Sen. John Connor

Filed: 3/23/2021

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 2358

2    AMENDMENT NO. ______. Amend Senate Bill 2358 by replacing
3everything after the enacting clause with the following:
 
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

 

 

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1        to the taxpayer as interest or dividends during the
2        taxable year to the extent excluded from gross income
3        in the computation of adjusted gross income, except
4        stock dividends of qualified public utilities
5        described in Section 305(e) of the Internal Revenue
6        Code;
7            (B) An amount equal to the amount of tax imposed by
8        this Act to the extent deducted from gross income in
9        the computation of adjusted gross income for the
10        taxable year;
11            (C) An amount equal to the amount received during
12        the taxable year as a recovery or refund of real
13        property taxes paid with respect to the taxpayer's
14        principal residence under the Revenue Act of 1939 and
15        for which a deduction was previously taken under
16        subparagraph (L) of this paragraph (2) prior to July
17        1, 1991, the retrospective application date of Article
18        4 of Public Act 87-17. In the case of multi-unit or
19        multi-use structures and farm dwellings, the taxes on
20        the taxpayer's principal residence shall be that
21        portion of the total taxes for the entire property
22        which is attributable to such principal residence;
23            (D) An amount equal to the amount of the capital
24        gain deduction allowable under the Internal Revenue
25        Code, to the extent deducted from gross income in the
26        computation of adjusted gross income;

 

 

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1            (D-5) An amount, to the extent not included in
2        adjusted gross income, equal to the amount of money
3        withdrawn by the taxpayer in the taxable year from a
4        medical care savings account and the interest earned
5        on the account in the taxable year of a withdrawal
6        pursuant to subsection (b) of Section 20 of the
7        Medical Care Savings Account Act or subsection (b) of
8        Section 20 of the Medical Care Savings Account Act of
9        2000;
10            (D-10) For taxable years ending after December 31,
11        1997, an amount equal to any eligible remediation
12        costs that the individual deducted in computing
13        adjusted gross income and for which the individual
14        claims a credit under subsection (l) of Section 201;
15            (D-15) For taxable years 2001 and thereafter, an
16        amount equal to the bonus depreciation deduction taken
17        on the taxpayer's federal income tax return for the
18        taxable year under subsection (k) of Section 168 of
19        the Internal Revenue Code;
20            (D-16) If the taxpayer sells, transfers, abandons,
21        or otherwise disposes of property for which the
22        taxpayer was required in any taxable year to make an
23        addition modification under subparagraph (D-15), then
24        an amount equal to the aggregate amount of the
25        deductions taken in all taxable years under
26        subparagraph (Z) with respect to that property.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        included in base income of the unitary group for the
2        same taxable year and received by the taxpayer or by a
3        member of the taxpayer's unitary business group
4        (including amounts included in gross income under
5        Sections 951 through 964 of the Internal Revenue Code
6        and amounts included in gross income under Section 78
7        of the Internal Revenue Code) with respect to the
8        stock of the same person to whom the premiums and costs
9        were directly or indirectly paid, incurred, or
10        accrued. The preceding sentence does not apply to the
11        extent that the same dividends caused a reduction to
12        the addition modification required under Section
13        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
14        Act; .
15            (D-20) For taxable years beginning on or after
16        January 1, 2002 and ending on or before December 31,
17        2006, in the case of a distribution from a qualified
18        tuition program under Section 529 of the Internal
19        Revenue Code, other than (i) a distribution from a
20        College Savings Pool created under Section 16.5 of the
21        State Treasurer Act or (ii) a distribution from the
22        Illinois Prepaid Tuition Trust Fund, an amount equal
23        to the amount excluded from gross income under Section
24        529(c)(3)(B). For taxable years beginning on or after
25        January 1, 2007, in the case of a distribution from a
26        qualified tuition program under Section 529 of the

 

 

