102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB0696

 

Introduced 2/8/2021, by Rep. Adam Niemerg

 

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

    Amends the Illinois Income Tax Act. Creates an income tax deduction in an amount equal to the out-of-pocket costs incurred by a taxpayer during the taxable year for expenses associated with long-term care for the taxpayer or the taxpayer's family member. Effective immediately.


LRB102 10617 HLH 15946 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0696LRB102 10617 HLH 15946 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
15    the 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
10        1, 1991, the retrospective application date of Article
11        4 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
24        on the account in the taxable year of a withdrawal
25        pursuant to subsection (b) of Section 20 of the
26        Medical Care Savings Account Act or subsection (b) of

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        stock of the same person to whom the premiums and costs
2        were directly or indirectly paid, incurred, or
3        accrued. The preceding sentence does not apply to the
4        extent that the same dividends caused a reduction to
5        the addition modification required under Section
6        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
7        Act; .
8            (D-20) For taxable years beginning on or after
9        January 1, 2002 and ending on or before December 31,
10        2006, in the case of a distribution from a qualified
11        tuition program under Section 529 of the Internal
12        Revenue Code, other than (i) a distribution from a
13        College Savings Pool created under Section 16.5 of the
14        State Treasurer Act or (ii) a distribution from the
15        Illinois Prepaid Tuition Trust Fund, an amount equal
16        to the amount excluded from gross income under Section
17        529(c)(3)(B). For taxable years beginning on or after
18        January 1, 2007, in the case of a distribution from a
19        qualified tuition program under Section 529 of the
20        Internal Revenue Code, other than (i) a distribution
21        from a College Savings Pool created under Section 16.5
22        of the State Treasurer Act, (ii) a distribution from
23        the Illinois Prepaid Tuition Trust Fund, or (iii) a
24        distribution from a qualified tuition program under
25        Section 529 of the Internal Revenue Code that (I)
26        adopts and determines that its offering materials

 

 

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1        comply with the College Savings Plans Network's
2        disclosure principles and (II) has made reasonable
3        efforts to inform in-state residents of the existence
4        of in-state qualified tuition programs by informing
5        Illinois residents directly and, where applicable, to
6        inform financial intermediaries distributing the
7        program to inform in-state residents of the existence
8        of in-state qualified tuition programs at least
9        annually, an amount equal to the amount excluded from
10        gross income under Section 529(c)(3)(B).
11            For the purposes of this subparagraph (D-20), a
12        qualified tuition program has made reasonable efforts
13        if it makes disclosures (which may use the term
14        "in-state program" or "in-state plan" and need not
15        specifically refer to Illinois or its qualified
16        programs by name) (i) directly to prospective
17        participants in its offering materials or makes a
18        public disclosure, such as a website posting; and (ii)
19        where applicable, to intermediaries selling the
20        out-of-state program in the same manner that the
21        out-of-state program distributes its offering
22        materials;
23            (D-20.5) For taxable years beginning on or after
24        January 1, 2018, in the case of a distribution from a
25        qualified ABLE program under Section 529A of the
26        Internal Revenue Code, other than a distribution from

 

 

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1        a qualified ABLE program created under Section 16.6 of
2        the State Treasurer Act, an amount equal to the amount
3        excluded from gross income under Section 529A(c)(1)(B)
4        of the Internal Revenue Code;
5            (D-21) For taxable years beginning on or after
6        January 1, 2007, in the case of transfer of moneys from
7        a qualified tuition program under Section 529 of the
8        Internal Revenue Code that is administered by the
9        State to an out-of-state program, an amount equal to
10        the amount of moneys previously deducted from base
11        income under subsection (a)(2)(Y) of this Section;
12            (D-21.5) For taxable years beginning on or after
13        January 1, 2018, in the case of the transfer of moneys
14        from a qualified tuition program under Section 529 or
15        a qualified ABLE program under Section 529A of the
16        Internal Revenue Code that is administered by this
17        State to an ABLE account established under an
18        out-of-state ABLE account program, an amount equal to
19        the contribution component of the transferred amount
20        that was previously deducted from base income under
21        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
22        Section;
23            (D-22) For taxable years beginning on or after
24        January 1, 2009, and prior to January 1, 2018, in the
25        case of a nonqualified withdrawal or refund of moneys
26        from a qualified tuition program under Section 529 of

 

 

