Compilation of Rules and Regulations of the State of Georgia › Department 560 - RULES OF DEPARTMENT OF REVENUE › Chapter 560-7 - INCOME TAX DIVISION › Subject 560-7-3 - SUBSTANTIVE REGULATIONS › Rule 560-7-3-.06 - Taxation of Corporations

Current through Rules and Regulations filed through June 27, 2024
(1)
Taxable Income.
Georgia
				taxable income of a corporation before apportionment and allocation shall be
				computed pursuant to O.C.G.A. §
									48-7-21.
(2)
Affiliated Corporation.
For
				purposes of the affiliated corporations dividend deduction provided in O.C.G.A.
				§
									48-7-21, the term "affiliated corporation" means a corporation that is a member of the
				taxpayer's "affiliated group" within the meaning of § 1504 of the Internal
				Revenue Code. This shall apply whether or not the affiliated group files a
				federal consolidated return.
(3)
Separate Return.
In the event a taxpayer files a separate return
				with Georgia but is included in a consolidated federal return, the taxpayer
				shall start with its separate company federal taxable income or loss. The
				separate company federal taxable income or loss shall be the taxable income or
				loss of the corporation included in the consolidated federal return but without
				the modifications listed in Internal Revenue Service Regulation §
				1.1502-12.
(4)
Consolidated
				Return.
See Regulation
				 560-7-3-.13.
(5)
Net Operating Losses.
(a) Net operating losses shall be treated as
				provided in paragraph (10.1) of subsection (b) of O.C.G.A. §
										48-7-21.
				Any limitations included in the Internal Revenue Code of 1986 on the amount of
				net operating loss that can be used in a taxable year shall be applied;
				provided, however, that such limitations, including, but not limited to, the 80
				percent limitation, shall be applied to Georgia taxable net income.
(b) In the event a taxpayer is entitled to a
				refund of income taxes by reason of a net operating loss carryback under
				paragraph (10.1) of subsection (b) of O.C.G.A. §
										48-7-21, the taxpayer may file an amended return within the time period prescribed by
				O.C.G.A. §
										48-7-21 or  alternatively may file an "application for a tentative carryback adjustment
				of the taxes" within a period of twelve (12) months following the end of the
				taxable year of the net operating loss. The application shall be in such form
				as the Commissioner shall prescribe. Such application shall not constitute a
				claim for credit or refund for purposes of O.C.G.A. §
										48-2-35.
				Within a period of ninety (90) days from the last day of the month in which the
				application for a tentative carryback adjustment is filed, the Commissioner
				shall make, to the extent he or she deems practicable in such period, a limited
				examination of the application to determine the amount of tax decrease
				attributable to such carryback adjustment upon the basis of the application and
				examination. The Commissioner may disallow, without further action, any
				application which contains errors of computation which he or she deems cannot
				be corrected within such ninety (90) day period or which contains material
				omissions. The decrease so determined shall be applied against any unpaid
				amount of the tax and the remainder shall, within such ninety (90) day period,
				be either credited against any income tax then due from the taxpayer, or
				refunded to the taxpayer. Any such credit or refund made within such ninety
				(90) day period shall be without interest. If the Commissioner should determine
				that the amount credited or refunded under this paragraph is in excess of the
				amount properly attributable to the carryback adjustment, he or she may assess
				the amount of the excess as a deficiency as if it were due to a mathematical
				error appearing on the face of a return.
(c) The provisions of § 108 of the
				Internal Revenue Code of 1986, as amended, as they relate to Georgia net
				operating losses, shall be applied as follows:
1. Except as otherwise provided in this
				regulation, the Internal Revenue Code § 108 provisions shall be applied in
				the same manner as provided in the Internal Revenue Code and related
				regulations. The reduction in the Georgia net operating losses shall be
				determined by applying the Georgia apportionment percentage for the year of the
				discharge to the amount of the Internal Revenue Code § 108 net operating
				loss reduction determined pursuant to this regulation.
2. If the taxpayer files a consolidated
				federal income tax return, such provisions shall be applied on a separate
				entity basis. Thus, except as provided in this regulation, the Internal Revenue
				Service regulations relating to how to apply Internal Revenue Code § 108
				to consolidated returns shall not apply. However, a determination under the
				federal consolidated return regulations that the separate entity has an amount
				of discharge of indebtedness income and or is required to reduce tax attributes
				shall also apply for Georgia purposes except that paragraph (a)(4) of Internal
				Revenue Service Regulation § 1.1502-28 shall not apply.
