99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3923

 

Introduced , by Rep. Bill Mitchell

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203  from Ch. 120, par. 2-203
35 ILCS 5/211

    Amends the Illinois Income Tax Act. Creates a deduction in an amount equal to workers' compensation costs incurred by the taxpayer that are attributable to employees of the taxpayer who are employed at a location in a county with high unemployment. Creates a credit for taxpayers who (i) are not otherwise entitled to a tax credit under the Economic Development for a Growing Economy Tax Credit Act and (ii) employ at least 5 new employees at a project location in a county with high unemployment. Provides that the amount of the credit shall be determined by multiplying the taxpayer's income tax rate by the average wage of the new employees and then multiplying the result by the number of new employees.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3923LRB099 09700 HLH 29909 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 Sections 203 and 211 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

 

 

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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;

 

 

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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

 

 

HB3923- 19 -LRB099 09700 HLH 29909 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

 

 

HB3923- 20 -LRB099 09700 HLH 29909 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

 

 

HB3923- 21 -LRB099 09700 HLH 29909 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

 

 

HB3923- 22 -LRB099 09700 HLH 29909 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

 

 

HB3923- 23 -LRB099 09700 HLH 29909 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

 

 

HB3923- 24 -LRB099 09700 HLH 29909 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;

 

 

HB3923- 25 -LRB099 09700 HLH 29909 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

 

 

HB3923- 26 -LRB099 09700 HLH 29909 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

 

 

HB3923- 27 -LRB099 09700 HLH 29909 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            (HH) For taxable years beginning on or after
12        January 1, 2016, an amount equal to the costs incurred
13        by the taxpayer as an employer under Sections 2, 3, and
14        4 of the Workers' Compensation Act that are
15        attributable to employees of the taxpayer who are
16        employed at a location in a county with high
17        unemployment; for the purposes of this subparagraph, a
18        "county with high unemployment" means a county that had
19        an unemployment rate for the entire taxable year that
20        exceeds the average unemployment rate for the State for
21        the entire taxable year by at least 2%, as reported by
22        the Department of Employment Security; this
23        subparagraph (HH) is exempt from the provisions of
24        Section 250.
 
25    (b) Corporations.

 

 

HB3923- 28 -LRB099 09700 HLH 29909 b

1        (1) In general. In the case of a corporation, base
2    income means an amount equal to the taxpayer's taxable
3    income for the taxable year as modified by paragraph (2).
4        (2) Modifications. The taxable income referred to in
5    paragraph (1) shall be modified by adding thereto the sum
6    of the following amounts:
7            (A) An amount equal to all amounts paid or accrued
8        to the taxpayer as interest and all distributions
9        received from regulated investment companies during
10        the taxable year to the extent excluded from gross
11        income in the computation of taxable income;
12            (B) An amount equal to the amount of tax imposed by
13        this Act to the extent deducted from gross income in
14        the computation of taxable income for the taxable year;
15            (C) In the case of a regulated investment company,
16        an amount equal to the excess of (i) the net long-term
17        capital gain for the taxable year, over (ii) the amount
18        of the capital gain dividends designated as such in
19        accordance with Section 852(b)(3)(C) of the Internal
20        Revenue Code and any amount designated under Section
21        852(b)(3)(D) of the Internal Revenue Code,
22        attributable to the taxable year (this amendatory Act
23        of 1995 (Public Act 89-89) is declarative of existing
24        law and is not a new enactment);
25            (D) The amount of any net operating loss deduction
26        taken in arriving at taxable income, other than a net

 

 

HB3923- 29 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 30 -LRB099 09700 HLH 29909 b

1        loss carryback or carryforward from more than one other
2        taxable year ending prior to December 31, 1986, the
3        addition modification provided in this subparagraph
4        (E) shall be the sum of the amounts computed
5        independently under the preceding provisions of this
6        subparagraph (E) for each such taxable year;
7            (E-5) For taxable years ending after December 31,
8        1997, an amount equal to any eligible remediation costs
9        that the corporation deducted in computing adjusted
10        gross income and for which the corporation claims a
11        credit under subsection (l) of Section 201;
12            (E-10) For taxable years 2001 and thereafter, an
13        amount equal to the bonus depreciation deduction taken
14        on the taxpayer's federal income tax return for the
15        taxable year under subsection (k) of Section 168 of the
16        Internal Revenue Code;
17            (E-11) If the taxpayer sells, transfers, abandons,
18        or otherwise disposes of property for which the
19        taxpayer was required in any taxable year to make an
20        addition modification under subparagraph (E-10), then
21        an amount equal to the aggregate amount of the
22        deductions taken in all taxable years under
23        subparagraph (T) with respect to that property.
24            If the taxpayer continues to own property through
25        the last day of the last tax year for which the
26        taxpayer may claim a depreciation deduction for