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1        the Internal Revenue Code administered by the State
2        that is not used for qualified expenses at an eligible
3        education institution, an amount equal to the
4        contribution component of the nonqualified withdrawal
5        or refund that was previously deducted from base
6        income under subsection (a)(2)(y) of this Section,
7        provided that the withdrawal or refund did not result
8        from the beneficiary's death or disability. For
9        taxable years beginning on or after January 1, 2018:
10        (1) in the case of a nonqualified withdrawal or
11        refund, as defined under Section 16.5 of the State
12        Treasurer Act, of moneys from a qualified tuition
13        program under Section 529 of the Internal Revenue Code
14        administered by the State, an amount equal to the
15        contribution component of the nonqualified withdrawal
16        or refund that was previously deducted from base
17        income under subsection (a)(2)(Y) of this Section, and
18        (2) in the case of a nonqualified withdrawal or refund
19        from a qualified ABLE program under Section 529A of
20        the Internal Revenue Code administered by the State
21        that is not used for qualified disability expenses, an
22        amount equal to the contribution component of the
23        nonqualified withdrawal or refund that was previously
24        deducted from base income under subsection (a)(2)(HH)
25        of this Section;
26            (D-23) An amount equal to the credit allowable to

 

 

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1        the taxpayer under Section 218(a) of this Act,
2        determined without regard to Section 218(c) of this
3        Act;
4            (D-24) For taxable years ending on or after
5        December 31, 2017, an amount equal to the deduction
6        allowed under Section 199 of the Internal Revenue Code
7        for the taxable year;
8    and by deducting from the total so obtained the sum of the
9    following amounts:
10            (E) For taxable years ending before December 31,
11        2001, any amount included in such total in respect of
12        any compensation (including but not limited to any
13        compensation paid or accrued to a serviceman while a
14        prisoner of war or missing in action) paid to a
15        resident by reason of being on active duty in the Armed
16        Forces of the United States and in respect of any
17        compensation paid or accrued to a resident who as a
18        governmental employee was a prisoner of war or missing
19        in action, and in respect of any compensation paid to a
20        resident in 1971 or thereafter for annual training
21        performed pursuant to Sections 502 and 503, Title 32,
22        United States Code as a member of the Illinois
23        National Guard or, beginning with taxable years ending
24        on or after December 31, 2007, the National Guard of
25        any other state. For taxable years ending on or after
26        December 31, 2001, any amount included in such total

 

 

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1        in respect of any compensation (including but not
2        limited to any compensation paid or accrued to a
3        serviceman while a prisoner of war or missing in
4        action) paid to a resident by reason of being a member
5        of any component of the Armed Forces of the United
6        States and in respect of any compensation paid or
7        accrued to a resident who as a governmental employee
8        was a prisoner of war or missing in action, and in
9        respect of any compensation paid to a resident in 2001
10        or thereafter by reason of being a member of the
11        Illinois National Guard or, beginning with taxable
12        years ending on or after December 31, 2007, the
13        National Guard of any other state. The provisions of
14        this subparagraph (E) are exempt from the provisions
15        of Section 250;
16            (F) An amount equal to all amounts included in
17        such total pursuant to the provisions of Sections
18        402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
19        408 of the Internal Revenue Code, or included in such
20        total as distributions under the provisions of any
21        retirement or disability plan for employees of any
22        governmental agency or unit, or retirement payments to
23        retired partners, which payments are excluded in
24        computing net earnings from self employment by Section
25        1402 of the Internal Revenue Code and regulations
26        adopted pursuant thereto;

 

 

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1            (G) The valuation limitation amount;
2            (H) An amount equal to the amount of any tax
3        imposed by this Act which was refunded to the taxpayer
4        and included in such total for the taxable year;
5            (I) An amount equal to all amounts included in
6        such total pursuant to the provisions of Section 111
7        of the Internal Revenue Code as a recovery of items
8        previously deducted from adjusted gross income in the
9        computation of taxable income;
10            (J) An amount equal to those dividends included in
11        such total which were paid by a corporation which
12        conducts business operations in a River Edge
13        Redevelopment Zone or zones created under the River
14        Edge Redevelopment Zone Act, and conducts
15        substantially all of its operations in a River Edge
16        Redevelopment Zone or zones. This subparagraph (J) is
17        exempt from the provisions of Section 250;
18            (K) An amount equal to those dividends included in
19        such total that were paid by a corporation that
20        conducts business operations in a federally designated
21        Foreign Trade Zone or Sub-Zone and that is designated
22        a High Impact Business located in Illinois; provided
23        that dividends eligible for the deduction provided in
24        subparagraph (J) of paragraph (2) of this subsection
25        shall not be eligible for the deduction provided under
26        this subparagraph (K);

