99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB2457

 

Introduced 2/17/2015, by Rep. Dwight Kay

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203  from Ch. 120, par. 2-203

    Amends the Illinois Income Tax Act. Creates a deduction for expenses paid or incurred by an eligible educator in connection with certain materials used by the educator in the classroom. Provides that the deduction may not exceed $500 in any taxable year. Provides that the deduction is exempt from the Act's automatic sunset provision. Effective immediately.


LRB099 03795 HLH 23808 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2457LRB099 03795 HLH 23808 b

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 Section 203 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    and by deducting from the total so obtained the sum of the
16    following amounts:
17            (E) For taxable years ending before December 31,
18        2001, any amount included in such total in respect of
19        any compensation (including but not limited to any
20        compensation paid or accrued to a serviceman while a
21        prisoner of war or missing in action) paid to a
22        resident by reason of being on active duty in the Armed
23        Forces of the United States and in respect of any
24        compensation paid or accrued to a resident who as a
25        governmental employee was a prisoner of war or missing
26        in action, and in respect of any compensation paid to a

 

 

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1        resident in 1971 or thereafter for annual training
2        performed pursuant to Sections 502 and 503, Title 32,
3        United States Code as a member of the Illinois National
4        Guard or, beginning with taxable years ending on or
5        after December 31, 2007, the National Guard of any
6        other state. For taxable years ending on or after
7        December 31, 2001, any amount included in such total in
8        respect of any compensation (including but not limited
9        to any compensation paid or accrued to a serviceman
10        while a prisoner of war or missing in action) paid to a
11        resident by reason of being a member of any component
12        of the Armed Forces of the United States and in respect
13        of any compensation paid or accrued to a resident who
14        as a governmental employee was a prisoner of war or
15        missing in action, and in respect of any compensation
16        paid to a resident in 2001 or thereafter by reason of
17        being a member of the Illinois National Guard or,
18        beginning with taxable years ending on or after
19        December 31, 2007, the National Guard of any other
20        state. The provisions of this subparagraph (E) are
21        exempt from the provisions of Section 250;
22            (F) An amount equal to all amounts included in such
23        total pursuant to the provisions of Sections 402(a),
24        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
25        Internal Revenue Code, or included in such total as
26        distributions under the provisions of any retirement

 

 

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1        or disability plan for employees of any governmental
2        agency or unit, or retirement payments to retired
3        partners, which payments are excluded in computing net
4        earnings from self employment by Section 1402 of the
5        Internal Revenue Code and regulations adopted pursuant
6        thereto;
7            (G) The valuation limitation amount;
8            (H) An amount equal to the amount of any tax
9        imposed by this Act which was refunded to the taxpayer
10        and included in such total for the taxable year;
11            (I) An amount equal to all amounts included in such
12        total pursuant to the provisions of Section 111 of the
13        Internal Revenue Code as a recovery of items previously
14        deducted from adjusted gross income in the computation
15        of taxable income;
16            (J) An amount equal to those dividends included in
17        such total which were paid by a corporation which
18        conducts business operations in a River Edge
19        Redevelopment Zone or zones created under the River
20        Edge Redevelopment Zone Act, and conducts
21        substantially all of its operations in a River Edge
22        Redevelopment Zone or zones. This subparagraph (J) is
23        exempt from the provisions of Section 250;
24            (K) An amount equal to those dividends included in
25        such total that were paid by a corporation that
26        conducts business operations in a federally designated

 

 

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1        Foreign Trade Zone or Sub-Zone and that is designated a
2        High Impact Business located in Illinois; provided
3        that dividends eligible for the deduction provided in
4        subparagraph (J) of paragraph (2) of this subsection
5        shall not be eligible for the deduction provided under
6        this subparagraph (K);
7            (L) For taxable years ending after December 31,
8        1983, an amount equal to all social security benefits
9        and railroad retirement benefits included in such
10        total pursuant to Sections 72(r) and 86 of the Internal
11        Revenue Code;
12            (M) With the exception of any amounts subtracted
13        under subparagraph (N), an amount equal to the sum of
14        all amounts disallowed as deductions by (i) Sections
15        171(a) (2), and 265(2) of the Internal Revenue Code,
16        and all amounts of expenses allocable to interest and
17        disallowed as deductions by Section 265(1) of the
18        Internal Revenue Code; and (ii) for taxable years
19        ending on or after August 13, 1999, Sections 171(a)(2),
20        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
21        Code, plus, for taxable years ending on or after
22        December 31, 2011, Section 45G(e)(3) of the Internal
23        Revenue Code and, for taxable years ending on or after
24        December 31, 2008, any amount included in gross income
25        under Section 87 of the Internal Revenue Code; the
26        provisions of this subparagraph are exempt from the

 

 

HB2457- 17 -LRB099 03795 HLH 23808 b

1        provisions of Section 250;
2            (N) 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            (O) An amount equal to any contribution made to a
12        job training project established pursuant to the Tax
13        Increment Allocation Redevelopment Act;
14            (P) An amount equal to the amount of the deduction
15        used to compute the federal income tax credit for
16        restoration of substantial amounts held under claim of
17        right for the taxable year pursuant to Section 1341 of
18        the Internal Revenue Code or of any itemized deduction
19        taken from adjusted gross income in the computation of
20        taxable income for restoration of substantial amounts
21        held under claim of right for the taxable year;
22            (Q) An amount equal to any amounts included in such
23        total, received by the taxpayer as an acceleration in
24        the payment of life, endowment or annuity benefits in
25        advance of the time they would otherwise be payable as
26        an indemnity for a terminal illness;

 

 

HB2457- 18 -LRB099 03795 HLH 23808 b

1            (R) An amount equal to the amount of any federal or
2        State bonus paid to veterans of the Persian Gulf War;
3            (S) An amount, to the extent included in adjusted
4        gross income, equal to the amount of a contribution
5        made in the taxable year on behalf of the taxpayer to a
6        medical care savings account established under the
7        Medical Care Savings Account Act or the Medical Care
8        Savings Account Act of 2000 to the extent the
9        contribution is accepted by the account administrator
10        as provided in that Act;
11            (T) An amount, to the extent included in adjusted
12        gross income, equal to the amount of interest earned in
13        the taxable year on a medical care savings account
14        established under the Medical Care Savings Account Act
15        or the Medical Care Savings Account Act of 2000 on
16        behalf of the taxpayer, other than interest added
17        pursuant to item (D-5) of this paragraph (2);
18            (U) For one taxable year beginning on or after
19        January 1, 1994, an amount equal to the total amount of
20        tax imposed and paid under subsections (a) and (b) of
21        Section 201 of this Act on grant amounts received by
22        the taxpayer under the Nursing Home Grant Assistance
23        Act during the taxpayer's taxable years 1992 and 1993;
24            (V) Beginning with tax years ending on or after
25        December 31, 1995 and ending with tax years ending on
26        or before December 31, 2004, an amount equal to the

