102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2349

 

Introduced 2/26/2021, by Sen. Michael E. Hastings

 

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

    Amends the Illinois Income Tax Act. Creates a deduction for certain unreimbursed home office expenses. Effective immediately.


LRB102 16370 HLH 21757 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2349LRB102 16370 HLH 21757 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB2349- 19 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 20 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 21 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 22 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 23 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 24 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 25 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 26 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 27 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 28 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 29 -LRB102 16370 HLH 21757 b

1        company) that would have been taken into account as a
2        deduction for federal income tax purposes if the
3        expense or loss had been uninsured. If a taxpayer
4        makes the election provided for by this subparagraph
5        (GG), the insurer to which the premiums were paid must
6        add back to income the amount subtracted by the
7        taxpayer pursuant to this subparagraph (GG). This
8        subparagraph (GG) is exempt from the provisions of
9        Section 250; and
10            (HH) For taxable years beginning on or after
11        January 1, 2018 and prior to January 1, 2023, a maximum
12        of $10,000 contributed in the taxable year to a
13        qualified ABLE account under Section 16.6 of the State
14        Treasurer Act, except that amounts excluded from gross
15        income under Section 529(c)(3)(C)(i) or Section
16        529A(c)(1)(C) of the Internal Revenue Code shall not
17        be considered moneys contributed under this
18        subparagraph (HH). For purposes of this subparagraph
19        (HH), contributions made by an employer on behalf of
20        an employee, or matching contributions made by an
21        employee, shall be treated as made by the employee.
22            (II) For taxable years beginning on or after
23        January 1, 2022, unreimbursed home office expenses
24        incurred during the taxable year that would have been
25        eligible for a deduction when calculating the
26        taxpayer's federal adjusted gross income prior to

 

 

SB2349- 30 -LRB102 16370 HLH 21757 b

1        January 1, 2018 but are not eligible for such a
2        deduction in the current taxable year; this
3        subparagraph (II) is exempt from the provisions of
4        Section 250.
 
5    (b) Corporations.
6        (1) In general. In the case of a corporation, base
7    income means an amount equal to the taxpayer's taxable
8    income for the taxable year as modified by paragraph (2).
9        (2) Modifications. The taxable income referred to in
10    paragraph (1) shall be modified by adding thereto the sum
11    of the following amounts:
12            (A) An amount equal to all amounts paid or accrued
13        to the taxpayer as interest and all distributions
14        received from regulated investment companies during
15        the taxable year to the extent excluded from gross
16        income 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 in
19        the computation of taxable income for the taxable
20        year;
21            (C) In the case of a regulated investment company,
22        an amount equal to the excess of (i) the net long-term
23        capital gain for the taxable year, over (ii) the
24        amount of the capital gain dividends designated as
25        such in accordance with Section 852(b)(3)(C) of the

 

 

SB2349- 31 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 32 -LRB102 16370 HLH 21757 b

1            base income of an earlier taxable year, and
2                (ii) 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 not exceed the amount of
6            such carryback or carryforward;
7            For taxable years in which there is a net
8        operating loss carryback or carryforward from more
9        than one other taxable year ending prior to December
10        31, 1986, the addition modification provided in this
11        subparagraph (E) shall be the sum of the amounts
12        computed independently under the preceding provisions
13        of this subparagraph (E) for each such taxable year;
14            (E-5) For taxable years ending after December 31,
15        1997, an amount equal to any eligible remediation
16        costs that the corporation deducted in computing
17        adjusted gross income and for which the corporation
18        claims a credit under subsection (l) of Section 201;
19            (E-10) For taxable years 2001 and thereafter, an
20        amount equal to the bonus depreciation deduction taken
21        on the taxpayer's federal income tax return for the
22        taxable year under subsection (k) of Section 168 of
23        the Internal Revenue Code;
24            (E-11) If the taxpayer sells, transfers, abandons,
25        or otherwise disposes of property for which the
26        taxpayer was required in any taxable year to make an

 

 

