When a subsidiary is sold out of an Illinois combined unitary group, does the federal consolidated-return limit on using the sold subsidiary's losses (Treas. Reg. 1.1502-11(b)) also cap how much of that subsidiary's Illinois net loss carryover the group can use?

Plain-English summary

This General Information Letter answers a question from a tax representative for the U.S. common parent of an affiliated corporate group. The parent owns a holding company, which owns a subsidiary ("Subsidiary"), which in turn owns a lower-tier subsidiary ("Subsidiary 2") along with a number of U.S. and overseas companies under it. In 2016, Subsidiary sold 100% of the stock of Subsidiary 2 to an unrelated third party. For federal purposes, that sale is a stock sale, and Subsidiary's gain is the amount realized minus its basis in Subsidiary 2's stock. Under federal consolidated-return rules (Treas. Reg. 1.1502-32), that stock basis moves up and down over time based on how much of Subsidiary 2's income or losses get absorbed by the rest of the consolidated group. A related rule, Treas. Reg. 1.1502-11(b), limits how much of a departing subsidiary's current-year and carryforward losses can be used to offset the parent's gain from selling that subsidiary's stock, specifically to stop the group from artificially inflating its own gain-reducing basis.

The taxpayer asked three related questions: (1) whether Illinois adopts these same federal consolidated-return rules (Treas. Reg. 1.1502-11(b) and 1.1502-32) for figuring stock basis on the sale, (2) whether that federal loss-limitation provision restricts how much Illinois NOL carryover the group can use in the year of the sale, and (3) whether there are any limits on a unitary group's ability to use the NOL attributes of a member that leaves the group mid-year.

The Department's answer: Illinois does adopt the federal consolidated-return regulations, including Treas. Reg. 1.1502-11(b) and 1.1502-32, for purposes of computing combined base income under 86 Ill. Adm. Code 100.5270(a)(1) — so the gain on the sale of Subsidiary 2's stock is calculated the same way for Illinois as for federal purposes, and the same federal loss-absorption limits apply when figuring combined base income. However, that federal limitation does not carry over to the separate calculation of the Illinois net operating loss deduction. Illinois computes its own NOL deduction under 86 Ill. Adm. Code 100.2330, 100.2340, and 100.2350, and nothing in those rules imports the Treas. Reg. 1.1502-11(b) limitation or extends the Treas. Reg. 1.1502-32 basis-adjustment rules to the Illinois modification under 35 ILCS 5/203(b)(2) or the Illinois NOL deduction under 35 ILCS 5/207.

On the third question, the Department explained that when a member leaves a unitary group during the year, 86 Ill. Adm. Code 100.2350(b) and 100.5270(f) govern how that member's share of net loss for its part of the year is determined, and 100.5270(a)(3) and 100.2350(c)(3)-(4) govern how carrybacks/carryovers are attributed pro rata among group members. There is nothing in the Department's regulations that would prohibit or impair the group's use of available Illinois NOLs from a member in the year that member leaves. Any excess Illinois NOL not absorbed in the year of sale becomes an attribute that follows the departing entity, which can use it on a later separate return or as a member of a new unitary group.

What this means for you

If your unitary group is selling a subsidiary

The stock-sale gain calculation itself (basis, and the federal loss-absorption limitation under Treas. Reg. 1.1502-11(b)) is computed the same way for Illinois combined-return purposes as it is federally, because 86 Ill. Adm. Code 100.5270(a)(1) treats the unitary group as a federal consolidated group for this purpose. Don't assume Illinois recalculates stock basis differently from the federal consolidated return.

Don't assume the federal NOL-absorption limit follows through to your Illinois NOL carryover

Even though the federal gain/basis computation limits how much of the sold subsidiary's losses can offset the parent's gain in the consolidated return, that limitation is not carried into the separate Illinois net loss deduction computed under 86 Ill. Adm. Code 100.2330, 100.2340, and 100.2350. The full Illinois NOL carryover attributable to the sold or departing member remains available, subject only to Illinois's own attribution rules — not the federal 1.1502-11(b) cap.

If a member leaves your unitary group mid-year

The departing member's share of net loss for its part-year period is determined under 86 Ill. Adm. Code 100.5270(f)(2), and any excess Illinois NOL allocated to that member that isn't used in the year of departure becomes that entity's own carryover attribute — usable on a future separate return or by a new unitary group it later joins.

