Illinois - Unitary net capital losses are carried back under federal capital loss carryback provisions

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An Illinois unitary group's 2002 net capital loss may be carried back to a member's separate, pre-unitary, 1999 Illinois return by allocating the net capital loss only among those members that incurred a loss in the 2002 loss year (the separate-company accounting method), which is the method followed by the federal capital loss carryback rules. The taxpayer argued that the net capital loss should be allocated pro rata among all members of the 2002 unitary group based on each member's total gross receipts (the combined apportionment method). An Illinois appellate court reasoned that the "separate accounting method" was expressly authorized by the Illinois Income Tax Act and the Department's regulation was appropriately used by the Department. [AT&T Teleholdings, Inc, fka Ameritech Corporation v. Department of Revenue, Ill. App. Ct. Dkt. No. 1-11-0493, 9/28/12]



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