99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB0295

 

Introduced , by Rep. William Davis

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203  from Ch. 120, par. 2-203
35 ILCS 5/901  from Ch. 120, par. 9-901
35 ILCS 5/1501  from Ch. 120, par. 15-1501
30 ILCS 105/5.866 new
30 ILCS 105/6z-101 new

    Amends the Illinois Income Tax Act. Creates an addition modification in an amount equal to the deduction for qualified domestic production activities allowed under Section 199 of the Internal Revenue Code for the taxable year. Makes changes concerning the definition of "unitary business group". Provides that moneys attributable to those changes shall be deposited into the Bill Payment Trust Fund. Provides that moneys in the Fund shall be used to make payments to certain bona fide creditors of the State. Amends the State Finance Act to create the Fund. Effective immediately.


LRB099 04263 HLH 24287 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Sections 203, 901, and 1501 as follows:
 
6    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7    Sec. 203. Base income defined.
8    (a) Individuals.
9        (1) In general. In the case of an individual, base
10    income means an amount equal to the taxpayer's adjusted
11    gross income for the taxable year as modified by paragraph
12    (2).
13        (2) Modifications. The adjusted gross income referred
14    to in paragraph (1) shall be modified by adding thereto the
15    sum of the following amounts:
16            (A) An amount equal to all amounts paid or accrued
17        to the taxpayer as interest or dividends during the
18        taxable year to the extent excluded from gross income
19        in the computation of adjusted gross income, except
20        stock dividends of qualified public utilities
21        described in Section 305(e) of the Internal Revenue
22        Code;
23            (B) An amount equal to the amount of tax imposed by

 

 

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1        this Act to the extent deducted from gross income in
2        the computation of adjusted gross income for the
3        taxable year;
4            (C) An amount equal to the amount received during
5        the taxable year as a recovery or refund of real
6        property taxes paid with respect to the taxpayer's
7        principal residence under the Revenue Act of 1939 and
8        for which a deduction was previously taken under
9        subparagraph (L) of this paragraph (2) prior to July 1,
10        1991, the retrospective application date of Article 4
11        of Public Act 87-17. In the case of multi-unit or
12        multi-use structures and farm dwellings, the taxes on
13        the taxpayer's principal residence shall be that
14        portion of the total taxes for the entire property
15        which is attributable to such principal residence;
16            (D) An amount equal to the amount of the capital
17        gain deduction allowable under the Internal Revenue
18        Code, to the extent deducted from gross income in the
19        computation of adjusted gross income;
20            (D-5) An amount, to the extent not included in
21        adjusted gross income, equal to the amount of money
22        withdrawn by the taxpayer in the taxable year from a
23        medical care savings account and the interest earned on
24        the account in the taxable year of a withdrawal
25        pursuant to subsection (b) of Section 20 of the Medical
26        Care Savings Account Act or subsection (b) of Section

 

 

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1        20 of the Medical Care Savings Account Act of 2000;
2            (D-10) For taxable years ending after December 31,
3        1997, an amount equal to any eligible remediation costs
4        that the individual deducted in computing adjusted
5        gross income and for which the individual claims a
6        credit under subsection (l) of Section 201;
7            (D-15) For taxable years 2001 and thereafter, an
8        amount equal to the bonus depreciation deduction taken
9        on the taxpayer's federal income tax return for the
10        taxable year under subsection (k) of Section 168 of the
11        Internal Revenue Code;
12            (D-16) If the taxpayer sells, transfers, abandons,
13        or otherwise disposes of property for which the
14        taxpayer was required in any taxable year to make an
15        addition modification under subparagraph (D-15), then
16        an amount equal to the aggregate amount of the
17        deductions taken in all taxable years under
18        subparagraph (Z) with respect to that property.
19            If the taxpayer continues to own property through
20        the last day of the last tax year for which the
21        taxpayer may claim a depreciation deduction for
22        federal income tax purposes and for which the taxpayer
23        was allowed in any taxable year to make a subtraction
24        modification under subparagraph (Z), then an amount
25        equal to that subtraction modification.
26            The taxpayer is required to make the addition

 

 

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1        modification under this subparagraph only once with
2        respect to any one piece of property;
3            (D-17) An amount equal to the amount otherwise
4        allowed as a deduction in computing base income for
5        interest paid, accrued, or incurred, directly or
6        indirectly, (i) for taxable years ending on or after
7        December 31, 2004, to a foreign person who would be a
8        member of the same unitary business group but for the
9        fact that foreign person's business activity outside
10        the United States is 80% or more of the foreign
11        person's total business activity and (ii) for taxable
12        years ending on or after December 31, 2008, to a person
13        who would be a member of the same unitary business
14        group but for the fact that the person is prohibited
15        under Section 1501(a)(27) from being included in the
16        unitary business group because he or she is ordinarily
17        required to apportion business income under different
18        subsections of Section 304. The addition modification
19        required by this subparagraph shall be reduced to the
20        extent that dividends were included in base income of
21        the unitary group for the same taxable year and
22        received by the taxpayer or by a member of the
23        taxpayer's unitary business group (including amounts
24        included in gross income under Sections 951 through 964
25        of the Internal Revenue Code and amounts included in
26        gross income under Section 78 of the Internal Revenue

 

 

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1        Code) with respect to the stock of the same person to
2        whom the interest was paid, accrued, or incurred.
3            This paragraph shall not apply to the following:
4                (i) an item of interest paid, accrued, or
5            incurred, directly or indirectly, to a person who
6            is subject in a foreign country or state, other
7            than a state which requires mandatory unitary
8            reporting, to a tax on or measured by net income
9            with respect to such interest; or
10                (ii) an item of interest paid, accrued, or
11            incurred, directly or indirectly, to a person if
12            the taxpayer can establish, based on a
13            preponderance of the evidence, both of the
14            following:
15                    (a) the person, during the same taxable
16                year, paid, accrued, or incurred, the interest
17                to a person that is not a related member, and
18                    (b) the transaction giving rise to the
19                interest expense between the taxpayer and the
20                person did not have as a principal purpose the
21                avoidance of Illinois income tax, and is paid
22                pursuant to a contract or agreement that
23                reflects an arm's-length interest rate and
24                terms; or
25                (iii) the taxpayer can establish, based on
26            clear and convincing evidence, that the interest

 

 

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1            paid, accrued, or incurred relates to a contract or
2            agreement entered into at arm's-length rates and
3            terms and the principal purpose for the payment is
4            not federal or Illinois tax avoidance; or
5                (iv) an item of interest paid, accrued, or
6            incurred, directly or indirectly, to a person if
7            the taxpayer establishes by clear and convincing
8            evidence that the adjustments are unreasonable; or
9            if the taxpayer and the Director agree in writing
10            to the application or use of an alternative method
11            of apportionment under Section 304(f).
12                Nothing in this subsection shall preclude the
13            Director from making any other adjustment
14            otherwise allowed under Section 404 of this Act for
15            any tax year beginning after the effective date of
16            this amendment provided such adjustment is made
17            pursuant to regulation adopted by the Department
18            and such regulations provide methods and standards
19            by which the Department will utilize its authority
20            under Section 404 of this Act;
21            (D-18) An amount equal to the amount of intangible
22        expenses and costs otherwise allowed as a deduction in
23        computing base income, and that were paid, accrued, or
24        incurred, directly or indirectly, (i) for taxable
25        years ending on or after December 31, 2004, to a
26        foreign person who would be a member of the same

 

 

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1        unitary business group but for the fact that the
2        foreign person's business activity outside the United
3        States is 80% or more of that person's total business
4        activity and (ii) for taxable years ending on or after
5        December 31, 2008, to a person who would be a member of
6        the same unitary business group but for the fact that
7        the person is prohibited under Section 1501(a)(27)
8        from being included in the unitary business group
9        because he or she is ordinarily required to apportion
10        business income under different subsections of Section
11        304. The addition modification required by this
12        subparagraph shall be reduced to the extent that
13        dividends were included in base income of the unitary
14        group for the same taxable year and received by the
15        taxpayer or by a member of the taxpayer's unitary
16        business group (including amounts included in gross
17        income under Sections 951 through 964 of the Internal
18        Revenue Code and amounts included in gross income under
19        Section 78 of the Internal Revenue Code) with respect
20        to the stock of the same person to whom the intangible
21        expenses and costs were directly or indirectly paid,
22        incurred, or accrued. The preceding sentence does not
23        apply to the extent that the same dividends caused a
24        reduction to the addition modification required under
25        Section 203(a)(2)(D-17) of this Act. As used in this
26        subparagraph, the term "intangible expenses and costs"

 

 

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1        includes (1) expenses, losses, and costs for, or
2        related to, the direct or indirect acquisition, use,
3        maintenance or management, ownership, sale, exchange,
4        or any other disposition of intangible property; (2)
5        losses incurred, directly or indirectly, from
6        factoring transactions or discounting transactions;
7        (3) royalty, patent, technical, and copyright fees;
8        (4) licensing fees; and (5) other similar expenses and
9        costs. For purposes of this subparagraph, "intangible
10        property" includes patents, patent applications, trade
11        names, trademarks, service marks, copyrights, mask
12        works, trade secrets, and similar types of intangible
13        assets.
14            This paragraph shall not apply to the following:
15                (i) any item of intangible expenses or costs
16            paid, accrued, or incurred, directly or
17            indirectly, from a transaction with a person who is
18            subject in a foreign country or state, other than a
19            state which requires mandatory unitary reporting,
20            to a tax on or measured by net income with respect
21            to such item; or
22                (ii) any item of intangible expense or cost
23            paid, accrued, or incurred, directly or
24            indirectly, if the taxpayer can establish, based
25            on a preponderance of the evidence, both of the
26            following:

 

 

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1                    (a) the person during the same taxable
2                year paid, accrued, or incurred, the
3                intangible expense or cost to a person that is
4                not a related member, and
5                    (b) the transaction giving rise to the
6                intangible expense or cost between the
7                taxpayer and the person did not have as a
8                principal purpose the avoidance of Illinois
9                income tax, and is paid pursuant to a contract
10                or agreement that reflects arm's-length terms;
11                or
12                (iii) any item of intangible expense or cost
13            paid, accrued, or incurred, directly or
14            indirectly, from a transaction with a person if the
15            taxpayer establishes by clear and convincing
16            evidence, that the adjustments are unreasonable;
17            or if the taxpayer and the Director agree in
18            writing to the application or use of an alternative
19            method of apportionment under Section 304(f);
20                Nothing in this subsection shall preclude the
21            Director from making any other adjustment
22            otherwise allowed under Section 404 of this Act for
23            any tax year beginning after the effective date of
24            this amendment provided such adjustment is made
25            pursuant to regulation adopted by the Department
26            and such regulations provide methods and standards

 

 

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1            by which the Department will utilize its authority
2            under Section 404 of this Act;
3            (D-19) For taxable years ending on or after
4        December 31, 2008, an amount equal to the amount of
5        insurance premium expenses and costs otherwise allowed
6        as a deduction in computing base income, and that were
7        paid, accrued, or incurred, directly or indirectly, to
8        a person who would be a member of the same unitary
9        business group but for the fact that the person is
10        prohibited under Section 1501(a)(27) from being
11        included in the unitary business group because he or
12        she is ordinarily required to apportion business
13        income under different subsections of Section 304. The
14        addition modification required by this subparagraph
15        shall be reduced to the extent that dividends were
16        included in base income of the unitary group for the
17        same taxable year and received by the taxpayer or by a
18        member of the taxpayer's unitary business group
19        (including amounts included in gross income under
20        Sections 951 through 964 of the Internal Revenue Code
21        and amounts included in gross income under Section 78
22        of the Internal Revenue Code) with respect to the stock
23        of the same person to whom the premiums and costs were
24        directly or indirectly paid, incurred, or accrued. The
25        preceding sentence does not apply to the extent that
26        the same dividends caused a reduction to the addition

 

 

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1        modification required under Section 203(a)(2)(D-17) or
2        Section 203(a)(2)(D-18) of this Act.
3            (D-20) For taxable years beginning on or after
4        January 1, 2002 and ending on or before December 31,
5        2006, in the case of a distribution from a qualified
6        tuition program under Section 529 of the Internal
7        Revenue Code, other than (i) a distribution from a
8        College Savings Pool created under Section 16.5 of the
9        State Treasurer Act or (ii) a distribution from the
10        Illinois Prepaid Tuition Trust Fund, an amount equal to
11        the amount excluded from gross income under Section
12        529(c)(3)(B). For taxable years beginning on or after
13        January 1, 2007, in the case of a distribution from a
14        qualified tuition program under Section 529 of the
15        Internal Revenue Code, other than (i) a distribution
16        from a College Savings Pool created under Section 16.5
17        of the State Treasurer Act, (ii) a distribution from
18        the Illinois Prepaid Tuition Trust Fund, or (iii) a
19        distribution from a qualified tuition program under
20        Section 529 of the Internal Revenue Code that (I)
21        adopts and determines that its offering materials
22        comply with the College Savings Plans Network's
23        disclosure principles and (II) has made reasonable
24        efforts to inform in-state residents of the existence
25        of in-state qualified tuition programs by informing
26        Illinois residents directly and, where applicable, to

 

 

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1        inform financial intermediaries distributing the
2        program to inform in-state residents of the existence
3        of in-state qualified tuition programs at least
4        annually, an amount equal to the amount excluded from
5        gross income under Section 529(c)(3)(B).
6            For the purposes of this subparagraph (D-20), a
7        qualified tuition program has made reasonable efforts
8        if it makes disclosures (which may use the term
9        "in-state program" or "in-state plan" and need not
10        specifically refer to Illinois or its qualified
11        programs by name) (i) directly to prospective
12        participants in its offering materials or makes a
13        public disclosure, such as a website posting; and (ii)
14        where applicable, to intermediaries selling the
15        out-of-state program in the same manner that the
16        out-of-state program distributes its offering
17        materials;
18            (D-21) For taxable years beginning on or after
19        January 1, 2007, in the case of transfer of moneys from
20        a qualified tuition program under Section 529 of the
21        Internal Revenue Code that is administered by the State
22        to an out-of-state program, an amount equal to the
23        amount of moneys previously deducted from base income
24        under subsection (a)(2)(Y) of this Section;
25            (D-22) For taxable years beginning on or after
26        January 1, 2009, in the case of a nonqualified

 

 

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1        withdrawal or refund of moneys from a qualified tuition
2        program under Section 529 of the Internal Revenue Code
3        administered by the State that is not used for
4        qualified expenses at an eligible education
5        institution, an amount equal to the contribution
6        component of the nonqualified withdrawal or refund
7        that was previously deducted from base income under
8        subsection (a)(2)(y) of this Section, provided that
9        the withdrawal or refund did not result from the
10        beneficiary's death or disability;
11            (D-23) An amount equal to the credit allowable to
12        the taxpayer under Section 218(a) of this Act,
13        determined without regard to Section 218(c) of this
14        Act;
15            (D-24) For taxable years ending on or after
16        December 31, 2015, an amount equal to the deduction
17        allowed under Section 199 of the Internal Revenue Code
18        for the taxable year;
19    and by deducting from the total so obtained the sum of the
20    following amounts:
21            (E) For taxable years ending before December 31,
22        2001, any amount included in such total in respect of
23        any compensation (including but not limited to any
24        compensation paid or accrued to a serviceman while a
25        prisoner of war or missing in action) paid to a
26        resident by reason of being on active duty in the Armed

 

 

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1        Forces of the United States and in respect of any
2        compensation paid or accrued to a resident who as a
3        governmental employee was a prisoner of war or missing
4        in action, and in respect of any compensation paid to a
5        resident in 1971 or thereafter for annual training
6        performed pursuant to Sections 502 and 503, Title 32,
7        United States Code as a member of the Illinois National
8        Guard or, beginning with taxable years ending on or
9        after December 31, 2007, the National Guard of any
10        other state. For taxable years ending on or after
11        December 31, 2001, any amount included in such total in
12        respect of any compensation (including but not limited
13        to any compensation paid or accrued to a serviceman
14        while a prisoner of war or missing in action) paid to a
15        resident by reason of being a member of any component
16        of the Armed Forces of the United States and in respect
17        of any compensation paid or accrued to a resident who
18        as a governmental employee was a prisoner of war or
19        missing in action, and in respect of any compensation
20        paid to a resident in 2001 or thereafter by reason of
21        being a member of the Illinois National Guard or,
22        beginning with taxable years ending on or after
23        December 31, 2007, the National Guard of any other
24        state. The provisions of this subparagraph (E) are
25        exempt from the provisions of Section 250;
26            (F) An amount equal to all amounts included in such

 

 

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1        total pursuant to the provisions of Sections 402(a),
2        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
3        Internal Revenue Code, or included in such total as
4        distributions under the provisions of any retirement
5        or disability plan for employees of any governmental
6        agency or unit, or retirement payments to retired
7        partners, which payments are excluded in computing net
8        earnings from self employment by Section 1402 of the
9        Internal Revenue Code and regulations adopted pursuant
10        thereto;
11            (G) The valuation limitation amount;
12            (H) An amount equal to the amount of any tax
13        imposed by this Act which was refunded to the taxpayer
14        and included in such total for the taxable year;
15            (I) An amount equal to all amounts included in such
16        total pursuant to the provisions of Section 111 of the
17        Internal Revenue Code as a recovery of items previously
18        deducted from adjusted gross income in the computation
19        of taxable income;
20            (J) An amount equal to those dividends included in
21        such total which were paid by a corporation which
22        conducts business operations in a River Edge
23        Redevelopment Zone or zones created under the River
24        Edge Redevelopment Zone Act, and conducts
25        substantially all of its operations in a River Edge
26        Redevelopment Zone or zones. This subparagraph (J) is

 

 

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1        exempt from the provisions of Section 250;
2            (K) An amount equal to those dividends included in
3        such total that were paid by a corporation that
4        conducts business operations in a federally designated
5        Foreign Trade Zone or Sub-Zone and that is designated a
6        High Impact Business located in Illinois; provided
7        that dividends eligible for the deduction provided in
8        subparagraph (J) of paragraph (2) of this subsection
9        shall not be eligible for the deduction provided under
10        this subparagraph (K);
11            (L) For taxable years ending after December 31,
12        1983, an amount equal to all social security benefits
13        and railroad retirement benefits included in such
14        total pursuant to Sections 72(r) and 86 of the Internal
15        Revenue Code;
16            (M) With the exception of any amounts subtracted
17        under subparagraph (N), an amount equal to the sum of
18        all amounts disallowed as deductions by (i) Sections
19        171(a) (2), and 265(2) of the Internal Revenue Code,
20        and all amounts of expenses allocable to interest and
21        disallowed as deductions by Section 265(1) of the
22        Internal Revenue Code; and (ii) for taxable years
23        ending on or after August 13, 1999, Sections 171(a)(2),
24        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
25        Code, plus, for taxable years ending on or after
26        December 31, 2011, Section 45G(e)(3) of the Internal

 

 

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1        Revenue Code and, for taxable years ending on or after
2        December 31, 2008, any amount included in gross income
3        under Section 87 of the Internal Revenue Code; the
4        provisions of this subparagraph are exempt from the
5        provisions of Section 250;
6            (N) An amount equal to all amounts included in such
7        total which are exempt from taxation by this State
8        either by reason of its statutes or Constitution or by
9        reason of the Constitution, treaties or statutes of the
10        United States; provided that, in the case of any
11        statute of this State that exempts income derived from
12        bonds or other obligations from the tax imposed under
13        this Act, the amount exempted shall be the interest net
14        of bond premium amortization;
15            (O) An amount equal to any contribution made to a
16        job training project established pursuant to the Tax
17        Increment Allocation Redevelopment Act;
18            (P) An amount equal to the amount of the deduction
19        used to compute the federal income tax credit for
20        restoration of substantial amounts held under claim of
21        right for the taxable year pursuant to Section 1341 of
22        the Internal Revenue Code or of any itemized deduction
23        taken from adjusted gross income in the computation of
24        taxable income for restoration of substantial amounts
25        held under claim of right for the taxable year;
26            (Q) An amount equal to any amounts included in such

 

 

