Ill. Admin. Code tit. 86 § 100.5270
EXAMPLE 1: Corporations A and B properly make an election under IITA Section 502(e), or are properly required to file a combined return under IITA Section 502(e). On a separate return basis, A's federal taxable income would be a loss of ($500). This amount does not include an excess capital loss of $75 pursuant to IRC section 1211(a). B's federal taxable income is $1,000 of which $100 is capital gain. As a result of applying 26 CFR 1.1502-11 and 26 CFR 1.1502 -22, the combined federal taxable income for A and B is $425.
EXAMPLE 2: Same facts as Example 1 in subsection (a)(1) except that Corporation C has also properly joined in the election, or is properly required to join in the combined return filing, and its federal taxable income is a loss of ($800). If there are no addition or subtraction modifications and all of the group's base income is apportioned to Illinois, the group's combined Illinois net loss for the taxable year is ($375).
EXAMPLE 3: Same facts as Example 2 in subsection (a)(2). Assuming the taxable year ends prior to December 31, 1986, the group's combined net operating loss of ($375) shall be divided between A and C as follows for purposes of carryback and carryover:
Corp. A: 500/1,300 x (375) = 144
Corp. C: 800/1,300 x (375) = 231
EXAMPLE 4: Same facts as Example 2 in subsection (a)(2) except that the group had combined excess addition modifications of $100. This amount will be divided among the loss members as follows:
Corp. A: 500/1,300 x 100 = 38
Corp. C: 800/1,300 x 100 = 62
EXAMPLE 1: Corporations A, B and C constitute a unitary business group. Corporations A and B are eligible to make the election under IITA Section 502(e) for tax years ending before December 31, 1993. However, under Public Law 86-272, Corporation C is not taxable in Illinois. Based on these facts, if the election to be treated as one taxpayer is made, the combined Illinois sales factor shall be determined by dividing the combined group's total combined Illinois sales (that is, excluding any sales of Corporation C shipped to purchasers in Illinois) by the total combined sales of the unitary business group everywhere. If the same facts are applied to a tax year ending on or after December 31, 1993, the same result will occur in the mandatory combined return situation.
EXAMPLE 2: Same facts as in Example 1, except these additional facts also exist. Under Public Law 86-272, Corporations B and C are taxable in South Carolina, but corporation A is not. Based on these facts, if the election to be treated as one taxpayer is made, or the taxpayers are required to be treated as one taxpayer, the combined Illinois sales factor shall be determined by dividing the combined group's total Illinois sales (including any sales of Corporation A shipped to purchasers in South Carolina from any place of storage in Illinois, i.e., throwback sales) by the total sales of the unitary business group everywhere.
EXAMPLE 1: Corporations A, B and C were members of a unitary business group that elected to file a combined return for 1989. Corporation D was not a member of the ABC combined group in 1989, but becomes a member of combined group ABCD filing a combined return for 1990. During 1989, Corporations A, B and C employed a total of 150 persons in Illinois and Corporation D employed 50 people in Illinois, for a total of 200. During 1990, Corporations A, B and C employed 100 persons in Illinois and Corporation D employed 100 persons in Illinois, again for a total of 200. IITA Section 201(e), which provides for a Replacement Tax Investment Credit for qualified property placed in service by the taxpayer during the year, allows an additional 0.5 % credit for that property to a taxpayer whose Illinois employment has increased by at least 1% over its Illinois employment in the immediately preceding year. Combined group ABCD cannot qualify for the additional 0.5% credit during 1990 because the combined Illinois employment of Corporations A, B, C and D remained unchanged between 1989 and 1990. Because eligibility is determined at the combined group level, no additional credit is allowed for qualified property placed in service by Corporation D in 1990, even though Corporation D's Illinois employment doubled between 1989 and 1990.
EXAMPLE 2: Corporations P, Q, R and S filed a combined Illinois return for calendar year 1990. On January 1, 1991, Corporation S was sold to an unrelated purchaser. Corporations P, Q and R filed a combined Illinois return for calendar year 1991. Combined group PQRS employed 400 people in Illinois during 1990, 100 of whom were actually employees of Corporation P and 100 of whom were actually employees of Corporation S. Combined group PQR employed 350 people in Illinois during 1991, 50 of whom were actually employees of Corporation P. Combined group PQR can qualify for the additional 0.5% Replacement Tax Investment Credit allowed under IITA Section 201(e) for qualified property placed in service during 1990 because the Illinois employment of the three members of the combined group increased from 300 in 1989 to 400 in 1990. Because the eligibility is determined at the combined group level, property placed in service by Corporation P during 1990 may qualify for the additional 0.5% credit even though Corporation P's Illinois employment actually decreased.
