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2005 Illinois Code - 35 ILCS 5/      Illinois Income Tax Act. Article 3 - Allocation And Apportionment Of Base Income


      (35 ILCS 5/Art. 3 heading)
ARTICLE 3. ALLOCATION AND APPORTIONMENT OF BASE INCOME.

    (35 ILCS 5/301) (from Ch. 120, par. 3‑301)
    Sec. 301. General Rule.
    (a) Residents. All items of income or deduction which were taken into account in the computation of base income for the taxable year by a resident shall be allocated to this State.
    (b) Part‑year residents. All items of income or deduction which were taken into account in the computation of base income for the taxable year by a part‑year resident shall, for that part of the year the part‑year resident was a resident of this State, be allocated to this State and, for the remaining part of the year, be allocated to this State only to the extent provided by Section 302, 303 or 304 (relating to compensation, nonbusiness income and business income, respectively).
    (c) Other persons.
        (1) In general. Any item of income or deduction
    
which was taken into account in the computation of base income for the taxable year by any person other than a resident and which is referred to in Section 302, 303 or 304 (relating to compensation, nonbusiness income and business income, respectively) shall be allocated to this State only to the extent provided by such section.
        (2) Unspecified items. Any item of income or
    
deduction which was taken into account in the computation of base income for the taxable year by any person other than a resident and which is not otherwise specifically allocated or apportioned pursuant to Section 302, 303 or 304 (including, without limitation, interest, dividends, items of income taken into account under the provisions of Sections 401 through 425 of the Internal Revenue Code, and benefit payments received by a beneficiary of a supplemental unemployment benefit trust which is referred to in Section 501(c)(17) of the Internal Revenue Code):
            (A) in the case of an individual, trust, or
        
estate, shall not be allocated to this State; and
            (B) in the case of a corporation or a
        
partnership, shall be allocated to this State if the taxpayer had its commercial domicile in this State at the time such item was paid, incurred or accrued.
(Source: P.A. 90‑491, eff. 1‑1‑98; 90‑562, eff. 12‑16‑97.)

    (35 ILCS 5/302) (from Ch. 120, par. 3‑302)
    Sec. 302. Compensation paid to nonresidents.
    (a) In general. All items of compensation paid in this State (as determined under Section 304(a)(2)(B)) to an individual who is a nonresident at the time of such payment and all items of deduction directly allocable thereto, shall be allocated to this State.
    (b) Reciprocal exemption. The Director may enter into an agreement with the taxing authorities of any state which imposes a tax on or measured by income to provide that compensation paid in such state to residents of this State shall be exempt from such tax; in such case, any compensation paid in this State to residents of such state shall not be allocated to this State. All reciprocal agreements shall be subject to the requirements of Section 2505‑575 of the Department of Revenue Law (20 ILCS 2505/2505‑575).
    (c) Cross references.
        (1) For allocation of amounts received by
    
nonresidents from certain employee trusts, see Section 301(b)(2).
        (2) For allocation of compensation by residents, see
    
Section 301(a).
(Source: P.A. 90‑491, eff. 1‑1‑98; 91‑239, eff. 1‑1‑00.)

    (35 ILCS 5/303) (from Ch. 120, par. 3‑303)
    Sec. 303. (a) In general. 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, 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.
    (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", approved December 14, 1973, 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).
(Source: P.A. 79‑743.)

    (35 ILCS 5/304)(from Ch. 120, par. 3‑304)
    Sec. 304. Business income of persons other than residents.
    (a) In general. The business income of a person other than a resident shall be allocated to this State if such person's business income is derived solely from this State. If a person other than a resident derives business income from this State and one or more other states, then, for tax years ending on or before December 30, 1998, and except as otherwise provided by this Section, such person's business income shall be apportioned to this State by multiplying the income by a fraction, the numerator of which is the sum of the property factor (if any), the payroll factor (if any) and 200% of the sales factor (if any), and the denominator of which is 4 reduced by the number of factors other than the sales factor which have a denominator of zero and by an additional 2 if the sales factor has a denominator of zero. For tax years ending on or after December 31, 1998, and except as otherwise provided by this Section, persons other than residents who derive business income from this State and one or more other states shall compute their apportionment factor by weighting their property, payroll, and sales factors as provided in subsection (h) of this Section.
    (1) Property factor.
        (A) The property factor is a fraction, the numerator
    
