SB2017 EngrossedLRB100 09276 HLH 21584 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

 

 

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

 

 

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

 

 

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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

 

 

SB2017 Engrossed- 20 -LRB100 09276 HLH 21584 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

 

 

SB2017 Engrossed- 21 -LRB100 09276 HLH 21584 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

 

 

SB2017 Engrossed- 22 -LRB100 09276 HLH 21584 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

 

 

SB2017 Engrossed- 23 -LRB100 09276 HLH 21584 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

 

 

SB2017 Engrossed- 24 -LRB100 09276 HLH 21584 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;

 

 

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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

 

 

SB2017 Engrossed- 26 -LRB100 09276 HLH 21584 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

 

 

SB2017 Engrossed- 27 -LRB100 09276 HLH 21584 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, an amount equal to the amount
14        contributed by taxpayer during the taxable year to an
15        ABLE account, as provided in Section 16.6 of the State
16        Treasurer Act; provided that the deduction under this
17        subparagraph may not exceed $10,000 per taxpayer per
18        taxable year; this subparagraph (HH) is exempt from the
19        provisions of Section 250.
 
20    (b) Corporations.
21        (1) In general. In the case of a corporation, base
22    income means an amount equal to the taxpayer's taxable
23    income for the taxable year as modified by paragraph (2).
24        (2) Modifications. The taxable income referred to in
25    paragraph (1) shall be modified by adding thereto the sum

 

 

SB2017 Engrossed- 28 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 29 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 30 -LRB100 09276 HLH 21584 b

1        subparagraph (E) for each such taxable year;
2            (E-5) For taxable years ending after December 31,
3        1997, an amount equal to any eligible remediation costs
4        that the corporation deducted in computing adjusted
5        gross income and for which the corporation claims a
6        credit under subsection (l) of Section 201;
7            (E-10) 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            (E-11) 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 (E-10), then
16        an amount equal to the aggregate amount of the
17        deductions taken in all taxable years under
18        subparagraph (T) 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 (T), then an amount
25        equal to that subtraction modification.
26            The taxpayer is required to make the addition

 

 

SB2017 Engrossed- 31 -LRB100 09276 HLH 21584 b

1        modification under this subparagraph only once with
2        respect to any one piece of property;
3            (E-12) 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 the 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 pursuant to Sections 951
25        through 964 of the Internal Revenue Code and amounts
26        included in gross income under Section 78 of the

 

 

SB2017 Engrossed- 32 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 33 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 34 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 35 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 36 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 37 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 38 -LRB100 09276 HLH 21584 b

1        the same dividends caused a reduction to the addition
2        modification required under Section 203(b)(2)(E-12) or
3        Section 203(b)(2)(E-13) of this Act;
4            (E-15) For taxable years beginning after December
5        31, 2008, any deduction for dividends paid by a captive
6        real estate investment trust that is allowed to a real
7        estate investment trust under Section 857(b)(2)(B) of
8        the Internal Revenue Code for dividends paid;
9            (E-16) An amount equal to the credit allowable to
10        the taxpayer under Section 218(a) of this Act,
11        determined without regard to Section 218(c) of this
12        Act;
13    and by deducting from the total so obtained the sum of the
14    following amounts:
15            (F) An amount equal to the amount of any tax
16        imposed by this Act which was refunded to the taxpayer
17        and included in such total for the taxable year;
18            (G) An amount equal to any amount included in such
19        total under Section 78 of the Internal Revenue Code;
20            (H) In the case of a regulated investment company,
21        an amount equal to the amount of exempt interest
22        dividends as defined in subsection (b) (5) of Section
23        852 of the Internal Revenue Code, paid to shareholders
24        for the taxable year;
25            (I) With the exception of any amounts subtracted
26        under subparagraph (J), an amount equal to the sum of

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB2017 Engrossed- 44 -LRB100 09276 HLH 21584 b