 

 

HB2457- 19 -LRB099 03795 HLH 23808 b

1        amount paid by a taxpayer who is a self-employed
2        taxpayer, a partner of a partnership, or a shareholder
3        in a Subchapter S corporation for health insurance or
4        long-term care insurance for that taxpayer or that
5        taxpayer's spouse or dependents, to the extent that the
6        amount paid for that health insurance or long-term care
7        insurance may be deducted under Section 213 of the
8        Internal Revenue Code, has not been deducted on the
9        federal income tax return of the taxpayer, and does not
10        exceed the taxable income attributable to that
11        taxpayer's income, self-employment income, or
12        Subchapter S corporation income; except that no
13        deduction shall be allowed under this item (V) if the
14        taxpayer is eligible to participate in any health
15        insurance or long-term care insurance plan of an
16        employer of the taxpayer or the taxpayer's spouse. The
17        amount of the health insurance and long-term care
18        insurance subtracted under this item (V) shall be
19        determined by multiplying total health insurance and
20        long-term care insurance premiums paid by the taxpayer
21        times a number that represents the fractional
22        percentage of eligible medical expenses under Section
23        213 of the Internal Revenue Code of 1986 not actually
24        deducted on the taxpayer's federal income tax return;
25            (W) For taxable years beginning on or after January
26        1, 1998, all amounts included in the taxpayer's federal

 

 

HB2457- 20 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 21 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 22 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 23 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 24 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 25 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 26 -LRB099 03795 HLH 23808 b

1        outside the United States is 80% or more of that
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, but not to exceed the
10        addition modification required to be made for the same
11        taxable year under Section 203(a)(2)(D-18) for
12        intangible expenses and costs paid, accrued, or
13        incurred, directly or indirectly, to the same foreign
14        person. This subparagraph (EE) is exempt from the
15        provisions of Section 250;
16            (FF) An amount equal to any amount awarded to the
17        taxpayer during the taxable year by the Court of Claims
18        under subsection (c) of Section 8 of the Court of
19        Claims Act for time unjustly served in a State prison.
20        This subparagraph (FF) is exempt from the provisions of
21        Section 250; and
22            (GG) For taxable years ending on or after December
23        31, 2011, in the case of a taxpayer who was required to
24        add back any insurance premiums under Section
25        203(a)(2)(D-19), such taxpayer may elect to subtract
26        that part of a reimbursement received from the

 

 

HB2457- 27 -LRB099 03795 HLH 23808 b

1        insurance company equal to the amount of the expense or
2        loss (including expenses incurred by the insurance
3        company) that would have been taken into account as a
4        deduction for federal income tax purposes if the
5        expense or loss had been uninsured. If a taxpayer makes
6        the election provided for by this subparagraph (GG),
7        the insurer to which the premiums were paid must add
8        back to income the amount subtracted by the taxpayer
9        pursuant to this subparagraph (GG). This subparagraph
10        (GG) is exempt from the provisions of Section 250; and
11        .
12            (HH) For taxable years ending on or after December
13        31, 2015, unreimbursed expenses, not in excess of $500,
14        paid or incurred by an eligible educator in connection
15        with books, supplies (other than nonathletic supplies
16        for courses of instruction in health or physical
17        education), computer equipment (including related
18        software and services), and other equipment, and
19        supplementary materials used by the eligible educator
20        in the classroom.
21            For the purposes of this subparagraph (HH):
22            "Eligible educator" means, with respect to any
23        taxable year, an individual who is a kindergarten
24        through grade 12 teacher, instructor, counselor,
25        principal, or aide in a school for at least 900 hours
26        during a school year.

 

 

HB2457- 28 -LRB099 03795 HLH 23808 b

1            "School" means any public or nonpublic elementary
2        or secondary school in Illinois that is in compliance
3        with Title VI of the Civil Rights Act of 1964 and
4        attendance at which satisfies the requirements of
5        Section 26-1 of the School Code.
6            This subparagraph (HH) is exempt from the
7        provisions of Section 250.
 
8    (b) Corporations.
9        (1) In general. In the case of a corporation, base
10    income means an amount equal to the taxpayer's taxable
11    income for the taxable year as modified by paragraph (2).
12        (2) Modifications. The taxable income referred to in
13    paragraph (1) shall be modified by adding thereto the sum
14    of the following amounts:
15            (A) An amount equal to all amounts paid or accrued
16        to the taxpayer as interest and all distributions
17        received from regulated investment companies during
18        the taxable year to the extent excluded from gross
19        income in the computation of taxable income;
20            (B) An amount equal to the amount of tax imposed by
21        this Act to the extent deducted from gross income in
22        the computation of taxable income for the taxable year;
23            (C) In the case of a regulated investment company,
24        an amount equal to the excess of (i) the net long-term
25        capital gain for the taxable year, over (ii) the amount

 

 

HB2457- 29 -LRB099 03795 HLH 23808 b

1        of the capital gain dividends designated as such in
2        accordance with Section 852(b)(3)(C) of the Internal
3        Revenue Code and any amount designated under Section
4        852(b)(3)(D) of the Internal Revenue Code,
5        attributable to the taxable year (this amendatory Act
6        of 1995 (Public Act 89-89) is declarative of existing
7        law and is not a new enactment);
8            (D) The amount of any net operating loss deduction
9        taken in arriving at taxable income, other than a net
10        operating loss carried forward from a taxable year
11        ending prior to December 31, 1986;
12            (E) For taxable years in which a net operating loss
13        carryback or carryforward from a taxable year ending
14        prior to December 31, 1986 is an element of taxable
15        income under paragraph (1) of subsection (e) or
16        subparagraph (E) of paragraph (2) of subsection (e),
17        the amount by which addition modifications other than
18        those provided by this subparagraph (E) exceeded
19        subtraction modifications in such earlier taxable
20        year, with the following limitations applied in the
21        order that they are listed:
22                (i) the addition modification relating to the
23            net operating loss carried back or forward to the
24            taxable year from any taxable year ending prior to
25            December 31, 1986 shall be reduced by the amount of
26            addition modification under this subparagraph (E)

 

 

