- 2 -
Enlarge image
|
Illinois Department of Revenue
Schedule 4255 Instructions
Who must file?
Taxpayers who claimed an Enterprise Zone Investment Credit or River Edge Redevelopment Zone Investment Credit, High Impact
Business Investment Credit, Reimagining Energy and Vehicles (REV) Illinois Investment Credit, or Replacement Tax Investment Credit —
You must file Schedule 4255, Recapture of Investment Tax Credits, if you claimed an investment tax credit against your Illinois income
or replacement tax liability in a previous year and any of the property considered in the computation of that investment credit becomes
disqualified.
You must recapture any such investment tax credit in the year in which the property becomes disqualified (to the extent the credit was actually
used in any previous year). Use this form to figure the amount of recaptured credit that you must add to this year’s tax liability. You must
complete and file a separate Schedule 4255 for each tax year in which the now disqualified property was placed in service, beginning with
the earliest year. Each Schedule 4255 should report only items placed in service during the same tax year you entered at the top of the form.
You cannot amend a previous year’s return in order to exclude the disqualified property. Attach all completed Schedules 4255 to your
return. TENTATIVE FINAL
Taxpayers who claimed an additional income tax credit —
You must file Schedule 4255 if you claimed an additional income tax credit (i.e., Angel Investment Credit, Economic Development for a
Growing Economy (EDGE) Credit, New Construction EDGE Credit, New Markets Development, or Historic Preservation Credit) against your
Illinois income tax liability in a previous year and are required to recapture the credit. See "When am I required to recapture an additional
income tax credit?" for more information.
You must recapture any such additional income tax credit (to the extent the credit was actually used in any previous year) in the year in which
the recapture event took place (see "When am I required to recapture an additional income tax credit?"). Use this form to figure the amount
of recaptured credit that you must add to this year’s tax liability. If you attach multiple Schedules 4255 because you are required to recapture
other investment credit amounts from multiple years, you must complete Step 6 only on the last succeeding Schedule 4255 completed. If you
have recapture amounts to report for multiple additional income tax credits (including credits claimed in multiple years), include them all in
the amounts reported in Step 6 on the last succeeding Schedule 4255 you complete. You cannot amend a previous year’s return in order to
exclude the credit you are required to recapture. Attach all completed Schedules 4255 to your return.
Note: For tax years ending on or after December 31, 2000, investment tax credits earned by you and allocable to your partners and
shareholders subject to replacement tax automatically flow through to those partners and shareholders. The amount allocable to other
partners and shareholders remains with you.
Partners and shareholders are required to report any recapture on their respective returns. You must attach Schedule 4255 to your return
and provide a copy to your partners or shareholders.
When does an investment property cease to qualify?
Enterprise Zone or River Edge Redevelopment Zone Investment Credit — Property ceases to qualify if, within 48 months of placing it
into service, you dispose of the property, convert it to personal use, or move it outside an Illinois enterprise zone or river edge redevelopment
zone.
High Impact Business Investment Credit — For tax years ending on or before December 31, 1996, property ceases to qualify if, within
48 months of placing it into service, you dispose of the property, convert it to personal use, or move it outside of Illinois. For tax years ending
on or after January 1, 1997, if you entered into an agreement with a taxing district and were granted a tax abatement and you relocate
your entire facility in violation of the terms and length of the contract under Section 18-183 of the Property Tax Code, you must recapture the
amount of credit previously received under the agreement.
REV Illinois Investment Credit — Property ceases to qualify if, within 48 months of placing it into service, you dispose of the property,
convert it to personal use, or move it outside a REV Illinois project site location.
Replacement Tax Investment Credit — Property ceases to qualify if, within 48 months of placing it into service, you dispose of the
property or move it outside of Illinois. In addition, property placed in service prior to January 1, 1994, becomes disqualified if it is used for
purposes other than manufacturing, retailing, coal mining, or fluorite mining within 48 months after being placed in service. Property placed in
service on or after January 1, 1994, also becomes disqualified if it is converted to personal use, or if you are no longer primarily engaged in
manufacturing, retailing, coal mining, or fluorite mining.
Note: Property is “disposed of” if it is sold, exchanged, traded-in, abandoned, retired from use, destroyed by casualty, stolen, or transferred
as a gift. Property is not “disposed of” if it is mortgaged or used as security for a loan, unless it is converted to a non-qualifying use.
When am I required to recapture an additional income tax credit?
You are required to recapture
• Angel Investment Credits you claimed in a prior tax year if, during this tax year, you disposed of your investment in the qualified new
business venture for which you claimed the credit, other than a permitted sale of the investment to a person who is not a related member,
and the disposition occurred within three years after you made your qualifying investment in that business, or you failed to maintain a
minimum employment threshold in Illinois through the date which is three (3) years from the issue date of the last tax credit certificate.
• EDGE and New Construction EDGE Credits you claimed in a prior tax year if, during this tax year, you cease operations at a project
location that is the subject of an agreement with the intent to terminate operations in Illinois.
Schedule 4255 Instructions (R-12/23) Printed by the authority of the state of Illinois - electronic only - one copy. Page 1 of 5
|
