102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB2871

 

Introduced 2/19/2021, by Rep. Natalie A. Manley

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203  from Ch. 120, par. 2-203
35 ILCS 5/601  from Ch. 120, par. 6-601

    Amends the Illinois Income Tax Act. Provides that, when calculating the taxpayer's base income, the taxpayer's federal adjusted gross income shall be modified to exclude the portion of the income or loss received from a trade or business conducted within and without Illinois or from a pass-through entity conducting business within and without Illinois that is not derived from or connected with Illinois sources. Repeals provisions concerning a credit for foreign taxes. Effective immediately.


LRB102 10759 HLH 16088 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2871LRB102 10759 HLH 16088 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Sections 203 and 601 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;

 

 

HB2871- 17 -LRB102 10759 HLH 16088 b

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);

 

 

HB2871- 18 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 19 -LRB102 10759 HLH 16088 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

 

 

HB2871- 20 -LRB102 10759 HLH 16088 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

 

 

HB2871- 21 -LRB102 10759 HLH 16088 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;

 

 

HB2871- 22 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 23 -LRB102 10759 HLH 16088 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

 

 

HB2871- 24 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 25 -LRB102 10759 HLH 16088 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

 

 

HB2871- 26 -LRB102 10759 HLH 16088 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

 

 

HB2871- 27 -LRB102 10759 HLH 16088 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

 

 

HB2871- 28 -LRB102 10759 HLH 16088 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

 

 

HB2871- 29 -LRB102 10759 HLH 16088 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    (b) Corporations.
23        (1) In general. In the case of a corporation, base
24    income means an amount equal to the taxpayer's taxable
25    income for the taxable year as modified by paragraph (2).

 

 

HB2871- 30 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 31 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 32 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 33 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 34 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 35 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 36 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 37 -LRB102 10759 HLH 16088 b

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

 

 

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

 

 

HB2871- 39 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 40 -LRB102 10759 HLH 16088 b

1        and amounts included in gross income under Section 78
2        of the Internal Revenue Code) with respect to the
3        stock of the same person to whom the premiums and costs
4        were directly or indirectly paid, incurred, or
5        accrued. The preceding sentence does not apply to the
6        extent that the same dividends caused a reduction to
7        the addition modification required under Section
8        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
9        Act;
10            (E-15) For taxable years beginning after December
11        31, 2008, any deduction for dividends paid by a
12        captive real estate investment trust that is allowed
13        to a real estate investment trust under Section
14        857(b)(2)(B) of the Internal Revenue Code for
15        dividends paid;
16            (E-16) An amount equal to the credit allowable to
17        the taxpayer under Section 218(a) of this Act,
18        determined without regard to Section 218(c) of this
19        Act;
20            (E-17) For taxable years ending on or after
21        December 31, 2017, an amount equal to the deduction
22        allowed under Section 199 of the Internal Revenue Code
23        for the taxable year;
24            (E-18) for taxable years beginning after December
25        31, 2018, an amount equal to the deduction allowed
26        under Section 250(a)(1)(A) of the Internal Revenue

 

 

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

 

 

HB2871- 42 -LRB102 10759 HLH 16088 b

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

 

 

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

 

 

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

 

 

HB2871- 45 -LRB102 10759 HLH 16088 b

1        Sub-Zone located in Illinois. No taxpayer that is
2        eligible for the deduction provided in subparagraph
3        (M) of paragraph (2) of this subsection shall be
4        eligible for the deduction provided under this
5        subparagraph (M-1). The subtraction modification
6        available to taxpayers in any year under this
7        subsection shall be that portion of the total interest
8        paid by the borrower with respect to such loan
9        attributable to the eligible property as calculated
10        under the previous sentence;
11            (N) Two times any contribution made during the
12        taxable year to a designated zone organization to the
13        extent that the contribution (i) qualifies as a
14        charitable contribution under subsection (c) of
15        Section 170 of the Internal Revenue Code and (ii)
16        must, by its terms, be used for a project approved by
17        the Department of Commerce and Economic Opportunity
18        under Section 11 of the Illinois Enterprise Zone Act
19        or under Section 10-10 of the River Edge Redevelopment
20        Zone Act. This subparagraph (N) is exempt from the
21        provisions of Section 250;
22            (O) An amount equal to: (i) 85% for taxable years
23        ending on or before December 31, 1992, or, a
24        percentage equal to the percentage allowable under
25        Section 243(a)(1) of the Internal Revenue Code of 1986
26        for taxable years ending after December 31, 1992, of

