103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB1241

 

Introduced 1/31/2023, by Rep. Margaret Croke - Norine K. Hammond, William "Will" Davis and Joe C. Sosnowski

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/203  from Ch. 120, par. 2-203
35 ILCS 5/234 new

    Creates the Endow Illinois Tax Credit Act. Provides that the Department of Revenue shall award income tax credits to taxpayers who provide an endowment gift to a permanent endowment fund during the taxable year and receive a certificate of receipt for that gift. Provides that the credit is equal to 25% of the endowment gift. Contains provisions setting forth maximum credit amounts. Amends the Illinois Income Tax Act to require an addition modification equal to the amount of any federal deduction claimed for an endowment gift for which a taxpayer receives a credit under the Endow Illinois Tax Credit Act. Makes conforming changes. Effective immediately.


LRB103 25002 HLH 51336 b

 

 

A BILL FOR

 

HB1241LRB103 25002 HLH 51336 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Endow
5Illinois Tax Credit Act.
 
6    Section 5. Definitions. As used in this Act:
7    "Business entity" means a corporation (including a
8Subchapter S corporation), trust, estate, partnership, limited
9liability company, or sole proprietorship.
10    "Consumer Price Index" means the index published by the
11Bureau of Labor Statistics of the United States Department of
12Labor that measures the average change in prices of goods and
13services purchased by all urban consumers, United States city
14average, all items, 1982-84 = 100.
15    "Credit-eligible endowment gift" means an endowment gift
16for which a taxpayer intends to apply for an income tax credit
17under this Act.
18    "Department" means the Department of Revenue.
19    "Donor advised fund" has the meaning given to that term in
20subsection (d) of Section 4966 of the Internal Revenue Code of
211986.
22    "Endowment gift" means an irrevocable contribution to a
23permanent endowment fund held by a qualified community

 

 

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1foundation.
2    "Permanent endowment fund" means a fund that (i) is held
3by a qualified community foundation, (ii) provides charitable
4grants exclusively for the benefit of residents of the State
5or charities and charitable projects located in the State,
6(iii) is intended to exist in perpetuity, (iv) has an annual
7spending rate based on the foundation spending policy, but not
8to exceed 7%, and (v) is not a donor advised fund.
9    "Qualified community foundation" means a community
10foundation or similar publicly supported organization
11described in Section 170 (b)(1)(A)(vi) of the Internal Revenue
12Code of 1986 that is organized or operating in this State and
13that substantially complies with the national standards for
14U.S. community foundations established by the National Council
15on Foundations, as determined by the Department.
16    "Taxpayer" means any individual who is subject to the tax
17imposed under subsections (a) and (b) of Section 201 of the
18Illinois Income Tax Act or any business entity that is subject
19to the tax imposed under subsections (a) and (b) of Section 201
20of the Illinois Income Tax Act.
 
21    Section 10. Tax credit awards; limitations.
22    (a) For taxable years ending on or after December 31, 2024
23and ending before January 1, 2034, the Department shall award,
24in accordance with this Act, income tax credits to taxpayers
25who provide an endowment gift to a permanent endowment fund

 

 

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1during the taxable year and receive a certificate of receipt
2under Section 15 for that gift. Subject to the limitations in
3this Section, the amount of the credit that may be awarded to a
4taxpayer by the Department under this Act is an amount equal to
525% of the endowment gift.
6    (b) The aggregate amount of all Endow Illinois tax credits
7awarded by the Department under this Act in calendar year 2024
8may not exceed $50,000,000. In calendar year 2025 and each
9calendar year thereafter, the aggregate amount of all Endow
10Illinois tax credits awarded by the Department under this Act
11may not exceed the maximum aggregate credit amount authorized
12under this subsection for the immediately preceding calendar
13year, multiplied by the sum of one plus the percentage
14increase, if any, in the Consumer Price Index during the
1512-month period ending in September of that preceding calendar
16year and rounded to the nearest $25,000.
17    (c) The aggregate amount of all Endow Illinois tax credits
18that the Department may award to any taxpayer under this Act in
19calendar year 2024 may not exceed $100,000. In calendar year
202025 and each calendar year thereafter, the aggregate amount
21of all Endow Illinois credits that the Department may award to
22any taxpayer under this Act may not exceed the maximum credit
23amount authorized under this subsection for any taxpayer in
24the immediately preceding calendar year, multiplied by the sum
25of one plus the percentage increase, if any, in the Consumer
26Price Index during the 12-month period ending in September of

 

 

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1that preceding calendar year and rounded to the nearest
2$1,000.
3    (d) The aggregate amount of all credits that the
4Department may authorize in any calendar year based on
5endowment gifts to any specific community foundation may not
6exceed 15% of the aggregate amount of all Endow Illinois tax
7credits authorized by the Department under this Act in that
8calendar year.
9    (e) Of the annual amount available for tax credits, 10%
10must be reserved for endowment gifts that do not exceed the
11small gift maximum set forth in this subsection. For the
12calendar year ending on December 31, 2024, the small gift
13maximum is $30,000. For subsequent calendar years, the small
14gift maximum is the small gift maximum for the immediately
15preceding calendar year, multiplied by the sum of one plus the
16percentage increase, if any, in the Consumer Price Index
17during the 12-month period ending in September of that
18immediately preceding calendar year and rounded to the nearest
19$100.
20    (f) For the purpose of this Section, a credit is
21considered to be awarded on the date the Department issues an
22approved contribution authorization certificate under Section
2315.
 
24    Section 15. Applications for tax credits.
25    (a) The taxpayer shall apply to the Department, in the

 

 

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1form and manner prescribed by the Department, for a
2contribution authorization certificate. A taxpayer who makes
3more than one credit-eligible endowment gift must make a
4separate application for each contribution authorization
5certificate. Applications under this subsection shall be
6reviewed by the Department and shall either be approved or
7denied. Each approved contribution authorization certificate
8shall be sent to the taxpayer within 3 business days after the
9certificate is approved. The Department shall maintain on its
10website a running total of: (i) the total amount of credits
11remaining under this Act for which taxpayers may apply for a
12contribution authorization certificate issued in the calendar
13year; (ii) the total amount of credits allocated during the
14calendar year for each specific community foundation; and
15(iii) the total amount remaining for the calendar year under
16the small gift maximum set forth in Section 10. Those running
17totals shall be updated every business day.
18    (b) The taxpayer shall make the endowment gift to the
19permanent endowment fund either prior to or within 60 days
20after the taxpayer receives the approved contribution
21authorization certificate under subsection (a). The qualified
22community foundation shall, within 30 days after receipt of an
23endowment gift for which a contribution authorization
24certificate has been approved by the Department under
25subsection (a), issue to the taxpayer a written certificate of
26receipt, which shall contain the information required by the

 

 

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1Department by rule. No receipt shall be issued for amounts
2that are not actually received by the qualified community
3foundation within 60 days after the taxpayer receives the
4approved contribution authorization certificate.
 
