§ 303 — (a) In general

Illinois § 303

• Jurisdiction: Illinois
• Topic: GOVERNMENT
• Ch. 35: REVENUE
• Act 35 ILCS 5/: Illinois Income Tax Act.
• Art.: Article 3 - Allocation And Apportionment Of Base Income

Text

Any item of capital gain or loss, and any item of income from rents or royalties from real or tangible personal property, interest, dividends, and patent or copyright royalties, and prizes awarded under the Illinois Lottery Law, and, for taxable years ending on or after December 31, 2019, wagering and gambling winnings from Illinois sources as set forth in subsection (e-1) of this Section, and, for taxable years ending on or after December 31, 2021, sports wagering and winnings from Illinois sources as set forth in subsection (e-2) of this Section, to the extent such item constitutes nonbusiness income, together with any item of deduction directly allocable thereto, shall be allocated by any person other than a resident as provided in this Section. (b) Capital gains and losses. (1) Real property. Capital gains and losses from sales or exchanges of real property are allocable to this State if the property is located in this State. (2) Tangible personal property. Capital gains and losses from sales or exchanges of tangible personal property are allocable to this State if, at the time of such sale or exchange: (A) The property had its situs in this State; or (B) The taxpayer had its commercial domicile in this State and was not taxable in the state in which the property had its situs. (3) Intangibles. Capital gains and losses from sales or exchanges of intangible personal property are allocable to this State if the taxpayer had its commercial domicile in this State at the time of such sale or exchange. (4) Pass-through entities. Gains and losses from sales or exchanges of shares in a Subchapter S corporation or from an interest in a partnership, other than an investment partnership as defined in paragraph (11.5) of subsection (a) of Section 1501, are allocable to this State if the pass-through entity is taxable in this State, and those gains and losses shall be allocated in proportion to the average of the pass-through entity's Illinois apportionment factor computed under Section 304 in the year of the sale or exchange and the 2 tax years immediately preceding the year of the sale or exchange. If the pass-through entity was not in existence during both of the preceding 2 years, then only the years in which the pass-through entity was in existence shall be considered when computing the average. (c) Rents and royalties. (1) Real property. Rents and royalties from real property are allocable to this State if the property is located in this State. (2) Tangible personal property. Rents and royalties from tangible personal property are allocable to this State: (A) If and to the extent that the property is utilized in this State; or (B) In their entirety if, at the time such rents or royalties were paid or accrued, the taxpayer had its commercial domicile in this State and was not organized under the laws of or taxable with respect to such rents or royalties in the state in which the property was utilized. The extent of utilization of tangible personal property in a state is determined by multiplying the rents or royalties derived from such property by a fraction, the numerator of which is the number of days of physical location of the property in the state during the rental or royalty period in the taxable year and the denominator of which is the number of days of physical location of the property everywhere during all rental or royalty periods in the taxable year. If the physical location of the property during the rental or royalty period is unknown or unascertainable by the taxpayer, tangible personal property is utilized in the state in which the property was located at the time the rental or royalty payer obtained possession. (d) Patent and copyright royalties. (1) Allocation. Patent and copyright royalties are allocable to this State: (A) If and to the extent that the patent or copyright is utilized by the payer in this State; or (B) If and to the extent that the patent or copyright is utilized by the payer in a state in which the taxpayer is not taxable with respect to such royalties and, at the time such royalties were paid or accrued, the taxpayer had its commercial domicile in this State. (2) Utilization. (A) A patent is utilized in a state to the extent that it is employed in production, fabrication, manufacturing or other processing in the state or to the extent that a patented product is produced in the state. If the basis of receipts from patent royalties does not permit allocation to states or if the accounting procedures do not reflect states of utilization, the patent is utilized in this State if the taxpayer has its commercial domicile in this State. (B) A copyright is utilized in a state to the extent that printing or other publication originates in the state. If the basis of receipts from copyright royalties does not permit allocation to states or if the accounting procedures do not reflect states of utilization, the copyright is utilized in this State if the taxpayer has its commercial domicile in this State. (e) Illinois lottery prizes. Prizes awarded under the Illinois Lottery Law are allocable to this State. Payments received in taxable years ending on or after December 31, 2013, from the assignment of a prize under Section 13.1 of the Illinois Lottery Law are allocable to this State. (e-1) Wagering and gambling winnings. Payments received in taxable years ending on or after December 31, 2019 of winnings from pari-mutuel wagering conducted at a wagering facility licensed under the Illinois Horse Racing Act of 1975 and from gambling games conducted on a riverboat or in a casino or organization gaming facility licensed under the Illinois Gambling Act are allocable to this State. (e-2) Sports wagering and winnings. Payments received in taxable years ending on or after December 31, 2021 of winnings from sports wagering conducted in accordance with the Sports Wagering Act are allocable to this State. (e-5) Unemployment benefits. Unemployment benefits paid by the Illinois Department of Employment Security are allocable to this State. (f) Taxability in other state. For purposes of allocation of income pursuant to this Section, a taxpayer is taxable in another state if: (1) In that state he is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business, or a corporate stock tax; or (2) That state has jurisdiction to subject the taxpayer to a net income tax regardless of whether, in fact, the state does or does not. (g) Cross references. (1) For allocation of interest and dividends by persons other than residents, see Section 301(c)(2). (2) For allocation of nonbusiness income by residents, see Section 301(a).

Legislative History

(Source: P.A. 104-6, eff. 6-16-25.)