In July, the Illinois Tax Tribunal released an order denying a taxpayer’s motion for summary judgment in a “unitary business” case, finding that there were disputed issues of fact as to whether the taxpayer was engaged in a unitary business with a company that the taxpayer sold. The taxpayer, a passive holding company, asserted that the gain from the sale of its partnership interest in an operating company could not be included in the holding company's Illinois business income, because the holding company and the operating company were not "unitary" under US Constitutional standards and Illinois law. The Tribunal determined that whether or not the holding company and the operating company were unitary was a "question of fact" that precluded summary judgment in favor of the taxpayer. The Tribunal’s decision highlights the general notion that the existence of a unitary relationship between two business enterprises, or between a business enterprise and an asset, is a highly fact-intensive inquiry. Notably, the Tribunal's decision also supports the proposition that a passive holding company can be — but is not per se— engaged in a unitary business with an operating company that it owns. In other words, the Tribunal’s order confirms that the same fact-intensive unitary analysis should be undertaken whether a holding company or an operating company is the taxpayer at issue a conclusion that has not always been consistently reached by state authorities.
For more information, please see “A Question of Fact: Illinois Tax Tribunal Denies Summary Judgment Motion in Unitary Business Case” on the SALT Savvy blog, available at https://www.saltsavvy.com/