1        through 964 of the Internal Revenue Code and including,
2        for taxable years ending on or after December 31, 2008,
3        dividends received from a captive real estate
4        investment trust, from any such corporation specified
5        in clause (i) that would but for the provisions of
6        Section 1504 (b) (3) of the Internal Revenue Code be
7        treated as a member of the affiliated group which
8        includes the dividend recipient, exceed the amount of
9        the modification provided under subparagraph (G) of
10        paragraph (2) of this subsection (b) which is related
11        to such dividends. This subparagraph (O) is exempt from
12        the provisions of Section 250 of this Act;
13            (P) An amount equal to any contribution made to a
14        job training project established pursuant to the Tax
15        Increment Allocation Redevelopment Act;
16            (Q) An amount equal to the amount of the deduction
17        used to compute the federal income tax credit for
18        restoration of substantial amounts held under claim of
19        right for the taxable year pursuant to Section 1341 of
20        the Internal Revenue Code;
21            (R) On and after July 20, 1999, in the case of an
22        attorney-in-fact with respect to whom an interinsurer
23        or a reciprocal insurer has made the election under
24        Section 835 of the Internal Revenue Code, 26 U.S.C.
25        835, an amount equal to the excess, if any, of the
26        amounts paid or incurred by that interinsurer or

 

 

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

 

 

SB2017 Engrossed- 46 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 47 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 48 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 49 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 50 -LRB100 09276 HLH 21584 b

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

 

 

SB2017 Engrossed- 51 -LRB100 09276 HLH 21584 b

1        without regard to any net operating loss deduction.
2        This subparagraph (Z) is exempt from the provisions of
3        Section 250.
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

 

 

SB2017 Engrossed- 52 -LRB100 09276 HLH 21584 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)

 

 

SB2017 Engrossed- 53 -LRB100 09276 HLH 21584 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,

 

 

SB2017 Engrossed- 54 -LRB100 09276 HLH 21584 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;

 

 

SB2017 Engrossed- 55 -LRB100 09276 HLH 21584 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

 

 

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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

 

 

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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

 

 

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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

 

 

SB2017 Engrossed- 69 -LRB100 09276 HLH 21584 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

 

 

SB2017 Engrossed- 70 -LRB100 09276 HLH 21584 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

 

 

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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.
12        (3) Limitation. The amount of any modification
13    otherwise required under this subsection shall, under
14    regulations prescribed by the Department, be adjusted by
15    any amounts included therein which were properly paid,
16    credited, or required to be distributed, or permanently set
17    aside for charitable purposes pursuant to Internal Revenue
18    Code Section 642(c) during the taxable year.
 
19    (d) Partnerships.
20        (1) In general. In the case of a partnership, base
21    income means an amount equal to the taxpayer's taxable
22    income for the taxable year as modified by paragraph (2).
23        (2) Modifications. The taxable income referred to in
24    paragraph (1) shall be modified by adding thereto the sum
25    of the following amounts:

 

 

SB2017 Engrossed- 72 -LRB100 09276 HLH 21584 b

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

 

 

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

 

 

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

 

 

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

 

 

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1            and such regulations provide methods and standards
2            by which the Department will utilize its authority
3            under Section 404 of this Act; and
4            (D-8) An amount equal to the amount of intangible
5        expenses and costs otherwise allowed as a deduction in
6        computing base income, and that were paid, accrued, or
7        incurred, directly or indirectly, (i) for taxable
8        years ending on or after December 31, 2004, to a
9        foreign person who would be a member of the same
10        unitary business group but for the fact that the
11        foreign person's business activity outside the United
12        States is 80% or more of that person's total business
13        activity and (ii) for taxable years ending on or after
14        December 31, 2008, to a person who would be a member of
15        the same unitary business group but for the fact that
16        the person is prohibited under Section 1501(a)(27)
17        from being included in the unitary business group
18        because he or she is ordinarily required to apportion
19        business income under different subsections of Section
20        304. The addition modification required by this
21        subparagraph shall be reduced to the extent that
22        dividends were included in base income of the unitary
23        group for the same taxable year and received by the
24        taxpayer or by a member of the taxpayer's unitary
25        business group (including amounts included in gross
26        income pursuant to Sections 951 through 964 of the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        of the United States; provided that, in the case of any
2        statute of this State that exempts income derived from
3        bonds or other obligations from the tax imposed under
4        this Act, the amount exempted shall be the interest net
5        of bond premium amortization;
6            (H) Any income of the partnership which
7        constitutes personal service income as defined in
8        Section 1348 (b) (1) of the Internal Revenue Code (as
9        in effect December 31, 1981) or a reasonable allowance
10        for compensation paid or accrued for services rendered
11        by partners to the partnership, whichever is greater;
12        this subparagraph (H) is exempt from the provisions of
13        Section 250;
14            (I) An amount equal to all amounts of income
15        distributable to an entity subject to the Personal
16        Property Tax Replacement Income Tax imposed by
17        subsections (c) and (d) of Section 201 of this Act
18        including amounts distributable to organizations
19        exempt from federal income tax by reason of Section
20        501(a) of the Internal Revenue Code; this subparagraph
21        (I) is exempt from the provisions of Section 250;
22            (J) With the exception of any amounts subtracted
23        under subparagraph (G), an amount equal to the sum of
24        all amounts disallowed as deductions by (i) Sections
25        171(a) (2), and 265(2) of the Internal Revenue Code,
26        and all amounts of expenses allocable to interest and