Common questions

Does Illinois follow the federal consolidated-return rules for computing stock basis and gain on a subsidiary sale?
Yes. 86 Ill. Adm. Code 100.5270(a)(1) directs the designated agent to compute combined base income by treating all unitary group members as a federal consolidated group and applying the federal consolidated-return regulations, including Treas. Reg. 1.1502-11 and 1.1502-32, with limited exceptions not relevant here.

Does the federal limitation in Treas. Reg. 1.1502-11(b) reduce the amount of Illinois NOL carryover a group can use in the year it sells a subsidiary?
No. The Department stated that "the provisions of Treasury Regulations § 1.1502-11(b) do not apply to limit the use of the Illinois net operating loss carryovers of a member of the combined group," because the Illinois NOL deduction is computed separately under 86 Ill. Adm. Code 100.2330, 100.2340, and 100.2350, which do not import that federal limitation.

What happens to the NOL carryover of a member that leaves the unitary group during the year?
The departing member's share of the group's net loss is determined for its part-year period, and any portion of the Illinois NOL allocated to that member that is not absorbed in the year it leaves becomes an attribute of that entity, which it can use on a separate return or as a member of a different unitary group later.

Is this GIL binding on the Department?
No. As the letter itself states, "A GIL does not constitute a statement of policy that applies, interprets or prescribes the tax laws, and it is not binding on the Department."

Citations and references

• 35 ILCS 5/502(e) (Illinois Income Tax Act — unitary business group treated as one taxpayer)
• 35 ILCS 5/203(b)(2) (Illinois Income Tax Act — modification adjustments)
• 35 ILCS 5/207 (Illinois Income Tax Act — Illinois net operating loss deduction)
• 86 Ill. Adm. Code 1200.110 (Private Letter Rulings)
• 86 Ill. Adm. Code 1200.120(b) and (c) (General Information Letters)
• 86 Ill. Adm. Code 100.5270(a)(1), (a)(3), (b)(3), (f)(1)-(2) (combined unitary return regulations)
• 86 Ill. Adm. Code 100.2330, 100.2340, 100.2350(a), (b), (c)(3)-(4) (Illinois net loss computation and attribution)
• Treas. Reg. § 1.1502-11(a), (b)(1), (b)(2)(i)-(ii) (consolidated taxable income; loss-absorption limitation on sale of member stock)
• Treas. Reg. § 1.1502-12 (separate taxable income of a consolidated group member)
• Treas. Reg. § 1.1502-21(b)(2)(iv) (consolidated net operating loss deduction)
• Treas. Reg. § 1.1502-32 (investment/stock basis adjustments; includes 1.1502-32(b)(2) and (b)(5) Example 2(d))
• Treas. Reg. § 1.1502-47 (limitations on consolidation of life and non-life companies, referenced as an exception not adopted by Illinois)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/income-tax/2017.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/income-tax/2017/it-17-0004-gil.pdf

Original ruling text

IT 17-0004-GIL 03/16/2017 COMBINED UNITARY RETURNS – ILLINOIS NET LOS
Elimination of Circular Stock Basis Adjustments When There is No Excluded COD Income
Provisions Do Not Limit Amount of Illinois Net Loss Carryovers of Member of Combined Group.
(This is a GIL.)

March 16, 2017

Re:

Combined return regulations

Dear Xxxx:
This is in response to your letter February 7, 2017, in which you request a General Information Letter
(GIL). A GIL is designed to provide general information, is not a statement of Department policy, and
is not binding on the Department. See 86 Ill. Adm. Code 1200.120(b) and (c), which may be accessed
from the Department’s web site at www.ILtax.com.
Your letter states as follows:
As previously discussed, COMPANY on behalf of its client, a U.S. corporation organized under
Delaware law and the common parent of an affiliated group of corporations (“Taxpayer”) does
hereby request the Department of Revenue (“Department”) to issue a General Information Letter
(“GIL”) based on the facts contained in this letter. The Taxpayer understands that a GIL is not a
statement of the Department’s policy and is not binding on the Department. Once the
Department issues the GIL, the Taxpayer may immediately request a Private Letter Ruling
(“PLR”) and comply with all requirements as authorized by 86 Ill. Adm. Code 1200.110.
Facts
The Taxpayer files a U.S. federal consolidated tax return and has a calendar year end. The
Taxpayer owns 100% of the stock of a US holding company which in turn is the sole shareholder
of a US subsidiary (“Subsidiary”). Subsidiary owns 100% of the stock of a lower tiered US
Subsidiary (“Subsidiary 2”). Subsidiary 2 owns a number of companies both in the U.S. and
overseas.
The Taxpayer has federal and Illinois net operating losses (“NOLs”). During 2016, Subsidiary
sold 100% of the stock of Subsidiary 2 to an unrelated third party.
Federal Income Tax Treatment
For federal income tax purposes, the sale of Subsidiary 2 will be treated as a stock sale and
Subsidiary’s gain will be determined as the amount realized less Subsidiary’s basis in Subsidiary

