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| [ Introduced ] | [ Senate Amendment 001 ] |
90_SB0484eng
35 ILCS 5/201 from Ch. 120, par. 2-201
Amends the Illinois Income Tax Act. Provides that, for
partners, shareholders of subchapter S corporations, and
owners of limited liability companies, there shall be allowed
a research and development credit to be determined in
accordance with the determination of income and distributive
share of income under the Internal Revenue Code. States that
this amendatory Act is declarative of existing law and is not
a new enactment.
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1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 201.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 201 as follows:
7 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
8 Sec. 201. Tax Imposed.
9 (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate
11 for each taxable year ending after July 31, 1969 on the
12 privilege of earning or receiving income in or as a resident
13 of this State. Such tax shall be in addition to all other
14 occupation or privilege taxes imposed by this State or by any
15 municipal corporation or political subdivision thereof.
16 (b) Rates. The tax imposed by subsection (a) of this
17 Section shall be determined as follows:
18 (1) In the case of an individual, trust or estate,
19 for taxable years ending prior to July 1, 1989, an amount
20 equal to 2 1/2% of the taxpayer's net income for the
21 taxable year.
22 (2) In the case of an individual, trust or estate,
23 for taxable years beginning prior to July 1, 1989 and
24 ending after June 30, 1989, an amount equal to the sum of
25 (i) 2 1/2% of the taxpayer's net income for the period
26 prior to July 1, 1989, as calculated under Section 202.3,
27 and (ii) 3% of the taxpayer's net income for the period
28 after June 30, 1989, as calculated under Section 202.3.
29 (3) In the case of an individual, trust or estate,
30 for taxable years beginning after June 30, 1989, an
31 amount equal to 3% of the taxpayer's net income for the
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1 taxable year.
2 (4) (Blank).
3 (5) (Blank).
4 (6) In the case of a corporation, for taxable years
5 ending prior to July 1, 1989, an amount equal to 4% of
6 the taxpayer's net income for the taxable year.
7 (7) In the case of a corporation, for taxable years
8 beginning prior to July 1, 1989 and ending after June 30,
9 1989, an amount equal to the sum of (i) 4% of the
10 taxpayer's net income for the period prior to July 1,
11 1989, as calculated under Section 202.3, and (ii) 4.8% of
12 the taxpayer's net income for the period after June 30,
13 1989, as calculated under Section 202.3.
14 (8) In the case of a corporation, for taxable years
15 beginning after June 30, 1989, an amount equal to 4.8% of
16 the taxpayer's net income for the taxable year.
17 (c) Beginning on July 1, 1979 and thereafter, in
18 addition to such income tax, there is also hereby imposed the
19 Personal Property Tax Replacement Income Tax measured by net
20 income on every corporation (including Subchapter S
21 corporations), partnership and trust, for each taxable year
22 ending after June 30, 1979. Such taxes are imposed on the
23 privilege of earning or receiving income in or as a resident
24 of this State. The Personal Property Tax Replacement Income
25 Tax shall be in addition to the income tax imposed by
26 subsections (a) and (b) of this Section and in addition to
27 all other occupation or privilege taxes imposed by this State
28 or by any municipal corporation or political subdivision
29 thereof.
30 (d) Additional Personal Property Tax Replacement Income
31 Tax Rates. The personal property tax replacement income tax
32 imposed by this subsection and subsection (c) of this Section
33 in the case of a corporation, other than a Subchapter S
34 corporation, shall be an additional amount equal to 2.85% of
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1 such taxpayer's net income for the taxable year, except that
2 beginning on January 1, 1981, and thereafter, the rate of
3 2.85% specified in this subsection shall be reduced to 2.5%,
4 and in the case of a partnership, trust or a Subchapter S
5 corporation shall be an additional amount equal to 1.5% of
6 such taxpayer's net income for the taxable year.
7 (e) Investment credit. A taxpayer shall be allowed a
8 credit against the Personal Property Tax Replacement Income
9 Tax for investment in qualified property.
10 (1) A taxpayer shall be allowed a credit equal to
11 .5% of the basis of qualified property placed in service
12 during the taxable year, provided such property is placed
13 in service on or after July 1, 1984. There shall be
14 allowed an additional credit equal to .5% of the basis of
15 qualified property placed in service during the taxable
16 year, provided such property is placed in service on or
17 after July 1, 1986, and the taxpayer's base employment
18 within Illinois has increased by 1% or more over the
19 preceding year as determined by the taxpayer's employment
20 records filed with the Illinois Department of Employment
21 Security. Taxpayers who are new to Illinois shall be
22 deemed to have met the 1% growth in base employment for
23 the first year in which they file employment records with
24 the Illinois Department of Employment Security. The
25 provisions added to this Section by Public Act 85-1200
26 (and restored by Public Act 87-895) shall be construed as
27 declaratory of existing law and not as a new enactment.