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1        total, received by the taxpayer as an acceleration in
2        the payment of life, endowment or annuity benefits in
3        advance of the time they would otherwise be payable as
4        an indemnity for a terminal illness;
5            (R) An amount equal to the amount of any federal or
6        State bonus paid to veterans of the Persian Gulf War;
7            (S) An amount, to the extent included in adjusted
8        gross income, equal to the amount of a contribution
9        made in the taxable year on behalf of the taxpayer to a
10        medical care savings account established under the
11        Medical Care Savings Account Act or the Medical Care
12        Savings Account Act of 2000 to the extent the
13        contribution is accepted by the account administrator
14        as provided in that Act;
15            (T) An amount, to the extent included in adjusted
16        gross income, equal to the amount of interest earned in
17        the taxable year on a medical care savings account
18        established under the Medical Care Savings Account Act
19        or the Medical Care Savings Account Act of 2000 on
20        behalf of the taxpayer, other than interest added
21        pursuant to item (D-5) of this paragraph (2);
22            (U) For one taxable year beginning on or after
23        January 1, 1994, an amount equal to the total amount of
24        tax imposed and paid under subsections (a) and (b) of
25        Section 201 of this Act on grant amounts received by
26        the taxpayer under the Nursing Home Grant Assistance

 

 

HB0295- 19 -LRB099 04263 HLH 24287 b

1        Act during the taxpayer's taxable years 1992 and 1993;
2            (V) Beginning with tax years ending on or after
3        December 31, 1995 and ending with tax years ending on
4        or before December 31, 2004, an amount equal to the
5        amount paid by a taxpayer who is a self-employed
6        taxpayer, a partner of a partnership, or a shareholder
7        in a Subchapter S corporation for health insurance or
8        long-term care insurance for that taxpayer or that
9        taxpayer's spouse or dependents, to the extent that the
10        amount paid for that health insurance or long-term care
11        insurance may be deducted under Section 213 of the
12        Internal Revenue Code, has not been deducted on the
13        federal income tax return of the taxpayer, and does not
14        exceed the taxable income attributable to that
15        taxpayer's income, self-employment income, or
16        Subchapter S corporation income; except that no
17        deduction shall be allowed under this item (V) if the
18        taxpayer is eligible to participate in any health
19        insurance or long-term care insurance plan of an
20        employer of the taxpayer or the taxpayer's spouse. The
21        amount of the health insurance and long-term care
22        insurance subtracted under this item (V) shall be
23        determined by multiplying total health insurance and
24        long-term care insurance premiums paid by the taxpayer
25        times a number that represents the fractional
26        percentage of eligible medical expenses under Section

 

 

HB0295- 20 -LRB099 04263 HLH 24287 b

1        213 of the Internal Revenue Code of 1986 not actually
2        deducted on the taxpayer's federal income tax return;
3            (W) For taxable years beginning on or after January
4        1, 1998, all amounts included in the taxpayer's federal
5        gross income in the taxable year from amounts converted
6        from a regular IRA to a Roth IRA. This paragraph is
7        exempt from the provisions of Section 250;
8            (X) For taxable year 1999 and thereafter, an amount
9        equal to the amount of any (i) distributions, to the
10        extent includible in gross income for federal income
11        tax purposes, made to the taxpayer because of his or
12        her status as a victim of persecution for racial or
13        religious reasons by Nazi Germany or any other Axis
14        regime or as an heir of the victim and (ii) items of
15        income, to the extent includible in gross income for
16        federal income tax purposes, attributable to, derived
17        from or in any way related to assets stolen from,
18        hidden from, or otherwise lost to a victim of
19        persecution for racial or religious reasons by Nazi
20        Germany or any other Axis regime immediately prior to,
21        during, and immediately after World War II, including,
22        but not limited to, interest on the proceeds receivable
23        as insurance under policies issued to a victim of
24        persecution for racial or religious reasons by Nazi
25        Germany or any other Axis regime by European insurance
26        companies immediately prior to and during World War II;

 

 

HB0295- 21 -LRB099 04263 HLH 24287 b

1        provided, however, this subtraction from federal
2        adjusted gross income does not apply to assets acquired
3        with such assets or with the proceeds from the sale of
4        such assets; provided, further, this paragraph shall
5        only apply to a taxpayer who was the first recipient of
6        such assets after their recovery and who is a victim of
7        persecution for racial or religious reasons by Nazi
8        Germany or any other Axis regime or as an heir of the
9        victim. The amount of and the eligibility for any
10        public assistance, benefit, or similar entitlement is
11        not affected by the inclusion of items (i) and (ii) of
12        this paragraph in gross income for federal income tax
13        purposes. This paragraph is exempt from the provisions
14        of Section 250;
15            (Y) For taxable years beginning on or after January
16        1, 2002 and ending on or before December 31, 2004,
17        moneys contributed in the taxable year to a College
18        Savings Pool account under Section 16.5 of the State
19        Treasurer Act, except that amounts excluded from gross
20        income under Section 529(c)(3)(C)(i) of the Internal
21        Revenue Code shall not be considered moneys
22        contributed under this subparagraph (Y). For taxable
23        years beginning on or after January 1, 2005, a maximum
24        of $10,000 contributed in the taxable year to (i) a
25        College Savings Pool account under Section 16.5 of the
26        State Treasurer Act or (ii) the Illinois Prepaid

 

 

HB0295- 22 -LRB099 04263 HLH 24287 b

1        Tuition Trust Fund, except that amounts excluded from
2        gross income under Section 529(c)(3)(C)(i) of the
3        Internal Revenue Code shall not be considered moneys
4        contributed under this subparagraph (Y). For purposes
5        of this subparagraph, contributions made by an
6        employer on behalf of an employee, or matching
7        contributions made by an employee, shall be treated as
8        made by the employee. This subparagraph (Y) is exempt
9        from the provisions of Section 250;
10            (Z) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not including
22            the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

HB0295- 23 -LRB099 04263 HLH 24287 b

1                (3) for taxable years ending after December
2            31, 2005:
3                    (i) for property on which a bonus
4                depreciation deduction of 30% of the adjusted
5                basis was taken, "x" equals "y" multiplied by
6                30 and then divided by 70 (or "y" multiplied by
7                0.429); and
8                    (ii) for property on which a bonus
9                depreciation deduction of 50% of the adjusted
10                basis was taken, "x" equals "y" multiplied by
11                1.0.
12            The aggregate amount deducted under this
13        subparagraph in all taxable years for any one piece of
14        property may not exceed the amount of the bonus
15        depreciation deduction taken on that property on the
16        taxpayer's federal income tax return under subsection
17        (k) of Section 168 of the Internal Revenue Code. This
18        subparagraph (Z) is exempt from the provisions of
19        Section 250;
20            (AA) If the taxpayer sells, transfers, abandons,
21        or otherwise disposes of property for which the
22        taxpayer was required in any taxable year to make an
23        addition modification under subparagraph (D-15), then
24        an amount equal to that addition modification.
25            If the taxpayer continues to own property through
26        the last day of the last tax year for which the

 

 

HB0295- 24 -LRB099 04263 HLH 24287 b

1        taxpayer may claim a depreciation deduction for
2        federal income tax purposes and for which the taxpayer
3        was required in any taxable year to make an addition
4        modification under subparagraph (D-15), then an amount
5        equal to that addition modification.
6            The taxpayer is allowed to take the deduction under
7        this subparagraph only once with respect to any one
8        piece of property.
9            This subparagraph (AA) is exempt from the
10        provisions of Section 250;
11            (BB) Any amount included in adjusted gross income,
12        other than salary, received by a driver in a
13        ridesharing arrangement using a motor vehicle;
14            (CC) The amount of (i) any interest income (net of
15        the deductions allocable thereto) taken into account
16        for the taxable year with respect to a transaction with
17        a taxpayer that is required to make an addition
18        modification with respect to such transaction under
19        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
20        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
21        the amount of that addition modification, and (ii) any
22        income from intangible property (net of the deductions
23        allocable thereto) taken into account for the taxable
24        year with respect to a transaction with a taxpayer that
25        is required to make an addition modification with
26        respect to such transaction under Section

 

 

HB0295- 25 -LRB099 04263 HLH 24287 b

1        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
2        203(d)(2)(D-8), but not to exceed the amount of that
3        addition modification. This subparagraph (CC) is
4        exempt from the provisions of Section 250;
5            (DD) An amount equal to the interest income taken
6        into account for the taxable year (net of the
7        deductions allocable thereto) with respect to
8        transactions with (i) a foreign person who would be a
9        member of the taxpayer's unitary business group but for
10        the fact that the foreign person's business activity
11        outside the United States is 80% or more of that
12        person's total business activity and (ii) for taxable
13        years ending on or after December 31, 2008, to a person
14        who would be a member of the same unitary business
15        group but for the fact that the person is prohibited
16        under Section 1501(a)(27) from being included in the
17        unitary business group because he or she is ordinarily
18        required to apportion business income under different
19        subsections of Section 304, but not to exceed the
20        addition modification required to be made for the same
21        taxable year under Section 203(a)(2)(D-17) for
22        interest paid, accrued, or incurred, directly or
23        indirectly, to the same person. This subparagraph (DD)
24        is exempt from the provisions of Section 250;
25            (EE) An amount equal to the income from intangible
26        property taken into account for the taxable year (net

 

 

HB0295- 26 -LRB099 04263 HLH 24287 b

1        of the deductions allocable thereto) with respect to
2        transactions with (i) a foreign person who would be a
3        member of the taxpayer's unitary business group but for
4        the fact that the foreign person's business activity
5        outside the United States is 80% or more of that
6        person's total business activity and (ii) for taxable
7        years ending on or after December 31, 2008, to a person
8        who would be a member of the same unitary business
9        group but for the fact that the person is prohibited
10        under Section 1501(a)(27) from being included in the
11        unitary business group because he or she is ordinarily
12        required to apportion business income under different
13        subsections of Section 304, but not to exceed the
14        addition modification required to be made for the same
15        taxable year under Section 203(a)(2)(D-18) for
16        intangible expenses and costs paid, accrued, or
17        incurred, directly or indirectly, to the same foreign
18        person. This subparagraph (EE) is exempt from the
19        provisions of Section 250;
20            (FF) An amount equal to any amount awarded to the
21        taxpayer during the taxable year by the Court of Claims
22        under subsection (c) of Section 8 of the Court of
23        Claims Act for time unjustly served in a State prison.
24        This subparagraph (FF) is exempt from the provisions of
25        Section 250; and
26            (GG) For taxable years ending on or after December

 

 

HB0295- 27 -LRB099 04263 HLH 24287 b

1        31, 2011, in the case of a taxpayer who was required to
2        add back any insurance premiums under Section
3        203(a)(2)(D-19), such taxpayer may elect to subtract
4        that part of a reimbursement received from the
5        insurance company equal to the amount of the expense or
6        loss (including expenses incurred by the insurance
7        company) that would have been taken into account as a
8        deduction for federal income tax purposes if the
9        expense or loss had been uninsured. If a taxpayer makes
10        the election provided for by this subparagraph (GG),
11        the insurer to which the premiums were paid must add
12        back to income the amount subtracted by the taxpayer
13        pursuant to this subparagraph (GG). This subparagraph
14        (GG) is exempt from the provisions of Section 250.
 
15    (b) Corporations.
16        (1) In general. In the case of a corporation, base
17    income means an amount equal to the taxpayer's taxable
18    income for the taxable year as modified by paragraph (2).
19        (2) Modifications. The taxable income referred to in
20    paragraph (1) shall be modified by adding thereto the sum
21    of the following amounts:
22            (A) An amount equal to all amounts paid or accrued
23        to the taxpayer as interest and all distributions
24        received from regulated investment companies during
25        the taxable year to the extent excluded from gross

 

 

HB0295- 28 -LRB099 04263 HLH 24287 b

1        income in the computation of taxable income;
2            (B) An amount equal to the amount of tax imposed by
3        this Act to the extent deducted from gross income in
4        the computation of taxable income for the taxable year;
5            (C) In the case of a regulated investment company,
6        an amount equal to the excess of (i) the net long-term
7        capital gain for the taxable year, over (ii) the amount
8        of the capital gain dividends designated as such in
9        accordance with Section 852(b)(3)(C) of the Internal
10        Revenue Code and any amount designated under Section
11        852(b)(3)(D) of the Internal Revenue Code,
12        attributable to the taxable year (this amendatory Act
13        of 1995 (Public Act 89-89) is declarative of existing
14        law and is not a new enactment);
15            (D) The amount of any net operating loss deduction
16        taken in arriving at taxable income, other than a net
17        operating loss carried forward from a taxable year
18        ending prior to December 31, 1986;
19            (E) For taxable years in which a net operating loss
20        carryback or carryforward from a taxable year ending
21        prior to December 31, 1986 is an element of taxable
22        income under paragraph (1) of subsection (e) or
23        subparagraph (E) of paragraph (2) of subsection (e),
24        the amount by which addition modifications other than
25        those provided by this subparagraph (E) exceeded
26        subtraction modifications in such earlier taxable

 

 

HB0295- 29 -LRB099 04263 HLH 24287 b

1        year, with the following limitations applied in the
2        order that they are listed:
3                (i) the addition modification relating to the
4            net operating loss carried back or forward to the
5            taxable year from any taxable year ending prior to
6            December 31, 1986 shall be reduced by the amount of
7            addition modification under this subparagraph (E)
8            which related to that net operating loss and which
9            was taken into account in calculating the base
10            income of an earlier taxable year, and
11                (ii) the addition modification relating to the
12            net operating loss carried back or forward to the
13            taxable year from any taxable year ending prior to
14            December 31, 1986 shall not exceed the amount of
15            such carryback or carryforward;
16            For taxable years in which there is a net operating
17        loss carryback or carryforward from more than one other
18        taxable year ending prior to December 31, 1986, the
19        addition modification provided in this subparagraph
20        (E) shall be the sum of the amounts computed
21        independently under the preceding provisions of this
22        subparagraph (E) for each such taxable year;
23            (E-5) For taxable years ending after December 31,
24        1997, an amount equal to any eligible remediation costs
25        that the corporation deducted in computing adjusted
26        gross income and for which the corporation claims a

 

 

HB0295- 30 -LRB099 04263 HLH 24287 b

1        credit under subsection (l) of Section 201;
2            (E-10) For taxable years 2001 and thereafter, an
3        amount equal to the bonus depreciation deduction taken
4        on the taxpayer's federal income tax return for the
5        taxable year under subsection (k) of Section 168 of the
6        Internal Revenue Code;
7            (E-11) If the taxpayer sells, transfers, abandons,
8        or otherwise disposes of property for which the
9        taxpayer was required in any taxable year to make an
10        addition modification under subparagraph (E-10), then
11        an amount equal to the aggregate amount of the
12        deductions taken in all taxable years under
13        subparagraph (T) with respect to that property.
14            If the taxpayer continues to own property through
15        the last day of the last tax year for which the
16        taxpayer may claim a depreciation deduction for
17        federal income tax purposes and for which the taxpayer
18        was allowed in any taxable year to make a subtraction
19        modification under subparagraph (T), then an amount
20        equal to that subtraction modification.
21            The taxpayer is required to make the addition
22        modification under this subparagraph only once with
23        respect to any one piece of property;
24            (E-12) An amount equal to the amount otherwise
25        allowed as a deduction in computing base income for
26        interest paid, accrued, or incurred, directly or

 

 

HB0295- 31 -LRB099 04263 HLH 24287 b

1        indirectly, (i) for taxable years ending on or after
2        December 31, 2004, to a foreign person who would be a
3        member of the same unitary business group but for the
4        fact the foreign person's business activity outside
5        the United States is 80% or more of the foreign
6        person's total business activity and (ii) for taxable
7        years ending on or after December 31, 2008, to a person
8        who would be a member of the same unitary business
9        group but for the fact that the person is prohibited
10        under Section 1501(a)(27) from being included in the
11        unitary business group because he or she is ordinarily
12        required to apportion business income under different
13        subsections of Section 304. The addition modification
14        required by this subparagraph shall be reduced to the
15        extent that dividends were included in base income of
16        the unitary group for the same taxable year and
17        received by the taxpayer or by a member of the
18        taxpayer's unitary business group (including amounts
19        included in gross income pursuant to Sections 951
20        through 964 of the Internal Revenue Code and amounts
21        included in gross income under Section 78 of the
22        Internal Revenue Code) with respect to the stock of the
23        same person to whom the interest was paid, accrued, or
24        incurred.
25            This paragraph shall not apply to the following:
26                (i) an item of interest paid, accrued, or

 

 

HB0295- 32 -LRB099 04263 HLH 24287 b

1            incurred, directly or indirectly, to a person who
2            is subject in a foreign country or state, other
3            than a state which requires mandatory unitary
4            reporting, to a tax on or measured by net income
5            with respect to such interest; or
6                (ii) an item of interest paid, accrued, or
7            incurred, directly or indirectly, to a person if
8            the taxpayer can establish, based on a
9            preponderance of the evidence, both of the
10            following:
11                    (a) the person, during the same taxable
12                year, paid, accrued, or incurred, the interest
13                to a person that is not a related member, and
14                    (b) the transaction giving rise to the
15                interest expense between the taxpayer and the
16                person did not have as a principal purpose the
17                avoidance of Illinois income tax, and is paid
18                pursuant to a contract or agreement that
19                reflects an arm's-length interest rate and
20                terms; or
21                (iii) the taxpayer can establish, based on
22            clear and convincing evidence, that the interest
23            paid, accrued, or incurred relates to a contract or
24            agreement entered into at arm's-length rates and
25            terms and the principal purpose for the payment is
26            not federal or Illinois tax avoidance; or

 

 

HB0295- 33 -LRB099 04263 HLH 24287 b

1                (iv) an item of interest paid, accrued, or
2            incurred, directly or indirectly, to a person if
3            the taxpayer establishes by clear and convincing
4            evidence that the adjustments are unreasonable; or
5            if the taxpayer and the Director agree in writing
6            to the application or use of an alternative method
7            of apportionment under Section 304(f).
8                Nothing in this subsection shall preclude the
9            Director from making any other adjustment
10            otherwise allowed under Section 404 of this Act for
11            any tax year beginning after the effective date of
12            this amendment provided such adjustment is made
13            pursuant to regulation adopted by the Department
14            and such regulations provide methods and standards
15            by which the Department will utilize its authority
16            under Section 404 of this Act;
17            (E-13) An amount equal to the amount of intangible
18        expenses and costs otherwise allowed as a deduction in
19        computing base income, and that were paid, accrued, or
20        incurred, directly or indirectly, (i) for taxable
21        years ending on or after December 31, 2004, to a
22        foreign person who would be a member of the same
23        unitary business group but for the fact that the
24        foreign person's business activity outside the United
25        States is 80% or more of that person's total business
26        activity and (ii) for taxable years ending on or after

 

 

HB0295- 34 -LRB099 04263 HLH 24287 b

1        December 31, 2008, to a person who would be a member of
2        the same unitary business group but for the fact that
3        the person is prohibited under Section 1501(a)(27)
4        from being included in the unitary business group
5        because he or she is ordinarily required to apportion
6        business income under different subsections of Section
7        304. The addition modification required by this
8        subparagraph shall be reduced to the extent that
9        dividends were included in base income of the unitary
10        group for the same taxable year and received by the
11        taxpayer or by a member of the taxpayer's unitary
12        business group (including amounts included in gross
13        income pursuant to Sections 951 through 964 of the
14        Internal Revenue Code and amounts included in gross
15        income under Section 78 of the Internal Revenue Code)
16        with respect to the stock of the same person to whom
17        the intangible expenses and costs were directly or
18        indirectly paid, incurred, or accrued. The preceding
19        sentence shall not apply to the extent that the same
20        dividends caused a reduction to the addition
21        modification required under Section 203(b)(2)(E-12) of
22        this Act. As used in this subparagraph, the term
23        "intangible expenses and costs" includes (1) expenses,
24        losses, and costs for, or related to, the direct or
25        indirect acquisition, use, maintenance or management,
26        ownership, sale, exchange, or any other disposition of

 

 