of which is the average value of the person's real and tangible personal property owned or rented and used in the trade or business in this State during the taxable year and the denominator of which is the average value of all the person's real and tangible personal property owned or rented and used in the trade or business during the taxable year.
        (B) Property owned by the person is valued at its
    
original cost. Property rented by the person is valued at 8 times the net annual rental rate. Net annual rental rate is the annual rental rate paid by the person less any annual rental rate received by the person from sub‑rentals.
        (C) The average value of property shall be
    
determined by averaging the values at the beginning and ending of the taxable year but the Director may require the averaging of monthly values during the taxable year if reasonably required to reflect properly the average value of the person's property.
    (2) Payroll factor.
        (A) The payroll factor is a fraction, the numerator
    
of which is the total amount paid in this State during the taxable year by the person for compensation, and the denominator of which is the total compensation paid everywhere during the taxable year.
        (B) Compensation is paid in this State if:
            (i) The individual's service is performed
        
entirely within this State;
            (ii) The individual's service is performed both
        
within and without this State, but the service performed without this State is incidental to the individual's service performed within this State; or
            (iii) Some of the service is performed within
        
this State and either the base of operations, or if there is no base of operations, the place from which the service is directed or controlled is within this State, or the base of operations or the place from which the service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in this State.
            (iv) Compensation paid to nonresident
        
professional athletes.
            (a) General. The Illinois source income of a
        
nonresident individual who is a member of a professional athletic team includes the portion of the individual's total compensation for services performed as a member of a professional athletic team during the taxable year which the number of duty days spent within this State performing services for the team in any manner during the taxable year bears to the total number of duty days spent both within and without this State during the taxable year.
            (b) Travel days. Travel days that do not involve
        
either a game, practice, team meeting, or other similar team event are not considered duty days spent in this State. However, such travel days are considered in the total duty days spent both within and without this State.
            (c) Definitions. For purposes of this subpart
        
(iv):
                (1) The term "professional athletic team"
            
includes, but is not limited to, any professional baseball, basketball, football, soccer, or hockey team.
                (2) The term "member of a professional
            
athletic team" includes those employees who are active players, players on the disabled list, and any other persons required to travel and who travel with and perform services on behalf of a professional athletic team on a regular basis. This includes, but is not limited to, coaches, managers, and trainers.
                (3) Except as provided in items (C) and (D)
            
of this subpart (3), the term "duty days" means all days during the taxable year from the beginning of the professional athletic team's official pre‑season training period through the last game in which the team competes or is scheduled to compete. Duty days shall be counted for the year in which they occur, including where a team's official pre‑season training period through the last game in which the team competes or is scheduled to compete, occurs during more than one tax year.
                    (A) Duty days shall also include days on
                
which a member of a professional athletic team performs service for a team on a date that does not fall within the foregoing period (e.g., participation in instructional leagues, the "All Star Game", or promotional "caravans"). Performing a service for a professional athletic team includes conducting training and rehabilitation activities, when such activities are conducted at team facilities.
                    (B) Also included in duty days are game
                
days, practice days, days spent at team meetings, promotional caravans, preseason training camps, and days served with the team through all post‑season games in which the team competes or is scheduled to compete.
                    (C) Duty days for any person who joins a
                
team during the period from the beginning of the professional athletic team's official pre‑season training period through the last game in which the team competes, or is scheduled to compete, shall begin on the day that person joins the team. Conversely, duty days for any person who leaves a team during this period shall end on the day that person leaves the team. Where a person switches teams during a taxable year, a separate duty‑day calculation shall be made for the period the person was with each team.
                    (D) Days for which a member of a
                
professional athletic team is not compensated and is not performing services for the team in any manner, including days when such member of a professional athletic team has been suspended without pay and prohibited from performing any services for the team, shall not be treated as duty days.
                    (E) Days for which a member of a
                