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1        Internal Revenue Code, other than (i) a distribution
2        from a College Savings Pool created under Section 16.5
3        of the State Treasurer Act, (ii) a distribution from
4        the Illinois Prepaid Tuition Trust Fund, or (iii) a
5        distribution from a qualified tuition program under
6        Section 529 of the Internal Revenue Code that (I)
7        adopts and determines that its offering materials
8        comply with the College Savings Plans Network's
9        disclosure principles and (II) has made reasonable
10        efforts to inform in-state residents of the existence
11        of in-state qualified tuition programs by informing
12        Illinois residents directly and, where applicable, to
13        inform financial intermediaries distributing the
14        program to inform in-state residents of the existence
15        of in-state qualified tuition programs at least
16        annually, an amount equal to the amount excluded from
17        gross income under Section 529(c)(3)(B).
18            For the purposes of this subparagraph (D-20), a
19        qualified tuition program has made reasonable efforts
20        if it makes disclosures (which may use the term
21        "in-state program" or "in-state plan" and need not
22        specifically refer to Illinois or its qualified
23        programs by name) (i) directly to prospective
24        participants in its offering materials or makes a
25        public disclosure, such as a website posting; and (ii)
26        where applicable, to intermediaries selling the

 

 

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1        out-of-state program in the same manner that the
2        out-of-state program distributes its offering
3        materials;
4            (D-20.5) For taxable years beginning on or after
5        January 1, 2018, in the case of a distribution from a
6        qualified ABLE program under Section 529A of the
7        Internal Revenue Code, other than a distribution from
8        a qualified ABLE program created under Section 16.6 of
9        the State Treasurer Act, an amount equal to the amount
10        excluded from gross income under Section 529A(c)(1)(B)
11        of the Internal Revenue Code;
12            (D-21) For taxable years beginning on or after
13        January 1, 2007, in the case of transfer of moneys from
14        a qualified tuition program under Section 529 of the
15        Internal Revenue Code that is administered by the
16        State to an out-of-state program, an amount equal to
17        the amount of moneys previously deducted from base
18        income under subsection (a)(2)(Y) of this Section;
19            (D-21.5) For taxable years beginning on or after
20        January 1, 2018, in the case of the transfer of moneys
21        from a qualified tuition program under Section 529 or
22        a qualified ABLE program under Section 529A of the
23        Internal Revenue Code that is administered by this
24        State to an ABLE account established under an
25        out-of-state ABLE account program, an amount equal to
26        the contribution component of the transferred amount

 

 

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1        that was previously deducted from base income under
2        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
3        Section;
4            (D-22) For taxable years beginning on or after
5        January 1, 2009, and prior to January 1, 2018, in the
6        case of a nonqualified withdrawal or refund of moneys
7        from a qualified tuition program under Section 529 of
8        the Internal Revenue Code administered by the State
9        that is not used for qualified expenses at an eligible
10        education institution, an amount equal to the
11        contribution component of the nonqualified withdrawal
12        or refund that was previously deducted from base
13        income under subsection (a)(2)(y) of this Section,
14        provided that the withdrawal or refund did not result
15        from the beneficiary's death or disability. For
16        taxable years beginning on or after January 1, 2018:
17        (1) in the case of a nonqualified withdrawal or
18        refund, as defined under Section 16.5 of the State
19        Treasurer Act, of moneys from a qualified tuition
20        program under Section 529 of the Internal Revenue Code
21        administered by the State, an amount equal to the
22        contribution component of the nonqualified withdrawal
23        or refund that was previously deducted from base
24        income under subsection (a)(2)(Y) of this Section, and
25        (2) in the case of a nonqualified withdrawal or refund
26        from a qualified ABLE program under Section 529A of

 

 

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1        the Internal Revenue Code administered by the State
2        that is not used for qualified disability expenses, an
3        amount equal to the contribution component of the
4        nonqualified withdrawal or refund that was previously
5        deducted from base income under subsection (a)(2)(HH)
6        of this Section;
7            (D-23) An amount equal to the credit allowable to
8        the taxpayer under Section 218(a) of this Act,
9        determined without regard to Section 218(c) of this
10        Act;
11            (D-24) For taxable years ending on or after
12        December 31, 2017, an amount equal to the deduction
13        allowed under Section 199 of the Internal Revenue Code
14        for the taxable year;
15    and by deducting from the total so obtained the sum of the
16    following amounts:
17            (E) For taxable years ending before December 31,
18        2001, any amount included in such total in respect of
19        any compensation (including but not limited to any
20        compensation paid or accrued to a serviceman while a
21        prisoner of war or missing in action) paid to a
22        resident by reason of being on active duty in the Armed
23        Forces of the United States and in respect of any
24        compensation paid or accrued to a resident who as a
25        governmental employee was a prisoner of war or missing
26        in action, and in respect of any compensation paid to a