5    Section 20. Annual report. By March 31, 2025, and by March
631 of each subsequent year, the Department must submit an
7annual report to the Governor and the General Assembly
8concerning the activities conducted under this Act during the
9previous calendar year. The report must include a detailed
10listing of tax credits authorized under this Act by the
11Department. The report may not disclose any information if the
12disclosure would violate Section 917 of the Illinois Income
13Tax Act.
 
14    Section 25. Rulemaking. The Department may adopt rules for
15the implementation of this Act.
 
16    Section 900. The Illinois Income Tax Act is amended by
17changing Section 203 and by adding Section 234 as follows:
 
18    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
19    Sec. 203. Base income defined.
20    (a) Individuals.
21        (1) In general. In the case of an individual, base
22    income means an amount equal to the taxpayer's adjusted

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        prohibited under Section 1501(a)(27) from being
2        included in the unitary business group because he or
3        she is ordinarily required to apportion business
4        income under different subsections of Section 304. The
5        addition modification required by this subparagraph
6        shall be reduced to the extent that dividends were
7        included in base income of the unitary group for the
8        same taxable year and received by the taxpayer or by a
9        member of the taxpayer's unitary business group
10        (including amounts included in gross income under
11        Sections 951 through 964 of the Internal Revenue Code
12        and amounts included in gross income under Section 78
13        of the Internal Revenue Code) with respect to the
14        stock of the same person to whom the premiums and costs
15        were directly or indirectly paid, incurred, or
16        accrued. The preceding sentence does not apply to the
17        extent that the same dividends caused a reduction to
18        the addition modification required under Section
19        203(a)(2)(D-17) or Section 203(a)(2)(D-18) of this
20        Act;
21            (D-20) For taxable years beginning on or after
22        January 1, 2002 and ending on or before December 31,
23        2006, in the case of a distribution from a qualified
24        tuition program under Section 529 of the Internal
25        Revenue Code, other than (i) a distribution from a
26        College Savings Pool created under Section 16.5 of the

 

 

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1        State Treasurer Act or (ii) a distribution from the
2        Illinois Prepaid Tuition Trust Fund, an amount equal
3        to the amount excluded from gross income under Section
4        529(c)(3)(B). For taxable years beginning on or after
5        January 1, 2007, in the case of a distribution from a
6        qualified tuition program under Section 529 of the
7        Internal Revenue Code, other than (i) a distribution
8        from a College Savings Pool created under Section 16.5
9        of the State Treasurer Act, (ii) a distribution from
10        the Illinois Prepaid Tuition Trust Fund, or (iii) a
11        distribution from a qualified tuition program under
12        Section 529 of the Internal Revenue Code that (I)
13        adopts and determines that its offering materials
14        comply with the College Savings Plans Network's
15        disclosure principles and (II) has made reasonable
16        efforts to inform in-state residents of the existence
17        of in-state qualified tuition programs by informing
18        Illinois residents directly and, where applicable, to
19        inform financial intermediaries distributing the
20        program to inform in-state residents of the existence
21        of in-state qualified tuition programs at least
22        annually, an amount equal to the amount excluded from
23        gross income under Section 529(c)(3)(B).
24            For the purposes of this subparagraph (D-20), a
25        qualified tuition program has made reasonable efforts
26        if it makes disclosures (which may use the term

 

 

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1        "in-state program" or "in-state plan" and need not
2        specifically refer to Illinois or its qualified
3        programs by name) (i) directly to prospective
4        participants in its offering materials or makes a
5        public disclosure, such as a website posting; and (ii)
6        where applicable, to intermediaries selling the
7        out-of-state program in the same manner that the
8        out-of-state program distributes its offering
9        materials;
10            (D-20.5) For taxable years beginning on or after
11        January 1, 2018, in the case of a distribution from a
12        qualified ABLE program under Section 529A of the
13        Internal Revenue Code, other than a distribution from
14        a qualified ABLE program created under Section 16.6 of
15        the State Treasurer Act, an amount equal to the amount
16        excluded from gross income under Section 529A(c)(1)(B)
17        of the Internal Revenue Code;
18            (D-21) For taxable years beginning on or after
19        January 1, 2007, in the case of transfer of moneys from
20        a qualified tuition program under Section 529 of the
21        Internal Revenue Code that is administered by the
22        State to an out-of-state program, an amount equal to
23        the amount of moneys previously deducted from base
24        income under subsection (a)(2)(Y) of this Section;
25            (D-21.5) For taxable years beginning on or after
26        January 1, 2018, in the case of the transfer of moneys

 

 

HB1241- 19 -LRB103 25002 HLH 51336 b

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

 

 

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1        administered by the State, an amount equal to the
2        contribution component of the nonqualified withdrawal
3        or refund that was previously deducted from base
4        income under subsection (a)(2)(Y) of this Section, and
5        (2) in the case of a nonqualified withdrawal or refund
6        from a qualified ABLE program under Section 529A of
7        the Internal Revenue Code administered by the State
8        that is not used for qualified disability expenses, an
9        amount equal to the contribution component of the
10        nonqualified withdrawal or refund that was previously
11        deducted from base income under subsection (a)(2)(HH)
12        of this Section;
13            (D-23) An amount equal to the credit allowable to
14        the taxpayer under Section 218(a) of this Act,
15        determined without regard to Section 218(c) of this
16        Act;
17            (D-24) For taxable years ending on or after
18        December 31, 2017, an amount equal to the deduction
19        allowed under Section 199 of the Internal Revenue Code
20        for the taxable year;
21            (D-25) In the case of a resident, an amount equal
22        to the amount of tax for which a credit is allowed
23        pursuant to Section 201(p)(7) of this Act;
24            (D-26) the amount that is claimed as a federal
25        deduction when computing the taxpayer's federal
26        taxable income for the taxable year and that is

