100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3677

 

Introduced , by Rep. Brandon W. Phelps

 

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

    Amends the Illinois Income Tax Act. Creates a deduction in the amount of $5,000 for taxpayers whose adjusted gross income for the taxable year is less than $100,000. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3677LRB100 05276 HLH 20047 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB3677- 17 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 18 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 19 -LRB100 05276 HLH 20047 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

 

 

HB3677- 20 -LRB100 05276 HLH 20047 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

 

 

HB3677- 21 -LRB100 05276 HLH 20047 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

 

 

HB3677- 22 -LRB100 05276 HLH 20047 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

 

 

HB3677- 23 -LRB100 05276 HLH 20047 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

 

 

HB3677- 24 -LRB100 05276 HLH 20047 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;

 

 

HB3677- 25 -LRB100 05276 HLH 20047 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

 

 

HB3677- 26 -LRB100 05276 HLH 20047 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

 

 

HB3677- 27 -LRB100 05276 HLH 20047 b

1        insurance company equal to the amount of the expense or
2        loss (including expenses incurred by the insurance
3        company) that would have been taken into account as a
4        deduction for federal income tax purposes if the
5        expense or loss had been uninsured. If a taxpayer makes
6        the election provided for by this subparagraph (GG),
7        the insurer to which the premiums were paid must add
8        back to income the amount subtracted by the taxpayer
9        pursuant to this subparagraph (GG). This subparagraph
10        (GG) is exempt from the provisions of Section 250; and
11        .
12            (HH) For taxable years beginning on or after
13        January 1, 2017 and beginning prior to January 1, 2022,
14        for each taxpayer whose adjusted gross income is less
15        than $100,000, $5,000.
 
16    (b) Corporations.
17        (1) In general. In the case of a corporation, base
18    income means an amount equal to the taxpayer's taxable
19    income for the taxable year as modified by paragraph (2).
20        (2) Modifications. The taxable income referred to in
21    paragraph (1) shall be modified by adding thereto the sum
22    of the following amounts:
23            (A) An amount equal to all amounts paid or accrued
24        to the taxpayer as interest and all distributions
25        received from regulated investment companies during

 

 

HB3677- 28 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 29 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 30 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 31 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 32 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 33 -LRB100 05276 HLH 20047 b

1            not federal or Illinois tax avoidance; or
2                (iv) an item of interest paid, accrued, or
3            incurred, directly or indirectly, to a person if
4            the taxpayer establishes by clear and convincing
5            evidence that the adjustments are unreasonable; or
6            if the taxpayer and the Director agree in writing
7            to the application or use of an alternative method
8            of apportionment under Section 304(f).
9                Nothing in this subsection shall preclude the
10            Director from making any other adjustment
11            otherwise allowed under Section 404 of this Act for
12            any tax year beginning after the effective date of
13            this amendment provided such adjustment is made
14            pursuant to regulation adopted by the Department
15            and such regulations provide methods and standards
16            by which the Department will utilize its authority
17            under Section 404 of this Act;
18            (E-13) An amount equal to the amount of intangible
19        expenses and costs otherwise allowed as a deduction in
20        computing base income, and that were paid, accrued, or
21        incurred, directly or indirectly, (i) for taxable
22        years ending on or after December 31, 2004, to a
23        foreign person who would be a member of the same
24        unitary business group but for the fact that the
25        foreign person's business activity outside the United
26        States is 80% or more of that person's total business

 

 

HB3677- 34 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 35 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 36 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 37 -LRB100 05276 HLH 20047 b

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

 

 

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1        31, 2008, any deduction for dividends paid by a captive
2        real estate investment trust that is allowed to a real
3        estate investment trust under Section 857(b)(2)(B) of
4        the Internal Revenue Code for dividends paid;
5            (E-16) An amount equal to the credit allowable to
6        the taxpayer under Section 218(a) of this Act,
7        determined without regard to Section 218(c) of this
8        Act;
9    and by deducting from the total so obtained the sum of the
10    following amounts:
11            (F) An amount equal to the amount of any tax
12        imposed by this Act which was refunded to the taxpayer
13        and included in such total for the taxable year;
14            (G) An amount equal to any amount included in such
15        total under Section 78 of the Internal Revenue Code;
16            (H) In the case of a regulated investment company,
17        an amount equal to the amount of exempt interest
18        dividends as defined in subsection (b) (5) of Section
19        852 of the Internal Revenue Code, paid to shareholders
20        for the taxable year;
21            (I) With the exception of any amounts subtracted
22        under subparagraph (J), an amount equal to the sum of
23        all amounts disallowed as deductions by (i) Sections
24        171(a) (2), and 265(a)(2) and amounts disallowed as
25        interest expense by Section 291(a)(3) of the Internal
26        Revenue Code, and all amounts of expenses allocable to