 

 

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1        resident in 1971 or thereafter for annual training
2        performed pursuant to Sections 502 and 503, Title 32,
3        United States Code as a member of the Illinois
4        National Guard or, beginning with taxable years ending
5        on or after December 31, 2007, the National Guard of
6        any other state. For taxable years ending on or after
7        December 31, 2001, any amount included in such total
8        in respect of any compensation (including but not
9        limited to any compensation paid or accrued to a
10        serviceman while a prisoner of war or missing in
11        action) paid to a resident by reason of being a member
12        of any component of the Armed Forces of the United
13        States and in respect of any compensation paid or
14        accrued to a resident who as a governmental employee
15        was a prisoner of war or missing in action, and in
16        respect of any compensation paid to a resident in 2001
17        or thereafter by reason of being a member of the
18        Illinois National Guard or, beginning with taxable
19        years ending on or after December 31, 2007, the
20        National Guard of any other state. The provisions of
21        this subparagraph (E) are exempt from the provisions
22        of Section 250;
23            (F) An amount equal to all amounts included in
24        such total pursuant to the provisions of Sections
25        402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
26        408 of the Internal Revenue Code, or included in such

 

 

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

 

 

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1        conducts business operations in a federally designated
2        Foreign Trade Zone or Sub-Zone and that is designated
3        a High Impact Business located in Illinois; provided
4        that dividends eligible for the deduction provided in
5        subparagraph (J) of paragraph (2) of this subsection
6        shall not be eligible for the deduction provided under
7        this subparagraph (K);
8            (L) For taxable years ending after December 31,
9        1983, an amount equal to all social security benefits
10        and railroad retirement benefits included in such
11        total pursuant to Sections 72(r) and 86 of the
12        Internal Revenue Code;
13            (M) With the exception of any amounts subtracted
14        under subparagraph (N), an amount equal to the sum of
15        all amounts disallowed as deductions by (i) Sections
16        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
17        and all amounts of expenses allocable to interest and
18        disallowed as deductions by Section 265(a)(1) of the
19        Internal Revenue Code; and (ii) for taxable years
20        ending on or after August 13, 1999, Sections
21        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
22        Internal Revenue Code, plus, for taxable years ending
23        on or after December 31, 2011, Section 45G(e)(3) of
24        the Internal Revenue Code and, for taxable years
25        ending on or after December 31, 2008, any amount
26        included in gross income under Section 87 of the

 

 

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

 

 

10200SB2358sam001- 20 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 21 -LRB102 10763 HLH 23116 a

1            (V) Beginning with tax years ending on or after
2        December 31, 1995 and ending with tax years ending on
3        or before December 31, 2004, an amount equal to the
4        amount paid by a taxpayer who is a self-employed
5        taxpayer, a partner of a partnership, or a shareholder
6        in a Subchapter S corporation for health insurance or
7        long-term care insurance for that taxpayer or that
8        taxpayer's spouse or dependents, to the extent that
9        the amount paid for that health insurance or long-term
10        care insurance may be deducted under Section 213 of
11        the Internal Revenue Code, has not been deducted on
12        the federal income tax return of the taxpayer, and
13        does not exceed the taxable income attributable to
14        that taxpayer's income, self-employment income, or
15        Subchapter S corporation income; except that no
16        deduction shall be allowed under this item (V) if the
17        taxpayer is eligible to participate in any health
18        insurance or long-term care insurance plan of an
19        employer of the taxpayer or the taxpayer's spouse. The
20        amount of the health insurance and long-term care
21        insurance subtracted under this item (V) shall be
22        determined by multiplying total health insurance and
23        long-term care insurance premiums paid by the taxpayer
24        times a number that represents the fractional
25        percentage of eligible medical expenses under Section
26        213 of the Internal Revenue Code of 1986 not actually

 

 

10200SB2358sam001- 22 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 23 -LRB102 10763 HLH 23116 a

