102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB0490

 

Introduced 2/23/2021, by Sen. Win Stoller

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203  from Ch. 120, par. 2-203
35 ILCS 735/3-3.5 new

    Amends the Illinois Income Tax Act. Creates an income tax deduction for an amount of up to $50,000 per tax year contributed to a small business asset purchase account and all interest earned on such accounts during the tax year. Provides that a "small business asset purchase account" means an account established by a taxpayer, the proceeds of which are used to purchase property used primarily in Illinois for which a federal income tax deduction is claimed under Section 179 of the Internal Revenue Code. Provides an addition modification for amounts withdrawn from a small business asset purchase account that are not used for qualified purchases. Amends the Uniform Penalty and Interest Act to establish a penalty for improper use of moneys in a small business asset purchase account. Effective immediately.


LRB102 04170 HLH 14187 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB0490LRB102 04170 HLH 14187 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        the taxpayer under Section 218(a) of this Act,
2        determined without regard to Section 218(c) of this
3        Act;
4            (D-24) For taxable years ending on or after
5        December 31, 2017, an amount equal to the deduction
6        allowed under Section 199 of the Internal Revenue Code
7        for the taxable year;
8            (D-25) An amount withdrawn from a small business
9        asset purchase account that is not used for purchases
10        of property for which a deduction under Section 179 of
11        the Internal Revenue Code is claimed for the tax year
12        in which the amount is withdrawn and which property is
13        used predominantly in Illinois; such amounts are
14        subject to the 10% penalty for ineligible use under
15        Section 3-3.5 of the Uniform Penalty and Interest Act;
16    and by deducting from the total so obtained the sum of the
17    following amounts:
18            (E) For taxable years ending before December 31,
19        2001, any amount included in such total in respect of
20        any compensation (including but not limited to any
21        compensation paid or accrued to a serviceman while a
22        prisoner of war or missing in action) paid to a
23        resident by reason of being on active duty in the Armed
24        Forces of the United States and in respect of any
25        compensation paid or accrued to a resident who as a
26        governmental employee was a prisoner of war or missing

 

 

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

 

 

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1        408 of the Internal Revenue Code, or included in such
2        total as distributions under the provisions of any
3        retirement or disability plan for employees of any
4        governmental agency or unit, or retirement payments to
5        retired partners, which payments are excluded in
6        computing net earnings from self employment by Section
7        1402 of the Internal Revenue Code and regulations
8        adopted pursuant thereto;
9            (G) The valuation limitation amount;
10            (H) 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            (I) An amount equal to all amounts included in
14        such total pursuant to the provisions of Section 111
15        of the Internal Revenue Code as a recovery of items
16        previously deducted from adjusted gross income in the
17        computation of taxable income;
18            (J) An amount equal to those dividends included in
19        such total which were paid by a corporation which
20        conducts business operations in a River Edge
21        Redevelopment Zone or zones created under the River
22        Edge Redevelopment Zone Act, and conducts
23        substantially all of its operations in a River Edge
24        Redevelopment Zone or zones. This subparagraph (J) is
25        exempt from the provisions of Section 250;
26            (K) An amount equal to those dividends included in

 

 

SB0490- 18 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 19 -LRB102 04170 HLH 14187 b

1        included in gross income under Section 87 of the
2        Internal Revenue Code; the provisions of this
3        subparagraph are exempt from the provisions of Section
4        250;
5            (N) An amount equal to all amounts included in
6        such total which are exempt from taxation by this
7        State either by reason of its statutes or Constitution
8        or by reason of the Constitution, treaties or statutes
9        of the United States; provided that, in the case of any
10        statute of this State that exempts income derived from
11        bonds or other obligations from the tax imposed under
12        this Act, the amount exempted shall be the interest
13        net of bond premium amortization;
14            (O) An amount equal to any contribution made to a
15        job training project established pursuant to the Tax
16        Increment Allocation Redevelopment Act;
17            (P) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code or of any itemized deduction
22        taken from adjusted gross income in the computation of
23        taxable income for restoration of substantial amounts
24        held under claim of right for the taxable year;
25            (Q) An amount equal to any amounts included in
26        such total, received by the taxpayer as an

 

 

