Revenue Committee

Filed: 5/19/2004

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 2209

2     AMENDMENT NO. ______. Amend Senate Bill 2209 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Illinois Income Tax Act is amended by
5 changing Section 304 as follows:
 
6     (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
7     Sec. 304. Business income of persons other than residents.
8     (a) In general. The business income of a person other than
9 a resident shall be allocated to this State if such person's
10 business income is derived solely from this State. If a person
11 other than a resident derives business income from this State
12 and one or more other states, then, for tax years ending on or
13 before December 30, 1998, and except as otherwise provided by
14 this Section, such person's business income shall be
15 apportioned to this State by multiplying the income by a
16 fraction, the numerator of which is the sum of the property
17 factor (if any), the payroll factor (if any) and 200% of the
18 sales factor (if any), and the denominator of which is 4
19 reduced by the number of factors other than the sales factor
20 which have a denominator of zero and by an additional 2 if the
21 sales factor has a denominator of zero. For tax years ending on
22 or after December 31, 1998, and except as otherwise provided by
23 this Section, persons other than residents who derive business
24 income from this State and one or more other states shall

 

 

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1 compute their apportionment factor by weighting their
2 property, payroll, and sales factors as provided in subsection
3 (h) of this Section.
4     (1) Property factor.
5         (A) The property factor is a fraction, the numerator of
6     which is the average value of the person's real and
7     tangible personal property owned or rented and used in the
8     trade or business in this State during the taxable year and
9     the denominator of which is the average value of all the
10     person's real and tangible personal property owned or
11     rented and used in the trade or business during the taxable
12     year.
13         (B) Property owned by the person is valued at its
14     original cost. Property rented by the person is valued at 8
15     times the net annual rental rate. Net annual rental rate is
16     the annual rental rate paid by the person less any annual
17     rental rate received by the person from sub-rentals.
18         (C) The average value of property shall be determined
19     by averaging the values at the beginning and ending of the
20     taxable year but the Director may require the averaging of
21     monthly values during the taxable year if reasonably
22     required to reflect properly the average value of the
23     person's property.
24     (2) Payroll factor.
25         (A) The payroll factor is a fraction, the numerator of
26     which is the total amount paid in this State during the
27     taxable year by the person for compensation, and the
28     denominator of which is the total compensation paid
29     everywhere during the taxable year.
30         (B) Compensation is paid in this State if:
31             (i) The individual's service is performed entirely
32         within this State;
33             (ii) The individual's service is performed both
34         within and without this State, but the service

 

 

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1         performed without this State is incidental to the
2         individual's service performed within this State; or
3             (iii) Some of the service is performed within this
4         State and either the base of operations, or if there is
5         no base of operations, the place from which the service
6         is directed or controlled is within this State, or the
7         base of operations or the place from which the service
8         is directed or controlled is not in any state in which
9         some part of the service is performed, but the
10         individual's residence is in this State.
11         Beginning with taxable years ending on or after
12     December 31, 1992, for residents of states that impose a
13     comparable tax liability on residents of this State, for
14     purposes of item (i) of this paragraph (B), in the case of
15     persons who perform personal services under personal
16     service contracts for sports performances, services by
17     that person at a sporting event taking place in Illinois
18     shall be deemed to be a performance entirely within this
19     State.
20     (3) Sales factor.
21         (A) The sales factor is a fraction, the numerator of
22     which is the total sales of the person in this State during
23     the taxable year, and the denominator of which is the total
24     sales of the person everywhere during the taxable year.
25         (B) Sales of tangible personal property are in this
26     State if:
27             (i) The property is delivered or shipped to a
28         purchaser, other than the United States government,
29         within this State regardless of the f. o. b. point or
30         other conditions of the sale; or
31             (ii) The property is shipped from an office, store,
32         warehouse, factory or other place of storage in this
33         State and either the purchaser is the United States
34         government or the person is not taxable in the state of

 

 