 

 

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1        interest and disallowed as deductions by Section
2        265(a)(1) of the Internal Revenue Code; and (ii) for
3        taxable years ending on or after August 13, 1999,
4        Sections 171(a)(2), 265, 280C, 291(a)(3), and
5        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
6        for tax years ending on or after December 31, 2011,
7        amounts disallowed as deductions by Section 45G(e)(3)
8        of the Internal Revenue Code and, for taxable years
9        ending on or after December 31, 2008, any amount
10        included in gross income under Section 87 of the
11        Internal Revenue Code and the policyholders' share of
12        tax-exempt interest of a life insurance company under
13        Section 807(a)(2)(B) of the Internal Revenue Code (in
14        the case of a life insurance company with gross income
15        from a decrease in reserves for the tax year) or
16        Section 807(b)(1)(B) of the Internal Revenue Code (in
17        the case of a life insurance company allowed a
18        deduction for an increase in reserves for the tax
19        year); the provisions of this subparagraph are exempt
20        from the provisions of Section 250;
21            (J) An amount equal to all amounts included in such
22        total which are exempt from taxation by this State
23        either by reason of its statutes or Constitution or by
24        reason of the Constitution, treaties or statutes of the
25        United States; provided that, in the case of any
26        statute of this State that exempts income derived from

 

 

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1        bonds or other obligations from the tax imposed under
2        this Act, the amount exempted shall be the interest net
3        of bond premium amortization;
4            (K) An amount equal to those dividends included in
5        such total which were paid by a corporation which
6        conducts business operations in a River Edge
7        Redevelopment Zone or zones created under the River
8        Edge Redevelopment Zone Act and conducts substantially
9        all of its operations in a River Edge Redevelopment
10        Zone or zones. This subparagraph (K) is exempt from the
11        provisions of Section 250;
12            (L) An amount equal to those dividends included in
13        such total that were paid by a corporation that
14        conducts business operations in a federally designated
15        Foreign Trade Zone or Sub-Zone and that is designated a
16        High Impact Business located in Illinois; provided
17        that dividends eligible for the deduction provided in
18        subparagraph (K) of paragraph 2 of this subsection
19        shall not be eligible for the deduction provided under
20        this subparagraph (L);
21            (M) For any taxpayer that is a financial
22        organization within the meaning of Section 304(c) of
23        this Act, an amount included in such total as interest
24        income from a loan or loans made by such taxpayer to a
25        borrower, to the extent that such a loan is secured by
26        property which is eligible for the River Edge

 

 

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

 

 

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1        the taxpayer and the borrower should be divided into
2        the basis of the Section 201(h) investment credit
3        property which secures the loan or loans, using for
4        this purpose the original basis of such property on the
5        date that it was placed in service in a federally
6        designated Foreign Trade Zone or Sub-Zone located in
7        Illinois. No taxpayer that is eligible for the
8        deduction provided in subparagraph (M) of paragraph
9        (2) of this subsection shall be eligible for the
10        deduction provided under this subparagraph (M-1). The
11        subtraction modification available to taxpayers in any
12        year under this subsection shall be that portion of the
13        total interest paid by the borrower with respect to
14        such loan attributable to the eligible property as
15        calculated under the previous sentence;
16            (N) Two times any contribution made during the
17        taxable year to a designated zone organization to the
18        extent that the contribution (i) qualifies as a
19        charitable contribution under subsection (c) of
20        Section 170 of the Internal Revenue Code and (ii) must,
21        by its terms, be used for a project approved by the
22        Department of Commerce and Economic Opportunity under
23        Section 11 of the Illinois Enterprise Zone Act or under
24        Section 10-10 of the River Edge Redevelopment Zone Act.
25        This subparagraph (N) is exempt from the provisions of
26        Section 250;

 

 

