Section 48-7-21 - Taxation of corporations(a) Every domestic corporation and every foreign corporation shall pay annually an income tax equivalent to 5.75 percent of its Georgia taxable net income. Georgia taxable net income of a corporation shall be the corporation's taxable income from property owned or from business done in this state. A corporation's taxable income from property owned or from business done in this state shall consist of the corporation's taxable income as defined in the Internal Revenue Code of 1986, with the adjustments provided for in subsection (b) of this Code section and allocated and apportioned as provided in Code Section 48-7-31.(b)(1)(A) When interest income is derived from obligations of any state or political subdivision except this state and political subdivisions of this state, the interest income shall be added to taxable income to the extent that the interest income is not included in gross income for federal income tax purposes. Interest or dividends on obligations of any authority, commission, instrumentality, territory, or possession of the United States which by the laws of the United States are exempt from federal income tax but not from state income tax shall also be added to taxable income.(B) There shall be subtracted from taxable income interest or dividends on obligations of the United States and its territories and possessions or of any authority, commission, or instrumentality of the United States to the extent such interest or dividends are includable in gross income for federal income tax purposes but exempt from state income taxes under the laws of the United States. There shall also be subtracted from taxable income any income derived from the authorized activities of a domestic international banking facility operating pursuant to the provisions of Article 5A of Chapter 1 of Title 7, the "Domestic International Banking Facility Act," and any income arising from the conduct of a banking business with persons or entities located outside the United States, its territories, or possessions. Any amount subtracted pursuant to this subparagraph shall be reduced by any interest expenses directly or indirectly attributable to the production of the interest or dividend income.(2) There shall be added to taxable income any taxes on, or measured by, net income or net profits paid or accrued within the taxable year imposed by the authority of the United States or any foreign country, by any state except the State of Georgia, or by any territory, county, school district, municipality, or other tax subdivision of any state, territory, or foreign country to the extent such taxes are deducted in determining federal taxable income.(3) No portion of any deductions or losses which occurred in a year in which the taxpayer was not subject to taxation in this state, including, but not limited to, net operating losses may be deducted in any tax year. When the federal adjusted gross income or net income of a corporation includes such deductions or losses, an adjustment deleting them shall be made under rules established by the commissioner. The provisions of this subsection shall not prohibit the carry-over of any deductions or losses, including, but not limited to, net operating losses of any taxpayer which were incurred in a year or years in which the taxpayer was subject to methods of taxation in this state other than the corporate income tax.(4) Income, losses, and deductions previously used in computing Georgia taxable income shall not again be used in computing Georgia taxable income. The commissioner shall provide for needed adjustments by regulation.(5) All elections under Section 338 of the Internal Revenue Code of 1986 shall also apply under this article.(6) This article shall not be construed to repeal any tax exemptions contained in other laws of this state not referred to in this article. Those exemptions and the exemptions provided for by federal law and treaty shall be deducted on forms provided by the commissioner.(7) All elections made by corporate taxpayers under the Internal Revenue Code of 1954 or the Internal Revenue Code of 1986 shall also apply under this article except elections involving consolidated corporate returns and Subchapter "S" elections which shall be treated as follows:(A)(i) Affiliated corporations which file a consolidated federal income tax return must file separate income tax returns with this state unless they elect to file a consolidated return as provided in paragraph (7.1) of this subsection. (ii) No depository financial institution shall be deprived of the benefit of any exemption, deduction, or credit authorized by this title as a consequence of its election to file otherwise lawful consolidated returns with its parent organization or any corporate subsidiaries with respect to any state or local tax levied against such depository financial institution as a result of this title. As used in this division, the term:(I) "Bank" means any financial institution chartered under the laws of this state or under the laws of the United States and domiciled in this state which is authorized to receive deposits in this state and which has a corporate structure authorizing the issuance of capital stock.(II) "Depository financial institution" means a "bank" or a "savings and loan association."