HB0295- 35 -LRB099 04263 HLH 24287 b

1        intangible property; (2) losses incurred, directly or
2        indirectly, from factoring transactions or discounting
3        transactions; (3) royalty, patent, technical, and
4        copyright fees; (4) licensing fees; and (5) other
5        similar expenses and costs. For purposes of this
6        subparagraph, "intangible property" includes patents,
7        patent applications, trade names, trademarks, service
8        marks, copyrights, mask works, trade secrets, and
9        similar types of intangible assets.
10            This paragraph shall not apply to the following:
11                (i) any item of intangible expenses or costs
12            paid, accrued, or incurred, directly or
13            indirectly, from a transaction with a person who is
14            subject in a foreign country or state, other than a
15            state which requires mandatory unitary reporting,
16            to a tax on or measured by net income with respect
17            to such item; or
18                (ii) any item of intangible expense or cost
19            paid, accrued, or incurred, directly or
20            indirectly, if the taxpayer can establish, based
21            on a preponderance of the evidence, both of the
22            following:
23                    (a) the person during the same taxable
24                year paid, accrued, or incurred, the
25                intangible expense or cost to a person that is
26                not a related member, and

 

 

HB0295- 36 -LRB099 04263 HLH 24287 b

1                    (b) the transaction giving rise to the
2                intangible expense or cost between the
3                taxpayer and the person did not have as a
4                principal purpose the avoidance of Illinois
5                income tax, and is paid pursuant to a contract
6                or agreement that reflects arm's-length terms;
7                or
8                (iii) any item of intangible expense or cost
9            paid, accrued, or incurred, directly or
10            indirectly, from a transaction with a person if the
11            taxpayer establishes by clear and convincing
12            evidence, that the adjustments are unreasonable;
13            or if the taxpayer and the Director agree in
14            writing to the application or use of an alternative
15            method of apportionment under Section 304(f);
16                Nothing in this subsection shall preclude the
17            Director from making any other adjustment
18            otherwise allowed under Section 404 of this Act for
19            any tax year beginning after the effective date of
20            this amendment provided such adjustment is made
21            pursuant to regulation adopted by the Department
22            and such regulations provide methods and standards
23            by which the Department will utilize its authority
24            under Section 404 of this Act;
25            (E-14) For taxable years ending on or after
26        December 31, 2008, an amount equal to the amount of

 

 

HB0295- 37 -LRB099 04263 HLH 24287 b

1        insurance premium expenses and costs otherwise allowed
2        as a deduction in computing base income, and that were
3        paid, accrued, or incurred, directly or indirectly, to
4        a person who would be a member of the same unitary
5        business group but for the fact that the person is
6        prohibited under Section 1501(a)(27) from being
7        included in the unitary business group because he or
8        she is ordinarily required to apportion business
9        income under different subsections of Section 304. The
10        addition modification required by this subparagraph
11        shall be reduced to the extent that dividends were
12        included in base income of the unitary group for the
13        same taxable year and received by the taxpayer or by a
14        member of the taxpayer's unitary business group
15        (including amounts included in gross income under
16        Sections 951 through 964 of the Internal Revenue Code
17        and amounts included in gross income under Section 78
18        of the Internal Revenue Code) with respect to the stock
19        of the same person to whom the premiums and costs were
20        directly or indirectly paid, incurred, or accrued. The
21        preceding sentence does not apply to the extent that
22        the same dividends caused a reduction to the addition
23        modification required under Section 203(b)(2)(E-12) or
24        Section 203(b)(2)(E-13) of this Act;
25            (E-15) For taxable years beginning after December
26        31, 2008, any deduction for dividends paid by a captive

 

 

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1        real estate investment trust that is allowed to a real
2        estate investment trust under Section 857(b)(2)(B) of
3        the Internal Revenue Code for dividends paid;
4            (E-16) An amount equal to the credit allowable to
5        the taxpayer under Section 218(a) of this Act,
6        determined without regard to Section 218(c) of this
7        Act;
8            (E-17) For taxable years ending on or after
9        December 31, 2015, an amount equal to the deduction
10        allowed under Section 199 of the Internal Revenue Code
11        for the taxable year;
12            (E-18) For taxable years ending on or after
13        December 31, 2015, any deduction allowed to the
14        taxpayer under Sections 243 through 246A of the
15        Internal Revenue Code;
16    and by deducting from the total so obtained the sum of the
17    following amounts:
18            (F) An amount equal to the amount of any tax
19        imposed by this Act which was refunded to the taxpayer
20        and included in such total for the taxable year;
21            (G) An amount equal to any amount included in such
22        total under Section 78 of the Internal Revenue Code;
23            (H) In the case of a regulated investment company,
24        an amount equal to the amount of exempt interest
25        dividends as defined in subsection (b) (5) of Section
26        852 of the Internal Revenue Code, paid to shareholders

 

 

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1        for the taxable year;
2            (I) With the exception of any amounts subtracted
3        under subparagraph (J), an amount equal to the sum of
4        all amounts disallowed as deductions by (i) Sections
5        171(a) (2), and 265(a)(2) and amounts disallowed as
6        interest expense by Section 291(a)(3) of the Internal
7        Revenue Code, and all amounts of expenses allocable to
8        interest and disallowed as deductions by Section
9        265(a)(1) of the Internal Revenue Code; and (ii) for
10        taxable years ending on or after August 13, 1999,
11        Sections 171(a)(2), 265, 280C, 291(a)(3), and
12        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
13        for tax years ending on or after December 31, 2011,
14        amounts disallowed as deductions by Section 45G(e)(3)
15        of the Internal Revenue Code and, for taxable years
16        ending on or after December 31, 2008, any amount
17        included in gross income under Section 87 of the
18        Internal Revenue Code and the policyholders' share of
19        tax-exempt interest of a life insurance company under
20        Section 807(a)(2)(B) of the Internal Revenue Code (in
21        the case of a life insurance company with gross income
22        from a decrease in reserves for the tax year) or
23        Section 807(b)(1)(B) of the Internal Revenue Code (in
24        the case of a life insurance company allowed a
25        deduction for an increase in reserves for the tax
26        year); the provisions of this subparagraph are exempt

 

 

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1        from the provisions of Section 250;
2            (J) An amount equal to all amounts included in such
3        total which are exempt from taxation by this State
4        either by reason of its statutes or Constitution or by
5        reason of the Constitution, treaties or statutes of the
6        United States; provided that, in the case of any
7        statute of this State that exempts income derived from
8        bonds or other obligations from the tax imposed under
9        this Act, the amount exempted shall be the interest net
10        of bond premium amortization;
11            (K) An amount equal to those dividends included in
12        such total which were paid by a corporation which
13        conducts business operations in a River Edge
14        Redevelopment Zone or zones created under the River
15        Edge Redevelopment Zone Act and conducts substantially
16        all of its operations in a River Edge Redevelopment
17        Zone or zones. This subparagraph (K) is exempt from the
18        provisions of Section 250;
19            (L) An amount equal to those dividends included in
20        such total that were paid by a corporation that
21        conducts business operations in a federally designated
22        Foreign Trade Zone or Sub-Zone and that is designated a
23        High Impact Business located in Illinois; provided
24        that dividends eligible for the deduction provided in
25        subparagraph (K) of paragraph 2 of this subsection
26        shall not be eligible for the deduction provided under

 

 

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1        this subparagraph (L);
2            (M) For any taxpayer that is a financial
3        organization within the meaning of Section 304(c) of
4        this Act, an amount included in such total as interest
5        income from a loan or loans made by such taxpayer to a
6        borrower, to the extent that such a loan is secured by
7        property which is eligible for the River Edge
8        Redevelopment Zone Investment Credit. To determine the
9        portion of a loan or loans that is secured by property
10        eligible for a Section 201(f) investment credit to the
11        borrower, the entire principal amount of the loan or
12        loans between the taxpayer and the borrower should be
13        divided into the basis of the Section 201(f) investment
14        credit property which secures the loan or loans, using
15        for this purpose the original basis of such property on
16        the date that it was placed in service in the River
17        Edge Redevelopment Zone. The subtraction modification
18        available to taxpayer in any year under this subsection
19        shall be that portion of the total interest paid by the
20        borrower with respect to such loan attributable to the
21        eligible property as calculated under the previous
22        sentence. This subparagraph (M) is exempt from the
23        provisions of Section 250;
24            (M-1) For any taxpayer that is a financial
25        organization within the meaning of Section 304(c) of
26        this Act, an amount included in such total as interest

 

 

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1        income from a loan or loans made by such taxpayer to a
2        borrower, to the extent that such a loan is secured by
3        property which is eligible for the High Impact Business
4        Investment Credit. To determine the portion of a loan
5        or loans that is secured by property eligible for a
6        Section 201(h) investment credit to the borrower, the
7        entire principal amount of the loan or loans between
8        the taxpayer and the borrower should be divided into
9        the basis of the Section 201(h) investment credit
10        property which secures the loan or loans, using for
11        this purpose the original basis of such property on the
12        date that it was placed in service in a federally
13        designated Foreign Trade Zone or Sub-Zone located in
14        Illinois. No taxpayer that is eligible for the
15        deduction provided in subparagraph (M) of paragraph
16        (2) of this subsection shall be eligible for the
17        deduction provided under this subparagraph (M-1). The
18        subtraction modification available to taxpayers in any
19        year under this subsection shall be that portion of the
20        total interest paid by the borrower with respect to
21        such loan attributable to the eligible property as
22        calculated under the previous sentence;
23            (N) Two times any contribution made during the
24        taxable year to a designated zone organization to the
25        extent that the contribution (i) qualifies as a
26        charitable contribution under subsection (c) of

 

 

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1        Section 170 of the Internal Revenue Code and (ii) must,
2        by its terms, be used for a project approved by the
3        Department of Commerce and Economic Opportunity under
4        Section 11 of the Illinois Enterprise Zone Act or under
5        Section 10-10 of the River Edge Redevelopment Zone Act.
6        This subparagraph (N) is exempt from the provisions of
7        Section 250;
8            (O) An amount equal to: (i) 85% for taxable years
9        ending on or before December 31, 1992, or, a percentage
10        equal to the percentage allowable under Section
11        243(a)(1) of the Internal Revenue Code of 1986 for
12        taxable years ending after December 31, 1992, of the
13        amount by which dividends included in taxable income
14        and received from a corporation that is not created or
15        organized under the laws of the United States or any
16        state or political subdivision thereof, including, for
17        taxable years ending on or after December 31, 1988,
18        dividends received or deemed received or paid or deemed
19        paid under Sections 951 through 965 of the Internal
20        Revenue Code, exceed the amount of the modification
21        provided under subparagraph (G) of paragraph (2) of
22        this subsection (b) which is related to such dividends,
23        and including, for taxable years ending on or after
24        December 31, 2008, dividends received from a captive
25        real estate investment trust; plus (ii) 100% of the
26        amount by which dividends, included in taxable income

 

 

HB0295- 44 -LRB099 04263 HLH 24287 b

1        and received, including, for taxable years ending on or
2        after December 31, 1988, dividends received or deemed
3        received or paid or deemed paid under Sections 951
4        through 964 of the Internal Revenue Code and including,
5        for taxable years ending on or after December 31, 2008,
6        dividends received from a captive real estate
7        investment trust, from any such corporation specified
8        in clause (i) that would but for the provisions of
9        Section 1504 (b) (3) of the Internal Revenue Code be
10        treated as a member of the affiliated group which
11        includes the dividend recipient, exceed the amount of
12        the modification provided under subparagraph (G) of
13        paragraph (2) of this subsection (b) which is related
14        to such dividends. This subparagraph (O) shall not
15        apply to taxable years ending on or after December 31,
16        2015 is exempt from the provisions of Section 250 of
17        this Act;
18            (P) An amount equal to any contribution made to a
19        job training project established pursuant to the Tax
20        Increment Allocation Redevelopment Act;
21            (Q) An amount equal to the amount of the deduction
22        used to compute the federal income tax credit for
23        restoration of substantial amounts held under claim of
24        right for the taxable year pursuant to Section 1341 of
25        the Internal Revenue Code;
26            (R) On and after July 20, 1999, in the case of an

 

 

HB0295- 45 -LRB099 04263 HLH 24287 b

1        attorney-in-fact with respect to whom an interinsurer
2        or a reciprocal insurer has made the election under
3        Section 835 of the Internal Revenue Code, 26 U.S.C.
4        835, an amount equal to the excess, if any, of the
5        amounts paid or incurred by that interinsurer or
6        reciprocal insurer in the taxable year to the
7        attorney-in-fact over the deduction allowed to that
8        interinsurer or reciprocal insurer with respect to the
9        attorney-in-fact under Section 835(b) of the Internal
10        Revenue Code for the taxable year; the provisions of
11        this subparagraph are exempt from the provisions of
12        Section 250;
13            (S) For taxable years ending on or after December
14        31, 1997, in the case of a Subchapter S corporation, an
15        amount equal to all amounts of income allocable to a
16        shareholder subject to the Personal Property Tax
17        Replacement Income Tax imposed by subsections (c) and
18        (d) of Section 201 of this Act, including amounts
19        allocable to organizations exempt from federal income
20        tax by reason of Section 501(a) of the Internal Revenue
21        Code. This subparagraph (S) is exempt from the
22        provisions of Section 250;
23            (T) For taxable years 2001 and thereafter, for the
24        taxable year in which the bonus depreciation deduction
25        is taken on the taxpayer's federal income tax return
26        under subsection (k) of Section 168 of the Internal

 

 

HB0295- 46 -LRB099 04263 HLH 24287 b

1        Revenue Code and for each applicable taxable year
2        thereafter, an amount equal to "x", where:
3                (1) "y" equals the amount of the depreciation
4            deduction taken for the taxable year on the
5            taxpayer's federal income tax return on property
6            for which the bonus depreciation deduction was
7            taken in any year under subsection (k) of Section
8            168 of the Internal Revenue Code, but not including
9            the bonus depreciation deduction;
10                (2) for taxable years ending on or before
11            December 31, 2005, "x" equals "y" multiplied by 30
12            and then divided by 70 (or "y" multiplied by
13            0.429); and
14                (3) for taxable years ending after December
15            31, 2005:
16                    (i) for property on which a bonus
17                depreciation deduction of 30% of the adjusted
18                basis was taken, "x" equals "y" multiplied by
19                30 and then divided by 70 (or "y" multiplied by
20                0.429); and
21                    (ii) for property on which a bonus
22                depreciation deduction of 50% of the adjusted
23                basis was taken, "x" equals "y" multiplied by
24                1.0.
25            The aggregate amount deducted under this
26        subparagraph in all taxable years for any one piece of

 

 

HB0295- 47 -LRB099 04263 HLH 24287 b

1        property may not exceed the amount of the bonus
2        depreciation deduction taken on that property on the
3        taxpayer's federal income tax return under subsection
4        (k) of Section 168 of the Internal Revenue Code. This
5        subparagraph (T) is exempt from the provisions of
6        Section 250;
7            (U) If the taxpayer sells, transfers, abandons, or
8        otherwise disposes of property for which the taxpayer
9        was required in any taxable year to make an addition
10        modification under subparagraph (E-10), then an amount
11        equal to that addition modification.
12            If the taxpayer continues to own property through
13        the last day of the last tax year for which the
14        taxpayer may claim a depreciation deduction for
15        federal income tax purposes and for which the taxpayer
16        was required in any taxable year to make an addition
17        modification under subparagraph (E-10), then an amount
18        equal to that addition modification.
19            The taxpayer is allowed to take the deduction under
20        this subparagraph only once with respect to any one
21        piece of property.
22            This subparagraph (U) is exempt from the
23        provisions of Section 250;
24            (V) The amount of: (i) any interest income (net of
25        the deductions allocable thereto) taken into account
26        for the taxable year with respect to a transaction with

 

 

HB0295- 48 -LRB099 04263 HLH 24287 b

1        a taxpayer that is required to make an addition
2        modification with respect to such transaction under
3        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
4        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
5        the amount of such addition modification, (ii) any
6        income from intangible property (net of the deductions
7        allocable thereto) taken into account for the taxable
8        year with respect to a transaction with a taxpayer that
9        is required to make an addition modification with
10        respect to such transaction under Section
11        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
12        203(d)(2)(D-8), but not to exceed the amount of such
13        addition modification, and (iii) any insurance premium
14        income (net of deductions allocable thereto) taken
15        into account for the taxable year with respect to a
16        transaction with a taxpayer that is required to make an
17        addition modification with respect to such transaction
18        under Section 203(a)(2)(D-19), Section
19        203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
20        203(d)(2)(D-9), but not to exceed the amount of that
21        addition modification. This subparagraph (V) is exempt
22        from the provisions of Section 250;
23            (W) An amount equal to the interest income taken
24        into account for the taxable year (net of the
25        deductions allocable thereto) with respect to
26        transactions with (i) a foreign person who would be a

 

 

HB0295- 49 -LRB099 04263 HLH 24287 b

1        member of the taxpayer's unitary business group but for
2        the fact that the foreign person's business activity
3        outside the United States is 80% or more of that
4        person's total business activity and (ii) for taxable
5        years ending on or after December 31, 2008, to a person
6        who would be a member of the same unitary business
7        group but for the fact that the person is prohibited
8        under Section 1501(a)(27) from being included in the
9        unitary business group because he or she is ordinarily
10        required to apportion business income under different
11        subsections of Section 304, but not to exceed the
12        addition modification required to be made for the same
13        taxable year under Section 203(b)(2)(E-12) for
14        interest paid, accrued, or incurred, directly or
15        indirectly, to the same person. This subparagraph (W)
16        is exempt from the provisions of Section 250;
17            (X) An amount equal to the income from intangible
18        property taken into account for the taxable year (net
19        of the deductions allocable thereto) with respect to
20        transactions with (i) a foreign person who would be a
21        member of the taxpayer's unitary business group but for
22        the fact that the foreign person's business activity
23        outside the United States is 80% or more of that
24        person's total business activity and (ii) for taxable
25        years ending on or after December 31, 2008, to a person
26        who would be a member of the same unitary business

 

 

HB0295- 50 -LRB099 04263 HLH 24287 b

1        group but for the fact that the person is prohibited
2        under Section 1501(a)(27) from being included in the
3        unitary business group because he or she is ordinarily
4        required to apportion business income under different
5        subsections of Section 304, but not to exceed the
6        addition modification required to be made for the same
7        taxable year under Section 203(b)(2)(E-13) for
8        intangible expenses and costs paid, accrued, or
9        incurred, directly or indirectly, to the same foreign
10        person. This subparagraph (X) is exempt from the
11        provisions of Section 250;
12            (Y) For taxable years ending on or after December
13        31, 2011, in the case of a taxpayer who was required to
14        add back any insurance premiums under Section
15        203(b)(2)(E-14), such taxpayer may elect to subtract
16        that part of a reimbursement received from the
17        insurance company equal to the amount of the expense or
18        loss (including expenses incurred by the insurance
19        company) that would have been taken into account as a
20        deduction for federal income tax purposes if the
21        expense or loss had been uninsured. If a taxpayer makes
22        the election provided for by this subparagraph (Y), the
23        insurer to which the premiums were paid must add back
24        to income the amount subtracted by the taxpayer
25        pursuant to this subparagraph (Y). This subparagraph
26        (Y) is exempt from the provisions of Section 250; and

 

 

HB0295- 51 -LRB099 04263 HLH 24287 b

1            (Z) The difference between the nondeductible
2        controlled foreign corporation dividends under Section
3        965(e)(3) of the Internal Revenue Code over the taxable
4        income of the taxpayer, computed without regard to
5        Section 965(e)(2)(A) of the Internal Revenue Code, and
6        without regard to any net operating loss deduction.
7        This subparagraph (Z) is exempt from the provisions of
8        Section 250.
9        (3) Special rule. For purposes of paragraph (2) (A),
10    "gross income" in the case of a life insurance company, for
11    tax years ending on and after December 31, 1994, and prior
12    to December 31, 2011, shall mean the gross investment
13    income for the taxable year and, for tax years ending on or
14    after December 31, 2011, shall mean all amounts included in
15    life insurance gross income under Section 803(a)(3) of the
16    Internal Revenue Code.
 