HB2457- 30 -LRB099 03795 HLH 23808 b

1            which related to that net operating loss and which
2            was taken into account in calculating the base
3            income of an earlier taxable year, and
4                (ii) the addition modification relating to the
5            net operating loss carried back or forward to the
6            taxable year from any taxable year ending prior to
7            December 31, 1986 shall not exceed the amount of
8            such carryback or carryforward;
9            For taxable years in which there is a net operating
10        loss carryback or carryforward from more than one other
11        taxable year ending prior to December 31, 1986, the
12        addition modification provided in this subparagraph
13        (E) shall be the sum of the amounts computed
14        independently under the preceding provisions of this
15        subparagraph (E) for each such taxable year;
16            (E-5) For taxable years ending after December 31,
17        1997, an amount equal to any eligible remediation costs
18        that the corporation deducted in computing adjusted
19        gross income and for which the corporation claims a
20        credit under subsection (l) of Section 201;
21            (E-10) For taxable years 2001 and thereafter, an
22        amount equal to the bonus depreciation deduction taken
23        on the taxpayer's federal income tax return for the
24        taxable year under subsection (k) of Section 168 of the
25        Internal Revenue Code;
26            (E-11) If the taxpayer sells, transfers, abandons,

 

 

HB2457- 31 -LRB099 03795 HLH 23808 b

1        or otherwise disposes of property for which the
2        taxpayer was required in any taxable year to make an
3        addition modification under subparagraph (E-10), then
4        an amount equal to the aggregate amount of the
5        deductions taken in all taxable years under
6        subparagraph (T) with respect to that property.
7            If the taxpayer continues to own property through
8        the last day of the last tax year for which the
9        taxpayer may claim a depreciation deduction for
10        federal income tax purposes and for which the taxpayer
11        was allowed in any taxable year to make a subtraction
12        modification under subparagraph (T), then an amount
13        equal to that subtraction modification.
14            The taxpayer is required to make the addition
15        modification under this subparagraph only once with
16        respect to any one piece of property;
17            (E-12) An amount equal to the amount otherwise
18        allowed as a deduction in computing base income for
19        interest paid, accrued, or incurred, directly or
20        indirectly, (i) for taxable years ending on or after
21        December 31, 2004, to a foreign person who would be a
22        member of the same unitary business group but for the
23        fact the foreign person's business activity outside
24        the United States is 80% or more of the foreign
25        person's total business activity and (ii) for taxable
26        years ending on or after December 31, 2008, to a person

 

 

HB2457- 32 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 33 -LRB099 03795 HLH 23808 b

1            the taxpayer can establish, based on a
2            preponderance of the evidence, both of the
3            following:
4                    (a) the person, during the same taxable
5                year, paid, accrued, or incurred, the interest
6                to a person that is not a related member, and
7                    (b) the transaction giving rise to the
8                interest expense between the taxpayer and the
9                person did not have as a principal purpose the
10                avoidance of Illinois income tax, and is paid
11                pursuant to a contract or agreement that
12                reflects an arm's-length interest rate and
13                terms; or
14                (iii) the taxpayer can establish, based on
15            clear and convincing evidence, that the interest
16            paid, accrued, or incurred relates to a contract or
17            agreement entered into at arm's-length rates and
18            terms and the principal purpose for the payment is
19            not federal or Illinois tax avoidance; or
20                (iv) an item of interest paid, accrued, or
21            incurred, directly or indirectly, to a person if
22            the taxpayer establishes by clear and convincing
23            evidence that the adjustments are unreasonable; or
24            if the taxpayer and the Director agree in writing
25            to the application or use of an alternative method
26            of apportionment under Section 304(f).

 

 

HB2457- 34 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 35 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 36 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 37 -LRB099 03795 HLH 23808 b

1                (iii) any item of intangible expense or cost
2            paid, accrued, or incurred, directly or
3            indirectly, from a transaction with a person if the
4            taxpayer establishes by clear and convincing
5            evidence, that the adjustments are unreasonable;
6            or if the taxpayer and the Director agree in
7            writing to the application or use of an alternative
8            method of apportionment under Section 304(f);
9                Nothing in this subsection shall preclude the
10            Director from making any other adjustment
11            otherwise allowed under Section 404 of this Act for
12            any tax year beginning after the effective date of
13            this amendment provided such adjustment is made
14            pursuant to regulation adopted by the Department
15            and such regulations provide methods and standards
16            by which the Department will utilize its authority
17            under Section 404 of this Act;
18            (E-14) For taxable years ending on or after
19        December 31, 2008, an amount equal to the amount of
20        insurance premium expenses and costs otherwise allowed
21        as a deduction in computing base income, and that were
22        paid, accrued, or incurred, directly or indirectly, to
23        a person who would be a member of the same unitary
24        business group but for the fact that the person is
25        prohibited under Section 1501(a)(27) from being
26        included in the unitary business group because he or

 

 

HB2457- 38 -LRB099 03795 HLH 23808 b

1        she is ordinarily required to apportion business
2        income under different subsections of Section 304. The
3        addition modification required by this subparagraph
4        shall be reduced to the extent that dividends were
5        included in base income of the unitary group for the
6        same taxable year and received by the taxpayer or by a
7        member of the taxpayer's unitary business group
8        (including amounts included in gross income under
9        Sections 951 through 964 of the Internal Revenue Code
10        and amounts included in gross income under Section 78
11        of the Internal Revenue Code) with respect to the stock
12        of the same person to whom the premiums and costs were
13        directly or indirectly paid, incurred, or accrued. The
14        preceding sentence does not apply to the extent that
15        the same dividends caused a reduction to the addition
16        modification required under Section 203(b)(2)(E-12) or
17        Section 203(b)(2)(E-13) of this Act;
18            (E-15) For taxable years beginning after December
19        31, 2008, any deduction for dividends paid by a captive
20        real estate investment trust that is allowed to a real
21        estate investment trust under Section 857(b)(2)(B) of
22        the Internal Revenue Code for dividends paid;
23            (E-16) An amount equal to the credit allowable to
24        the taxpayer under Section 218(a) of this Act,
25        determined without regard to Section 218(c) of this
26        Act;

 

 