1        World War II; provided, however, this subtraction from
2        federal adjusted gross income does not apply to assets
3        acquired with such assets or with the proceeds from
4        the sale of such assets; provided, further, this
5        paragraph shall only apply to a taxpayer who was the
6        first recipient of such assets after their recovery
7        and who is a victim of persecution for racial or
8        religious reasons by Nazi Germany or any other Axis
9        regime or as an heir of the victim. The amount of and
10        the eligibility for any public assistance, benefit, or
11        similar entitlement is not affected by the inclusion
12        of items (i) and (ii) of this paragraph in gross income
13        for federal income tax purposes. This paragraph is
14        exempt from the provisions of Section 250;
15            (Y) For taxable years beginning on or after
16        January 1, 2002 and ending on or before December 31,
17        2004, moneys contributed in the taxable year to a
18        College Savings Pool account under Section 16.5 of the
19        State Treasurer Act, except that amounts excluded from
20        gross income under Section 529(c)(3)(C)(i) of the
21        Internal Revenue Code shall not be considered moneys
22        contributed under this subparagraph (Y). For taxable
23        years beginning on or after January 1, 2005, a maximum
24        of $10,000 contributed in the taxable year to (i) a
25        College Savings Pool account under Section 16.5 of the
26        State Treasurer Act or (ii) the Illinois Prepaid

 

 

10200SB2358sam001- 24 -LRB102 10763 HLH 23116 a

1        Tuition Trust Fund, except that amounts excluded from
2        gross income under Section 529(c)(3)(C)(i) of the
3        Internal Revenue Code shall not be considered moneys
4        contributed under this subparagraph (Y). For purposes
5        of this subparagraph, contributions made by an
6        employer on behalf of an employee, or matching
7        contributions made by an employee, shall be treated as
8        made by the employee. This subparagraph (Y) is exempt
9        from the provisions of Section 250;
10            (Z) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not
22            including the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

10200SB2358sam001- 25 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 26 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 27 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 28 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 29 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 30 -LRB102 10763 HLH 23116 a

1        an employee, or matching contributions made by an
2        employee, shall be treated as made by the employee.
 
3    (b) Corporations.
4        (1) In general. In the case of a corporation, base
5    income means an amount equal to the taxpayer's taxable
6    income for the taxable year as modified by paragraph (2).
7        (2) Modifications. The taxable income referred to in
8    paragraph (1) shall be modified by adding thereto the sum
9    of the following amounts:
10            (A) An amount equal to all amounts paid or accrued
11        to the taxpayer as interest and all distributions
12        received from regulated investment companies during
13        the taxable year to the extent excluded from gross
14        income in the computation of taxable income;
15            (B) An amount equal to the amount of tax imposed by
16        this Act to the extent deducted from gross income in
17        the computation of taxable income for the taxable
18        year;
19            (C) In the case of a regulated investment company,
20        an amount equal to the excess of (i) the net long-term
21        capital gain for the taxable year, over (ii) the
22        amount of the capital gain dividends designated as
23        such in accordance with Section 852(b)(3)(C) of the
24        Internal Revenue Code and any amount designated under
25        Section 852(b)(3)(D) of the Internal Revenue Code,

 

 

10200SB2358sam001- 31 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 32 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 33 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 34 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 35 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 36 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 37 -LRB102 10763 HLH 23116 a

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

 

 

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

 

 

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

 

 

10200SB2358sam001- 40 -LRB102 10763 HLH 23116 a

1        addition modification required by this subparagraph
2        shall be reduced to the extent that dividends were
3        included in base income of the unitary group for the
4        same taxable year and received by the taxpayer or by a
5        member of the taxpayer's unitary business group
6        (including amounts included in gross income under
7        Sections 951 through 964 of the Internal Revenue Code
8        and amounts included in gross income under Section 78
9        of the Internal Revenue Code) with respect to the
10        stock of the same person to whom the premiums and costs
11        were directly or indirectly paid, incurred, or
12        accrued. The preceding sentence does not apply to the
13        extent that the same dividends caused a reduction to
14        the addition modification required under Section
15        203(b)(2)(E-12) or Section 203(b)(2)(E-13) of this
16        Act;
17            (E-15) For taxable years beginning after December
18        31, 2008, any deduction for dividends paid by a
19        captive real estate investment trust that is allowed
20        to a real estate investment trust under Section
21        857(b)(2)(B) of the Internal Revenue Code for
22        dividends paid;
23            (E-16) An amount equal to the credit allowable to
24        the taxpayer under Section 218(a) of this Act,
25        determined without regard to Section 218(c) of this
26        Act;

 

 