2. As a member of a consolidated return, Subsidiary will apply Treas. Reg. §1.1502-32 to
   determine its basis in Subsidiary’s 2 stock.
   Where an affiliated group member of the federal consolidated group has generated a loss that
   is not fully offset by income of the other members of the consolidated group, Treas. Reg.
   §1.1502-32 requires a positive adjustment to be made to the affiliated group member’s stock
   basis equal to the amount of the group’s loss allocable to the affiliated group member under

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Treas. Reg. 1.1502-21(b)(2)(iv). To the extent that these unabsorbed losses, representing net
operating loss carryovers attributable to Subsidiary 2 and its consolidated group members are
utilized by the consolidated group in future periods, a negative stock basis adjustment is made
to the basis of the relevant companies as provided for by Treas. Reg. 1.1502-32(b)(2) and
1.1502-32(b)(5) Example 2(d).
The Taxpayer’s federal consolidated group has net operating losses (“NOLs”) that will be carried
to the 2016 tax year. Subsidiary 2 and its subsidiaries have certain of these NOL attributes as
provided under Treas. Reg. 1.1502-21, and Subsidiary 2 has negative basis adjustments under
Treas. Reg. 1.1502-32 to the extent these NOLs will be utilized by the Taxpayer’s consolidated
group in 2016. Treas. Reg. 1.1502-11(b) provides specific rules concerning the use of NOLs
attributable to a member being sold to offset the gain on the sale of that same subsidiary
member’s shares. In particular, Treas. Reg. 1.1502-11(b)(1) states “Elimination of circular stock
basis adjustments where there is no excluded COD income. In general – If one member (P)
disposes of the stock of another member (S), this paragraph (b) limits the use of S’s deductions
and losses in the year of disposition and the carryback of items to prior years. The purpose of
the limitation is to prevent P’s income or gain from the disposition of S’s stock from increasing
the absorption of S’s deductions and losses, because the increase absorption would reduce P’s
basis (or increase its excess loss account) in S’s stock under Treas. Reg. 1.1502-32 and, in turn,
increase P’s income or gain.” As a result of this provision, the Taxpayer can only use the current
year or carryforward losses of Subsidiary 2 and its subsidiaries to the extent that the other
consolidated members of the Taxpayer have taxable income without regard to the sale of
Subsidiary 2 stock.
As a result of Treas. Reg. §1.1502-11(b)(2), a portion of Subsidiary 2’s NOL will be utilized by
the Taxpayer for the 2016 tax year for which a downward adjustment to Subsidiary’s basis in
Subsidiary 2 stock will be made for the amount of Subsidiary 2 NOLs used by the Taxpayer’s
consolidated group under Treas. Reg. §1.1502-32, and a portion of Subsidiary 2’s NOLs will not
be utilized by the Taxpayer for the 2016 tax year for which no adjustment to the basis of
Subsidiary’s stock in Subsidiary 2 will be required under Treas. Reg. §1.1502-32.
Guidance Requested

1. Does Illinois adopt the provisions of Treas. Reg. 1.1502-11(b) and 1.1502-32 in determining
   the stock basis for purposes of calculating gain or loss on the sale of stock?
2. When calculating the amount of Illinois NOLs that a Taxpayer can use in the year of the sale
   of the subsidiary stock, do the provisions of Treas. Reg. 1.1502-11(b) impair the Taxpayer’s use
   of available Illinois NOLs from prior years?
3. When a member of a unitary group leaves the group during the tax year, are there any
   limitations on the unitary group’s ability to use the NOLs attributes relating to the member that is
   leaving the unitary group?
   Discussion
   The Department has adopted the federal consolidated return rules to calculate the combined
   base income of a unitary group. 86 Ill. Adm. Code Section 100.5270(a)(1) provides that the