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1            (O) An amount equal to: (i) 85% for taxable years
2        ending on or before December 31, 1992, or, a percentage
3        equal to the percentage allowable under Section
4        243(a)(1) of the Internal Revenue Code of 1986 for
5        taxable years ending after December 31, 1992, of the
6        amount by which dividends included in taxable income
7        and received from a corporation that is not created or
8        organized under the laws of the United States or any
9        state or political subdivision thereof, including, for
10        taxable years ending on or after December 31, 1988,
11        dividends received or deemed received or paid or deemed
12        paid under Sections 951 through 965 of the Internal
13        Revenue Code, exceed the amount of the modification
14        provided under subparagraph (G) of paragraph (2) of
15        this subsection (b) which is related to such dividends,
16        and including, for taxable years ending on or after
17        December 31, 2008, dividends received from a captive
18        real estate investment trust; plus (ii) 100% of the
19        amount by which dividends, included in taxable income
20        and received, including, for taxable years ending on or
21        after December 31, 1988, dividends received or deemed
22        received or paid or deemed paid under Sections 951
23        through 964 of the Internal Revenue Code and including,
24        for taxable years ending on or after December 31, 2008,
25        dividends received from a captive real estate
26        investment trust, from any such corporation specified

 

 

HB3677- 44 -LRB100 05276 HLH 20047 b

1        in clause (i) that would but for the provisions of
2        Section 1504 (b) (3) of the Internal Revenue Code be
3        treated as a member of the affiliated group which
4        includes the dividend recipient, exceed the amount of
5        the modification provided under subparagraph (G) of
6        paragraph (2) of this subsection (b) which is related
7        to such dividends. This subparagraph (O) is exempt from
8        the provisions of Section 250 of this Act;
9            (P) An amount equal to any contribution made to a
10        job training project established pursuant to the Tax
11        Increment Allocation Redevelopment Act;
12            (Q) 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            (R) On and after July 20, 1999, in the case of an
18        attorney-in-fact with respect to whom an interinsurer
19        or a reciprocal insurer has made the election under
20        Section 835 of the Internal Revenue Code, 26 U.S.C.
21        835, an amount equal to the excess, if any, of the
22        amounts paid or incurred by that interinsurer or
23        reciprocal insurer in the taxable year to the
24        attorney-in-fact over the deduction allowed to that
25        interinsurer or reciprocal insurer with respect to the
26        attorney-in-fact under Section 835(b) of the Internal

 

 

HB3677- 45 -LRB100 05276 HLH 20047 b

1        Revenue Code for the taxable year; the provisions of
2        this subparagraph are exempt from the provisions of
3        Section 250;
4            (S) For taxable years ending on or after December
5        31, 1997, in the case of a Subchapter S corporation, an
6        amount equal to all amounts of income allocable to a
7        shareholder subject to the Personal Property Tax
8        Replacement Income Tax imposed by subsections (c) and
9        (d) of Section 201 of this Act, including amounts
10        allocable to organizations exempt from federal income
11        tax by reason of Section 501(a) of the Internal Revenue
12        Code. This subparagraph (S) is exempt from the
13        provisions of Section 250;
14            (T) For taxable years 2001 and thereafter, for the
15        taxable year in which the bonus depreciation deduction
16        is taken on the taxpayer's federal income tax return
17        under subsection (k) of Section 168 of the Internal
18        Revenue Code and for each applicable taxable year
19        thereafter, an amount equal to "x", where:
20                (1) "y" equals the amount of the depreciation
21            deduction taken for the taxable year on the
22            taxpayer's federal income tax return on property
23            for which the bonus depreciation deduction was
24            taken in any year under subsection (k) of Section
25            168 of the Internal Revenue Code, but not including
26            the bonus depreciation deduction;

 

 

HB3677- 46 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 47 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 48 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 49 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 50 -LRB100 05276 HLH 20047 b

