Illinois Administrative Code › Title 86 - REVENUE › Part 100 - INCOME TAX › Subpart C - NET OPERATING LOSSES OF UNITARY BUSINESS GROUPS OCCURRING PRIOR TO DECEMBER 31, 1986 › Section 100.2230 - Net Operating Losses Occurring Prior to December 31, 1986, of Unitary Business Groups: Treatment by Members of the Unitary Business Group. (IITA Section 202) - Carrybacks and Carryforwards

Current through Register Vol. 48, No. 28, July 12, 2024
a) The Illinois income tax treatment of net
				operating loss carrybacks and carryforwards will generally follow that of the
				Internal Revenue Code. However, to the extent that a federal net operating loss
				for Illinois income tax purposes of a member is absorbed in the computation of
				combined federal taxable income in the year that it arose, no carryback or
				carryforward of that loss will be allowed. This prohibition is mandated by IITA
				Section 203(g) which precludes deducting the same item more than once.
EXAMPLE: Corporations A, B, C and D are members of a unitary
				  business group for calendar year 1982. In that year, Corporations A, B and C
				  had federal taxable incomes for Illinois income tax purposes of $200,000,
				  $300,000 and $500,000, respectively, while Corporation D had a federal net
				  operating loss for Illinois income tax purposes of $250,000. Since Corporation
				  D's 1982 federal net operating loss for Illinois income tax purposes is used to
				  offset the 1982 federal taxable incomes for Illinois income tax purposes of the
				  other group members in the computation of 1982 combined federal taxable income,
				  Corporation D will not be able to carry back to 1979 or carry forward to 1983
				  or later years any portion of its 1982 federal net operating loss for Illinois
				  income tax purposes. In these circumstances, Corporation D would not be
				  entitled to a refund of 1979 Illinois income tax based on a net operating loss
				  carryback from 1982 even if it received a refund of its 1979 federal income tax
				  on that basis. In addition, if Corporation D carried forward the 1982 net
				  operating loss to 1983 or later years in computing federal taxable income for
				  federal income tax purposes, it is obligated to adjust that figure upward by
				  those carryforward amounts in calculating its federal taxable income for
				  Illinois income tax purposes for those carryforward years.
b) In the event that the group members'
				federal taxable incomes for Illinois income tax purposes and federal net
				operating losses for Illinois income tax purposes result in a combined federal
				net operating loss, this loss will be divided among those group members which
				incur federal net operating losses for Illinois income tax purposes. This
				division will be made pro rata based on the relative size of the federal net
				operating losses for Illinois income tax purposes of the members having such
				losses. The members will then individually carryback or carryforward their
				respective shares of the combined federal net operating loss in conformity with
				the applicable provisions of 26 U.S.C. Section 172, i.e. generally 3 year
				carryback and 15 year carryforward; for financial institutions, 10 year
				carryback and a 5 year carryforward; for real estate investment trusts, no
				carryback and a 15 year carryforward, etc. However, the amount of the loss that
				the individual member (hereinafter sometimes referred to as the "loss member")
				can carryback or forward to any year shall be limited to the lesser of the
				following amounts computed with respect to the carryback or carryforward year.
1) (hereinafter sometimes referred to as
				Limitation No. 1) The sum of the federal taxable incomes and federal net
				operating losses for Illinois income tax purposes in that year for the loss
				member and any other person that was a member of the same unitary business
				group as the loss member in that year and in the year that the loss was
				incurred by the loss member.
2)
				(hereinafter sometimes referred to as Limitation No. 2) The combined federal
				taxable income for that year of any unitary business group to which the loss
				member belonged.