10200SB2358sam001- 41 -LRB102 10763 HLH 23116 a

1            (E-17) For taxable years ending on or after
2        December 31, 2017, an amount equal to the deduction
3        allowed under Section 199 of the Internal Revenue Code
4        for the taxable year;
5            (E-18) for taxable years beginning after December
6        31, 2018, an amount equal to the deduction allowed
7        under Section 250(a)(1)(A) of the Internal Revenue
8        Code for the taxable year.
9    and by deducting from the total so obtained the sum of the
10    following amounts:
11            (F) An amount equal to the amount of any tax
12        imposed by this Act which was refunded to the taxpayer
13        and included in such total for the taxable year;
14            (G) An amount equal to any amount included in such
15        total under Section 78 of the Internal Revenue Code;
16            (H) In the case of a regulated investment company,
17        an amount equal to the amount of exempt interest
18        dividends as defined in subsection (b)(5) of Section
19        852 of the Internal Revenue Code, paid to shareholders
20        for the taxable year;
21            (I) With the exception of any amounts subtracted
22        under subparagraph (J), an amount equal to the sum of
23        all amounts disallowed as deductions by (i) Sections
24        171(a)(2), and 265(a)(2) and amounts disallowed as
25        interest expense by Section 291(a)(3) of the Internal
26        Revenue Code, and all amounts of expenses allocable to

 

 

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

 

 

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

 

 

10200SB2358sam001- 44 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 45 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 46 -LRB102 10763 HLH 23116 a

1        Zone Act. This subparagraph (N) is exempt from the
2        provisions of Section 250;
3            (O) An amount equal to: (i) 85% for taxable years
4        ending on or before December 31, 1992, or, a
5        percentage equal to the percentage allowable under
6        Section 243(a)(1) of the Internal Revenue Code of 1986
7        for taxable years ending after December 31, 1992, of
8        the amount by which dividends included in taxable
9        income and received from a corporation that is not
10        created or organized under the laws of the United
11        States or any state or political subdivision thereof,
12        including, for taxable years ending on or after
13        December 31, 1988, dividends received or deemed
14        received or paid or deemed paid under Sections 951
15        through 965 of the Internal Revenue Code, exceed the
16        amount of the modification provided under subparagraph
17        (G) of paragraph (2) of this subsection (b) which is
18        related to such dividends, and including, for taxable
19        years ending on or after December 31, 2008, dividends
20        received from a captive real estate investment trust;
21        plus (ii) 100% of the amount by which dividends,
22        included in taxable income and received, including,
23        for taxable years ending on or after December 31,
24        1988, dividends received or deemed received or paid or
25        deemed paid under Sections 951 through 964 of the
26        Internal Revenue Code and including, for taxable years

 

 

10200SB2358sam001- 47 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 48 -LRB102 10763 HLH 23116 a

1        attorney-in-fact over the deduction allowed to that
2        interinsurer or reciprocal insurer with respect to the
3        attorney-in-fact under Section 835(b) of the Internal
4        Revenue Code for the taxable year; the provisions of
5        this subparagraph are exempt from the provisions of
6        Section 250;
7            (S) For taxable years ending on or after December
8        31, 1997, in the case of a Subchapter S corporation, an
9        amount equal to all amounts of income allocable to a
10        shareholder subject to the Personal Property Tax
11        Replacement Income Tax imposed by subsections (c) and
12        (d) of Section 201 of this Act, including amounts
13        allocable to organizations exempt from federal income
14        tax by reason of Section 501(a) of the Internal
15        Revenue Code. This subparagraph (S) is exempt from the
16        provisions of Section 250;
17            (T) 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

 

 

10200SB2358sam001- 49 -LRB102 10763 HLH 23116 a

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 (T) is exempt from the provisions of
26        Section 250;

 

 

10200SB2358sam001- 50 -LRB102 10763 HLH 23116 a

1            (U) 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 (E-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 (E-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 (U) is exempt from the
17        provisions of Section 250;
18            (V) 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, (ii) any
26        income from intangible property (net of the deductions

 

 

10200SB2358sam001- 51 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 52 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 53 -LRB102 10763 HLH 23116 a