 

 

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1            (L) For taxable years ending after December 31,
2        1983, an amount equal to all social security benefits
3        and railroad retirement benefits included in such
4        total pursuant to Sections 72(r) and 86 of the
5        Internal Revenue Code;
6            (M) With the exception of any amounts subtracted
7        under subparagraph (N), an amount equal to the sum of
8        all amounts disallowed as deductions by (i) Sections
9        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
10        and all amounts of expenses allocable to interest and
11        disallowed as deductions by Section 265(a)(1) of the
12        Internal Revenue Code; and (ii) for taxable years
13        ending on or after August 13, 1999, Sections
14        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
15        Internal Revenue Code, plus, for taxable years ending
16        on or after December 31, 2011, Section 45G(e)(3) of
17        the Internal Revenue Code and, for taxable years
18        ending on or after December 31, 2008, any amount
19        included in gross income under Section 87 of the
20        Internal Revenue Code; the provisions of this
21        subparagraph are exempt from the provisions of Section
22        250;
23            (N) An amount equal to all amounts included in
24        such total 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

 

 

HB0696- 19 -LRB102 10617 HLH 15946 b

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
5        net of bond premium amortization;
6            (O) An amount equal to any contribution made to a
7        job training project established pursuant to the Tax
8        Increment Allocation Redevelopment Act;
9            (P) An amount equal to the amount of the deduction
10        used to compute the federal income tax credit for
11        restoration of substantial amounts held under claim of
12        right for the taxable year pursuant to Section 1341 of
13        the Internal Revenue Code or of any itemized deduction
14        taken from adjusted gross income in the computation of
15        taxable income for restoration of substantial amounts
16        held under claim of right for the taxable year;
17            (Q) An amount equal to any amounts included in
18        such total, received by the taxpayer as an
19        acceleration in the payment of life, endowment or
20        annuity benefits in advance of the time they would
21        otherwise be payable as an indemnity for a terminal
22        illness;
23            (R) An amount equal to the amount of any federal or
24        State bonus paid to veterans of the Persian Gulf War;
25            (S) An amount, to the extent included in adjusted
26        gross income, equal to the amount of a contribution

 

 

HB0696- 20 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 21 -LRB102 10617 HLH 15946 b

1        taxpayer's spouse or dependents, to the extent that
2        the amount paid for that health insurance or long-term
3        care insurance may be deducted under Section 213 of
4        the Internal Revenue Code, has not been deducted on
5        the federal income tax return of the taxpayer, and
6        does not exceed the taxable income attributable to
7        that taxpayer's income, self-employment income, or
8        Subchapter S corporation income; except that no
9        deduction shall be allowed under this item (V) if the
10        taxpayer is eligible to participate in any health
11        insurance or long-term care insurance plan of an
12        employer of the taxpayer or the taxpayer's spouse. The
13        amount of the health insurance and long-term care
14        insurance subtracted under this item (V) shall be
15        determined by multiplying total health insurance and
16        long-term care insurance premiums paid by the taxpayer
17        times a number that represents the fractional
18        percentage of eligible medical expenses under Section
19        213 of the Internal Revenue Code of 1986 not actually
20        deducted on the taxpayer's federal income tax return;
21            (W) For taxable years beginning on or after
22        January 1, 1998, all amounts included in the
23        taxpayer's federal gross income in the taxable year
24        from amounts converted from a regular IRA to a Roth
25        IRA. This paragraph is exempt from the provisions of
26        Section 250;

 

 

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

 

 

HB0696- 23 -LRB102 10617 HLH 15946 b

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

 

 

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

 

 

HB0696- 25 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 26 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 27 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 28 -LRB102 10617 HLH 15946 b