SB2349- 33 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 34 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 35 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 36 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 37 -LRB102 16370 HLH 21757 b

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

 

 

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

 

 

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

 

 

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1        she is ordinarily required to apportion business
2        income under different subsections of Section 304. The
3        addition modification required by this subparagraph
4        shall be reduced to the extent that dividends were
5        included in base income of the unitary group for the
6        same taxable year and received by the taxpayer or by a
7        member of the taxpayer's unitary business group
8        (including amounts included in gross income under
9        Sections 951 through 964 of the Internal Revenue Code
10        and amounts included in gross income under Section 78
11        of the Internal Revenue Code) with respect to the
12        stock of the same person to whom the premiums and costs
13        were directly or indirectly paid, incurred, or
14        accrued. The preceding sentence does not apply to the
15        extent that the same dividends caused a reduction to
16        the addition modification required under Section
17        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
18        Act;
19            (E-15) For taxable years beginning after December
20        31, 2008, any deduction for dividends paid by a
21        captive real estate investment trust that is allowed
22        to a real estate investment trust under Section
23        857(b)(2)(B) of the Internal Revenue Code for
24        dividends paid;
25            (E-16) An amount equal to the credit allowable to
26        the taxpayer under Section 218(a) of this Act,

 

 

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1        determined without regard to Section 218(c) of this
2        Act;
3            (E-17) For taxable years ending on or after
4        December 31, 2017, an amount equal to the deduction
5        allowed under Section 199 of the Internal Revenue Code
6        for the taxable year;
7            (E-18) for taxable years beginning after December
8        31, 2018, an amount equal to the deduction allowed
9        under Section 250(a)(1)(A) of the Internal Revenue
10        Code for the taxable year.
11    and by deducting from the total so obtained the sum of the
12    following amounts:
13            (F) An amount equal to the amount of any tax
14        imposed by this Act which was refunded to the taxpayer
15        and included in such total for the taxable year;
16            (G) An amount equal to any amount included in such
17        total under Section 78 of the Internal Revenue Code;
18            (H) In the case of a regulated investment company,
19        an amount equal to the amount of exempt interest
20        dividends as defined in subsection (b)(5) of Section
21        852 of the Internal Revenue Code, paid to shareholders
22        for the taxable year;
23            (I) With the exception of any amounts subtracted
24        under subparagraph (J), an amount equal to the sum of
25        all amounts disallowed as deductions by (i) Sections
26        171(a)(2), and 265(a)(2) and amounts disallowed as

 

 

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

 

 

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

 

 

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

 

 

SB2349- 45 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 46 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 47 -LRB102 16370 HLH 21757 b

1        deemed paid under Sections 951 through 964 of the
2        Internal Revenue Code and including, for taxable years
3        ending on or after December 31, 2008, dividends
4        received from a captive real estate investment trust,
5        from any such corporation specified in clause (i) that
6        would but for the provisions of Section 1504(b)(3) of
7        the Internal Revenue Code be treated as a member of the
8        affiliated group which includes the dividend
9        recipient, exceed the amount of the modification
10        provided under subparagraph (G) of paragraph (2) of
11        this subsection (b) which is related to such
12        dividends. This subparagraph (O) is exempt from the
13        provisions of Section 250 of this Act;
14            (P) An amount equal to any contribution made to a
15        job training project established pursuant to the Tax
16        Increment Allocation Redevelopment Act;
17            (Q) 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;
22            (R) On and after July 20, 1999, in the case of an
23        attorney-in-fact with respect to whom an interinsurer
24        or a reciprocal insurer has made the election under
25        Section 835 of the Internal Revenue Code, 26 U.S.C.
26        835, an amount equal to the excess, if any, of the

 

 

SB2349- 48 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 49 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 50 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 51 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 52 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 53 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 54 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 55 -LRB102 16370 HLH 21757 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB2349- 65 -LRB102 16370 HLH 21757 b