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designated agent will determine the combined base income “by treating all members of the
unitary business group (including ineligible members) as if they constituted a federal
consolidated group and by applying the federal regulations for determining consolidated taxable
income, except that the separate return limitation year provisions and the limitations on
consolidation of life and non-life companies in Treasury Reg. Section 1.1502-47 shall not apply.
(See Treas. Reg. Section 1.1502-11, 26 CFR 1.1502-11).”
To the extent deductions and losses of the Taxpayer are limited under Treasury Regulation
Section 1.1502-11(b), the same limitations will apply in determining the combined base income.
The gain reported on the sale by Subsidiary of its ownership in Subsidiary 2 should be the same
for Illinois purposes as it is for federal.
However, the provisions of Treasury Regulation Section 1502-11(b) should not limit the
Taxpayer’s use of the Illinois NOL carryover attributable to Subsidiary 2. 86 Ill. Adm. Code
Section 100.5270(b)(3) provides that the designated agent to compute the combined Illinois NOL
deduction in accordance with 86 Ill. Adm. Code Sections 100.2330, 100.2340 and 100.2350. In
addition, nothing in the Department’s combined return regulations extend the investment
adjustment rules of Treasury Regulations Section 1.1502-32 to either the Illinois modification
adjustments under Illinois Income Tax (“IITA”) Section 203(b)(2) or the Illinois net operating loss
deduction under IITA Section 207.
Finally, the Taxpayer’s designated agent must compute the combined Illinois NOL deduction in
accordance with 86 Ill. Adm. Code Section 100.2330, 100.2340 and 100.2350. In particular, 86
Ill. Adm. Code Section 100.2350(b) provides that “if a corporation ceases to be a member of a
unitary business group during the year, regardless of whether it filed a separate or combined
return, the amount of net loss attributable to that member for that portion of the tax year prior to
leaving shall be determined in accordance with 86 Ill. Adm. Code Section 100.5270(f)(2) of this
Part.”
There is nothing in the Department’s regulations which would prohibit or impair the Taxpayer’s
use of the available Illinois NOLs from any member of the unitary group in the year a member
leaves the group. For Illinois purposes, the entity that left the group during the year will be
included with the other members full year return. After applying the provisions of 86 Ill. Adm.
Code Section 100.5270 to calculate the amount of NOLs that can be used to offset income for
the group, any excess NOL will be assigned to the members of the unitary group, including the
member that has left the group during the tax year. The portion of the excess NOL not used in
the year of the sale that is assigned to the member that left the group, will become an attribute
of that entity. The entity that was sold may utilize this NOL attribute on either a separate return
or a combined return if it becomes a member of another unitary group.

RULING
Section 502(e) of the Illinois Income Tax Act (“IITA”; 35 ILCS 5/502(e)) states, in part, as follows:
For taxable years ending on or after December 31, 1993, taxpayers that are corporations (other
than Subchapter S corporations) and that are members of the same unitary business group shall
be treated as one taxpayer for purposes of any original return, amended return which includes

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the same taxpayers of the unitary group which joined in filing the original return, extension, claim
for refund, assessment, collection and payment and determination of the group’s tax liability
under this Act.
To implement IITA Section 502(e), Department Regulations Section 100.5270(a)(1) states that the
designated agent will determine combined base income “by treating all members of the unitary business
group (including ineligible members) as if they constituted a federal consolidated group and by applying
the federal regulations for determining consolidated taxable income, except that the separate return
limitation year provisions and the limitations on consolidation of life and non-life companies in Treasury
Reg. Section 1.1502-47 shall not apply. (See Treasury Reg. Section 1.1502-11, 26 CFR 1.1502-11).”
Treasury Regulations § 1.1502-11(a) states:
The consolidated taxable income for a consolidated return year shall be determined by taking
into account—
(1) The separate taxable income of each member of the group (see § 1.1502-12 for the
computation of separate taxable income)
(2) Any consolidated net operating loss deduction (see § 1.1502-21 (or § 1.1502-21A, as
appropriate) for the computation of the consolidated net operating loss deduction);
(3) Any consolidated capital gain net income (net capital gain for taxable years beginning before
January 1, 1977) (see § 1.1502-22 (or § 1.1502-22A, as appropriate) for the computation of the
consolidated capital gain net income (net capital gain for taxable years beginning before January
1, 1977);
(4) Any consolidated section 1231 net loss (see § 1.1502-23 (or § 1.1502-23A, as appropriate)
for the computation of the consolidated section 1231 net loss);
(5) Any consolidated charitable contributions deduction (see § 1.1502-24 for the computation of
the consolidated charitable contributions deduction);
(6) Any consolidated section 922 deduction (see § 1.1502-25 for the computation of the
consolidated section 922 deduction);
(7) Any consolidated dividends received deduction (see § 1.1502-26 for the computation of the
consolidated dividends received deduction); and
(8) Any consolidated section 247 deduction (see § 1.1502-27 for the computation of the
consolidated section 247 deduction).
Treasury Regulations § 1.1502-12 defines separate taxable income. The section states in part, as
follows:
The separate taxable income of a member (including a case in which deductions exceed gross
income) is computed in accordance with the provisions of the Code covering the determination
of taxable income of separate corporations, subject to the following modifications:
…
(o) Basis shall be determined under §§ 1.1502-31 and 1.1502-32, and earnings and profits shall
be determined under § 1.1502-33;
Treasury Regulations § 1.1502-11(b)(1) states, in part:
If one member (P) disposes of the stock of another member (S), this paragraph (b) limits the use
of S’s deductions and losses in the year of disposition and the carryback of items to prior years.