1        taxable years ending on or after December 31, 2008, to
2        a person who would be a member of the same unitary
3        business group but for the fact that the person is
4        prohibited under Section 1501(a)(27) from being
5        included in the unitary business group because he or
6        she is ordinarily required to apportion business
7        income under different subsections of Section 304, but
8        not to exceed the addition modification required to be
9        made for the same taxable year under Section
10        203(a)(2)(D-18) for intangible expenses and costs
11        paid, accrued, or incurred, directly or indirectly, to
12        the same foreign person. This subparagraph (EE) is
13        exempt from the provisions of Section 250;
14            (FF) An amount equal to any amount awarded to the
15        taxpayer during the taxable year by the Court of
16        Claims under subsection (c) of Section 8 of the Court
17        of Claims Act for time unjustly served in a State
18        prison. This subparagraph (FF) is exempt from the
19        provisions of Section 250;
20            (GG) For taxable years ending on or after December
21        31, 2011, in the case of a taxpayer who was required to
22        add back any insurance premiums under Section
23        203(a)(2)(D-19), such taxpayer may elect to subtract
24        that part of a reimbursement received from the
25        insurance company equal to the amount of the expense
26        or loss (including expenses incurred by the insurance

 

 

HB0696- 29 -LRB102 10617 HLH 15946 b

1        company) that would have been taken into account as a
2        deduction for federal income tax purposes if the
3        expense or loss had been uninsured. If a taxpayer
4        makes the election provided for by this subparagraph
5        (GG), the insurer to which the premiums were paid must
6        add back to income the amount subtracted by the
7        taxpayer pursuant to this subparagraph (GG). This
8        subparagraph (GG) is exempt from the provisions of
9        Section 250; and
10            (HH) For taxable years beginning on or after
11        January 1, 2018 and prior to January 1, 2023, a maximum
12        of $10,000 contributed in the taxable year to a
13        qualified ABLE account under Section 16.6 of the State
14        Treasurer Act, except that amounts excluded from gross
15        income under Section 529(c)(3)(C)(i) or Section
16        529A(c)(1)(C) of the Internal Revenue Code shall not
17        be considered moneys contributed under this
18        subparagraph (HH). For purposes of this subparagraph
19        (HH), contributions made by an employer on behalf of
20        an employee, or matching contributions made by an
21        employee, shall be treated as made by the employee;
22        and .
23            (II) For taxable years beginning on or after
24        January 1, 2021, the full amount of out-of-pocket
25        costs incurred by a taxpayer during the taxable year
26        for expenses associated with long-term care for the

 

 

HB0696- 30 -LRB102 10617 HLH 15946 b

1        taxpayer or the taxpayer's family member; for the
2        purposes of this subparagraph (II), "family member"
3        means (i) the taxpayer's spouse or (ii) the child,
4        sibling, parent, grandparent, or grandchild of the
5        taxpayer or the taxpayer's spouse. This subparagraph
6        (II) is exempt from the provisions of Section 250.
 
7    (b) Corporations.
8        (1) In general. In the case of a corporation, base
9    income means an amount equal to the taxpayer's taxable
10    income for the taxable year as modified by paragraph (2).
11        (2) Modifications. The taxable income referred to in
12    paragraph (1) shall be modified by adding thereto the sum
13    of the following amounts:
14            (A) An amount equal to all amounts paid or accrued
15        to the taxpayer as interest and all distributions
16        received from regulated investment companies during
17        the taxable year to the extent excluded from gross
18        income in the computation of taxable income;
19            (B) An amount equal to the amount of tax imposed by
20        this Act to the extent deducted from gross income in
21        the computation of taxable income for the taxable
22        year;
23            (C) In the case of a regulated investment company,
24        an amount equal to the excess of (i) the net long-term
25        capital gain for the taxable year, over (ii) the

 

 

HB0696- 31 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 32 -LRB102 10617 HLH 15946 b

1            (E) which related to that net operating loss and
2            which was taken into account in calculating the
3            base 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
10        operating loss carryback or carryforward from more
11        than one other taxable year ending prior to December
12        31, 1986, the addition modification provided in this
13        subparagraph (E) shall be the sum of the amounts
14        computed independently under the preceding provisions
15        of this subparagraph (E) for each such taxable year;
16            (E-5) For taxable years ending after December 31,
17        1997, an amount equal to any eligible remediation
18        costs that the corporation deducted in computing
19        adjusted gross income and for which the corporation
20        claims a credit under subsection (l) of Section 201;
21            (E-10) For taxable years 2001 and thereafter, an
22        amount equal to the bonus depreciation deduction taken
23        on the taxpayer's federal income tax return for the
24        taxable year under subsection (k) of Section 168 of
25        the Internal Revenue Code;
26            (E-11) If the taxpayer sells, transfers, abandons,

