- 30% of the qualified Illinois Production Spending.
- 30% credit on Illinois salaries up to $100,000 per worker.
- Tax credit can be carried forward 5 years from when originally issued by Illinois Film Office/Department of Commerce and Economic Opportunity.
- The Illinois Film Tax Credit is currently scheduled for legislative renewal in 2026.
- 15% additional credit- applicants will receive an additional 15% tax credit on salaries of individuals (making at least $1,000 in total wages) who live in economically disadvantaged areas whose unemployment rate is at least 150% of the State's annual average.
Catalano, Caboor & Co. frequently provides services beyond traditional accounting, auditing and tax responsibilities nationwide.
Adoption Tax Credit
Taxpayers who adopted or started the adoption process in 2021 may qualify for the adoption credit. This credit can be applied to international, domestic private, and public foster care adoption. Taxpayers who adopt their spouse's child can't claim this credit.
Here is some basic information to help people understand this credit and if they can claim it when filing their taxes:
- The maximum adoption credit taxpayers can claim on their 2021 tax return is $14,440 per eligible child.
- There are income limits that could affect the amount of the credit
- Taxpayers should complete Form 8839, Qualified Adoption Expenses. They use this form to figure how much credit they can claim on their tax return.
- An eligible child must be younger than 18. If the adopted person is older, they must be unable to physically take care of themselves.
- This credit is non-refundable. This means the amount of the credit is limited to the taxpayer's taxes due for 2021. Any credit leftover from their owed 2021 taxes can be carried forward for up to five years.
- Qualified expenses include:
- Reasonable and necessary adoption fees.
- Court costs and legal fees.
- Adoption related travel expenses like meals and lodging.
- Other expenses directly related to the legal adoption of an eligible child.
- In some cases, a registered domestic partner may pay the adoption expenses. If they live in a state that allows a same-sex second parent or co-parent to adopt their partner's child, these may also be considered qualified expenses.
- Expenses may also qualify even if the taxpayer pays them before an eligible child is identified. For example, some future adoptive parents pay for a home study at the beginning of the adoption process. These parents can claim the fees as qualified adoption expenses.
Form 10-Q/10-K Filing
Quarterly and Annual reports required by SEC for public company's. Ask Tony Ozzauto for more information.
Illinois Film Production Tax Credit
Illinois Live Theater Production Tax Credit
Illinois Live Theater Production Tax Credit Program (35 ILCS 17 Act)
- The Program provides for a transferrable credit of 20% of all qualified Illinois expenditures including Illinois resident salaries (non-talent) up to $100,000 per worker.
- The minimum Illinois spend for the production is $100,000 for Illinois labor and marketing expenditures.
- An eligible applicant includes: a theater producer, owner, licensee, operator or presenter.
- Eligible theaters must have a seating capacity of at least 1,200 seats.
- A production must either be Long-Run (runs longer than 8 weeks with at least 6 performances per week) or Pre-Broadway (scheduled for Broadway’s Theater District in New York City within 12 months after its Illinois presentation).
- Application must be submitted no sooner than 180 days prior to opening of ticket sales and no later than the last business day prior to the opening.
Credits will be shall be awarded on a first-come, first served basis, based on the date on which each properly completed application for an Accredited Theater Production Certificate is received by the Department. If more than one application is received on the same day, the credits will be awarded based on the time of submission of that particular day. Each Theater Tax Credit Award shall be limited to $500,000 per Accredited Theater Production per tax year. If an Accredited Theater Production receives only a portion of the Theater Tax Credit Award to which the Department has determined it is entitled due to the annual fiscal cap on the amount of credits that can be awarded, the Accredited Theater Production shall not be entitled to any Theater Tax Credit Award in the following Tax Years.
During our years of experience dealing with many taxing authorities, we have achieved a level of competence that can ensure our clients they are being properly represented before the various federal and state tax agencies.
As a business grows, it must hire more employees, which can result in increased payroll administration. We can assist you in implementing the controls necessary to ensure a reliable, efficient, and effective payroll system. Our firm can also help you develop a payroll system and prepare all necessary payroll tax returns in a timely manner.
Many of our clients are responsible for collecting and submitting sales taxes in many different vicinities. We can assist your company in the compilation of information and preparation of sales tax returns in an efficient and timely manner.
Tax Planning & Preparation
Tax planning and preparation form a winning combination for our successful individual and business clients. Whether you are an individual or a multi-tiered partnership, our experienced staff can develop tax strategies that take advantage of new tax laws and legislation.
Tax planning is an essential element of the tax preparation process. By making tax planning part of your overall business strategy, you can use our experience and access to the most current new developments in the tax laws to minimize both your current and future tax liabilities.
