Part 100: INCOME TAX

Section 100.2455 Subtraction Modification: Federally Disallowed Deductions (IITA Sections 203(a)(2)(M), 203(b)(2)(I), 203(c)(2)(L) and 203(d)(2)(J)) a) Taxpayers are entitled to subtract from taxable income (adjusted gross income, in the case of an individual), an amount equal to…

Section 100.2465 Claim of Right Repayments (IITA Section 203(a)(2)(P), (b)(2)(Q), (c)(2)(P) and (d)(2)(M)) a) In computing base income, a taxpayer may subtract from federal taxable income or adjusted gross income an amount equal to the amount of the deduction used to compute the …

Section 100.2470 Subtraction of Amounts Exempt from Taxation by Virtue of Illinois Law, the Illinois or U.S. Constitutions, or by Reason of U.S. Treaties or Statutes (IITA Sections 203(a)(2)(N), 203(b)(2)(J), 203(c)(2)(K) and 203(d)(2)(G)) a) In calculating base income, taxpayers…

Section 100.2480 Enterprise Zone and River Edge Redevelopment Zone Dividend Subtraction (IITA Sections 203(a)(2)(J), 203(b)(2)(K), 203(c)(2)(M) and 203(d)(2)(K)) a) Taxpayers are entitled to subtract from taxable income (adjusted gross income, in the case of an individual) an amo…

Section 100.2490 Foreign Trade Zone/High Impact Business Dividend Subtraction (IITA Sections 203(a)(2)(K), 203(b)(2)(L), 203(c)(2)(O), 203(d)(2)(M)) a) Taxpayers are entitled to subtract from taxable income (adjusted gross income, in the case of an individual) an amount equal to …

Section 100.2510 Subtraction for Contributions to Illinois Qualified Tuition Programs (Section 529 Plans) (IITA Section 203(a)(2)(Y)) a) IITA Section 203(a)(2)(Y) allows individuals a subtraction modification in the computation of base income for taxable years beginning on and af…

Section 100.2565 Subtraction for Recovery of Itemized Deductions (IITA Section 203(a)(2)(I)) a) In computing base income, an individual is allowed to subtract from his or her federal adjusted gross income an amount equal to all amounts included in that total pursuant to the provi…

Section 100.2580 Medical Care Savings Accounts (IITA Sections 203(a)(2)(D-5), 203(a)(2)(S) and 203(a)(2)(T)) a) For the purposes of this Section, "Act" means the Medical Care Savings Account Act [820 ILCS 152], repealed January 1, 2000, or the Medical Care Savings Account Act of …

Section 100.2590 Taxation of Certain Employees of Railroads, Motor Carriers, Air Carriers and Water Carriers a) Federal law affects the authority of the State of Illinois to subject certain employees of railroads, motor carriers, merchant mariners, and air carriers to Illinois in…

Section 100.2655 Subtraction Modification for Enterprise Zone and River Edge Redevelopment Zone Interest (IITA Section 203(b)(2)(M)) a) A corporation that is a "financial organization" within the meaning of IITA Section 304(c) may subtract an amount included in its taxable income…

Section 100.2657 Subtraction Modification for High Impact Business Interest (IITA Section 203(b)(2)(M-1)) a) A corporation that is a "financial organization" within the meaning of IITA Section 304(c) may subtract an amount included in its taxable income as interest income from a …

Section 100.2665 Subtraction for Payments to an Attorney-in-Fact (IITA Section 203(b)(2)(R)) a) Under an interinsurance or reciprocal insurance arrangement, the members or subscribers are liable to reimburse each other for insured losses. The operations of an interinsurer or reci…

Section 100.2668 Subtraction for Dividends from Controlled Foreign Corporations (IITA Section 203(b)(2)(Z)) a) Under Internal Revenue Code section 965(e), the taxable income of a shareholder of a controlled foreign corporation (CFC) may not be less than the "nondeductible CFC div…