 

 

HB3923- 31 -LRB099 09700 HLH 29909 b

1        federal income tax purposes and for which the taxpayer
2        was allowed in any taxable year to make a subtraction
3        modification under subparagraph (T), then an amount
4        equal to that subtraction modification.
5            The taxpayer is required to make the addition
6        modification under this subparagraph only once with
7        respect to any one piece of property;
8            (E-12) An amount equal to the amount otherwise
9        allowed as a deduction in computing base income for
10        interest paid, accrued, or incurred, directly or
11        indirectly, (i) for taxable years ending on or after
12        December 31, 2004, to a foreign person who would be a
13        member of the same unitary business group but for the
14        fact the foreign person's business activity outside
15        the United States is 80% or more of the foreign
16        person's total business activity and (ii) for taxable
17        years ending on or after December 31, 2008, to a person
18        who would be a member of the same unitary business
19        group but for the fact that the person is prohibited
20        under Section 1501(a)(27) from being included in the
21        unitary business group because he or she is ordinarily
22        required to apportion business income under different
23        subsections of Section 304. The addition modification
24        required by this subparagraph shall be reduced to the
25        extent that dividends were included in base income of
26        the unitary group for the same taxable year and

 

 

HB3923- 32 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 33 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 34 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 35 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 36 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 37 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 38 -LRB099 09700 HLH 29909 b

1        and amounts included in gross income under Section 78
2        of the Internal Revenue Code) with respect to the stock
3        of the same person to whom the premiums and costs were
4        directly or indirectly paid, incurred, or accrued. The
5        preceding sentence does not apply to the extent that
6        the same dividends caused a reduction to the addition
7        modification required under Section 203(b)(2)(E-12) or
8        Section 203(b)(2)(E-13) of this Act;
9            (E-15) For taxable years beginning after December
10        31, 2008, any deduction for dividends paid by a captive
11        real estate investment trust that is allowed to a real
12        estate investment trust under Section 857(b)(2)(B) of
13        the Internal Revenue Code for dividends paid;
14            (E-16) An amount equal to the credit allowable to
15        the taxpayer under Section 218(a) of this Act,
16        determined without regard to Section 218(c) of this
17        Act;
18    and by deducting from the total so obtained the sum of the
19    following amounts:
20            (F) An amount equal to the amount of any tax
21        imposed by this Act which was refunded to the taxpayer
22        and included in such total for the taxable year;
23            (G) An amount equal to any amount included in such
24        total under Section 78 of the Internal Revenue Code;
25            (H) In the case of a regulated investment company,
26        an amount equal to the amount of exempt interest

 

 

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1        dividends as defined in subsection (b) (5) of Section
2        852 of the Internal Revenue Code, paid to shareholders
3        for the taxable year;
4            (I) With the exception of any amounts subtracted
5        under subparagraph (J), an amount equal to the sum of
6        all amounts disallowed as deductions by (i) Sections
7        171(a) (2), and 265(a)(2) and amounts disallowed as
8        interest expense by Section 291(a)(3) of the Internal
9        Revenue Code, and all amounts of expenses allocable to
10        interest and disallowed as deductions by Section
11        265(a)(1) of the Internal Revenue Code; and (ii) for
12        taxable years ending on or after August 13, 1999,
13        Sections 171(a)(2), 265, 280C, 291(a)(3), and
14        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
15        for tax years ending on or after December 31, 2011,
16        amounts disallowed as deductions by Section 45G(e)(3)
17        of the Internal Revenue Code and, for taxable years
18        ending on or after December 31, 2008, any amount
19        included in gross income under Section 87 of the
20        Internal Revenue Code and the policyholders' share of
21        tax-exempt interest of a life insurance company under
22        Section 807(a)(2)(B) of the Internal Revenue Code (in
23        the case of a life insurance company with gross income
24        from a decrease in reserves for the tax year) or
25        Section 807(b)(1)(B) of the Internal Revenue Code (in
26        the case of a life insurance company allowed a

 

 

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1        deduction for an increase in reserves for the tax
2        year); the provisions of this subparagraph are exempt
3        from the provisions of Section 250;
4            (J) An amount equal to all amounts included in such
5        total which are exempt from taxation by this State
6        either by reason of its statutes or Constitution or by
7        reason of the Constitution, treaties or statutes of the
8        United States; provided that, in the case of any
9        statute of this State that exempts income derived from
10        bonds or other obligations from the tax imposed under
11        this Act, the amount exempted shall be the interest net
12        of bond premium amortization;
13            (K) An amount equal to those dividends included in
14        such total which were paid by a corporation which
15        conducts business operations in a River Edge
16        Redevelopment Zone or zones created under the River
17        Edge Redevelopment Zone Act and conducts substantially
18        all of its operations in a River Edge Redevelopment
19        Zone or zones. This subparagraph (K) is exempt from the
20        provisions of Section 250;
21            (L) An amount equal to those dividends included in
22        such total that were paid by a corporation that
23        conducts business operations in a federally designated
24        Foreign Trade Zone or Sub-Zone and that is designated a
25        High Impact Business located in Illinois; provided
26        that dividends eligible for the deduction provided in