HB2457- 39 -LRB099 03795 HLH 23808 b

1    and by deducting from the total so obtained the sum of the
2    following amounts:
3            (F) 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            (G) An amount equal to any amount included in such
7        total under Section 78 of the Internal Revenue Code;
8            (H) In the case of a regulated investment company,
9        an amount equal to the amount of exempt interest
10        dividends as defined in subsection (b) (5) of Section
11        852 of the Internal Revenue Code, paid to shareholders
12        for the taxable year;
13            (I) With the exception of any amounts subtracted
14        under subparagraph (J), an amount equal to the sum of
15        all amounts disallowed as deductions by (i) Sections
16        171(a) (2), and 265(a)(2) and amounts disallowed as
17        interest expense by Section 291(a)(3) of the Internal
18        Revenue Code, and all amounts of expenses allocable to
19        interest and disallowed as deductions by Section
20        265(a)(1) of the Internal Revenue Code; and (ii) for
21        taxable years ending on or after August 13, 1999,
22        Sections 171(a)(2), 265, 280C, 291(a)(3), and
23        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
24        for tax years ending on or after December 31, 2011,
25        amounts disallowed as deductions by Section 45G(e)(3)
26        of the Internal Revenue Code and, for taxable years

 

 

HB2457- 40 -LRB099 03795 HLH 23808 b

1        ending on or after December 31, 2008, any amount
2        included in gross income under Section 87 of the
3        Internal Revenue Code and the policyholders' share of
4        tax-exempt interest of a life insurance company under
5        Section 807(a)(2)(B) of the Internal Revenue Code (in
6        the case of a life insurance company with gross income
7        from a decrease in reserves for the tax year) or
8        Section 807(b)(1)(B) of the Internal Revenue Code (in
9        the case of a life insurance company allowed a
10        deduction for an increase in reserves for the tax
11        year); the provisions of this subparagraph are exempt
12        from the provisions of Section 250;
13            (J) An amount equal to all amounts included in such
14        total which are exempt from taxation by this State
15        either by reason of its statutes or Constitution or by
16        reason of the Constitution, treaties or statutes of the
17        United States; provided that, in the case of any
18        statute of this State that exempts income derived from
19        bonds or other obligations from the tax imposed under
20        this Act, the amount exempted shall be the interest net
21        of bond premium amortization;
22            (K) An amount equal to those dividends included in
23        such total which were paid by a corporation which
24        conducts business operations in a River Edge
25        Redevelopment Zone or zones created under the River
26        Edge Redevelopment Zone Act and conducts substantially

 

 

HB2457- 41 -LRB099 03795 HLH 23808 b

1        all of its operations in a River Edge Redevelopment
2        Zone or zones. This subparagraph (K) is exempt from the
3        provisions of Section 250;
4            (L) An amount equal to those dividends included in
5        such total that were paid by a corporation that
6        conducts business operations in a federally designated
7        Foreign Trade Zone or Sub-Zone and that is designated a
8        High Impact Business located in Illinois; provided
9        that dividends eligible for the deduction provided in
10        subparagraph (K) of paragraph 2 of this subsection
11        shall not be eligible for the deduction provided under
12        this subparagraph (L);
13            (M) For any taxpayer that is a financial
14        organization within the meaning of Section 304(c) of
15        this Act, an amount included in such total as interest
16        income from a loan or loans made by such taxpayer to a
17        borrower, to the extent that such a loan is secured by
18        property which is eligible for the River Edge
19        Redevelopment Zone Investment Credit. To determine the
20        portion of a loan or loans that is secured by property
21        eligible for a Section 201(f) investment credit to the
22        borrower, the entire principal amount of the loan or
23        loans between the taxpayer and the borrower should be
24        divided into the basis of the Section 201(f) investment
25        credit property which secures the loan or loans, using
26        for this purpose the original basis of such property on

 

 

HB2457- 42 -LRB099 03795 HLH 23808 b

1        the date that it was placed in service in the River
2        Edge Redevelopment Zone. The subtraction modification
3        available to taxpayer in any year under this subsection
4        shall be that portion of the total interest paid by the
5        borrower with respect to such loan attributable to the
6        eligible property as calculated under the previous
7        sentence. This subparagraph (M) is exempt from the
8        provisions of Section 250;
9            (M-1) For any taxpayer that is a financial
10        organization within the meaning of Section 304(c) of
11        this Act, an amount included in such total as interest
12        income from a loan or loans made by such taxpayer to a
13        borrower, to the extent that such a loan is secured by
14        property which is eligible for the High Impact Business
15        Investment Credit. To determine the portion of a loan
16        or loans that is secured by property eligible for a
17        Section 201(h) investment credit to the borrower, the
18        entire principal amount of the loan or loans between
19        the taxpayer and the borrower should be divided into
20        the basis of the Section 201(h) investment credit
21        property which secures the loan or loans, using for
22        this purpose the original basis of such property on the
23        date that it was placed in service in a federally
24        designated Foreign Trade Zone or Sub-Zone located in
25        Illinois. No taxpayer that is eligible for the
26        deduction provided in subparagraph (M) of paragraph

 

 

HB2457- 43 -LRB099 03795 HLH 23808 b

1        (2) of this subsection shall be eligible for the
2        deduction provided under this subparagraph (M-1). The
3        subtraction modification available to taxpayers in any
4        year under this subsection shall be that portion of the
5        total interest paid by the borrower with respect to
6        such loan attributable to the eligible property as
7        calculated under the previous sentence;
8            (N) Two times any contribution made during the
9        taxable year to a designated zone organization to the
10        extent that the contribution (i) qualifies as a
11        charitable contribution under subsection (c) of
12        Section 170 of the Internal Revenue Code and (ii) must,
13        by its terms, be used for a project approved by the
14        Department of Commerce and Economic Opportunity under
15        Section 11 of the Illinois Enterprise Zone Act or under
16        Section 10-10 of the River Edge Redevelopment Zone Act.
17        This subparagraph (N) is exempt from the provisions of
18        Section 250;
19            (O) An amount equal to: (i) 85% for taxable years
20        ending on or before December 31, 1992, or, a percentage
21        equal to the percentage allowable under Section
22        243(a)(1) of the Internal Revenue Code of 1986 for
23        taxable years ending after December 31, 1992, of the
24        amount by which dividends included in taxable income
25        and received from a corporation that is not created or
26        organized under the laws of the United States or any

 

 

HB2457- 44 -LRB099 03795 HLH 23808 b

1        state or political subdivision thereof, including, for
2        taxable years ending on or after December 31, 1988,
3        dividends received or deemed received or paid or deemed
4        paid under Sections 951 through 965 of the Internal
5        Revenue Code, exceed the amount of the modification
6        provided under subparagraph (G) of paragraph (2) of
7        this subsection (b) which is related to such dividends,
8        and including, for taxable years ending on or after
9        December 31, 2008, dividends received from a captive
10        real estate investment trust; plus (ii) 100% of the
11        amount by which dividends, included in taxable income
12        and received, including, for taxable years ending on or
13        after December 31, 1988, dividends received or deemed
14        received or paid or deemed paid under Sections 951
15        through 964 of the Internal Revenue Code and including,
16        for taxable years ending on or after December 31, 2008,
17        dividends received from a captive real estate
18        investment trust, from any such corporation specified
19        in clause (i) that would but for the provisions of
20        Section 1504 (b) (3) of the Internal Revenue Code be
21        treated as a member of the affiliated group which
22        includes the dividend recipient, exceed the amount of
23        the modification provided under subparagraph (G) of
24        paragraph (2) of this subsection (b) which is related
25        to such dividends. This subparagraph (O) is exempt from
26        the provisions of Section 250 of this Act;