professional athletic team is on the disabled list and does not conduct rehabilitation activities at facilities of the team, and is not otherwise performing services for the team in Illinois, shall not be considered duty days spent in this State. All days on the disabled list, however, are considered to be included in total duty days spent both within and without this State.
                (4) The term "total compensation for services
            
performed as a member of a professional athletic team" means the total compensation received during the taxable year for services performed:
                    (A) from the beginning of the official
                
pre‑season training period through the last game in which the team competes or is scheduled to compete during that taxable year; and
                    (B) during the taxable year on a date
                
which does not fall within the foregoing period (e.g., participation in instructional leagues, the "All Star Game", or promotional caravans).
                This compensation shall include, but is not
            
limited to, salaries, wages, bonuses as described in this subpart, and any other type of compensation paid during the taxable year to a member of a professional athletic team for services performed in that year. This compensation does not include strike benefits, severance pay, termination pay, contract or option year buy‑out payments, expansion or relocation payments, or any other payments not related to services performed for the team.
                For purposes of this subparagraph, "bonuses"
            
included in "total compensation for services performed as a member of a professional athletic team" subject to the allocation described in Section 302(c)(1) are: bonuses earned as a result of play (i.e., performance bonuses) during the season, including bonuses paid for championship, playoff or "bowl" games played by a team, or for selection to all‑star league or other honorary positions; and bonuses paid for signing a contract, unless the payment of the signing bonus is not conditional upon the signee playing any games for the team or performing any subsequent services for the team or even making the team, the signing bonus is payable separately from the salary and any other compensation, and the signing bonus is nonrefundable.
    (3) Sales factor.
        (A) The sales factor is a fraction, the numerator of
    
which is the total sales of the person in this State during the taxable year, and the denominator of which is the total sales of the person everywhere during the taxable year.
        (B) Sales of tangible personal property are in this
    
State if:
            (i) The property is delivered or shipped to a
        
purchaser, other than the United States government, within this State regardless of the f. o. b. point or other conditions of the sale; or
            (ii) The property is shipped from an office,
        
store, warehouse, factory or other place of storage in this State and either the purchaser is the United States government or the person is not taxable in the state of the purchaser; provided, however, that premises owned or leased by a person who has independently contracted with the seller for the printing of newspapers, periodicals or books shall not be deemed to be an office, store, warehouse, factory or other place of storage for purposes of this Section. Sales of tangible personal property are not in this State if the seller and purchaser would be members of the same unitary business group but for the fact that either the seller or purchaser is a person with 80% or more of total business activity outside of the United States and the property is purchased for resale.
        (B‑1) Patents, copyrights, trademarks, and similar
    
items of intangible personal property.
            (i) Gross receipts from the licensing, sale, or
        
other disposition of a patent, copyright, trademark, or similar item of intangible personal property are in this State to the extent the item is utilized in this State during the year the gross receipts are included in gross income.
            (ii) Place of utilization.
                (I) 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 a patent is utilized in more than one state, the extent to which it is utilized in any one state shall be a fraction equal to the gross receipts of the licensee or purchaser from sales or leases of items produced, fabricated, manufactured, or processed within that state using the patent and of patented items produced within that state, divided by the total of such gross receipts for all states in which the patent is utilized.
                (II) A copyright is utilized in a state to
            
the extent that printing or other publication originates in the state. If a copyright is utilized in more than one state, the extent to which it is utilized in any one state shall be a fraction equal to the gross receipts from sales or licenses of materials printed or published in that state divided by the total of such gross receipts for all states in which the copyright is utilized.
                (III) Trademarks and other items of
            
intangible personal property governed by this paragraph (B‑1) are utilized in the state in which the commercial domicile of the licensee or purchaser is located.
            (iii) If the state of utilization of an item of
        
property governed by this paragraph (B‑1) cannot be determined from the taxpayer's books and records or from the books and records of any person related to the taxpayer within the meaning of Section 267(b) of the Internal Revenue Code, 26 U.S.C. 267, the gross receipts attributable to that item shall be excluded from both the numerator and the denominator of the sales factor.
        (B‑2) Gross receipts from the license, sale, or
    
other disposition of patents, copyrights, trademarks, and similar items of intangible personal property may be included in the numerator or denominator of the sales factor only if gross receipts from licenses, sales, or other disposition of such items comprise more than 50% of the taxpayer's total gross receipts included in gross income during the tax year and during each of the 2 immediately preceding tax years; provided that, when a taxpayer is a member of a unitary business group, such determination shall be made on the basis of the gross receipts of the entire unitary business group.
        (C) Sales, other than sales governed by paragraphs
    