 

 

HB2871- 46 -LRB102 10759 HLH 16088 b

1        the amount by which dividends included in taxable
2        income and received from a corporation that is not
3        created or organized under the laws of the United
4        States or any state or political subdivision thereof,
5        including, for taxable years ending on or after
6        December 31, 1988, dividends received or deemed
7        received or paid or deemed paid under Sections 951
8        through 965 of the Internal Revenue Code, exceed the
9        amount of the modification provided under subparagraph
10        (G) of paragraph (2) of this subsection (b) which is
11        related to such dividends, and including, for taxable
12        years ending on or after December 31, 2008, dividends
13        received from a captive real estate investment trust;
14        plus (ii) 100% of the amount by which dividends,
15        included in taxable income and received, including,
16        for taxable years ending on or after December 31,
17        1988, dividends received or deemed received or paid or
18        deemed paid under Sections 951 through 964 of the
19        Internal Revenue Code and including, for taxable years
20        ending on or after December 31, 2008, dividends
21        received from a captive real estate investment trust,
22        from any such corporation specified in clause (i) that
23        would but for the provisions of Section 1504(b)(3) of
24        the Internal Revenue Code be treated as a member of the
25        affiliated group which includes the dividend
26        recipient, exceed the amount of the modification

 

 

HB2871- 47 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 48 -LRB102 10759 HLH 16088 b

1        31, 1997, in the case of a Subchapter S corporation, an
2        amount equal to all amounts of income allocable to a
3        shareholder subject to the Personal Property Tax
4        Replacement Income Tax imposed by subsections (c) and
5        (d) of Section 201 of this Act, including amounts
6        allocable to organizations exempt from federal income
7        tax by reason of Section 501(a) of the Internal
8        Revenue Code. This subparagraph (S) is exempt from the
9        provisions of Section 250;
10            (T) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not
22            including the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

HB2871- 49 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 50 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 51 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 52 -LRB102 10759 HLH 16088 b

1        203(b)(2)(E-12) for interest paid, accrued, or
2        incurred, directly or indirectly, to the same person.
3        This subparagraph (W) is exempt from the provisions of
4        Section 250;
5            (X) 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(b)(2)(E-13) for intangible expenses and costs
23        paid, accrued, or incurred, directly or indirectly, to
24        the same foreign person. This subparagraph (X) is
25        exempt from the provisions of Section 250;
26            (Y) For taxable years ending on or after December

 

 

HB2871- 53 -LRB102 10759 HLH 16088 b

1        31, 2011, in the case of a taxpayer who was required to
2        add back any insurance premiums under Section
3        203(b)(2)(E-14), such taxpayer may elect to subtract
4        that part of a reimbursement received from the
5        insurance company equal to the amount of the expense
6        or loss (including expenses incurred by the insurance
7        company) that would have been taken into account as a
8        deduction for federal income tax purposes if the
9        expense or loss had been uninsured. If a taxpayer
10        makes the election provided for by this subparagraph
11        (Y), the insurer to which the premiums were paid must
12        add back to income the amount subtracted by the
13        taxpayer pursuant to this subparagraph (Y). This
14        subparagraph (Y) is exempt from the provisions of
15        Section 250; and
16            (Z) The difference between the nondeductible
17        controlled foreign corporation dividends under Section
18        965(e)(3) of the Internal Revenue Code over the
19        taxable income of the taxpayer, computed without
20        regard to Section 965(e)(2)(A) of the Internal Revenue
21        Code, and without regard to any net operating loss
22        deduction. This subparagraph (Z) is exempt from the
23        provisions of Section 250.
24        (3) Special rule. For purposes of paragraph (2)(A),
25    "gross income" in the case of a life insurance company,
26    for tax years ending on and after December 31, 1994, and

 

 

HB2871- 54 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 55 -LRB102 10759 HLH 16088 b

