corporation’s federal
discuss and receive information from the
1120-S Schedule K. In Column (a), line 15 “Other
Department about this return. This authorization
deductions”, enter the sum of the other separately
is specific to the S corporation income tax return
stated deductions from the federal Schedule K,
for this tax year. If the taxpayer wishes to have
line 12d. However, do not include any amount
this individual represent the taxpayer on other
that is only informational and not available as a
matters, or for other tax years, the taxpayer must
current-year deduction to the shareholder.
submit an IA 8821 Tax Information Disclosure
For Column (a), line 16 “Iowa modifications”,
Designation or IA 2848 Power of Attorney.
enter the total net Iowa modifications reported on
This authorization is limited to the ability to
Part 4, line 20 of this return.
discuss the return and receive return information
Column (b) Amount subject to apportionment:
from the Department. It does not authorize the
For each line in Column (b), enter the amount
individual to act on behalf of the taxpayer or to
from Column (a) that is subject to apportionment.
appoint another person as Power of Attorney for
This is determined by reducing each amount in
the taxpayer.
Column (a) by any portion of that income, loss,
Signature
deduction, or modification that was reported as
The return must be signed and dated by the
nonbusiness income on Iowa Schedule D. If the
president or other duly authorized officer. An
S corporation did not complete an Iowa Schedule
amended return must be signed and dated by the
D for the year, column (b) must equal column (a).
Iowa pass-through representative for the tax year.
The sum of the amounts reported in Column (b)
The return will not be considered valid unless this
should
equal
the
income
subject
to
requirement is met. Also include the signer’s title
apportionment reported on Part 4, line 23 of this
and daytime phone number.
return.
Column (c) BAR: In Column (c), enter the S
corporation’s BAR from Schedule E, line 13.
Column (d) Iowa apportioned amount: In
Column (d), lines 1-16, multiply the amount in
Column (b) by the BAR in Column (c). This is the
S corporation’s income apportioned to Iowa.
Enter on Column (d), line 17 the Iowa
nonbusiness income from Part 4, line 26 of this
return. Finally, enter on Column (d), line 18 the
total Iowa composite tax paid for the nonresident
shareholders as reported on the S corporation’s
2022 IA PTE-C, line 1, or enter on Column (d),
line 19 the Iowa PTET credits reported to
shareholders. The Iowa PTET credits reported to
shareholders equals the S corporation’s net Iowa
PTET from Part 6, line 40 x 94% (.94). However,
if you are using this return to make a PTET
election for a short tax year that began in 2024,
the Iowa PTET credits reported to shareholders
equals the S corporation’s net Iowa PTET from
Part 6, line 40 x 94.3% (.943).

Authorized Signer:
By signing this form, you attest that you are
authorized to act on behalf of the S corporation in
tax matters. The Department will consider the
person who signs this form to have full authority
to interact with the Department on behalf of the
taxpayer without the need to file an additional
Representative Certification form. This includes
the ability to discuss the return and other tax
matters with the Department, act on behalf of the
taxpayer, and to appoint a Power of Attorney to
represent the taxpayer before the Department.
Preparer Information
If the return was prepared by someone other than
the taxpayer, all lines for preparer information
must be completed. Enter the Preparer Tax
Identification Number (PTIN) issued by the IRS
for the preparer’s identification. A Tax Return
Preparer as defined by Iowa Code section 421.62
may be subject to penalty for failure to include
their PTIN.
42-005l (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 13
Instructions for preparing the IA 1120S
• Enter the shareholder’s share of the S
Schedule K-1
corporation’s total nonbusiness income from
IA Schedule K-1 shows each shareholder’s share
Iowa Schedule D, line 17.
of all-source income and deductions, Iowa • Enter the S corporation’s BAR from the IA
modifications, Iowa allocated and apportioned
1120S, Schedule E, line 13.
amounts, Iowa tax credits, and other important • Answer yes or no to the question of whether
information. Complete information for each
the S corporation is including additional
shareholder in an acceptable format must be
attachments with the K-1.
provided. The IA 1120S and IA Schedule K-1 are • Answer yes or no to the question of whether
provided on our website.
the S corporation made a PTET election for the
tax year.
Part I: General Information
Corporation information
Part II: Shareholder’s Pro Rata Share Items:
Enter the name and Federal Employer
Column (a) federal/all-source amounts: Enter
Identification Number (FEIN) of the S corporation
the shareholder’s pro rata share of the federal/allon each IA Schedule K-1.
source S corporation items from the
corresponding lines of the IA 1120S, Iowa
If this is an amended IA Schedule K-1, check the
Schedule K, column (a). The allocation of
“Amended K-1” box. If the S corporation is
shareholder items among shareholders should
amending for a federal centralized partnership
be consistent with the allocations made on the
audit change or an Iowa pass-through entity audit
federal Schedules K-1. Alternative allocations of
change and is electing to pay with an IA 103, do
S corporation items among shareholders for Iowa
not issue amended Schedules K-1. Instead, the
tax
purposes are not permitted.
S corporation will need to send a letter to the
shareholder as described on the instructions
Column (b) amounts attributable to Iowa: On
above for the IA 1120S, line 41.
lines 1-16 of column (b) enter the shareholder’s
pro rata share of the Iowa apportioned amount
Shareholder Information
from the corresponding lines of the IA 1120S,
• Enter name, Social Security Number (SSN) or
Iowa Schedule K, column (d). On line 17 of
FEIN, and address of shareholder. In the case
column (b), enter the shareholder’s pro rata share
of a disregarded entity, enter the applicable
of the Iowa allocated income from the IA 1120S,
information of the beneficial owner.
Iowa Schedule K, column (d), line 17.
• Check either the resident shareholder or
nonresident shareholder box. A nonresident
Provide a supplemental schedule to shareholders
shareholder includes any individual who is not
with the IA Schedule K-1 describing the type and
a resident of Iowa, any estate or trust without a
amount of each Iowa modification or Iowa allocated
situs in Iowa, or any business entity without a
income reported on lines 16 or 17, if any.
commercial domicile in Iowa. Any shareholder
Part III: Iowa Composite and PTET Credits:
whose state or residence, situs, or commercial
On line 1, enter the nonresident shareholder’s
domicile, as applicable, is not known by the S
share of the Iowa composite tax paid by the S
corporation shall be considered a nonresident
corporation from the total reported on the IA
shareholder.
1120S, Iowa Schedule K, column (d), line 18.
• Check the appropriate box for the
On line 2, enter the shareholder’s share of the
shareholder’s entity type.
Iowa PTET credit from the total reported on the
• Enter shareholder’s percentage of ownership
IA 1120S, Iowa Schedule K, column (d), line 19.
in the S corporation.
PTET credits must be allocated to shareholders
• Enter the shareholder’s share of the S
in the ratio of each shareholder’s share of the
corporation’s Iowa receipts reported on the IA
earnings of the S corporation to the S
1120S, Schedule E, column A, line 12.
corporation’s total earnings.
• Enter the shareholder’s share of the S
corporation’s everywhere receipts reported on
the IA 1120S, Schedule E, column B, line 12.
42-005m (11/03/2023)