(B) and (B‑1), are in this State if:
            (i) The income‑producing activity is performed
        
in this State; or
            (ii) The income‑producing activity is performed
        
both within and without this State and a greater proportion of the income‑producing activity is performed within this State than without this State, based on performance costs.
        (D) For taxable years ending on or after December
    
31, 1995, the following items of income shall not be included in the numerator or denominator of the sales factor: dividends; amounts included under Section 78 of the Internal Revenue Code; and Subpart F income as defined in Section 952 of the Internal Revenue Code. No inference shall be drawn from the enactment of this paragraph (D) in construing this Section for taxable years ending before December 31, 1995.
        (E) Paragraphs (B‑1) and (B‑2) shall apply to tax
    
years ending on or after December 31, 1999, provided that a taxpayer may elect to apply the provisions of these paragraphs to prior tax years. Such election shall be made in the form and manner prescribed by the Department, shall be irrevocable, and shall apply to all tax years; provided that, if a taxpayer's Illinois income tax liability for any tax year, as assessed under Section 903 prior to January 1, 1999, was computed in a manner contrary to the provisions of paragraphs (B‑1) or (B‑2), no refund shall be payable to the taxpayer for that tax year to the extent such refund is the result of applying the provisions of paragraph (B‑1) or (B‑2) retroactively. In the case of a unitary business group, such election shall apply to all members of such group for every tax year such group is in existence, but shall not apply to any taxpayer for any period during which that taxpayer is not a member of such group.
    (b) Insurance companies.
        (1) In general. Except as otherwise provided by
    
paragraph (2), business income of an insurance company for a taxable year shall be apportioned to this State by multiplying such income by a fraction, the numerator of which is the direct premiums written for insurance upon property or risk in this State, and the denominator of which is the direct premiums written for insurance upon property or risk everywhere. For purposes of this subsection, the term "direct premiums written" means the total amount of direct premiums written, assessments and annuity considerations as reported for the taxable year on the annual statement filed by the company with the Illinois Director of Insurance in the form approved by the National Convention of Insurance Commissioners or such other form as may be prescribed in lieu thereof.
        (2) Reinsurance. If the principal source of premiums
    
written by an insurance company consists of premiums for reinsurance accepted by it, the business income of such company shall be apportioned to this State by multiplying such income by a fraction, the numerator of which is the sum of (i) direct premiums written for insurance upon property or risk in this State, plus (ii) premiums written for reinsurance accepted in respect of property or risk in this State, and the denominator of which is the sum of (iii) direct premiums written for insurance upon property or risk everywhere, plus (iv) premiums written for reinsurance accepted in respect of property or risk everywhere. For purposes of this paragraph, premiums written for reinsurance accepted in respect of property or risk in this State, whether or not otherwise determinable, may, at the election of the company, be determined on the basis of the proportion which premiums written for reinsurance accepted from companies commercially domiciled in Illinois bears to premiums written for reinsurance accepted from all sources, or, alternatively, in the proportion which the sum of the direct premiums written for insurance upon property or risk in this State by each ceding company from which reinsurance is accepted bears to the sum of the total direct premiums written by each such ceding company for the taxable year.
    (c) Financial organizations.
        (1) In general. Business income of a financial
    
organization shall be apportioned to this State by multiplying such income by a fraction, the numerator of which is its business income from sources within this State, and the denominator of which is its business income from all sources. For the purposes of this subsection, the business income of a financial organization from sources within this State is the sum of the amounts referred to in subparagraphs (A) through (E) following, but excluding the adjusted income of an international banking facility as determined in paragraph (2):
            (A) Fees, commissions or other compensation for
        