(III) "Savings and loan association" means any financial institution, other than a credit union, chartered under the laws of this state or under the laws of the United States and domiciled in this state which is authorized to receive deposits in this state and which has a mutual corporate form;(B) Subchapter "S" elections apply only if all stockholders are subject to tax in this state on their portion of the corporate income. If all nonresident stockholders pay the Georgia income tax on their portion of the corporate income, the election shall be allowed; and(C)(i) A Subchapter "S" corporation may annually make an irrevocable election, on its timely filed return under Code Section 48-7-51, to pay the tax levied by this chapter at the entity level for the taxable period covered by such return. Such election must be made on or before the due date for filing the applicable income tax return, including any extensions which have been granted.(ii) Notwithstanding the provisions of subparagraph (B) of this paragraph, an electing Subchapter "S" corporation, with respect to a taxable period, shall pay an income tax equivalent to 5.75 percent of its net income as computed pursuant to this Code section, and allocated and apportioned pursuant to Code Section 48-7-31, for such taxable period, and such shareholders shall not recognize their respective share of the portion of income on which tax was actually paid pursuant to this subparagraph.(iii) No electing Subchapter "S" corporation nor any of its shareholders shall be entitled to any credit under Code Section 48-7-28 with respect to such tax so paid or any deduction for such income under subsection (d) of Code Section 48-7-27; provided, however, that such electing Subchapter "S" corporation shall otherwise be eligible for credits provided by this chapter and shall be considered an "other entity" for purposes of Code Sections 48-7-29.16, 48-7-29.20, and 48-7-29.21.(iv) The election under this subparagraph shall have no impact on the determination of the basis of the shareholders of an electing Subchapter "S" corporation in such shareholders' stock and indebtedness of such electing Subchapter "S" corporation, except that such shareholders' pro rata share of the tax paid or accrued by such electing Subchapter "S" corporation pursuant to such election shall be taken into account in determining such basis.(v) In computing the net income that is subject to taxation, the electing Subchapter "S" corporation shall not be allowed any deduction for taxes that are based on or measured by gross or net income or any other variant thereof.(vi) This subsection shall only apply to a Subchapter "S" corporation that is 100 percent directly owned and controlled by persons eligible to be shareholders of an "S" corporation under Section 1361 of the Internal Revenue Code of 1986, as amended.(vii) As used in this subparagraph, the term: (I) "Electing Subchapter 'S' corporation" means, with respect to a taxable period, a Subchapter "S" corporation that has made the election under this subparagraph with respect to such taxable period.(II) "Subchapter 'S' corporation" means an entity subject to taxation under Subchapter S of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986 and the regulations thereunder.(7.1)(A) As used in this paragraph, the term: (i) "Georgia affiliated group" means a group of corporations of which each member: (I) Is a member of an affiliated group as defined in 26 U.S.C. Section 1504, provided that such affiliated group files a federal consolidated corporate income tax return;(II) Is subject to taxation under this chapter;(III) Is subject to taxation in Georgia, even after the application of Public Law 86-272 ( 15 U.S.C. Sections 381 - 384 );(IV) Has the same taxable year;(V) Was a member of the affiliated group for the entire taxable year or was a member of the affiliated group for a portion of the taxable year if the member was subject to taxation under subsection (a) of this Code section during the entire portion of the taxable year during which it was not a member of the federal consolidated group;(VI) Apportions Georgia taxable income or loss separately for each corporation, unless the member is subject to paragraph (1) of subsection (b) of Code Section 48-7-31;(VII) Allocates taxable income or loss separately for each corporation in accordance with Code Section 48-7-31;(VIII) Computes apportionable income or loss utilizing separate apportionment factors for each corporation in accordance with Code Section 48-7-31, unless the member is subject to paragraph (1) of subsection (b) of Code Section 48-7-31; and(IX) Combines and reports taxable income or loss on a single return for the Georgia affiliated group which includes all members of the affiliated group included on the federal consolidated corporate income tax return that are eligible under this Code section to be included in the Georgia affiliated group.(ii) 'Georgia consolidated return' means a Georgia corporate income tax return filed on behalf of the members of a Georgia affiliated group in accordance with this Code section pursuant to the election made under this subsection.(B) A Georgia affiliated group may elect to file a Georgia consolidated return on an originally filed return, including extensions, if applicable. Under no circumstances may the department compel a taxpayer to file a Georgia consolidated return if the taxpayer has not so elected.(C) For purposes of allocation and apportionment, each member of a Georgia affiliated group shall be considered a separate taxpayer, and any taxable loss of a member of a Georgia affiliated group shall be deductible against the taxable income of any other member of the Georgia affiliated group only if and to the extent such loss is apportioned and allocated to Georgia.(D) The tax liability of the Georgia affiliated group shall be determined by applying the rate specified in subsection (a) of this Code section to the group's taxable income. The separate taxable income or loss of each corporation in the Georgia affiliated group shall be included in the consolidated taxable income or loss to the extent that its taxable income or loss is separately apportioned or allocated to the State of Georgia, as computed and determined in accordance with this chapter.