17    (c) Trusts and estates.
18        (1) In general. In the case of a trust or estate, base
19    income means an amount equal to the taxpayer's taxable
20    income for the taxable year as modified by paragraph (2).
21        (2) Modifications. Subject to the provisions of
22    paragraph (3), the taxable income referred to in paragraph
23    (1) shall be modified by adding thereto the sum of the
24    following amounts:
25            (A) An amount equal to all amounts paid or accrued

 

 

HB0295- 52 -LRB099 04263 HLH 24287 b

1        to the taxpayer as interest or dividends during the
2        taxable year to the extent excluded from gross income
3        in the computation of taxable income;
4            (B) In the case of (i) an estate, $600; (ii) a
5        trust which, under its governing instrument, is
6        required to distribute all of its income currently,
7        $300; and (iii) any other trust, $100, but in each such
8        case, only to the extent such amount was deducted in
9        the computation of taxable income;
10            (C) An amount equal to the amount of tax imposed by
11        this Act to the extent deducted from gross income in
12        the computation of taxable income for the taxable year;
13            (D) The amount of any net operating loss deduction
14        taken in arriving at taxable income, other than a net
15        operating loss carried forward from a taxable year
16        ending prior to December 31, 1986;
17            (E) For taxable years in which a net operating loss
18        carryback or carryforward from a taxable year ending
19        prior to December 31, 1986 is an element of taxable
20        income under paragraph (1) of subsection (e) or
21        subparagraph (E) of paragraph (2) of subsection (e),
22        the amount by which addition modifications other than
23        those provided by this subparagraph (E) exceeded
24        subtraction modifications in such taxable year, with
25        the following limitations applied in the order that
26        they are listed:

 

 

HB0295- 53 -LRB099 04263 HLH 24287 b

1                (i) the addition modification relating to the
2            net operating loss carried back or forward to the
3            taxable year from any taxable year ending prior to
4            December 31, 1986 shall be reduced by the amount of
5            addition modification under this subparagraph (E)
6            which related to that net operating loss and which
7            was taken into account in calculating the base
8            income of an earlier taxable year, and
9                (ii) the addition modification relating to the
10            net operating loss carried back or forward to the
11            taxable year from any taxable year ending prior to
12            December 31, 1986 shall not exceed the amount of
13            such carryback or carryforward;
14            For taxable years in which there is a net operating
15        loss carryback or carryforward from more than one other
16        taxable year ending prior to December 31, 1986, the
17        addition modification provided in this subparagraph
18        (E) shall be the sum of the amounts computed
19        independently under the preceding provisions of this
20        subparagraph (E) for each such taxable year;
21            (F) For taxable years ending on or after January 1,
22        1989, an amount equal to the tax deducted pursuant to
23        Section 164 of the Internal Revenue Code if the trust
24        or estate is claiming the same tax for purposes of the
25        Illinois foreign tax credit under Section 601 of this
26        Act;

 

 

HB0295- 54 -LRB099 04263 HLH 24287 b

1            (G) An amount equal to the amount of the capital
2        gain deduction allowable under the Internal Revenue
3        Code, to the extent deducted from gross income in the
4        computation of taxable income;
5            (G-5) For taxable years ending after December 31,
6        1997, an amount equal to any eligible remediation costs
7        that the trust or estate deducted in computing adjusted
8        gross income and for which the trust or estate claims a
9        credit under subsection (l) of Section 201;
10            (G-10) For taxable years 2001 and thereafter, an
11        amount equal to the bonus depreciation deduction taken
12        on the taxpayer's federal income tax return for the
13        taxable year under subsection (k) of Section 168 of the
14        Internal Revenue Code; and
15            (G-11) If the taxpayer sells, transfers, abandons,
16        or otherwise disposes of property for which the
17        taxpayer was required in any taxable year to make an
18        addition modification under subparagraph (G-10), then
19        an amount equal to the aggregate amount of the
20        deductions taken in all taxable years under
21        subparagraph (R) with respect to that property.
22            If the taxpayer continues to own property through
23        the last day of the last tax year for which the
24        taxpayer may claim a depreciation deduction for
25        federal income tax purposes and for which the taxpayer
26        was allowed in any taxable year to make a subtraction

 

 

HB0295- 55 -LRB099 04263 HLH 24287 b

1        modification under subparagraph (R), then an amount
2        equal to that subtraction modification.
3            The taxpayer is required to make the addition
4        modification under this subparagraph only once with
5        respect to any one piece of property;
6            (G-12) An amount equal to the amount otherwise
7        allowed as a deduction in computing base income for
8        interest paid, accrued, or incurred, directly or
9        indirectly, (i) for taxable years ending on or after
10        December 31, 2004, to a foreign person who would be a
11        member of the same unitary business group but for the
12        fact that the foreign person's business activity
13        outside the United States is 80% or more of the foreign
14        person's total business activity and (ii) for taxable
15        years ending on or after December 31, 2008, to a person
16        who would be a member of the same unitary business
17        group but for the fact that the person is prohibited
18        under Section 1501(a)(27) from being included in the
19        unitary business group because he or she is ordinarily
20        required to apportion business income under different
21        subsections of Section 304. The addition modification
22        required by this subparagraph shall be reduced to the
23        extent that dividends were included in base income of
24        the unitary group for the same taxable year and
25        received by the taxpayer or by a member of the
26        taxpayer's unitary business group (including amounts

 

 

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1        included in gross income pursuant to Sections 951
2        through 964 of the Internal Revenue Code and amounts
3        included in gross income under Section 78 of the
4        Internal Revenue Code) with respect to the stock of the
5        same person to whom the interest was paid, accrued, or
6        incurred.
7            This paragraph shall not apply to the following:
8                (i) an item of interest paid, accrued, or
9            incurred, directly or indirectly, to a person who
10            is subject in a foreign country or state, other
11            than a state which requires mandatory unitary
12            reporting, to a tax on or measured by net income
13            with respect to such interest; or
14                (ii) an item of interest paid, accrued, or
15            incurred, directly or indirectly, to a person if
16            the taxpayer can establish, based on a
17            preponderance of the evidence, both of the
18            following:
19                    (a) the person, during the same taxable
20                year, paid, accrued, or incurred, the interest
21                to a person that is not a related member, and
22                    (b) the transaction giving rise to the
23                interest expense between the taxpayer and the
24                person did not have as a principal purpose the
25                avoidance of Illinois income tax, and is paid
26                pursuant to a contract or agreement that

 

 

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1                reflects an arm's-length interest rate and
2                terms; or
3                (iii) the taxpayer can establish, based on
4            clear and convincing evidence, that the interest
5            paid, accrued, or incurred relates to a contract or
6            agreement entered into at arm's-length rates and
7            terms and the principal purpose for the payment is
8            not federal or Illinois tax avoidance; or
9                (iv) an item of interest paid, accrued, or
10            incurred, directly or indirectly, to a person if
11            the taxpayer establishes by clear and convincing
12            evidence that the adjustments are unreasonable; or
13            if the taxpayer and the Director agree in writing
14            to the application or use of an alternative method
15            of apportionment under Section 304(f).
16                Nothing in this subsection shall preclude the
17            Director from making any other adjustment
18            otherwise allowed under Section 404 of this Act for
19            any tax year beginning after the effective date of
20            this amendment provided such adjustment is made
21            pursuant to regulation adopted by the Department
22            and such regulations provide methods and standards
23            by which the Department will utilize its authority
24            under Section 404 of this Act;
25            (G-13) An amount equal to the amount of intangible
26        expenses and costs otherwise allowed as a deduction in

 

 

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1        computing base income, and that were paid, accrued, or
2        incurred, directly or indirectly, (i) for taxable
3        years ending on or after December 31, 2004, to a
4        foreign person who would be a member of the same
5        unitary business group but for the fact that the
6        foreign person's business activity outside the United
7        States is 80% or more of that person's total business
8        activity and (ii) for taxable years ending on or after
9        December 31, 2008, to a person who would be a member of
10        the same unitary business group but for the fact that
11        the person is prohibited under Section 1501(a)(27)
12        from being included in the unitary business group
13        because he or she is ordinarily required to apportion
14        business income under different subsections of Section
15        304. The addition modification required by this
16        subparagraph shall be reduced to the extent that
17        dividends were included in base income of the unitary
18        group for the same taxable year and received by the
19        taxpayer or by a member of the taxpayer's unitary
20        business group (including amounts included in gross
21        income pursuant to Sections 951 through 964 of the
22        Internal Revenue Code and amounts included in gross
23        income under Section 78 of the Internal Revenue Code)
24        with respect to the stock of the same person to whom
25        the intangible expenses and costs were directly or
26        indirectly paid, incurred, or accrued. The preceding

 

 

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1        sentence shall not apply to the extent that the same
2        dividends caused a reduction to the addition
3        modification required under Section 203(c)(2)(G-12) of
4        this Act. As used in this subparagraph, the term
5        "intangible expenses and costs" includes: (1)
6        expenses, losses, and costs for or related to the
7        direct or indirect acquisition, use, maintenance or
8        management, ownership, sale, exchange, or any other
9        disposition of intangible property; (2) losses
10        incurred, directly or indirectly, from factoring
11        transactions or discounting transactions; (3) royalty,
12        patent, technical, and copyright fees; (4) licensing
13        fees; and (5) other similar expenses and costs. For
14        purposes of this subparagraph, "intangible property"
15        includes patents, patent applications, trade names,
16        trademarks, service marks, copyrights, mask works,
17        trade secrets, and similar types of intangible assets.
18            This paragraph shall not apply to the following:
19                (i) any item of intangible expenses or costs
20            paid, accrued, or incurred, directly or
21            indirectly, from a transaction with a person who is
22            subject in a foreign country or state, other than a
23            state which requires mandatory unitary reporting,
24            to a tax on or measured by net income with respect
25            to such item; or
26                (ii) any item of intangible expense or cost

 

 

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1            paid, accrued, or incurred, directly or
2            indirectly, if the taxpayer can establish, based
3            on a preponderance of the evidence, both of the
4            following:
5                    (a) the person during the same taxable
6                year paid, accrued, or incurred, the
7                intangible expense or cost to a person that is
8                not a related member, and
9                    (b) the transaction giving rise to the
10                intangible expense or cost between the
11                taxpayer and the person did not have as a
12                principal purpose the avoidance of Illinois
13                income tax, and is paid pursuant to a contract
14                or agreement that reflects arm's-length terms;
15                or
16                (iii) any item of intangible expense or cost
17            paid, accrued, or incurred, directly or
18            indirectly, from a transaction with a person if the
19            taxpayer establishes by clear and convincing
20            evidence, that the adjustments are unreasonable;
21            or if the taxpayer and the Director agree in
22            writing to the application or use of an alternative
23            method of apportionment under Section 304(f);
24                Nothing in this subsection shall preclude the
25            Director from making any other adjustment
26            otherwise allowed under Section 404 of this Act for

 

 

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1            any tax year beginning after the effective date of
2            this amendment provided such adjustment is made
3            pursuant to regulation adopted by the Department
4            and such regulations provide methods and standards
5            by which the Department will utilize its authority
6            under Section 404 of this Act;
7            (G-14) For taxable years ending on or after
8        December 31, 2008, an amount equal to the amount of
9        insurance premium expenses and costs otherwise allowed
10        as a deduction in computing base income, and that were
11        paid, accrued, or incurred, directly or indirectly, to
12        a person who would be a member of the same unitary
13        business group but for the fact that the person is
14        prohibited under Section 1501(a)(27) from being
15        included in the unitary business group because he or
16        she is ordinarily required to apportion business
17        income under different subsections of Section 304. The
18        addition modification required by this subparagraph
19        shall be reduced to the extent that dividends were
20        included in base income of the unitary group for the
21        same taxable year and received by the taxpayer or by a
22        member of the taxpayer's unitary business group
23        (including amounts included in gross income under
24        Sections 951 through 964 of the Internal Revenue Code
25        and amounts included in gross income under Section 78
26        of the Internal Revenue Code) with respect to the stock

 

 

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1        of the same person to whom the premiums and costs were
2        directly or indirectly paid, incurred, or accrued. The
3        preceding sentence does not apply to the extent that
4        the same dividends caused a reduction to the addition
5        modification required under Section 203(c)(2)(G-12) or
6        Section 203(c)(2)(G-13) of this Act;
7            (G-15) An amount equal to the credit allowable to
8        the taxpayer under Section 218(a) of this Act,
9        determined without regard to Section 218(c) of this
10        Act;
11            (G-16) For taxable years ending on or after
12        December 31, 2015, an amount equal to the deduction
13        allowed under Section 199 of the Internal Revenue Code
14        for the taxable year;
15    and by deducting from the total so obtained the sum of the
16    following amounts:
17            (H) An amount equal to all amounts included in such
18        total pursuant to the provisions of Sections 402(a),
19        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
20        Internal Revenue Code or included in such total as
21        distributions under the provisions of any retirement
22        or disability plan for employees of any governmental
23        agency or unit, or retirement payments to retired
24        partners, which payments are excluded in computing net
25        earnings from self employment by Section 1402 of the
26        Internal Revenue Code and regulations adopted pursuant

 

 

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1        thereto;
2            (I) The valuation limitation amount;
3            (J) An amount equal to the amount of any tax
4        imposed by this Act which was refunded to the taxpayer
5        and included in such total for the taxable year;
6            (K) An amount equal to all amounts included in
7        taxable income as modified by subparagraphs (A), (B),
8        (C), (D), (E), (F) and (G) which are exempt from
9        taxation by this State either by reason of its statutes
10        or Constitution or by reason of the Constitution,
11        treaties or statutes of the United States; provided
12        that, in the case of any statute of this State that
13        exempts income derived from bonds or other obligations
14        from the tax imposed under this Act, the amount
15        exempted shall be the interest net of bond premium
16        amortization;
17            (L) With the exception of any amounts subtracted
18        under subparagraph (K), an amount equal to the sum of
19        all amounts disallowed as deductions by (i) Sections
20        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
21        and all amounts of expenses allocable to interest and
22        disallowed as deductions by Section 265(1) of the
23        Internal Revenue Code; and (ii) for taxable years
24        ending on or after August 13, 1999, Sections 171(a)(2),
25        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
26        Code, plus, (iii) for taxable years ending on or after

 

 

HB0295- 64 -LRB099 04263 HLH 24287 b

1        December 31, 2011, Section 45G(e)(3) of the Internal
2        Revenue Code and, for taxable years ending on or after
3        December 31, 2008, any amount included in gross income
4        under Section 87 of the Internal Revenue Code; the
5        provisions of this subparagraph are exempt from the
6        provisions of Section 250;
7            (M) An amount equal to those dividends included in
8        such total which were paid by a corporation which
9        conducts business operations in a River Edge
10        Redevelopment Zone or zones created under the River
11        Edge Redevelopment Zone Act and conducts substantially
12        all of its operations in a River Edge Redevelopment
13        Zone or zones. This subparagraph (M) is exempt from the
14        provisions of Section 250;
15            (N) An amount equal to any contribution made to a
16        job training project established pursuant to the Tax
17        Increment Allocation Redevelopment Act;
18            (O) An amount equal to those dividends included in
19        such total that were paid by a corporation that
20        conducts business operations in a federally designated
21        Foreign Trade Zone or Sub-Zone and that is designated a
22        High Impact Business located in Illinois; provided
23        that dividends eligible for the deduction provided in
24        subparagraph (M) of paragraph (2) of this subsection
25        shall not be eligible for the deduction provided under
26        this subparagraph (O);

 

 

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1            (P) An amount equal to the amount of the deduction
2        used to compute the federal income tax credit for
3        restoration of substantial amounts held under claim of
4        right for the taxable year pursuant to Section 1341 of
5        the Internal Revenue Code;
6            (Q) For taxable year 1999 and thereafter, an amount
7        equal to the amount of any (i) distributions, to the
8        extent includible in gross income for federal income
9        tax purposes, made to the taxpayer because of his or
10        her status as a victim of persecution for racial or
11        religious reasons by Nazi Germany or any other Axis
12        regime or as an heir of the victim and (ii) items of
13        income, to the extent includible in gross income for
14        federal income tax purposes, attributable to, derived
15        from or in any way related to assets stolen from,
16        hidden from, or otherwise lost to a victim of
17        persecution for racial or religious reasons by Nazi
18        Germany or any other Axis regime immediately prior to,
19        during, and immediately after World War II, including,
20        but not limited to, interest on the proceeds receivable
21        as insurance under policies issued to a victim of
22        persecution for racial or religious reasons by Nazi
23        Germany or any other Axis regime by European insurance
24        companies immediately prior to and during World War II;
25        provided, however, this subtraction from federal
26        adjusted gross income does not apply to assets acquired

 

 

HB0295- 66 -LRB099 04263 HLH 24287 b

1        with such assets or with the proceeds from the sale of
2        such assets; provided, further, this paragraph shall
3        only apply to a taxpayer who was the first recipient of
4        such assets after their recovery and who is a victim of
5        persecution for racial or religious reasons by Nazi
6        Germany or any other Axis regime or as an heir of the
7        victim. The amount of and the eligibility for any
8        public assistance, benefit, or similar entitlement is
9        not affected by the inclusion of items (i) and (ii) of
10        this paragraph in gross income for federal income tax
11        purposes. This paragraph is exempt from the provisions
12        of Section 250;
13            (R) For taxable years 2001 and thereafter, for the
14        taxable year in which the bonus depreciation deduction
15        is taken on the taxpayer's federal income tax return
16        under subsection (k) of Section 168 of the Internal
17        Revenue Code and for each applicable taxable year
18        thereafter, an amount equal to "x", where:
19                (1) "y" equals the amount of the depreciation
20            deduction taken for the taxable year on the
21            taxpayer's federal income tax return on property
22            for which the bonus depreciation deduction was
23            taken in any year under subsection (k) of Section
24            168 of the Internal Revenue Code, but not including
25            the bonus depreciation deduction;
26                (2) for taxable years ending on or before

 

 

HB0295- 67 -LRB099 04263 HLH 24287 b

1            December 31, 2005, "x" equals "y" multiplied by 30
2            and then divided by 70 (or "y" multiplied by
3            0.429); and
4                (3) for taxable years ending after December
5            31, 2005:
6                    (i) for property on which a bonus
7                depreciation deduction of 30% of the adjusted
8                basis was taken, "x" equals "y" multiplied by
9                30 and then divided by 70 (or "y" multiplied by
10                0.429); and
11                    (ii) for property on which a bonus
12                depreciation deduction of 50% of the adjusted
13                basis was taken, "x" equals "y" multiplied by
14                1.0.
15            The aggregate amount deducted under this
16        subparagraph in all taxable years for any one piece of
17        property may not exceed the amount of the bonus
18        depreciation deduction taken on that property on the
19        taxpayer's federal income tax return under subsection
20        (k) of Section 168 of the Internal Revenue Code. This
21        subparagraph (R) is exempt from the provisions of
22        Section 250;
23            (S) If the taxpayer sells, transfers, abandons, or
24        otherwise disposes of property for which the taxpayer
25        was required in any taxable year to make an addition
26        modification under subparagraph (G-10), then an amount

 

 

HB0295- 68 -LRB099 04263 HLH 24287 b

1        equal to that addition modification.
2            If the taxpayer continues to own property through
3        the last day of the last tax year for which the
4        taxpayer may claim a depreciation deduction for
5        federal income tax purposes and for which the taxpayer
6        was required in any taxable year to make an addition
7        modification under subparagraph (G-10), then an amount
8        equal to that addition modification.
9            The taxpayer is allowed to take the deduction under
10        this subparagraph only once with respect to any one
11        piece of property.
12            This subparagraph (S) is exempt from the
13        provisions of Section 250;
14            (T) The amount of (i) any interest income (net of
15        the deductions allocable thereto) taken into account
16        for the taxable year with respect to a transaction with
17        a taxpayer that is required to make an addition
18        modification with respect to such transaction under
19        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
20        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
21        the amount of such addition modification and (ii) any
22        income from intangible property (net of the deductions
23        allocable thereto) taken into account for the taxable
24        year with respect to a transaction with a taxpayer that
25        is required to make an addition modification with
26        respect to such transaction under Section

 

 

