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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Income Tax Act is amended by adding | ||||||||||||||||||||||||
5 | Section 218 as follows: | ||||||||||||||||||||||||
6 | (35 ILCS 5/218 new) | ||||||||||||||||||||||||
7 | Sec. 218. Alternate research and development credit. | ||||||||||||||||||||||||
8 | (a) For taxable years ending on or after December 31, 2008, | ||||||||||||||||||||||||
9 | each taxpayer who, during the taxable year, makes qualified | ||||||||||||||||||||||||
10 | research expenditures is entitled to a credit against the tax | ||||||||||||||||||||||||
11 | imposed under subsections (a) and (b) of Section 201 in an | ||||||||||||||||||||||||
12 | amount equal to the following: | ||||||||||||||||||||||||
13 | (1) For taxpayers who have conducted business | ||||||||||||||||||||||||
14 | activities in each of the 3 preceding taxable years, the | ||||||||||||||||||||||||
15 | credit under this Section is 12% of the taxpayer's adjusted | ||||||||||||||||||||||||
16 | research expense; or | ||||||||||||||||||||||||
17 | (2) For taxpayers who have not conducted business | ||||||||||||||||||||||||
18 | activities in each of the 3 preceding taxable years, the | ||||||||||||||||||||||||
19 | credit under this Section is 6.5% of the qualified research | ||||||||||||||||||||||||
20 | expenditures made in the current taxable year. | ||||||||||||||||||||||||
21 | (b) For the purpose of this Section: | ||||||||||||||||||||||||
22 | "Adjusted research expense" means an amount equal to: (i) | ||||||||||||||||||||||||
23 | the amount of qualified research expenditures made in the |
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1 | current taxable year; less (ii) 50% of the average of the | ||||||
2 | qualified research expenditures made for the 3 preceding | ||||||
3 | taxable years. | ||||||
4 | "Qualifying research expenditures" means the qualifying | ||||||
5 | expenditures as defined for the federal credit for increasing | ||||||
6 | research activities that would be allowable under Section 41 of | ||||||
7 | the Internal Revenue Code and that are conducted in this State. | ||||||
8 | (c) For partners, shareholders of Subchapter S | ||||||
9 | corporations, and owners of limited liability companies, if the | ||||||
10 | liability company is treated as a partnership for purposes of | ||||||
11 | federal and State income taxation, there is allowed a credit | ||||||
12 | under this Section to be determined in accordance with the | ||||||
13 | determination of income and distributive share of income under | ||||||
14 | Sections 702 and 704 and Subchapter S of the Internal Revenue | ||||||
15 | Code. | ||||||
16 | (d) The credit may not be carried back. Any credit in | ||||||
17 | excess of the tax liability for the taxable year may be carried | ||||||
18 | forward. A taxpayer may elect to have the unused credit shown | ||||||
19 | on its final completed return carried over as a credit against | ||||||
20 | the tax liability for the following 5 taxable years or until it | ||||||
21 | has been fully used, whichever occurs first. If an unused | ||||||
22 | credit is carried forward to a given year from 2 or more | ||||||
23 | earlier years, that credit arising in the earliest year must be | ||||||
24 | applied first against the tax liability for the given year. If | ||||||
25 | a tax liability for the given year still remains, the credit | ||||||
26 | from the next earliest year must then be applied, and so on, |
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1 | until all credits have been used or no tax liability for the | ||||||
2 | given year remains. Any remaining unused credit or credits then | ||||||
3 | must be carried forward to the next following year in which a | ||||||
4 | tax liability is incurred, except that no credit may be carried | ||||||
5 | forward to a year that is more than 5 years after the year in | ||||||
6 | which the expense for which the credit is given was incurred.
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7 | (e) This Section is exempt from the provisions of Section | ||||||
8 | 250 of this Act.
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9 | (f) A taxpayer may not claim a credit under this Section in | ||||||
10 | any taxable year that the taxpayer claims a credit under | ||||||
11 | subsection (k) of Section 201 of this Act.
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12 | Section 99. Effective date. This Act takes effect upon | ||||||
13 | becoming law.
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