Form IL-477, officially titled Replacement Tax Investment Credits, is used by Illinois businesses and tax-exempt organizations to calculate their replacement tax investment credit for qualified property placed in service during the tax year. It’s issued by the Illinois Department of Revenue (IDOR) and must be attached to one of the following returns: IL-1120, IL-1065, IL-1120-ST, IL-1041, or IL-990-T.
This form allows you to claim a credit for investments in qualified property, such as tangible personal property or buildings used in your business. Essentially, it rewards Illinois taxpayers who invest in business assets that help drive economic growth within the state.
The form also includes a section for businesses new to Illinois, allowing them to qualify for additional credits, and a base employment worksheet to determine if your employment levels entitle you to extra tax incentives. In addition, it provides a space for calculating carryforward credits, meaning unused credits from prior years can still reduce your current tax.
Form IL-477 applies to both corporations and partnerships, including S corporations and trusts subject to the Illinois replacement tax.
How To File Form IL-477
You must file Form IL-477 along with your main Illinois tax return — either corporate, partnership, trust, or exempt organization forms (IL-1120, IL-1065, IL-1120-ST, IL-1041, or IL-990-T).
Filing Instructions:
- Attach Form IL-477 to your corresponding Illinois income tax return.
- Complete all applicable steps before submission, even if no credit is claimed.
- Keep records of property purchases and employment reports as IDOR may request verification.
- Electronic filing is preferred when available, but paper filing is accepted if mailed with your return.
This form must be submitted for every year in which you claim an investment credit for property placed in service during that tax period.
How to Complete Form IL-477
Header Section
- Year Ending: Enter the month and year corresponding to your tax year end.
- Name and FEIN: Write your business name exactly as it appears on your Illinois return. Enter your nine-digit Federal Employer Identification Number (FEIN).
Step 1: Figure Your Replacement Tax Investment Credit
This section calculates the amount of investment credit you can claim for qualified property placed in service during the year.
| Column | Description |
|---|---|
| A | Description of Qualified Property: List each asset or property placed in service that qualifies for the investment credit. |
| B | Date Placed in Service (Month/Year): Record the exact month and year the property began being used in your business. |
| C | Useful Life: Enter the useful life of the property in years. |
| D | New or Used: Indicate whether the property is new or used. If used, include the state abbreviation where it was previously used. |
| E | Business Activity: Describe the activity or operation in which the property is used, following IDOR instructions. |
| F | Location of Use: Enter the city or county in Illinois where the property is located. |
| G | Basis: Write the property’s basis for tax purposes — generally its purchase price or cost basis. |
| H | Credit Calculation: Multiply Column G by 0.5% (0.005) to compute the investment credit for each property. |
Line 2 – Total of Columns G and H:
Add up the figures in both Columns G and H for all listed properties.
Line 3 – New Business Credit:
If your business is new to Illinois, transfer the total from Line 2, Column H, here. Then check the box in Step 2.
If your business is not new, proceed to Step 2 to determine whether you qualify for an additional credit.
Line 4 – Distributive Share:
Enter your share of Replacement Tax Investment Credit from partnerships or S corporations, as reported on Schedule K-1-P (attach copies).
Line 5 – Total Credit From This Year:
Add Line 2, Column H + Lines 3 and 4. This equals your total credit for qualified property placed in service this year.
Line 6 – Partnerships or S Corporations Only:
Multiply Line 5 by the percentage of ownership belonging to partners or shareholders subject to replacement tax. (See the form instructions for calculating this percentage.)
Line 7 – Remaining Credit:
Subtract Line 6 from Line 5.
Line 8 – Prior Year Carryforward:
Enter any unused replacement tax investment credit carried forward from previous years.
Line 9 – Total Investment Credit Available:
Add Lines 7 and 8. This is your total available credit for the current year.
Line 10 – Total Replacement Tax:
Enter your total replacement tax due (see instructions for your primary return).
Line 11 – Trusts Only:
Trusts should enter the credit amount from Form IL-1041, Schedule CR, Line 60.
Line 12 – Adjusted Replacement Tax:
Subtract Line 11 from Line 10. If zero or negative, enter 0.
Line 13 – Allowable Credit:
Enter the lesser of Line 9 or Line 12. This is your replacement tax investment credit for this year. Also record this amount on your main tax return.
Line 14 – Excess Credit Carryforward:
Subtract Line 13 from Line 9. If negative, enter 0. The remaining amount may be carried forward up to five years.
Step 2: Figure Your Base Employment Calculation Worksheet
This step determines if you qualify for the additional credit by comparing your employment levels between the current and previous years.
- Checkbox – New to Illinois:
If your business is new, check this box and skip Lines 15–22. You automatically qualify for the additional credit.
Line 15 – Base Employment:
List the number of covered workers for each month of the year from your Illinois Department of Employment Security Form UI-3/40 (Employer’s Contribution and Wage Report).
- Column A: Current year.
- Column B: Preceding year.
Include only the months in which your business was taxed by Illinois.
Line 16 – Total Employment:
Add the 12 monthly figures in each column.
Line 17 – Number of Months:
Enter the total number of months your business was active and taxed during the year for each column.
Line 18 – Average Employment:
Divide Line 16 by Line 17 for both columns. Round each to six decimal places.
Line 19 – Employment Difference:
Subtract the prior year’s average (Column B) from the current year’s average (Column A).
- If the result is zero or negative, stop here — you don’t qualify for an additional credit.
- If positive, proceed to Line 20.
Line 20 – Growth Ratio:
Divide Line 19 by Line 18, Column B. Round to six decimals.
- If this ratio is 0.01 or greater, transfer the amount from Line 2, Column H, to Line 3.
- If it’s less than 0.01, continue to Line 21.
Line 21 – Adjusted Growth Percentage:
Multiply Line 20 by 50% (0.50). Round to six decimals.
Line 22 – Additional Credit Calculation:
Multiply Line 2, Column G, by Line 21. Enter the result here and also on Line 3.
Step 3: Affirm The Listed Credits Are Valid
Check this box to affirm that:
- All replacement tax investment credits listed are valid, and
- The credits are based on costs incurred under a binding contract entered into on or before December 31, 2018.
Your signature on the main return confirms this affirmation under penalties of perjury.
Final Notes Before Filing
- Attach Form IL-477 to your main tax return (IL-1120, IL-1065, IL-1120-ST, IL-1041, or IL-990-T).
- Include all supporting schedules (e.g., Schedule K-1-P, Schedule CR).
- Retain a copy for your records.
- Double-check calculations for Columns G and H and rounding precision.