1        person. This subparagraph (X) is exempt from the
2        provisions of Section 250;
3            (Y) For taxable years ending on or after December
4        31, 2011, in the case of a taxpayer who was required to
5        add back any insurance premiums under Section
6        203(b)(2)(E-14), such taxpayer may elect to subtract
7        that part of a reimbursement received from the
8        insurance company equal to the amount of the expense or
9        loss (including expenses incurred by the insurance
10        company) that would have been taken into account as a
11        deduction for federal income tax purposes if the
12        expense or loss had been uninsured. If a taxpayer makes
13        the election provided for by this subparagraph (Y), the
14        insurer to which the premiums were paid must add back
15        to income the amount subtracted by the taxpayer
16        pursuant to this subparagraph (Y). This subparagraph
17        (Y) is exempt from the provisions of Section 250; and
18            (Z) The difference between the nondeductible
19        controlled foreign corporation dividends under Section
20        965(e)(3) of the Internal Revenue Code over the taxable
21        income of the taxpayer, computed without regard to
22        Section 965(e)(2)(A) of the Internal Revenue Code, and
23        without regard to any net operating loss deduction.
24        This subparagraph (Z) is exempt from the provisions of
25        Section 250; and .
26            (AA) For taxable years beginning on or after

 

 

HB3677- 51 -LRB100 05276 HLH 20047 b

1        January 1, 2017 and beginning prior to January 1, 2022,
2        for each taxpayer whose adjusted gross income is less
3        than $100,000, $5,000.
4        (3) Special rule. For purposes of paragraph (2) (A),
5    "gross income" in the case of a life insurance company, for
6    tax years ending on and after December 31, 1994, and prior
7    to December 31, 2011, shall mean the gross investment
8    income for the taxable year and, for tax years ending on or
9    after December 31, 2011, shall mean all amounts included in
10    life insurance gross income under Section 803(a)(3) of the
11    Internal Revenue Code.
 
12    (c) Trusts and estates.
13        (1) In general. In the case of a trust or estate, base
14    income means an amount equal to the taxpayer's taxable
15    income for the taxable year as modified by paragraph (2).
16        (2) Modifications. Subject to the provisions of
17    paragraph (3), the taxable income referred to in paragraph
18    (1) shall be modified by adding thereto the sum of the
19    following amounts:
20            (A) An amount equal to all amounts paid or accrued
21        to the taxpayer as interest or dividends during the
22        taxable year to the extent excluded from gross income
23        in the computation of taxable income;
24            (B) In the case of (i) an estate, $600; (ii) a
25        trust which, under its governing instrument, is

 

 

HB3677- 52 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 53 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 54 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 55 -LRB100 05276 HLH 20047 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            under Section 404 of this Act;
2            (G-14) For taxable years ending on or after
3        December 31, 2008, an amount equal to the amount of
4        insurance premium expenses and costs otherwise allowed
5        as a deduction in computing base income, and that were
6        paid, accrued, or incurred, directly or indirectly, to
7        a person who would be a member of the same unitary
8        business group but for the fact that the person is
9        prohibited under Section 1501(a)(27) from being
10        included in the unitary business group because he or
11        she is ordinarily required to apportion business
12        income under different subsections of Section 304. The
13        addition modification required by this subparagraph
14        shall be reduced to the extent that dividends were
15        included in base income of the unitary group for the
16        same taxable year and received by the taxpayer or by a
17        member of the taxpayer's unitary business group
18        (including amounts included in gross income under
19        Sections 951 through 964 of the Internal Revenue Code
20        and amounts included in gross income under Section 78
21        of the Internal Revenue Code) with respect to the stock
22        of the same person to whom the premiums and costs were
23        directly or indirectly paid, incurred, or accrued. The
24        preceding sentence does not apply to the extent that
25        the same dividends caused a reduction to the addition
26        modification required under Section 203(c)(2)(G-12) or

 

 

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1        Section 203(c)(2)(G-13) of this Act;
2            (G-15) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6    and by deducting from the total so obtained the sum of the
7    following amounts:
8            (H) An amount equal to all amounts included in such
9        total pursuant to the provisions of Sections 402(a),
10        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
11        Internal Revenue Code or included in such total as
12        distributions under the provisions of any retirement
13        or disability plan for employees of any governmental
14        agency or unit, or retirement payments to retired
15        partners, which payments are excluded in computing net
16        earnings from self employment by Section 1402 of the
17        Internal Revenue Code and regulations adopted pursuant
18        thereto;
19            (I) The valuation limitation amount;
20            (J) 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            (K) An amount equal to all amounts included in
24        taxable income as modified by subparagraphs (A), (B),
25        (C), (D), (E), (F) and (G) which are exempt from
26        taxation by this State either by reason of its statutes

 

 