28 If, in any year, the increase in base employment within
29 Illinois over the preceding year is less than 1%, the
30 additional credit shall be limited to that percentage
31 times a fraction, the numerator of which is .5% and the
32 denominator of which is 1%, but shall not exceed .5%.
33 The investment credit shall not be allowed to the extent
34 that it would reduce a taxpayer's liability in any tax
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1 year below zero, nor may any credit for qualified
2 property be allowed for any year other than the year in
3 which the property was placed in service in Illinois. For
4 tax years ending on or after December 31, 1987, and on or
5 before December 31, 1988, the credit shall be allowed for
6 the tax year in which the property is placed in service,
7 or, if the amount of the credit exceeds the tax liability
8 for that year, whether it exceeds the original liability
9 or the liability as later amended, such excess may be
10 carried forward and applied to the tax liability of the 5
11 taxable years following the excess credit years if the
12 taxpayer (i) makes investments which cause the creation
13 of a minimum of 2,000 full-time equivalent jobs in
14 Illinois, (ii) is located in an enterprise zone
15 established pursuant to the Illinois Enterprise Zone Act
16 and (iii) is certified by the Department of Commerce and
17 Community Affairs as complying with the requirements
18 specified in clause (i) and (ii) by July 1, 1986. The
19 Department of Commerce and Community Affairs shall notify
20 the Department of Revenue of all such certifications
21 immediately. For tax years ending after December 31,
22 1988, the credit shall be allowed for the tax year in
23 which the property is placed in service, or, if the
24 amount of the credit exceeds the tax liability for that
25 year, whether it exceeds the original liability or the
26 liability as later amended, such excess may be carried
27 forward and applied to the tax liability of the 5 taxable
28 years following the excess credit years. The credit shall
29 be applied to the earliest year for which there is a
30 liability. If there is credit from more than one tax year
31 that is available to offset a liability, earlier credit
32 shall be applied first.
33 (2) The term "qualified property" means property
34 which:
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1 (A) is tangible, whether new or used,
2 including buildings and structural components of
3 buildings and signs that are real property, but not
4 including land or improvements to real property that
5 are not a structural component of a building such as
6 landscaping, sewer lines, local access roads,
7 fencing, parking lots, and other appurtenances;
8 (B) is depreciable pursuant to Section 167 of
9 the Internal Revenue Code, except that "3-year
10 property" as defined in Section 168(c)(2)(A) of that
11 Code is not eligible for the credit provided by this
12 subsection (e);
13 (C) is acquired by purchase as defined in
14 Section 179(d) of the Internal Revenue Code;
15 (D) is used in Illinois by a taxpayer who is
16 primarily engaged in manufacturing, or in mining
17 coal or fluorite, or in retailing; and
18 (E) has not previously been used in Illinois
19 in such a manner and by such a person as would
20 qualify for the credit provided by this subsection
21 (e) or subsection (f).
22 (3) For purposes of this subsection (e),
23 "manufacturing" means the material staging and production
24 of tangible personal property by procedures commonly
25 regarded as manufacturing, processing, fabrication, or
26 assembling which changes some existing material into new
27 shapes, new qualities, or new combinations. For purposes
28 of this subsection (e) the term "mining" shall have the
29 same meaning as the term "mining" in Section 613(c) of
30 the Internal Revenue Code. For purposes of this
31 subsection (e), the term "retailing" means the sale of
32 tangible personal property or services rendered in
33 conjunction with the sale of tangible consumer goods or
34 commodities.
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1 (4) The basis of qualified property shall be the
2 basis used to compute the depreciation deduction for
3 federal income tax purposes.
4 (5) If the basis of the property for federal income
5 tax depreciation purposes is increased after it has been
6 placed in service in Illinois by the taxpayer, the amount
7 of such increase shall be deemed property placed in
8 service on the date of such increase in basis.