1        the computation of taxable income for the taxable
2        year;
3            (D) The amount of any net operating loss deduction
4        taken in arriving at taxable income, other than a net
5        operating loss carried forward from a taxable year
6        ending prior to December 31, 1986;
7            (E) For taxable years in which a net operating
8        loss carryback or carryforward from a taxable year
9        ending prior to December 31, 1986 is an element of
10        taxable income under paragraph (1) of subsection (e)
11        or subparagraph (E) of paragraph (2) of subsection
12        (e), the amount by which addition modifications other
13        than those provided by this subparagraph (E) exceeded
14        subtraction modifications in such taxable year, with
15        the following limitations applied in the order that
16        they are listed:
17                (i) the addition modification relating to the
18            net operating loss carried back or forward to the
19            taxable year from any taxable year ending prior to
20            December 31, 1986 shall be reduced by the amount
21            of addition modification under this subparagraph
22            (E) which related to that net operating loss and
23            which was taken into account in calculating the
24            base income of an earlier taxable year, and
25                (ii) the addition modification relating to the
26            net operating loss carried back or forward to the

 

 

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1            taxable year from any taxable year ending prior to
2            December 31, 1986 shall not exceed the amount of
3            such carryback or carryforward;
4            For taxable years in which there is a net
5        operating loss carryback or carryforward from more
6        than one other taxable year ending prior to December
7        31, 1986, the addition modification provided in this
8        subparagraph (E) shall be the sum of the amounts
9        computed independently under the preceding provisions
10        of this subparagraph (E) for each such taxable year;
11            (F) For taxable years ending on or after January
12        1, 1989, an amount equal to the tax deducted pursuant
13        to Section 164 of the Internal Revenue Code if the
14        trust or estate is claiming the same tax for purposes
15        of the Illinois foreign tax credit under Section 601
16        of this Act;
17            (G) An amount equal to the amount of the capital
18        gain deduction allowable under the Internal Revenue
19        Code, to the extent deducted from gross income in the
20        computation of taxable income;
21            (G-5) For taxable years ending after December 31,
22        1997, an amount equal to any eligible remediation
23        costs that the trust or estate deducted in computing
24        adjusted gross income and for which the trust or
25        estate claims a credit under subsection (l) of Section
26        201;

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB2871- 65 -LRB102 10759 HLH 16088 b

1            (G-15) 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            (G-16) 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    and by deducting from the total so obtained the sum of the
10    following amounts:
11            (H) An amount equal to all amounts included in
12        such total pursuant to the provisions of Sections
13        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
14        of the Internal Revenue Code or included in such total
15        as distributions under the provisions of any
16        retirement or disability plan for employees of any
17        governmental agency or unit, or retirement payments to
18        retired partners, which payments are excluded in
19        computing net earnings from self employment by Section
20        1402 of the Internal Revenue Code and regulations
21        adopted pursuant thereto;
22            (I) The valuation limitation amount;
23            (J) An amount equal to the amount of any tax
24        imposed by this Act which was refunded to the taxpayer
25        and included in such total for the taxable year;
26            (K) An amount equal to all amounts included in

 

 

HB2871- 66 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 67 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 68 -LRB102 10759 HLH 16088 b

1            (Q) 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

 

 

HB2871- 69 -LRB102 10759 HLH 16088 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            (R) For taxable years 2001 and thereafter, for the
9        taxable year in which the bonus depreciation deduction
10        is taken on the taxpayer's federal income tax return
11        under subsection (k) of Section 168 of the Internal
12        Revenue Code and for each applicable taxable year
13        thereafter, an amount equal to "x", where:
14                (1) "y" equals the amount of the depreciation
15            deduction taken for the taxable year on the
16            taxpayer's federal income tax return on property
17            for which the bonus depreciation deduction was
18            taken in any year under subsection (k) of Section
19            168 of the Internal Revenue Code, but not
20            including the bonus depreciation deduction;
21                (2) for taxable years ending on or before
22            December 31, 2005, "x" equals "y" multiplied by 30
23            and then divided by 70 (or "y" multiplied by
24            0.429); and
25                (3) for taxable years ending after December
26            31, 2005:

 

 

HB2871- 70 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 71 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 72 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 73 -LRB102 10759 HLH 16088 b