SB0490- 20 -LRB102 04170 HLH 14187 b

1        acceleration in the payment of life, endowment or
2        annuity benefits in advance of the time they would
3        otherwise be payable as an indemnity for a terminal
4        illness;
5            (R) An amount equal to the amount of any federal or
6        State bonus paid to veterans of the Persian Gulf War;
7            (S) An amount, to the extent included in adjusted
8        gross income, equal to the amount of a contribution
9        made in the taxable year on behalf of the taxpayer to a
10        medical care savings account established under the
11        Medical Care Savings Account Act or the Medical Care
12        Savings Account Act of 2000 to the extent the
13        contribution is accepted by the account administrator
14        as provided in that Act;
15            (T) An amount, to the extent included in adjusted
16        gross income, equal to the amount of interest earned
17        in the taxable year on a medical care savings account
18        established under the Medical Care Savings Account Act
19        or the Medical Care Savings Account Act of 2000 on
20        behalf of the taxpayer, other than interest added
21        pursuant to item (D-5) of this paragraph (2);
22            (U) For one taxable year beginning on or after
23        January 1, 1994, an amount equal to the total amount of
24        tax imposed and paid under subsections (a) and (b) of
25        Section 201 of this Act on grant amounts received by
26        the taxpayer under the Nursing Home Grant Assistance

 

 

SB0490- 21 -LRB102 04170 HLH 14187 b

1        Act during the taxpayer's taxable years 1992 and 1993;
2            (V) Beginning with tax years ending on or after
3        December 31, 1995 and ending with tax years ending on
4        or before December 31, 2004, an amount equal to the
5        amount paid by a taxpayer who is a self-employed
6        taxpayer, a partner of a partnership, or a shareholder
7        in a Subchapter S corporation for health insurance or
8        long-term care insurance for that taxpayer or that
9        taxpayer's spouse or dependents, to the extent that
10        the amount paid for that health insurance or long-term
11        care insurance may be deducted under Section 213 of
12        the Internal Revenue Code, has not been deducted on
13        the federal income tax return of the taxpayer, and
14        does not exceed the taxable income attributable to
15        that taxpayer's income, self-employment income, or
16        Subchapter S corporation income; except that no
17        deduction shall be allowed under this item (V) if the
18        taxpayer is eligible to participate in any health
19        insurance or long-term care insurance plan of an
20        employer of the taxpayer or the taxpayer's spouse. The
21        amount of the health insurance and long-term care
22        insurance subtracted under this item (V) shall be
23        determined by multiplying total health insurance and
24        long-term care insurance premiums paid by the taxpayer
25        times a number that represents the fractional
26        percentage of eligible medical expenses under Section

 

 

SB0490- 22 -LRB102 04170 HLH 14187 b

1        213 of the Internal Revenue Code of 1986 not actually
2        deducted on the taxpayer's federal income tax return;
3            (W) For taxable years beginning on or after
4        January 1, 1998, all amounts included in the
5        taxpayer's federal gross income in the taxable year
6        from amounts converted from a regular IRA to a Roth
7        IRA. This paragraph is exempt from the provisions of
8        Section 250;
9            (X) For taxable year 1999 and thereafter, an
10        amount equal to the amount of any (i) distributions,
11        to the extent includible in gross income for federal
12        income tax purposes, made to the taxpayer because of
13        his or her status as a victim of persecution for racial
14        or religious reasons by Nazi Germany or any other Axis
15        regime or as an heir of the victim and (ii) items of
16        income, to the extent includible in gross income for
17        federal income tax purposes, attributable to, derived
18        from or in any way related to assets stolen from,
19        hidden from, or otherwise lost to a victim of
20        persecution for racial or religious reasons by Nazi
21        Germany or any other Axis regime immediately prior to,
22        during, and immediately after World War II, including,
23        but not limited to, interest on the proceeds
24        receivable as insurance under policies issued to a
25        victim of persecution for racial or religious reasons
26        by Nazi Germany or any other Axis regime by European

 

 