9 (6) The term "placed in service" shall have the
10 same meaning as under Section 46 of the Internal Revenue
11 Code.
12 (7) If during any taxable year, any property ceases
13 to be qualified property in the hands of the taxpayer
14 within 48 months after being placed in service, or the
15 situs of any qualified property is moved outside Illinois
16 within 48 months after being placed in service, the
17 Personal Property Tax Replacement Income Tax for such
18 taxable year shall be increased. Such increase shall be
19 determined by (i) recomputing the investment credit which
20 would have been allowed for the year in which credit for
21 such property was originally allowed by eliminating such
22 property from such computation and, (ii) subtracting such
23 recomputed credit from the amount of credit previously
24 allowed. For the purposes of this paragraph (7), a
25 reduction of the basis of qualified property resulting
26 from a redetermination of the purchase price shall be
27 deemed a disposition of qualified property to the extent
28 of such reduction.
29 (8) Unless the investment credit is extended by
30 law, the basis of qualified property shall not include
31 costs incurred after December 31, 2003, except for costs
32 incurred pursuant to a binding contract entered into on
33 or before December 31, 2003.
34 (f) Investment credit; Enterprise Zone.
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1 (1) A taxpayer shall be allowed a credit against
2 the tax imposed by subsections (a) and (b) of this
3 Section for investment in qualified property which is
4 placed in service in an Enterprise Zone created pursuant
5 to the Illinois Enterprise Zone Act. For partners, and
6 for shareholders of Subchapter S corporations, and owners
7 of limited liability companies, if the liability company
8 is treated as a partnership for purposes of federal and
9 State income taxation, there shall be allowed a credit
10 under this subsection (f) to be determined in accordance
11 with the determination of income and distributive share
12 of income under Sections 702 and 704 and Subchapter S of
13 the Internal Revenue Code. The credit shall be .5% of the
14 basis for such property. The credit shall be available
15 only in the taxable year in which the property is placed
16 in service in the Enterprise Zone and shall not be
17 allowed to the extent that it would reduce a taxpayer's
18 liability for the tax imposed by subsections (a) and (b)
19 of this Section to below zero. For tax years ending on or
20 after December 31, 1985, the credit shall be allowed for
21 the tax year in which the property is placed in service,
22 or, if the amount of the credit exceeds the tax liability
23 for that year, whether it exceeds the original liability
24 or the liability as later amended, such excess may be
25 carried forward and applied to the tax liability of the 5
26 taxable years following the excess credit year. The
27 credit shall be applied to the earliest year for which
28 there is a liability. If there is credit from more than
29 one tax year that is available to offset a liability, the
30 credit accruing first in time shall be applied first.
31 (2) The term qualified property means property
32 which:
33 (A) is tangible, whether new or used,
34 including buildings and structural components of
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1 buildings;
2 (B) is depreciable pursuant to Section 167 of
3 the Internal Revenue Code, except that "3-year
4 property" as defined in Section 168(c)(2)(A) of that
5 Code is not eligible for the credit provided by this
6 subsection (f);
7 (C) is acquired by purchase as defined in
8 Section 179(d) of the Internal Revenue Code;
9 (D) is used in the Enterprise Zone by the
10 taxpayer; and
11 (E) has not been previously used in Illinois
12 in such a manner and by such a person as would
13 qualify for the credit provided by this subsection
14 (f) or subsection (e).
15 (3) The basis of qualified property shall be the
16 basis used to compute the depreciation deduction for
17 federal income tax purposes.
18 (4) If the basis of the property for federal income
19 tax depreciation purposes is increased after it has been
20 placed in service in the Enterprise Zone by the taxpayer,
21 the amount of such increase shall be deemed property
22 placed in service on the date of such increase in basis.
23 (5) The term "placed in service" shall have the
24 same meaning as under Section 46 of the Internal Revenue
25 Code.
26 (6) If during any taxable year, any property ceases
27 to be qualified property in the hands of the taxpayer
28 within 48 months after being placed in service, or the
29 situs of any qualified property is moved outside the
30 Enterprise Zone within 48 months after being placed in
31 service, the tax imposed under subsections (a) and (b) of
32 this Section for such taxable year shall be increased.
33 Such increase shall be determined by (i) recomputing the
34 investment credit which would have been allowed for the
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1 year in which credit for such property was originally
2 allowed by eliminating such property from such
3 computation, and (ii) subtracting such recomputed credit
4 from the amount of credit previously allowed. For the
5 purposes of this paragraph (6), a reduction of the basis
6 of qualified property resulting from a redetermination of
7 the purchase price shall be deemed a disposition of
8 qualified property to the extent of such reduction.