Section 100.2770 Subtraction for Recovery of Itemized Deductions of a Decedent (IITA Section 203(c)(2)(W)) a) In computing its base income, an estate is allowed to subtract from its federal taxable income an amount equal to all amounts included in that total pursuant to the provi…

Section 100.2775 Subtraction for Refunds of Taxes Paid to Other States for Which a Credit Was Claimed (IITA Section 203(c)(2)(X)) a) In computing its base income, an estate is allowed to subtract from its federal taxable income an amount equal to the refund included in that total…

Section 100.2850 Subtraction Modification for Personal Service Income or Reasonable Allowance for Compensation to Partners (IITA Section 203(d)(2)(H)) a) In General. A partnership is allowed to subtract from taxable income any income of the partnership that constitutes personal s…

Section 100.3000 Terms Used In Article 3 (IITA Section 301) Article 3 of the Illinois Income Tax Act sets forth the rules for determining that portion of a person's base income which is allocable to Illinois in the computation of net income under IITA Section 202. In the case of …

Section 100.3010 Business and Nonbusiness Income (IITA Section 301) a) In general. For purposes of administration of Article 3 of the Illinois Income Tax Act: 1) For transactions and activities occurring prior to July 30, 2004 (the effective date of Public Act 93-0840), business …

Section 100.3015 Business Income Election (IITA Section 1501) a) For each taxable year beginning on or after January 1, 2003, a taxpayer may elect to treat all income other than compensation as business income. This election shall be made in accordance with rules adopted by the D…

Section 100.3020 Resident (IITA Section 301) a) General definition. The term "resident" is defined in IITA Section 1501(a)(20) to mean: 1) an individual who is in Illinois for other than a temporary or transitory purpose during the taxable year or who is domiciled in Illinois but…

Section 100.3100 Compensation (IITA Section 302) a) General Definition Compensation is defined in IITA Section 1502(a)(3) to mean wages, salaries, commissions and any other form of remuneration paid to employees for personal services. The term is thus comparable to the term "wage…

Section 100.3110 State (IITA Section 302) The term "state" when applied to a jurisdiction other than Illinois is defined in IITA Section 1501(a)(22) to mean any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any Territory or Possession of t…

Section 100.3120 Allocation of Compensation Paid to Nonresidents (IITA Section 302) a) Compensation Paid in This State – General Rule 1) In order for items of compensation paid to an individual who is a nonresident of Illinois at the time of payment to be allocated to Illinois, t…

Section 100.3200 Taxability in Other State (IITA Section 303) a) General definition 1) For purposes of allocation of nonbusiness income and for purposes of the sales factor used in apportioning business income, a taxpayer is taxable in another state if: A) in that state he or she…

Section 100.3210 Commercial Domicile (IITA Section 303) a) General definition. The term "commercial domicile" is defined in IITA Section 1501(a)(2) to mean the principal place from which the trade or business of the taxpayer is directed or managed. In general, this is the place a…

Section 100.3220 Allocation of Certain Items of Nonbusiness Income by Persons Other Than Residents (IITA Section 303) a) In General. IITA Section 303 provides rules for the allocation by any person other than a resident of Illinois of any item of capital gain or loss, and any ite…

Section 100.3300 Allocation and Apportionment of Base Income (IITA Section 304) a) Residents. All items of income or deduction which are taken into account in the computation of base income for the taxable year by a resident of Illinois are allocated to Illinois under IITA Sectio…

Section 100.3310 Business Income of Persons Other Than Residents (IITA Section 304) – In General The business income of a person other than a resident is allocated to Illinois if such person's business income is derived solely from Illinois. Note that any reference to person in t…

Section 100.3330 Business Income of Persons Other Than Residents (IITA Section 304 – Allocation Any person subject to the taxing jurisdiction of this state shall allocate all of its nonbusiness income within or without this state in accordance with IITA Section 303 and 86 Ill. Ad…

Section 100.3340 Business Income of Persons Other Than Residents (IITA Section 304) In filing returns with this state, if any person departs from or modifies the manner in which income has been classified as business income or nonbusiness income in returns for prior years, such p…