Our significant investment in computerized tax preparation and research software enables us to accurately and efficiently prepare returns for various types of entities including individuals, corporations, partnerships, trusts, estates, and not-for-profit organizations.
We prefer to take a proactive vs. reactive approach to tax services. By keeping current on new tax laws and legislation, we are in a position to identify key tax planning opportunities that minimize both your current and future tax liabilities. We provide our individual and business clients with the taxation expertise and knowledge that they deserve throughout the year. Tax services offered include but are not limited to:
- Tax planning & return preparation - Individuals - Corporations - Partnerships - LLCs/LLPs - Estates, trusts & gift - Not-for-profit organizations
- Taxing authority representation
- Divorce and support issues
- Tax effects of buying/selling a business
We take a proactive approach by identifying tax-planning opportunities to minimize current and future tax liabilities. Our services offered include, but are not limited to:
Tax Planning & Return Preparation. Our professionals use computerized systems and research software to accurately and efficiently prepare returns for individuals, corporations, partnerships, trusts, estates, and not-for-profit organizations.
Estates, Trusts & Gifting. Effective estate and gift planning orderly transfers assets to beneficiaries, provides security for surviving family members, and reduces tax liability. Our professionals can guide you through the process of getting your financial affairs in order.
International Taxation. We have experience with tax matters for businesses operating in, or doing business in, foreign countries.
Sales Tax Reporting. We keep businesses compliant with taxing authorities by compiling and preparing sales tax returns for clients responsible for collecting and submitting sales taxes.
IRS Representation. Federal, State and local representation on tax issues requiring representation or communication with taxing authorities.
Divorce Planning. Our professionals help identify the value of the assets, project the potential tax impact, and work to bring a quick closure.
Business Entity Selection. We evaluate the pros and cons of operating as an S or C corporation, sole proprietor, or partnership and help you select the entity that best fits your needs.
Multiple State Tax Returns
If you’ve lived or worked in more than one state, you may need to file multiple state tax returns. You may have to file part-year resident returns or nonresident returns in multiple states in these kinds of scenarios.
Estate & Trust Tax Preparation
Effective estate and gift planning facilitates the orderly transfer of assets to your beneficiaries, provides security for your surviving spouse, and can reduce or eliminate the tax due on the transfer of your business and other assets. For business owners, providing for business continuity and succession of ownership is essential. We can guide you through the complex process of getting your financial affairs in order.
Our experience with the taxation of U.S residents working abroad and foreign citizens working in the U.S. has provided us with an extensive base of knowledge in the area of international taxation.
Illinois Research and Development (R&D) Tax Credit
Illinois Research and Development (R&D) credit, which took effect in 1990, was modeled on the federal R&D credit in place at that time.
It is a nonrefundable corporate income tax credit equal to 6.5 percent of the incremental increases in qualified R&D expenditures within the State. The credit can be carried forward, up to five years, after it is earned.
Qualifying R&D expenditures are defined under Internal Revenue Code, Section 41. Three general
conditions must be met for expenditures to qualify for the R&D credit. Qualifying expenditures
must help discover information that is technological in nature, be useful in the development of a
new or improved business component, and be considered experimental in its relation to improving
business component function, performance, or quality. Research is considered technological in
nature if the process of experimentation used to discover such information fundamentally relies
on principles of the physical or biological sciences, engineering, or computer science.
Illinois’ credit is calculated similar to how the federal R&D credit was calculated before 1990. The
R&D credit establishes a baseline level of expenditures that is the average of the previous three
years’ expenditures. The incremental increase is the level of current year R&D expenditures that
exceeds the three-year baseline. The credit is then the rate of 6.5 percent times the incremental
increase in R&D expenditures.
There are a small number of relatively large manufacturing or wholesale firms who earn
most of the R&D credit in Illinois. Between 2005 and 2007, a maximum of 252 firms earned
the credit. A majority (61.0 percent) of the R&D credits earned in 2007 were earned by the
manufacturing industry.9 Firms earning the R&D credit in 2007 had an average federally
taxable income of $181.5 million, compared with an average federally taxable income of under
$10.0 million for all corporate (1120) filers. The top 25 firms by R&D credit earned between
2005 and 2007 accounted for 89.7 percent of all credits earned during that period.
We have assisted many clients with their R&D Tax Credit needs. Please contact us with any questions.