1        and amounts included in gross income under Section 78
2        of the Internal Revenue Code) with respect to the
3        stock of the same person to whom the premiums and costs
4        were directly or indirectly paid, incurred, or
5        accrued. The preceding sentence does not apply to the
6        extent that the same dividends caused a reduction to
7        the addition modification required under Section
8        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
9        Act;
10            (G-15) An amount equal to the credit allowable to
11        the taxpayer under Section 218(a) of this Act,
12        determined without regard to Section 218(c) of this
13        Act;
14            (G-16) For taxable years ending on or after
15        December 31, 2017, an amount equal to the deduction
16        allowed under Section 199 of the Internal Revenue Code
17        for the taxable year;
18    and by deducting from the total so obtained the sum of the
19    following amounts:
20            (H) An amount equal to all amounts included in
21        such total pursuant to the provisions of Sections
22        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
23        of the Internal Revenue Code or included in such total
24        as distributions under the provisions of any
25        retirement or disability plan for employees of any
26        governmental agency or unit, or retirement payments to

 

 

SB2349- 66 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 67 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 68 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 69 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 70 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 71 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 72 -LRB102 16370 HLH 21757 b

1        allocable thereto) taken into account for the taxable
2        year with respect to a transaction with a taxpayer
3        that is required to make an addition modification with
4        respect to such transaction under Section
5        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
6        203(d)(2)(D-8), but not to exceed the amount of such
7        addition modification. This subparagraph (T) is exempt
8        from the provisions of Section 250;
9            (U) An amount equal to the interest income taken
10        into account for the taxable year (net of the
11        deductions allocable thereto) with respect to
12        transactions with (i) a foreign person who would be a
13        member of the taxpayer's unitary business group but
14        for the fact the foreign person's business activity
15        outside the United States is 80% or more of that
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, but not to exceed the
24        addition modification required to be made for the same
25        taxable year under Section 203(c)(2)(G-12) for
26        interest paid, accrued, or incurred, directly or

 

 

SB2349- 73 -LRB102 16370 HLH 21757 b

1        indirectly, to the same person. This subparagraph (U)
2        is exempt from the provisions of Section 250;
3            (V) An amount equal to the income from intangible
4        property taken into account for the taxable year (net
5        of the deductions allocable thereto) with respect to
6        transactions with (i) a foreign person who would be a
7        member of the taxpayer's unitary business group but
8        for the fact that the foreign person's business
9        activity outside the United States is 80% or more of
10        that person's total business activity and (ii) for
11        taxable years ending on or after December 31, 2008, 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, but
18        not to exceed the addition modification required to be
19        made for the same taxable year under Section
20        203(c)(2)(G-13) for intangible expenses and costs
21        paid, accrued, or incurred, directly or indirectly, to
22        the same foreign person. This subparagraph (V) is
23        exempt from the provisions of Section 250;
24            (W) in the case of an estate, an amount equal to
25        all amounts included in such total pursuant to the
26        provisions of Section 111 of the Internal Revenue Code

 

 

SB2349- 74 -LRB102 16370 HLH 21757 b

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

 

 

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1        2018 and before January 1, 2026, the amount of excess
2        business loss of the taxpayer disallowed as a
3        deduction by Section 461(l)(1)(B) of the Internal
4        Revenue Code.
5        (3) Limitation. The amount of any modification
6    otherwise required under this subsection shall, under
7    regulations prescribed by the Department, be adjusted by
8    any amounts included therein which were properly paid,
9    credited, or required to be distributed, or permanently
10    set aside for charitable purposes pursuant to Internal
11    Revenue Code Section 642(c) during the taxable year.
 
