On February 20, 2009, the Illinois Supreme Court ruled that for purposes of the Investment Tax Credit (“ITC”) against the Illinois Personal Property Replacement Income Tax,1 a sale of electricity is a sale of tangible personal property. The case involved a public utility’s claim that it was engaged in the occupation of “retailing” when making sales of electricity. Exelon Corporation v. Department of Revenue, Ill. S.Ct. No. 105582 (Slip.Op. Feb. 20, 2009), ___ Ill. 2d ___ (2009). The ITC is a .5 percent credit that may be applied against the Replacement Income Tax by taxpayers engaged in retailing, manufacturing, or mining of coal or fluorite. The credit is allowed for qualified property, which is tangible, depreciable, and acquired by purchase, and with a useful life of at least four years when placed in service in Illinois. The court’s decision has important implications for purposes of both Illinois income tax and Illinois sales and use tax.

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