1        not to exceed the addition modification required to be
2        made for the same taxable year under Section
3        203(b)(2)(E-13) for intangible expenses and costs
4        paid, accrued, or incurred, directly or indirectly, to
5        the same foreign person. This subparagraph (X) is
6        exempt from the provisions of Section 250;
7            (Y) For taxable years ending on or after December
8        31, 2011, in the case of a taxpayer who was required to
9        add back any insurance premiums under Section
10        203(b)(2)(E-14), such taxpayer may elect to subtract
11        that part of a reimbursement received from the
12        insurance company equal to the amount of the expense
13        or loss (including expenses incurred by the insurance
14        company) that would have been taken into account as a
15        deduction for federal income tax purposes if the
16        expense or loss had been uninsured. If a taxpayer
17        makes the election provided for by this subparagraph
18        (Y), the insurer to which the premiums were paid must
19        add back to income the amount subtracted by the
20        taxpayer pursuant to this subparagraph (Y). This
21        subparagraph (Y) is exempt from the provisions of
22        Section 250; and
23            (Z) The difference between the nondeductible
24        controlled foreign corporation dividends under Section
25        965(e)(3) of the Internal Revenue Code over the
26        taxable income of the taxpayer, computed without

 

 

10200SB2358sam001- 54 -LRB102 10763 HLH 23116 a

1        regard to Section 965(e)(2)(A) of the Internal Revenue
2        Code, and without regard to any net operating loss
3        deduction. This subparagraph (Z) is exempt from the
4        provisions of Section 250.
5        (3) Special rule. For purposes of paragraph (2)(A),
6    "gross income" in the case of a life insurance company,
7    for tax years ending on and after December 31, 1994, and
8    prior to December 31, 2011, shall mean the gross
9    investment income for the taxable year and, for tax years
10    ending on or after December 31, 2011, shall mean all
11    amounts included in life insurance gross income under
12    Section 803(a)(3) of the Internal Revenue Code.
 
13    (c) Trusts and estates.
14        (1) In general. In the case of a trust or estate, base
15    income means an amount equal to the taxpayer's taxable
16    income for the taxable year as modified by paragraph (2).
17        (2) Modifications. Subject to the provisions of
18    paragraph (3), the taxable income referred to in paragraph
19    (1) shall be modified by adding thereto the sum of the
20    following amounts:
21            (A) An amount equal to all amounts paid or accrued
22        to the taxpayer as interest or dividends during the
23        taxable year to the extent excluded from gross income
24        in the computation of taxable income;
25            (B) In the case of (i) an estate, $600; (ii) a

 

 

10200SB2358sam001- 55 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 56 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 57 -LRB102 10763 HLH 23116 a

1        computation of taxable income;
2            (G-5) For taxable years ending after December 31,
3        1997, an amount equal to any eligible remediation
4        costs that the trust or estate deducted in computing
5        adjusted gross income and for which the trust or
6        estate claims a credit under subsection (l) of Section
7        201;
8            (G-10) 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; and
13            (G-11) 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 (G-10), then
17        an amount equal to the aggregate amount of the
18        deductions taken in all taxable years under
19        subparagraph (R) 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 (R), then an amount
26        equal to that subtraction modification.

 

 

10200SB2358sam001- 58 -LRB102 10763 HLH 23116 a

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            (G-12) 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 the foreign person's business activity
11        outside 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 pursuant to Sections 951
26        through 964 of the Internal Revenue Code and amounts

 

 

10200SB2358sam001- 59 -LRB102 10763 HLH 23116 a

1        included in gross income under Section 78 of the
2        Internal Revenue Code) with respect to the stock of
3        the same person to whom the interest was paid,
4        accrued, or 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

 

 

10200SB2358sam001- 60 -LRB102 10763 HLH 23116 a

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            (G-13) 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 pursuant to Sections 951 through 964 of the
21        Internal Revenue Code and amounts included in gross
22        income under Section 78 of the Internal Revenue Code)
23        with respect to the stock of the same person to whom
24        the intangible expenses and costs were directly or
25        indirectly paid, incurred, or accrued. The preceding
26        sentence shall 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(c)(2)(G-12) of
3        this Act. As used in this subparagraph, the term
4        "intangible expenses and costs" includes: (1)
5        expenses, losses, and costs for or related to the
6        direct or indirect acquisition, use, maintenance or
7        management, ownership, sale, exchange, or any other
8        disposition of intangible property; (2) losses
9        incurred, directly or indirectly, from factoring
10        transactions or discounting transactions; (3) royalty,
11        patent, technical, and copyright fees; (4) licensing
12        fees; and (5) other similar expenses and costs. For
13        purposes of this subparagraph, "intangible property"
14        includes patents, patent applications, trade names,
15        trademarks, service marks, copyrights, mask works,
16        trade secrets, and 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