12    (d) Partnerships.
13        (1) In general. In the case of a partnership, base
14    income means an amount equal to the taxpayer's taxable
15    income for the taxable year as modified by paragraph (2).
16        (2) Modifications. The taxable income referred to in
17    paragraph (1) shall be modified by adding thereto the sum
18    of the following amounts:
19            (A) An amount equal to all amounts paid or accrued
20        to the taxpayer as interest or dividends during the
21        taxable year to the extent excluded from gross income
22        in the computation of taxable income;
23            (B) An amount equal to the amount of tax imposed by
24        this Act to the extent deducted from gross income for
25        the taxable year;

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB2349- 84 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 85 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 86 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 87 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 88 -LRB102 16370 HLH 21757 b

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

 

 

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

 

 

SB2349- 90 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 91 -LRB102 16370 HLH 21757 b

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

 

 

SB2349- 92 -LRB102 16370 HLH 21757 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        but which would be taken into account by an individual
2        in calculating his taxable income.
3        (3) Recapture of business expenses on disposition of
4    asset or business. Notwithstanding any other law to the
5    contrary, if in prior years income from an asset or
6    business has been classified as business income and in a
7    later year is demonstrated to be non-business income, then
8    all expenses, without limitation, deducted in such later
9    year and in the 2 immediately preceding taxable years
10    related to that asset or business that generated the
11    non-business income shall be added back and recaptured as
12    business income in the year of the disposition of the
13    asset or business. Such amount shall be apportioned to
14    Illinois using the greater of the apportionment fraction
15    computed for the business under Section 304 of this Act
16    for the taxable year or the average of the apportionment
17    fractions computed for the business under Section 304 of
18    this Act for the taxable year and for the 2 immediately
19    preceding taxable years.
 
20    (f) Valuation limitation amount.
21        (1) In general. The valuation limitation amount
22    referred to in subsections (a)(2)(G), (c)(2)(I) and
23    (d)(2)(E) is an amount equal to:
24            (A) The sum of the pre-August 1, 1969 appreciation
25        amounts (to the extent consisting of gain reportable

 

 

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1        under the provisions of Section 1245 or 1250 of the
2        Internal Revenue Code) for all property in respect of
3        which such gain was reported for the taxable year;
4        plus
5            (B) The lesser of (i) the sum of the pre-August 1,
6        1969 appreciation amounts (to the extent consisting of
7        capital gain) for all property in respect of which
8        such gain was reported for federal income tax purposes
9        for the taxable year, or (ii) the net capital gain for
10        the taxable year, reduced in either case by any amount
11        of such gain included in the amount determined under
12        subsection (a)(2)(F) or (c)(2)(H).
13        (2) Pre-August 1, 1969 appreciation amount.
14            (A) If the fair market value of property referred
15        to in paragraph (1) was readily ascertainable on
16        August 1, 1969, the pre-August 1, 1969 appreciation
17        amount for such property is the lesser of (i) the
18        excess of such fair market value over the taxpayer's
19        basis (for determining gain) for such property on that
20        date (determined under the Internal Revenue Code as in
21        effect on that date), or (ii) the total gain realized
22        and reportable for federal income tax purposes in
23        respect of the sale, exchange or other disposition of
24        such property.
25            (B) If the fair market value of property referred
26        to in paragraph (1) was not readily ascertainable on

 

 

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1        August 1, 1969, the pre-August 1, 1969 appreciation
2        amount for such property is that amount which bears
3        the same ratio to the total gain reported in respect of
4        the property for federal income tax purposes for the
5        taxable year, as the number of full calendar months in
6        that part of the taxpayer's holding period for the
7        property ending July 31, 1969 bears to the number of
8        full calendar months in the taxpayer's entire holding
9        period for the property.
10            (C) The Department shall prescribe such
11        regulations as may be necessary to carry out the
12        purposes of this paragraph.
 
13    (g) Double deductions. Unless specifically provided
14otherwise, nothing in this Section shall permit the same item
15to be deducted more than once.
 
16    (h) Legislative intention. Except as expressly provided by
17this Section there shall be no modifications or limitations on
18the amounts of income, gain, loss or deduction taken into
19account in determining gross income, adjusted gross income or
20taxable income for federal income tax purposes for the taxable
21year, or in the amount of such items entering into the
22computation of base income and net income under this Act for
23such taxable year, whether in respect of property values as of
24August 1, 1969 or otherwise.

 

 

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1(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
2101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.