2013 Illinois Compiled Statutes
Chapter 35 - REVENUE
35 ILCS 5/ - Illinois Income Tax Act.
Article 4 - Accounting

(35 ILCS 5/Art. 4 heading)

35 ILCS 5/401

(35 ILCS 5/401) (from Ch. 120, par. 4-401)
Sec. 401. Taxable Year.
(a) In general. For purposes of the tax imposed by this Act, the taxable year of a person shall be the same as the taxable year of such person for federal income tax purposes. The taxable year of any person required to file a return under this Act but not under the Internal Revenue Code shall be his annual accounting period if it is a fiscal or calendar year, and in all other cases shall be the calendar year.
(b) Change in taxable year. If the taxable year of a person is changed for federal income tax purposes, the taxable year of such person for purposes of the tax imposed by this Act shall be similarly changed. In the case of a taxable year for a period of less than 12 months, the standard exemption allowed under section 204 shall be prorated on the basis of the number of days in such year to 365.
(c) Termination of taxable year for jeopardy. Notwithstanding the provisions of subsections (a) and (b), if the Department terminates the taxable year of a taxpayer under section 1102 (relating to tax in jeopardy), the tax shall be computed for the period determined by such action.
(Source: P.A. 76-261.)

35 ILCS 5/402

(35 ILCS 5/402) (from Ch. 120, par. 4-402)
Sec. 402. Methods of Accounting.
(a) Same as federal. For purposes of the tax imposed by this Act, a person's method of accounting shall be the same as such person's method of accounting for federal income tax purposes. If no method of accounting has been regularly used by such person, base and net income for purposes of this Act shall be computed under such method as in the opinion of the Department fairly reflects income.
(b) Change of accounting method. If a person's method of accounting is changed for federal income tax purposes, for purposes of this Act it shall be similarly changed.
(Source: P.A. 76-261.)

35 ILCS 5/403

(35 ILCS 5/403) (from Ch. 120, par. 4-403)
Sec. 403. Effect of Determination for Federal Purposes. (a) Reporting. To the extent not inconsistent with the provisions of this Act or forms or regulations prescribed by the Department, each person making a return under this Act shall take into account the items of income, deduction and exclusion on such return in the same manner and amounts as reflected in such person's federal income tax return for the same taxable year.
(b) Adjustment. A final determination pursuant to the Internal Revenue Code adjusting any item or items of income, deduction or exclusion for any taxable year shall be correct for purposes of this Act to the extent such item or items enter into the determination of base income.
(c) Identification of differences. To the extent required by forms or regulations prescribed by the Department, any person making a return under this Act may be required to indicate the item or items of income, deduction and exclusion which would enter into the determination of base income if this Act were amended to incorporate the Internal Revenue Code as amended and in effect for such taxable year.
(Source: P.A. 81-1405.)

35 ILCS 5/404

(35 ILCS 5/404) (from Ch. 120, par. 4-404)
Sec. 404. Reallocation of Items.
(a) If it appears to the Director that any agreement, understanding or arrangement exists between any persons which causes any person's base income allocable to this State to be improperly or inaccurately reflected, the Director may adjust such items of income and deduction, and any factor taken into account in allocating income to this State, to such extent as may reasonably be required to determine the base income of such person properly allocable to this State.
(b) The Director may not make an adjustment to base income under this Section that has the same effect as retroactively applying any amendments to this Act made by Public Act 93-0840, Public Act 95-0233, or Public Act 95-0707.
(Source: P.A. 95-948, eff. 8-29-08.)

35 ILCS 5/405

(35 ILCS 5/405)
Sec. 405. Carryovers in certain acquisitions.
(a) In the case of the acquisition of assets of a corporation by another corporation described in Section 381(a) of the Internal Revenue Code, the acquiring corporation shall succeed to and take into account, as of the close of the day of distribution or transfer, all Article 2 credits and net losses under Section 207 of the corporation from which the assets were acquired.
(b) In the case of the acquisition of assets of a partnership by another partnership in a transaction in which the acquiring partnership is considered to be a continuation of the partnership from which the assets were acquired under the provisions of Section 708 of the Internal Revenue Code and any regulations promulgated under that Section, the acquiring partnership shall succeed to and take into account, as of the close of the day of distribution or transfer, all Article 2 credits and net losses under Section 207 of the partnership from which the assets were acquired.
(b-5) No limitation under Section 382 of the Internal Revenue Code or the separate return limitation year regulations promulgated under Section 1502 of the Internal Revenue Code shall apply to the carryover of any Article 2 credit or net loss allowable under Section 207.
(c) The provisions of this amendatory Act of the 91st General Assembly shall apply to all acquisitions occurring in taxable years ending on or after December 31, 1986; provided that if a taxpayer's Illinois income tax liability for any taxable year, as assessed under Section 903 prior to January 1, 1999, was computed without taking into account all of the Article 2 credits and net losses under Section 207 as allowed by this Section:
(1) no refund shall be payable to the taxpayer for

that taxable year as the result of allowing any portion of the Article 2 credits or net losses under Section 207 that were not taken into account in computing the tax assessed prior to January 1, 1999;

(2) any deficiency which has not been paid may be

reduced (but not below zero) by the allowance of some or all of the Article 2 credits or net losses under Section 207 that were not taken into account in computing the tax assessed prior to January 1, 1999; and

(3) in the case of any Article 2 credit or net loss

under Section 207 that, pursuant to this subsection (c), could not be taken into account either in computing the tax assessed prior to January 1, 1999 for a taxable year or in reducing a deficiency for that taxable year under paragraph (2) of subsection (c), the allowance of such credit or loss in any other taxable year shall not be denied on the grounds that such credit or loss should properly have been claimed in that taxable year under subsection (a) or (b).

(Source: P.A. 91-541, eff. 8-13-99; 91-913, eff. 1-1-01.)