HB0295- 69 -LRB099 04263 HLH 24287 b

1        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
2        203(d)(2)(D-8), but not to exceed the amount of such
3        addition modification. This subparagraph (T) is exempt
4        from the provisions of Section 250;
5            (U) An amount equal to the interest income taken
6        into account for the taxable year (net of the
7        deductions allocable thereto) with respect to
8        transactions with (i) a foreign person who would be a
9        member of the taxpayer's unitary business group but for
10        the fact the foreign person's business activity
11        outside the United States is 80% or more of that
12        person's total business activity and (ii) for taxable
13        years ending on or after December 31, 2008, to a person
14        who would be a member of the same unitary business
15        group but for the fact that the person is prohibited
16        under Section 1501(a)(27) from being included in the
17        unitary business group because he or she is ordinarily
18        required to apportion business income under different
19        subsections of Section 304, but not to exceed the
20        addition modification required to be made for the same
21        taxable year under Section 203(c)(2)(G-12) for
22        interest paid, accrued, or incurred, directly or
23        indirectly, to the same person. This subparagraph (U)
24        is exempt from the provisions of Section 250;
25            (V) An amount equal to the income from intangible
26        property taken into account for the taxable year (net

 

 

HB0295- 70 -LRB099 04263 HLH 24287 b

1        of the deductions allocable thereto) with respect to
2        transactions with (i) a foreign person who would be a
3        member of the taxpayer's unitary business group but for
4        the fact that the foreign person's business activity
5        outside the United States is 80% or more of that
6        person's total business activity and (ii) for taxable
7        years ending on or after December 31, 2008, to a person
8        who would be a member of the same unitary business
9        group but for the fact that the person is prohibited
10        under Section 1501(a)(27) from being included in the
11        unitary business group because he or she is ordinarily
12        required to apportion business income under different
13        subsections of Section 304, but not to exceed the
14        addition modification required to be made for the same
15        taxable year under Section 203(c)(2)(G-13) for
16        intangible expenses and costs paid, accrued, or
17        incurred, directly or indirectly, to the same foreign
18        person. This subparagraph (V) is exempt from the
19        provisions of Section 250;
20            (W) in the case of an estate, an amount equal to
21        all amounts included in such total pursuant to the
22        provisions of Section 111 of the Internal Revenue Code
23        as a recovery of items previously deducted by the
24        decedent from adjusted gross income in the computation
25        of taxable income. This subparagraph (W) is exempt from
26        Section 250;

 

 

HB0295- 71 -LRB099 04263 HLH 24287 b

1            (X) an amount equal to the refund included in such
2        total of any tax deducted for federal income tax
3        purposes, to the extent that deduction was added back
4        under subparagraph (F). This subparagraph (X) is
5        exempt from the provisions of Section 250; and
6            (Y) For taxable years ending on or after December
7        31, 2011, in the case of a taxpayer who was required to
8        add back any insurance premiums under Section
9        203(c)(2)(G-14), such taxpayer may elect to subtract
10        that part of a reimbursement received from the
11        insurance company equal to the amount of the expense or
12        loss (including expenses incurred by the insurance
13        company) that would have been taken into account as a
14        deduction for federal income tax purposes if the
15        expense or loss had been uninsured. If a taxpayer makes
16        the election provided for by this subparagraph (Y), the
17        insurer to which the premiums were paid must add back
18        to income the amount subtracted by the taxpayer
19        pursuant to this subparagraph (Y). This subparagraph
20        (Y) is exempt from the provisions of Section 250.
21        (3) Limitation. The amount of any modification
22    otherwise required under this subsection shall, under
23    regulations prescribed by the Department, be adjusted by
24    any amounts included therein which were properly paid,
25    credited, or required to be distributed, or permanently set
26    aside for charitable purposes pursuant to Internal Revenue

 

 

HB0295- 72 -LRB099 04263 HLH 24287 b

1    Code Section 642(c) during the taxable year.
 
2    (d) Partnerships.
3        (1) In general. In the case of a partnership, base
4    income means an amount equal to the taxpayer's taxable
5    income for the taxable year as modified by paragraph (2).
6        (2) Modifications. The taxable income referred to in
7    paragraph (1) shall be modified by adding thereto the sum
8    of the following amounts:
9            (A) An amount equal to all amounts paid or accrued
10        to the taxpayer as interest or dividends during the
11        taxable year to the extent excluded from gross income
12        in the computation of taxable income;
13            (B) An amount equal to the amount of tax imposed by
14        this Act to the extent deducted from gross income for
15        the taxable year;
16            (C) The amount of deductions allowed to the
17        partnership pursuant to Section 707 (c) of the Internal
18        Revenue Code in calculating its taxable income;
19            (D) An amount equal to the amount of the capital
20        gain deduction allowable under the Internal Revenue
21        Code, to the extent deducted from gross income in the
22        computation of taxable income;
23            (D-5) For taxable years 2001 and thereafter, an
24        amount equal to the bonus depreciation deduction taken
25        on the taxpayer's federal income tax return for the

 

 

HB0295- 73 -LRB099 04263 HLH 24287 b

1        taxable year under subsection (k) of Section 168 of the
2        Internal Revenue Code;
3            (D-6) If the taxpayer sells, transfers, abandons,
4        or otherwise disposes of property for which the
5        taxpayer was required in any taxable year to make an
6        addition modification under subparagraph (D-5), then
7        an amount equal to the aggregate amount of the
8        deductions taken in all taxable years under
9        subparagraph (O) with respect to that property.
10            If the taxpayer continues to own property through
11        the last day of the last tax year for which the
12        taxpayer may claim a depreciation deduction for
13        federal income tax purposes and for which the taxpayer
14        was allowed in any taxable year to make a subtraction
15        modification under subparagraph (O), then an amount
16        equal to that subtraction modification.
17            The taxpayer is required to make the addition
18        modification under this subparagraph only once with
19        respect to any one piece of property;
20            (D-7) An amount equal to the amount otherwise
21        allowed as a deduction in computing base income for
22        interest paid, accrued, or incurred, directly or
23        indirectly, (i) for taxable years ending on or after
24        December 31, 2004, to a foreign person who would be a
25        member of the same unitary business group but for the
26        fact the foreign person's business activity outside

 

 

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1        the United States is 80% or more of the foreign
2        person's total business activity and (ii) for taxable
3        years ending on or after December 31, 2008, to a person
4        who would be a member of the same unitary business
5        group but for the fact that the person is prohibited
6        under Section 1501(a)(27) from being included in the
7        unitary business group because he or she is ordinarily
8        required to apportion business income under different
9        subsections of Section 304. The addition modification
10        required by this subparagraph shall be reduced to the
11        extent that dividends were included in base income of
12        the unitary group for the same taxable year and
13        received by the taxpayer or by a member of the
14        taxpayer's unitary business group (including amounts
15        included in gross income pursuant to Sections 951
16        through 964 of the Internal Revenue Code and amounts
17        included in gross income under Section 78 of the
18        Internal Revenue Code) with respect to the stock of the
19        same person to whom the interest was paid, accrued, or
20        incurred.
21            This paragraph shall not apply to the following:
22                (i) an item of interest paid, accrued, or
23            incurred, directly or indirectly, to a person who
24            is subject in a foreign country or state, other
25            than a state which requires mandatory unitary
26            reporting, to a tax on or measured by net income

 

 

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1            with respect to such interest; or
2                (ii) an item of interest paid, accrued, or
3            incurred, directly or indirectly, to a person if
4            the taxpayer can establish, based on a
5            preponderance of the evidence, both of the
6            following:
7                    (a) the person, during the same taxable
8                year, paid, accrued, or incurred, the interest
9                to a person that is not a related member, and
10                    (b) the transaction giving rise to the
11                interest expense between the taxpayer and the
12                person did not have as a principal purpose the
13                avoidance of Illinois income tax, and is paid
14                pursuant to a contract or agreement that
15                reflects an arm's-length interest rate and
16                terms; or
17                (iii) the taxpayer can establish, based on
18            clear and convincing evidence, that the interest
19            paid, accrued, or incurred relates to a contract or
20            agreement entered into at arm's-length rates and
21            terms and the principal purpose for the payment is
22            not federal or Illinois tax avoidance; or
23                (iv) an item of interest paid, accrued, or
24            incurred, directly or indirectly, to a person if
25            the taxpayer establishes by clear and convincing
26            evidence that the adjustments are unreasonable; or

 

 

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1            if the taxpayer and the Director agree in writing
2            to the application or use of an alternative method
3            of apportionment under Section 304(f).
4                Nothing in this subsection shall preclude the
5            Director from making any other adjustment
6            otherwise allowed under Section 404 of this Act for
7            any tax year beginning after the effective date of
8            this amendment provided such adjustment is made
9            pursuant to regulation adopted by the Department
10            and such regulations provide methods and standards
11            by which the Department will utilize its authority
12            under Section 404 of this Act; and
13            (D-8) An amount equal to the amount of intangible
14        expenses and costs otherwise allowed as a deduction in
15        computing base income, and that were paid, accrued, or
16        incurred, directly or indirectly, (i) for taxable
17        years ending on or after December 31, 2004, to a
18        foreign person who would be a member of the same
19        unitary business group but for the fact that the
20        foreign person's business activity outside the United
21        States is 80% or more of that person's total business
22        activity and (ii) for taxable years ending on or after
23        December 31, 2008, to a person who would be a member of
24        the same unitary business group but for the fact that
25        the person is prohibited under Section 1501(a)(27)
26        from being included in the unitary business group

 

 

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1        because he or she is ordinarily required to apportion
2        business income under different subsections of Section
3        304. The addition modification required by this
4        subparagraph shall be reduced to the extent that
5        dividends were included in base income of the unitary
6        group for the same taxable year and received by the
7        taxpayer or by a member of the taxpayer's unitary
8        business group (including amounts included in gross
9        income pursuant to Sections 951 through 964 of the
10        Internal Revenue Code and amounts included in gross
11        income under Section 78 of the Internal Revenue Code)
12        with respect to the stock of the same person to whom
13        the intangible expenses and costs were directly or
14        indirectly paid, incurred or accrued. The preceding
15        sentence shall not apply to the extent that the same
16        dividends caused a reduction to the addition
17        modification required under Section 203(d)(2)(D-7) of
18        this Act. As used in this subparagraph, the term
19        "intangible expenses and costs" includes (1) expenses,
20        losses, and costs for, or related to, the direct or
21        indirect acquisition, use, maintenance or management,
22        ownership, sale, exchange, or any other disposition of
23        intangible property; (2) losses incurred, directly or
24        indirectly, from factoring transactions or discounting
25        transactions; (3) royalty, patent, technical, and
26        copyright fees; (4) licensing fees; and (5) other

 

 

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1        similar expenses and costs. For purposes of this
2        subparagraph, "intangible property" includes patents,
3        patent applications, trade names, trademarks, service
4        marks, copyrights, mask works, trade secrets, and
5        similar types of intangible assets;
6            This paragraph shall not apply to the following:
7                (i) any item of intangible expenses or costs
8            paid, accrued, or incurred, directly or
9            indirectly, from a transaction with a person who is
10            subject in a foreign country or state, other than a
11            state which requires mandatory unitary reporting,
12            to a tax on or measured by net income with respect
13            to such item; or
14                (ii) any item of intangible expense or cost
15            paid, accrued, or incurred, directly or
16            indirectly, if the taxpayer can establish, based
17            on a preponderance of the evidence, both of the
18            following:
19                    (a) the person during the same taxable
20                year paid, accrued, or incurred, the
21                intangible expense or cost to a person that is
22                not a related member, and
23                    (b) the transaction giving rise to the
24                intangible expense or cost between the
25                taxpayer and the person did not have as a
26                principal purpose the avoidance of Illinois

 

 

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1                income tax, and is paid pursuant to a contract
2                or agreement that reflects arm's-length terms;
3                or
4                (iii) any item of intangible expense or cost
5            paid, accrued, or incurred, directly or
6            indirectly, from a transaction with a person if the
7            taxpayer establishes by clear and convincing
8            evidence, that the adjustments are unreasonable;
9            or if the taxpayer and the Director agree in
10            writing to the application or use of an alternative
11            method of apportionment under Section 304(f);
12                Nothing in this subsection shall preclude the
13            Director from making any other adjustment
14            otherwise allowed under Section 404 of this Act for
15            any tax year beginning after the effective date of
16            this amendment provided such adjustment is made
17            pursuant to regulation adopted by the Department
18            and such regulations provide methods and standards
19            by which the Department will utilize its authority
20            under Section 404 of this Act;
21            (D-9) For taxable years ending on or after December
22        31, 2008, an amount equal to the amount of insurance
23        premium expenses and costs otherwise allowed as a
24        deduction in computing base income, and that were paid,
25        accrued, or incurred, directly or indirectly, to a
26        person who would be a member of the same unitary

 

 

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1        business group but for the fact that the person is
2        prohibited under Section 1501(a)(27) from being
3        included in the unitary business group because he or
4        she is ordinarily required to apportion business
5        income under different subsections of Section 304. The
6        addition modification required by this subparagraph
7        shall be reduced to the extent that dividends were
8        included in base income of the unitary group for the
9        same taxable year and received by the taxpayer or by a
10        member of the taxpayer's unitary business group
11        (including amounts included in gross income under
12        Sections 951 through 964 of the Internal Revenue Code
13        and amounts included in gross income under Section 78
14        of the Internal Revenue Code) with respect to the stock
15        of the same person to whom the premiums and costs were
16        directly or indirectly paid, incurred, or accrued. The
17        preceding sentence does not apply to the extent that
18        the same dividends caused a reduction to the addition
19        modification required under Section 203(d)(2)(D-7) or
20        Section 203(d)(2)(D-8) of this Act;
21            (D-10) An amount equal to the credit allowable to
22        the taxpayer under Section 218(a) of this Act,
23        determined without regard to Section 218(c) of this
24        Act;
25            (D-11) For taxable years ending on or after
26        December 31, 2015, an amount equal to the deduction

 

 

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1        allowed under Section 199 of the Internal Revenue Code
2        for the taxable year;
3    and by deducting from the total so obtained the following
4    amounts:
5            (E) The valuation limitation amount;
6            (F) An amount equal to the amount of any tax
7        imposed by this Act which was refunded to the taxpayer
8        and included in such total for the taxable year;
9            (G) An amount equal to all amounts included in
10        taxable income as modified by subparagraphs (A), (B),
11        (C) and (D) which are exempt from taxation by this
12        State either by reason of its statutes or Constitution
13        or by reason of the Constitution, treaties or statutes
14        of the United States; provided that, in the case of any
15        statute of this State that exempts income derived from
16        bonds or other obligations from the tax imposed under
17        this Act, the amount exempted shall be the interest net
18        of bond premium amortization;
19            (H) Any income of the partnership which
20        constitutes personal service income as defined in
21        Section 1348 (b) (1) of the Internal Revenue Code (as
22        in effect December 31, 1981) or a reasonable allowance
23        for compensation paid or accrued for services rendered
24        by partners to the partnership, whichever is greater;
25        this subparagraph (H) is exempt from the provisions of
26        Section 250;

 

 

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1            (I) An amount equal to all amounts of income
2        distributable to an entity subject to the Personal
3        Property Tax Replacement Income Tax imposed by
4        subsections (c) and (d) of Section 201 of this Act
5        including amounts distributable to organizations
6        exempt from federal income tax by reason of Section
7        501(a) of the Internal Revenue Code; this subparagraph
8        (I) is exempt from the provisions of Section 250;
9            (J) With the exception of any amounts subtracted
10        under subparagraph (G), an amount equal to the sum of
11        all amounts disallowed as deductions by (i) Sections
12        171(a) (2), and 265(2) of the Internal Revenue Code,
13        and all amounts of expenses allocable to interest and
14        disallowed as deductions by Section 265(1) of the
15        Internal Revenue Code; and (ii) for taxable years
16        ending on or after August 13, 1999, Sections 171(a)(2),
17        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
18        Code, plus, (iii) for taxable years ending on or after
19        December 31, 2011, Section 45G(e)(3) of the Internal
20        Revenue Code and, for taxable years ending on or after
21        December 31, 2008, any amount included in gross income
22        under Section 87 of the Internal Revenue Code; the
23        provisions of this subparagraph are exempt from the
24        provisions of Section 250;
25            (K) An amount equal to those dividends included in
26        such total which were paid by a corporation which

 

 

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1        conducts business operations in a River Edge
2        Redevelopment Zone or zones created under the River
3        Edge Redevelopment Zone Act and conducts substantially
4        all of its operations from a River Edge Redevelopment
5        Zone or zones. This subparagraph (K) is exempt from the
6        provisions of Section 250;
7            (L) An amount equal to any contribution made to a
8        job training project established pursuant to the Real
9        Property Tax Increment Allocation Redevelopment Act;
10            (M) An amount equal to those dividends included in
11        such total that were paid by a corporation that
12        conducts business operations in a federally designated
13        Foreign Trade Zone or Sub-Zone and that is designated a
14        High Impact Business located in Illinois; provided
15        that dividends eligible for the deduction provided in
16        subparagraph (K) of paragraph (2) of this subsection
17        shall not be eligible for the deduction provided under
18        this subparagraph (M);
19            (N) An amount equal to the amount of the deduction
20        used to compute the federal income tax credit for
21        restoration of substantial amounts held under claim of
22        right for the taxable year pursuant to Section 1341 of
23        the Internal Revenue Code;
24            (O) For taxable years 2001 and thereafter, for the
25        taxable year in which the bonus depreciation deduction
26        is taken on the taxpayer's federal income tax return

 

 

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1        under subsection (k) of Section 168 of the Internal
2        Revenue Code and for each applicable taxable year
3        thereafter, an amount equal to "x", where:
4                (1) "y" equals the amount of the depreciation
5            deduction taken for the taxable year on the
6            taxpayer's federal income tax return on property
7            for which the bonus depreciation deduction was
8            taken in any year under subsection (k) of Section
9            168 of the Internal Revenue Code, but not including
10            the bonus depreciation deduction;
11                (2) for taxable years ending on or before
12            December 31, 2005, "x" equals "y" multiplied by 30
13            and then divided by 70 (or "y" multiplied by
14            0.429); and
15                (3) for taxable years ending after December
16            31, 2005:
17                    (i) for property on which a bonus
18                depreciation deduction of 30% of the adjusted
19                basis was taken, "x" equals "y" multiplied by
20                30 and then divided by 70 (or "y" multiplied by
21                0.429); and
22                    (ii) for property on which a bonus
23                depreciation deduction of 50% of the adjusted
24                basis was taken, "x" equals "y" multiplied by
25                1.0.
26            The aggregate amount deducted under this

 

 

HB0295- 85 -LRB099 04263 HLH 24287 b

1        subparagraph in all taxable years for any one piece of
2        property may not exceed the amount of the bonus
3        depreciation deduction taken on that property on the
4        taxpayer's federal income tax return under subsection
5        (k) of Section 168 of the Internal Revenue Code. This
6        subparagraph (O) is exempt from the provisions of
7        Section 250;
8            (P) If the taxpayer sells, transfers, abandons, or
9        otherwise disposes of property for which the taxpayer
10        was required in any taxable year to make an addition
11        modification under subparagraph (D-5), then an amount
12        equal to that addition modification.
13            If the taxpayer continues to own property through
14        the last day of the last tax year for which the
15        taxpayer may claim a depreciation deduction for
16        federal income tax purposes and for which the taxpayer
17        was required in any taxable year to make an addition
18        modification under subparagraph (D-5), then an amount
19        equal to that addition modification.
20            The taxpayer is allowed to take the deduction under
21        this subparagraph only once with respect to any one
22        piece of property.
23            This subparagraph (P) is exempt from the
24        provisions of Section 250;
25            (Q) The amount of (i) any interest income (net of
26        the deductions allocable thereto) taken into account

 

 

HB0295- 86 -LRB099 04263 HLH 24287 b

1        for the taxable year with respect to a transaction with
2        a taxpayer that is required to make an addition
3        modification with respect to such transaction under
4        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
5        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
6        the amount of such addition modification and (ii) any
7        income from intangible property (net of the deductions
8        allocable thereto) taken into account for the taxable
9        year with respect to a transaction with a taxpayer that
10        is required to make an addition modification with
11        respect to such transaction under Section
12        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
13        203(d)(2)(D-8), but not to exceed the amount of such
14        addition modification. This subparagraph (Q) is exempt
15        from Section 250;
16            (R) An amount equal to the interest income taken
17        into account for the taxable year (net of the
18        deductions allocable thereto) with respect to
19        transactions with (i) a foreign person who would be a
20        member of the taxpayer's unitary business group but for
21        the fact that the foreign person's business activity
22        outside the United States is 80% or more of that
23        person's total business activity and (ii) for taxable
24        years ending on or after December 31, 2008, to a person
25        who would be a member of the same unitary business
26        group but for the fact that the person is prohibited

 

 

HB0295- 87 -LRB099 04263 HLH 24287 b

1        under Section 1501(a)(27) from being included in the
2        unitary business group because he or she is ordinarily
3        required to apportion business income under different
4        subsections of Section 304, but not to exceed the
5        addition modification required to be made for the same
6        taxable year under Section 203(d)(2)(D-7) for interest
7        paid, accrued, or incurred, directly or indirectly, to
8        the same person. This subparagraph (R) is exempt from
9        Section 250;
10            (S) An amount equal to the income from intangible
11        property taken into account for the taxable year (net
12        of the deductions allocable thereto) with respect to
13        transactions with (i) a foreign person who would be a
14        member of the taxpayer's unitary business group but for
15        the fact that the foreign person's business activity
16        outside the United States is 80% or more of that
17        person's total business activity and (ii) for taxable
18        years ending on or after December 31, 2008, to a person
19        who would be a member of the same unitary business
20        group but for the fact that the person is prohibited
21        under Section 1501(a)(27) from being included in the
22        unitary business group because he or she is ordinarily
23        required to apportion business income under different
24        subsections of Section 304, but not to exceed the
25        addition modification required to be made for the same
26        taxable year under Section 203(d)(2)(D-8) for

 

 

HB0295- 88 -LRB099 04263 HLH 24287 b

1        intangible expenses and costs paid, accrued, or
2        incurred, directly or indirectly, to the same person.
3        This subparagraph (S) is exempt from Section 250; and
4            (T) For taxable years ending on or after December
5        31, 2011, in the case of a taxpayer who was required to
6        add back any insurance premiums under Section
7        203(d)(2)(D-9), such taxpayer may elect to subtract
8        that part of a reimbursement received from the
9        insurance company equal to the amount of the expense or
10        loss (including expenses incurred by the insurance
11        company) that would have been taken into account as a
12        deduction for federal income tax purposes if the
13        expense or loss had been uninsured. If a taxpayer makes
14        the election provided for by this subparagraph (T), the
15        insurer to which the premiums were paid must add back
16        to income the amount subtracted by the taxpayer
17        pursuant to this subparagraph (T). This subparagraph
18        (T) is exempt from the provisions of Section 250.
 