Economic Development for a Growing Economy(EDGE) Tax Credit
The Illinois Economic Development for a Growing Economy (“EDGE”) program is requiring companies certify regarding the company’s payroll submission prior to obtaining EDGE credit. Please complete this form and return the signed document to: CEO.EDGE@illinois.gov prior to credit being issued. Please note, in order for EDGE credit to be issued, we must have a signed certificate on file. If you have already sent us your payroll and Exhibit D, please forward your signed Company COVID-19 Payroll Certification to avoid any unnecessary delays in award of EDGE credit.
Illinois’ EDGE program provides annual corporate tax credits to qualifying businesses which support job creation, capital investment and improve the standard of living for all Illinois residents. Initial qualification criteria require certain job creation and project investment requirements:
100 or Fewer World-Wide Employees
More than 100 World-Wide Employees
*Applicants cannot receive more in credits than the project investment.
The non-refundable income tax credit is equal to 50% of the income tax withholdings of new job created in the state. This percentage increases to 75% if the business expansion project is located in an “underserved area” census tract which meets one of the following four tests:
- Poverty rate of at least 20%; or
- 75% or more of the children in the area are eligible to participate in the federal free lunch or reduced-price meals program for a period of at least two (2) consecutive calendar years preceding the date of the application; or
- At least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP) for a period of at least two (2) consecutive calendar years preceding the date of the application; or
- Average unemployment rate that is more than 120% of the national unemployment average, for a period of at least two (2) consecutive calendar years preceding the date of the application.
Additional credits are also available as reimbursement for qualifying training costs. Ten percent of eligible training costs of newly hired full-time employees positions at the project may also be included as part of annual credits. Qualifying credits are identified as costs incurred to upgrade the technological skills of Full-Time Employees in Illinois and include:
- curriculum development; training materials (including scrap product costs);
- trainee domestic travel expenses;
- instructor costs (including wages, fringe benefits, tuition and domestic travel expenses);
- rent, purchase or lease of training equipment; and other usual and customary training costs.
Note: Training costs do not include costs associated with travel outside the United States (unless the Taxpayer receives prior written approval for the travel by the Director based on a showing of substantial need or other proof the training is not reasonably available within the United States), wages and fringe benefits of employees during periods of training, or administrative cost related to Full-Time Employees of the Taxpayer.
Tax credits amounts are calculated on a case-by-case basis. EDGE credits are processed on an annual basis, for up to 10 years, based upon employment ramp-up plans outlined by the business and agreed to by the Department.
EDGE Tool Box
- EDGE Tax Credit Application
- EDGE Annual Reporting Requirement Overview
- EDGE Exhibit D
- EDGE Exhibit E Payroll Report
- Company COVID-19 Payroll Certification
- EDGE Vendor Diversity & Sexual Harassment Policy Report
- Illinois Corporate Accountability
- EDGE - COVID Guidance
For more information contact CEO.EDGE@illinois.gov
Please contact our CPA Jeff Hansen with all your IL Edge Tax Credits inquiries.
Historic Rehabilitation Tax Credit
The Tax Cuts and Jobs Act, signed December 22, 2017, affects the Rehabilitation Tax Credit for amounts that taxpayers pay or incur for qualified expenditures after December 31, 2017. The credit is a percentage of expenditures for the rehabilitation of qualifying buildings in the year the property is placed in service.
- Requires taxpayers take the 20-percent credit ratably over five years instead of in the year they placed the building into service
- Eliminates the 10 percent rehabilitation credit for the pre-1936 buildings
A transition rule provides relief to owners of either a certified historic structure or a pre-1936 building by allowing owners to use the prior law if the project meets these conditions:
- The taxpayer owns or leases the building on January 1, 2018 and at all times thereafter
- The 24- or 60-month period selected for the substantial rehabilitation test begins by June 20, 2018
Notice 2020-58 grants relief for certain section 47 deadlines on account of the COVID-19 pandemic. As part of the relief granted, for taxpayers subject to the transition rule, Notice 2020-58 provides that, if the 24- or 60- month measuring period in which the requisite amount of qualified expenditures is paid or incurred to satisfy the substantial rehabilitation test for a building originally ends on or after April 1, 2020, and before March 31, 2021, the last day of the 24- or 60-month measuring period for a taxpayer to pay or incur the requisite amount with respect to the building is postponed to March 31, 2021.
Reminders for Claiming the Rehabilitation Tax Credit
Form 3468, Investment Credit, is used to claim a variety of investment credits, including the section 47 rehabilitation credit. The instructions to the Form 3468 provide detailed requirements for completing the form.
The form must be attached to the return for each year in which the qualified rehabilitation tax credits are claimed. The form is not required when carrying forward or back net operating losses from a rehabilitation tax credit claimed in another tax year.