 

 

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1        attributable to an endowment gift for which the
2        taxpayer receives a credit under the Endow Illinois
3        Tax Credit Act;
4    and by deducting from the total so obtained the sum of the
5    following amounts:
6            (E) For taxable years ending before December 31,
7        2001, any amount included in such total in respect of
8        any compensation (including but not limited to any
9        compensation paid or accrued to a serviceman while a
10        prisoner of war or missing in action) paid to a
11        resident by reason of being on active duty in the Armed
12        Forces of the United States and in respect of any
13        compensation paid or accrued to a resident who as a
14        governmental employee was a prisoner of war or missing
15        in action, and in respect of any compensation paid to a
16        resident in 1971 or thereafter for annual training
17        performed pursuant to Sections 502 and 503, Title 32,
18        United States Code as a member of the Illinois
19        National Guard or, beginning with taxable years ending
20        on or after December 31, 2007, the National Guard of
21        any other state. For taxable years ending on or after
22        December 31, 2001, any amount included in such total
23        in respect of any compensation (including but not
24        limited to any compensation paid or accrued to a
25        serviceman while a prisoner of war or missing in
26        action) paid to a resident by reason of being a member

 

 

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1        of any component of the Armed Forces of the United
2        States and in respect of any compensation paid or
3        accrued to a resident who as a governmental employee
4        was a prisoner of war or missing in action, and in
5        respect of any compensation paid to a resident in 2001
6        or thereafter by reason of being a member of the
7        Illinois National Guard or, beginning with taxable
8        years ending on or after December 31, 2007, the
9        National Guard of any other state. The provisions of
10        this subparagraph (E) are exempt from the provisions
11        of Section 250;
12            (F) An amount equal to all amounts included in
13        such total pursuant to the provisions of Sections
14        402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
15        408 of the Internal Revenue Code, or included in such
16        total as distributions under the provisions of any
17        retirement or disability plan for employees of any
18        governmental agency or unit, or retirement payments to
19        retired partners, which payments are excluded in
20        computing net earnings from self employment by Section
21        1402 of the Internal Revenue Code and regulations
22        adopted pursuant thereto;
23            (G) The valuation limitation amount;
24            (H) An amount equal to the amount of any tax
25        imposed by this Act which was refunded to the taxpayer
26        and included in such total for the taxable year;

 

 

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1            (I) An amount equal to all amounts included in
2        such total pursuant to the provisions of Section 111
3        of the Internal Revenue Code as a recovery of items
4        previously deducted from adjusted gross income in the
5        computation of taxable income;
6            (J) An amount equal to those dividends included in
7        such total which were paid by a corporation which
8        conducts business operations in a River Edge
9        Redevelopment Zone or zones created under the River
10        Edge Redevelopment Zone Act, and conducts
11        substantially all of its operations in a River Edge
12        Redevelopment Zone or zones. This subparagraph (J) is
13        exempt from the provisions of Section 250;
14            (K) An amount equal to those dividends included in
15        such total that were paid by a corporation that
16        conducts business operations in a federally designated
17        Foreign Trade Zone or Sub-Zone and that is designated
18        a High Impact Business located in Illinois; provided
19        that dividends eligible for the deduction provided in
20        subparagraph (J) of paragraph (2) of this subsection
21        shall not be eligible for the deduction provided under
22        this subparagraph (K);
23            (L) For taxable years ending after December 31,
24        1983, an amount equal to all social security benefits
25        and railroad retirement benefits included in such
26        total pursuant to Sections 72(r) and 86 of the

 

 

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1        Internal Revenue Code;
2            (M) With the exception of any amounts subtracted
3        under subparagraph (N), an amount equal to the sum of
4        all amounts disallowed as deductions by (i) Sections
5        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
6        and all amounts of expenses allocable to interest and
7        disallowed as deductions by Section 265(a)(1) of the
8        Internal Revenue Code; and (ii) for taxable years
9        ending on or after August 13, 1999, Sections
10        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
11        Internal Revenue Code, plus, for taxable years ending
12        on or after December 31, 2011, Section 45G(e)(3) of
13        the Internal Revenue Code and, for taxable years
14        ending on or after December 31, 2008, any amount
15        included in gross income under Section 87 of the
16        Internal Revenue Code; the provisions of this
17        subparagraph are exempt from the provisions of Section
18        250;
19            (N) An amount equal to all amounts included in
20        such total which are exempt from taxation by this
21        State either by reason of its statutes or Constitution
22        or by reason of the Constitution, treaties or statutes
23        of the United States; provided that, in the case of any
24        statute of this State that exempts income derived from
25        bonds or other obligations from the tax imposed under
26        this Act, the amount exempted shall be the interest

 

 

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1        net of bond premium amortization;
2            (O) An amount equal to any contribution made to a
3        job training project established pursuant to the Tax
4        Increment Allocation Redevelopment Act;
5            (P) An amount equal to the amount of the deduction
6        used to compute the federal income tax credit for
7        restoration of substantial amounts held under claim of
8        right for the taxable year pursuant to Section 1341 of
9        the Internal Revenue Code or of any itemized deduction
10        taken from adjusted gross income in the computation of
11        taxable income for restoration of substantial amounts
12        held under claim of right for the taxable year;
13            (Q) An amount equal to any amounts included in
14        such total, received by the taxpayer as an
15        acceleration in the payment of life, endowment or
16        annuity benefits in advance of the time they would
17        otherwise be payable as an indemnity for a terminal
18        illness;
19            (R) An amount equal to the amount of any federal or
20        State bonus paid to veterans of the Persian Gulf War;
21            (S) An amount, to the extent included in adjusted
22        gross income, equal to the amount of a contribution
23        made in the taxable year on behalf of the taxpayer to a
24        medical care savings account established under the
25        Medical Care Savings Account Act or the Medical Care
26        Savings Account Act of 2000 to the extent the

 

 