SB0490- 23 -LRB102 04170 HLH 14187 b

1        insurance companies immediately prior to and during
2        World War II; provided, however, this subtraction from
3        federal adjusted gross income does not apply to assets
4        acquired with such assets or with the proceeds from
5        the sale of such assets; provided, further, this
6        paragraph shall only apply to a taxpayer who was the
7        first recipient of such assets after their recovery
8        and who is a victim of persecution for racial or
9        religious reasons by Nazi Germany or any other Axis
10        regime or as an heir of the victim. The amount of and
11        the eligibility for any public assistance, benefit, or
12        similar entitlement is not affected by the inclusion
13        of items (i) and (ii) of this paragraph in gross income
14        for federal income tax purposes. This paragraph is
15        exempt from the provisions of Section 250;
16            (Y) For taxable years beginning on or after
17        January 1, 2002 and ending on or before December 31,
18        2004, moneys contributed in the taxable year to a
19        College Savings Pool account under Section 16.5 of the
20        State Treasurer Act, 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 taxable
24        years beginning on or after January 1, 2005, a maximum
25        of $10,000 contributed in the taxable year to (i) a
26        College Savings Pool account under Section 16.5 of the

 

 

SB0490- 24 -LRB102 04170 HLH 14187 b

1        State Treasurer Act or (ii) the Illinois Prepaid
2        Tuition Trust Fund, except that amounts excluded from
3        gross income under Section 529(c)(3)(C)(i) of the
4        Internal Revenue Code shall not be considered moneys
5        contributed under this subparagraph (Y). For purposes
6        of this subparagraph, contributions made by an
7        employer on behalf of an employee, or matching
8        contributions made by an employee, shall be treated as
9        made by the employee. This subparagraph (Y) is exempt
10        from the provisions of Section 250;
11            (Z) For taxable years 2001 and thereafter, for the
12        taxable year in which the bonus depreciation deduction
13        is taken on the taxpayer's federal income tax return
14        under subsection (k) of Section 168 of the Internal
15        Revenue Code and for each applicable taxable year
16        thereafter, an amount equal to "x", where:
17                (1) "y" equals the amount of the depreciation
18            deduction taken for the taxable year on the
19            taxpayer's federal income tax return on property
20            for which the bonus depreciation deduction was
21            taken in any year under subsection (k) of Section
22            168 of the Internal Revenue Code, but not
23            including the bonus depreciation deduction;
24                (2) for taxable years ending on or before
25            December 31, 2005, "x" equals "y" multiplied by 30
26            and then divided by 70 (or "y" multiplied by

 

 

SB0490- 25 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 26 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 27 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 28 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 29 -LRB102 04170 HLH 14187 b

1        provisions of Section 250;
2            (GG) For taxable years ending on or after December
3        31, 2011, in the case of a taxpayer who was required to
4        add back any insurance premiums under Section
5        203(a)(2)(D-19), such taxpayer may elect to subtract
6        that part of a reimbursement received from the
7        insurance company equal to the amount of the expense
8        or loss (including expenses incurred by the insurance
9        company) that would have been taken into account as a
10        deduction for federal income tax purposes if the
11        expense or loss had been uninsured. If a taxpayer
12        makes the election provided for by this subparagraph
13        (GG), the insurer to which the premiums were paid must
14        add back to income the amount subtracted by the
15        taxpayer pursuant to this subparagraph (GG). This
16        subparagraph (GG) is exempt from the provisions of
17        Section 250; and
18            (HH) For taxable years beginning on or after
19        January 1, 2018 and prior to January 1, 2023, a maximum
20        of $10,000 contributed in the taxable year to a
21        qualified ABLE account under Section 16.6 of the State
22        Treasurer Act, except that amounts excluded from gross
23        income under Section 529(c)(3)(C)(i) or Section
24        529A(c)(1)(C) of the Internal Revenue Code shall not
25        be considered moneys contributed under this
26        subparagraph (HH). For purposes of this subparagraph

 

 

SB0490- 30 -LRB102 04170 HLH 14187 b

1        (HH), contributions made by an employer on behalf of
2        an employee, or matching contributions made by an
3        employee, shall be treated as made by the employee;
4        and .
5            (II) For taxable years beginning on or after
6        January 1, 2022, an amount of up to $50,000 per tax
7        year contributed to a small business asset purchase
8        account during the tax year, plus all interest earned
9        on such accounts during the tax year; a "small
10        business asset purchase account" means an account
11        established by a taxpayer, the proceeds of which are
12        used to purchase property used primarily in Illinois
13        for which a federal income tax deduction is claimed
14        under Section 179 of the Internal Revenue Code.
 