1        that person's total business activity and (ii) for
2        taxable years ending on or after December 31, 2008, to
3        a person who would be a member of the same unitary
4        business group but for the fact that the person is
5        prohibited under Section 1501(a)(27) from being
6        included in the unitary business group because he or
7        she is ordinarily required to apportion business
8        income under different subsections of Section 304, but
9        not to exceed the addition modification required to be
10        made for the same taxable year under Section
11        203(c)(2)(G-13) for intangible expenses and costs
12        paid, accrued, or incurred, directly or indirectly, to
13        the same foreign person. This subparagraph (V) is
14        exempt from the provisions of Section 250;
15            (W) in the case of an estate, an amount equal to
16        all amounts included in such total pursuant to the
17        provisions of Section 111 of the Internal Revenue Code
18        as a recovery of items previously deducted by the
19        decedent from adjusted gross income in the computation
20        of taxable income. This subparagraph (W) is exempt
21        from Section 250;
22            (X) an amount equal to the refund included in such
23        total of any tax deducted for federal income tax
24        purposes, to the extent that deduction was added back
25        under subparagraph (F). This subparagraph (X) is
26        exempt from the provisions of Section 250;

 

 

HB2871- 74 -LRB102 10759 HLH 16088 b

1            (Y) For taxable years ending on or after December
2        31, 2011, in the case of a taxpayer who was required to
3        add back any insurance premiums under Section
4        203(c)(2)(G-14), such taxpayer may elect to subtract
5        that part of a reimbursement received from the
6        insurance company equal to the amount of the expense
7        or loss (including expenses incurred by the insurance
8        company) that would have been taken into account as a
9        deduction for federal income tax purposes if the
10        expense or loss had been uninsured. If a taxpayer
11        makes the election provided for by this subparagraph
12        (Y), the insurer to which the premiums were paid must
13        add back to income the amount subtracted by the
14        taxpayer pursuant to this subparagraph (Y). This
15        subparagraph (Y) is exempt from the provisions of
16        Section 250; and
17            (Z) For taxable years beginning after December 31,
18        2018 and before January 1, 2026, the amount of excess
19        business loss of the taxpayer disallowed as a
20        deduction by Section 461(l)(1)(B) of the Internal
21        Revenue Code.
22        (3) Limitation. The amount of any modification
23    otherwise required under this subsection shall, under
24    regulations prescribed by the Department, be adjusted by
25    any amounts included therein which were properly paid,
26    credited, or required to be distributed, or permanently

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                intangible expense or cost between the
2                taxpayer and the person did not have as a
3                principal purpose the avoidance of Illinois
4                income tax, and is paid pursuant to a contract
5                or agreement that reflects arm's-length terms;
6                or
7                (iii) any item of intangible expense or cost
8            paid, accrued, or incurred, directly or
9            indirectly, from a transaction with a person if
10            the taxpayer establishes by clear and convincing
11            evidence, that the adjustments are unreasonable;
12            or if the taxpayer and the Director agree in
13            writing to the application or use of an
14            alternative method of apportionment under Section
15            304(f);
16                Nothing in this subsection shall preclude the
17            Director from making any other adjustment
18            otherwise allowed under Section 404 of this Act
19            for any tax year beginning after the effective
20            date of this amendment provided such adjustment is
21            made pursuant to regulation adopted by the
22            Department and such regulations provide methods
23            and standards by which the Department will utilize
24            its authority under Section 404 of this Act;
25            (D-9) For taxable years ending on or after
26        December 31, 2008, an amount equal to the amount of

 

 

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1        insurance premium expenses and costs otherwise allowed
2        as a deduction in computing base income, and that were
3        paid, accrued, or incurred, directly or indirectly, 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. The
10        addition modification required by this subparagraph
11        shall be reduced to the extent that dividends were
12        included in base income of the unitary group for the
13        same taxable year and received by the taxpayer or by a
14        member of the taxpayer's unitary business group
15        (including amounts included in gross income under
16        Sections 951 through 964 of the Internal Revenue Code
17        and amounts included in gross income under Section 78
18        of the Internal Revenue Code) with respect to the
19        stock of the same person to whom the premiums and costs
20        were directly or indirectly paid, incurred, or
21        accrued. The preceding sentence does not apply to the
22        extent that the same dividends caused a reduction to
23        the addition modification required under Section
24        203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
25            (D-10) An amount equal to the credit allowable to
26        the taxpayer under Section 218(a) of this Act,

