Some States Tax "Subpart F Income"
SOME STATES TAX “SUBPART F INCOME” just like the federal government.
The federal government will look through offshore holding companies and tax any passive income it sees in the ownership chain. Examples of passive income are interest and dividends. Such income is called "subpart F income.”
Nabisco argued in Illinois that it should not have to report subpart F income until the earnings are physically
repatriated to the US. It lost recently before the Cook County circuit court. The court said the earnings have to be reported as part of the company’s tax base in Illinois at the same time they become taxable at the federal level. Nabisco is headquartered in Illinois.