15    (b) Corporations.
16        (1) In general. In the case of a corporation, base
17    income means an amount equal to the taxpayer's taxable
18    income for the taxable year as modified by paragraph (2).
19        (2) Modifications. The taxable income referred to in
20    paragraph (1) shall be modified by adding thereto the sum
21    of the following amounts:
22            (A) An amount equal to all amounts paid or accrued
23        to the taxpayer as interest and all distributions
24        received from regulated investment companies during
25        the taxable year to the extent excluded from gross

 

 

SB0490- 31 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 32 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 33 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 34 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 35 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 36 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 37 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 38 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 39 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 40 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 41 -LRB102 04170 HLH 14187 b

1        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
2        Act;
3            (E-15) For taxable years beginning after December
4        31, 2008, any deduction for dividends paid by a
5        captive real estate investment trust that is allowed
6        to a real estate investment trust under Section
7        857(b)(2)(B) of the Internal Revenue Code for
8        dividends paid;
9            (E-16) An amount equal to the credit allowable to
10        the taxpayer under Section 218(a) of this Act,
11        determined without regard to Section 218(c) of this
12        Act;
13            (E-17) For taxable years ending on or after
14        December 31, 2017, an amount equal to the deduction
15        allowed under Section 199 of the Internal Revenue Code
16        for the taxable year;
17            (E-18) for taxable years beginning after December
18        31, 2018, an amount equal to the deduction allowed
19        under Section 250(a)(1)(A) of the Internal Revenue
20        Code for the taxable year; .
21            (E-19) An amount withdrawn from a small business
22        asset purchase account that is not used for purchases
23        of property for which a deduction under Section 179 of
24        the Internal Revenue Code is claimed for the tax year
25        in which the amount is withdrawn and which property is
26        used predominantly in Illinois; such amounts are

 

 

SB0490- 42 -LRB102 04170 HLH 14187 b

1        subject to the 10% penalty for ineligible use under
2        Section 3-3.5 of the Uniform Penalty and Interest Act;
3    and by deducting from the total so obtained the sum of the
4    following amounts:
5            (F) An amount equal to the amount of any tax
6        imposed by this Act which was refunded to the taxpayer
7        and included in such total for the taxable year;
8            (G) An amount equal to any amount included in such
9        total under Section 78 of the Internal Revenue Code;
10            (H) In the case of a regulated investment company,
11        an amount equal to the amount of exempt interest
12        dividends as defined in subsection (b)(5) of Section
13        852 of the Internal Revenue Code, paid to shareholders
14        for the taxable year;
15            (I) With the exception of any amounts subtracted
16        under subparagraph (J), an amount equal to the sum of
17        all amounts disallowed as deductions by (i) Sections
18        171(a)(2), and 265(a)(2) and amounts disallowed as
19        interest expense by Section 291(a)(3) of the Internal
20        Revenue Code, and all amounts of expenses allocable to
21        interest and disallowed as deductions by Section
22        265(a)(1) of the Internal Revenue Code; and (ii) for
23        taxable years ending on or after August 13, 1999,
24        Sections 171(a)(2), 265, 280C, 291(a)(3), and
25        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
26        for tax years ending on or after December 31, 2011,

 

 

SB0490- 43 -LRB102 04170 HLH 14187 b

1        amounts disallowed as deductions by Section 45G(e)(3)
2        of the Internal Revenue Code and, for taxable years
3        ending on or after December 31, 2008, any amount
4        included in gross income under Section 87 of the
5        Internal Revenue Code and the policyholders' share of
6        tax-exempt interest of a life insurance company under
7        Section 807(a)(2)(B) of the Internal Revenue Code (in
8        the case of a life insurance company with gross income
9        from a decrease in reserves for the tax year) or
10        Section 807(b)(1)(B) of the Internal Revenue Code (in
11        the case of a life insurance company allowed a
12        deduction for an increase in reserves for the tax
13        year); the provisions of this subparagraph are exempt
14        from the provisions of Section 250;
15            (J) An amount equal to all amounts included in
16        such total which are exempt from taxation by this
17        State either by reason of its statutes or Constitution
18        or by reason of the Constitution, treaties or statutes
19        of the United States; provided that, in the case of any
20        statute of this State that exempts income derived from
21        bonds or other obligations from the tax imposed under
22        this Act, the amount exempted shall be the interest
23        net of bond premium amortization;
24            (K) An amount equal to those dividends included in
25        such total which were paid by a corporation which
26        conducts business operations in a River Edge