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1        contribution is accepted by the account administrator
2        as provided in that Act;
3            (T) An amount, to the extent included in adjusted
4        gross income, equal to the amount of interest earned
5        in the taxable year on a medical care savings account
6        established under the Medical Care Savings Account Act
7        or the Medical Care Savings Account Act of 2000 on
8        behalf of the taxpayer, other than interest added
9        pursuant to item (D-5) of this paragraph (2);
10            (U) For one taxable year beginning on or after
11        January 1, 1994, an amount equal to the total amount of
12        tax imposed and paid under subsections (a) and (b) of
13        Section 201 of this Act on grant amounts received by
14        the taxpayer under the Nursing Home Grant Assistance
15        Act during the taxpayer's taxable years 1992 and 1993;
16            (V) Beginning with tax years ending on or after
17        December 31, 1995 and ending with tax years ending on
18        or before December 31, 2004, an amount equal to the
19        amount paid by a taxpayer who is a self-employed
20        taxpayer, a partner of a partnership, or a shareholder
21        in a Subchapter S corporation for health insurance or
22        long-term care insurance for that taxpayer or that
23        taxpayer's spouse or dependents, to the extent that
24        the amount paid for that health insurance or long-term
25        care insurance may be deducted under Section 213 of
26        the Internal Revenue Code, has not been deducted on

 

 

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1        the federal income tax return of the taxpayer, and
2        does not exceed the taxable income attributable to
3        that taxpayer's income, self-employment income, or
4        Subchapter S corporation income; except that no
5        deduction shall be allowed under this item (V) if the
6        taxpayer is eligible to participate in any health
7        insurance or long-term care insurance plan of an
8        employer of the taxpayer or the taxpayer's spouse. The
9        amount of the health insurance and long-term care
10        insurance subtracted under this item (V) shall be
11        determined by multiplying total health insurance and
12        long-term care insurance premiums paid by the taxpayer
13        times a number that represents the fractional
14        percentage of eligible medical expenses under Section
15        213 of the Internal Revenue Code of 1986 not actually
16        deducted on the taxpayer's federal income tax return;
17            (W) For taxable years beginning on or after
18        January 1, 1998, all amounts included in the
19        taxpayer's federal gross income in the taxable year
20        from amounts converted from a regular IRA to a Roth
21        IRA. This paragraph is exempt from the provisions of
22        Section 250;
23            (X) For taxable year 1999 and thereafter, an
24        amount equal to the amount of any (i) distributions,
25        to the extent includible in gross income for federal
26        income tax purposes, made to the taxpayer because of

 

 

HB1241- 28 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 29 -LRB103 25002 HLH 51336 b

1        of items (i) and (ii) of this paragraph in gross income
2        for federal income tax purposes. This paragraph is
3        exempt from the provisions of Section 250;
4            (Y) For taxable years beginning on or after
5        January 1, 2002 and ending on or before December 31,
6        2004, moneys contributed in the taxable year to a
7        College Savings Pool account under Section 16.5 of the
8        State Treasurer Act, except that amounts excluded from
9        gross income under Section 529(c)(3)(C)(i) of the
10        Internal Revenue Code shall not be considered moneys
11        contributed under this subparagraph (Y). For taxable
12        years beginning on or after January 1, 2005, a maximum
13        of $10,000 contributed in the taxable year to (i) a
14        College Savings Pool account under Section 16.5 of the
15        State Treasurer Act or (ii) the Illinois Prepaid
16        Tuition Trust Fund, except that amounts excluded from
17        gross income under Section 529(c)(3)(C)(i) of the
18        Internal Revenue Code shall not be considered moneys
19        contributed under this subparagraph (Y). For purposes
20        of this subparagraph, contributions made by an
21        employer on behalf of an employee, or matching
22        contributions made by an employee, shall be treated as
23        made by the employee. This subparagraph (Y) is exempt
24        from the provisions of Section 250;
25            (Z) For taxable years 2001 and thereafter, for the
26        taxable year in which the bonus depreciation deduction

 

 

HB1241- 30 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 31 -LRB103 25002 HLH 51336 b

1                    (iii) for property on which a bonus
2                depreciation deduction of 100% of the adjusted
3                basis was taken in a taxable year ending on or
4                after December 31, 2021, "x" equals the
5                depreciation deduction that would be allowed
6                on that property if the taxpayer had made the
7                election under Section 168(k)(7) of the
8                Internal Revenue Code to not claim bonus
9                depreciation on that property; and
10                    (iv) for property on which a bonus
11                depreciation deduction of a percentage other
12                than 30%, 50% or 100% of the adjusted basis
13                was taken in a taxable year ending on or after
14                December 31, 2021, "x" equals "y" multiplied
15                by 100 times the percentage bonus depreciation
16                on the property (that is, 100(bonus%)) and
17                then divided by 100 times 1 minus the
18                percentage bonus depreciation on the property
19                (that is, 100(1–bonus%)).
20            The aggregate amount deducted under this
21        subparagraph in all taxable years for any one piece of
22        property may not exceed the amount of the bonus
23        depreciation deduction taken on that property on the
24        taxpayer's federal income tax return under subsection
25        (k) of Section 168 of the Internal Revenue Code. This
26        subparagraph (Z) is exempt from the provisions of

 

 

HB1241- 32 -LRB103 25002 HLH 51336 b

1        Section 250;
2            (AA) If the taxpayer sells, transfers, abandons,
3        or otherwise disposes of property for which the
4        taxpayer was required in any taxable year to make an
5        addition modification under subparagraph (D-15), then
6        an amount equal to that addition modification.
7            If the taxpayer continues to own property through
8        the last day of the last tax year for which a
9        subtraction is allowed with respect to that property
10        under subparagraph (Z) and for which the taxpayer was
11        required in any taxable year to make an addition
12        modification under subparagraph (D-15), then an amount
13        equal to that addition modification.
14            The taxpayer is allowed to take the deduction
15        under this subparagraph only once with respect to any
16        one piece of property.
17            This subparagraph (AA) is exempt from the
18        provisions of Section 250;
19            (BB) Any amount included in adjusted gross income,
20        other than salary, received by a driver in a
21        ridesharing arrangement using a motor vehicle;
22            (CC) The amount of (i) any interest income (net of
23        the deductions allocable thereto) taken into account
24        for the taxable year with respect to a transaction
25        with a taxpayer that is required to make an addition
26        modification with respect to such transaction under

 

 

HB1241- 33 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 34 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 35 -LRB103 25002 HLH 51336 b

