Iowa: Department of Revenue Revises GILTI Guidance

The Iowa Department of Revenue recently issued guidance addressing the state’s revised treatment of GILTI.  Prior to the passage of House File 2641, taxpayers were required to include GILTI in their Iowa tax base, but were allowed the IRC section 250 deduction.  Under the revised law, an exclusion applies to the net GILTI amount (i.e., amounts included in income under IRC section 951A net of the IRC section 250 deduction).  The exclusion applies retroactively to tax years beginning on or after January 1, 2019. Importantly, the exclusion does not apply to individual and fiduciary income taxpayers who must include all GILTI in their Iowa net income to the same extent it is included in their federal adjusted gross income.  The guidance also states that Iowa does not respect an IRC section 962 election, noting that “if an individual is permitted to file as a corporation under the IRC, that fictional status is not recognized for Iowa purposes.”  Lastly, the Department provides reporting instructions for individual, fiduciary, pass-through, and corporate taxpayers and clarifies that GILTI should not be included in calculating a taxpayer’s Iowa apportionment factor.  Please contact Caroline Balfour  at 612-305-5798 with questions.