 

 

SB0490- 44 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 45 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 46 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 47 -LRB102 04170 HLH 14187 b

1        for taxable years ending after December 31, 1992, of
2        the amount by which dividends included in taxable
3        income and received from a corporation that is not
4        created or organized under the laws of the United
5        States or any state or political subdivision thereof,
6        including, for taxable years ending on or after
7        December 31, 1988, dividends received or deemed
8        received or paid or deemed paid under Sections 951
9        through 965 of the Internal Revenue Code, exceed the
10        amount of the modification provided under subparagraph
11        (G) of paragraph (2) of this subsection (b) which is
12        related to such dividends, and including, for taxable
13        years ending on or after December 31, 2008, dividends
14        received from a captive real estate investment trust;
15        plus (ii) 100% of the amount by which dividends,
16        included in taxable income and received, including,
17        for taxable years ending on or after December 31,
18        1988, dividends received or deemed received or paid or
19        deemed paid under Sections 951 through 964 of the
20        Internal Revenue Code and including, for taxable years
21        ending on or after December 31, 2008, dividends
22        received from a captive real estate investment trust,
23        from any such corporation specified in clause (i) that
24        would but for the provisions of Section 1504(b)(3) of
25        the Internal Revenue Code be treated as a member of the
26        affiliated group which includes the dividend

 

 

SB0490- 48 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 49 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 50 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 51 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 52 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 53 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 54 -LRB102 04170 HLH 14187 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(b)(2)(E-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) The difference between the nondeductible
18        controlled foreign corporation dividends under Section
19        965(e)(3) of the Internal Revenue Code over the
20        taxable income of the taxpayer, computed without
21        regard to Section 965(e)(2)(A) of the Internal Revenue
22        Code, and without regard to any net operating loss
23        deduction. This subparagraph (Z) is exempt from the
24        provisions of Section 250; and .
25            (AA) For taxable years beginning on or after
26        January 1, 2022, an amount of up to $50,000 per tax

 

 

SB0490- 55 -LRB102 04170 HLH 14187 b

1        year contributed to a small business asset purchase
2        account during the tax year, plus all interest earned
3        on such accounts during the tax year; a "small
4        business asset purchase account" means an account
5        established by a taxpayer, the proceeds of which are
6        used to purchase property used primarily in Illinois
7        for which a federal income tax deduction is claimed
8        under Section 179 of the Internal Revenue Code.
9        (3) Special rule. For purposes of paragraph (2)(A),
10    "gross income" in the case of a life insurance company,
11    for tax years ending on and after December 31, 1994, and
12    prior to December 31, 2011, shall mean the gross
13    investment income for the taxable year and, for tax years
14    ending on or after December 31, 2011, shall mean all
15    amounts included in life insurance gross income under
16    Section 803(a)(3) of the Internal Revenue Code.
 
17    (c) Trusts and estates.
18        (1) In general. In the case of a trust or estate, base
19    income means an amount equal to the taxpayer's taxable
20    income for the taxable year as modified by paragraph (2).
21        (2) Modifications. Subject to the provisions of
22    paragraph (3), the taxable income referred to in paragraph
23    (1) shall be modified by adding thereto the sum of the
24    following amounts:
25            (A) An amount equal to all amounts paid or accrued

 

 

SB0490- 56 -LRB102 04170 HLH 14187 b

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

 

 

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

 

 

SB0490- 58 -LRB102 04170 HLH 14187 b

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

 

 

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

 

 

SB0490- 60 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 61 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 62 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 63 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 64 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 65 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 66 -LRB102 04170 HLH 14187 b