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1         the purchaser; provided, however, that premises owned
2         or leased by a person who has independently contracted
3         with the seller for the printing of newspapers,
4         periodicals or books shall not be deemed to be an
5         office, store, warehouse, factory or other place of
6         storage for purposes of this Section. For taxable years
7         ending before December 31, 2004, sales Sales of
8         tangible personal property are not in this State if the
9         seller and purchaser would be members of the same
10         unitary business group but for the fact that either the
11         seller or purchaser is a person with 80% or more of
12         total business activity outside of the United States
13         and the property is purchased for resale.
14         (B-1) Patents, copyrights, trademarks, and similar
15     items of intangible personal property.
16             (i) Gross receipts from the licensing, sale, or
17         other disposition of a patent, copyright, trademark,
18         or similar item of intangible personal property are in
19         this State to the extent the item is utilized in this
20         State during the year the gross receipts are included
21         in gross income.
22             (ii) Place of utilization.
23                 (I) A patent is utilized in a state to the
24             extent that it is employed in production,
25             fabrication, manufacturing, or other processing in
26             the state or to the extent that a patented product
27             is produced in the state. If a patent is utilized
28             in more than one state, the extent to which it is
29             utilized in any one state shall be a fraction equal
30             to the gross receipts of the licensee or purchaser
31             from sales or leases of items produced,
32             fabricated, manufactured, or processed within that
33             state using the patent and of patented items
34             produced within that state, divided by the total of

 

 

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1             such gross receipts for all states in which the
2             patent is utilized.
3                 (II) A copyright is utilized in a state to the
4             extent that printing or other publication
5             originates in the state. If a copyright is utilized
6             in more than one state, the extent to which it is
7             utilized in any one state shall be a fraction equal
8             to the gross receipts from sales or licenses of
9             materials printed or published in that state
10             divided by the total of such gross receipts for all
11             states in which the copyright is utilized.
12                 (III) Trademarks and other items of intangible
13             personal property governed by this paragraph (B-1)
14             are utilized in the state in which the commercial
15             domicile of the licensee or purchaser is located.
16             (iii) If the state of utilization of an item of
17         property governed by this paragraph (B-1) cannot be
18         determined from the taxpayer's books and records or
19         from the books and records of any person related to the
20         taxpayer within the meaning of Section 267(b) of the
21         Internal Revenue Code, 26 U.S.C. 267, the gross
22         receipts attributable to that item shall be excluded
23         from both the numerator and the denominator of the
24         sales factor.
25         (B-2) Gross receipts from the license, sale, or other
26     disposition of patents, copyrights, trademarks, and
27     similar items of intangible personal property may be
28     included in the numerator or denominator of the sales
29     factor only if gross receipts from licenses, sales, or
30     other disposition of such items comprise more than 50% of
31     the taxpayer's total gross receipts included in gross
32     income during the tax year and during each of the 2
33     immediately preceding tax years; provided that, when a
34     taxpayer is a member of a unitary business group, such

 

 

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1     determination shall be made on the basis of the gross
2     receipts of the entire unitary business group.
3         (C) For taxable years ending before December 31, 2004,
4     sales Sales, other than sales governed by paragraphs (B),
5     and (B-1), and (B-2), are in this State if:
6             (i) The income-producing activity is performed in
7         this State; or
8             (ii) The income-producing activity is performed
9         both within and without this State and a greater
10         proportion of the income-producing activity is
11         performed within this State than without this State,
12         based on performance costs.
13         (C-5) For taxable years ending on or after December 31,
14     2004, sales, other than sales governed by paragraphs (B),
15     (B-1), and (B-2), are in this State if the purchaser is in
16     this State or the sale is otherwise attributable to this
17     State's marketplace. The following examples are
18     illustrative:
19             (i) Sales from the sale or lease of real property
20         are in this State if the property is located in this
21         State.
22             (ii) Sales from the lease or rental of tangible
23         personal property are in this State if the property is
24         located in this State during the rental period. Sales
25         from the lease or rental of tangible personal property
26         that is characteristically moving property, including,
27         but not limited to, motor vehicles, rolling stock,
28         aircraft, vessels, or mobile equipment are in this
29         State to the extent that the property is used in this
30         State.
31             (iii) Sales of intangible personal property are in
32         this State if the purchaser realizes benefit from the
33         property in this State. If the purchaser realizes
34         benefit from the the property both within and without

 

 