9 (g) Jobs Tax Credit; Enterprise Zone and Foreign
10 Trade Zone or Sub-Zone.
11 (1) A taxpayer conducting a trade or business in an
12 enterprise zone or a High Impact Business designated by
13 the Department of Commerce and Community Affairs
14 conducting a trade or business in a federally designated
15 Foreign Trade Zone or Sub-Zone shall be allowed a credit
16 against the tax imposed by subsections (a) and (b) of
17 this Section in the amount of $500 per eligible employee
18 hired to work in the zone during the taxable year.
19 (2) To qualify for the credit:
20 (A) the taxpayer must hire 5 or more eligible
21 employees to work in an enterprise zone or federally
22 designated Foreign Trade Zone or Sub-Zone during the
23 taxable year;
24 (B) the taxpayer's total employment within the
25 enterprise zone or federally designated Foreign
26 Trade Zone or Sub-Zone must increase by 5 or more
27 full-time employees beyond the total employed in
28 that zone at the end of the previous tax year for
29 which a jobs tax credit under this Section was
30 taken, or beyond the total employed by the taxpayer
31 as of December 31, 1985, whichever is later; and
32 (C) the eligible employees must be employed
33 180 consecutive days in order to be deemed hired for
34 purposes of this subsection.
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1 (3) An "eligible employee" means an employee who
2 is:
3 (A) Certified by the Department of Commerce
4 and Community Affairs as "eligible for services"
5 pursuant to regulations promulgated in accordance
6 with Title II of the Job Training Partnership Act,
7 Training Services for the Disadvantaged or Title III
8 of the Job Training Partnership Act, Employment and
9 Training Assistance for Dislocated Workers Program.
10 (B) Hired after the enterprise zone or
11 federally designated Foreign Trade Zone or Sub-Zone
12 was designated or the trade or business was located
13 in that zone, whichever is later.
14 (C) Employed in the enterprise zone or Foreign
15 Trade Zone or Sub-Zone. An employee is employed in
16 an enterprise zone or federally designated Foreign
17 Trade Zone or Sub-Zone if his services are rendered
18 there or it is the base of operations for the
19 services performed.
20 (D) A full-time employee working 30 or more
21 hours per week.
22 (4) For tax years ending on or after December 31,
23 1985 and prior to December 31, 1988, the credit shall be
24 allowed for the tax year in which the eligible employees
25 are hired. For tax years ending on or after December 31,
26 1988, the credit shall be allowed for the tax year
27 immediately following the tax year in which the eligible
28 employees are hired. If the amount of the credit exceeds
29 the tax liability for that year, whether it exceeds the
30 original liability or the liability as later amended,
31 such excess may be carried forward and applied to the tax
32 liability of the 5 taxable years following the excess
33 credit year. The credit shall be applied to the earliest
34 year for which there is a liability. If there is credit
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1 from more than one tax year that is available to offset a
2 liability, earlier credit shall be applied first.
3 (5) The Department of Revenue shall promulgate such
4 rules and regulations as may be deemed necessary to carry
5 out the purposes of this subsection (g).
6 (6) The credit shall be available for eligible
7 employees hired on or after January 1, 1986.
8 (h) Investment credit; High Impact Business.
9 (1) Subject to subsection (b) of Section 5.5 of the
10 Illinois Enterprise Zone Act, a taxpayer shall be allowed
11 a credit against the tax imposed by subsections (a) and
12 (b) of this Section for investment in qualified property
13 which is placed in service by a Department of Commerce
14 and Community Affairs designated High Impact Business.
15 The credit shall be .5% of the basis for such property.
16 The credit shall not be available until the minimum
17 investments in qualified property set forth in Section
18 5.5 of the Illinois Enterprise Zone Act have been
19 satisfied and shall not be allowed to the extent that it
20 would reduce a taxpayer's liability for the tax imposed
21 by subsections (a) and (b) of this Section to below zero.
22 The credit applicable to such minimum investments shall
23 be taken in the taxable year in which such minimum
24 investments have been completed. The credit for
25 additional investments beyond the minimum investment by a
26 designated high impact business shall be available only
27 in the taxable year in which the property is placed in
28 service and shall not be allowed to the extent that it
29 would reduce a taxpayer's liability for the tax imposed
30 by subsections (a) and (b) of this Section to below zero.