 

 

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1        subparagraph (K) of paragraph 2 of this subsection
2        shall not be eligible for the deduction provided under
3        this subparagraph (L);
4            (M) For any taxpayer that is a financial
5        organization within the meaning of Section 304(c) of
6        this Act, an amount included in such total as interest
7        income from a loan or loans made by such taxpayer to a
8        borrower, to the extent that such a loan is secured by
9        property which is eligible for the River Edge
10        Redevelopment Zone Investment Credit. To determine the
11        portion of a loan or loans that is secured by property
12        eligible for a Section 201(f) investment credit to the
13        borrower, the entire principal amount of the loan or
14        loans between the taxpayer and the borrower should be
15        divided into the basis of the Section 201(f) investment
16        credit property which secures the loan or loans, using
17        for this purpose the original basis of such property on
18        the date that it was placed in service in the River
19        Edge Redevelopment Zone. The subtraction modification
20        available to taxpayer in any year under this subsection
21        shall be that portion of the total interest paid by the
22        borrower with respect to such loan attributable to the
23        eligible property as calculated under the previous
24        sentence. This subparagraph (M) is exempt from the
25        provisions of Section 250;
26            (M-1) For any taxpayer that is a financial

 

 

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

 

 

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

 

 

HB3923- 44 -LRB099 09700 HLH 29909 b

1        real estate investment trust; plus (ii) 100% of the
2        amount by which dividends, included in taxable income
3        and received, including, for taxable years ending on or
4        after December 31, 1988, dividends received or deemed
5        received or paid or deemed paid under Sections 951
6        through 964 of the Internal Revenue Code and including,
7        for taxable years ending on or after December 31, 2008,
8        dividends received from a captive real estate
9        investment trust, from any such corporation specified
10        in clause (i) that would but for the provisions of
11        Section 1504 (b) (3) of the Internal Revenue Code be
12        treated as a member of the affiliated group which
13        includes the dividend recipient, exceed the amount of
14        the modification provided under subparagraph (G) of
15        paragraph (2) of this subsection (b) which is related
16        to such dividends. This subparagraph (O) is exempt from
17        the provisions of Section 250 of this Act;
18            (P) An amount equal to any contribution made to a
19        job training project established pursuant to the Tax
20        Increment Allocation Redevelopment Act;
21            (Q) An amount equal to the amount of the deduction
22        used to compute the federal income tax credit for
23        restoration of substantial amounts held under claim of
24        right for the taxable year pursuant to Section 1341 of
25        the Internal Revenue Code;
26            (R) On and after July 20, 1999, in the case of an

 

 

HB3923- 45 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 46 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 47 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 48 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 49 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 50 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 51 -LRB099 09700 HLH 29909 b

1            (Z) The difference between the nondeductible
2        controlled foreign corporation dividends under Section
3        965(e)(3) of the Internal Revenue Code over the taxable
4        income of the taxpayer, computed without regard to
5        Section 965(e)(2)(A) of the Internal Revenue Code, and
6        without regard to any net operating loss deduction.
7        This subparagraph (Z) is exempt from the provisions of
8        Section 250; and .
9            (AA) For taxable years beginning on or after
10        January 1, 2016, an amount equal to the costs incurred
11        by the taxpayer as an employer under Sections 2, 3, and
12        4 of the Workers' Compensation Act that are
13        attributable to employees of the taxpayer who are
14        employed at a location in a county with high
15        unemployment; for the purposes of this subparagraph, a
16        "county with high unemployment" means a county that had
17        an unemployment rate for the entire taxable year that
18        exceeds the average unemployment rate for the State for
19        the entire taxable year by at least 2%, as reported by
20        the Department of Employment Security; this
21        subparagraph (AA) is exempt from the provisions of
22        Section 250.
23        (3) Special rule. For purposes of paragraph (2) (A),
24    "gross income" in the case of a life insurance company, for
25    tax years ending on and after December 31, 1994, and prior
26    to December 31, 2011, shall mean the gross investment

 

 

HB3923- 52 -LRB099 09700 HLH 29909 b

1    income for the taxable year and, for tax years ending on or
2    after December 31, 2011, shall mean all amounts included in
3    life insurance gross income under Section 803(a)(3) of the
4    Internal Revenue Code.
 
