Illinois Administrative Code › Title 86 - REVENUE › Part 100 - INCOME TAX › Subpart M - BUSINESS INCOME OF PERSONS OTHER THAN RESIDENTS › Section 100.3350 - Property Factor (IITA Section 304)

Current through Register Vol. 48, No. 28, July 12, 2024
a) In general. The property factor of the
				apportionment formula for each trade or business of a person shall include all
				real and tangible personal property owned or rented by such person and used
				during the tax period in the regular course of such trade or business. The term
				"real and tangible personal property" includes land, building, machinery,
				stocks of goods, equipment, and other real and tangible personal property but
				does not include coin or currency. Property used in connection with the
				production of nonbusiness income shall be excluded from the property factor.
				Property used both in the regular course of a person's trade or business and in
				the production of nonbusiness income shall be included in the factor only to
				the extent the property is used in the regular course of the person's trade or
				business. The method of determining that portion of the value to be included in
				the factor will depend on the facts of each case. The property factor shall
				include the average value of property includable in the factor. See subsection
				(g), below.
b) Property used for
				the production of business income. Property shall be included in the property
				factor if it is actually used or is available for or capable of being used
				during the tax period in the regular course of the trade or business of the
				person. Property held as reserves or standby facilities or property held as a
				reserve source of materials shall be included in the factor. For example, a
				plant temporarily idle or raw material reserves not currently being processed
				are includable in the factor. Property or equipment under construction during
				the tax period (except inventoriable goods in process), shall be excluded from
				the factor until such property is actually used in the regular course of the
				trade or business of the person. If the property is partially used in the
				regular course of the trade or business of the person while under construction,
				the value of the property to the extent used shall be included in the property
				factor. Property used in the regular course of the trade or business of the
				person shall remain in the property factor until its permanent withdrawal is
				established by an identifiable event such as its conversion to the production
				of nonbusiness income, its sale, or the lapse of an extended period of time
				(normally five years) during which the property is held for sale.
1) Example 1: Corporation A closed its
				manufacturing plant in State X and held such property for sale. The property
				remained vacant until its sale one year later. The value of the manufacturing
				plant is included in the property factor until the plant is sold.
2) Example 2: Same as above except that the
				property was rented until the plant was sold. The plant is included in the
				property factor until the plant is sold.
3) Example 3: Corporation A operates a chain
				of retail grocery stores. The corporation closed Store A, which was then
				remodeled into three small retail stores, such as a dress shop, dry cleaning,
				and barber shop, which were leased to unrelated parties. The property is
				removed from the property factor on the date the remodeling of Store A
				commenced.