19    (e) Gross income; adjusted gross income; taxable income.
20        (1) In general. Subject to the provisions of paragraph
21    (2) and subsection (b) (3), for purposes of this Section
22    and Section 803(e), a taxpayer's gross income, adjusted
23    gross income, or taxable income for the taxable year shall
24    mean the amount of gross income, adjusted gross income or
25    taxable income properly reportable for federal income tax

 

 

HB0295- 89 -LRB099 04263 HLH 24287 b

1    purposes for the taxable year under the provisions of the
2    Internal Revenue Code. Taxable income may be less than
3    zero. However, for taxable years ending on or after
4    December 31, 1986, net operating loss carryforwards from
5    taxable years ending prior to December 31, 1986, may not
6    exceed the sum of federal taxable income for the taxable
7    year before net operating loss deduction, plus the excess
8    of addition modifications over subtraction modifications
9    for the taxable year. For taxable years ending prior to
10    December 31, 1986, taxable income may never be an amount in
11    excess of the net operating loss for the taxable year as
12    defined in subsections (c) and (d) of Section 172 of the
13    Internal Revenue Code, provided that when taxable income of
14    a corporation (other than a Subchapter S corporation),
15    trust, or estate is less than zero and addition
16    modifications, other than those provided by subparagraph
17    (E) of paragraph (2) of subsection (b) for corporations or
18    subparagraph (E) of paragraph (2) of subsection (c) for
19    trusts and estates, exceed subtraction modifications, an
20    addition modification must be made under those
21    subparagraphs for any other taxable year to which the
22    taxable income less than zero (net operating loss) is
23    applied under Section 172 of the Internal Revenue Code or
24    under subparagraph (E) of paragraph (2) of this subsection
25    (e) applied in conjunction with Section 172 of the Internal
26    Revenue Code.

 

 

HB0295- 90 -LRB099 04263 HLH 24287 b

1        (2) Special rule. For purposes of paragraph (1) of this
2    subsection, the taxable income properly reportable for
3    federal income tax purposes shall mean:
4            (A) Certain life insurance companies. In the case
5        of a life insurance company subject to the tax imposed
6        by Section 801 of the Internal Revenue Code, life
7        insurance company taxable income, plus the amount of
8        distribution from pre-1984 policyholder surplus
9        accounts as calculated under Section 815a of the
10        Internal Revenue Code;
11            (B) Certain other insurance companies. In the case
12        of mutual insurance companies subject to the tax
13        imposed by Section 831 of the Internal Revenue Code,
14        insurance company taxable income;
15            (C) Regulated investment companies. In the case of
16        a regulated investment company subject to the tax
17        imposed by Section 852 of the Internal Revenue Code,
18        investment company taxable income;
19            (D) Real estate investment trusts. In the case of a
20        real estate investment trust subject to the tax imposed
21        by Section 857 of the Internal Revenue Code, real
22        estate investment trust taxable income;
23            (E) Consolidated corporations. In the case of a
24        corporation which is a member of an affiliated group of
25        corporations filing a consolidated income tax return
26        for the taxable year for federal income tax purposes,

 

 

HB0295- 91 -LRB099 04263 HLH 24287 b

1        taxable income determined as if such corporation had
2        filed a separate return for federal income tax purposes
3        for the taxable year and each preceding taxable year
4        for which it was a member of an affiliated group. For
5        purposes of this subparagraph, the taxpayer's separate
6        taxable income shall be determined as if the election
7        provided by Section 243(b) (2) of the Internal Revenue
8        Code had been in effect for all such years;
9            (F) Cooperatives. In the case of a cooperative
10        corporation or association, the taxable income of such
11        organization determined in accordance with the
12        provisions of Section 1381 through 1388 of the Internal
13        Revenue Code, but without regard to the prohibition
14        against offsetting losses from patronage activities
15        against income from nonpatronage activities; except
16        that a cooperative corporation or association may make
17        an election to follow its federal income tax treatment
18        of patronage losses and nonpatronage losses. In the
19        event such election is made, such losses shall be
20        computed and carried over in a manner consistent with
21        subsection (a) of Section 207 of this Act and
22        apportioned by the apportionment factor reported by
23        the cooperative on its Illinois income tax return filed
24        for the taxable year in which the losses are incurred.
25        The election shall be effective for all taxable years
26        with original returns due on or after the date of the

 

 

HB0295- 92 -LRB099 04263 HLH 24287 b

1        election. In addition, the cooperative may file an
2        amended return or returns, as allowed under this Act,
3        to provide that the election shall be effective for
4        losses incurred or carried forward for taxable years
5        occurring prior to the date of the election. Once made,
6        the election may only be revoked upon approval of the
7        Director. The Department shall adopt rules setting
8        forth requirements for documenting the elections and
9        any resulting Illinois net loss and the standards to be
10        used by the Director in evaluating requests to revoke
11        elections. Public Act 96-932 is declaratory of
12        existing law;
13            (G) Subchapter S corporations. In the case of: (i)
14        a Subchapter S corporation for which there is in effect
15        an election for the taxable year under Section 1362 of
16        the Internal Revenue Code, the taxable income of such
17        corporation determined in accordance with Section
18        1363(b) of the Internal Revenue Code, except that
19        taxable income shall take into account those items
20        which are required by Section 1363(b)(1) of the
21        Internal Revenue Code to be separately stated; and (ii)
22        a Subchapter S corporation for which there is in effect
23        a federal election to opt out of the provisions of the
24        Subchapter S Revision Act of 1982 and have applied
25        instead the prior federal Subchapter S rules as in
26        effect on July 1, 1982, the taxable income of such

 

 

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1        corporation determined in accordance with the federal
2        Subchapter S rules as in effect on July 1, 1982; and
3            (H) Partnerships. In the case of a partnership,
4        taxable income determined in accordance with Section
5        703 of the Internal Revenue Code, except that taxable
6        income shall take into account those items which are
7        required by Section 703(a)(1) to be separately stated
8        but which would be taken into account by an individual
9        in calculating his taxable income.
10        (3) Recapture of business expenses on disposition of
11    asset or business. Notwithstanding any other law to the
12    contrary, if in prior years income from an asset or
13    business has been classified as business income and in a
14    later year is demonstrated to be non-business income, then
15    all expenses, without limitation, deducted in such later
16    year and in the 2 immediately preceding taxable years
17    related to that asset or business that generated the
18    non-business income shall be added back and recaptured as
19    business income in the year of the disposition of the asset
20    or business. Such amount shall be apportioned to Illinois
21    using the greater of the apportionment fraction computed
22    for the business under Section 304 of this Act for the
23    taxable year or the average of the apportionment fractions
24    computed for the business under Section 304 of this Act for
25    the taxable year and for the 2 immediately preceding
26    taxable years.
 

 

 

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1    (f) Valuation limitation amount.
2        (1) In general. The valuation limitation amount
3    referred to in subsections (a) (2) (G), (c) (2) (I) and
4    (d)(2) (E) is an amount equal to:
5            (A) The sum of the pre-August 1, 1969 appreciation
6        amounts (to the extent consisting of gain reportable
7        under the provisions of Section 1245 or 1250 of the
8        Internal Revenue Code) for all property in respect of
9        which such gain was reported for the taxable year; plus
10            (B) The lesser of (i) the sum of the pre-August 1,
11        1969 appreciation amounts (to the extent consisting of
12        capital gain) for all property in respect of which such
13        gain was reported for federal income tax purposes for
14        the taxable year, or (ii) the net capital gain for the
15        taxable year, reduced in either case by any amount of
16        such gain included in the amount determined under
17        subsection (a) (2) (F) or (c) (2) (H).
18        (2) Pre-August 1, 1969 appreciation amount.
19            (A) If the fair market value of property referred
20        to in paragraph (1) was readily ascertainable on August
21        1, 1969, the pre-August 1, 1969 appreciation amount for
22        such property is the lesser of (i) the excess of such
23        fair market value over the taxpayer's basis (for
24        determining gain) for such property on that date
25        (determined under the Internal Revenue Code as in

 

 

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1        effect on that date), or (ii) the total gain realized
2        and reportable for federal income tax purposes in
3        respect of the sale, exchange or other disposition of
4        such property.
5            (B) If the fair market value of property referred
6        to in paragraph (1) was not readily ascertainable on
7        August 1, 1969, the pre-August 1, 1969 appreciation
8        amount for such property is that amount which bears the
9        same ratio to the total gain reported in respect of the
10        property for federal income tax purposes for the
11        taxable year, as the number of full calendar months in
12        that part of the taxpayer's holding period for the
13        property ending July 31, 1969 bears to the number of
14        full calendar months in the taxpayer's entire holding
15        period for the property.
16            (C) The Department shall prescribe such
17        regulations as may be necessary to carry out the
18        purposes of this paragraph.
 
19    (g) Double deductions. Unless specifically provided
20otherwise, nothing in this Section shall permit the same item
21to be deducted more than once.
 
22    (h) Legislative intention. Except as expressly provided by
23this Section there shall be no modifications or limitations on
24the amounts of income, gain, loss or deduction taken into

 

 

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1account in determining gross income, adjusted gross income or
2taxable income for federal income tax purposes for the taxable
3year, or in the amount of such items entering into the
4computation of base income and net income under this Act for
5such taxable year, whether in respect of property values as of
6August 1, 1969 or otherwise.
7(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
8eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
996-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
106-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
11eff. 8-23-11; 97-905, eff. 8-7-12.)
 
12    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
13    Sec. 901. Collection authority.
14    (a) In general.
15    The Department shall collect the taxes imposed by this Act.
16The Department shall collect certified past due child support
17amounts under Section 2505-650 of the Department of Revenue Law
18(20 ILCS 2505/2505-650). Except as provided in subsections (c),
19(e), (f), (g), and (h), and (i) of this Section, money
20collected pursuant to subsections (a) and (b) of Section 201 of
21this Act shall be paid into the General Revenue Fund in the
22State treasury; money collected pursuant to subsections (c) and
23(d) of Section 201 of this Act shall be paid into the Personal
24Property Tax Replacement Fund, a special fund in the State
25Treasury; and money collected under Section 2505-650 of the

 

 

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1Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
2into the Child Support Enforcement Trust Fund, a special fund
3outside the State Treasury, or to the State Disbursement Unit
4established under Section 10-26 of the Illinois Public Aid
5Code, as directed by the Department of Healthcare and Family
6Services.
7    (b) Local Government Distributive Fund.
8    Beginning August 1, 1969, and continuing through June 30,
91994, the Treasurer shall transfer each month from the General
10Revenue Fund to a special fund in the State treasury, to be
11known as the "Local Government Distributive Fund", an amount
12equal to 1/12 of the net revenue realized from the tax imposed
13by subsections (a) and (b) of Section 201 of this Act during
14the preceding month. Beginning July 1, 1994, and continuing
15through June 30, 1995, the Treasurer shall transfer each month
16from the General Revenue Fund to the Local Government
17Distributive Fund an amount equal to 1/11 of the net revenue
18realized from the tax imposed by subsections (a) and (b) of
19Section 201 of this Act during the preceding month. Beginning
20July 1, 1995 and continuing through January 31, 2011, the
21Treasurer shall transfer each month from the General Revenue
22Fund to the Local Government Distributive Fund an amount equal
23to the net of (i) 1/10 of the net revenue realized from the tax
24imposed by subsections (a) and (b) of Section 201 of the
25Illinois Income Tax Act during the preceding month (ii) minus,
26beginning July 1, 2003 and ending June 30, 2004, $6,666,666,

 

 

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1and beginning July 1, 2004, zero. Beginning February 1, 2011,
2and continuing through January 31, 2015, the Treasurer shall
3transfer each month from the General Revenue Fund to the Local
4Government Distributive Fund an amount equal to the sum of (i)
56% (10% of the ratio of the 3% individual income tax rate prior
6to 2011 to the 5% individual income tax rate after 2010) of the
7net revenue realized from the tax imposed by subsections (a)
8and (b) of Section 201 of this Act upon individuals, trusts,
9and estates during the preceding month and (ii) 6.86% (10% of
10the ratio of the 4.8% corporate income tax rate prior to 2011
11to the 7% corporate income tax rate after 2010) of the net
12revenue realized from the tax imposed by subsections (a) and
13(b) of Section 201 of this Act upon corporations during the
14preceding month. Beginning February 1, 2015 and continuing
15through January 31, 2025, the Treasurer shall transfer each
16month from the General Revenue Fund to the Local Government
17Distributive Fund an amount equal to the sum of (i) 8% (10% of
18the ratio of the 3% individual income tax rate prior to 2011 to
19the 3.75% individual income tax rate after 2014) of the net
20revenue realized from the tax imposed by subsections (a) and
21(b) of Section 201 of this Act upon individuals, trusts, and
22estates during the preceding month and (ii) 9.14% (10% of the
23ratio of the 4.8% corporate income tax rate prior to 2011 to
24the 5.25% corporate income tax rate after 2014) of the net
25revenue realized from the tax imposed by subsections (a) and
26(b) of Section 201 of this Act upon corporations during the

 

 

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1preceding month. Beginning February 1, 2025, the Treasurer
2shall transfer each month from the General Revenue Fund to the
3Local Government Distributive Fund an amount equal to the sum
4of (i) 9.23% (10% of the ratio of the 3% individual income tax
5rate prior to 2011 to the 3.25% individual income tax rate
6after 2024) of the net revenue realized from the tax imposed by
7subsections (a) and (b) of Section 201 of this Act upon
8individuals, trusts, and estates during the preceding month and
9(ii) 10% of the net revenue realized from the tax imposed by
10subsections (a) and (b) of Section 201 of this Act upon
11corporations during the preceding month. Net revenue realized
12for a month shall be defined as the revenue from the tax
13imposed by subsections (a) and (b) of Section 201 of this Act
14which is deposited in the General Revenue Fund, the Education
15Assistance Fund, the Income Tax Surcharge Local Government
16Distributive Fund, the Fund for the Advancement of Education,
17and the Commitment to Human Services Fund during the month
18minus the amount paid out of the General Revenue Fund in State
19warrants during that same month as refunds to taxpayers for
20overpayment of liability under the tax imposed by subsections
21(a) and (b) of Section 201 of this Act.
22    Beginning on August 26, 2014 (the effective date of Public
23Act 98-1052) this amendatory Act of the 98th General Assembly,
24the Comptroller shall perform the transfers required by this
25subsection (b) no later than 60 days after he or she receives
26the certification from the Treasurer as provided in Section 1

 

 

HB0295- 100 -LRB099 04263 HLH 24287 b

1of the State Revenue Sharing Act.
2    (c) Deposits Into Income Tax Refund Fund.
3        (1) Beginning on January 1, 1989 and thereafter, the
4    Department shall deposit a percentage of the amounts
5    collected pursuant to subsections (a) and (b)(1), (2), and
6    (3), of Section 201 of this Act into a fund in the State
7    treasury known as the Income Tax Refund Fund. The
8    Department shall deposit 6% of such amounts during the
9    period beginning January 1, 1989 and ending on June 30,
10    1989. Beginning with State fiscal year 1990 and for each
11    fiscal year thereafter, the percentage deposited into the
12    Income Tax Refund Fund during a fiscal year shall be the
13    Annual Percentage. For fiscal years 1999 through 2001, the
14    Annual Percentage shall be 7.1%. For fiscal year 2003, the
15    Annual Percentage shall be 8%. For fiscal year 2004, the
16    Annual Percentage shall be 11.7%. Upon the effective date
17    of this amendatory Act of the 93rd General Assembly, the
18    Annual Percentage shall be 10% for fiscal year 2005. For
19    fiscal year 2006, the Annual Percentage shall be 9.75%. For
20    fiscal year 2007, the Annual Percentage shall be 9.75%. For
21    fiscal year 2008, the Annual Percentage shall be 7.75%. For
22    fiscal year 2009, the Annual Percentage shall be 9.75%. For
23    fiscal year 2010, the Annual Percentage shall be 9.75%. For
24    fiscal year 2011, the Annual Percentage shall be 8.75%. For
25    fiscal year 2012, the Annual Percentage shall be 8.75%. For
26    fiscal year 2013, the Annual Percentage shall be 9.75%. For

 

 

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1    fiscal year 2014, the Annual Percentage shall be 9.5%. For
2    fiscal year 2015, the Annual Percentage shall be 10%. For
3    all other fiscal years, the Annual Percentage shall be
4    calculated as a fraction, the numerator of which shall be
5    the amount of refunds approved for payment by the
6    Department during the preceding fiscal year as a result of
7    overpayment of tax liability under subsections (a) and
8    (b)(1), (2), and (3) of Section 201 of this Act plus the
9    amount of such refunds remaining approved but unpaid at the
10    end of the preceding fiscal year, minus the amounts
11    transferred into the Income Tax Refund Fund from the
12    Tobacco Settlement Recovery Fund, and the denominator of
13    which shall be the amounts which will be collected pursuant
14    to subsections (a) and (b)(1), (2), and (3) of Section 201
15    of this Act during the preceding fiscal year; except that
16    in State fiscal year 2002, the Annual Percentage shall in
17    no event exceed 7.6%. The Director of Revenue shall certify
18    the Annual Percentage to the Comptroller on the last
19    business day of the fiscal year immediately preceding the
20    fiscal year for which it is to be effective.
21        (2) Beginning on January 1, 1989 and thereafter, the
22    Department shall deposit a percentage of the amounts
23    collected pursuant to subsections (a) and (b)(6), (7), and
24    (8), (c) and (d) of Section 201 of this Act into a fund in
25    the State treasury known as the Income Tax Refund Fund. The
26    Department shall deposit 18% of such amounts during the

 

 