 

 

HB2871- 84 -LRB102 10759 HLH 16088 b

1        determined without regard to Section 218(c) of this
2        Act;
3            (D-11) For taxable years ending on or after
4        December 31, 2017, an amount equal to the deduction
5        allowed under Section 199 of the Internal Revenue Code
6        for the taxable year;
7    and by deducting from the total so obtained the following
8    amounts:
9            (E) The valuation limitation amount;
10            (F) An amount equal to the amount of any tax
11        imposed by this Act which was refunded to the taxpayer
12        and included in such total for the taxable year;
13            (G) An amount equal to all amounts included in
14        taxable income as modified by subparagraphs (A), (B),
15        (C) and (D) which are exempt from taxation by this
16        State either by reason of its statutes or Constitution
17        or by reason of the Constitution, treaties or statutes
18        of the United States; provided that, in the case of any
19        statute of this State that exempts income derived from
20        bonds or other obligations from the tax imposed under
21        this Act, the amount exempted shall be the interest
22        net of bond premium amortization;
23            (H) Any income of the partnership which
24        constitutes personal service income as defined in
25        Section 1348(b)(1) of the Internal Revenue Code (as in
26        effect December 31, 1981) or a reasonable allowance

 

 

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1        for compensation paid or accrued for services rendered
2        by partners to the partnership, whichever is greater;
3        this subparagraph (H) is exempt from the provisions of
4        Section 250;
5            (I) An amount equal to all amounts of income
6        distributable to an entity subject to the Personal
7        Property Tax Replacement Income Tax imposed by
8        subsections (c) and (d) of Section 201 of this Act
9        including amounts distributable to organizations
10        exempt from federal income tax by reason of Section
11        501(a) of the Internal Revenue Code; this subparagraph
12        (I) is exempt from the provisions of Section 250;
13            (J) With the exception of any amounts subtracted
14        under subparagraph (G), an amount equal to the sum of
15        all amounts disallowed as deductions by (i) Sections
16        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
17        and all amounts of expenses allocable to interest and
18        disallowed as deductions by Section 265(a)(1) of the
19        Internal Revenue Code; and (ii) for taxable years
20        ending on or after August 13, 1999, Sections
21        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
22        Internal Revenue Code, plus, (iii) for taxable years
23        ending on or after December 31, 2011, Section
24        45G(e)(3) of the Internal Revenue Code and, for
25        taxable years ending on or after December 31, 2008,
26        any amount included in gross income under Section 87

 

 

HB2871- 86 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 87 -LRB102 10759 HLH 16088 b

1        right for the taxable year pursuant to Section 1341 of
2        the Internal Revenue Code;
3            (O) 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

 

 

HB2871- 88 -LRB102 10759 HLH 16088 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 (O) is exempt from the provisions of
12        Section 250;
13            (P) If the taxpayer sells, transfers, abandons, or
14        otherwise disposes of property for which the taxpayer
15        was required in any taxable year to make an addition
16        modification under subparagraph (D-5), then an amount
17        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-5), 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

 

 

HB2871- 89 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 90 -LRB102 10759 HLH 16088 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(d)(2)(D-7) for interest paid, accrued, or
13        incurred, directly or indirectly, to the same person.
14        This subparagraph (R) is exempt from Section 250;
15            (S) An amount equal to the income from intangible
16        property taken into account for the taxable year (net
17        of the deductions allocable thereto) with respect to
18        transactions with (i) a foreign person who would be a
19        member of the taxpayer's unitary business group but
20        for the fact that the foreign person's business
21        activity outside the United States is 80% or more of
22        that person's total business activity and (ii) for
23        taxable years ending on or after December 31, 2008, to
24        a person who would be a member of the same unitary
25        business group but for the fact that the person is
26        prohibited under Section 1501(a)(27) from being

 

 

HB2871- 91 -LRB102 10759 HLH 16088 b

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

 

 

HB2871- 92 -LRB102 10759 HLH 16088 b

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

 