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The purpose of the limitation is to prevent P’s income or gain from the disposition of S’s stock
from increasing the absorption of S’s deductions and losses, because the increased absorption
would reduce P’s basis (or increase its excess loss account) in S’s stock under § 1.1502-32 and,
in turn, increase P’s income or gain.
The Treasury Regulations §1.1502-11(b)(2)(i) and (ii) set forth this limitation, as follows:
(i) If P disposes of one or more shares of S’s stock, the extent to which S’s deductions and
losses for the tax year of the disposition (and its deductions and losses carried over from prior
tax years) may offset income and gain is subject to limitation. The amount of S’s deductions and
losses that may offset income and gain is determined by tentatively computing taxable income
(or loss) for the year of disposition (and any prior years to which the deductions or losses may
be carried) without taking into account P’s income and gain from the disposition.
(ii) Application of limitation. S’s deductions and losses offset income and gain only to the extent
of the amount determined under paragraph (b)(2)(i) of this section. To the extent S’s deductions
and losses in the year of disposition cannot offset income or gain because of the limitation
under this paragraph (b), the items are carried to other years under the applicable provisions of
the Internal Revenue Code and regulations as if they were the only items incurred by S in the
year of disposition. For example, to the extent S incurs an operating loss in the year of
disposition that is limited, the loss is treated as a separate net operating loss attributable to S
arising in that year. The tentative computation does not affect the manner in which S’s unlimited
deductions and losses are absorbed or the manner in which deductions and losses of other
members are absorbed. (If the amount of S’s unlimited deductions and losses actually absorbed
is less than the amount absorbed in the tentative computation, P’s stock basis adjustment under
§1.1502-32 reflect only the amounts actually absorbed.)
The provisions of Treasury Regulations § 1.1502-32 apply in the determination of consolidated taxable
income, and therefore under Department Regulations section 100.5270 the same apply in determining
the combined based income of a combined group. In addition, the combined return regulations do not
require that basis be adjusted for Illinois addition and subtraction modifications. Therefore, the basis
used to determine a member’s separate taxable income under the consolidated return regulations is
the basis used to determine the combined base income of a combined group.
The provisions of Treasury Regulations § 1.1502-11(b) apply in the determination of consolidated
taxable income, and therefore under Department Regulations section 100.5270 the same apply in
determining the combined based income of a combined group. Accordingly, to the extent deductions
and losses of S are limited under Treasury Regulations § 1.1502-11(b), the same limitation applies in
determining combined base income.
However, the provisions of Treasury Regulations § 1.1502-11(b) do not apply to limit the use of the
Illinois net operating loss carryovers of a member of the combined group. Department Regulations
section 100.5270(b)(3) states:
The designated agent shall compute the combined Illinois net loss deduction by determining the
amount of deduction available for each member of the combined group in accordance with
Sections 100.2330, 100.2340 and 100.2350 of this Part and then by combining these amounts.