 

 

10200SB2358sam001- 63 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 64 -LRB102 10763 HLH 23116 a

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            (G-14) 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

 

 

10200SB2358sam001- 65 -LRB102 10763 HLH 23116 a

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(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
7        Act;
8            (G-15) 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            (G-16) 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 sum of the
17    following amounts:
18            (H) An amount equal to all amounts included in
19        such total pursuant to the provisions of Sections
20        402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and 408
21        of the Internal Revenue Code or included in such total
22        as distributions under the provisions of any
23        retirement or disability plan for employees of any
24        governmental agency or unit, or retirement payments to
25        retired partners, which payments are excluded in
26        computing net earnings from self employment by Section

 

 

10200SB2358sam001- 66 -LRB102 10763 HLH 23116 a

1        1402 of the Internal Revenue Code and regulations
2        adopted pursuant thereto;
3            (I) The valuation limitation amount;
4            (J) An amount equal to the amount of any tax
5        imposed by this Act which was refunded to the taxpayer
6        and included in such total for the taxable year;
7            (K) An amount equal to all amounts included in
8        taxable income as modified by subparagraphs (A), (B),
9        (C), (D), (E), (F) and (G) which are exempt from
10        taxation by this State either by reason of its
11        statutes or Constitution or by reason of the
12        Constitution, treaties or statutes of the United
13        States; provided that, in the case of any statute of
14        this State that exempts income derived from bonds or
15        other obligations from the tax imposed under this Act,
16        the amount exempted shall be the interest net of bond
17        premium amortization;
18            (L) With the exception of any amounts subtracted
19        under subparagraph (K), an amount equal to the sum of
20        all amounts disallowed as deductions by (i) Sections
21        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
22        and all amounts of expenses allocable to interest and
23        disallowed as deductions by Section 265(a)(1) of the
24        Internal Revenue Code; and (ii) for taxable years
25        ending on or after August 13, 1999, Sections
26        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the

 

 

10200SB2358sam001- 67 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 68 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 69 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 70 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 71 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 72 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 73 -LRB102 10763 HLH 23116 a

1            (V) An amount equal to the income from intangible
2        property taken into account for the taxable year (net
3        of the deductions allocable thereto) with respect to
4        transactions with (i) a foreign person who would be a
5        member of the taxpayer's unitary business group but
6        for the fact that the foreign person's business
7        activity outside the United States is 80% or more of
8        that person's total business activity and (ii) for
9        taxable years ending on or after December 31, 2008, to
10        a person who would be a member of the same unitary
11        business group but for the fact that the person is
12        prohibited under Section 1501(a)(27) from being
13        included in the unitary business group because he or
14        she is ordinarily required to apportion business
15        income under different subsections of Section 304, but
16        not to exceed the addition modification required to be
17        made for the same taxable year under Section
18        203(c)(2)(G-13) for intangible expenses and costs
19        paid, accrued, or incurred, directly or indirectly, to
20        the same foreign person. This subparagraph (V) is
21        exempt from the provisions of Section 250;
22            (W) in the case of an estate, an amount equal to
23        all amounts included in such total pursuant to the
24        provisions of Section 111 of the Internal Revenue Code
25        as a recovery of items previously deducted by the
26        decedent from adjusted gross income in the computation

 

 

10200SB2358sam001- 74 -LRB102 10763 HLH 23116 a

1        of taxable income. This subparagraph (W) is exempt
2        from Section 250;
3            (X) an amount equal to the refund included in such
4        total of any tax deducted for federal income tax
5        purposes, to the extent that deduction was added back
6        under subparagraph (F). This subparagraph (X) is
7        exempt from the provisions of Section 250;
8            (Y) For taxable years ending on or after December
9        31, 2011, in the case of a taxpayer who was required to
10        add back any insurance premiums under Section
11        203(c)(2)(G-14), such taxpayer may elect to subtract
12        that part of a reimbursement received from the
13        insurance company equal to the amount of the expense
14        or loss (including expenses incurred by the insurance
15        company) that would have been taken into account as a
16        deduction for federal income tax purposes if the
17        expense or loss had been uninsured. If a taxpayer
18        makes the election provided for by this subparagraph
19        (Y), the insurer to which the premiums were paid must
20        add back to income the amount subtracted by the
21        taxpayer pursuant to this subparagraph (Y). This
22        subparagraph (Y) is exempt from the provisions of
23        Section 250; and
24            (Z) For taxable years beginning after December 31,
25        2018 and before January 1, 2026, the amount of excess
26        business loss of the taxpayer disallowed as a