 

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

 

 

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

 

 

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

 

 

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1        Section 1363(b) of the Internal Revenue Code, except
2        that taxable income shall take into account those
3        items which are required by Section 1363(b)(1) of the
4        Internal Revenue Code to be separately stated; and
5        (ii) a Subchapter S corporation for which there is in
6        effect a federal election to opt out of the provisions
7        of the Subchapter S Revision Act of 1982 and have
8        applied instead the prior federal Subchapter S rules
9        as in effect on July 1, 1982, the taxable income of
10        such corporation determined in accordance with the
11        federal Subchapter S rules as in effect on July 1,
12        1982; and
13            (H) Partnerships. In the case of a partnership,
14        taxable income determined in accordance with Section
15        703 of the Internal Revenue Code, except that taxable
16        income shall take into account those items which are
17        required by Section 703(a)(1) to be separately stated
18        but which would be taken into account by an individual
19        in calculating his taxable income.
20        (3) Recapture of business expenses on disposition of
21    asset or business. Notwithstanding any other law to the
22    contrary, if in prior years income from an asset or
23    business has been classified as business income and in a
24    later year is demonstrated to be non-business income, then
25    all expenses, without limitation, deducted in such later
26    year and in the 2 immediately preceding taxable years

 

 

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1    related to that asset or business that generated the
2    non-business income shall be added back and recaptured as
3    business income in the year of the disposition of the
4    asset or business. Such amount shall be apportioned to
5    Illinois using the greater of the apportionment fraction
6    computed for the business under Section 304 of this Act
7    for the taxable year or the average of the apportionment
8    fractions computed for the business under Section 304 of
9    this Act for the taxable year and for the 2 immediately
10    preceding taxable years.
 
11    (f) Valuation limitation amount.
12        (1) In general. The valuation limitation amount
13    referred to in subsections (a)(2)(G), (c)(2)(I) and
14    (d)(2)(E) is an amount equal to:
15            (A) The sum of the pre-August 1, 1969 appreciation
16        amounts (to the extent consisting of gain reportable
17        under the provisions of Section 1245 or 1250 of the
18        Internal Revenue Code) for all property in respect of
19        which such gain was reported for the taxable year;
20        plus
21            (B) The lesser of (i) the sum of the pre-August 1,
22        1969 appreciation amounts (to the extent consisting of
23        capital gain) for all property in respect of which
24        such gain was reported for federal income tax purposes
25        for the taxable year, or (ii) the net capital gain for

 

 

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

 

 

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1            (C) The Department shall prescribe such
2        regulations as may be necessary to carry out the
3        purposes of this paragraph.
 
4    (g) Double deductions. Unless specifically provided
5otherwise, nothing in this Section shall permit the same item
6to be deducted more than once.
 
7    (g-5) For taxable years beginning on or after January 1,
82022, in calculating the taxpayer's base income, the
9taxpayer's federal adjusted gross income shall also be
10modified to exclude the portion of the income or loss received
11from a trade or business conducted within and without Illinois
12or from a pass-through entity conducting business within and
13without Illinois that is not derived from or connected with
14Illinois sources as determined in the provisions in Article 3
15of this Act. This subsection (g-5) is exempt from the
16provisions of Section 250.
 
17    (h) Legislative intention. Except as expressly provided by
18this Section there shall be no modifications or limitations on
19the amounts of income, gain, loss or deduction taken into
20account in determining gross income, adjusted gross income or
21taxable income for federal income tax purposes for the taxable
22year, or in the amount of such items entering into the
23computation of base income and net income under this Act for

 

 

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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    (35 ILCS 5/601)  (from Ch. 120, par. 6-601)
6    Sec. 601. Payment on due date of return.
7    (a) In general. Every taxpayer required to file a return
8under this Act shall, without assessment, notice or demand,
9pay any tax due thereon to the Department, at the place fixed
10for filing, on or before the date fixed for filing such return
11(determined without regard to any extension of time for filing
12the return) pursuant to regulations prescribed by the
13Department. If, however, the due date for payment of a
14taxpayer's federal income tax liability for a tax year (as
15provided in the Internal Revenue Code or by Treasury
16regulation, or as extended by the Internal Revenue Service) is
17later than the date fixed for filing the taxpayer's Illinois
18income tax return for that tax year, the Department may, by
19rule, prescribe a due date for payment that is not later than
20the due date for payment of the taxpayer's federal income tax
21liability. For purposes of the Illinois Administrative
22Procedure Act, the adoption of rules to prescribe a later due
23date for payment shall be deemed an emergency and necessary
24for the public interest, safety, and welfare.
25    (b) Amount payable. In making payment as provided in this

