Illinois Administrative Code
Title 86 - REVENUE
Part 100 - INCOME TAX
Subpart B - CREDITS
Section 100.2160 - Research and Development Credit (IITA Section 201(k))
Current through Register Vol. 47, No. 12, March 24, 2023
a) For tax years ending after July 1, 1990 and prior to December 31, 2003, and tax years ending on or after December 31, 2004 and prior to January 1, 2027, each taxpayer shall be allowed a credit against the tax imposed by IITA Section 201(a) and (b) for increasing research activities in this State. It is the intent of the General Assembly that the research and development credit under IITA Section 201(k) applies continuously for all tax years ending on or after December 31, 2004 and ending prior to January 1, 2027, including, but not limited to, the period beginning on January 1, 2016, the date on which the credit expired prior to enactment of PA 100-22, and ending on July 6, 2017, the effective date of PA 100-22. All actions taken in reliance on the continuation of the credit under IITA Section 201(k) by any taxpayer are hereby validated. (IITA 201(k))
b) The credit allowed shall be equal to 61/2% of the qualifying expenditures for increasing research activities in this State. (IITA Section 201(k))
c) Not all "research" will qualify for the credit. Nor will every expenditure associated with research qualify for the credit. Qualified research is defined in IRC section 41(d). Qualifying expenditures means the qualifying expenditures as defined for the federal credit for increasing research activities which would be allowable under IRC section 41 and which are conducted in this State.
d) Qualifying expenditures for increasing research activities in this State means the excess of qualifying expenditures for the taxable year in which incurred over qualifying expenditures for the base period. Qualifying expenditures for the base period means the average of the qualifying expenditures for each year in the base period.
e) Base period means the 3 taxable years immediately preceding the taxable year for which the determination is being made. For purposes of computing the average qualifying expenditures for the base period:
f) Any credit in excess of the tax liability for the taxable year may be carried forward to offset the income tax liability of the taxpayer for the next 5 years or until it has been fully utilized, whichever occurs first (IITA Section 201(k)), provided that no credit earned in a tax year ending prior to December 31, 2003 may be carried forward to any year ending on or after December 31, 2003. If an unused credit is carried forward to a given year from 2 or more earlier years, that credit arising in the earliest year is applied first. If a tax liability for the given year remains, the credit from the next earliest year is applied. Any remaining unused credit or credits can be carried forward to the next following year in which a tax liability exists. However, the credit can only be carried forward 5 years from the year in which the taxpayer incurred the expense for which the credit was given. Any unused credit is then forfeited.
g) Combined Returns. In the case of taxpayers filing combined returns, Section 100.5270(d) details the manner in which the credit is determined.
h) Pass-through of Credits to Partners and Subchapter S Corporation Shareholders
Amended at 38 Ill. Reg. 9550, effective April 21, 2014
Amended at 44 Ill. Reg. 2845, effective 1/30/2020