2023 IA 1120S Iowa Income Tax Return of S Corporation Instructions, page 14
Part IV: Shareholder’s portion of Iowa credits:
Enter the shareholder’s pro rata share of each
Iowa tax credit included by the S corporation on
the IA 1120S, Schedule B. For each tax credit
claim provide the tax credit code, tax credit
certificate number (if applicable), and current
year amount allocated to the shareholder. Tax
credits must be allocated to shareholder in the
ratio of each shareholder’s share of the earnings
of the S corporation to the S corporation’s total
earnings, unless Iowa law explicitly provides for a
different method of allocation.
Franchise Tax Credit
If you are a financial institution and the
shareholder is eligible to claim the Franchise Tax
Credit, you must include the following
information on a separate supplemental
schedule with the IA Schedule K-1 to allow
shareholders to complete an IA 147:
• The financial institution’s total net income
from IA 1120S, Part 4, line 21.
• The financial institution’s total franchise
tax liability minus credit claims from IA
1120F, line 14.
• The shareholder’s ownership percentage.

Individual
shareholders:
Resident
and
nonresident individual shareholders must report
all S corporation income that is reportable on the
shareholder’s federal individual income tax return
when completing the IA 1040 Iowa Individual
Income Tax Return. The shareholder’s all-source
Iowa modifications from IA Schedule K-1, column
(a), line 16 are reported as “Other Income” on the
IA 1040, Schedule 1, line 11, column (A) if
positive or as “Other Adjustments” on the IA
1040, Schedule 1, line 19, column (B) if negative,
to the extent they affect Iowa net income. In
addition, nonresident or part-year resident
individual shareholders report the IA Schedule K1, column (b) amounts attributable to Iowa on the
IA 126, Iowa Nonresident and Part-Year Resident
Credit. Report the Iowa-source amount of each S
corporation item on the appropriate line of the IA
126, to the extent it affects Iowa net income. Iowa
modifications and Iowa allocated income from the
IA Schedule K-1, column (b), lines 16 and 17 are
reportable on the IA 126, line 12 (if positive) or
line 23 (if negative).

Information for shareholders on reporting the
IA 1120S Schedule K-1
Any shareholder can have nexus with Iowa for
income or franchise tax purposes and an Iowa tax
return filing requirement by having an ownership
interest in an S corporation doing business in Iowa.

Estate/trust
shareholders:
Resident
and
nonresident estate/trust shareholders must report
all S corporation income that is reportable on the
shareholder’s federal income tax return when
completing the IA 1041. The shareholder’s allsource modifications from IA Schedule K-1,
column (a), line 16 are reported on the IA 1041,
Schedule A, Part I, line 4 (if positive) or Part II,
line 6 (if negative). In addition, nonresident or
part-year resident estates/trusts report the IA
Schedule K-1, column (b) amounts attributable to
Iowa on the IA 1041, Schedule C Computation of
Nonresident/Part-year Resident Tax Credit.
Report the Iowa-source amount of each S
corporation item on the appropriate line of the IA
1041, Schedule C to the extent it affects Iowa
taxable income. Iowa modifications and Iowa
allocated income from the IA Schedule K-1,
column (b), lines 16 and 17 are reportable on the
IA 1041, Schedule C, Column B, line 18, to the
extent they affect Iowa taxable income.

If the tax year of a shareholder is different than
that of the S corporation, the distributive share of
S corporation items is to be included on the
shareholder’s Iowa return for the tax year during
which the tax year of the S corporation ends.
Business-entity shareholders: Any shareholder
that is a business entity (corporation, partnership,
LLC, etc.) must use the appropriate amounts from
the Iowa Schedule K-1 to complete their Iowa tax
return. When reporting business income, the
shareholder’s all-source Iowa modifications from
IA Schedule K-1, column (a), line 16 are reported
on Schedule A of the IA 1065, IA 1120, IA 1120S,
or IA 1120F. The shareholder’s share of the S
corporation’s Iowa Receipts and Receipts
Everywhere from the IA Schedule K-1, Part I, are
reported on the BAR of the IA 1065, IA 1120, IA
1120S, or on the IA Franchise Schedule 59F of
the IA 1120F.

42-005n (11/03/2023)