financial services rendered within this State;
            (B) Gross profits from trading in stocks, bonds
        
or other securities managed within this State;
            (C) Dividends, and interest from Illinois
        
customers, which are received within this State;
            (D) Interest charged to customers at places of
        
business maintained within this State for carrying debit balances of margin accounts, without deduction of any costs incurred in carrying such accounts; and
            (E) Any other gross income resulting from the
        
operation as a financial organization within this State. In computing the amounts referred to in paragraphs (A) through (E) of this subsection, any amount received by a member of an affiliated group (determined under Section 1504(a) of the Internal Revenue Code but without reference to whether any such corporation is an "includible corporation" under Section 1504(b) of the Internal Revenue Code) from another member of such group shall be included only to the extent such amount exceeds expenses of the recipient directly related thereto.
        (2) International Banking Facility.
            (A) Adjusted Income. The adjusted income of an
        
international banking facility is its income reduced by the amount of the floor amount.
            (B) Floor Amount. The floor amount shall be the
        
amount, if any, determined by multiplying the income of the international banking facility by a fraction, not greater than one, which is determined as follows:
                (i) The numerator shall be:
                The average aggregate, determined on a
            
quarterly basis, of the financial organization's loans to banks in foreign countries, to foreign domiciled borrowers (except where secured primarily by real estate) and to foreign governments and other foreign official institutions, as reported for its branches, agencies and offices within the state on its "Consolidated Report of Condition", Schedule A, Lines 2.c., 5.b., and 7.a., which was filed with the Federal Deposit Insurance Corporation and other regulatory authorities, for the year 1980, minus
                The average aggregate, determined on a
            
quarterly basis, of such loans (other than loans of an international banking facility), as reported by the financial institution for its branches, agencies and offices within the state, on the corresponding Schedule and lines of the Consolidated Report of Condition for the current taxable year, provided, however, that in no case shall the amount determined in this clause (the subtrahend) exceed the amount determined in the preceding clause (the minuend); and
                (ii) the denominator shall be the average
            
aggregate, determined on a quarterly basis, of the international banking facility's loans to banks in foreign countries, to foreign domiciled borrowers (except where secured primarily by real estate) and to foreign governments and other foreign official institutions, which were recorded in its financial accounts for the current taxable year.
            (C) Change to Consolidated Report of Condition
        
and in Qualification. In the event the Consolidated Report of Condition which is filed with the Federal Deposit Insurance Corporation and other regulatory authorities is altered so that the information required for determining the floor amount is not found on Schedule A, lines 2.c., 5.b. and 7.a., the financial institution shall notify the Department and the Department may, by regulations or otherwise, prescribe or authorize the use of an alternative source for such information. The financial institution shall also notify the Department should its international banking facility fail to qualify as such, in whole or in part, or should there be any amendment or change to the Consolidated Report of Condition, as originally filed, to the extent such amendment or change alters the information used in determining the floor amount.
    (d) Transportation services. Business income derived from furnishing transportation services shall be apportioned to this State in accordance with paragraphs (1) and (2):
        (1) Such business income (other than that derived
    
from transportation by pipeline) shall be apportioned to this State by multiplying such income by a fraction, the numerator of which is the revenue miles of the person in this State, and the denominator of which is the revenue miles of the person everywhere. For purposes of this paragraph, a revenue mile is the transportation of 1 passenger or 1 net ton of freight the distance of 1 mile for a consideration. Where a person is engaged in the transportation of both passengers and freight, the fraction above referred to shall be determined by means of an average of the passenger revenue mile fraction and the freight revenue mile fraction, weighted to reflect the person's
            (A) relative railway operating income from total
        
passenger and total freight service, as reported to the Interstate Commerce Commission, in the case of transportation by railroad, and
            (B) relative gross receipts from passenger and
        
freight transportation, in case of transportation other than by railroad.
        (2) Such business income derived from transportation
    