 

 

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

 

 

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1        High Impact Business located in Illinois; provided
2        that dividends eligible for the deduction provided in
3        subparagraph (K) of paragraph (2) of this subsection
4        shall not be eligible for the deduction provided under
5        this subparagraph (M);
6            (N) An amount equal to the amount of the deduction
7        used to compute the federal income tax credit for
8        restoration of substantial amounts held under claim of
9        right for the taxable year pursuant to Section 1341 of
10        the Internal Revenue Code;
11            (O) For taxable years 2001 and thereafter, for the
12        taxable year in which the bonus depreciation deduction
13        is taken on the taxpayer's federal income tax return
14        under subsection (k) of Section 168 of the Internal
15        Revenue Code and for each applicable taxable year
16        thereafter, an amount equal to "x", where:
17                (1) "y" equals the amount of the depreciation
18            deduction taken for the taxable year on the
19            taxpayer's federal income tax return on property
20            for which the bonus depreciation deduction was
21            taken in any year under subsection (k) of Section
22            168 of the Internal Revenue Code, but not including
23            the bonus depreciation deduction;
24                (2) for taxable years ending on or before
25            December 31, 2005, "x" equals "y" multiplied by 30
26            and then divided by 70 (or "y" multiplied by

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        the election provided for by this subparagraph (T), the
2        insurer to which the premiums were paid must add back
3        to income the amount subtracted by the taxpayer
4        pursuant to this subparagraph (T). This subparagraph
5        (T) is exempt from the provisions of Section 250.
 
6    (e) Gross income; adjusted gross income; taxable income.
7        (1) In general. Subject to the provisions of paragraph
8    (2) and subsection (b) (3), for purposes of this Section
9    and Section 803(e), a taxpayer's gross income, adjusted
10    gross income, or taxable income for the taxable year shall
11    mean the amount of gross income, adjusted gross income or
12    taxable income properly reportable for federal income tax
13    purposes for the taxable year under the provisions of the
14    Internal Revenue Code. Taxable income may be less than
15    zero. However, for taxable years ending on or after
16    December 31, 1986, net operating loss carryforwards from
17    taxable years ending prior to December 31, 1986, may not
18    exceed the sum of federal taxable income for the taxable
19    year before net operating loss deduction, plus the excess
20    of addition modifications over subtraction modifications
21    for the taxable year. For taxable years ending prior to
22    December 31, 1986, taxable income may never be an amount in
23    excess of the net operating loss for the taxable year as
24    defined in subsections (c) and (d) of Section 172 of the
25    Internal Revenue Code, provided that when taxable income of

 

 

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

 

 

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1        insurance company taxable income;
2            (C) Regulated investment companies. In the case of
3        a regulated investment company subject to the tax
4        imposed by Section 852 of the Internal Revenue Code,
5        investment company taxable income;
6            (D) Real estate investment trusts. In the case of a
7        real estate investment trust subject to the tax imposed
8        by Section 857 of the Internal Revenue Code, real
9        estate investment trust taxable income;
10            (E) Consolidated corporations. In the case of a
11        corporation which is a member of an affiliated group of
12        corporations filing a consolidated income tax return
13        for the taxable year for federal income tax purposes,
14        taxable income determined as if such corporation had
15        filed a separate return for federal income tax purposes
16        for the taxable year and each preceding taxable year
17        for which it was a member of an affiliated group. For
18        purposes of this subparagraph, the taxpayer's separate
19        taxable income shall be determined as if the election
20        provided by Section 243(b) (2) of the Internal Revenue
21        Code had been in effect for all such years;
22            (F) Cooperatives. In the case of a cooperative
23        corporation or association, the taxable income of such
24        organization determined in accordance with the
25        provisions of Section 1381 through 1388 of the Internal
26        Revenue Code, but without regard to the prohibition

 

 

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

 

 