 

 

10200SB2358sam001- 75 -LRB102 10763 HLH 23116 a

1        deduction by Section 461(l)(1)(B) of the Internal
2        Revenue Code.
3        (3) Limitation. The amount of any modification
4    otherwise required under this subsection shall, under
5    regulations prescribed by the Department, be adjusted by
6    any amounts included therein which were properly paid,
7    credited, or required to be distributed, or permanently
8    set aside for charitable purposes pursuant to Internal
9    Revenue Code Section 642(c) during the taxable year.
 
10    (d) Partnerships.
11        (1) In general. In the case of a partnership, base
12    income means an amount equal to the taxpayer's taxable
13    income for the taxable year as modified by paragraph (2).
14        (2) Modifications. The taxable income referred to in
15    paragraph (1) shall be modified by adding thereto the sum
16    of the following amounts:
17            (A) An amount equal to all amounts paid or accrued
18        to the taxpayer as interest or dividends during the
19        taxable year to the extent excluded from gross income
20        in the computation of taxable income;
21            (B) An amount equal to the amount of tax imposed by
22        this Act to the extent deducted from gross income for
23        the taxable year;
24            (C) The amount of deductions allowed to the
25        partnership pursuant to Section 707 (c) of the

 

 

10200SB2358sam001- 76 -LRB102 10763 HLH 23116 a

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

 

 

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

 

 

10200SB2358sam001- 78 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 79 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 80 -LRB102 10763 HLH 23116 a

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

 

 

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

 

 

10200SB2358sam001- 82 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 83 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 84 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 85 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 86 -LRB102 10763 HLH 23116 a

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            (K) 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 from a River Edge Redevelopment
17        Zone or zones. This subparagraph (K) is exempt from
18        the provisions of Section 250;
19            (L) An amount equal to any contribution made to a
20        job training project established pursuant to the Real
21        Property Tax Increment Allocation Redevelopment Act;
22            (M) 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

 

 

10200SB2358sam001- 87 -LRB102 10763 HLH 23116 a

1        that dividends eligible for the deduction provided in
2        subparagraph (K) of paragraph (2) of this subsection
3        shall not be eligible for the deduction provided under
4        this subparagraph (M);
5            (N) 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            (O) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not
22            including the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

10200SB2358sam001- 88 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 89 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 90 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 91 -LRB102 10763 HLH 23116 a

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

 

 

10200SB2358sam001- 92 -LRB102 10763 HLH 23116 a

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        the same ratio to the total gain reported in respect of
2        the property for federal income tax purposes for the
3        taxable year, as the number of full calendar months in
4        that part of the taxpayer's holding period for the
5        property ending July 31, 1969 bears to the number of
6        full calendar months in the taxpayer's entire holding
7        period for the property.
8            (C) The Department shall prescribe such
9        regulations as may be necessary to carry out the
10        purposes of this paragraph.
 
11    (g) Double deductions. Unless specifically provided
12otherwise, nothing in this Section shall permit the same item
13to be deducted more than once.
 
14    (g-5) For taxable years beginning on or after January 1,
152022, in calculating the taxpayer's base income, the
16taxpayer's federal adjusted gross income shall also be
17modified to exclude the portion of the income or loss received
18from a trade or business conducted within and without Illinois
19or from a pass-through entity conducting business within and
20without Illinois that is not derived from or connected with
21Illinois sources as determined in the provisions in Article 3
22of this Act. This subsection (g-5) is exempt from the
23provisions of Section 250.
 

 

 

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1    (h) Legislative intention. Except as expressly provided by
2this Section there shall be no modifications or limitations on
3the amounts of income, gain, loss or deduction taken into
4account in determining gross income, adjusted gross income or
5taxable income for federal income tax purposes for the taxable
6year, or in the amount of such items entering into the
7computation of base income and net income under this Act for
8such taxable year, whether in respect of property values as of
9August 1, 1969 or otherwise.
10(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
11101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.".