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1         this State, the gross receipts from the sale shall be
2         divided among those states in which the taxpayer is
3         taxable in proportion to the benefit in each state. If
4         the proportionate benefit in this State cannot be
5         determined, the sale shall be excluded from both the
6         numerator and the denominator of the sales factor.
7             (iv) Sales of services are in this State if the
8         benefit of the service is realized in this State. If
9         the benefit of the service is realized both within and
10         without this State, the gross receipts from the sale
11         shall be divided among those states in which the
12         taxpayer is taxable in proportion to the benefit of
13         service realized in each state. If the proportionate
14         benefit in this State cannot be determined, the sale
15         shall be excluded from both the numerator and the
16         denominator of the sales factor. The Department may
17         adopt rules prescribing where the benefit of specific
18         types of service, including, but not limited to,
19         telecommunications, broadcast, cable, advertising,
20         publishing, and utility service, is realized.
21         (D) For taxable years ending on or after December 31,
22     1995, the following items of income shall not be included
23     in the numerator or denominator of the sales factor:
24     dividends; amounts included under Section 78 of the
25     Internal Revenue Code; and Subpart F income as defined in
26     Section 952 of the Internal Revenue Code. No inference
27     shall be drawn from the enactment of this paragraph (D) in
28     construing this Section for taxable years ending before
29     December 31, 1995.
30         (E) Paragraphs (B-1) and (B-2) shall apply to tax years
31     ending on or after December 31, 1999, provided that a
32     taxpayer may elect to apply the provisions of these
33     paragraphs to prior tax years. Such election shall be made
34     in the form and manner prescribed by the Department, shall

 

 

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1     be irrevocable, and shall apply to all tax years; provided
2     that, if a taxpayer's Illinois income tax liability for any
3     tax year, as assessed under Section 903 prior to January 1,
4     1999, was computed in a manner contrary to the provisions
5     of paragraphs (B-1) or (B-2), no refund shall be payable to
6     the taxpayer for that tax year to the extent such refund is
7     the result of applying the provisions of paragraph (B-1) or
8     (B-2) retroactively. In the case of a unitary business
9     group, such election shall apply to all members of such
10     group for every tax year such group is in existence, but
11     shall not apply to any taxpayer for any period during which
12     that taxpayer is not a member of such group.
13     (b) Insurance companies.
14         (1) In general. Except as otherwise provided by
15     paragraph (2), business income of an insurance company for
16     a taxable year shall be apportioned to this State by
17     multiplying such income by a fraction, the numerator of
18     which is the direct premiums written for insurance upon
19     property or risk in this State, and the denominator of
20     which is the direct premiums written for insurance upon
21     property or risk everywhere. For purposes of this
22     subsection, the term "direct premiums written" means the
23     total amount of direct premiums written, assessments and
24     annuity considerations, and surplus line contracts, but
25     excluding deposit-type funds, as reported for the taxable
26     year on the annual statement filed by the company with the
27     Illinois Director of Insurance in the form approved by the
28     National Convention of Insurance Commissioners as filed by
29     the taxpayer with the Illinois Department of Insurance or,
30     if no report is filed with the Illinois Department of
31     Insurance, as filed by the taxpayer with its state of
32     domicile. If no such annual report is filed with any of the
33     United States for a particular year, "direct premiums
34     written" shall be determined by applying the instructions

 

 

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1     to the Illinois annual report form for that year or such
2     other form as may be prescribed in lieu thereof.
3         (2) Reinsurance. If the principal source of premiums
4     written by an insurance company consists of premiums for
5     reinsurance accepted by it, the business income of such
6     company shall be apportioned to this State by multiplying
7     such income by a fraction, the numerator of which is the
8     sum of (i) direct premiums written for insurance upon
9     property or risk in this State, plus (ii) premiums written
10     for reinsurance accepted in respect of property or risk in
11     this State, and the denominator of which is the sum of
12     (iii) direct premiums written for insurance upon property
13     or risk everywhere, plus (iv) premiums written for
14     reinsurance accepted in respect of property or risk
15     everywhere. For taxable years ending before December 31,
16     2004, for purposes of this paragraph, premiums written for
17     reinsurance accepted in respect of property or risk in this
18     State, whether or not otherwise determinable, may, at the
19     election of the company, be determined on the basis of the
20     proportion which premiums written for reinsurance accepted
21     from companies commercially domiciled in Illinois bears to
22     premiums written for reinsurance accepted from all
23     sources, or, alternatively, in the proportion which the sum
24     of the direct premiums written for insurance upon property
25     or risk in this State by each ceding company from which
26     reinsurance is accepted bears to the sum of the total
27     direct premiums written by each such ceding company for the
28     taxable year.
29     (c) Financial organizations.
30         (1) In general. For taxable years ending before
31     December 31, 2004, business Business income of a financial
32     organization shall be apportioned to this State by
33     multiplying such income by a fraction, the numerator of
34     which is its business income from sources within this