5    (c) Trusts and estates.
6        (1) In general. In the case of a trust or estate, base
7    income means an amount equal to the taxpayer's taxable
8    income for the taxable year as modified by paragraph (2).
9        (2) Modifications. Subject to the provisions of
10    paragraph (3), the taxable income referred to in paragraph
11    (1) shall be modified by adding thereto the sum of the
12    following amounts:
13            (A) An amount equal to all amounts paid or accrued
14        to the taxpayer as interest or dividends during the
15        taxable year to the extent excluded from gross income
16        in the computation of taxable income;
17            (B) In the case of (i) an estate, $600; (ii) a
18        trust which, under its governing instrument, is
19        required to distribute all of its income currently,
20        $300; and (iii) any other trust, $100, but in each such
21        case, only to the extent such amount was deducted in
22        the computation of taxable income;
23            (C) An amount equal to the amount of tax imposed by
24        this Act to the extent deducted from gross income in
25        the computation of taxable income for the taxable year;

 

 

HB3923- 53 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 54 -LRB099 09700 HLH 29909 b

1            such carryback or carryforward;
2            For taxable years in which there is a net operating
3        loss carryback or carryforward from more than one other
4        taxable year ending prior to December 31, 1986, the
5        addition modification provided in this subparagraph
6        (E) shall be the sum of the amounts computed
7        independently under the preceding provisions of this
8        subparagraph (E) for each such taxable year;
9            (F) For taxable years ending on or after January 1,
10        1989, an amount equal to the tax deducted pursuant to
11        Section 164 of the Internal Revenue Code if the trust
12        or estate is claiming the same tax for purposes of the
13        Illinois foreign tax credit under Section 601 of this
14        Act;
15            (G) An amount equal to the amount of the capital
16        gain deduction allowable under the Internal Revenue
17        Code, to the extent deducted from gross income in the
18        computation of taxable income;
19            (G-5) For taxable years ending after December 31,
20        1997, an amount equal to any eligible remediation costs
21        that the trust or estate deducted in computing adjusted
22        gross income and for which the trust or estate claims a
23        credit under subsection (l) of Section 201;
24            (G-10) For taxable years 2001 and thereafter, an
25        amount equal to the bonus depreciation deduction taken
26        on the taxpayer's federal income tax return for the

 

 

HB3923- 55 -LRB099 09700 HLH 29909 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            (H) An amount equal to all amounts included in such
2        total pursuant to the provisions of Sections 402(a),
3        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
4        Internal Revenue Code or included in such total as
5        distributions under the provisions of any retirement
6        or disability plan for employees of any governmental
7        agency or unit, or retirement payments to retired
8        partners, which payments are excluded in computing net
9        earnings from self employment by Section 1402 of the
10        Internal Revenue Code and regulations adopted pursuant
11        thereto;
12            (I) The valuation limitation amount;
13            (J) An amount equal to the amount of any tax
14        imposed by this Act which was refunded to the taxpayer
15        and included in such total for the taxable year;
16            (K) An amount equal to all amounts included in
17        taxable income as modified by subparagraphs (A), (B),
18        (C), (D), (E), (F) and (G) which are exempt from
19        taxation by this State either by reason of its statutes
20        or Constitution or by reason of the Constitution,
21        treaties or statutes of the United States; provided
22        that, in the case of any statute of this State that
23        exempts income derived from bonds or other obligations
24        from the tax imposed under this Act, the amount
25        exempted shall be the interest net of bond premium
26        amortization;

 

 

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

 

 

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1        Increment Allocation Redevelopment Act;
2            (O) An amount equal to those dividends included in
3        such total that were paid by a corporation that
4        conducts business operations in a federally designated
5        Foreign Trade Zone or Sub-Zone and that is designated a
6        High Impact Business located in Illinois; provided
7        that dividends eligible for the deduction provided in
8        subparagraph (M) of paragraph (2) of this subsection
9        shall not be eligible for the deduction provided under
10        this subparagraph (O);
11            (P) An amount equal to the amount of the deduction
12        used to compute the federal income tax credit for
13        restoration of substantial amounts held under claim of
14        right for the taxable year pursuant to Section 1341 of
15        the Internal Revenue Code;
16            (Q) For taxable year 1999 and thereafter, an amount
17        equal to the amount of any (i) distributions, to the
18        extent includible in gross income for federal income
19        tax purposes, made to the taxpayer because of his or
20        her status as a victim of persecution for racial or
21        religious reasons by Nazi Germany or any other Axis
22        regime or as an heir of the victim and (ii) items of
23        income, to the extent includible in gross income for
24        federal income tax purposes, attributable to, derived
25        from or in any way related to assets stolen from,
26        hidden from, or otherwise lost to a victim of

 

 

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

 

 