 

 

HB0696- 33 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 34 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 35 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 36 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 37 -LRB102 10617 HLH 15946 b

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

 

 

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

 

 

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1                or
2                (iii) any item of intangible expense or cost
3            paid, accrued, or incurred, directly or
4            indirectly, from a transaction with a person if
5            the taxpayer establishes by clear and convincing
6            evidence, that the adjustments are unreasonable;
7            or if the taxpayer and the Director agree in
8            writing to the application or use of an
9            alternative method of apportionment under Section
10            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
14            for any tax year beginning after the effective
15            date of this amendment provided such adjustment is
16            made pursuant to regulation adopted by the
17            Department and such regulations provide methods
18            and standards by which the Department will utilize
19            its authority under Section 404 of this Act;
20            (E-14) For taxable years ending on or after
21        December 31, 2008, an amount equal to the amount of
22        insurance premium expenses and costs otherwise allowed
23        as a deduction in computing base income, and that were
24        paid, accrued, or incurred, directly or indirectly, to
25        a person who would be a member of the same unitary
26        business group but for the fact that the person is

 

 

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1        prohibited under Section 1501(a)(27) from being
2        included in the unitary business group because he or
3        she is ordinarily required to apportion business
4        income under different subsections of Section 304. The
5        addition modification required by this subparagraph
6        shall be reduced to the extent that dividends were
7        included in base income of the unitary group for the
8        same taxable year and received by the taxpayer or by a
9        member of the taxpayer's unitary business group
10        (including amounts included in gross income under
11        Sections 951 through 964 of the Internal Revenue Code
12        and amounts included in gross income under Section 78
13        of the Internal Revenue Code) with respect to the
14        stock of the same person to whom the premiums and costs
15        were directly or indirectly paid, incurred, or
16        accrued. The preceding sentence does not apply to the
17        extent that the same dividends caused a reduction to
18        the addition modification required under Section
19        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
20        Act;
21            (E-15) For taxable years beginning after December
22        31, 2008, any deduction for dividends paid by a
23        captive real estate investment trust that is allowed
24        to a real estate investment trust under Section
25        857(b)(2)(B) of the Internal Revenue Code for
26        dividends paid;

 

 

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1            (E-16) An amount equal to the credit allowable to
2        the taxpayer under Section 218(a) of this Act,
3        determined without regard to Section 218(c) of this
4        Act;
5            (E-17) For taxable years ending on or after
6        December 31, 2017, an amount equal to the deduction
7        allowed under Section 199 of the Internal Revenue Code
8        for the taxable year;
9            (E-18) for taxable years beginning after December
10        31, 2018, an amount equal to the deduction allowed
11        under Section 250(a)(1)(A) of the Internal Revenue
12        Code for the taxable year.
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
26        such total which are exempt from taxation by this

 

 

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1        State either by reason of its statutes or Constitution
2        or by reason of the Constitution, treaties or statutes
3        of the 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
7        net 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
15        the 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
20        a 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)
11        investment credit property which secures the loan or
12        loans, using for this purpose the original basis of
13        such property on the date that it was placed in service
14        in the River Edge Redevelopment Zone. The subtraction
15        modification available to the taxpayer in any year
16        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. This
20        subparagraph (M) is exempt from the provisions of
21        Section 250;
22            (M-1) For any taxpayer that is a financial
23        organization within the meaning of Section 304(c) of
24        this Act, an amount included in such total as interest
25        income from a loan or loans made by such taxpayer to a
26        borrower, to the extent that such a loan is secured by

 

 

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

 

 

HB0696- 46 -LRB102 10617 HLH 15946 b

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

 

 

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

 

 

HB0696- 48 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 49 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 50 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 51 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 52 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 53 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 54 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 55 -LRB102 10617 HLH 15946 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                avoidance of Illinois income tax, and is paid
2                pursuant to a contract or agreement that
3                reflects an arm's-length interest rate and
4                terms; or
5                (iii) the taxpayer can establish, based on
6            clear and convincing evidence, that the interest
7            paid, accrued, or incurred relates to a contract
8            or agreement entered into at arm's-length rates
9            and terms and the principal purpose for the
10            payment is not federal or Illinois tax avoidance;
11            or
12                (iv) an item of interest paid, accrued, or
13            incurred, directly or indirectly, to a person if
14            the taxpayer establishes by clear and convincing
15            evidence that the adjustments are unreasonable; or
16            if the taxpayer and the Director agree in writing
17            to the application or use of an alternative method
18            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
22            for any tax year beginning after the effective
23            date of this amendment provided such adjustment is
24            made pursuant to regulation adopted by the
25            Department and such regulations provide methods
26            and standards by which the Department will utilize

