2015 Corporation Income Tax General Instructions - Georgia Department Of Revenue (Page 9 of 24) in pdf

GENERAL INFORMATION: INCOME TAX (continued)

A corporation may subtract federally taxable interest received

When salaries and wages are reduced on the Federal return

on Georgia municipal bonds designated as “Build America

to compute Federal taxable income because of a Federal jobs

Bonds” under Section 54AA of the Internal Revenue Code of

tax credit, the eliminated salary and wage deduction should

1986. “Recovery Zone Economic Development Bonds” under

be listed in Schedule 5 as a subtraction from Federal taxable

income. See Georgia Code Section 48-7-21 for additional

Section 1400U-2 of the Internal Revenue Code or any other

bond treated as a “Qualified Bond” under Section 6431 (f) of

adjustments.

the Internal Revenue Code are considered “Build America

ALLOCATION AND APPORTIONMENT OF INCOME

Bonds” for this purpose.

If any corporation, domestic or foreign, does business or owns

A corporation may subtract federally taxable interest received

property both within and outside Georgia, Schedules 6 and 7

on Georgia municipal bonds issued by the State of Georgia

should be used to compute Georgia taxable income.

and certain authorities or agencies of the State of Georgia for

The tax imposed by Georgia law applies to the entire net

which there is a special exemption under Georgia law from

income as previously defined, received by every corporation,

Georgia tax on interest.

foreign or domestic, that owns property in this state, does

A corporation which is a party to state contracts may subtract

business in this State, or derives income from sources in this

from Federal taxable income 10% of qualified payments

state. Every such corporation shall be deemed to be doing

to minority subcontractors or $100,000, whichever is less,

business in this State if engaged within this State in any

per taxable year. The Commissioner of the Department of

activities or transactions for the purpose of financial profit

Administrative Services maintains a list of certified minority

or gain; whether or not such corporation is registered to do

subcontractors for the Revenue Department and general

business in this State; whether or not it maintains an office

public. To register as a minority subcontractor or to view

or place of business within this State; whether or not any

the list, visit the DOAS website at:

such activity or transaction is connected with interstate or

purchasing/suppliers

foreign commerce. If the business income of the corporation

Corporations doing business both within and outside Georgia

is derived in part from Georgia sources, from property owned

who incur a loss shall compute the net operating loss carryover

or business done within this State, and derived in part from

deduction by allocating to Georgia only the amount of the loss

property owned or business done outside the State, the tax

attributable to operations within Georgia. This deduction shall

is imposed only on that portion of the business income which

is reasonably attributable to Georgia sources and property

be entered on Schedule 7, Line 8.

owned and business done within the State, to be determined

A net operating loss sustained for the current taxable

as follows:

year must be carried back and carried forward in the

(1) Interest received on bonds held for investment and income

procedural sequence of taxable periods provided by

Section 172 of the Internal Revenue Code of 1986, as it

received from other intangible property held for investment

existed on January 1, 2015, and as adopted by the income

are not subject to apportionment. Rentals received from

tax laws of Georgia. Accordingly, for tax years beginning

real estate held purely for investment purposes and not

on or after January 1, 2015, losses should generally be

used in the operation of the business are also not subject

carried back two years (with special rules for farmers,

to apportionment. All expenses connected with the interest

etc). Also for tax years beginning on or after January 1,

and rentals from such investments are likewise not subject

2005, Georgia law was changed to specifically provide

to apportionment but must be applied against the investment

that Georgia follows I.R.C. Sections 108, 381, 382, and 384.

income. The net investment income from intangible property

shall be allocated to Georgia if the situs of the corporation is

Please see page 1 for the net operating loss carryover

in Georgia or the intangible property was acquired as income

provisions Georgia does not follow.

from property held in Georgia, or as a result of business done

If you claim a net operating loss deduction, you must file a

in Georgia. The net investment income from tangible property

complete statement detailing the sources for such deduction.

in Georgia shall be allocated to Georgia.

(Attach Form IT-552 and Form 600, Schedule 11.)

(2) Gains from the sale of tangible or intangible property not

All corporations except consolidated subsidiaries should list

held, owned or used in connection with the trade or business of

the total available net operating loss carryover on Schedule

the corporation, nor for sale in the regular course of business

1, Line 6 of Schedule 7, line 8.

shall be allocated to the State if the property held is real or

Georgia Taxes Deductible. There shall be added to taxable

tangible personal property situated in the State, or intangible

income any taxes on, or measured by, net income or net

property having an actual situs or a business situs within the

profits paid or accrued within the taxable year imposed by

State. Otherwise, such gains shall be allocated outside the

the authority of the United States or any foreign country, or

State.

by any state except the State of Georgia, or by any territory,

(3) When net income of the above classes have been

county, school district, municipality, or other tax subdivision

separately allocated and deducted, the remainder of the net

of any state, territory, or foreign country to the extent such

business income shall be apportioned as follows:

taxes are deducted to determine Federal taxable income. This

includes Federal environmental tax.

Page 7

2015 Corporation Income Tax General Instructions - Georgia Department Of Revenue Page 9

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