HB3923- 67 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 68 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 69 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 70 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 71 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 72 -LRB099 09700 HLH 29909 b

1        insurer to which the premiums were paid must add back
2        to income the amount subtracted by the taxpayer
3        pursuant to this subparagraph (Y). This subparagraph
4        (Y) is exempt from the provisions of Section 250; and .
5            (Z) For taxable years beginning on or after January
6        1, 2016, an amount equal to the costs incurred by the
7        taxpayer as an employer under Sections 2, 3, and 4 of
8        the Workers' Compensation Act that are attributable to
9        employees of the taxpayer who are employed at a
10        location in a county with high unemployment; for the
11        purposes of this subparagraph, a "county with high
12        unemployment" means a county that had an unemployment
13        rate for the entire taxable year that exceeds the
14        average unemployment rate for the State for the entire
15        taxable year by at least 2%, as reported by the
16        Department of Employment Security; this subparagraph
17        (Z) is exempt from the provisions of Section 250.
18        (3) Limitation. The amount of any modification
19    otherwise required under this subsection shall, under
20    regulations prescribed by the Department, be adjusted by
21    any amounts included therein which were properly paid,
22    credited, or required to be distributed, or permanently set
23    aside for charitable purposes pursuant to Internal Revenue
24    Code Section 642(c) during the taxable year.
 
25    (d) Partnerships.

 

 

HB3923- 73 -LRB099 09700 HLH 29909 b

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

 

 

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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 (D-5), then
4        an amount equal to the aggregate amount of the
5        deductions taken in all taxable years under
6        subparagraph (O) 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 (O), 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            (D-7) 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

 

 

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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

 

 

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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).

 

 

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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; and
10            (D-8) 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

 

 

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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(d)(2)(D-7) 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

 

 

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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

 

 

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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            (D-9) For taxable years ending on or after December
19        31, 2008, an amount equal to the amount of insurance
20        premium expenses and costs otherwise allowed as a
21        deduction in computing base income, and that were paid,
22        accrued, or incurred, directly or indirectly, to a
23        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

 

 

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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(d)(2)(D-7) or
17        Section 203(d)(2)(D-8) of this Act;
18            (D-10) An amount equal to the credit allowable to
19        the taxpayer under Section 218(a) of this Act,
20        determined without regard to Section 218(c) of this
21        Act;
22    and by deducting from the total so obtained the following
23    amounts:
24            (E) The valuation limitation amount;
25            (F) An amount equal to the amount of any tax
26        imposed by this Act which was refunded to the taxpayer

 

 

HB3923- 82 -LRB099 09700 HLH 29909 b

1        and included in such total for the taxable year;
2            (G) An amount equal to all amounts included in
3        taxable income as modified by subparagraphs (A), (B),
4        (C) and (D) which are exempt from taxation by this
5        State either by reason of its statutes or Constitution
6        or by reason of the Constitution, treaties or statutes
7        of the United States; provided that, in the case of any
8        statute of this State that exempts income derived from
9        bonds or other obligations from the tax imposed under
10        this Act, the amount exempted shall be the interest net
11        of bond premium amortization;
12            (H) Any income of the partnership which
13        constitutes personal service income as defined in
14        Section 1348 (b) (1) of the Internal Revenue Code (as
15        in effect December 31, 1981) or a reasonable allowance
16        for compensation paid or accrued for services rendered
17        by partners to the partnership, whichever is greater;
18        this subparagraph (H) is exempt from the provisions of
19        Section 250;
20            (I) An amount equal to all amounts of income
21        distributable to an entity subject to the Personal
22        Property Tax Replacement Income Tax imposed by
23        subsections (c) and (d) of Section 201 of this Act
24        including amounts distributable to organizations
25        exempt from federal income tax by reason of Section
26        501(a) of the Internal Revenue Code; this subparagraph

 

 

HB3923- 83 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 84 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 85 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 86 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 87 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 88 -LRB099 09700 HLH 29909 b

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

 

 

HB3923- 89 -LRB099 09700 HLH 29909 b

1        that part of a reimbursement received from the
2        insurance company equal to the amount of the expense or
3        loss (including expenses incurred by the insurance
4        company) that would have been taken into account as a
5        deduction for federal income tax purposes if the
6        expense or loss had been uninsured. If a taxpayer makes
7        the election provided for by this subparagraph (T), the
8        insurer to which the premiums were paid must add back
9        to income the amount subtracted by the taxpayer
10        pursuant to this subparagraph (T). This subparagraph
11        (T) is exempt from the provisions of Section 250; and .
12            (U) For taxable years beginning on or after January
13        1, 2016, an amount equal to the costs incurred by the
14        taxpayer as an employer under Sections 2, 3, and 4 of
15        the Workers' Compensation Act that are attributable to
16        employees of the taxpayer who are employed at a
17        location in a county with high unemployment; for the
18        purposes of this subparagraph, a "county with high
19        unemployment" means a county that had an unemployment
20        rate for the entire taxable year that exceeds the
21        average unemployment rate for the State for the entire
22        taxable year by at least 2%, as reported by the
23        Department of Employment Security; this subparagraph
24        (U) is exempt from the provisions of Section 250.
 