 

 

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1     State, and the denominator of which is its business income
2     from all sources. For the purposes of this subsection, the
3     business income of a financial organization from sources
4     within this State is the sum of the amounts referred to in
5     subparagraphs (A) through (E) following, but excluding the
6     adjusted income of an international banking facility as
7     determined in paragraph (2):
8             (A) Fees, commissions or other compensation for
9         financial services rendered within this State;
10             (B) Gross profits from trading in stocks, bonds or
11         other securities managed within this State;
12             (C) Dividends, and interest from Illinois
13         customers, which are received within this State;
14             (D) Interest charged to customers at places of
15         business maintained within this State for carrying
16         debit balances of margin accounts, without deduction
17         of any costs incurred in carrying such accounts; and
18             (E) Any other gross income resulting from the
19         operation as a financial organization within this
20         State. In computing the amounts referred to in
21         paragraphs (A) through (E) of this subsection, any
22         amount received by a member of an affiliated group
23         (determined under Section 1504(a) of the Internal
24         Revenue Code but without reference to whether any such
25         corporation is an "includible corporation" under
26         Section 1504(b) of the Internal Revenue Code) from
27         another member of such group shall be included only to
28         the extent such amount exceeds expenses of the
29         recipient directly related thereto.
30         (2) International Banking Facility. For taxable years
31     ending before December 31, 2004:
32             (A) Adjusted Income. The adjusted income of an
33         international banking facility is its income reduced
34         by the amount of the floor amount.

 

 

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1             (B) Floor Amount. The floor amount shall be the
2         amount, if any, determined by multiplying the income of
3         the international banking facility by a fraction, not
4         greater than one, which is determined as follows:
5                 (i) The numerator shall be:
6                 The average aggregate, determined on a
7             quarterly basis, of the financial organization's
8             loans to banks in foreign countries, to foreign
9             domiciled borrowers (except where secured
10             primarily by real estate) and to foreign
11             governments and other foreign official
12             institutions, as reported for its branches,
13             agencies and offices within the state on its
14             "Consolidated Report of Condition", Schedule A,
15             Lines 2.c., 5.b., and 7.a., which was filed with
16             the Federal Deposit Insurance Corporation and
17             other regulatory authorities, for the year 1980,
18             minus
19                 The average aggregate, determined on a
20             quarterly basis, of such loans (other than loans of
21             an international banking facility), as reported by
22             the financial institution for its branches,
23             agencies and offices within the state, on the
24             corresponding Schedule and lines of the
25             Consolidated Report of Condition for the current
26             taxable year, provided, however, that in no case
27             shall the amount determined in this clause (the
28             subtrahend) exceed the amount determined in the
29             preceding clause (the minuend); and
30                 (ii) the denominator shall be the average
31             aggregate, determined on a quarterly basis, of the
32             international banking facility's loans to banks in
33             foreign countries, to foreign domiciled borrowers
34             (except where secured primarily by real estate)

 

 

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1             and to foreign governments and other foreign
2             official institutions, which were recorded in its
3             financial accounts for the current taxable year.
4             (C) Change to Consolidated Report of Condition and
5         in Qualification. In the event the Consolidated Report
6         of Condition which is filed with the Federal Deposit
7         Insurance Corporation and other regulatory authorities
8         is altered so that the information required for
9         determining the floor amount is not found on Schedule
10         A, lines 2.c., 5.b. and 7.a., the financial institution
11         shall notify the Department and the Department may, by
12         regulations or otherwise, prescribe or authorize the
13         use of an alternative source for such information. The
14         financial institution shall also notify the Department
15         should its international banking facility fail to
16         qualify as such, in whole or in part, or should there
17         be any amendment or change to the Consolidated Report
18         of Condition, as originally filed, to the extent such
19         amendment or change alters the information used in
20         determining the floor amount.
21         (3) For taxable years ending on or after December 31,
22     2004, the business income of a financial organization shall
23     be apportioned to this State by multiplying such income by
24     a fraction, the numerator of which is its gross receipts
25     from sources in this State or otherwise attributable to
26     this State's marketplace and the denominator of which is
27     its gross receipts everywhere during the taxable year.
28     "Gross receipts" for purposes of this subparagraph (3)
29     means gross income, including net taxable gain on
30     disposition of assets, including securities and money
31     market instruments, when derived from transactions and
32     activities in the regular course of the financial
33     organization's trade or business. If a person derives
34     business income from activities in addition to the

