Section 48-7-42. Affiliated entity defined; assignment of corporate income tax credit; carryover of unused credit; joint and severable liability

   (a) As used in this Code section, the term "affiliated entity" means:

   (1) A corporation that is a member of the taxpayer's "affiliated group" within the meaning of Section 1504(a) of the Internal Revenue Code; or

   (2) An entity affiliated with a corporation, business, partnership, or limited liability company taxpayer, which entity:

      (A) Owns or leases the land on which a project is constructed;

      (B) Provides capital for construction of the project; and

      (C) Is the grantor or owner under a management agreement with a managing company of the project.

(b) In lieu of claiming any Georgia income tax credit for which a taxpayer otherwise is eligible for the taxable year (such eligibility being determined for this purpose without regard to any limitation imposed by reason of the taxpayer's precredit income tax liability), the taxpayer may elect to assign such credit in whole or in part to one or more affiliated entities for such taxable year by attaching a statement to the taxpayer's return for the taxable year; provided, however, that no carryover attributable to the unused portion of any previously claimed or assigned credit may be assigned or reassigned, except as provided in subsection (d) of this Code section. 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. In the case of any credit that must be claimed in installments in more than one taxable year, the election under this subsection may be made on an annual basis with respect to each such installment, provided that the taxpayer shall notify the commissioner with respect to the assignment of each such installment by filing a separate copy of the election statement for such installment no later than the due date for filing the applicable income tax return, including any extensions which have been granted. Once made, an election under this subsection shall be irrevocable.

(c) The recipient of a tax credit assigned under subsection (b) of this Code section shall attach a statement to its return identifying the assignor of the tax credit, in addition to providing any other information required to be provided by a claimant of the assigned tax credit.

(d) If the assignor and the recipient of a tax credit assigned under subsection (b) of this Code section cease to be affiliated entities, any carryover attributable to the unused portion of such credit shall be transferred back to the assignor of the credit. Such assignor shall be permitted to use any such carryover itself, and also shall be permitted to assign such carryover to one or more affiliated entities, as if such carryover were an income tax credit for which the assignor became eligible in the taxable year in which the carryover was transferred back to the assignor.

(e) The assignor and recipient of a tax credit assigned under subsection (b) of this Code section shall be jointly and severally liable for any tax (plus interest and penalties, if any) attributable to the disallowance or recapture of the assigned credit.

(f) Notwithstanding the subsequent occurrence of any transaction, corporations that were treated as affiliated entities on December 31, 2001, shall continue to be so treated with respect to each other for purposes of this Code section for the taxable year during which they otherwise would cease to be affiliated entities (but for the modification contained in this subsection) and for the succeeding ten taxable years, but only if either the assignor or the recipient of the credit in question is a corporation as described in subparagraph (d)(2.2)(B) of Code Section 48-7-31 as it existed on December 31, 2001.

Code 1981, § 48-7-42, enacted by Ga. L. 1999, p. 9, § 1; Ga. L. 2000, p. 1339, § 1; Ga. L. 2001, p. 4, § 48; Ga. L. 2001, p. 984, § 11; Ga. L. 2002, p. 954, § 2; Ga. L. 2005, p. 60, § 48/HB 95; Ga. L. 2005, p. 159, § 17/HB 488.