 

 

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1            its authority under Section 404 of this Act;
2            (G-13) An amount equal to the amount of intangible
3        expenses and costs otherwise allowed as a deduction in
4        computing base income, and that were paid, accrued, or
5        incurred, directly or indirectly, (i) for taxable
6        years ending on or after December 31, 2004, to a
7        foreign person who would be a member of the same
8        unitary business group but for the fact that the
9        foreign person's business activity outside the United
10        States is 80% or more of that person's total business
11        activity and (ii) for taxable years ending on or after
12        December 31, 2008, to a person who would be a member of
13        the same unitary business group but for the fact that
14        the person is prohibited under Section 1501(a)(27)
15        from being included in the unitary business group
16        because he or she is ordinarily required to apportion
17        business income under different subsections of Section
18        304. The addition modification required by this
19        subparagraph shall be reduced to the extent that
20        dividends were included in base income of the unitary
21        group for the same taxable year and received by the
22        taxpayer or by a member of the taxpayer's unitary
23        business group (including amounts included in gross
24        income pursuant to Sections 951 through 964 of the
25        Internal Revenue Code and amounts included in gross
26        income under Section 78 of the Internal Revenue Code)

 

 

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

 

 

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

 

 

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

 

 

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1        (including amounts included in gross income under
2        Sections 951 through 964 of the Internal Revenue Code
3        and amounts included in gross income under Section 78
4        of the Internal Revenue Code) with respect to the
5        stock of the same person to whom the premiums and costs
6        were directly or indirectly paid, incurred, or
7        accrued. The preceding sentence does not apply to the
8        extent that the same dividends caused a reduction to
9        the addition modification required under Section
10        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
11        Act;
12            (G-15) 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            (G-16) For taxable years ending on or after
17        December 31, 2017, an amount equal to the deduction
18        allowed under Section 199 of the Internal Revenue Code
19        for the taxable year;
20    and by deducting from the total so obtained the sum of the
21    following amounts:
22            (H) An amount equal to all amounts included in
23        such total pursuant to the provisions of Sections
24        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
25        of the Internal Revenue Code or included in such total
26        as distributions under the provisions of any

 

 

HB0696- 66 -LRB102 10617 HLH 15946 b

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

 

 

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

 

 

HB0696- 68 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 69 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 70 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 71 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 72 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 73 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 74 -LRB102 10617 HLH 15946 b

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

 

 

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1        Section 250; and
2            (Z) For taxable years beginning after December 31,
3        2018 and before January 1, 2026, the amount of excess
4        business loss of the taxpayer disallowed as a
5        deduction by Section 461(l)(1)(B) of the Internal
6        Revenue Code.
7        (3) Limitation. The amount of any modification
8    otherwise required under this subsection shall, under
9    regulations prescribed by the Department, be adjusted by
10    any amounts included therein which were properly paid,
11    credited, or required to be distributed, or permanently
12    set aside for charitable purposes pursuant to Internal
13    Revenue Code Section 642(c) during the taxable year.
 
14    (d) Partnerships.
15        (1) In general. In the case of a partnership, base
16    income means an amount equal to the taxpayer's taxable
17    income for the taxable year as modified by paragraph (2).
18        (2) Modifications. The taxable income referred to in
19    paragraph (1) shall be modified by adding thereto the sum
20    of the following amounts:
21            (A) An amount equal to all amounts paid or accrued
22        to the taxpayer as interest or dividends during the
23        taxable year to the extent excluded from gross income
24        in the computation of taxable income;
25            (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 for
2        the taxable year;
3            (C) The amount of deductions allowed to the
4        partnership pursuant to Section 707 (c) of the
5        Internal Revenue Code in calculating its taxable
6        income;
7            (D) An amount equal to the amount of the capital
8        gain deduction allowable under the Internal Revenue
9        Code, to the extent deducted from gross income in the
10        computation of taxable income;
11            (D-5) For taxable years 2001 and thereafter, an
12        amount equal to the bonus depreciation deduction taken
13        on the taxpayer's federal income tax return for the
14        taxable year under subsection (k) of Section 168 of
15        the Internal Revenue Code;
16            (D-6) 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-5), then
20        an amount equal to the aggregate amount of the
21        deductions taken in all taxable years under
22        subparagraph (O) with respect to that property.
23            If the taxpayer continues to own property through
24        the last day of the last tax year for which the
25        taxpayer may claim a depreciation deduction for
26        federal income tax purposes and for which the taxpayer