Section 100.3350 Property Factor (IITA Section 304) a) In general. The property factor of the apportionment formula for each trade or business of a person shall include all real and tangible personal property owned or rented by such person and used during the tax period in the re…

Section 100.3360 Payroll Factor (IITA Section 304) a) In general 1) The payroll factor of the apportionment formula for each trade or business of an employer shall include the total amount paid by the employer in the regular course of its trade or business for compensation during…

Section 100.3370 Sales Factor (IITA Section 304) a) In General 1) IITA Section 1501(a)(21) defines the term "sales" to mean all gross receipts of the person not allocated under IITA Sections 301, 302 and 303. Thus, for the purposes of the sales factor of the apportionment formula…

Section 100.3371 Sales Factor for Telecommunications Services a) For taxable years ending on or after December 31, 2008, IITA Section 304(a)(3)(B-5) provides express guidance for determining when gross receipts from the sale of telecommunications service or mobile telecommunicati…

Section 100.3373 Sales Factor for Publishing a) For taxable years ending on or after December 31, 2008, sales of services (other than sales covered by IITA Section 304(a)(3)(B-1), (B-2) and (B-5)) are in this State if the services are received in this State. The Department may ad…

Section 100.3375 Combined Apportionment (IITA Section 304(e)) a) Where 2 or more persons are engaged in a unitary business as described in IITA Section 1501(a)(27), a part of which is conducted in this State by one or more members of the group, the business income attributable to…

Section 100.3380 Special Rules (IITA Section 304) a) Determining Business Activity or Market Within Illinois 1) Petition IITA Section 304(f) provides that, if the allocation and apportionment provisions of Section 304(a) through (e) and (h) do not, for taxable years ending before…

Section 100.3390 Petitions for Alternative Allocation or Apportionment (IITA Section 304(f)) a) In general. IITA Section 304(f) provides that, if the allocation and apportionment provisions of IITA Section 304(a) through (e) do not, for taxable years ending before December 31, 20…

Section 100.3400 Apportionment of Business Income of Financial Organizations for Taxable Years Ending Prior to December 31, 2008 (IITA Section 304(c)) a) In General. For taxable years ending prior to December 31, 2008, business income of a financial organization shall be apportio…

Section 100.3405 Apportionment of Business Income of Financial Organizations for Taxable Years Ending on or after December 31, 2008 (IITA Section 304(c)) a) In General. For taxable years ending on or after December 31, 2008, the business income of a financial organization shall b…

Section 100.3420 Apportionment of Business Income of Insurance Companies (IITA Section 304(b)) a) In General. Except as otherwise provided in this Section, business income of an insurance company for a taxable year shall be apportioned to this State by multiplying such income by …

Section 100.3450 Apportionment of Business Income of Transportation Companies (IITA Section 304(d)) a) In General 1) For taxable years ending prior to December 31, 2008, business income of a transportation company shall be apportioned to this State by multiplying that income by a…

Section 100.3500 Allocation and Apportionment of Base Income by Nonresident Partners a) In General. 1) This Section provides guidance for allocation and apportionment of base income by nonresidents. All base income of a resident is allocated to Illinois pursuant to IITA Section 3…

Section 100.3600 Combined Apportionment for Taxpayers Using Different Apportionment Formulas (IITA Section 1501(a)(27)) a) IITA Section 1501(a)(27) provides that, in no event, for taxable years ending prior to December 31, 2017, may any unitary business group include members that…

Section 100.4100 Taxable Years (IITA Section 401) a) The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the base income is computed under the IITA. "Taxable year" means, in the case of a return made for a …

Section 100.4500 Carryovers of Tax Attributes (IITA Section 405) a) In general. Except as expressly provided by statute, carryovers of net loss deductions and credits are only allowed to be claimed by the taxpayer that incurred the loss or earned the credit. See, e.g., New Coloni…

Section 100.5000 Time for Filing Returns (IITA Section 505) a) Unless an extension of time for filing a return is granted, returns shall be filed on or before the due dates specified below. 1) Individuals Under IITA Section 505(a)(2), the annual return of an individual or married…