 

 

HB2457- 45 -LRB099 03795 HLH 23808 b

1            (P) An amount equal to any contribution made to a
2        job training project established pursuant to the Tax
3        Increment Allocation Redevelopment Act;
4            (Q) An amount equal to the amount of the deduction
5        used to compute the federal income tax credit for
6        restoration of substantial amounts held under claim of
7        right for the taxable year pursuant to Section 1341 of
8        the Internal Revenue Code;
9            (R) On and after July 20, 1999, in the case of an
10        attorney-in-fact with respect to whom an interinsurer
11        or a reciprocal insurer has made the election under
12        Section 835 of the Internal Revenue Code, 26 U.S.C.
13        835, an amount equal to the excess, if any, of the
14        amounts paid or incurred by that interinsurer or
15        reciprocal insurer in the taxable year to the
16        attorney-in-fact over the deduction allowed to that
17        interinsurer or reciprocal insurer with respect to the
18        attorney-in-fact under Section 835(b) of the Internal
19        Revenue Code for the taxable year; the provisions of
20        this subparagraph are exempt from the provisions of
21        Section 250;
22            (S) For taxable years ending on or after December
23        31, 1997, in the case of a Subchapter S corporation, an
24        amount equal to all amounts of income allocable to a
25        shareholder subject to the Personal Property Tax
26        Replacement Income Tax imposed by subsections (c) and

 

 

HB2457- 46 -LRB099 03795 HLH 23808 b

1        (d) of Section 201 of this Act, including amounts
2        allocable to organizations exempt from federal income
3        tax by reason of Section 501(a) of the Internal Revenue
4        Code. This subparagraph (S) is exempt from the
5        provisions of Section 250;
6            (T) For taxable years 2001 and thereafter, for the
7        taxable year in which the bonus depreciation deduction
8        is taken on the taxpayer's federal income tax return
9        under subsection (k) of Section 168 of the Internal
10        Revenue Code and for each applicable taxable year
11        thereafter, an amount equal to "x", where:
12                (1) "y" equals the amount of the depreciation
13            deduction taken for the taxable year on the
14            taxpayer's federal income tax return on property
15            for which the bonus depreciation deduction was
16            taken in any year under subsection (k) of Section
17            168 of the Internal Revenue Code, but not including
18            the bonus depreciation deduction;
19                (2) for taxable years ending on or before
20            December 31, 2005, "x" equals "y" multiplied by 30
21            and then divided by 70 (or "y" multiplied by
22            0.429); and
23                (3) for taxable years ending after December
24            31, 2005:
25                    (i) for property on which a bonus
26                depreciation deduction of 30% of the adjusted

 

 

HB2457- 47 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 48 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 49 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 50 -LRB099 03795 HLH 23808 b

1        property taken into account for the taxable year (net
2        of the deductions allocable thereto) with respect to
3        transactions with (i) a foreign person who would be a
4        member of the taxpayer's unitary business group but for
5        the fact that the foreign person's business activity
6        outside the United States is 80% or more of that
7        person's total business activity and (ii) for taxable
8        years ending on or after December 31, 2008, to a person
9        who would be a member of the same unitary business
10        group but for the fact that the person is prohibited
11        under Section 1501(a)(27) from being included in the
12        unitary business group because he or she is ordinarily
13        required to apportion business income under different
14        subsections of Section 304, but not to exceed the
15        addition modification required to be made for the same
16        taxable year under Section 203(b)(2)(E-13) for
17        intangible expenses and costs paid, accrued, or
18        incurred, directly or indirectly, to the same foreign
19        person. This subparagraph (X) is exempt from the
20        provisions of Section 250;
21            (Y) For taxable years ending on or after December
22        31, 2011, in the case of a taxpayer who was required to
23        add back any insurance premiums under Section
24        203(b)(2)(E-14), such taxpayer may elect to subtract
25        that part of a reimbursement received from the
26        insurance company equal to the amount of the expense or

 

 

HB2457- 51 -LRB099 03795 HLH 23808 b

1        loss (including expenses incurred by the insurance
2        company) that would have been taken into account as a
3        deduction for federal income tax purposes if the
4        expense or loss had been uninsured. If a taxpayer makes
5        the election provided for by this subparagraph (Y), the
6        insurer to which the premiums were paid must add back
7        to income the amount subtracted by the taxpayer
8        pursuant to this subparagraph (Y). This subparagraph
9        (Y) is exempt from the provisions of Section 250; and
10            (Z) The difference between the nondeductible
11        controlled foreign corporation dividends under Section
12        965(e)(3) of the Internal Revenue Code over the taxable
13        income of the taxpayer, computed without regard to
14        Section 965(e)(2)(A) of the Internal Revenue Code, and
15        without regard to any net operating loss deduction.
16        This subparagraph (Z) is exempt from the provisions of
17        Section 250.
18        (3) Special rule. For purposes of paragraph (2) (A),
19    "gross income" in the case of a life insurance company, for
20    tax years ending on and after December 31, 1994, and prior
21    to December 31, 2011, shall mean the gross investment
22    income for the taxable year and, for tax years ending on or
23    after December 31, 2011, shall mean all amounts included in
24    life insurance gross income under Section 803(a)(3) of the
25    Internal Revenue Code.
 