by pipeline shall be apportioned to this State by multiplying such income by a fraction, the numerator of which is the revenue miles of the person in this State, and the denominator of which is the revenue miles of the person everywhere. For the purposes of this paragraph, a revenue mile is the transportation by pipeline of 1 barrel of oil, 1,000 cubic feet of gas, or of any specified quantity of any other substance, the distance of 1 mile for a consideration.
    (e) Combined apportionment. Where 2 or more persons are engaged in a unitary business as described in subsection (a)(27) of Section 1501, a part of which is conducted in this State by one or more members of the group, the business income attributable to this State by any such member or members shall be apportioned by means of the combined apportionment method.
    (f) Alternative allocation. If the allocation and apportionment provisions of subsections (a) through (e) and of subsection (h) do not fairly represent the extent of a person's business activity in this State, the person may petition for, or the Director may require, in respect of all or any part of the person's business activity, if reasonable:
        (1) Separate accounting;
        (2) The exclusion of any one or more factors;
        (3) The inclusion of one or more additional factors
    
which will fairly represent the person's business activities in this State; or
        (4) The employment of any other method to effectuate
    
an equitable allocation and apportionment of the person's business income.
    (g) Cross reference. For allocation of business income by residents, see Section 301(a).
    (h) For tax years ending on or after December 31, 1998, the apportionment factor of persons who apportion their business income to this State under subsection (a) shall be equal to:
        (1) for tax years ending on or after December 31,
    
1998 and before December 31, 1999, 16 2/3% of the property factor plus 16 2/3% of the payroll factor plus 66 2/3% of the sales factor;
        (2) for tax years ending on or after December 31,
    
1999 and before December 31, 2000, 8 1/3% of the property factor plus 8 1/3% of the payroll factor plus 83 1/3% of the sales factor;
        (3) for tax years ending on or after December 31,
    
2000, the sales factor.
If, in any tax year ending on or after December 31, 1998 and before December 31, 2000, the denominator of the payroll, property, or sales factor is zero, the apportionment factor computed in paragraph (1) or (2) of this subsection for that year shall be divided by an amount equal to 100% minus the percentage weight given to each factor whose denominator is equal to zero.
(Source: P.A. 94‑247, eff. 1‑1‑06.)

    (35 ILCS 5/305)(from Ch. 120, par. 3‑305)
    Sec. 305. Allocation of Partnership Income by partnerships and partners other than residents.
    (a) Allocation of partnership business income by partners other than residents. The respective shares of partners other than residents in so much of the business income of the partnership as is allocated or apportioned to this State in the possession of the partnership shall be taken into account by such partners pro rata in accordance with their respective distributive shares of such partnership income for the partnership's taxable year and allocated to this State.
    (b) Allocation of partnership nonbusiness income by partners other than residents. The respective shares of partners other than residents in the items of partnership income and deduction not taken into account in computing the business income of a partnership shall be taken into account by such partners pro rata in accordance with their respective distributive shares of such partnership income for the partnership's taxable year, and allocated as if such items had been paid, incurred or accrued directly to such partners in their separate capacities.
    (c) Allocation or apportionment of base income by partnership. Base income of a partnership shall be allocated or apportioned to this State pursuant to Article 3, in the same manner as it is allocated or apportioned for any other nonresident.
    (c‑5) Taxable income of an investment partnership, as defined in Section 1501(a)(11.5) of this Act, that is distributable to a nonresident partner shall be treated as nonbusiness income and shall be allocated to the partner's state of residence (in the case of an individual) or commercial domicile (in the case of any other person). However, any income distributable to a nonresident partner shall be treated as business income and apportioned as if such income had been received directly by the partner if the partner has made an election under Section 1501(a)(1) of this Act to treat all income as business income or if such income is from investment activity:
        (1) that is directly or integrally related to any
    
other business activity conducted in this State by the nonresident partner (or any member of that partner's unitary business group);
        (2) that serves an operational function to any other
    
business activity of the nonresident partner (or any member of that partner's unitary business group) in this State; or
        (3) where assets of the investment partnership were
    
acquired with working capital from a trade or business activity conducted in this State in which the nonresident partner (or any member of that partner's unitary business group) owns an interest.
    (d) Cross reference. For allocation of partnership income or deductions by residents, see Section 301(a).
(Source: P.A. 93‑840, eff. 7‑30‑04.)

