Current through Register Vol. 48, No. 38, September 20, 2024
a) Transportation company. The term
"transportation company" means any person deriving 80 percent or more of its
gross income, averaged over a period of three years, which includes the current
tax year and the immediately preceding two tax years, from furnishing
transportation services and ancillary services.
1) For purposes of this subsection (a), gross
income shall include only amounts that are received in the ordinary course of
the person's regular business activities and that are included in net income
under the IITA. For purposes of determining whether a person is predominantly
engaged in the business activities of a transportation company when a person is
formed in a current tax year or in its immediately preceding tax year, only the
years for which the person is in existence will be used in determining whether
the person meets the 80 percent test.
2) The treatment of items of income that are
not included in apportionable business income is not affected by the
classification of the person as a transportation company, and those items are
therefore disregarded for purposes of the gross income test. For example,
interest received on United States Treasury obligations is excluded from
Illinois base income and, accordingly, is disregarded for purposes of
determining whether the business income of a person should be apportioned using
the transportation company formula. Similarly, dividends received by a
corporation shall be disregarded to the extent the dividends are deducted from
federal taxable income under
26 USC
243 or are subtracted in the computation of
Illinois base income under IITA Section 203(b)(2)(O).
3) In the case of a sale or disposition of
any asset (whether tangible or intangible, and whether the asset is part of the
person's stock in trade) that occurs in the ordinary course of a person's
regular business activities, only the net gain shall be taken into account for
purposes of the gross income test. Thus, for example, gross income from the
sale of inventory is equal to its gross receipts minus the cost of goods sold,
while gross income from the sale of stock is equal to the sales price minus any
brokerage commission and minus the person's basis in the stock. If gross income
from a transaction is negative, the loss shall not be considered for purposes
of the gross income test.
4) Income
that results from transactions outside the ordinary course of a person's
regular business activities is not taken into account for the purposes of the
gross income test. For example, amounts received from the sale of a person's
headquarters shall be disregarded, whether or not the gain is characterized as
business income.
5) In applying the
gross income test, a person's transactions with a person to which it is related
(including transactions with a member of the person's unitary business group
that are eliminated in combination under Section
100.3320(d)
of this Part) shall be treated in the same manner as transactions between the
person and an unrelated person, subject in all cases to the authority of the
Department under IITA Section 404 to make such adjustments as are necessary to
properly reflect each party's Illinois business activities.
b) Transportation services. The
term "transportation services" means the movement of freight or passengers by
air, land or water, or the movement of liquid or gaseous substances by
pipeline, performed by the taxpayer. Transportation services include intermodal
services, which means the movement of freight by more than one form of carrier
during a single movement without handling the freight itself when changing
modes. For purposes of this Section, "freight" means any item, other than an
individual passenger, that is transported for consideration.
c) Ancillary services. "Ancillary services"
means those services generally provided to customers in connection with the
provision of transportation services, and that are provided by the same person
who is performing the connected transportation service. Ancillary services
include, but are not limited to:
1) transfer
of freight from one bulk packaging to another bulk packaging or between a bulk
packing and a non-bulk packaging for purposes of continuing the movement of the
freight in commerce;
2) with regard
to railroads, the in-transit sale of food or beverages, switching,
transportation detention charges, and packing and warehousing;
3) with regard to airlines, the in-flight
rental of pillows, blankets or headsets, the in-flight sale of food or
beverages, baggage services, and changing or cancelling reservations;
and
4) with regard to trucking
companies:
A) packing and warehousing;
and
B) notwithstanding the
requirement that ancillary services must be provided by the same person who is
performing the connected transportation service, furnishing vehicles with
drivers (including owner-operators) to another transportation company under a
lease or similar arrangement.