(E) Each corporation in a Georgia affiliated group that files a Georgia consolidated return shall be jointly and severally liable for the group's Georgia income tax liability with respect to the taxable year, except that any corporation which was not a member of the Georgia affiliated group for the entire taxable year shall be jointly and severally liable only for the portion of the tax liability attributable to that part of the year during which the corporation was a member, prorated on a daily basis.(F) The election provided for in this subsection is irrevocable and is binding on both the department and the Georgia affiliated group for a period of five years without modification, notwithstanding the powers granted to the department under this title. At the end of the five-year period of filing a Georgia consolidated return, the taxpayer's election shall be automatically terminated. Upon the automatic termination of such election, the taxpayer may reelect to file a Georgia consolidated return.(G) Notwithstanding subparagraph (F) of this paragraph, due to the material change in the law and the procedure for qualification as a member of a Georgia affiliated group, a Georgia affiliated group filing a Georgia consolidated return under the provisions of this paragraph prior to the amendment by this Act shall have the option either to terminate its election with respect to tax years after the period covered by the last Georgia consolidated return due under this Code section or to continue filing a Georgia consolidated return under the previous criteria.(H) Nothing in this subsection shall be construed as allowing or requiring the filing of combined income tax returns under the unitary business concept.(I) The department shall promulgate regulations interpreting the provisions of this paragraph.(8) There shall be subtracted from taxable income dividends received by:(A) A corporation from sources outside the United States as defined in the Internal Revenue Code of 1986. For purposes of this subparagraph, dividends received by a corporation from sources outside of the United States shall include amounts treated as a dividend and income deemed to have been received under provisions of the Internal Revenue Code of 1986 by such corporation if such amounts could have been subtracted from taxable income under this paragraph, had such amounts actually been received. The deduction provided by Section 250 shall apply to the extent the same income was included in Georgia taxable net income. The deduction, exclusion, or subtraction provided by Section 245A, Section 965, or any other section of the Internal Revenue Code of 1986 shall not apply to the extent income has been subtracted pursuant to this subparagraph. Amounts to be subtracted under this subparagraph shall include the following unless excluded by this paragraph, as defined by the Internal Revenue Code of 1986: (i) Qualified electing fund income;(ii) Subpart F income, including income specified in Section 951A of the Internal Revenue Code of 1986; and(iii) Income attributable to an increase in United States property by a controlled foreign corporation. The amount subtracted under this subparagraph shall be reduced by any expenses directly attributable to the dividend income; and
(B) Corporations from affiliated corporations within the United States, when the corporation receiving the dividends is engaged in business in this state and is subject to the payment of taxes under the income tax laws of this state, to the extent that the dividends have been included in net income under this Code section. Dividends from affiliates shall be reduced by any expenses directly attributable to the dividend income.(9) Where a corporation's salary and wage deductions are reduced in computing federal taxable income because the corporation has taken a federal jobs tax credit which required, as a condition to using the federal jobs tax credit, the elimination of salary and wage deductions, the eliminated salary and wage deductions shall be subtracted from taxable income.(10) Georgia taxable income shall be adjusted as provided in Code Section 48-7-28.3.(10.1) Net operating losses for corporations shall be treated as follows: (A) For any taxable year in which the taxpayer takes a federal net operating loss deduction on its federal income tax return, the amount of such deduction shall be added back to federal taxable income, and Georgia taxable net income for such taxable year shall be computed from the taxpayer's federal taxable income as so adjusted. There shall be allowed as a separate deduction from Georgia taxable net income so computed an amount equal to the aggregate of the Georgia net operating loss carryovers to such year, plus the Georgia net operating loss carrybacks to such year if such carrybacks are allowed by the Internal Revenue Code of 1986. Any limitations included in the Internal Revenue Code of 1986 on the amount of net operating loss that can be used in a taxable year shall be applied for purposes of this Code section; provided, however, that such limitations, including, but not limited to, the 80 percent limitation, shall be applied to Georgia taxable net income;(B) The Georgia net operating loss for such taxable year shall be computed by making the adjustments to federal taxable income required by this article and in the case of corporations doing business both within and outside Georgia, by apportioning and allocating to Georgia, as provided in Code Section 48-7-31, only the amount of the loss