 

 

HB2457- 52 -LRB099 03795 HLH 23808 b

1    (c) Trusts and estates.
2        (1) In general. In the case of a trust or estate, base
3    income means an amount equal to the taxpayer's taxable
4    income for the taxable year as modified by paragraph (2).
5        (2) Modifications. Subject to the provisions of
6    paragraph (3), the taxable income referred to in paragraph
7    (1) shall be modified by adding thereto the sum of the
8    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) In the case of (i) an estate, $600; (ii) a
14        trust which, under its governing instrument, is
15        required to distribute all of its income currently,
16        $300; and (iii) any other trust, $100, but in each such
17        case, only to the extent such amount was deducted in
18        the computation of taxable income;
19            (C) An amount equal to the amount of tax imposed by
20        this Act to the extent deducted from gross income in
21        the computation of taxable income for the taxable year;
22            (D) The amount of any net operating loss deduction
23        taken in arriving at taxable income, other than a net
24        operating loss carried forward from a taxable year
25        ending prior to December 31, 1986;
26            (E) For taxable years in which a net operating loss

 

 

HB2457- 53 -LRB099 03795 HLH 23808 b

1        carryback or carryforward from a taxable year ending
2        prior to December 31, 1986 is an element of taxable
3        income under paragraph (1) of subsection (e) or
4        subparagraph (E) of paragraph (2) of subsection (e),
5        the amount by which addition modifications other than
6        those provided by this subparagraph (E) exceeded
7        subtraction modifications in such taxable year, with
8        the following limitations applied in the order that
9        they are listed:
10                (i) the addition modification relating to the
11            net operating loss carried back or forward to the
12            taxable year from any taxable year ending prior to
13            December 31, 1986 shall be reduced by the amount of
14            addition modification under this subparagraph (E)
15            which related to that net operating loss and which
16            was taken into account in calculating the base
17            income of an earlier taxable year, and
18                (ii) the addition modification relating to the
19            net operating loss carried back or forward to the
20            taxable year from any taxable year ending prior to
21            December 31, 1986 shall not exceed the amount of
22            such carryback or carryforward;
23            For taxable years in which there is a net operating
24        loss carryback or carryforward from more than one other
25        taxable year ending prior to December 31, 1986, the
26        addition modification provided in this subparagraph

 

 

HB2457- 54 -LRB099 03795 HLH 23808 b

1        (E) shall be the sum of the amounts computed
2        independently under the preceding provisions of this
3        subparagraph (E) for each such taxable year;
4            (F) For taxable years ending on or after January 1,
5        1989, an amount equal to the tax deducted pursuant to
6        Section 164 of the Internal Revenue Code if the trust
7        or estate is claiming the same tax for purposes of the
8        Illinois foreign tax credit under Section 601 of this
9        Act;
10            (G) An amount equal to the amount of the capital
11        gain deduction allowable under the Internal Revenue
12        Code, to the extent deducted from gross income in the
13        computation of taxable income;
14            (G-5) For taxable years ending after December 31,
15        1997, an amount equal to any eligible remediation costs
16        that the trust or estate deducted in computing adjusted
17        gross income and for which the trust or estate claims a
18        credit under subsection (l) of Section 201;
19            (G-10) For taxable years 2001 and thereafter, an
20        amount equal to the bonus depreciation deduction taken
21        on the taxpayer's federal income tax return for the
22        taxable year under subsection (k) of Section 168 of the
23        Internal Revenue Code; and
24            (G-11) If the taxpayer sells, transfers, abandons,
25        or otherwise disposes of property for which the
26        taxpayer was required in any taxable year to make an

 

 

HB2457- 55 -LRB099 03795 HLH 23808 b

1        addition modification under subparagraph (G-10), then
2        an amount equal to the aggregate amount of the
3        deductions taken in all taxable years under
4        subparagraph (R) with respect to that property.
5            If the taxpayer continues to own property through
6        the last day of the last tax year for which the
7        taxpayer may claim a depreciation deduction for
8        federal income tax purposes and for which the taxpayer
9        was allowed in any taxable year to make a subtraction
10        modification under subparagraph (R), then an amount
11        equal to that subtraction modification.
12            The taxpayer is required to make the addition
13        modification under this subparagraph only once with
14        respect to any one piece of property;
15            (G-12) An amount equal to the amount otherwise
16        allowed as a deduction in computing base income for
17        interest paid, accrued, or incurred, directly or
18        indirectly, (i) for taxable years ending on or after
19        December 31, 2004, to a foreign person who would be a
20        member of the same unitary business group but for the
21        fact that the foreign person's business activity
22        outside the United States is 80% or more of the foreign
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

 

 

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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. The addition modification
5        required by this subparagraph shall be reduced to the
6        extent that dividends were included in base income of
7        the unitary group for the same taxable year and
8        received by the taxpayer or by a member of the
9        taxpayer's unitary business group (including amounts
10        included in gross income pursuant to Sections 951
11        through 964 of the Internal Revenue Code and amounts
12        included in gross income under Section 78 of the
13        Internal Revenue Code) with respect to the stock of the
14        same person to whom the interest was paid, accrued, or
15        incurred.
16            This paragraph shall not apply to the following:
17                (i) an item of interest paid, accrued, or
18            incurred, directly or indirectly, to a person who
19            is subject in a foreign country or state, other
20            than a state which requires mandatory unitary
21            reporting, to a tax on or measured by net income
22            with respect to such interest; or
23                (ii) an item of interest paid, accrued, or
24            incurred, directly or indirectly, to a person if
25            the taxpayer can establish, based on a
26            preponderance of the evidence, both of the

 

 

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

 

 

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1            otherwise allowed under Section 404 of this Act for
2            any tax year beginning after the effective date of
3            this amendment provided such adjustment is made
4            pursuant to regulation adopted by the Department
5            and such regulations provide methods and standards
6            by which the Department will utilize its authority
7            under Section 404 of this Act;
8            (G-13) An amount equal to the amount of intangible
9        expenses and costs otherwise allowed as a deduction in
10        computing base income, and that were paid, accrued, or
11        incurred, directly or indirectly, (i) for taxable
12        years ending on or after December 31, 2004, to a
13        foreign person who would be a member of the same
14        unitary business group but for the fact that the
15        foreign person's business activity outside the United
16        States is 80% or more of that person's total business
17        activity and (ii) for taxable years ending on or after
18        December 31, 2008, to a person who would be a member of
19        the same unitary business group but for the fact that
20        the person is prohibited under Section 1501(a)(27)
21        from being included in the unitary business group
22        because he or she is ordinarily required to apportion
23        business income under different subsections of Section
24        304. The addition modification required by this
25        subparagraph shall be reduced to the extent that
26        dividends were included in base income of the unitary

 

 

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1        group for the same taxable year and received by the
2        taxpayer or by a member of the taxpayer's unitary
3        business group (including amounts included in gross
4        income pursuant to Sections 951 through 964 of the
5        Internal Revenue Code and amounts included in gross
6        income under Section 78 of the Internal Revenue Code)
7        with respect to the stock of the same person to whom
8        the intangible expenses and costs were directly or
9        indirectly paid, incurred, or accrued. The preceding
10        sentence shall not apply to the extent that the same
11        dividends caused a reduction to the addition
12        modification required under Section 203(c)(2)(G-12) of
13        this Act. As used in this subparagraph, the term
14        "intangible expenses and costs" includes: (1)
15        expenses, losses, and costs for or related to the
16        direct or indirect acquisition, use, maintenance or
17        management, ownership, sale, exchange, or any other
18        disposition of intangible property; (2) losses
19        incurred, directly or indirectly, from factoring
20        transactions or discounting transactions; (3) royalty,
21        patent, technical, and copyright fees; (4) licensing
22        fees; and (5) other similar expenses and costs. For
23        purposes of this subparagraph, "intangible property"
24        includes patents, patent applications, trade names,
25        trademarks, service marks, copyrights, mask works,
26        trade secrets, and similar types of intangible assets.