31 For tax years ending on or after December 31, 1987, the
32 credit shall be allowed for the tax year in which the
33 property is placed in service, or, if the amount of the
34 credit exceeds the tax liability for that year, whether
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1 it exceeds the original liability or the liability as
2 later amended, such excess may be carried forward and
3 applied to the tax liability of the 5 taxable years
4 following the excess credit year. The credit shall be
5 applied to the earliest year for which there is a
6 liability. If there is credit from more than one tax
7 year that is available to offset a liability, the credit
8 accruing first in time shall be applied first.
9 Changes made in this subdivision (h)(1) by Public
10 Act 88-670 restore changes made by Public Act 85-1182 and
11 reflect existing law.
12 (2) The term qualified property means property
13 which:
14 (A) is tangible, whether new or used,
15 including buildings and structural components of
16 buildings;
17 (B) is depreciable pursuant to Section 167 of
18 the Internal Revenue Code, except that "3-year
19 property" as defined in Section 168(c)(2)(A) of that
20 Code is not eligible for the credit provided by this
21 subsection (h);
22 (C) is acquired by purchase as defined in
23 Section 179(d) of the Internal Revenue Code; and
24 (D) is not eligible for the Enterprise Zone
25 Investment Credit provided by subsection (f) of this
26 Section.
27 (3) The basis of qualified property shall be the
28 basis used to compute the depreciation deduction for
29 federal income tax purposes.
30 (4) If the basis of the property for federal income
31 tax depreciation purposes is increased after it has been
32 placed in service in a federally designated Foreign Trade
33 Zone or Sub-Zone located in Illinois by the taxpayer, the
34 amount of such increase shall be deemed property placed
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1 in service on the date of such increase in basis.
2 (5) The term "placed in service" shall have the
3 same meaning as under Section 46 of the Internal Revenue
4 Code.
5 (6) If during any taxable year ending on or before
6 December 31, 1996, any property ceases to be qualified
7 property in the hands of the taxpayer within 48 months
8 after being placed in service, or the situs of any
9 qualified property is moved outside Illinois within 48
10 months after being placed in service, the tax imposed
11 under subsections (a) and (b) of this Section for such
12 taxable year shall be increased. Such increase shall be
13 determined by (i) recomputing the investment credit which
14 would have been allowed for the year in which credit for
15 such property was originally allowed by eliminating such
16 property from such computation, and (ii) subtracting such
17 recomputed credit from the amount of credit previously
18 allowed. For the purposes of this paragraph (6), a
19 reduction of the basis of qualified property resulting
20 from a redetermination of the purchase price shall be
21 deemed a disposition of qualified property to the extent
22 of such reduction.
23 (7) Beginning with tax years ending after December
24 31, 1996, if a taxpayer qualifies for the credit under
25 this subsection (h) and thereby is granted a tax
26 abatement and the taxpayer relocates its entire facility
27 in violation of the explicit terms and length of the
28 contract under Section 18-183 of the Property Tax Code,
29 the tax imposed under subsections (a) and (b) of this
30 Section shall be increased for the taxable year in which
31 the taxpayer relocated its facility by an amount equal to
32 the amount of credit received by the taxpayer under this
33 subsection (h).
34 (i) A credit shall be allowed against the tax imposed by
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1 subsections (a) and (b) of this Section for the tax imposed
2 by subsections (c) and (d) of this Section. This credit
3 shall be computed by multiplying the tax imposed by
4 subsections (c) and (d) of this Section by a fraction, the
5 numerator of which is base income allocable to Illinois and
6 the denominator of which is Illinois base income, and further
7 multiplying the product by the tax rate imposed by
8 subsections (a) and (b) of this Section.
9 Any credit earned on or after December 31, 1986 under
10 this subsection which is unused in the year the credit is
11 computed because it exceeds the tax liability imposed by
12 subsections (a) and (b) for that year (whether it exceeds the
13 original liability or the liability as later amended) may be
14 carried forward and applied to the tax liability imposed by
15 subsections (a) and (b) of the 5 taxable years following the
16 excess credit year. This credit shall be applied first to
17 the earliest year for which there is a liability. If there
18 is a credit under this subsection from more than one tax year
19 that is available to offset a liability the earliest credit
20 arising under this subsection shall be applied first.