1        the same foreign person. This subparagraph (EE) is
2        exempt from the provisions of Section 250;
3            (FF) An amount equal to any amount awarded to the
4        taxpayer during the taxable year by the Court of
5        Claims under subsection (c) of Section 8 of the Court
6        of Claims Act for time unjustly served in a State
7        prison. This subparagraph (FF) is exempt from the
8        provisions of Section 250;
9            (GG) For taxable years ending on or after December
10        31, 2011, in the case of a taxpayer who was required to
11        add back any insurance premiums under Section
12        203(a)(2)(D-19), such taxpayer may elect to subtract
13        that part of a reimbursement received from the
14        insurance company equal to the amount of the expense
15        or loss (including expenses incurred by the insurance
16        company) that would have been taken into account as a
17        deduction for federal income tax purposes if the
18        expense or loss had been uninsured. If a taxpayer
19        makes the election provided for by this subparagraph
20        (GG), the insurer to which the premiums were paid must
21        add back to income the amount subtracted by the
22        taxpayer pursuant to this subparagraph (GG). This
23        subparagraph (GG) is exempt from the provisions of
24        Section 250;
25            (HH) For taxable years beginning on or after
26        January 1, 2018 and prior to January 1, 2028, a maximum

 

 

HB1241- 36 -LRB103 25002 HLH 51336 b

1        of $10,000 contributed in the taxable year to a
2        qualified ABLE account under Section 16.6 of the State
3        Treasurer Act, except that amounts excluded from gross
4        income under Section 529(c)(3)(C)(i) or Section
5        529A(c)(1)(C) of the Internal Revenue Code shall not
6        be considered moneys contributed under this
7        subparagraph (HH). For purposes of this subparagraph
8        (HH), contributions made by an employer on behalf of
9        an employee, or matching contributions made by an
10        employee, shall be treated as made by the employee;
11        and
12            (II) For taxable years that begin on or after
13        January 1, 2021 and begin before January 1, 2026, the
14        amount that is included in the taxpayer's federal
15        adjusted gross income pursuant to Section 61 of the
16        Internal Revenue Code as discharge of indebtedness
17        attributable to student loan forgiveness and that is
18        not excluded from the taxpayer's federal adjusted
19        gross income pursuant to paragraph (5) of subsection
20        (f) of Section 108 of the Internal Revenue Code.
 
21    (b) Corporations.
22        (1) In general. In the case of a corporation, base
23    income means an amount equal to the taxpayer's taxable
24    income for the taxable year as modified by paragraph (2).
25        (2) Modifications. The taxable income referred to in

 

 

HB1241- 37 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 38 -LRB103 25002 HLH 51336 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB1241- 46 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 47 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 48 -LRB103 25002 HLH 51336 b

1            (E-19) for taxable years ending on or after June
2        30, 2021, an amount equal to the deduction allowed
3        under Section 250(a)(1)(B)(i) of the Internal Revenue
4        Code for the taxable year;
5            (E-20) for taxable years ending on or after June
6        30, 2021, an amount equal to the deduction allowed
7        under Sections 243(e) and 245A(a) of the Internal
8        Revenue Code for the taxable year; and .
9            (E-21) the amount that is claimed as a federal
10        deduction when computing the taxpayer's federal
11        taxable income for the taxable year and that is
12        attributable to an endowment gift for which the
13        taxpayer receives a credit under the Endow Illinois
14        Tax Credit Act;
15    and by deducting from the total so obtained the sum of the
16    following amounts:
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 any amount included in such
21        total under Section 78 of the Internal Revenue Code;
22            (H) In the case of a regulated investment company,
23        an amount equal to the amount of exempt interest
24        dividends as defined in subsection (b)(5) of Section
25        852 of the Internal Revenue Code, paid to shareholders
26        for the taxable year;

 

 

HB1241- 49 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 50 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 51 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 52 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 53 -LRB103 25002 HLH 51336 b

1        charitable contribution under subsection (c) of
2        Section 170 of the Internal Revenue Code and (ii)
3        must, by its terms, be used for a project approved by
4        the Department of Commerce and Economic Opportunity
5        under Section 11 of the Illinois Enterprise Zone Act
6        or under Section 10-10 of the River Edge Redevelopment
7        Zone Act. This subparagraph (N) is exempt from the
8        provisions of Section 250;
9            (O) An amount equal to: (i) 85% for taxable years
10        ending on or before December 31, 1992, or, a
11        percentage equal to the percentage allowable under
12        Section 243(a)(1) of the Internal Revenue Code of 1986
13        for taxable years ending after December 31, 1992, of
14        the amount by which dividends included in taxable
15        income and received from a corporation that is not
16        created or organized under the laws of the United
17        States or any state or political subdivision thereof,
18        including, for taxable years ending on or after
19        December 31, 1988, dividends received or deemed
20        received or paid or deemed paid under Sections 951
21        through 965 of the Internal Revenue Code, exceed the
22        amount of the modification provided under subparagraph
23        (G) of paragraph (2) of this subsection (b) which is
24        related to such dividends, and including, for taxable
25        years ending on or after December 31, 2008, dividends
26        received from a captive real estate investment trust;

 

 

HB1241- 54 -LRB103 25002 HLH 51336 b

1        plus (ii) 100% of the amount by which dividends,
2        included in taxable income and received, including,
3        for taxable years ending on or after December 31,
4        1988, dividends received or deemed received or paid or
5        deemed paid under Sections 951 through 964 of the
6        Internal Revenue Code and including, for taxable years
7        ending on or after December 31, 2008, dividends
8        received from a captive real estate investment trust,
9        from any such corporation specified in clause (i) that
10        would but for the provisions of Section 1504(b)(3) of
11        the Internal Revenue Code be treated as a member of the
12        affiliated group which includes the dividend
13        recipient, exceed the amount of the modification
14        provided under subparagraph (G) of paragraph (2) of
15        this subsection (b) which is related to such
16        dividends. For taxable years ending on or after June
17        30, 2021, (i) for purposes of this subparagraph, the
18        term "dividend" does not include any amount treated as
19        a dividend under Section 1248 of the Internal Revenue
20        Code, and (ii) this subparagraph shall not apply to
21        dividends for which a deduction is allowed under
22        Section 245(a) of the Internal Revenue Code. This
23        subparagraph (O) is exempt from the provisions of
24        Section 250 of this Act;
25            (P) An amount equal to any contribution made to a
26        job training project established pursuant to the Tax