HB0295- 102 -LRB099 04263 HLH 24287 b

1    period beginning January 1, 1989 and ending on June 30,
2    1989. Beginning with State fiscal year 1990 and for each
3    fiscal year thereafter, the percentage deposited into the
4    Income Tax Refund Fund during a fiscal year shall be the
5    Annual Percentage. For fiscal years 1999, 2000, and 2001,
6    the Annual Percentage shall be 19%. For fiscal year 2003,
7    the Annual Percentage shall be 27%. For fiscal year 2004,
8    the Annual Percentage shall be 32%. Upon the effective date
9    of this amendatory Act of the 93rd General Assembly, the
10    Annual Percentage shall be 24% for fiscal year 2005. For
11    fiscal year 2006, the Annual Percentage shall be 20%. For
12    fiscal year 2007, the Annual Percentage shall be 17.5%. For
13    fiscal year 2008, the Annual Percentage shall be 15.5%. For
14    fiscal year 2009, the Annual Percentage shall be 17.5%. For
15    fiscal year 2010, the Annual Percentage shall be 17.5%. For
16    fiscal year 2011, the Annual Percentage shall be 17.5%. For
17    fiscal year 2012, the Annual Percentage shall be 17.5%. For
18    fiscal year 2013, the Annual Percentage shall be 14%. For
19    fiscal year 2014, the Annual Percentage shall be 13.4%. For
20    fiscal year 2015, the Annual Percentage shall be 14%. For
21    all other fiscal years, the Annual Percentage shall be
22    calculated as a fraction, the numerator of which shall be
23    the amount of refunds approved for payment by the
24    Department during the preceding fiscal year as a result of
25    overpayment of tax liability under subsections (a) and
26    (b)(6), (7), and (8), (c) and (d) of Section 201 of this

 

 

HB0295- 103 -LRB099 04263 HLH 24287 b

1    Act plus the amount of such refunds remaining approved but
2    unpaid at the end of the preceding fiscal year, and the
3    denominator of which shall be the amounts which will be
4    collected pursuant to subsections (a) and (b)(6), (7), and
5    (8), (c) and (d) of Section 201 of this Act during the
6    preceding fiscal year; except that in State fiscal year
7    2002, the Annual Percentage shall in no event exceed 23%.
8    The Director of Revenue shall certify the Annual Percentage
9    to the Comptroller on the last business day of the fiscal
10    year immediately preceding the fiscal year for which it is
11    to be effective.
12        (3) The Comptroller shall order transferred and the
13    Treasurer shall transfer from the Tobacco Settlement
14    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
15    in January, 2001, (ii) $35,000,000 in January, 2002, and
16    (iii) $35,000,000 in January, 2003.
17    (d) Expenditures from Income Tax Refund Fund.
18        (1) Beginning January 1, 1989, money in the Income Tax
19    Refund Fund shall be expended exclusively for the purpose
20    of paying refunds resulting from overpayment of tax
21    liability under Section 201 of this Act, for paying rebates
22    under Section 208.1 in the event that the amounts in the
23    Homeowners' Tax Relief Fund are insufficient for that
24    purpose, and for making transfers pursuant to this
25    subsection (d).
26        (2) The Director shall order payment of refunds

 

 

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1    resulting from overpayment of tax liability under Section
2    201 of this Act from the Income Tax Refund Fund only to the
3    extent that amounts collected pursuant to Section 201 of
4    this Act and transfers pursuant to this subsection (d) and
5    item (3) of subsection (c) have been deposited and retained
6    in the Fund.
7        (3) As soon as possible after the end of each fiscal
8    year, the Director shall order transferred and the State
9    Treasurer and State Comptroller shall transfer from the
10    Income Tax Refund Fund to the Personal Property Tax
11    Replacement Fund an amount, certified by the Director to
12    the Comptroller, equal to the excess of the amount
13    collected pursuant to subsections (c) and (d) of Section
14    201 of this Act deposited into the Income Tax Refund Fund
15    during the fiscal year over the amount of refunds resulting
16    from overpayment of tax liability under subsections (c) and
17    (d) of Section 201 of this Act paid from the Income Tax
18    Refund Fund during the fiscal year.
19        (4) As soon as possible after the end of each fiscal
20    year, the Director shall order transferred and the State
21    Treasurer and State Comptroller shall transfer from the
22    Personal Property Tax Replacement Fund to the Income Tax
23    Refund Fund an amount, certified by the Director to the
24    Comptroller, equal to the excess of the amount of refunds
25    resulting from overpayment of tax liability under
26    subsections (c) and (d) of Section 201 of this Act paid

 

 

HB0295- 105 -LRB099 04263 HLH 24287 b

1    from the Income Tax Refund Fund during the fiscal year over
2    the amount collected pursuant to subsections (c) and (d) of
3    Section 201 of this Act deposited into the Income Tax
4    Refund Fund during the fiscal year.
5        (4.5) As soon as possible after the end of fiscal year
6    1999 and of each fiscal year thereafter, the Director shall
7    order transferred and the State Treasurer and State
8    Comptroller shall transfer from the Income Tax Refund Fund
9    to the General Revenue Fund any surplus remaining in the
10    Income Tax Refund Fund as of the end of such fiscal year;
11    excluding for fiscal years 2000, 2001, and 2002 amounts
12    attributable to transfers under item (3) of subsection (c)
13    less refunds resulting from the earned income tax credit.
14        (5) This Act shall constitute an irrevocable and
15    continuing appropriation from the Income Tax Refund Fund
16    for the purpose of paying refunds upon the order of the
17    Director in accordance with the provisions of this Section.
18    (e) Deposits into the Education Assistance Fund and the
19Income Tax Surcharge Local Government Distributive Fund.
20    On July 1, 1991, and thereafter, of the amounts collected
21pursuant to subsections (a) and (b) of Section 201 of this Act,
22minus deposits into the Income Tax Refund Fund, the Department
23shall deposit 7.3% into the Education Assistance Fund in the
24State Treasury. Beginning July 1, 1991, and continuing through
25January 31, 1993, of the amounts collected pursuant to
26subsections (a) and (b) of Section 201 of the Illinois Income

 

 

HB0295- 106 -LRB099 04263 HLH 24287 b

1Tax Act, minus deposits into the Income Tax Refund Fund, the
2Department shall deposit 3.0% into the Income Tax Surcharge
3Local Government Distributive Fund in the State Treasury.
4Beginning February 1, 1993 and continuing through June 30,
51993, of the amounts collected pursuant to subsections (a) and
6(b) of Section 201 of the Illinois Income Tax Act, minus
7deposits into the Income Tax Refund Fund, the Department shall
8deposit 4.4% into the Income Tax Surcharge Local Government
9Distributive Fund in the State Treasury. Beginning July 1,
101993, and continuing through June 30, 1994, of the amounts
11collected under subsections (a) and (b) of Section 201 of this
12Act, minus deposits into the Income Tax Refund Fund, the
13Department shall deposit 1.475% into the Income Tax Surcharge
14Local Government Distributive Fund in the State Treasury.
15    (f) Deposits into the Fund for the Advancement of
16Education. Beginning February 1, 2015, the Department shall
17deposit the following portions of the revenue realized from the
18tax imposed upon individuals, trusts, and estates by
19subsections (a) and (b) of Section 201 of this Act during the
20preceding month, minus deposits into the Income Tax Refund
21Fund, into the Fund for the Advancement of Education:
22        (1) beginning February 1, 2015, and prior to February
23    1, 2025, 1/30; and
24        (2) beginning February 1, 2025, 1/26.
25    If the rate of tax imposed by subsection (a) and (b) of
26Section 201 is reduced pursuant to Section 201.5 of this Act,

 

 

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1the Department shall not make the deposits required by this
2subsection (f) on or after the effective date of the reduction.
3    (g) Deposits into the Commitment to Human Services Fund.
4Beginning February 1, 2015, the Department shall deposit the
5following portions of the revenue realized from the tax imposed
6upon individuals, trusts, and estates by subsections (a) and
7(b) of Section 201 of this Act during the preceding month,
8minus deposits into the Income Tax Refund Fund, into the
9Commitment to Human Services Fund:
10        (1) beginning February 1, 2015, and prior to February
11    1, 2025, 1/30; and
12        (2) beginning February 1, 2025, 1/26.
13    If the rate of tax imposed by subsection (a) and (b) of
14Section 201 is reduced pursuant to Section 201.5 of this Act,
15the Department shall not make the deposits required by this
16subsection (g) on or after the effective date of the reduction.
17    (h) Deposits into the Tax Compliance and Administration
18Fund. Beginning on the first day of the first calendar month to
19occur on or after August 26, 2014 (the effective date of Public
20Act 98-1098) this amendatory Act of the 98th General Assembly,
21each month the Department shall pay into the Tax Compliance and
22Administration Fund, to be used, subject to appropriation, to
23fund additional auditors and compliance personnel at the
24Department, an amount equal to 1/12 of 5% of the cash receipts
25collected during the preceding fiscal year by the Audit Bureau
26of the Department from the tax imposed by subsections (a), (b),

 

 

HB0295- 108 -LRB099 04263 HLH 24287 b

1(c), and (d) of Section 201 of this Act, net of deposits into
2the Income Tax Refund Fund made from those cash receipts.
3    (i) Deposits into the Bill Payment Trust Fund. On and after
4the effective date of this amendatory Act of the 99th General
5Assembly, the Department shall deposit into the Bill Payment
6Trust Fund each month an amount equal the revenue realized from
7the tax imposed by subsections (a) and (b) of Section 201 of
8this Act during the preceding month that is attributable to the
9changes made to Section 203 and Section 1501 of this Act by
10this amendatory Act of the 99th General Assembly, net of
11deposits into the Income Tax Refund Fund.
12(Source: P.A. 97-72, eff. 7-1-11; 97-732, eff. 6-30-12; 98-24,
13eff. 6-19-13; 98-674, eff. 6-30-14; 98-1052, eff. 8-26-14;
1498-1098, eff. 8-26-14; revised 9-26-14.)
 
15    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
16    Sec. 1501. Definitions.
17    (a) In general. When used in this Act, where not otherwise
18distinctly expressed or manifestly incompatible with the
19intent thereof:
20        (1) Business income. The term "business income" means
21    all income that may be treated as apportionable business
22    income under the Constitution of the United States.
23    Business income is net of the deductions allocable thereto.
24    Such term does not include compensation or the deductions
25    allocable thereto. For each taxable year beginning on or

 

 

HB0295- 109 -LRB099 04263 HLH 24287 b

1    after January 1, 2003, a taxpayer may elect to treat all
2    income other than compensation as business income. This
3    election shall be made in accordance with rules adopted by
4    the Department and, once made, shall be irrevocable.
5        (1.5) Captive real estate investment trust:
6            (A) The term "captive real estate investment
7        trust" means a corporation, trust, or association:
8                (i) that is considered a real estate
9            investment trust for the taxable year under
10            Section 856 of the Internal Revenue Code;
11                (ii) the certificates of beneficial interest
12            or shares of which are not regularly traded on an
13            established securities market; and
14                (iii) of which more than 50% of the voting
15            power or value of the beneficial interest or
16            shares, at any time during the last half of the
17            taxable year, is owned or controlled, directly,
18            indirectly, or constructively, by a single
19            corporation.
20            (B) The term "captive real estate investment
21        trust" does not include:
22                (i) a real estate investment trust of which
23            more than 50% of the voting power or value of the
24            beneficial interest or shares is owned or
25            controlled, directly, indirectly, or
26            constructively, by:

 

 

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1                    (a) a real estate investment trust, other
2                than a captive real estate investment trust;
3                    (b) a person who is exempt from taxation
4                under Section 501 of the Internal Revenue Code,
5                and who is not required to treat income
6                received from the real estate investment trust
7                as unrelated business taxable income under
8                Section 512 of the Internal Revenue Code;
9                    (c) a listed Australian property trust, if
10                no more than 50% of the voting power or value
11                of the beneficial interest or shares of that
12                trust, at any time during the last half of the
13                taxable year, is owned or controlled, directly
14                or indirectly, by a single person;
15                    (d) an entity organized as a trust,
16                provided a listed Australian property trust
17                described in subparagraph (c) owns or
18                controls, directly or indirectly, or
19                constructively, 75% or more of the voting power
20                or value of the beneficial interests or shares
21                of such entity; or
22                    (e) an entity that is organized outside of
23                the laws of the United States and that
24                satisfies all of the following criteria:
25                        (1) at least 75% of the entity's total
26                    asset value at the close of its taxable

 

 

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1                    year is represented by real estate assets
2                    (as defined in Section 856(c)(5)(B) of the
3                    Internal Revenue Code, thereby including
4                    shares or certificates of beneficial
5                    interest in any real estate investment
6                    trust), cash and cash equivalents, and
7                    U.S. Government securities;
8                        (2) the entity is not subject to tax on
9                    amounts that are distributed to its
10                    beneficial owners or is exempt from
11                    entity-level taxation;
12                        (3) the entity distributes at least
13                    85% of its taxable income (as computed in
14                    the jurisdiction in which it is organized)
15                    to the holders of its shares or
16                    certificates of beneficial interest on an
17                    annual basis;
18                        (4) either (i) the shares or
19                    beneficial interests of the entity are
20                    regularly traded on an established
21                    securities market or (ii) not more than 10%
22                    of the voting power or value in the entity
23                    is held, directly, indirectly, or
24                    constructively, by a single entity or
25                    individual; and
26                        (5) the entity is organized in a

 

 

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1                    country that has entered into a tax treaty
2                    with the United States; or
3                (ii) during its first taxable year for which it
4            elects to be treated as a real estate investment
5            trust under Section 856(c)(1) of the Internal
6            Revenue Code, a real estate investment trust the
7            certificates of beneficial interest or shares of
8            which are not regularly traded on an established
9            securities market, but only if the certificates of
10            beneficial interest or shares of the real estate
11            investment trust are regularly traded on an
12            established securities market prior to the earlier
13            of the due date (including extensions) for filing
14            its return under this Act for that first taxable
15            year or the date it actually files that return.
16            (C) For the purposes of this subsection (1.5), the
17        constructive ownership rules prescribed under Section
18        318(a) of the Internal Revenue Code, as modified by
19        Section 856(d)(5) of the Internal Revenue Code, apply
20        in determining the ownership of stock, assets, or net
21        profits of any person.
22        (2) Commercial domicile. The term "commercial
23    domicile" means the principal place from which the trade or
24    business of the taxpayer is directed or managed.
25        (3) Compensation. The term "compensation" means wages,
26    salaries, commissions and any other form of remuneration

 

 

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1    paid to employees for personal services.
2        (4) Corporation. The term "corporation" includes
3    associations, joint-stock companies, insurance companies
4    and cooperatives. Any entity, including a limited
5    liability company formed under the Illinois Limited
6    Liability Company Act, shall be treated as a corporation if
7    it is so classified for federal income tax purposes.
8        (5) Department. The term "Department" means the
9    Department of Revenue of this State.
10        (6) Director. The term "Director" means the Director of
11    Revenue of this State.
12        (7) Fiduciary. The term "fiduciary" means a guardian,
13    trustee, executor, administrator, receiver, or any person
14    acting in any fiduciary capacity for any person.
15        (8) Financial organization.
16            (A) The term "financial organization" means any
17        bank, bank holding company, trust company, savings
18        bank, industrial bank, land bank, safe deposit
19        company, private banker, savings and loan association,
20        building and loan association, credit union, currency
21        exchange, cooperative bank, small loan company, sales
22        finance company, investment company, or any person
23        which is owned by a bank or bank holding company. For
24        the purpose of this Section a "person" will include
25        only those persons which a bank holding company may
26        acquire and hold an interest in, directly or

 

 

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1        indirectly, under the provisions of the Bank Holding
2        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
3        where interests in any person must be disposed of
4        within certain required time limits under the Bank
5        Holding Company Act of 1956.
6            (B) For purposes of subparagraph (A) of this
7        paragraph, the term "bank" includes (i) any entity that
8        is regulated by the Comptroller of the Currency under
9        the National Bank Act, or by the Federal Reserve Board,
10        or by the Federal Deposit Insurance Corporation and
11        (ii) any federally or State chartered bank operating as
12        a credit card bank.
13            (C) For purposes of subparagraph (A) of this
14        paragraph, the term "sales finance company" has the
15        meaning provided in the following item (i) or (ii):
16                (i) A person primarily engaged in one or more
17            of the following businesses: the business of
18            purchasing customer receivables, the business of
19            making loans upon the security of customer
20            receivables, the business of making loans for the
21            express purpose of funding purchases of tangible
22            personal property or services by the borrower, or
23            the business of finance leasing. For purposes of
24            this item (i), "customer receivable" means:
25                    (a) a retail installment contract or
26                retail charge agreement within the meaning of

 

 

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1                the Sales Finance Agency Act, the Retail
2                Installment Sales Act, or the Motor Vehicle
3                Retail Installment Sales Act;
4                    (b) an installment, charge, credit, or
5                similar contract or agreement arising from the
6                sale of tangible personal property or services
7                in a transaction involving a deferred payment
8                price payable in one or more installments
9                subsequent to the sale; or
10                    (c) the outstanding balance of a contract
11                or agreement described in provisions (a) or (b)
12                of this item (i).
13                A customer receivable need not provide for
14            payment of interest on deferred payments. A sales
15            finance company may purchase a customer receivable
16            from, or make a loan secured by a customer
17            receivable to, the seller in the original
18            transaction or to a person who purchased the
19            customer receivable directly or indirectly from
20            that seller.
21                (ii) A corporation meeting each of the
22            following criteria:
23                    (a) the corporation must be a member of an
24                "affiliated group" within the meaning of
25                Section 1504(a) of the Internal Revenue Code,
26                determined without regard to Section 1504(b)

 

 

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1                of the Internal Revenue Code;
2                    (b) more than 50% of the gross income of
3                the corporation for the taxable year must be
4                interest income derived from qualifying loans.
5                A "qualifying loan" is a loan made to a member
6                of the corporation's affiliated group that
7                originates customer receivables (within the
8                meaning of item (i)) or to whom customer
9                receivables originated by a member of the
10                affiliated group have been transferred, to the
11                extent the average outstanding balance of
12                loans from that corporation to members of its
13                affiliated group during the taxable year do not
14                exceed the limitation amount for that
15                corporation. The "limitation amount" for a
16                corporation is the average outstanding
17                balances during the taxable year of customer
18                receivables (within the meaning of item (i))
19                originated by all members of the affiliated
20                group. If the average outstanding balances of
21                the loans made by a corporation to members of
22                its affiliated group exceed the limitation
23                amount, the interest income of that
24                corporation from qualifying loans shall be
25                equal to its interest income from loans to
26                members of its affiliated groups times a

 

 

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1                fraction equal to the limitation amount
2                divided by the average outstanding balances of
3                the loans made by that corporation to members
4                of its affiliated group;
5                    (c) the total of all shareholder's equity
6                (including, without limitation, paid-in
7                capital on common and preferred stock and
8                retained earnings) of the corporation plus the
9                total of all of its loans, advances, and other
10                obligations payable or owed to members of its
11                affiliated group may not exceed 20% of the
12                total assets of the corporation at any time
13                during the tax year; and
14                    (d) more than 50% of all interest-bearing
15                obligations of the affiliated group payable to
16                persons outside the group determined in
17                accordance with generally accepted accounting
18                principles must be obligations of the
19                corporation.
20            This amendatory Act of the 91st General Assembly is
21        declaratory of existing law.
22            (D) Subparagraphs (B) and (C) of this paragraph are
23        declaratory of existing law and apply retroactively,
24        for all tax years beginning on or before December 31,
25        1996, to all original returns, to all amended returns
26        filed no later than 30 days after the effective date of

 

 

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1        this amendatory Act of 1996, and to all notices issued
2        on or before the effective date of this amendatory Act
3        of 1996 under subsection (a) of Section 903, subsection
4        (a) of Section 904, subsection (e) of Section 909, or
5        Section 912. A taxpayer that is a "financial
6        organization" that engages in any transaction with an
7        affiliate shall be a "financial organization" for all
8        purposes of this Act.
9            (E) For all tax years beginning on or before
10        December 31, 1996, a taxpayer that falls within the
11        definition of a "financial organization" under
12        subparagraphs (B) or (C) of this paragraph, but who
13        does not fall within the definition of a "financial
14        organization" under the Proposed Regulations issued by
15        the Department of Revenue on July 19, 1996, may
16        irrevocably elect to apply the Proposed Regulations
17        for all of those years as though the Proposed
18        Regulations had been lawfully promulgated, adopted,
19        and in effect for all of those years. For purposes of
20        applying subparagraphs (B) or (C) of this paragraph to
21        all of those years, the election allowed by this
22        subparagraph applies only to the taxpayer making the
23        election and to those members of the taxpayer's unitary
24        business group who are ordinarily required to
25        apportion business income under the same subsection of
26        Section 304 of this Act as the taxpayer making the

 

 

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1        election. No election allowed by this subparagraph
2        shall be made under a claim filed under subsection (d)
3        of Section 909 more than 30 days after the effective
4        date of this amendatory Act of 1996.
5            (F) Finance Leases. For purposes of this
6        subsection, a finance lease shall be treated as a loan
7        or other extension of credit, rather than as a lease,
8        regardless of how the transaction is characterized for
9        any other purpose, including the purposes of any
10        regulatory agency to which the lessor is subject. A
11        finance lease is any transaction in the form of a lease
12        in which the lessee is treated as the owner of the
13        leased asset entitled to any deduction for
14        depreciation allowed under Section 167 of the Internal
15        Revenue Code.
16        (9) Fiscal year. The term "fiscal year" means an
17    accounting period of 12 months ending on the last day of
18    any month other than December.
19        (9.5) Fixed place of business. The term "fixed place of
20    business" has the same meaning as that term is given in
21    Section 864 of the Internal Revenue Code and the related
22    Treasury regulations.
23        (10) Includes and including. The terms "includes" and
24    "including" when used in a definition contained in this Act
25    shall not be deemed to exclude other things otherwise
26    within the meaning of the term defined.