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1        a Subchapter S corporation for which there is in effect
2        an election for the taxable year under Section 1362 of
3        the Internal Revenue Code, the taxable income of such
4        corporation determined in accordance with Section
5        1363(b) of the Internal Revenue Code, except that
6        taxable income shall take into account those items
7        which are required by Section 1363(b)(1) of the
8        Internal Revenue Code to be separately stated; and (ii)
9        a Subchapter S corporation for which there is in effect
10        a federal election to opt out of the provisions of the
11        Subchapter S Revision Act of 1982 and have applied
12        instead the prior federal Subchapter S rules as in
13        effect on July 1, 1982, the taxable income of such
14        corporation determined in accordance with the federal
15        Subchapter S rules as in effect on July 1, 1982; and
16            (H) Partnerships. In the case of a partnership,
17        taxable income determined in accordance with Section
18        703 of the Internal Revenue Code, except that taxable
19        income shall take into account those items which are
20        required by Section 703(a)(1) to be separately stated
21        but which would be taken into account by an individual
22        in calculating his taxable income.
23        (3) Recapture of business expenses on disposition of
24    asset or business. Notwithstanding any other law to the
25    contrary, if in prior years income from an asset or
26    business has been classified as business income and in a

 

 

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1    later year is demonstrated to be non-business income, then
2    all expenses, without limitation, deducted in such later
3    year and in the 2 immediately preceding taxable years
4    related to that asset or business that generated the
5    non-business income shall be added back and recaptured as
6    business income in the year of the disposition of the asset
7    or business. Such amount shall be apportioned to Illinois
8    using the greater of the apportionment fraction computed
9    for the business under Section 304 of this Act for the
10    taxable year or the average of the apportionment fractions
11    computed for the business under Section 304 of this Act for
12    the taxable year and for the 2 immediately preceding
13    taxable years.
 
14    (f) Valuation limitation amount.
15        (1) In general. The valuation limitation amount
16    referred to in subsections (a) (2) (G), (c) (2) (I) and
17    (d)(2) (E) is an amount equal to:
18            (A) The sum of the pre-August 1, 1969 appreciation
19        amounts (to the extent consisting of gain reportable
20        under the provisions of Section 1245 or 1250 of the
21        Internal Revenue Code) for all property in respect of
22        which such gain was reported for the taxable year; plus
23            (B) The lesser of (i) the sum of the pre-August 1,
24        1969 appreciation amounts (to the extent consisting of
25        capital gain) for all property in respect of which such

 

 

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1        gain was reported for federal income tax purposes for
2        the taxable year, or (ii) the net capital gain for the
3        taxable year, reduced in either case by any amount of
4        such gain included in the amount determined under
5        subsection (a) (2) (F) or (c) (2) (H).
6        (2) Pre-August 1, 1969 appreciation amount.
7            (A) If the fair market value of property referred
8        to in paragraph (1) was readily ascertainable on August
9        1, 1969, the pre-August 1, 1969 appreciation amount for
10        such property is the lesser of (i) the excess of such
11        fair market value over the taxpayer's basis (for
12        determining gain) for such property on that date
13        (determined under the Internal Revenue Code as in
14        effect on that date), or (ii) the total gain realized
15        and reportable for federal income tax purposes in
16        respect of the sale, exchange or other disposition of
17        such property.
18            (B) If the fair market value of property referred
19        to in paragraph (1) was not readily ascertainable on
20        August 1, 1969, the pre-August 1, 1969 appreciation
21        amount for such property is that amount which bears the
22        same ratio to the total gain reported in respect of the
23        property for federal income tax purposes for the
24        taxable year, as the number of full calendar months in
25        that part of the taxpayer's holding period for the
26        property ending July 31, 1969 bears to the number of

 

 

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1        full calendar months in the taxpayer's entire holding
2        period for the property.
3            (C) The Department shall prescribe such
4        regulations as may be necessary to carry out the
5        purposes of this paragraph.
 
6    (g) Double deductions. Unless specifically provided
7otherwise, nothing in this Section shall permit the same item
8to be deducted more than once.
 
9    (h) Legislative intention. Except as expressly provided by
10this Section there shall be no modifications or limitations on
11the amounts of income, gain, loss or deduction taken into
12account in determining gross income, adjusted gross income or
13taxable income for federal income tax purposes for the taxable
14year, or in the amount of such items entering into the
15computation of base income and net income under this Act for
16such taxable year, whether in respect of property values as of
17August 1, 1969 or otherwise.
18(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
19eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
2096-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
216-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
22eff. 8-23-11; 97-905, eff. 8-7-12.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.