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1        or Constitution or by reason of the Constitution,
2        treaties or statutes of the United States; provided
3        that, in the case of any statute of this State that
4        exempts income derived from bonds or other obligations
5        from the tax imposed under this Act, the amount
6        exempted shall be the interest net of bond premium
7        amortization;
8            (L) With the exception of any amounts subtracted
9        under subparagraph (K), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
12        and all amounts of expenses allocable to interest and
13        disallowed as deductions by Section 265(1) of the
14        Internal Revenue Code; and (ii) for taxable years
15        ending on or after August 13, 1999, Sections 171(a)(2),
16        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
17        Code, plus, (iii) for taxable years ending on or after
18        December 31, 2011, Section 45G(e)(3) of the Internal
19        Revenue Code and, for taxable years ending on or after
20        December 31, 2008, any amount included in gross income
21        under Section 87 of the Internal Revenue Code; the
22        provisions of this subparagraph are exempt from the
23        provisions of Section 250;
24            (M) An amount equal to those dividends included in
25        such total which were paid by a corporation which
26        conducts business operations in a River Edge

 

 

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1        Redevelopment Zone or zones created under the River
2        Edge Redevelopment Zone Act and conducts substantially
3        all of its operations in a River Edge Redevelopment
4        Zone or zones. This subparagraph (M) is exempt from the
5        provisions of Section 250;
6            (N) An amount equal to any contribution made to a
7        job training project established pursuant to the Tax
8        Increment Allocation Redevelopment Act;
9            (O) An amount equal to those dividends included in
10        such total that were paid by a corporation that
11        conducts business operations in a federally designated
12        Foreign Trade Zone or Sub-Zone and that is designated a
13        High Impact Business located in Illinois; provided
14        that dividends eligible for the deduction provided in
15        subparagraph (M) of paragraph (2) of this subsection
16        shall not be eligible for the deduction provided under
17        this subparagraph (O);
18            (P) An amount equal to the amount of the deduction
19        used to compute the federal income tax credit for
20        restoration of substantial amounts held under claim of
21        right for the taxable year pursuant to Section 1341 of
22        the Internal Revenue Code;
23            (Q) For taxable year 1999 and thereafter, an amount
24        equal to the amount of any (i) distributions, to the
25        extent includible in gross income for federal income
26        tax purposes, made to the taxpayer because of his or

 

 

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1        her status as a victim of persecution for racial or
2        religious reasons by Nazi Germany or any other Axis
3        regime or as an heir of the victim and (ii) items of
4        income, to the extent includible in gross income for
5        federal income tax purposes, attributable to, derived
6        from or in any way related to assets stolen from,
7        hidden from, or otherwise lost to a victim of
8        persecution for racial or religious reasons by Nazi
9        Germany or any other Axis regime immediately prior to,
10        during, and immediately after World War II, including,
11        but not limited to, interest on the proceeds receivable
12        as insurance under policies issued to a victim of
13        persecution for racial or religious reasons by Nazi
14        Germany or any other Axis regime by European insurance
15        companies immediately prior to and during World War II;
16        provided, however, this subtraction from federal
17        adjusted gross income does not apply to assets acquired
18        with such assets or with the proceeds from the sale of
19        such assets; provided, further, this paragraph shall
20        only apply to a taxpayer who was the first recipient of
21        such assets after their recovery and who is a victim of
22        persecution for racial or religious reasons by Nazi
23        Germany or any other Axis regime or as an heir of the
24        victim. The amount of and the eligibility for any
25        public assistance, benefit, or similar entitlement is
26        not affected by the inclusion of items (i) and (ii) of

 

 

HB3677- 66 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 67 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 68 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 69 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 70 -LRB100 05276 HLH 20047 b

1        under Section 1501(a)(27) from being included in the
2        unitary business group because he or she is ordinarily
3        required to apportion business income under different
4        subsections of Section 304, but not to exceed the
5        addition modification required to be made for the same
6        taxable year under Section 203(c)(2)(G-13) for
7        intangible expenses and costs paid, accrued, or
8        incurred, directly or indirectly, to the same foreign
9        person. This subparagraph (V) is exempt from the
10        provisions of Section 250;
11            (W) in the case of an estate, an amount equal to
12        all amounts included in such total pursuant to the
13        provisions of Section 111 of the Internal Revenue Code
14        as a recovery of items previously deducted by the
15        decedent from adjusted gross income in the computation
16        of taxable income. This subparagraph (W) is exempt from
17        Section 250;
18            (X) an amount equal to the refund included in such
19        total of any tax deducted for federal income tax
20        purposes, to the extent that deduction was added back
21        under subparagraph (F). This subparagraph (X) is
22        exempt from the provisions of Section 250; and
23            (Y) 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(c)(2)(G-14), such taxpayer may elect to subtract