 

 

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1     provision of financial services, this subparagraph (3)
2     shall apply only to its business income from financial
3     services, and its other business income shall be
4     apportioned to this State under the applicable provisions
5     of this Section. The following examples are illustrative:
6             (i) Receipts from the lease or rental of real or
7         tangible personal property are in this State if the
8         property is located in this State during the rental
9         period. Receipts from the lease or rental of tangible
10         personal property that is characteristically moving
11         property, including, but not limited to, motor
12         vehicles, rolling stock, aircraft, vessels, or mobile
13         equipment are from sources in this State to the extent
14         that the property is used in this State.
15             (ii) Interest income, commissions, fees, gains on
16         disposition, and other receipts from assets in the
17         nature of loans that are secured primarily by real
18         estate or tangible personal property are from sources
19         in this State if the security is located in this State.
20             (iii) Interest income, commissions, fees, gains on
21         disposition, and other receipts from consumer loans
22         that are not secured by real or tangible personal
23         property are from sources in this State if the debtor
24         is a resident of this State.
25             (iv) Interest income, commissions, fees, gains on
26         disposition, and other receipts from commercial loans
27         and installment obligations that are not secured by
28         real or tangible personal property are from sources in
29         this State if the proceeds of the loan are to be
30         applied in this State. If it cannot be determined where
31         the funds are to be applied, the income and receipts
32         are from sources in this State if the office of the
33         borrower from which the loan was negotiated in the
34         regular course of business is located in this State. If

 

 

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1         the location of this office cannot be determined, the
2         income and receipts shall be excluded from the
3         numerator and denominator of the sales factor.
4             (v) Interest income, fees, gains on disposition,
5         service charges, merchant discount income, and other
6         receipts from credit card receivables are from sources
7         in this State if the card charges are regularly billed
8         to a customer in this State.
9             (vi) Receipts from the performance of services,
10         including, but not limited to, fiduciary, advisory,
11         and brokerage services, are in this State if the
12         benefit of the service is realized in this State. If
13         the benefit of the service is realized both within and
14         without this State, the gross receipts from the sale
15         shall be divided among those states in which the
16         taxpayer is taxable in proportion to the benefit of
17         service realized in each state. If the proportionate
18         benefit in this State cannot be determined, the sale
19         shall be excluded from both the numerator and the
20         denominator of the gross receipts factor.
21             (vii) Receipts from the issuance of travelers
22         checks and money orders are from sources in this State
23         if the checks and money orders are issued from a
24         location within this State.
25             (viii) In the case of a financial organization that
26         accepts deposits, receipts from investments and from
27         money market instruments are apportioned to this State
28         based on the ratio that the total deposits of the
29         financial organization (including all members of the
30         financial organization's unitary group) from this
31         State, its residents, (including businesses with an
32         office or other place of business in this State), and
33         its political subdivisions, agencies, and
34         instrumentalities bear to total deposits everywhere.

 

 

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1         For purposes of this subdivision, deposits must be
2         attributed to this State under the preceding sentence,
3         whether or not the deposits are accepted or maintained
4         by the financial organization at locations within this
5         State. In the case of a financial organization that
6         does not accept deposits, receipts from investments in
7         securities and from money market instruments shall be
8         excluded from the numerator and the denominator of the
9         gross receipts factor.
10         (4) As used in subparagraph (3), "deposit" includes but
11     is not limited to:
12             (i) the unpaid balance of money or its equivalent
13         received or held by a financial institution in the
14         usual course of business and for which it has given or
15         is obligated to give credit, either conditionally or
16         unconditionally, to a commercial, checking, savings,
17         time, or thrift account whether or not advance notice
18         is required to withdraw the credited funds, or which is
19         evidenced by its certificate of deposit, thrift
20         certificate, investment certificate, or certificate of
21         indebtedness, or other similar name, or a check or
22         draft drawn against a deposit account and certified by
23         the financial organization, or a letter of credit or a
24         traveler's check on which the financial organization
25         is primarily liable. However, without limiting the
26         generality of the term "money or its equivalent", any
27         such account or instrument must be regarded as
28         evidencing the receipt of the equivalent of money when
29         credited or issued in exchange for checks or drafts or
30         for a promissory note upon which the person obtaining
31         the credit or instrument is primarily or secondarily
32         liable, or for a charge against a deposit account, or
33         in settlement of checks, drafts, or other instruments
34         forwarded to the bank for collection;