 

 

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1section there shall remain payable only the balance of such
2tax remaining due after giving effect to the following:
3        (1) Withheld tax. Any amount withheld during any
4    calendar year pursuant to Article 7 from compensation paid
5    to a taxpayer shall be deemed to have been paid on account
6    of any tax imposed by subsections 201(a) and (b) of this
7    Act on such taxpayer for his taxable year beginning in
8    such calendar year. If more than one taxable year begins
9    in a calendar year, such amount shall be deemed to have
10    been paid on account of such tax for the last taxable year
11    so beginning.
12        (2) Estimated and tentative tax payments. Any amount
13    of estimated tax paid by a taxpayer pursuant to Article 8
14    for a taxable year shall be deemed to have been paid on
15    account of the tax imposed by this Act for such taxable
16    year.
17        (3) Foreign tax. For taxable years beginning prior to
18    January 1, 2022, the The aggregate amount of tax which is
19    imposed upon or measured by income and which is paid by a
20    resident for a taxable year to another state or states on
21    income which is also subject to the tax imposed by
22    subsections 201(a) and (b) of this Act shall be credited
23    against the tax imposed by subsections 201(a) and (b)
24    otherwise due under this Act for such taxable year. For
25    taxable years ending prior to December 31, 2009 but
26    beginning prior to January 1, 2022, the aggregate credit

 

 

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1    provided under this paragraph shall not exceed that amount
2    which bears the same ratio to the tax imposed by
3    subsections 201(a) and (b) otherwise due under this Act as
4    the amount of the taxpayer's base income subject to tax
5    both by such other state or states and by this State bears
6    to his total base income subject to tax by this State for
7    the taxable year. For taxable years ending on or after
8    December 31, 2009 but beginning prior to January 1, 2022,
9    the credit provided under this paragraph for tax paid to
10    other states shall not exceed that amount which bears the
11    same ratio to the tax imposed by subsections 201(a) and
12    (b) otherwise due under this Act as the amount of the
13    taxpayer's base income that would be allocated or
14    apportioned to other states if all other states had
15    adopted the provisions in Article 3 of this Act bears to
16    the taxpayer's total base income subject to tax by this
17    State for the taxable year. This subsection is exempt from
18    the 30-day threshold set forth in subparagraph (iii) of
19    paragraph (B) of item (2) of subsection (a) of Section
20    304. The credit provided by this paragraph shall not be
21    allowed if any creditable tax was deducted in determining
22    base income for the taxable year. Any person claiming such
23    credit shall attach a statement in support thereof and
24    shall notify the Director of any refund or reductions in
25    the amount of tax claimed as a credit hereunder all in such
26    manner and at such time as the Department shall by

 

 

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1    regulations prescribe.
2        (4) Accumulation and capital gain distributions. If
3    the net income of a taxpayer includes amounts included in
4    his base income by reason of Section 667 of the Internal
5    Revenue Code (relating to accumulation and capital gain
6    distributions by a trust, respectively), the tax imposed
7    on such taxpayer by this Act shall be credited with his pro
8    rata portion of the taxes imposed by this Act on such trust
9    for preceding taxable years which would not have been
10    payable for such preceding years if the trust had in fact
11    made distributions to its beneficiaries at the times and
12    in the amounts specified in Sections 666 and 669 of the
13    Internal Revenue Code. The credit provided by this
14    paragraph shall not reduce the tax otherwise due from the
15    taxpayer to an amount less than that which would be due if
16    the amounts included by reason of Section 667 of the
17    Internal Revenue Code were excluded from his or her base
18    income.
19    (c) Cross reference. For application against tax due of
20overpayments of tax for a prior year, see Section 909.
21(Source: P.A. 101-585, eff. 8-26-19.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.