 

 

HB3677- 71 -LRB100 05276 HLH 20047 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 (Y), 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 (Y). This subparagraph
11        (Y) is exempt from the provisions of Section 250; and .
12            (Z) For taxable years beginning on or after January
13        1, 2017 and beginning prior to January 1, 2022, for
14        each taxpayer whose adjusted gross income is less than
15        $100,000, $5,000.
16        (3) Limitation. The amount of any modification
17    otherwise required under this subsection shall, under
18    regulations prescribed by the Department, be adjusted by
19    any amounts included therein which were properly paid,
20    credited, or required to be distributed, or permanently set
21    aside for charitable purposes pursuant to Internal Revenue
22    Code Section 642(c) during the taxable year.
 
23    (d) Partnerships.
24        (1) In general. In the case of a partnership, base
25    income means an amount equal to the taxpayer's taxable

 

 

HB3677- 72 -LRB100 05276 HLH 20047 b

1    income for the taxable year as modified by paragraph (2).
2        (2) Modifications. The taxable income referred to in
3    paragraph (1) shall be modified by adding thereto the sum
4    of the following amounts:
5            (A) An amount equal to all amounts paid or accrued
6        to the taxpayer as interest or dividends during the
7        taxable year to the extent excluded from gross income
8        in the computation of taxable income;
9            (B) An amount equal to the amount of tax imposed by
10        this Act to the extent deducted from gross income for
11        the taxable year;
12            (C) The amount of deductions allowed to the
13        partnership pursuant to Section 707 (c) of the Internal
14        Revenue Code in calculating its taxable income;
15            (D) 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            (D-5) For taxable years 2001 and thereafter, an
20        amount equal to the bonus depreciation deduction taken
21        on the taxpayer's federal income tax return for the
22        taxable year under subsection (k) of Section 168 of the
23        Internal Revenue Code;
24            (D-6) If the taxpayer sells, transfers, abandons,
25        or otherwise disposes of property for which the
26        taxpayer was required in any taxable year to make an

 

 

HB3677- 73 -LRB100 05276 HLH 20047 b

1        addition modification under subparagraph (D-5), then
2        an amount equal to the aggregate amount of the
3        deductions taken in all taxable years under
4        subparagraph (O) with respect to that property.
5            If the taxpayer continues to own property through
6        the last day of the last tax year for which the
7        taxpayer may claim a depreciation deduction for
8        federal income tax purposes and for which the taxpayer
9        was allowed in any taxable year to make a subtraction
10        modification under subparagraph (O), then an amount
11        equal to that subtraction modification.
12            The taxpayer is required to make the addition
13        modification under this subparagraph only once with
14        respect to any one piece of property;
15            (D-7) An amount equal to the amount otherwise
16        allowed as a deduction in computing base income for
17        interest paid, accrued, or incurred, directly or
18        indirectly, (i) for taxable years ending on or after
19        December 31, 2004, to a foreign person who would be a
20        member of the same unitary business group but for the
21        fact the foreign person's business activity outside
22        the United States is 80% or more of the foreign
23        person's total business activity and (ii) for taxable
24        years ending on or after December 31, 2008, to a person
25        who would be a member of the same unitary business
26        group but for the fact that the person is prohibited

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB3677- 86 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 87 -LRB100 05276 HLH 20047 b

1            (S) An amount equal to the income from intangible
2        property taken into account for the taxable year (net
3        of the 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(d)(2)(D-8) for
18        intangible expenses and costs paid, accrued, or
19        incurred, directly or indirectly, to the same person.
20        This subparagraph (S) is exempt from Section 250; and
21            (T) For taxable years ending on or after December
22        31, 2011, in the case of a taxpayer who was required to
23        add back any insurance premiums under Section
24        203(d)(2)(D-9), such taxpayer may elect to subtract
25        that part of a reimbursement received from the
26        insurance company equal to the amount of the expense or

 

 

HB3677- 88 -LRB100 05276 HLH 20047 b

1        loss (including expenses incurred by the insurance
2        company) that would have been taken into account as a
3        deduction for federal income tax purposes if the
4        expense or loss had been uninsured. If a taxpayer makes
5        the election provided for by this subparagraph (T), the
6        insurer to which the premiums were paid must add back
7        to income the amount subtracted by the taxpayer
8        pursuant to this subparagraph (T). This subparagraph
9        (T) is exempt from the provisions of Section 250; and .
10            (U) For taxable years beginning on or after January
11        1, 2017 and beginning prior to January 1, 2022, for
12        each taxpayer whose adjusted gross income is less than
13        $100,000, $5,000.
 