 

 

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1             (ii) trust funds received or held by the financial
2         organization, whether held in the trust department or
3         held or deposited in any other department of the
4         financial organization;
5             (iii) money received or held by a financial
6         organization, or the credit given for money or its
7         equivalent received or held by a financial
8         organization, in the usual course of business for a
9         special or specific purpose, regardless of the legal
10         relationship so established. Under this paragraph,
11         "deposit" includes, but is not limited to, escrow
12         funds, funds held as security for an obligation due to
13         the financial organization or others, including funds
14         held as dealers reserves, or for securities loaned by
15         the financial organization, funds deposited by a
16         debtor to meet maturing obligations, funds deposited
17         as advance payment on subscriptions to United States
18         government securities, funds held for distribution or
19         purchase of securities, funds held to meet its
20         acceptances or letters of credit, and withheld taxes.
21         It does not include funds received by the financial
22         organization for immediate application to the
23         reduction of an indebtedness to the receiving
24         financial organization, or under condition that the
25         receipt of the funds immediately reduces or
26         extinguishes the indebtedness;
27             (iv) outstanding drafts, including advice of
28         another financial organization, cashier's checks,
29         money orders, or other officer's checks issued in the
30         usual course of business for any purpose, but not
31         including those issued in payment for services,
32         dividends, or purchases or other costs or expenses of
33         the financial organization itself; and
34             (v) money or its equivalent held as a credit

 

 

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1         balance by a financial organization on behalf of its
2         customer if the entity is engaged in soliciting and
3         holding such balances in the regular course of its
4         business.
5         (5) As used in subparagraph (3), "money market
6     instruments" includes but is not limited to:
7             (i) Interest-bearing deposits, federal funds sold
8         and securities purchased under agreements to resell,
9         commercial paper, banker's acceptances, and purchased
10         certificates of deposit and similar instruments to the
11         extent that the instruments are reflected as assets
12         under generally accepted accounting principles.
13             "Securities" means corporate stock, bonds, and
14         other securities (including, for purposes of taxation
15         of gains on securities and for purchases under
16         agreements to resell, United States Treasury
17         securities, obligations of United States government
18         agencies and corporations, obligations of state and
19         political subdivisions, the interest on which is
20         exempt from Illinois income tax), participations in
21         securities backed by mortgages held by United States or
22         state government agencies, loan-backed securities, and
23         similar investments to the extent the investments are
24         reflected as assets under generally accepted
25         accounting principles.
26             (ii) For purposes of subparagraph (3), "money
27         market instruments" shall include investments in
28         investment partnerships, trusts, pools, funds,
29         investment companies, or any similar entity in
30         proportion to the investment of the entity in money
31         market instruments, and "securities" shall include
32         investments in investment partnerships, trusts, pools,
33         funds, investment companies, or any similar entity in
34         proportion to the investment of the entity in

 

 

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1         securities.
2     (d) Transportation services. For taxable years ending
3 before December 31, 2004, business Business income derived from
4 furnishing transportation services shall be apportioned to
5 this State in accordance with paragraphs (1) and (2):
6         (1) Such business income (other than that derived from
7     transportation by pipeline) shall be apportioned to this
8     State by multiplying such income by a fraction, the
9     numerator of which is the revenue miles of the person in
10     this State, and the denominator of which is the revenue
11     miles of the person everywhere. For purposes of this
12     paragraph, a revenue mile is the transportation of 1
13     passenger or 1 net ton of freight the distance of 1 mile
14     for a consideration. Where a person is engaged in the
15     transportation of both passengers and freight, the
16     fraction above referred to shall be determined by means of
17     an average of the passenger revenue mile fraction and the
18     freight revenue mile fraction, weighted to reflect the
19     person's
20             (A) relative railway operating income from total
21         passenger and total freight service, as reported to the
22         Interstate Commerce Commission, in the case of
23         transportation by railroad, and
24             (B) relative gross receipts from passenger and
25         freight transportation, in case of transportation
26         other than by railroad.
27         (2) Such business income derived from transportation
28     by pipeline shall be apportioned to this State by
29     multiplying such income by a fraction, the numerator of
30     which is the revenue miles of the person in this State, and
31     the denominator of which is the revenue miles of the person
32     everywhere. For the purposes of this paragraph, a revenue
33     mile is the transportation by pipeline of 1 barrel of oil,
34     1,000 cubic feet of gas, or of any specified quantity of