 

 

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

 

 

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1            indirectly, from a transaction with a person if the
2            taxpayer establishes by clear and convincing
3            evidence, that the adjustments are unreasonable;
4            or if the taxpayer and the Director agree in
5            writing to the application or use of an alternative
6            method of apportionment under Section 304(f);
7                Nothing in this subsection shall preclude the
8            Director from making any other adjustment
9            otherwise allowed under Section 404 of this Act for
10            any tax year beginning after the effective date of
11            this amendment provided such adjustment is made
12            pursuant to regulation adopted by the Department
13            and such regulations provide methods and standards
14            by which the Department will utilize its authority
15            under Section 404 of this Act;
16            (G-14) For taxable years ending on or after
17        December 31, 2008, an amount equal to the amount of
18        insurance premium expenses and costs otherwise allowed
19        as a deduction in computing base income, and that were
20        paid, accrued, or incurred, directly or indirectly, to
21        a person who would be a member of the same unitary
22        business group but for the fact that the person is
23        prohibited under Section 1501(a)(27) from being
24        included in the unitary business group because he or
25        she is ordinarily required to apportion business
26        income under different subsections of Section 304. The

 

 

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1        addition modification required by this subparagraph
2        shall be reduced to the extent that dividends were
3        included in base income of the unitary group for the
4        same taxable year and received by the taxpayer or by a
5        member of the taxpayer's unitary business group
6        (including amounts included in gross income under
7        Sections 951 through 964 of the Internal Revenue Code
8        and amounts included in gross income under Section 78
9        of the Internal Revenue Code) with respect to the stock
10        of the same person to whom the premiums and costs were
11        directly or indirectly paid, incurred, or accrued. The
12        preceding sentence does not apply to the extent that
13        the same dividends caused a reduction to the addition
14        modification required under Section 203(c)(2)(G-12) or
15        Section 203(c)(2)(G-13) of this Act;
16            (G-15) An amount equal to the credit allowable to
17        the taxpayer under Section 218(a) of this Act,
18        determined without regard to Section 218(c) of this
19        Act;
20    and by deducting from the total so obtained the sum of the
21    following amounts:
22            (H) An amount equal to all amounts included in such
23        total pursuant to the provisions of Sections 402(a),
24        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
25        Internal Revenue Code or included in such total as
26        distributions under the provisions of any retirement

 

 

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1        or disability plan for employees of any governmental
2        agency or unit, or retirement payments to retired
3        partners, which payments are excluded in computing net
4        earnings from self employment by Section 1402 of the
5        Internal Revenue Code and regulations adopted pursuant
6        thereto;
7            (I) The valuation limitation amount;
8            (J) An amount equal to the amount of any tax
9        imposed by this Act which was refunded to the taxpayer
10        and included in such total for the taxable year;
11            (K) An amount equal to all amounts included in
12        taxable income as modified by subparagraphs (A), (B),
13        (C), (D), (E), (F) and (G) which are exempt from
14        taxation by this State either by reason of its statutes
15        or Constitution or by reason of the Constitution,
16        treaties or statutes of the United States; provided
17        that, in the case of any statute of this State that
18        exempts income derived from bonds or other obligations
19        from the tax imposed under this Act, the amount
20        exempted shall be the interest net of bond premium
21        amortization;
22            (L) With the exception of any amounts subtracted
23        under subparagraph (K), an amount equal to the sum of
24        all amounts disallowed as deductions by (i) Sections
25        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
26        and all amounts of expenses allocable to interest and

 

 

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1        disallowed as deductions by Section 265(1) of the
2        Internal Revenue Code; and (ii) for taxable years
3        ending on or after August 13, 1999, Sections 171(a)(2),
4        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
5        Code, plus, (iii) for taxable years ending on or after
6        December 31, 2011, Section 45G(e)(3) of the Internal
7        Revenue Code and, for taxable years ending on or after
8        December 31, 2008, any amount included in gross income
9        under Section 87 of the Internal Revenue Code; the
10        provisions of this subparagraph are exempt from the
11        provisions of Section 250;
12            (M) An amount equal to those dividends included in
13        such total which were paid by a corporation which
14        conducts business operations in a River Edge
15        Redevelopment Zone or zones created under the River
16        Edge Redevelopment Zone Act and conducts substantially
17        all of its operations in a River Edge Redevelopment
18        Zone or zones. This subparagraph (M) is exempt from the
19        provisions of Section 250;
20            (N) An amount equal to any contribution made to a
21        job training project established pursuant to the Tax
22        Increment Allocation Redevelopment Act;
23            (O) An amount equal to those dividends included in
24        such total that were paid by a corporation that
25        conducts business operations in a federally designated
26        Foreign Trade Zone or Sub-Zone and that is designated a

 

 

HB2457- 65 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 66 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 67 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 68 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 69 -LRB099 03795 HLH 23808 b

1        income from intangible property (net of the deductions
2        allocable thereto) taken into account for the taxable
3        year with respect to a transaction with a taxpayer that
4        is required to make an addition modification with
5        respect to such transaction under Section
6        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
7        203(d)(2)(D-8), but not to exceed the amount of such
8        addition modification. This subparagraph (T) is exempt
9        from the provisions of Section 250;
10            (U) An amount equal to the interest income taken
11        into account for the taxable year (net of the
12        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 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(c)(2)(G-12) for

 

 

HB2457- 70 -LRB099 03795 HLH 23808 b

1        interest paid, accrued, or incurred, directly or
2        indirectly, to the same person. This subparagraph (U)
3        is exempt from the provisions of Section 250;
4            (V) An amount equal to the income from intangible
5        property taken into account for the taxable year (net
6        of the deductions allocable thereto) with respect to
7        transactions with (i) a foreign person who would be a
8        member of the taxpayer's unitary business group but for
9        the fact that the foreign person's business activity
10        outside the United States is 80% or more of that
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, but not to exceed the
19        addition modification required to be made for the same
20        taxable year under Section 203(c)(2)(G-13) for
21        intangible expenses and costs paid, accrued, or
22        incurred, directly or indirectly, to the same foreign
23        person. This subparagraph (V) is exempt from the
24        provisions of Section 250;
25            (W) in the case of an estate, an amount equal to
26        all amounts included in such total pursuant to the

