Illinois Administrative Code › Title 86 - REVENUE › Part 100 - INCOME TAX › Subpart E - ADDITIONS TO AND SUBTRACTIONS FROM TAXABLE INCOME OF INDIVIDUALS, CORPORATIONS, TRUSTS AND ESTATES AND PARTNERSHIPS › Section 100.2405 - Gross Income, Adjusted Gross Income, Taxable Income and Base Income Defined; Double Deductions Prohibited; Legislative Intention (IITA Section 203(e), (g) and (h))

Current through Register Vol. 48, No. 28, July 12, 2024
a) General
				Definitions. For the purposes of IITA Sections 203 and 803(e), and subject to
				the exceptions discussed in this Section,
a taxpayer's gross income,
				adjusted gross income or taxable income for the taxable year mean the amount of
				gross income, adjusted gross income or taxable income properly reportable for
				federal income tax purposes for the taxable year under the provisions of the
				Internal Revenue Code.
(IITA Section 203(e)(1))
b) Taxable Income Less than Zero.
Taxable income may be less than zero.
(IITA Section 203(e)(1))
				Accordingly, when the computation of a taxpayer's base income begins with its
				taxable income and its taxable income is negative, it may offset that negative
				amount against any addition modifications required to be made under IITA
				Section 203, consistent with the provisions of this subsection (b).
1) Taxable Years Ending On or After December
				31, 1986. For taxable years ending on or after December 31, 1986,
net
				operating loss carry-forwards from taxable years ending prior to December 31,
				1986 may not exceed the sum of federal taxable income for the taxable year
				before net operating loss deduction, plus the excess of addition modifications
				for the taxable year.
(IITA Section 203(e)(1))
EXAMPLE: In its taxable year ending December 31, 1986,
				  Corporation A properly reports a federal net operating loss (FNOL) of $100,000,
				  all of which is available to carry forward to its taxable years ending on or
				  after December 31, 1987 for federal income tax purposes. Corporation A has
				  addition modifications for its taxable year ending December 31, 1986 that
				  exceed its subtraction modifications for that year by $5,000. For Illinois
				  income tax purposes, the federal net operating loss available to carry forward
				  is $95,000 (the $100,000 federal net operating loss minus the $5,000 in excess
				  addition modifications). In its taxable year ending December 31, 1987,
				  Corporation A deducts $97,000 of the federal net operating loss. The remainder
				  is deducted in its taxable year ending December 31, 1988. For purposes of IITA
				  Section 203, Corporation A's taxable income for the taxable year ending
				  December 31, 1987 is computed without allowing $2,000 of the federal net
				  operating loss deduction taken in that year and its taxable income for December
				  31, 1988 is computed without allowing any of the $3,000 federal net operating
				  deduction. In order to avoid a double benefit, Corporation A adds back the
				  ineligible $2,000 and $3,000 of FNOL for Illinois purposes on its Illinois
				  return for 1987 and 1988, respectively.
2) Taxable Years Ending Before December 31,
				1986
A) For taxable years ending prior to
				December 31, 1986,
taxable income may never be an amount in excess of
				the net operating loss for the taxable year as defined in Internal Revenue Code
				section 172(c) and (d), provided that when taxable income of a corporation
				(other than a subchapter S corporation), trust, or estate is less than zero and
				addition modifications, other than those provided by IITA Section 203(b)(2)(E)
				or (c)(2)(E) for trusts and estates, exceed subtraction modifications, an
				addition modification is made under those
subsections
for any
				other taxable year to which taxable income less than zero (net operating loss)
				is applied under IRC section 172 or IITA Section 203(e)(2)(E) in conjunction
				with IRC section 172.
(IITA Section 203(e)(1))
B) For application of this provision, see
				Sections
				100.2230
				and
				100.2410.
3) Pre- and post-1986 net losses are
				discussed in detail in Sections
				100.2200
				through
				100.2250
				and individual net losses are specifically discussed at Section
				100.2410.