1        (including amounts included in gross income under
2        Sections 951 through 964 of the Internal Revenue Code
3        and amounts included in gross income under Section 78
4        of the Internal Revenue Code) with respect to the
5        stock of the same person to whom the premiums and costs
6        were directly or indirectly paid, incurred, or
7        accrued. The preceding sentence does not apply to the
8        extent that the same dividends caused a reduction to
9        the addition modification required under Section
10        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
11        Act;
12            (G-15) An amount equal to the credit allowable to
13        the taxpayer under Section 218(a) of this Act,
14        determined without regard to Section 218(c) of this
15        Act;
16            (G-16) For taxable years ending on or after
17        December 31, 2017, an amount equal to the deduction
18        allowed under Section 199 of the Internal Revenue Code
19        for the taxable year;
20            (G-17) An amount withdrawn from a small business
21        asset purchase account that is not used for purchases
22        of property for which a deduction under Section 179 of
23        the Internal Revenue Code is claimed for the tax year
24        in which the amount is withdrawn and which property is
25        used predominantly in Illinois; such amounts are
26        subject to the 10% penalty for ineligible use under

 

 

SB0490- 67 -LRB102 04170 HLH 14187 b

1        Section 3-3.5 of the Uniform Penalty and Interest Act;
2    and by deducting from the total so obtained the sum of the
3    following amounts:
4            (H) An amount equal to all amounts included in
5        such total pursuant to the provisions of Sections
6        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
7        of the Internal Revenue Code or included in such total
8        as distributions under the provisions of any
9        retirement or disability plan for employees of any
10        governmental agency or unit, or retirement payments to
11        retired partners, which payments are excluded in
12        computing net earnings from self employment by Section
13        1402 of the Internal Revenue Code and regulations
14        adopted pursuant thereto;
15            (I) The valuation limitation amount;
16            (J) An amount equal to the amount of any tax
17        imposed by this Act which was refunded to the taxpayer
18        and included in such total for the taxable year;
19            (K) An amount equal to all amounts included in
20        taxable income as modified by subparagraphs (A), (B),
21        (C), (D), (E), (F) and (G) which are exempt from
22        taxation by this State either by reason of its
23        statutes or Constitution or by reason of the
24        Constitution, treaties or statutes of the United
25        States; provided that, in the case of any statute of
26        this State that exempts income derived from bonds or

 

 

SB0490- 68 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 69 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 70 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 71 -LRB102 04170 HLH 14187 b

1            (R) For taxable years 2001 and thereafter, for the
2        taxable year in which the bonus depreciation deduction
3        is taken on the taxpayer's federal income tax return
4        under subsection (k) of Section 168 of the Internal
5        Revenue Code and for each applicable taxable year
6        thereafter, an amount equal to "x", where:
7                (1) "y" equals the amount of the depreciation
8            deduction taken for the taxable year on the
9            taxpayer's federal income tax return on property
10            for which the bonus depreciation deduction was
11            taken in any year under subsection (k) of Section
12            168 of the Internal Revenue Code, but not
13            including the bonus depreciation deduction;
14                (2) for taxable years ending on or before
15            December 31, 2005, "x" equals "y" multiplied by 30
16            and then divided by 70 (or "y" multiplied by
17            0.429); and
18                (3) for taxable years ending after December
19            31, 2005:
20                    (i) for property on which a bonus
21                depreciation deduction of 30% of the adjusted
22                basis was taken, "x" equals "y" multiplied by
23                30 and then divided by 70 (or "y" multiplied
24                by 0.429); and
25                    (ii) for property on which a bonus
26                depreciation deduction of 50% of the adjusted

 

 

SB0490- 72 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 73 -LRB102 04170 HLH 14187 b

1        provisions of Section 250;
2            (T) The amount of (i) any interest income (net of
3        the deductions allocable thereto) taken into account
4        for the taxable year with respect to a transaction
5        with a taxpayer that is required to make an addition
6        modification with respect to such transaction under
7        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
8        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
9        the amount of such addition modification and (ii) any
10        income from intangible property (net of the deductions
11        allocable thereto) taken into account for the taxable
12        year with respect to a transaction with a taxpayer
13        that is required to make an addition modification with
14        respect to such transaction under Section
15        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
16        203(d)(2)(D-8), but not to exceed the amount of such
17        addition modification. This subparagraph (T) is exempt
18        from the provisions of Section 250;
19            (U) An amount equal to the interest income taken
20        into account for the taxable year (net of the
21        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 the foreign person's business activity
25        outside the United States is 80% or more of that
26        person's total business activity and (ii) for taxable

 

 