25    (e) Gross income; adjusted gross income; taxable income.

 

 

HB3923- 90 -LRB099 09700 HLH 29909 b

1        (1) In general. Subject to the provisions of paragraph
2    (2) and subsection (b) (3), for purposes of this Section
3    and Section 803(e), a taxpayer's gross income, adjusted
4    gross income, or taxable income for the taxable year shall
5    mean the amount of gross income, adjusted gross income or
6    taxable income properly reportable for federal income tax
7    purposes for the taxable year under the provisions of the
8    Internal Revenue Code. Taxable income may be less than
9    zero. However, for taxable years ending on or after
10    December 31, 1986, net operating loss carryforwards from
11    taxable years ending prior to December 31, 1986, may not
12    exceed the sum of federal taxable income for the taxable
13    year before net operating loss deduction, plus the excess
14    of addition modifications over subtraction modifications
15    for the taxable year. For taxable years ending prior to
16    December 31, 1986, taxable income may never be an amount in
17    excess of the net operating loss for the taxable year as
18    defined in subsections (c) and (d) of Section 172 of the
19    Internal Revenue Code, provided that when taxable income of
20    a corporation (other than a Subchapter S corporation),
21    trust, or estate is less than zero and addition
22    modifications, other than those provided by subparagraph
23    (E) of paragraph (2) of subsection (b) for corporations or
24    subparagraph (E) of paragraph (2) of subsection (c) for
25    trusts and estates, exceed subtraction modifications, an
26    addition modification must be made under those

 

 

HB3923- 91 -LRB099 09700 HLH 29909 b

1    subparagraphs for any other taxable year to which the
2    taxable income less than zero (net operating loss) is
3    applied under Section 172 of the Internal Revenue Code or
4    under subparagraph (E) of paragraph (2) of this subsection
5    (e) applied in conjunction with Section 172 of the Internal
6    Revenue Code.
7        (2) Special rule. For purposes of paragraph (1) of this
8    subsection, the taxable income properly reportable for
9    federal income tax purposes shall mean:
10            (A) Certain life insurance companies. In the case
11        of a life insurance company subject to the tax imposed
12        by Section 801 of the Internal Revenue Code, life
13        insurance company taxable income, plus the amount of
14        distribution from pre-1984 policyholder surplus
15        accounts as calculated under Section 815a of the
16        Internal Revenue Code;
17            (B) Certain other insurance companies. In the case
18        of mutual insurance companies subject to the tax
19        imposed by Section 831 of the Internal Revenue Code,
20        insurance company taxable income;
21            (C) Regulated investment companies. In the case of
22        a regulated investment company subject to the tax
23        imposed by Section 852 of the Internal Revenue Code,
24        investment company taxable income;
25            (D) Real estate investment trusts. In the case of a
26        real estate investment trust subject to the tax imposed

 

 

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1        by Section 857 of the Internal Revenue Code, real
2        estate investment trust taxable income;
3            (E) Consolidated corporations. In the case of a
4        corporation which is a member of an affiliated group of
5        corporations filing a consolidated income tax return
6        for the taxable year for federal income tax purposes,
7        taxable income determined as if such corporation had
8        filed a separate return for federal income tax purposes
9        for the taxable year and each preceding taxable year
10        for which it was a member of an affiliated group. For
11        purposes of this subparagraph, the taxpayer's separate
12        taxable income shall be determined as if the election
13        provided by Section 243(b) (2) of the Internal Revenue
14        Code had been in effect for all such years;
15            (F) Cooperatives. In the case of a cooperative
16        corporation or association, the taxable income of such
17        organization determined in accordance with the
18        provisions of Section 1381 through 1388 of the Internal
19        Revenue Code, but without regard to the prohibition
20        against offsetting losses from patronage activities
21        against income from nonpatronage activities; except
22        that a cooperative corporation or association may make
23        an election to follow its federal income tax treatment
24        of patronage losses and nonpatronage losses. In the
25        event such election is made, such losses shall be
26        computed and carried over in a manner consistent with

 

 