 

 

HB1241- 55 -LRB103 25002 HLH 51336 b

1        Increment Allocation Redevelopment Act;
2            (Q) An amount equal to the amount of the deduction
3        used to compute the federal income tax credit for
4        restoration of substantial amounts held under claim of
5        right for the taxable year pursuant to Section 1341 of
6        the Internal Revenue Code;
7            (R) On and after July 20, 1999, in the case of an
8        attorney-in-fact with respect to whom an interinsurer
9        or a reciprocal insurer has made the election under
10        Section 835 of the Internal Revenue Code, 26 U.S.C.
11        835, an amount equal to the excess, if any, of the
12        amounts paid or incurred by that interinsurer or
13        reciprocal insurer in the taxable year to the
14        attorney-in-fact over the deduction allowed to that
15        interinsurer or reciprocal insurer with respect to the
16        attorney-in-fact under Section 835(b) of the Internal
17        Revenue Code for the taxable year; the provisions of
18        this subparagraph are exempt from the provisions of
19        Section 250;
20            (S) For taxable years ending on or after December
21        31, 1997, in the case of a Subchapter S corporation, an
22        amount equal to all amounts of income allocable to a
23        shareholder subject to the Personal Property Tax
24        Replacement Income Tax imposed by subsections (c) and
25        (d) of Section 201 of this Act, including amounts
26        allocable to organizations exempt from federal income

 

 

HB1241- 56 -LRB103 25002 HLH 51336 b

1        tax by reason of Section 501(a) of the Internal
2        Revenue Code. This subparagraph (S) is exempt from the
3        provisions of Section 250;
4            (T) For taxable years 2001 and thereafter, for the
5        taxable year in which the bonus depreciation deduction
6        is taken on the taxpayer's federal income tax return
7        under subsection (k) of Section 168 of the Internal
8        Revenue Code and for each applicable taxable year
9        thereafter, an amount equal to "x", where:
10                (1) "y" equals the amount of the depreciation
11            deduction taken for the taxable year on the
12            taxpayer's federal income tax return on property
13            for which the bonus depreciation deduction was
14            taken in any year under subsection (k) of Section
15            168 of the Internal Revenue Code, but not
16            including the bonus depreciation deduction;
17                (2) for taxable years ending on or before
18            December 31, 2005, "x" equals "y" multiplied by 30
19            and then divided by 70 (or "y" multiplied by
20            0.429); and
21                (3) for taxable years ending after December
22            31, 2005:
23                    (i) for property on which a bonus
24                depreciation deduction of 30% of the adjusted
25                basis was taken, "x" equals "y" multiplied by
26                30 and then divided by 70 (or "y" multiplied

 

 

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1                by 0.429);
2                    (ii) for property on which a bonus
3                depreciation deduction of 50% of the adjusted
4                basis was taken, "x" equals "y" multiplied by
5                1.0;
6                    (iii) for property on which a bonus
7                depreciation deduction of 100% of the adjusted
8                basis was taken in a taxable year ending on or
9                after December 31, 2021, "x" equals the
10                depreciation deduction that would be allowed
11                on that property if the taxpayer had made the
12                election under Section 168(k)(7) of the
13                Internal Revenue Code to not claim bonus
14                depreciation on that property; and
15                    (iv) for property on which a bonus
16                depreciation deduction of a percentage other
17                than 30%, 50% or 100% of the adjusted basis
18                was taken in a taxable year ending on or after
19                December 31, 2021, "x" equals "y" multiplied
20                by 100 times the percentage bonus depreciation
21                on the property (that is, 100(bonus%)) and
22                then divided by 100 times 1 minus the
23                percentage bonus depreciation on the property
24                (that is, 100(1–bonus%)).
25            The aggregate amount deducted under this
26        subparagraph in all taxable years for any one piece of

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB1241- 65 -LRB103 25002 HLH 51336 b

1        trust or estate is claiming the same tax for purposes
2        of the Illinois foreign tax credit under Section 601
3        of this Act;
4            (G) An amount equal to the amount of the capital
5        gain deduction allowable under the Internal Revenue
6        Code, to the extent deducted from gross income in the
7        computation of taxable income;
8            (G-5) For taxable years ending after December 31,
9        1997, an amount equal to any eligible remediation
10        costs that the trust or estate deducted in computing
11        adjusted gross income and for which the trust or
12        estate claims a credit under subsection (l) of Section
13        201;
14            (G-10) For taxable years 2001 and thereafter, an
15        amount equal to the bonus depreciation deduction taken
16        on the taxpayer's federal income tax return for the
17        taxable year under subsection (k) of Section 168 of
18        the Internal Revenue Code; and
19            (G-11) If the taxpayer sells, transfers, abandons,
20        or otherwise disposes of property for which the
21        taxpayer was required in any taxable year to make an
22        addition modification under subparagraph (G-10), then
23        an amount equal to the aggregate amount of the
24        deductions taken in all taxable years under
25        subparagraph (R) with respect to that property.
26            If the taxpayer continues to own property through

 

 

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

 

 

HB1241- 67 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 68 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 69 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 70 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 71 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 72 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 73 -LRB103 25002 HLH 51336 b

1        same taxable year and received by the taxpayer or by a
2        member of the taxpayer's unitary business group
3        (including amounts included in gross income under
4        Sections 951 through 964 of the Internal Revenue Code
5        and amounts included in gross income under Section 78
6        of the Internal Revenue Code) with respect to the
7        stock of the same person to whom the premiums and costs
8        were directly or indirectly paid, incurred, or
9        accrued. The preceding sentence does not apply to the
10        extent that the same dividends caused a reduction to
11        the addition modification required under Section
12        203(c)(2)(G-12) or Section 203(c)(2)(G-13) of this
13        Act;
14            (G-15) An amount equal to the credit allowable to
15        the taxpayer under Section 218(a) of this Act,
16        determined without regard to Section 218(c) of this
17        Act;
18            (G-16) For taxable years ending on or after
19        December 31, 2017, an amount equal to the deduction
20        allowed under Section 199 of the Internal Revenue Code
21        for the taxable year;
22            (G-17) the amount that is claimed as a federal
23        deduction when computing the taxpayer's federal
24        taxable income for the taxable year and that is
25        attributable to an endowment gift for which the
26        taxpayer receives a credit under the Endow Illinois