EXAMPLE 3: Prior to its 2013 repeal by Public Act 98-109, IITA Section 201(g) allowed a Jobs Tax Credit equal to $500 per eligible employee hired to work in an enterprise zone during a taxable year. The taxpayer must hire 5 or more eligible employees during the taxable year in order to qualify for the credit. The credit is taken in the taxable year following the year the employee is hired. Corporations W, X, Y and Z filed a combined Illinois return for calendar year 1990. Corporation Z was sold to an unrelated purchaser on December 31, 1990. Corporations W, X and Y filed a combined return for 1991. During 1990, WXYZ hired 5 eligible employees to work in an enterprise zone, 3 of whom were actually hired by Corporation Z. Combined group WXY may claim a Jobs Tax Credit of $2,500 for 1991 because it hired 5 eligible employees during 1990. The fact that Corporation Z, which hired 3 of the employees, left the combined group at the beginning of 1991 does not alter the fact that the combined group earned the Jobs Tax Credit nor entitle Corporation Z to any portion of the credit for its separate company return for 1991.
1990 | 1991 | 1992 | 1993 | |
Corp. A | 50,000 | 50,000 | 50,000 | 0 |
Corp. B | 25,000 | 25,000 | 100,000 | 200,000 |
Corp. C | 75,000 | 125,000 | 100,000 | 100,000 |
150,000 | 200,000 | 250,000 | 300,000 |
EXAMPLE 1: A, B, and C filed combined returns for the years ending December 31, 1990, December 31, 1991, December 31, 1992 and December 31, 1993. The proper amount of the Research and Development Credit for the year ending December 31, 1993 is determined based upon the combined activities on the combined return and is calculated as follows:
Total qualified expenditures for 1993................................ 300,000
Average qualified expenditures for 1990-92..................... 200,000
Excess of 1993 expenditures over base period.................. 100,000
Research and development credit for 1993........................... 6,500
EXAMPLE 2: A and B filed a combined return for the year ending December 31, 1990. C filed a separate return for the year ending December 31, 1990. A purchased the common stock of C on January 1, 1991. A, B and C filed combined returns for the years ending December 31, 1991, December 31, 1992 and December 31, 1993. The $75,000 of expenses for qualified research activities in Illinois incurred by C for the year ending December 31, 1990 should be included in the calculation of the average qualified expenditures for the base period. The credit for the combined return is calculated as follows:
Total qualified expenditures for 1993................................ 300,000
Average qualified expenditures for 1990-92..................... 200,000
Excess of 1993 expenditures over base period.................. 100,000
Research & Development Credit for 1993............................. 6,500
EXAMPLE 3: A, B and C filed combined returns for the years ending December 31, 1990, December 31, 1991 and December 31, 1992. On January 1, 1993, A sold the common stock of C to P (an unrelated corporation). For the year ending December 31, 1993, C was included in the combined return filed by P. In determining the proper amount of the Research and Development Credit for the combined return filed by A and B for the year ending December 31, 1993, the expenses for qualified research activities in Illinois incurred by C of $75,000, $125,000 and $100,000 for the years ending December 31, 1990, December 31, 1991 and December 31, 1992, respectively, shall not be included in the calculation of the average qualified expenditures for the base period for A and B for the year ending December 31, 1993. The credit for the combined return for A and B for the year ending December 31, 1993 is calculated as follows:
Total qualified expenditures for 1993................................ 200,000
Average qualified expenditures for 1990-92..................... 100,000
Excess of 1993 expenditures over base period.................. 100,000
Research & Development Credit for 1993............................. 6,500
EXAMPLE: In 1985, Corporation A purchased $300,000 of eligible property, $200,000 of which was used by A and $100,000 of which was transferred to and used by Corporation B. A and B filed a combined return for the year that showed an income tax liability of $1,000 and an investment credit of $1,500. The group's unused credit was $500. In 1987, B left the group, and during that year it owned and continued to use the $100,000 of eligible property. Its credit carryforward would be computed as follows:
$500 x $100,000/$300,000 = $166.67
EXAMPLE: Same facts as in the Example in subsection (d)(6) except in 1987 Corporation A transferred its eligible property (originally purchased for $200,000 in 1985) to Corporation B. Corporation B was acquired by Corporation C in 1987 and, immediately afterward, B sold all the eligible property (originally purchased for a total of $300,000) to an unrelated third party. B and C file a combined return for that year and their tax liability is increased by $1,000 due to the credit that was allowed on the combined return filed by A and B in 1985 and recaptured in 1987.
Ill. Admin. Code tit. 86, § 100.5270
Amended at 26 Ill. Reg. 13237, effective August 23, 2002