21 If, during any taxable year ending on or after December
22 31, 1986, the tax imposed by subsections (c) and (d) of this
23 Section for which a taxpayer has claimed a credit under this
24 subsection (i) is reduced, the amount of credit for such tax
25 shall also be reduced. Such reduction shall be determined by
26 recomputing the credit to take into account the reduced tax
27 imposed by subsection (c) and (d). If any portion of the
28 reduced amount of credit has been carried to a different
29 taxable year, an amended return shall be filed for such
30 taxable year to reduce the amount of credit claimed.
31 (j) Training expense credit. Beginning with tax years
32 ending on or after December 31, 1986, a taxpayer shall be
33 allowed a credit against the tax imposed by subsection (a)
34 and (b) under this Section for all amounts paid or accrued,
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1 on behalf of all persons employed by the taxpayer in Illinois
2 or Illinois residents employed outside of Illinois by a
3 taxpayer, for educational or vocational training in
4 semi-technical or technical fields or semi-skilled or skilled
5 fields, which were deducted from gross income in the
6 computation of taxable income. The credit against the tax
7 imposed by subsections (a) and (b) shall be 1.6% of such
8 training expenses. For partners, and for shareholders of
9 subchapter S corporations, and owners of limited liability
10 companies, if the liability company is treated as a
11 partnership for purposes of federal and State income
12 taxation, there shall be allowed a credit under this
13 subsection (j) to be determined in accordance with the
14 determination of income and distributive share of income
15 under Sections 702 and 704 and subchapter S of the Internal
16 Revenue Code.
17 Any credit allowed under this subsection which is unused
18 in the year the credit is earned may be carried forward to
19 each of the 5 taxable years following the year for which the
20 credit is first computed until it is used. This credit shall
21 be applied first to the earliest year for which there is a
22 liability. If there is a credit under this subsection from
23 more than one tax year that is available to offset a
24 liability the earliest credit arising under this subsection
25 shall be applied first.
26 (k) Research and development credit.
27 Beginning with tax years ending after July 1, 1990, a
28 taxpayer shall be allowed a credit against the tax imposed by
29 subsections (a) and (b) of this Section for increasing
30 research activities in this State. The credit allowed
31 against the tax imposed by subsections (a) and (b) shall be
32 equal to 6 1/2% of the qualifying expenditures for increasing
33 research activities in this State. For partners, shareholders
34 of subchapter S corporations, and owners of limited liability
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1 companies, if the liability company is treated as a
2 partnership for purposes of federal and State income
3 taxation, there shall be allowed a credit under this
4 subsection to be determined in accordance with the
5 determination of income and distributive share of income
6 under Sections 702 and 704 and subchapter S of the Internal
7 Revenue Code.
8 For purposes of this subsection, "qualifying
9 expenditures" means the qualifying expenditures as defined
10 for the federal credit for increasing research activities
11 which would be allowable under Section 41 of the Internal
12 Revenue Code and which are conducted in this State,
13 "qualifying expenditures for increasing research activities
14 in this State" means the excess of qualifying expenditures
15 for the taxable year in which incurred over qualifying
16 expenditures for the base period, "qualifying expenditures
17 for the base period" means the average of the qualifying
18 expenditures for each year in the base period, and "base
19 period" means the 3 taxable years immediately preceding the
20 taxable year for which the determination is being made.
21 Any credit in excess of the tax liability for the taxable
22 year may be carried forward. A taxpayer may elect to have the
23 unused credit shown on its final completed return carried
24 over as a credit against the tax liability for the following
25 5 taxable years or until it has been fully used, whichever
26 occurs first.
27 If an unused credit is carried forward to a given year
28 from 2 or more earlier years, that credit arising in the
29 earliest year will be applied first against the tax liability
30 for the given year. If a tax liability for the given year
31 still remains, the credit from the next earliest year will
32 then be applied, and so on, until all credits have been used
33 or no tax liability for the given year remains. Any
34 remaining unused credit or credits then will be carried
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1 forward to the next following year in which a tax liability
2 is incurred, except that no credit can be carried forward to
3 a year which is more than 5 years after the year in which the
4 expense for which the credit is given was incurred.
5 Unless extended by law, the credit shall not include
6 costs incurred after December 31, 1999, except for costs
7 incurred pursuant to a binding contract entered into on or
8 before December 31, 1999.
9 (Source: P.A. 88-45; 88-89; 88-141; 88-547, eff. 6-30-94;
10 88-670, eff.