 

 

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1     any other substance, the distance of 1 mile for a
2     consideration.
3         (3) For taxable years ending on or after December 31,
4     2004, business income derived from providing
5     transportation services other than airline services shall
6     be apportioned to this State by using a fraction, (a) the
7     numerator of which shall be (i) all receipts from any
8     movement or shipment of people, goods, mail , oil, gas, or
9     any other substance (other than by airline) that both
10     originates and terminates in this State, plus (ii) that
11     portion of the person's gross receipts from movements or
12     shipments of people, goods, mail, oil, gas, or any other
13     substance (other than by airline) passing through, into, or
14     out of this State, that is determined by the ratio that the
15     miles traveled in this State bears to total miles from
16     point of origin to point of destination and (b) the
17     denominator of which shall be all revenue derived from the
18     movement or shipment of people, goods, mail, oil, gas, or
19     any other substance (other than by airline). If a person
20     derives business income from activities in addition to the
21     provision of transportation services (other than by
22     airline), this subsection shall apply only to its business
23     income from transportation services and its other business
24     income shall be apportioned to this State according to the
25     applicable provisions of this Section.
26         (4) For taxable years ending on or after December 31,
27     2004, business income derived from providing airline
28     services shall be apportioned to this State by using a
29     fraction, (a) the numerator of which shall be arrivals of
30     aircraft to and departures from this State weighted as to
31     cost of aircraft by type and (b) the denominator of which
32     shall be total arrivals and departures of aircraft weighted
33     as to cost of aircraft by type. If a person derives
34     business income from activities in addition to the

 

 

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1     provision of airline services, this subsection shall apply
2     only to its business income from airline services and its
3     other business income shall be apportioned to this State
4     under the applicable provisions of this Section.
5     (e) Combined apportionment. Where 2 or more persons are
6 engaged in a unitary business as described in subsection
7 (a)(27) of Section 1501, a part of which is conducted in this
8 State by one or more members of the group, the business income
9 attributable to this State by any such member or members shall
10 be apportioned by means of the combined apportionment method.
11     (f) Alternative allocation. If the allocation and
12 apportionment provisions of subsections (a) through (e) and of
13 subsection (h) do not fairly represent the extent of a person's
14 business activity in this State, the person may petition for,
15 or the Director may, without a petition, permit or require, in
16 respect of all or any part of the person's business activity,
17 if reasonable:
18         (1) Separate accounting;
19         (2) The exclusion of any one or more factors;
20         (3) The inclusion of one or more additional factors
21     which will fairly represent the person's business
22     activities in this State; or
23         (4) The employment of any other method to effectuate an
24     equitable allocation and apportionment of the person's
25     business income.
26     (g) Cross reference. For allocation of business income by
27 residents, see Section 301(a).
28     (h) For tax years ending on or after December 31, 1998, the
29 apportionment factor of persons who apportion their business
30 income to this State under subsection (a) shall be equal to:
31         (1) for tax years ending on or after December 31, 1998
32     and before December 31, 1999, 16 2/3% of the property
33     factor plus 16 2/3% of the payroll factor plus 66 2/3% of
34     the sales factor;

 

 

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1         (2) for tax years ending on or after December 31, 1999
2     and before December 31, 2000, 8 1/3% of the property factor
3     plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
4     factor;
5         (3) for tax years ending on or after December 31, 2000,
6     the sales factor.
7 If, in any tax year ending on or after December 31, 1998 and
8 before December 31, 2000, the denominator of the payroll,
9 property, or sales factor is zero, the apportionment factor
10 computed in paragraph (1) or (2) of this subsection for that
11 year shall be divided by an amount equal to 100% minus the
12 percentage weight given to each factor whose denominator is
13 equal to zero.
14 (Source: P.A. 90-562, eff. 12-16-97; 90-613, eff. 7-9-98;
15 91-541, eff. 8-13-99.)".