14    (e) Gross income; adjusted gross income; taxable income.
15        (1) In general. Subject to the provisions of paragraph
16    (2) and subsection (b) (3), for purposes of this Section
17    and Section 803(e), a taxpayer's gross income, adjusted
18    gross income, or taxable income for the taxable year shall
19    mean the amount of gross income, adjusted gross income or
20    taxable income properly reportable for federal income tax
21    purposes for the taxable year under the provisions of the
22    Internal Revenue Code. Taxable income may be less than
23    zero. However, for taxable years ending on or after
24    December 31, 1986, net operating loss carryforwards from
25    taxable years ending prior to December 31, 1986, may not

 

 

HB3677- 89 -LRB100 05276 HLH 20047 b

1    exceed the sum of federal taxable income for the taxable
2    year before net operating loss deduction, plus the excess
3    of addition modifications over subtraction modifications
4    for the taxable year. For taxable years ending prior to
5    December 31, 1986, taxable income may never be an amount in
6    excess of the net operating loss for the taxable year as
7    defined in subsections (c) and (d) of Section 172 of the
8    Internal Revenue Code, provided that when taxable income of
9    a corporation (other than a Subchapter S corporation),
10    trust, or estate is less than zero and addition
11    modifications, other than those provided by subparagraph
12    (E) of paragraph (2) of subsection (b) for corporations or
13    subparagraph (E) of paragraph (2) of subsection (c) for
14    trusts and estates, exceed subtraction modifications, an
15    addition modification must be made under those
16    subparagraphs for any other taxable year to which the
17    taxable income less than zero (net operating loss) is
18    applied under Section 172 of the Internal Revenue Code or
19    under subparagraph (E) of paragraph (2) of this subsection
20    (e) applied in conjunction with Section 172 of the Internal
21    Revenue Code.
22        (2) Special rule. For purposes of paragraph (1) of this
23    subsection, the taxable income properly reportable for
24    federal income tax purposes shall mean:
25            (A) Certain life insurance companies. In the case
26        of a life insurance company subject to the tax imposed

 

 

HB3677- 90 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 91 -LRB100 05276 HLH 20047 b

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

 

 

HB3677- 92 -LRB100 05276 HLH 20047 b

1        the election may only be revoked upon approval of the
2        Director. The Department shall adopt rules setting
3        forth requirements for documenting the elections and
4        any resulting Illinois net loss and the standards to be
5        used by the Director in evaluating requests to revoke
6        elections. Public Act 96-932 is declaratory of
7        existing law;
8            (G) Subchapter S corporations. In the case of: (i)
9        a Subchapter S corporation for which there is in effect
10        an election for the taxable year under Section 1362 of
11        the Internal Revenue Code, the taxable income of such
12        corporation determined in accordance with Section
13        1363(b) of the Internal Revenue Code, except that
14        taxable income shall take into account those items
15        which are required by Section 1363(b)(1) of the
16        Internal Revenue Code to be separately stated; and (ii)
17        a Subchapter S corporation for which there is in effect
18        a federal election to opt out of the provisions of the
19        Subchapter S Revision Act of 1982 and have applied
20        instead the prior federal Subchapter S rules as in
21        effect on July 1, 1982, the taxable income of such
22        corporation determined in accordance with the federal
23        Subchapter S rules as in effect on July 1, 1982; and
24            (H) Partnerships. In the case of a partnership,
25        taxable income determined in accordance with Section
26        703 of the Internal Revenue Code, except that taxable

 

 

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

 

 

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

 

 

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

 

 

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1August 1, 1969 or otherwise.
2(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
3eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
496-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
56-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
6eff. 8-23-11; 97-905, eff. 8-7-12.)
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.