SB0490- 74 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 75 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 76 -LRB102 04170 HLH 14187 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        (Y), 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 (Y). This
8        subparagraph (Y) is exempt from the provisions of
9        Section 250; and
10            (Z) For taxable years beginning after December 31,
11        2018 and before January 1, 2026, the amount of excess
12        business loss of the taxpayer disallowed as a
13        deduction by Section 461(l)(1)(B) of the Internal
14        Revenue Code; and .
15            (AA) For taxable years beginning on or after
16        January 1, 2022, an amount of up to $50,000 per tax
17        year contributed to a small business asset purchase
18        account during the tax year, plus all interest earned
19        on such accounts during the tax year; a "small
20        business asset purchase account" means an account
21        established by a taxpayer, the proceeds of which are
22        used to purchase property used primarily in Illinois
23        for which a federal income tax deduction is claimed
24        under Section 179 of the Internal Revenue Code.
25        (3) Limitation. The amount of any modification
26    otherwise required under this subsection shall, under

 

 

SB0490- 77 -LRB102 04170 HLH 14187 b

1    regulations prescribed by the Department, be adjusted by
2    any amounts included therein which were properly paid,
3    credited, or required to be distributed, or permanently
4    set aside for charitable purposes pursuant to Internal
5    Revenue Code Section 642(c) during the taxable year.
 
6    (d) Partnerships.
7        (1) In general. In the case of a partnership, 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. The taxable income referred to in
11    paragraph (1) shall be modified by adding thereto the sum
12    of the following amounts:
13            (A) An amount equal to all amounts paid or accrued
14        to the taxpayer as interest or dividends during the
15        taxable year to the extent excluded from gross income
16        in the computation of taxable income;
17            (B) An amount equal to the amount of tax imposed by
18        this Act to the extent deducted from gross income for
19        the taxable year;
20            (C) The amount of deductions allowed to the
21        partnership pursuant to Section 707 (c) of the
22        Internal Revenue Code in calculating its taxable
23        income;
24            (D) An amount equal to the amount of the capital
25        gain deduction allowable under the Internal Revenue

 

 

SB0490- 78 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 79 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 80 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 81 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 82 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 83 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 84 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 85 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 86 -LRB102 04170 HLH 14187 b

1        203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
2            (D-10) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6            (D-11) For taxable years ending on or after
7        December 31, 2017, an amount equal to the deduction
8        allowed under Section 199 of the Internal Revenue Code
9        for the taxable year;
10            (D-12) An amount withdrawn from a small business
11        asset purchase account that is not used for purchases
12        of property for which a deduction under Section 179 of
13        the Internal Revenue Code is claimed for the tax year
14        in which the amount is withdrawn and which property is
15        used predominantly in Illinois; such amounts are
16        subject to the 10% penalty for ineligible use under
17        Section 3-3.5 of the Uniform Penalty and Interest Act;
18    and by deducting from the total so obtained the following
19    amounts:
20            (E) The valuation limitation amount;
21            (F) An amount equal to the amount of any tax
22        imposed by this Act which was refunded to the taxpayer
23        and included in such total for the taxable year;
24            (G) An amount equal to all amounts included in
25        taxable income as modified by subparagraphs (A), (B),
26        (C) and (D) which are exempt from taxation by this

 

 

SB0490- 87 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 88 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 89 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 90 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 91 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 92 -LRB102 04170 HLH 14187 b

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

 

 

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

 

 

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1        or loss (including expenses incurred by the insurance
2        company) that would have been taken into account as a
3        deduction for federal income tax purposes if the
4        expense or loss had been uninsured. If a taxpayer
5        makes the election provided for by this subparagraph
6        (T), the insurer to which the premiums were paid must
7        add back to income the amount subtracted by the
8        taxpayer pursuant to this subparagraph (T). This
9        subparagraph (T) is exempt from the provisions of
10        Section 250; and .
11            (U) For taxable years beginning on or after
12        January 1, 2022, an amount of up to $50,000 per tax
13        year contributed to a small business asset purchase
14        account during the tax year, plus all interest earned
15        on such accounts during the tax year; a "small
16        business asset purchase account" means an account
17        established by a taxpayer, the proceeds of which are
18        used to purchase property used primarily in Illinois
19        for which a federal income tax deduction is claimed
20        under Section 179 of the Internal Revenue Code.
 