3. Any elections, with respect to the order
				of the tax attribute reductions, made for federal income tax filing purposes
				and pursuant to Internal Revenue Service Regulations, shall also apply for
				Georgia purposes.
(d)
				Except as otherwise provided in this regulation, the provisions of Internal
				Revenue Code § 381, as they relate to Georgia net operating losses, shall
				be applied in the same manner as provided in the Internal Revenue Code and
				related regulations. If the taxpayer files a consolidated federal income tax
				return, such provisions shall be applied on a separate entity basis. However,
				when one or more members is a distributee of assets in a liquidation to which
				Internal Revenue Code § 332 applies and such member or members in the
				aggregate own stock of the liquidating corporation that satisfies the
				requirements of Internal Revenue Code § 1504(a)(2), such member or members
				shall succeed to the net operating loss in the same manner as provided in the
				Internal Revenue Service Regulations.
(e) The provisions of § 382 of the
				Internal Revenue Code of 1986, as amended, as they relate to Georgia net
				operating losses, shall be applied as follows:
1. Except as otherwise provided in this
				regulation, the Internal Revenue Code § 382 limitation shall be applied in
				the same manner as provided in the Internal Revenue Code and related
				regulations. Such limitation shall be computed on a separate entity basis even
				when a consolidated federal income tax return is filed. Except as provided in
				this regulation, the Internal Revenue Service Regulations regarding how to
				apply Internal Revenue Code § 382 when a consolidated return is filed and
				paragraph (f) of Internal Revenue Service Regulation § 1.382-8 shall not
				apply for Georgia purposes.
2. A
				determination that an ownership change has occurred for federal income tax
				filing purposes and pursuant to Internal Revenue Service Regulations (including
				those regulations relating to how to apply Internal Revenue Code § 382 to
				consolidated returns) shall apply for Georgia purposes.
3. Adjustments to prevent duplication of
				value contained in the Internal Revenue Code § 382 regulations (including
				those regulations relating to how to apply Internal Revenue Code § 382 to
				consolidated returns if a consolidated federal return is filed) apply for
				Georgia purposes. However, the election to restore value provided in paragraph
				(c) of Internal Revenue Service Regulation § 1.382-8 shall not be
				available.
4. Whenever an ownership
				change occurs, an Internal Revenue Code § 382 limitation will apply to all
				Georgia pre-change losses that are carried over to a post-change year.
				"Pre-change years" end on or before the date of an ownership change, while
				"post-change years" end after the date of an ownership change. In a post-change
				year, the limitation on the use of any pre-change year Georgia net operating
				losses shall be determined by applying that post-change year's apportionment
				percentage to the Internal Revenue Code § 382 limitation for that
				post-change year determined pursuant to this regulation.
5. The Internal Revenue Code § 382
				limitation does not reduce the total amount of pre-change Georgia net operating
				losses available for carry forward but, similar to federal treatment, restricts
				the amount of net operating losses from pre-change years that can be applied to
				the income in a post-change year.
6. If there is any unused Internal Revenue
				Code § 382 limitation for Georgia purposes in a post-change year, the
				following year's limitation shall be increased by the excess amounts determined
				for Georgia tax purposes in a manner similar to Internal Revenue Code §
				382(b)(2).
(f) Except as
				otherwise provided in this regulation, the provisions of Internal Revenue Code
				§ 384, as they relate to Georgia net operating losses, shall be applied in
				the same manner as provided in the Internal Revenue Code and related
				regulations. When a consolidated federal return is filed, the adjustment for
				such Internal Revenue Code Section shall be determined on a separate entity
				basis. The limitation on offsetting losses against any recognized built in
				gains which are allocated to Georgia shall be equal to the Internal Revenue
				Code § 384 limitation (determined pursuant to this regulation)
				attributable to such gains. The limitation on offsetting losses against any
				recognized gains which are apportioned to Georgia shall be equal to the
				Internal Revenue Code § 384 limitation (determined pursuant to this
				regulation) attributable to such gains multiplied by the apportionment
				percentage for the recognition period taxable year.
(g) Consolidated net operating losses,
				including the application of §§ 108, 381, 382, and 384 of the
				Internal Revenue Code of 1986, shall be treated as provided in Regulation
				 560-7-3-.13.