attributable to operations within Georgia. The term "Georgia net operating loss" shall mean the loss computed as provided in this paragraph. In the event the net Georgia adjustments completely offset a federal net operating loss, there shall be no Georgia net operating loss for the taxable year, and any excess of net Georgia adjustments over the federal net operating loss shall constitute Georgia taxable net income after any such excess has been allocated and apportioned to Georgia as provided in Code Section 48-7-31. The procedural sequence of taxable years to which a Georgia net operating loss may be carried back or carried over, and the number of years for which a net operating loss may be carried back or carried over, shall be the same as provided in the Internal Revenue Code. The terms "Georgia net operating loss carryback" and "Georgia net operating loss carryover" shall mean the Georgia net operating loss for the applicable year carried back or carried over in the manner and for the number of years as provided in this paragraph;(C) In the event the taxpayer elects to forgo the carryback period for the federal net operating loss as allowed under the Internal Revenue Code, the taxpayer shall also forgo the carryback period for Georgia purposes. If the taxpayer does not elect to forgo the carryback period for the federal net operating loss, the election to forgo the net operating loss period shall not be allowed for Georgia purposes. If the taxpayer does not have a federal net operating loss, the taxpayer may make an irrevocable election to forgo the carryback period for the Georgia net operating loss, provided that an affirmative statement is attached to the Georgia return for the year of the loss. Such election must be made on or before the due date for filing the income tax return for the taxable year wherein the loss was incurred, including any extensions which have been granted;(D) The provisions of Sections 108, 381, 382, and 384 of the Internal Revenue Code of 1986, as amended, as they relate to net operating losses also apply for Georgia purposes. The commissioner shall by regulation provide the method of determining how such sections apply;(E) In the event a taxpayer is entitled to a refund of income taxes by reason of a net operating loss carryback, a claim for such refund must be filed within three years after the due date for filing the income tax return for the taxable year wherein the loss was incurred, including any extensions which have been granted. Such tax refund shall be deemed to have been erroneously assessed and collected, and shall be paid under the provisions of Code Section 48-2-35; provided, however, that no interest shall accrue or be paid for any period prior to the close of the taxable year in which such net operating loss arises and no interest shall be paid if the claim for refund is processed within 90 days from the last day of the month in which the claim for such refund is filed; and(F) The commissioner shall have the authority to promulgate regulations regarding net operating losses with respect to this paragraph and with respect to consolidated return net operating losses.(11) There shall be subtracted from taxable income a portion of qualified payments to classified subcontractors, as provided in Code Section 48-7-38.(12) Georgia taxable income shall, if the taxpayer so elects, be adjusted with respect to federal depreciation deductions as provided in Code Section 48-7-39.(13) If the taxpayer claims the tax credit provided for in subsection (d) of Code Section 48-7-40.6 with respect to qualified child care property, Georgia taxable income shall be increased by any depreciation deductions attributable to such property to the extent such deductions are used in determining federal taxable income.(14) There shall be subtracted from taxable income the deduction provided and allowed by Section 179 of the Internal Revenue Code of 1986 as enacted on or before January 1, 2005, to the extent the deduction has not been included in the corporation's taxable income, as defined under the Internal Revenue Code of 1986.(15) Georgia taxable income shall be increased by the amount of the payments, compensation, or other economic benefit disallowed by Code Section 48-7-21.1.(16) Georgia taxable income shall be adjusted as provided in Code Section 48-7-28.4.(17) Georgia taxable net income shall be adjusted as provided in Code Section 48-7-53.Amended by 2023 Ga. Laws 21,§ 1, eff. 1/1/2024.Amended by 2022 Ga. Laws 824,§ 1, eff. 5/5/2022, app. to all taxable years beginning on or after 1/1/2023.Amended by 2022 Ga. Laws 782,§ 48, eff. 5/2/2022.Amended by 2022 Ga. Laws 716,§ 4-1, eff. 4/26/2022.Amended by 2021 Ga. Laws 164,§ 1, eff. 5/4/2021.Amended by 2018 Ga. Laws 381,§ 1, eff. 5/3/2018.Amended by 2018 Ga. Laws 292,§ 1, eff. 3/26/2018.Amended by 2018 Ga. Laws 284,§ 1-6, eff. 3/2/2018.Amended by 2018 Ga. Laws 284,§ 1-5, eff. upon passage of a joint resolution that is signed by the Governor ratifying such section by both houses of the Georgia General Assembly on or after 1/13/2020.Amended by 2018 Ga. Laws 284,§ 1-4, eff. 3/2/2018.Amended by 2010 Ga. Laws 627,§ 2, eff. 7/1/2010.Amended by 2009 Ga. Laws 170,§ 1, eff. 5/5/2009.Amended by 2008 Ga. Laws 746,§ 4, eff. 5/14/2008.Amended by 2007 Ga. Laws 147,§ 1, eff. 7/1/2007.Amended by 2005 Ga. Laws 31,§ 11, eff. 4/12/2005.Amended by 2005 Ga. Laws 31,§ 10, eff. 4/12/2005.Amended by 2005 Ga. Laws 31,§ 9, eff. 4/12/2005.Amended by 2005 Ga. Laws 31,§ 8, eff. 4/12/2005.Amended by 2005 Ga. Laws 30,§ 1, eff. 4/12/2005.Amended by 2005 Ga. Laws 9,§ 2, eff. 1/1/2006. See 2022 Ga. Laws 716, § 4-1. See 2018 Ga. Laws 292, § 5. See 2018 Ga. Laws 284, § 3-1. See 2005 Ga. Laws 9, § 7.