13 Subchapter “S” income. Where a corporation elects, under Sections 1371-1379 of the

Internal Revenue Code, to distribute the corporation’s income to the shareholders, the corporation’s income, in its entirety, is subject to individual reporting whether or not actually distributed. Both resident and nonresident shareholders shall report their share of the corporation’s net taxable income on their respective Iowa returns. Isaacson v. Iowa State Tax Commission, 183 N.W.2d 693, Iowa Supreme Court, February 9, 1971. Residents shall report their distributable share in total while nonresidents shall report only their portion of their distributable share which was earned in Iowa. For tax years beginning on or after Revenue[701] Ch 302, p.6 IAC 2/5/25 January 1, 1996, residents should refer to 701—Chapter 403 to determine if they qualify to compute Iowa taxable income by allocation and apportionment. See 701—Chapter 503 for allocation and apportionment of corporate income. This rule is intended to implement Iowa Code sections 422.7, 422.8, 422.15, and 422.36. [Editorial change: IAC Supplement 11/2/22; Editorial change: IAC Supplement 10/18/23]