 

 

HB1241- 74 -LRB103 25002 HLH 51336 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                basis was taken, "x" equals "y" multiplied by
2                1.0;
3                    (iii) for property on which a bonus
4                depreciation deduction of 100% of the adjusted
5                basis was taken in a taxable year ending on or
6                after December 31, 2021, "x" equals the
7                depreciation deduction that would be allowed
8                on that property if the taxpayer had made the
9                election under Section 168(k)(7) of the
10                Internal Revenue Code to not claim bonus
11                depreciation on that property; and
12                    (iv) for property on which a bonus
13                depreciation deduction of a percentage other
14                than 30%, 50% or 100% of the adjusted basis
15                was taken in a taxable year ending on or after
16                December 31, 2021, "x" equals "y" multiplied
17                by 100 times the percentage bonus depreciation
18                on the property (that is, 100(bonus%)) and
19                then divided by 100 times 1 minus the
20                percentage bonus depreciation on the property
21                (that is, 100(1–bonus%)).
22            The aggregate amount deducted under this
23        subparagraph in all taxable years for any one piece of
24        property may not exceed the amount of the bonus
25        depreciation deduction taken on that property on the
26        taxpayer's federal income tax return under subsection

 

 

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1        (k) of Section 168 of the Internal Revenue Code. This
2        subparagraph (R) is exempt from the provisions of
3        Section 250;
4            (S) If the taxpayer sells, transfers, abandons, or
5        otherwise disposes of property for which the taxpayer
6        was required in any taxable year to make an addition
7        modification under subparagraph (G-10), then an amount
8        equal to that addition modification.
9            If the taxpayer continues to own property through
10        the last day of the last tax year for which a
11        subtraction is allowed with respect to that property
12        under subparagraph (R) and for which the taxpayer was
13        required in any taxable year to make an addition
14        modification under subparagraph (G-10), then an amount
15        equal to that addition modification.
16            The taxpayer is allowed to take the deduction
17        under this subparagraph only once with respect to any
18        one piece of property.
19            This subparagraph (S) is exempt from the
20        provisions of Section 250;
21            (T) The amount of (i) any interest income (net of
22        the deductions allocable thereto) taken into account
23        for the taxable year with respect to a transaction
24        with a taxpayer that is required to make an addition
25        modification with respect to such transaction under
26        Section 203(a)(2)(D-17), 203(b)(2)(E-12),

 

 

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

 

 

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

 

 

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

 

 

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1        subparagraph (Y) is exempt from the provisions of
2        Section 250; and
3            (Z) For taxable years beginning after December 31,
4        2018 and before January 1, 2026, the amount of excess
5        business loss of the taxpayer disallowed as a
6        deduction by Section 461(l)(1)(B) of the Internal
7        Revenue Code.
8        (3) Limitation. The amount of any modification
9    otherwise required under this subsection shall, under
10    regulations prescribed by the Department, be adjusted by
11    any amounts included therein which were properly paid,
12    credited, or required to be distributed, or permanently
13    set aside for charitable purposes pursuant to Internal
14    Revenue Code Section 642(c) during the taxable year.
 
15    (d) Partnerships.
16        (1) In general. In the case of a partnership, base
17    income means an amount equal to the taxpayer's taxable
18    income for the taxable year as modified by paragraph (2).
19        (2) Modifications. The taxable income referred to in
20    paragraph (1) shall be modified by adding thereto the sum
21    of the following amounts:
22            (A) An amount equal to all amounts paid or accrued
23        to the taxpayer as interest or dividends during the
24        taxable year to the extent excluded from gross income
25        in the computation of taxable income;

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        (including amounts included in gross income under
2        Sections 951 through 964 of the Internal Revenue Code
3        and amounts included in gross income under Section 78
4        of the Internal Revenue Code) with respect to the
5        stock of the same person to whom the premiums and costs
6        were directly or indirectly paid, incurred, or
7        accrued. The preceding sentence does not apply to the
8        extent that the same dividends caused a reduction to
9        the addition modification required under Section
10        203(d)(2)(D-7) or Section 203(d)(2)(D-8) of this Act;
11            (D-10) An amount equal to the credit allowable to
12        the taxpayer under Section 218(a) of this Act,
13        determined without regard to Section 218(c) of this
14        Act;
15            (D-11) For taxable years ending on or after
16        December 31, 2017, an amount equal to the deduction
17        allowed under Section 199 of the Internal Revenue Code
18        for the taxable year;
19            (D-12) the amount that is claimed as a federal
20        deduction when computing the taxpayer's federal
21        taxable income for the taxable year and that is
22        attributable to an endowment gift for which the
23        taxpayer receives a credit under the Endow Illinois
24        Tax Credit Act;
25    and by deducting from the total so obtained the following
26    amounts:

 

 

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1            (E) The valuation limitation amount;
2            (F) An amount equal to the amount of any tax
3        imposed by this Act which was refunded to the taxpayer
4        and included in such total for the taxable year;
5            (G) An amount equal to all amounts included in
6        taxable income as modified by subparagraphs (A), (B),
7        (C) and (D) which are exempt from taxation by this
8        State either by reason of its statutes or Constitution
9        or by reason of the Constitution, treaties or statutes
10        of the United States; provided that, in the case of any
11        statute of this State that exempts income derived from
12        bonds or other obligations from the tax imposed under
13        this Act, the amount exempted shall be the interest
14        net of bond premium amortization;
15            (H) Any income of the partnership which
16        constitutes personal service income as defined in
17        Section 1348(b)(1) of the Internal Revenue Code (as in
18        effect December 31, 1981) or a reasonable allowance
19        for compensation paid or accrued for services rendered
20        by partners to the partnership, whichever is greater;
21        this subparagraph (H) is exempt from the provisions of
22        Section 250;
23            (I) An amount equal to all amounts of income
24        distributable to an entity subject to the Personal
25        Property Tax Replacement Income Tax imposed by
26        subsections (c) and (d) of Section 201 of this Act

 

 