Who must file
The instructions require taxpayers claiming a rehabilitation tax credit to file the Form 3468. This includes a shareholder, partner (other than a partner in an electing large partnership), or beneficiary claiming a credit through an S corporation, partnership, or trust.
In addition, if an estate or trust, S corporation, or partnership is the owner of a certified historic structure, it must file a Form 3468 even if the credit is not being claimed by the entity.
A lessor of property may elect to treat the lessee as having acquired the property. The lessee will be treated as the owner of the property required to file Form 3468. The lessor will attach a copy of the election to their return and the lessee will file Form 3468. The lessor also should provide the National Park Service project number to the lessee.
Property or Source of Credit
If the credit claimed for a rehabilitation of a certified historic structure is claimed by the owner of the property the project number assigned by the National Park Service (NPS) must be shown on the owners return. Caution: Do not use state or other identification numbers such as internal identification numbers.
If a lessee is treated as the owner of the property, the lessee should complete Part 1 of the Form 3468 and provide the National Park Service project number.
If the qualified rehabilitation expenditures are passed through to an S corporation, partnership, estate, or trust, then the employer identification number of the pass-through must be shown instead.
Date of Certification of Completed Work
Form 3468 requires the date the NPS Reviewer signed NPS Form 10-168, Part 3, Certification of Completed Work. Caution: Do not use dates for Part 1 or 2, the application date of Part 3 of the NPS Form 10-168, or any other date.
If the final certification hasn't been received by the time the tax return is filed for a year in which the credit is claimed, a copy of the first page of NPS Form 10-168, Historic Preservation Certification Application (Part 2—Description of Rehabilitation), with an indication that it was received by the Department of the Interior or the State Historic Preservation Officer, together with proof that the building is a certified historic structure (or that such status has been requested). Individuals filing electronically can submit the information with Form 8453. Certification information will be required in the year received.
Carryback or Carryforward
Do not file Form 3468 if the credit is a carryback or a carryforward from another year. Instead report the credit on Form 3800 (and From 8582-CR if required).
Recent Advice on the rehabiliation tax credit:
- Income Inclusion Amount under Section 50(d)(5)
- Form 4255 and Section 47 Rehabilitation Credits
- Form 3468 and Section 47 Rehabilitation Credits
In Historic Boardwalk Hall, LLC. v. Commissioner, 694 F.3d 425 (3d Cir. 2012), cert. denied, U.S., No. 12-901, May 28, 2013, the Third Circuit considered whether an investor’s interest in the success or failure of a partnership that incurred qualifying rehabilitation expenditures was sufficiently meaningful for the investor to qualify as a partner in that partnership. The Third Circuit determined that the investor's return from the partnership was effectively fixed, and that the investor also had no meaningful downside risk because its investment was guaranteed. The Third Circuit agreed with the Commissioner’s reallocation of all of the partnership’s claimed losses and tax credits from the investor to the principal, holding that “because [the investor] lacked a meaningful stake in either the success or failure of [the partnership], it was not a bona fide partner.
On January 13, 2014, the Internal Revenue Service issued Revenue Procedure 2014-12 which establishes the circumstances under which the Internal Revenue Service will not challenge partnership allocations of § 47 rehabilitation credit by a partnership to its partners.
Tax Exempt Use Property
The rehabilitation tax credit is not allowed for expenditures with respect to property that is considered be tax exempt use property. Under the tax-exempt entity leasing rules of 168(h), the threshold to determine if a disqualified lease exists has been raised to more than 50%.
Alternative Minimum Tax
For qualified rehabilitation credits determined under Internal Revenue Code Section 47 attributable to qualified rehabilitation expenses properly taken into account for periods after December 31, 2007 the alternative tax rules are not applicable. Thus, a taxpayer may use the rehabilitation tax credit to offset his regular tax liability. See the instructions on Form 3468, Investment Credit, for more information.
Place of Filing Notice
If you have claimed a rehabilitation tax credit and the entire project is not completed 30 months after you have claimed the credit and you have not received final certification from the Department of Interior, you must provide written notice to the Internal Revenue Service. The notice must be provided before the last day of the 30 months. The notice as required under Regulation Section 1.48-12(d)(7) is to be mailed to the address shown and you must consent to extend the statute of limitations.
For information on donating an easement on a historic building see the Conservation Easement Audit Techniques Guide .
Topical Tax Briefs
- Rehabilitation Credit and Low-Income Housing Credit Compared
- Late Submission of "HPC Application"
- Property Leased to a Tax-Exempt Entity
- Use of the Rehabilitation Tax Credit by Lessees
- Rehabilitation Tax Credit Recapture
Get Frequently Asked Questions about the Tax Aspects of Historic Preservation.Go To Top