Form 128a - Iowa Alternative Incremental Research Activities Credit printable pdf download

Special Instructions

Form 128A is used only if the taxpayer elects to use the alternative incremental research activities

credit. The alternative credit is available for tax years beginning on or after January 1, 2000. Form 128

should be used if the regular research activities credit is claimed. The taxpayer may elect to use this

alternative method regardless of the method used in computing the federal research activities credit.

This option is for Iowa purposes and is effective only for the current tax year. The taxpayer is not

required to use this alternative method in computing the research activities credit for subsequent years.

Lines 1, 2, 3, 6, 7, 8 and 9 - Enter only that portion of the qualifying research expenses that occurred

in Iowa.

Line 11 - Enter the average annual Iowa gross receipts for the four tax years before the year in which

the credit is being determined. You may be required to annualize gross receipts for any short tax year.

Lines 20, 21, and 22 - If research activities are conducted by eligible businesses under the New Jobs

and Income Program, New Capital Investment Program, High Quality Job Creation Program or the

Enterprise Zone Program, the higher percentages can be used to determine the credit. Effective July 1,

2005, research activities under the high quality job creation program or under the enterprise zone program

include the development and deployment costs of innovative renewable energy generation components

manufactured or assembled in Iowa. This cannot include components with more than 200 megawatts

of installed effective nameplate capacity. These costs are not eligible for the federal alternative

incremental research activities credit. A separate form IA 128A must be completed to account for these

expenses, which can be included on line 7 of the separate form IA 128A. The amount of the additional

credit relating to these expenses must use the lower percentages reflected on lines 20, 21 and 22.

EXAMPLE: An eligible business computes an Iowa alternative incremental research activities credit

of $50,000 using the lower percentages on lines 20, 21 and 22 and excluding any costs relating to

innovative renewable energy generation components. When the costs relating to innovative renewable

energy generation components are included on line 7, the Iowa credit is $75,000 using the lower

percentages on lines 20-22. The business can claim the higher percentages for the $50,000 computation,

which would result in an Iowa credit of $100,000. This can be added to the additional credit relating to

the innovative renewable energy generation components of $25,000, resulting in a total Iowa alternative

incremental research activities credit of $125,000.

41-129 (11/16/05)

Form 128a - Iowa Alternative Incremental Research Activities Credit