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1        including amounts distributable to organizations
2        exempt from federal income tax by reason of Section
3        501(a) of the Internal Revenue Code; this subparagraph
4        (I) is exempt from the provisions of Section 250;
5            (J) With the exception of any amounts subtracted
6        under subparagraph (G), an amount equal to the sum of
7        all amounts disallowed as deductions by (i) Sections
8        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
9        and all amounts of expenses allocable to interest and
10        disallowed as deductions by Section 265(a)(1) of the
11        Internal Revenue Code; and (ii) for taxable years
12        ending on or after August 13, 1999, Sections
13        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
14        Internal Revenue Code, plus, (iii) for taxable years
15        ending on or after December 31, 2011, Section
16        45G(e)(3) of the Internal Revenue Code and, for
17        taxable years ending on or after December 31, 2008,
18        any amount included in gross income under Section 87
19        of the Internal Revenue Code; the provisions of this
20        subparagraph are exempt from the provisions of Section
21        250;
22            (K) An amount equal to those dividends included in
23        such total which were paid by a corporation which
24        conducts business operations in a River Edge
25        Redevelopment Zone or zones created under the River
26        Edge Redevelopment Zone Act and conducts substantially

 

 

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1        all of its operations from a River Edge Redevelopment
2        Zone or zones. This subparagraph (K) is exempt from
3        the provisions of Section 250;
4            (L) An amount equal to any contribution made to a
5        job training project established pursuant to the Real
6        Property Tax Increment Allocation Redevelopment Act;
7            (M) An amount equal to those dividends included in
8        such total that were paid by a corporation that
9        conducts business operations in a federally designated
10        Foreign Trade Zone or Sub-Zone and that is designated
11        a High Impact Business located in Illinois; provided
12        that dividends eligible for the deduction provided in
13        subparagraph (K) of paragraph (2) of this subsection
14        shall not be eligible for the deduction provided under
15        this subparagraph (M);
16            (N) 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;
21            (O) For taxable years 2001 and thereafter, for the
22        taxable year in which the bonus depreciation deduction
23        is taken on the taxpayer's federal income tax return
24        under subsection (k) of Section 168 of the Internal
25        Revenue Code and for each applicable taxable year
26        thereafter, an amount equal to "x", where:

 

 

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1                (1) "y" equals the amount of the depreciation
2            deduction taken for the taxable year on the
3            taxpayer's federal income tax return on property
4            for which the bonus depreciation deduction was
5            taken in any year under subsection (k) of Section
6            168 of the Internal Revenue Code, but not
7            including the bonus depreciation deduction;
8                (2) for taxable years ending on or before
9            December 31, 2005, "x" equals "y" multiplied by 30
10            and then divided by 70 (or "y" multiplied by
11            0.429); and
12                (3) for taxable years ending after December
13            31, 2005:
14                    (i) for property on which a bonus
15                depreciation deduction of 30% of the adjusted
16                basis was taken, "x" equals "y" multiplied by
17                30 and then divided by 70 (or "y" multiplied
18                by 0.429);
19                    (ii) for property on which a bonus
20                depreciation deduction of 50% of the adjusted
21                basis was taken, "x" equals "y" multiplied by
22                1.0;
23                    (iii) for property on which a bonus
24                depreciation deduction of 100% of the adjusted
25                basis was taken in a taxable year ending on or
26                after December 31, 2021, "x" equals the

 

 

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1                depreciation deduction that would be allowed
2                on that property if the taxpayer had made the
3                election under Section 168(k)(7) of the
4                Internal Revenue Code to not claim bonus
5                depreciation on that property; and
6                    (iv) for property on which a bonus
7                depreciation deduction of a percentage other
8                than 30%, 50% or 100% of the adjusted basis
9                was taken in a taxable year ending on or after
10                December 31, 2021, "x" equals "y" multiplied
11                by 100 times the percentage bonus depreciation
12                on the property (that is, 100(bonus%)) and
13                then divided by 100 times 1 minus the
14                percentage bonus depreciation on the property
15                (that is, 100(1–bonus%)).
16            The aggregate amount deducted under this
17        subparagraph in all taxable years for any one piece of
18        property may not exceed the amount of the bonus
19        depreciation deduction taken on that property on the
20        taxpayer's federal income tax return under subsection
21        (k) of Section 168 of the Internal Revenue Code. This
22        subparagraph (O) is exempt from the provisions of
23        Section 250;
24            (P) If the taxpayer sells, transfers, abandons, or
25        otherwise disposes of property for which the taxpayer
26        was required in any taxable year to make an addition

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB1241- 103 -LRB103 25002 HLH 51336 b

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

 

 

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

 

 

HB1241- 105 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 106 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 107 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 108 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 109 -LRB103 25002 HLH 51336 b

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

 

 

HB1241- 110 -LRB103 25002 HLH 51336 b

1such taxable year, whether in respect of property values as of
2August 1, 1969 or otherwise.
3(Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19;
4102-16, eff. 6-17-21; 102-558, eff. 8-20-21; 102-658, eff.
58-27-21; 102-813, eff. 5-13-22; 102-1112, eff. 12-21-22.)
 
6    (35 ILCS 5/234 new)
7    Sec. 234. The Endow Illinois tax credit.
8    (a) For taxable years ending on or after December 31, 2024
9and ending before January 1, 2034, each taxpayer for whom a tax
10credit has been authorized by the Department of Revenue under
11the Endow Illinois Tax Credit Act is entitled to a credit
12against the tax imposed under subsections (a) and (b) of
13Section 201 in an amount equal to the amount authorized under
14that Act.
15    (b) For partners of partnerships and shareholders of
16Subchapter S corporations, there is allowed a credit under
17this Section to be determined in accordance with the
18determination of income and distributive share of income under
19Sections 702 and 704 and Subchapter S of the Internal Revenue
20Code.
21    (c) The credit may not be carried back and may not reduce
22the taxpayer's liability to less than zero. If the amount of
23the credit exceeds the tax liability for the year, the excess
24may be carried forward and applied to the tax liability of the
255 taxable years following the excess credit year. The tax

 

 

HB1241- 111 -LRB103 25002 HLH 51336 b

1credit shall be applied to the earliest year for which there is
2a tax liability. If there are credits for more than one year
3that are available to offset a liability, the earlier credit
4shall be applied first.
 
5    Section 999. Effective date. This Act takes effect upon
6becoming law.