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1        subsection (a) of Section 207 of this Act and
2        apportioned by the apportionment factor reported by
3        the cooperative on its Illinois income tax return filed
4        for the taxable year in which the losses are incurred.
5        The election shall be effective for all taxable years
6        with original returns due on or after the date of the
7        election. In addition, the cooperative may file an
8        amended return or returns, as allowed under this Act,
9        to provide that the election shall be effective for
10        losses incurred or carried forward for taxable years
11        occurring prior to the date of the election. Once made,
12        the election may only be revoked upon approval of the
13        Director. The Department shall adopt rules setting
14        forth requirements for documenting the elections and
15        any resulting Illinois net loss and the standards to be
16        used by the Director in evaluating requests to revoke
17        elections. Public Act 96-932 is declaratory of
18        existing law;
19            (G) Subchapter S corporations. In the case of: (i)
20        a Subchapter S corporation for which there is in effect
21        an election for the taxable year under Section 1362 of
22        the Internal Revenue Code, the taxable income of such
23        corporation determined in accordance with Section
24        1363(b) of the Internal Revenue Code, except that
25        taxable income shall take into account those items
26        which are required by Section 1363(b)(1) of the

 

 

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

 

 

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1    using the greater of the apportionment fraction computed
2    for the business under Section 304 of this Act for the
3    taxable year or the average of the apportionment fractions
4    computed for the business under Section 304 of this Act for
5    the taxable year and for the 2 immediately preceding
6    taxable years.
 
7    (f) Valuation limitation amount.
8        (1) In general. The valuation limitation amount
9    referred to in subsections (a) (2) (G), (c) (2) (I) and
10    (d)(2) (E) is an amount equal to:
11            (A) The sum of the pre-August 1, 1969 appreciation
12        amounts (to the extent consisting of gain reportable
13        under the provisions of Section 1245 or 1250 of the
14        Internal Revenue Code) for all property in respect of
15        which such gain was reported for the taxable year; plus
16            (B) The lesser of (i) the sum of the pre-August 1,
17        1969 appreciation amounts (to the extent consisting of
18        capital gain) for all property in respect of which such
19        gain was reported for federal income tax purposes for
20        the taxable year, or (ii) the net capital gain for the
21        taxable year, reduced in either case by any amount of
22        such gain included in the amount determined under
23        subsection (a) (2) (F) or (c) (2) (H).
24        (2) Pre-August 1, 1969 appreciation amount.
25            (A) If the fair market value of property referred

 

 

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1        to in paragraph (1) was readily ascertainable on August
2        1, 1969, the pre-August 1, 1969 appreciation amount for
3        such property is the lesser of (i) the excess of such
4        fair market value over the taxpayer's basis (for
5        determining gain) for such property on that date
6        (determined under the Internal Revenue Code as in
7        effect on that date), or (ii) the total gain realized
8        and reportable for federal income tax purposes in
9        respect of the sale, exchange or other disposition of
10        such property.
11            (B) If the fair market value of property referred
12        to in paragraph (1) was not readily ascertainable on
13        August 1, 1969, the pre-August 1, 1969 appreciation
14        amount for such property is that amount which bears the
15        same ratio to the total gain reported in respect of the
16        property for federal income tax purposes for the
17        taxable year, as the number of full calendar months in
18        that part of the taxpayer's holding period for the
19        property ending July 31, 1969 bears to the number of
20        full calendar months in the taxpayer's entire holding
21        period for the property.
22            (C) The Department shall prescribe such
23        regulations as may be necessary to carry out the
24        purposes of this paragraph.
 
25    (g) Double deductions. Unless specifically provided

 

 

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1otherwise, nothing in this Section shall permit the same item
2to be deducted more than once.
 
3    (h) Legislative intention. Except as expressly provided by
4this Section there shall be no modifications or limitations on
5the amounts of income, gain, loss or deduction taken into
6account in determining gross income, adjusted gross income or
7taxable income for federal income tax purposes for the taxable
8year, or in the amount of such items entering into the
9computation of base income and net income under this Act for
10such taxable year, whether in respect of property values as of
11August 1, 1969 or otherwise.
12(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
13eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1496-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
156-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
16eff. 8-23-11; 97-905, eff. 8-7-12.)
 
17    (35 ILCS 5/211)
18    Sec. 211. Economic Development for a Growing Economy Tax
19Credit.
20    (a) For tax years beginning on or after January 1, 1999, a
21Taxpayer who has entered into an Agreement under the Economic
22Development for a Growing Economy Tax Credit Act is entitled to
23a credit against the taxes imposed under subsections (a) and
24(b) of Section 201 of this Act in an amount to be determined in

 

 