 

 

HB2457- 71 -LRB099 03795 HLH 23808 b

1        provisions of Section 111 of the Internal Revenue Code
2        as a recovery of items previously deducted by the
3        decedent from adjusted gross income in the computation
4        of taxable income. This subparagraph (W) is exempt from
5        Section 250;
6            (X) an amount equal to the refund included in such
7        total of any tax deducted for federal income tax
8        purposes, to the extent that deduction was added back
9        under subparagraph (F). This subparagraph (X) is
10        exempt from the provisions of Section 250; and
11            (Y) For taxable years ending on or after December
12        31, 2011, in the case of a taxpayer who was required to
13        add back any insurance premiums under Section
14        203(c)(2)(G-14), such taxpayer may elect to subtract
15        that part of a reimbursement received from the
16        insurance company equal to the amount of the expense or
17        loss (including expenses incurred by the insurance
18        company) that would have been taken into account as a
19        deduction for federal income tax purposes if the
20        expense or loss had been uninsured. If a taxpayer makes
21        the election provided for by this subparagraph (Y), the
22        insurer to which the premiums were paid must add back
23        to income the amount subtracted by the taxpayer
24        pursuant to this subparagraph (Y). This subparagraph
25        (Y) is exempt from the provisions of Section 250; and .
26            (Z) For taxable years ending on or after December

 

 

HB2457- 72 -LRB099 03795 HLH 23808 b

1        31, 2015, unreimbursed expenses, not in excess of $500,
2        paid or incurred by an eligible educator in connection
3        with books, supplies (other than nonathletic supplies
4        for courses of instruction in health or physical
5        education), computer equipment (including related
6        software and services), and other equipment, and
7        supplementary materials used by the eligible educator
8        in the classroom.
9            For the purposes of this subparagraph (Z):
10            "Eligible educator" means, with respect to any
11        taxable year, an individual who is a kindergarten
12        through grade 12 teacher, instructor, counselor,
13        principal, or aide in a school for at least 900 hours
14        during a school year.
15            "School" means any public or nonpublic elementary
16        or secondary school in Illinois that is in compliance
17        with Title VI of the Civil Rights Act of 1964 and
18        attendance at which satisfies the requirements of
19        Section 26-1 of the School Code.
20            This subparagraph (Z) is exempt from the
21        provisions of Section 250.
22        (3) Limitation. The amount of any modification
23    otherwise required under this subsection shall, under
24    regulations prescribed by the Department, be adjusted by
25    any amounts included therein which were properly paid,
26    credited, or required to be distributed, or permanently set

 

 

HB2457- 73 -LRB099 03795 HLH 23808 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB2457- 83 -LRB099 03795 HLH 23808 b

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

 

 

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1        all of its operations from a River Edge Redevelopment
2        Zone or zones. This subparagraph (K) is exempt from the
3        provisions of Section 250;
4            (L) An amount equal to any contribution made to a
5        job training project established pursuant to the Real
6        Property Tax Increment Allocation Redevelopment Act;
7            (M) An amount equal to those dividends included in
8        such total that were paid by a corporation that
9        conducts business operations in a federally designated
10        Foreign Trade Zone or Sub-Zone and that is designated a
11        High Impact Business located in Illinois; provided
12        that dividends eligible for the deduction provided in
13        subparagraph (K) of paragraph (2) of this subsection
14        shall not be eligible for the deduction provided under
15        this subparagraph (M);
16            (N) An amount equal to the amount of the deduction
17        used to compute the federal income tax credit for
18        restoration of substantial amounts held under claim of
19        right for the taxable year pursuant to Section 1341 of
20        the Internal Revenue Code;
21            (O) For taxable years 2001 and thereafter, for the
22        taxable year in which the bonus depreciation deduction
23        is taken on the taxpayer's federal income tax return
24        under subsection (k) of Section 168 of the Internal
25        Revenue Code and for each applicable taxable year
26        thereafter, an amount equal to "x", where:

 

 

HB2457- 85 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 86 -LRB099 03795 HLH 23808 b

1        taxpayer's federal income tax return under subsection
2        (k) of Section 168 of the Internal Revenue Code. This
3        subparagraph (O) is exempt from the provisions of
4        Section 250;
5            (P) If the taxpayer sells, transfers, abandons, or
6        otherwise disposes of property for which the taxpayer
7        was required in any taxable year to make an addition
8        modification under subparagraph (D-5), then an amount
9        equal to that addition modification.
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 required in any taxable year to make an addition
15        modification under subparagraph (D-5), then an amount
16        equal to that addition modification.
17            The taxpayer is allowed to take the deduction under
18        this subparagraph only once with respect to any one
19        piece of property.
20            This subparagraph (P) is exempt from the
21        provisions of Section 250;
22            (Q) The amount of (i) any interest income (net of
23        the deductions allocable thereto) taken into account
24        for the taxable year with respect to a transaction with
25        a taxpayer that is required to make an addition
26        modification with respect to such transaction under

 

 

HB2457- 87 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 88 -LRB099 03795 HLH 23808 b

1        subsections of Section 304, but not to exceed the
2        addition modification required to be made for the same
3        taxable year under Section 203(d)(2)(D-7) for interest
4        paid, accrued, or incurred, directly or indirectly, to
5        the same person. This subparagraph (R) is exempt from
6        Section 250;
7            (S) An amount equal to the income from intangible
8        property taken into account for the taxable year (net
9        of the deductions allocable thereto) with respect to
10        transactions with (i) a foreign person who would be a
11        member of the taxpayer's unitary business group but for
12        the fact that the foreign person's business activity
13        outside the United States is 80% or more of that
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, but not to exceed the
22        addition modification required to be made for the same
23        taxable year under Section 203(d)(2)(D-8) for
24        intangible expenses and costs paid, accrued, or
25        incurred, directly or indirectly, to the same person.
26        This subparagraph (S) is exempt from Section 250; and

 

 

HB2457- 89 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 90 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 91 -LRB099 03795 HLH 23808 b

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

 

 

HB2457- 92 -LRB099 03795 HLH 23808 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1computation of base income and net income under this Act for
2such taxable year, whether in respect of property values as of
3August 1, 1969 or otherwise.
4(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
5eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
696-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
76-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
8eff. 8-23-11; 97-905, eff. 8-7-12.)
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.