    (35 ILCS 5/306) (from Ch. 120, par. 3‑306)
    Sec. 306. Allocation or apportionment of income by estates and trusts.
    The items of income and deduction taken into account by an estate or trust in computing its base income for a taxable year shall be allocated or apportioned to this State to the extent provided by Sections 301 through 304 and, to the extent properly paid, credited or required to be distributed to beneficiaries for such taxable year, shall be deemed to have been so paid, credited or distributed pro rata.
(Source: P. A. 76‑2402.)

    (35 ILCS 5/307) (from Ch. 120, par. 3‑307)
    Sec. 307. Allocation of income by estate or trust beneficiaries other than residents. (a) Allocation of business income by beneficiaries other than residents. To the extent the business income of an estate or trust allocated or apportioned to this State in the possession of the estate or trust is deemed to have been paid, credited or distributed by the estate or trust under Section 306, the respective shares of beneficiaries of the estate or trust, other than residents, in such business income shall be taken into account by such beneficiaries in proportion to their respective shares of the distributable net income of the estate or trust for its taxable year and allocated to this State.
    (b) Allocation of nonbusiness income by beneficiaries other than residents. To the extent items of estate or trust income and deduction not taken into account in computing the business income of an estate or trust are deemed to have been paid, credited or distributed by the estate or trust under Section 306, the respective shares of beneficiaries of the estate or trust, other than residents, in such items shall be taken into account by such beneficiaries in proportion to their respective shares of the distributable net income of the estate or trust for its taxable year, and allocated as if such items had been paid, incurred or accrued directly to such beneficiaries in their separate capacities.
    (c) Accumulation and capital gain distributions. In the event that, in any taxable year of a trust, the trust makes an accumulation distribution or a capital gain distribution (both as defined in Section 665 of the Internal Revenue Code), the total of the amounts which are included in the income of each beneficiary of such trust, other than a resident, under Sections 668 and 669 of the Internal Revenue Code shall be allocated to this State to the extent that the items of income included in such distribution were allocated or apportioned to this State in the hands of the trust.
    (d) Cross references. (1) For allocation of amounts received by nonresidents from certain employee trusts, see Section 301 (b) (2).
    (2) For allocation of estate or trust income or deductions by residents, see Section 301 (a).
(Source: P.A. 84‑550.)

    (35 ILCS 5/308) (from Ch. 120, par. 3‑308)
    Sec. 308. Allocation of Subchapter S Corporation Income by Subchapter S Corporations and Shareholders Other Than Residents. (a) Allocation of Subchapter S corporation business income by shareholders other than residents. The respective shares of shareholders other than residents in so much of the business income of the Subchapter S corporation as is allocated or apportioned to this State in the hands of the Subchapter S corporation shall be taken into account by such shareholder pro rata in accordance with the requirements of Section 1366 of the Internal Revenue Code for the Subchapter S corporation's taxable year and allocated to this State.
    (b) Allocation of Subchapter S corporation nonbusiness income by shareholders other than residents. The respective share of shareholders other than residents in the items of Subchapter S corporation income and deduction not taken into account in computing the business income of the Subchapter S corporation shall be taken into account by such shareholders pro rata in accordance with the requirements of Section 1366 of the Internal Revenue Code for the corporation's taxable year, and allocated as if such items had been paid, incurred or accrued directly to such shareholders in their separate capacities.
    (c) Allocation or apportionment of base income by the Subchapter S corporation. Base income of a Subchapter S corporation shall be allocated or apportioned to this State pursuant to this Article 3 in the same manner as it is allocated or apportioned for any other nonresident.
    (d) This Section shall not apply to any corporation for which there is in effect a federal election to opt out of the provisions of the Subchapter S Revision Act of 1982 and have applied instead the prior federal Subchapter S rules as in effect on July 1, 1982.
(Source: P.A. 83‑1352.)

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