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Department Regulations Section 100.2350(a) states:
IITA Section 207 provides that the amount of Illinois net loss that is available as a carryback or
carryover is determined after applying the allocation and apportionment provisions of Article 3.
That Section does not limit the amount of Illinois net loss that may be carried into a given year.
As a consequence, no such limitation shall apply.
Pursuant to this provision, the limitations imposed under Treasury Regulations § 1.1502-11(b) do not
apply to Illinois net operating loss carryovers.
Where a member of the combined group leaves the group during the taxable year, Department
Regulations section 100.5270(f)(1) states:
General rule. If a corporation becomes a member of a unitary business group after the beginning
of the combined return year or ceases to be a member of the unitary business group during the
combined return year, two tax returns will be affected for that taxable year. The combined return
shall include the separate company items of such corporation for the part of the year it was a
member of the unitary business group. Separate company items of a part-year member for any
portion of its taxable year prior to the date it joins or after the date it leaves the unitary business
group shall either be reported in a short year separate return filed by such part-year member (if
it is subject to Illinois income tax during that period) or included in any combined return filed on
behalf of a unitary business group to which such part-year member belongs during that portion
of the year.
Department Regulations section 100.5270(a)(3) states:
Carrybacks and carryovers, if any, shall be determined for each member and not for the group.
A pro rata share of the loss is attributable to each of the loss members. For Illinois net losses
that occurred in taxable years ending on or after December 31, 1986, the amount of any
carryback or carryover shall be determined by applying Sections 100.2340, 100.2350(c)(3) and
(c)(4) of this Part. For federal net operating losses that occurred in taxable years ending prior to
December 31, 1986, the amount of any carryback or carryforward shall be determined by
applying Section 100.2230 of this Part.
Department Regulations section 100.2350(c)(3) states:
Portion of combined Illinois net loss attributable to a member. The portion of a combined Illinois
net loss attributable to a member of a group is an amount equal to the combined Illinois net loss
of the group multiplied by a fraction, the numerator of which is what would have been the
separate Illinois net loss of such corporation had a combined return not been filed, and the
denominator of which is the sum of what would have been the separate Illinois net losses of all
members of the group in such year having such losses. The separate Illinois net loss of a
member of the group shall be determined pursuant to Sections 100.2320 and 100.2340 above.
Department Regulations section 100.2350(c)(4) states, in part:
Examples. The provisions of this subsection (c) may be illustrated by the following examples:

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C) Example 3: i) Corporation P was formed on January 1, 1986. P filed a separate return for the
calendar year 1986. On March 15, 1987, P formed Corporation S. P and S filed a combined
return for 1987. On January 1, 1988, P purchased all the stock of Corporation T, which had been
formed in 1987 and had filed a separate return for its taxable year ending December 31, 1987.
ii) P, S, and T join in the filing of a combined return for 1988, which return reflects a combined
Illinois net loss of $11,000. $2,000 of such combined net loss is attributable to P, $3,000 to S,
and $6,000 to T. Such attribution of the combined net loss was made on the basis of the separate
net losses of each member as determined under subsection (c)(3).
…
D) Example 4: i) Assume the same facts as in Example 3. Assume further that on June 15, 1989,
P sells all the stock of T to an outsider, that P and S file a combined return for 1989 (which
includes the income of T for the period January 1 through June 15), and that T files a separate
return for the period June 16 through December 31, 1989. ii) The 1988 combined Illinois net
loss, to the extent not absorbed in prior years [Note: IITA Section 207 no longer allows Illinois
losses to be carried back], must first be carried to the short period ending June 15, 1989. Any
portion of the $6,000 amount attributable to T which is not absorbed in … the short combined
period ending June 15, 1989, shall then be carried to T's separate short return year ending
December 31,1989.
Pursuant to these provisions, the Illinois net operating loss carryover of a part-year member that leaves
the group is a separate company item of such member that must be included in the combined Illinois
net loss deduction of the combined group that includes such member. As indicated above, IITA Section
207 does not limit the amount of Illinois net loss that may be carried into a given year. Accordingly,
there is no limitation on the amount of the loss of the part-year member that is carried to the combined
return of the selling group. See Schedule UB/NLD for the determination of the amount of the loss
carryover of the part-year member absorbed by the selling group and the amount available to carry
over to any separate return filed by such member or to the combined return of any unitary business
group that member might join.
As stated above, this is a GIL. A GIL does not constitute a statement of policy that applies, interprets
or prescribes the tax laws, and it is not binding on the Department.

Sincerely,

Brian L. Stocker
Associate Counsel (Income Tax)