21    (e) Gross income; adjusted gross income; taxable income.
22        (1) In general. Subject to the provisions of paragraph
23    (2) and subsection (b)(3), for purposes of this Section
24    and Section 803(e), a taxpayer's gross income, adjusted
25    gross income, or taxable income for the taxable year shall

 

 

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

 

 

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1    (e) applied in conjunction with Section 172 of the
2    Internal Revenue Code.
3        (2) Special rule. For purposes of paragraph (1) of
4    this subsection, the taxable income properly reportable
5    for federal income tax purposes shall mean:
6            (A) Certain life insurance companies. In the case
7        of a life insurance company subject to the tax imposed
8        by Section 801 of the Internal Revenue Code, life
9        insurance company taxable income, plus the amount of
10        distribution from pre-1984 policyholder surplus
11        accounts as calculated under Section 815a of the
12        Internal Revenue Code;
13            (B) Certain other insurance companies. In the case
14        of mutual insurance companies subject to the tax
15        imposed by Section 831 of the Internal Revenue Code,
16        insurance company taxable income;
17            (C) Regulated investment companies. In the case of
18        a regulated investment company subject to the tax
19        imposed by Section 852 of the Internal Revenue Code,
20        investment company taxable income;
21            (D) Real estate investment trusts. In the case of
22        a real estate investment trust subject to the tax
23        imposed by Section 857 of the Internal Revenue Code,
24        real estate investment trust taxable income;
25            (E) Consolidated corporations. In the case of a
26        corporation which is a member of an affiliated group

 

 

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1        of corporations filing a consolidated income tax
2        return for the taxable year for federal income tax
3        purposes, taxable income determined as if such
4        corporation had filed a separate return for federal
5        income tax purposes for the taxable year and each
6        preceding taxable year for which it was a member of an
7        affiliated group. For purposes of this subparagraph,
8        the taxpayer's separate taxable income shall be
9        determined as if the election provided by Section
10        243(b)(2) of the Internal Revenue Code had been in
11        effect for all such years;
12            (F) Cooperatives. In the case of a cooperative
13        corporation or association, the taxable income of such
14        organization determined in accordance with the
15        provisions of Section 1381 through 1388 of the
16        Internal Revenue Code, but without regard to the
17        prohibition against offsetting losses from patronage
18        activities against income from nonpatronage
19        activities; except that a cooperative corporation or
20        association may make an election to follow its federal
21        income tax treatment of patronage losses and
22        nonpatronage losses. In the event such election is
23        made, such losses shall be computed and carried over
24        in a manner consistent with subsection (a) of Section
25        207 of this Act and apportioned by the apportionment
26        factor reported by the cooperative on its Illinois

 

 

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

 

 

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

 

 

SB0490- 100 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 101 -LRB102 04170 HLH 14187 b

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

 

 

SB0490- 102 -LRB102 04170 HLH 14187 b

1otherwise, nothing in this Section shall permit the same item
2to be deducted more than once.
 
3    (h) Legislative intention. Except as expressly provided by
4this Section there shall be no modifications or limitations on
5the amounts of income, gain, loss or deduction taken into
6account in determining gross income, adjusted gross income or
7taxable income for federal income tax purposes for the taxable
8year, or in the amount of such items entering into the
9computation of base income and net income under this Act for
10such taxable year, whether in respect of property values as of
11August 1, 1969 or otherwise.
12(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
13101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)
 
14    Section 10. The Uniform Penalty and Interest Act is
15amended by adding Section 3-3.5 as follows:
 
16    (35 ILCS 735/3-3.5 new)
17    Sec. 3-3.5. Penalty for improper use of proceeds of Small
18Business Asset Purchase Account. A penalty of 10% of the
19amount withdrawn from a small business asset purchase account,
20as defined in Section 203 of the Illinois Income Tax Act,
21during a tax year that is used for purchases of property for
22which a deduction under Section 179 of the Internal Revenue
23Code is not claimed for the tax year in which the amount is

 

 

SB0490- 103 -LRB102 04170 HLH 14187 b

1withdrawn, or purchases of property for which the deduction
2under Section 179 of the Internal Revenue Code is claimed that
3is not used predominantly in Illinois.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.