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1the Agreement. If the Taxpayer is a partnership or Subchapter S
2corporation, the credit shall be allowed to the partners or
3shareholders in accordance with the determination of income and
4distributive share of income under Sections 702 and 704 and
5subchapter S of the Internal Revenue Code. The Department, in
6cooperation with the Department of Commerce and Economic
7Opportunity, shall prescribe rules to enforce and administer
8the provisions of this Section. This Section is exempt from the
9provisions of Section 250 of this Act.
10    The credit shall be subject to the conditions set forth in
11the Agreement and the following limitations:
12        (1) The tax credit shall not exceed the Incremental
13    Income Tax (as defined in Section 5-5 of the Economic
14    Development for a Growing Economy Tax Credit Act) with
15    respect to the project.
16        (2) The amount of the credit allowed during the tax
17    year plus the sum of all amounts allowed in prior years
18    shall not exceed 100% of the aggregate amount expended by
19    the Taxpayer during all prior tax years on approved costs
20    defined by Agreement.
21        (3) The amount of the credit shall be determined on an
22    annual basis. Except as applied in a carryover year
23    pursuant to Section 211(4) of this Act, the credit may not
24    be applied against any State income tax liability in more
25    than 10 taxable years; provided, however, that (i) an
26    eligible business certified by the Department of Commerce

 

 

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1    and Economic Opportunity under the Corporate Headquarters
2    Relocation Act may not apply the credit against any of its
3    State income tax liability in more than 15 taxable years
4    and (ii) credits allowed to that eligible business are
5    subject to the conditions and requirements set forth in
6    Sections 5-35 and 5-45 of the Economic Development for a
7    Growing Economy Tax Credit Act.
8        (4) The credit may not exceed the amount of taxes
9    imposed pursuant to subsections (a) and (b) of Section 201
10    of this Act. Any credit that is unused in the year the
11    credit is computed may be carried forward and applied to
12    the tax liability of the 5 taxable years following the
13    excess credit year. The credit shall be applied to the
14    earliest year for which there is a tax liability. If there
15    are credits from more than one tax year that are available
16    to offset a liability, the earlier credit shall be applied
17    first.
18        (5) No credit shall be allowed with respect to any
19    Agreement for any taxable year ending after the
20    Noncompliance Date. Upon receiving notification by the
21    Department of Commerce and Economic Opportunity of the
22    noncompliance of a Taxpayer with an Agreement, the
23    Department shall notify the Taxpayer that no credit is
24    allowed with respect to that Agreement for any taxable year
25    ending after the Noncompliance Date, as stated in such
26    notification. If any credit has been allowed with respect

 

 

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1    to an Agreement for a taxable year ending after the
2    Noncompliance Date for that Agreement, any refund paid to
3    the Taxpayer for that taxable year shall, to the extent of
4    that credit allowed, be an erroneous refund within the
5    meaning of Section 912 of this Act.
6        (6) For purposes of this Section, the terms
7    "Agreement", "Incremental Income Tax", and "Noncompliance
8    Date" have the same meaning as when used in the Economic
9    Development for a Growing Economy Tax Credit Act.
10    (b) For taxable years beginning on or after January 1,
112016, a taxpayer who (i) is not otherwise entitled to a tax
12credit under the Economic Development for a Growing Economy Tax
13Credit Act and (ii) employs at least 5 new employees, as "new
14employee" is defined in Section 5-5 of the Economic Development
15for a Growing Economy Tax Credit Act, at a project location in
16a county with high unemployment is entitled to a credit against
17the taxes imposed under subsections (a) and (b) of Section 201
18of this Act in an amount determined by multiplying the rate of
19tax set forth in subsection (b) of Section 201 for that
20taxpayer by the average wage paid by the taxpayer to those new
21employees, as certified by the Department of Commerce and
22Economic Opportunity, and then multiplying the result by the
23number of those new employees, as certified by the Department
24of Commerce and Economic Opportunity. The Department of
25Commerce and Economic Opportunity shall certify both the
26eligibility of the taxpayer to receive credits under this

 

 

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1Section and the wage and employment information set forth in
2this subsection (b).
3    If the Taxpayer is a partnership or Subchapter S
4corporation, the credit shall be allowed to the partners or
5shareholders in accordance with the determination of income and
6distributive share of income under Sections 702 and 704 and
7subchapter S of the Internal Revenue Code.
8    The credit may not exceed the amount of taxes imposed
9pursuant to subsections (a) and (b) of Section 201 of this Act.
10Any credit that is unused in the year the credit is computed
11may be carried forward and applied to the tax liability of the
125 taxable years following the excess credit year. The credit
13shall be applied to the earliest year for which there is a tax
14liability. If there are credits from more than one tax year
15that are available to offset a liability, the earlier credit
16shall be applied first.
17    For the purposes of this subsection (b), a "county with
18high unemployment" means a county that had an unemployment rate
19for the entire taxable year that exceeds the average
20unemployment rate for the State for the entire taxable year by
21at least 2%, as reported by the Department of Employment
22Security.
23    This subsection (b) is exempt from the provisions of
24Section 250 of this Act.
25(Source: P.A. 94-793, eff. 5-19-06.)