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the
4        stock of the same person to whom the premiums and costs
5        were directly or indirectly paid, incurred, or
6        accrued. The preceding sentence does not apply to the
7        extent that the same dividends caused a reduction to
8        the addition modification required under Section
9        203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
10            (D-10) An amount equal to the credit allowable to
11        the taxpayer under Section 218(a) of this Act,
12        determined without regard to Section 218(c) of this
13        Act;
14            (D-11) For taxable years ending on or after
15        December 31, 2017, an amount equal to the deduction
16        allowed under Section 199 of the Internal Revenue Code
17        for the taxable year;
18    and by deducting from the total so obtained the following
19    amounts:
20            (E) The valuation limitation amount;
21            (F) An amount equal to the amount of any tax
22        imposed by this Act which was refunded to the taxpayer
23        and included in such total for the taxable year;
24            (G) An amount equal to all amounts included in
25        taxable income as modified by subparagraphs (A), (B),
26        (C) and (D) which are exempt from taxation by this

 

 

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

 

 

HB0696- 86 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 87 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 88 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 89 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 90 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 91 -LRB102 10617 HLH 15946 b

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

 

 

HB0696- 92 -LRB102 10617 HLH 15946 b

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

 

 

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1    for the taxable year. For taxable years ending prior to
2    December 31, 1986, taxable income may never be an amount
3    in excess of the net operating loss for the taxable year as
4    defined in subsections (c) and (d) of Section 172 of the
5    Internal Revenue Code, provided that when taxable income
6    of a corporation (other than a Subchapter S corporation),
7    trust, or estate is less than zero and addition
8    modifications, other than those provided by subparagraph
9    (E) of paragraph (2) of subsection (b) for corporations or
10    subparagraph (E) of paragraph (2) of subsection (c) for
11    trusts and estates, exceed subtraction modifications, an
12    addition modification must be made under those
13    subparagraphs for any other taxable year to which the
14    taxable income less than zero (net operating loss) is
15    applied under Section 172 of the Internal Revenue Code or
16    under subparagraph (E) of paragraph (2) of this subsection
17    (e) applied in conjunction with Section 172 of the
18    Internal Revenue Code.
19        (2) Special rule. For purposes of paragraph (1) of
20    this subsection, the taxable income properly reportable
21    for federal income tax purposes shall mean:
22            (A) Certain life insurance companies. In the case
23        of a life insurance company subject to the tax imposed
24        by Section 801 of the Internal Revenue Code, life
25        insurance company taxable income, plus the amount of
26        distribution from pre-1984 policyholder surplus

 

 

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1        accounts as calculated under Section 815a of the
2        Internal Revenue Code;
3            (B) Certain other insurance companies. In the case
4        of mutual insurance companies subject to the tax
5        imposed by Section 831 of the Internal Revenue Code,
6        insurance company taxable income;
7            (C) Regulated investment companies. In the case of
8        a regulated investment company subject to the tax
9        imposed by Section 852 of the Internal Revenue Code,
10        investment company taxable income;
11            (D) Real estate investment trusts. In the case of
12        a real estate investment trust subject to the tax
13        imposed by Section 857 of the Internal Revenue Code,
14        real estate investment trust taxable income;
15            (E) Consolidated corporations. In the case of a
16        corporation which is a member of an affiliated group
17        of corporations filing a consolidated income tax
18        return for the taxable year for federal income tax
19        purposes, taxable income determined as if such
20        corporation had filed a separate return for federal
21        income tax purposes for the taxable year and each
22        preceding taxable year for which it was a member of an
23        affiliated group. For purposes of this subparagraph,
24        the taxpayer's separate taxable income shall be
25        determined as if the election provided by Section
26        243(b)(2) of the Internal Revenue Code had been in

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1such taxable year, whether in respect of property values as of
2August 1, 1969 or otherwise.
3(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
4101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)
 
5    Section 99. Effective date. This Act takes effect upon
6becoming law.