§100.2300. Illinois Net Loss Deduction for Losses Occurring On or After December 31, 1986 (IITA 207)

a)         In General  - For  taxable years  ending on  or  after December 31,  1986,  IITA  Section  207  provides  for computation of  Illinois net  losses for  corporations (including Subchapter S Corporations), trusts, estates and partnerships.  If,  after  applying  all  of  the modifications provided for in IITA Sections 203(b)(2), 203(c)(2)  or 203(d)(2)  and the  allocation and apportionment  provisions of  IITA  Article  3,  the taxpayer's net income results in an Illinois net loss, such loss shall be allowed as a carryback or carryover deduction in  the manner  allowed under Section 172 of the Internal Revenue Code, as in effect during the loss year for tax years ending prior to December 31, 1999.  For losses incurred in tax years ending on or after December 31, 1999, the Illinois net loss is allowed as a carryback to the 2 preceding taxable years and as a carryforward to the 20 succeeding tax years.  The rules for members of a unitary  business group  are  set  out  in  Sections 100.2340 and 100.2350.  Sections 100.2200 through 100.2250 which  also relate to net operating losses of unitary business  groups are only applicable to losses incurred in taxable years ending prior to December 31, 1986.  Section 100.9410(f)  sets forth the statute of limitations  for reporting  an Illinois  net  loss carryback.  An Illinois  net loss  deduction  is  not available  for individuals. Losses  incurred  by individuals are  recognized for  Illinois tax purposes in  the  computation  of  adjusted  gross  income  for federal tax purposes.

 

b)         Definitions

 

1)         "Illinois net  loss" means  the  amount  of  loss determined under  IITA Section  207.  That is, it is the amount of loss, if any, after applying the modifications and  allocation  and  apportionment provisions of  the Act,  as  calculated  for  tax years occurring on or after December 31, 1986.

 

2)         "Illinois net loss deduction" means the deduction which may  be carried  pursuant to  IITA  Section 207.

 

3)         "Net operating loss" means either:  The amount of net operating  loss determined  for  federal  tax purposes;  or for  losses  occurring  prior  to December 31,  1986,  the  amount  recognized  for Illinois tax purposes.

 

4)         "Net operating loss deduction" means either:  The amount of  deduction recognized  for federal  tax purposes;  or for  losses  occurring  prior  to December 31,  1986,  the  amount  recognized  for Illinois tax purposes.

 

5)         The following  terms have the following meanings:  NOL -  Net Operating Loss NOLD  - Net  Operating Loss Deduction  corp.  -  corporation  Treas.  - Treasury Reg. - Regulation Sec. - Section Apport. - Apportionment  Ill. -  Illinois sep. - separate comb. - combined

 

c)         Treatment of capital losses of corporations.  The treatment of capital losses is separate and apart from the rules governing Illinois net losses and Illinois net loss deductions.  Capital losses will continue to be governed by federal provisions.  For federal purposes, capital losses are permitted only to the extent of capital gains and the carryback of capital losses is permitted only to the extent of capital gains in the carryback year.  Since the federal carryback of capital losses changes federal taxable income, Illinois claims for refund based on such a federal change are permitted pursuant to IITA Section 506(b).  A change in federal taxable income resulting from a federal capital loss carryback would be given effect before applying an Illinois net loss deduction to the same year.

 

(Source:  Amended at 24 Ill. Reg. 10593, effective July 7, 2000)