 

 

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1        (11) Internal Revenue Code. The term "Internal Revenue
2    Code" means the United States Internal Revenue Code of 1954
3    or any successor law or laws relating to federal income
4    taxes in effect for the taxable year.
5        (11.5) Investment partnership.
6            (A) The term "investment partnership" means any
7        entity that is treated as a partnership for federal
8        income tax purposes that meets the following
9        requirements:
10                (i) no less than 90% of the partnership's cost
11            of its total assets consists of qualifying
12            investment securities, deposits at banks or other
13            financial institutions, and office space and
14            equipment reasonably necessary to carry on its
15            activities as an investment partnership;
16                (ii) no less than 90% of its gross income
17            consists of interest, dividends, and gains from
18            the sale or exchange of qualifying investment
19            securities; and
20                (iii) the partnership is not a dealer in
21            qualifying investment securities.
22            (B) For purposes of this paragraph (11.5), the term
23        "qualifying investment securities" includes all of the
24        following:
25                (i) common stock, including preferred or debt
26            securities convertible into common stock, and

 

 

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1            preferred stock;
2                (ii) bonds, debentures, and other debt
3            securities;
4                (iii) foreign and domestic currency deposits
5            secured by federal, state, or local governmental
6            agencies;
7                (iv) mortgage or asset-backed securities
8            secured by federal, state, or local governmental
9            agencies;
10                (v) repurchase agreements and loan
11            participations;
12                (vi) foreign currency exchange contracts and
13            forward and futures contracts on foreign
14            currencies;
15                (vii) stock and bond index securities and
16            futures contracts and other similar financial
17            securities and futures contracts on those
18            securities;
19                (viii) options for the purchase or sale of any
20            of the securities, currencies, contracts, or
21            financial instruments described in items (i) to
22            (vii), inclusive;
23                (ix) regulated futures contracts;
24                (x) commodities (not described in Section
25            1221(a)(1) of the Internal Revenue Code) or
26            futures, forwards, and options with respect to

 

 

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1            such commodities, provided, however, that any item
2            of a physical commodity to which title is actually
3            acquired in the partnership's capacity as a dealer
4            in such commodity shall not be a qualifying
5            investment security;
6                (xi) derivatives; and
7                (xii) a partnership interest in another
8            partnership that is an investment partnership.
9        (12) Mathematical error. The term "mathematical error"
10    includes the following types of errors, omissions, or
11    defects in a return filed by a taxpayer which prevents
12    acceptance of the return as filed for processing:
13            (A) arithmetic errors or incorrect computations on
14        the return or supporting schedules;
15            (B) entries on the wrong lines;
16            (C) omission of required supporting forms or
17        schedules or the omission of the information in whole
18        or in part called for thereon; and
19            (D) an attempt to claim, exclude, deduct, or
20        improperly report, in a manner directly contrary to the
21        provisions of the Act and regulations thereunder any
22        item of income, exemption, deduction, or credit.
23        (13) Nonbusiness income. The term "nonbusiness income"
24    means all income other than business income or
25    compensation.
26        (14) Nonresident. The term "nonresident" means a

 

 

HB0295- 123 -LRB099 04263 HLH 24287 b

1    person who is not a resident.
2        (15) Paid, incurred and accrued. The terms "paid",
3    "incurred" and "accrued" shall be construed according to
4    the method of accounting upon the basis of which the
5    person's base income is computed under this Act.
6        (16) Partnership and partner. The term "partnership"
7    includes a syndicate, group, pool, joint venture or other
8    unincorporated organization, through or by means of which
9    any business, financial operation, or venture is carried
10    on, and which is not, within the meaning of this Act, a
11    trust or estate or a corporation; and the term "partner"
12    includes a member in such syndicate, group, pool, joint
13    venture or organization.
14        The term "partnership" includes any entity, including
15    a limited liability company formed under the Illinois
16    Limited Liability Company Act, classified as a partnership
17    for federal income tax purposes.
18        The term "partnership" does not include a syndicate,
19    group, pool, joint venture, or other unincorporated
20    organization established for the sole purpose of playing
21    the Illinois State Lottery.
22        (17) Part-year resident. The term "part-year resident"
23    means an individual who became a resident during the
24    taxable year or ceased to be a resident during the taxable
25    year. Under Section 1501(a)(20)(A)(i) residence commences
26    with presence in this State for other than a temporary or

 

 

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1    transitory purpose and ceases with absence from this State
2    for other than a temporary or transitory purpose. Under
3    Section 1501(a)(20)(A)(ii) residence commences with the
4    establishment of domicile in this State and ceases with the
5    establishment of domicile in another State.
6        (18) Person. The term "person" shall be construed to
7    mean and include an individual, a trust, estate,
8    partnership, association, firm, company, corporation,
9    limited liability company, or fiduciary. For purposes of
10    Section 1301 and 1302 of this Act, a "person" means (i) an
11    individual, (ii) a corporation, (iii) an officer, agent, or
12    employee of a corporation, (iv) a member, agent or employee
13    of a partnership, or (v) a member, manager, employee,
14    officer, director, or agent of a limited liability company
15    who in such capacity commits an offense specified in
16    Section 1301 and 1302.
17        (18A) Records. The term "records" includes all data
18    maintained by the taxpayer, whether on paper, microfilm,
19    microfiche, or any type of machine-sensible data
20    compilation.
21        (19) Regulations. The term "regulations" includes
22    rules promulgated and forms prescribed by the Department.
23        (20) Resident. The term "resident" means:
24            (A) an individual (i) who is in this State for
25        other than a temporary or transitory purpose during the
26        taxable year; or (ii) who is domiciled in this State

 

 

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1        but is absent from the State for a temporary or
2        transitory purpose during the taxable year;
3            (B) The estate of a decedent who at his or her
4        death was domiciled in this State;
5            (C) A trust created by a will of a decedent who at
6        his death was domiciled in this State; and
7            (D) An irrevocable trust, the grantor of which was
8        domiciled in this State at the time such trust became
9        irrevocable. For purpose of this subparagraph, a trust
10        shall be considered irrevocable to the extent that the
11        grantor is not treated as the owner thereof under
12        Sections 671 through 678 of the Internal Revenue Code.
13        (21) Sales. The term "sales" means all gross receipts
14    of the taxpayer not allocated under Sections 301, 302 and
15    303.
16        (22) State. The term "state" when applied to a
17    jurisdiction other than this State means any state of the
18    United States, the District of Columbia, the Commonwealth
19    of Puerto Rico, any Territory or Possession of the United
20    States, and any foreign country, or any political
21    subdivision of any of the foregoing. For purposes of the
22    foreign tax credit under Section 601, the term "state"
23    means any state of the United States, the District of
24    Columbia, the Commonwealth of Puerto Rico, and any
25    territory or possession of the United States, or any
26    political subdivision of any of the foregoing, effective

 

 

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1    for tax years ending on or after December 31, 1989.
2        (23) Taxable year. The term "taxable year" means the
3    calendar year, or the fiscal year ending during such
4    calendar year, upon the basis of which the base income is
5    computed under this Act. "Taxable year" means, in the case
6    of a return made for a fractional part of a year under the
7    provisions of this Act, the period for which such return is
8    made.
9        (24) Taxpayer. The term "taxpayer" means any person
10    subject to the tax imposed by this Act.
11        (25) International banking facility. The term
12    international banking facility shall have the same meaning
13    as is set forth in the Illinois Banking Act or as is set
14    forth in the laws of the United States or regulations of
15    the Board of Governors of the Federal Reserve System.
16        (26) Income Tax Return Preparer.
17            (A) The term "income tax return preparer" means any
18        person who prepares for compensation, or who employs
19        one or more persons to prepare for compensation, any
20        return of tax imposed by this Act or any claim for
21        refund of tax imposed by this Act. The preparation of a
22        substantial portion of a return or claim for refund
23        shall be treated as the preparation of that return or
24        claim for refund.
25            (B) A person is not an income tax return preparer
26        if all he or she does is

 

 

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1                (i) furnish typing, reproducing, or other
2            mechanical assistance;
3                (ii) prepare returns or claims for refunds for
4            the employer by whom he or she is regularly and
5            continuously employed;
6                (iii) prepare as a fiduciary returns or claims
7            for refunds for any person; or
8                (iv) prepare claims for refunds for a taxpayer
9            in response to any notice of deficiency issued to
10            that taxpayer or in response to any waiver of
11            restriction after the commencement of an audit of
12            that taxpayer or of another taxpayer if a
13            determination in the audit of the other taxpayer
14            directly or indirectly affects the tax liability
15            of the taxpayer whose claims he or she is
16            preparing.
17        (27) Unitary business group.
18            (A) The term "unitary business group" means a group
19        of persons related through common ownership whose
20        business activities are integrated with, dependent
21        upon and contribute to each other. The group will not
22        include those members whose business activity outside
23        the United States is 80% or more of any such member's
24        total business activity; for purposes of this
25        paragraph and clause (a)(3)(B)(ii) of Section 304,
26        business activity within the United States shall be

 

 

HB0295- 128 -LRB099 04263 HLH 24287 b

1        measured by means of the factors ordinarily applicable
2        under subsections (a), (b), (c), (d), or (h) of Section
3        304 except that, in the case of members ordinarily
4        required to apportion business income by means of the 3
5        factor formula of property, payroll and sales
6        specified in subsection (a) of Section 304, including
7        the formula as weighted in subsection (h) of Section
8        304, such members shall not use the sales factor in the
9        computation and the results of the property and payroll
10        factor computations of subsection (a) of Section 304
11        shall be divided by 2 (by one if either the property or
12        payroll factor has a denominator of zero). The
13        computation required by the preceding sentence shall,
14        in each case, involve the division of the member's
15        property, payroll, or revenue miles in the United
16        States, insurance premiums on property or risk in the
17        United States, or financial organization business
18        income from sources within the United States, as the
19        case may be, by the respective worldwide figures for
20        such items. Common ownership in the case of
21        corporations is the direct or indirect control or
22        ownership of more than 50% of the outstanding voting
23        stock of the persons carrying on unitary business
24        activity. Unitary business activity can ordinarily be
25        illustrated where the activities of the members are:
26        (1) in the same general line (such as manufacturing,

 

 

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1        wholesaling, retailing of tangible personal property,
2        insurance, transportation or finance); or (2) are
3        steps in a vertically structured enterprise or process
4        (such as the steps involved in the production of
5        natural resources, which might include exploration,
6        mining, refining, and marketing); and, in either
7        instance, the members are functionally integrated
8        through the exercise of strong centralized management
9        (where, for example, authority over such matters as
10        purchasing, financing, tax compliance, product line,
11        personnel, marketing and capital investment is not
12        left to each member).
13            (B) In no event, for taxable years ending prior to
14        December 31, 2015, shall any unitary business group
15        include members which are ordinarily required to
16        apportion business income under different subsections
17        of Section 304 except that for tax years ending on or
18        after December 31, 1987 this prohibition shall not
19        apply to a holding company that would otherwise be a
20        member of a unitary business group with taxpayers that
21        apportion business income under any of subsections
22        (b), (c), (c-1), or (d) of Section 304. If a unitary
23        business group would, but for the preceding sentence,
24        include members that are ordinarily required to
25        apportion business income under different subsections
26        of Section 304, then for each subsection of Section 304

 

 

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1        for which there are two or more members, there shall be
2        a separate unitary business group composed of such
3        members. For purposes of the preceding two sentences, a
4        member is "ordinarily required to apportion business
5        income" under a particular subsection of Section 304 if
6        it would be required to use the apportionment method
7        prescribed by such subsection except for the fact that
8        it derives business income solely from Illinois. As
9        used in this paragraph, the phrase "United States"
10        means only the 50 states and the District of Columbia,
11        but does not include any territory or possession of the
12        United States or any area over which the United States
13        has asserted jurisdiction or claimed exclusive rights
14        with respect to the exploration for or exploitation of
15        natural resources.
16            (C) Holding companies.
17                (i) For purposes of this subparagraph, a
18            "holding company" is a corporation (other than a
19            corporation that is a financial organization under
20            paragraph (8) of this subsection (a) of Section
21            1501 because it is a bank holding company under the
22            provisions of the Bank Holding Company Act of 1956
23            (12 U.S.C. 1841, et seq.) or because it is owned by
24            a bank or a bank holding company) that owns a
25            controlling interest in one or more other
26            taxpayers ("controlled taxpayers"); that, during

 

 

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1            the period that includes the taxable year and the 2
2            immediately preceding taxable years or, if the
3            corporation was formed during the current or
4            immediately preceding taxable year, the taxable
5            years in which the corporation has been in
6            existence, derived substantially all its gross
7            income from dividends, interest, rents, royalties,
8            fees or other charges received from controlled
9            taxpayers for the provision of services, and gains
10            on the sale or other disposition of interests in
11            controlled taxpayers or in property leased or
12            licensed to controlled taxpayers or used by the
13            taxpayer in providing services to controlled
14            taxpayers; and that incurs no substantial expenses
15            other than expenses (including interest and other
16            costs of borrowing) incurred in connection with
17            the acquisition and holding of interests in
18            controlled taxpayers and in the provision of
19            services to controlled taxpayers or in the leasing
20            or licensing of property to controlled taxpayers.
21                (ii) The income of a holding company which is a
22            member of more than one unitary business group
23            shall be included in each unitary business group of
24            which it is a member on a pro rata basis, by
25            including in each unitary business group that
26            portion of the base income of the holding company

 

 

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1            that bears the same proportion to the total base
2            income of the holding company as the gross receipts
3            of the unitary business group bears to the combined
4            gross receipts of all unitary business groups (in
5            both cases without regard to the holding company)
6            or on any other reasonable basis, consistently
7            applied.
8                (iii) A holding company shall apportion its
9            business income under the subsection of Section
10            304 used by the other members of its unitary
11            business group. The apportionment factors of a
12            holding company which would be a member of more
13            than one unitary business group shall be included
14            with the apportionment factors of each unitary
15            business group of which it is a member on a pro
16            rata basis using the same method used in clause
17            (ii).
18                (iv) The provisions of this subparagraph (C)
19            are intended to clarify existing law.
20            (D) If including the base income and factors of a
21        holding company in more than one unitary business group
22        under subparagraph (C) does not fairly reflect the
23        degree of integration between the holding company and
24        one or more of the unitary business groups, the
25        dependence of the holding company and one or more of
26        the unitary business groups upon each other, or the

 

 

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1        contributions between the holding company and one or
2        more of the unitary business groups, the holding
3        company may petition the Director, under the
4        procedures provided under Section 304(f), for
5        permission to include all base income and factors of
6        the holding company only with members of a unitary
7        business group apportioning their business income
8        under one subsection of subsections (a), (b), (c), or
9        (d) of Section 304. If the petition is granted, the
10        holding company shall be included in a unitary business
11        group only with persons apportioning their business
12        income under the selected subsection of Section 304
13        until the Director grants a petition of the holding
14        company either to be included in more than one unitary
15        business group under subparagraph (C) or to include its
16        base income and factors only with members of a unitary
17        business group apportioning their business income
18        under a different subsection of Section 304.
19            (E) If the unitary business group members'
20        accounting periods differ, the common parent's
21        accounting period or, if there is no common parent, the
22        accounting period of the member that is expected to
23        have, on a recurring basis, the greatest Illinois
24        income tax liability must be used to determine whether
25        to use the apportionment method provided in subsection
26        (a) or subsection (h) of Section 304. The prohibition

 

 

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1        against membership in a unitary business group for
2        taxpayers ordinarily required to apportion income
3        under different subsections of Section 304 does not
4        apply to taxpayers required to apportion income under
5        subsection (a) and subsection (h) of Section 304. The
6        provisions of this amendatory Act of 1998 apply to tax
7        years ending on or after December 31, 1998.
8        (28) Subchapter S corporation. The term "Subchapter S
9    corporation" means a corporation for which there is in
10    effect an election under Section 1362 of the Internal
11    Revenue Code, or for which there is a federal election to
12    opt out of the provisions of the Subchapter S Revision Act
13    of 1982 and have applied instead the prior federal
14    Subchapter S rules as in effect on July 1, 1982.
15        (30) Foreign person. The term "foreign person" means
16    any person who is a nonresident alien individual and any
17    nonindividual entity, regardless of where created or
18    organized, whose business activity outside the United
19    States is 80% or more of the entity's total business
20    activity.
 
21    (b) Other definitions.
22        (1) Words denoting number, gender, and so forth, when
23    used in this Act, where not otherwise distinctly expressed
24    or manifestly incompatible with the intent thereof:
25            (A) Words importing the singular include and apply

 

 

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1        to several persons, parties or things;
2            (B) Words importing the plural include the
3        singular; and
4            (C) Words importing the masculine gender include
5        the feminine as well.
6        (2) "Company" or "association" as including successors
7    and assigns. The word "company" or "association", when used
8    in reference to a corporation, shall be deemed to embrace
9    the words "successors and assigns of such company or
10    association", and in like manner as if these last-named
11    words, or words of similar import, were expressed.
12        (3) Other terms. Any term used in any Section of this
13    Act with respect to the application of, or in connection
14    with, the provisions of any other Section of this Act shall
15    have the same meaning as in such other Section.
16(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11;
1797-636, eff. 6-1-12.)
 
18    Section 10. The State Finance Act is amended by adding
19Sections 5.866 and 6z-101 as follows:
 
20    (30 ILCS 105/5.866 new)
21    Sec. 5.866. The Bill Payment Trust Fund.
 
22    (30 ILCS 105/6z-101 new)
23    Sec. 6z-101. Bill Payment Trust Fund; creation. The Bill

 

 

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1Payment Trust Fund is created as a special fund in the State
2Treasury. Moneys in the Fund shall be used to make payments to
3bona fide creditors of the State who:
4        (1) have submitted a bill or invoice to the State that
5    (A) was properly approved under rules adopted under Section
6    3-3 of the State Prompt Payment Act, and (B) is more than
7    90 days past due; or
8        (2) are entitled to payment from State funds if the
9    State is more than 90 days delinquent in the payment of
10    those funds. For the purposes of this Section, the term
11    "bona fide creditor" includes, but is not limited to,
12    healthcare providers, public and private universities,
13    school districts, units of local government, and State
14    vendors.
15    The Bill Payment Trust Fund is not subject to
16administrative charges or chargebacks, including, but not
17limited to, those authorized under Section 8h of the State
18Finance Act.
 
19    Section 99. Effective date. This Act takes effect upon
20becoming law.