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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Income Tax Act is amended by | ||||||||||||||||||||||||
5 | changing Section 203 as follows: | ||||||||||||||||||||||||
6 | (35 ILCS 5/203) (from Ch. 120, par. 2-203) | ||||||||||||||||||||||||
7 | Sec. 203. Base income defined. | ||||||||||||||||||||||||
8 | (a) Individuals. | ||||||||||||||||||||||||
9 | (1) In general. In the case of an individual, base | ||||||||||||||||||||||||
10 | income means an
amount equal to the taxpayer's adjusted | ||||||||||||||||||||||||
11 | gross income for the taxable
year as modified by paragraph | ||||||||||||||||||||||||
12 | (2). | ||||||||||||||||||||||||
13 | (2) Modifications. The adjusted gross income referred | ||||||||||||||||||||||||
14 | to in
paragraph (1) shall be modified by adding thereto the | ||||||||||||||||||||||||
15 | sum of the
following amounts: | ||||||||||||||||||||||||
16 | (A) An amount equal to all amounts paid or accrued | ||||||||||||||||||||||||
17 | to the taxpayer
as interest or dividends during the | ||||||||||||||||||||||||
18 | taxable year to the extent excluded
from gross income | ||||||||||||||||||||||||
19 | in the computation of adjusted gross income, except | ||||||||||||||||||||||||
20 | stock
dividends of qualified public utilities | ||||||||||||||||||||||||
21 | described in Section 305(e) of the
Internal Revenue | ||||||||||||||||||||||||
22 | Code; | ||||||||||||||||||||||||
23 | (B) An amount equal to the amount of tax imposed by |
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| |||||||
1 | this Act to the
extent deducted from gross income in | ||||||
2 | the computation of adjusted gross
income for the | ||||||
3 | taxable year; | ||||||
4 | (C) An amount equal to the amount received during | ||||||
5 | the taxable year
as a recovery or refund of real | ||||||
6 | property taxes paid with respect to the
taxpayer's | ||||||
7 | principal residence under the Revenue Act of
1939 and | ||||||
8 | for which a deduction was previously taken under | ||||||
9 | subparagraph (L) of
this paragraph (2) prior to July 1, | ||||||
10 | 1991, the retrospective application date of
Article 4 | ||||||
11 | of Public Act 87-17. In the case of multi-unit or | ||||||
12 | multi-use
structures and farm dwellings, the taxes on | ||||||
13 | the taxpayer's principal residence
shall be that | ||||||
14 | portion of the total taxes for the entire property | ||||||
15 | which is
attributable to such principal residence; | ||||||
16 | (D) An amount equal to the amount of the capital | ||||||
17 | gain deduction
allowable under the Internal Revenue | ||||||
18 | Code, to the extent deducted from gross
income in the | ||||||
19 | computation of adjusted gross income; | ||||||
20 | (D-5) An amount, to the extent not included in | ||||||
21 | adjusted gross income,
equal to the amount of money | ||||||
22 | withdrawn by the taxpayer in the taxable year from
a | ||||||
23 | medical care savings account and the interest earned on | ||||||
24 | the account in the
taxable year of a withdrawal | ||||||
25 | pursuant to subsection (b) of Section 20 of the
Medical | ||||||
26 | Care Savings Account Act or subsection (b) of Section |
| |||||||
| |||||||
1 | 20 of the
Medical Care Savings Account Act of 2000; | ||||||
2 | (D-10) For taxable years ending after December 31, | ||||||
3 | 1997, an
amount equal to any eligible remediation costs | ||||||
4 | that the individual
deducted in computing adjusted | ||||||
5 | gross income and for which the
individual claims a | ||||||
6 | credit under subsection (l) of Section 201; | ||||||
7 | (D-15) For taxable years 2001 and thereafter, an | ||||||
8 | amount equal to the
bonus depreciation deduction taken | ||||||
9 | on the taxpayer's federal income tax return for the | ||||||
10 | taxable
year under subsection (k) of Section 168 of the | ||||||
11 | Internal Revenue Code; | ||||||
12 | (D-16) If the taxpayer sells, transfers, abandons, | ||||||
13 | or otherwise disposes of property for which the | ||||||
14 | taxpayer was required in any taxable year to
make an | ||||||
15 | addition modification under subparagraph (D-15), then | ||||||
16 | an amount equal
to the aggregate amount of the | ||||||
17 | deductions taken in all taxable
years under | ||||||
18 | subparagraph (Z) with respect to that property. | ||||||
19 | If the taxpayer continues to own property through | ||||||
20 | the last day of the last tax year for which the | ||||||
21 | taxpayer may claim a depreciation deduction for | ||||||
22 | federal income tax purposes and for which the taxpayer | ||||||
23 | was allowed in any taxable year to make a subtraction | ||||||
24 | modification under subparagraph (Z), then an amount | ||||||
25 | equal to that subtraction modification.
| ||||||
26 | The taxpayer is required to make the addition |
| |||||||
| |||||||
1 | modification under this
subparagraph
only once with | ||||||
2 | respect to any one piece of property; | ||||||
3 | (D-17) An amount equal to the amount otherwise | ||||||
4 | allowed as a deduction in computing base income for | ||||||
5 | interest paid, accrued, or incurred, directly or | ||||||
6 | indirectly, (i) for taxable years ending on or after | ||||||
7 | December 31, 2004, to a foreign person who would be a | ||||||
8 | member of the same unitary business group but for the | ||||||
9 | fact that foreign person's business activity outside | ||||||
10 | the United States is 80% or more of the foreign | ||||||
11 | person's total business activity and (ii) for taxable | ||||||
12 | years ending on or after December 31, 2008, to a person | ||||||
13 | who would be a member of the same unitary business | ||||||
14 | group but for the fact that the person is prohibited | ||||||
15 | under Section 1501(a)(27) from being included in the | ||||||
16 | unitary business group because he or she is ordinarily | ||||||
17 | required to apportion business income under different | ||||||
18 | subsections of Section 304. The addition modification | ||||||
19 | required by this subparagraph shall be reduced to the | ||||||
20 | extent that dividends were included in base income of | ||||||
21 | the unitary group for the same taxable year and | ||||||
22 | received by the taxpayer or by a member of the | ||||||
23 | taxpayer's unitary business group (including amounts | ||||||
24 | included in gross income under Sections 951 through 964 | ||||||
25 | of the Internal Revenue Code and amounts included in | ||||||
26 | gross income under Section 78 of the Internal Revenue |
| |||||||
| |||||||
1 | Code) with respect to the stock of the same person to | ||||||
2 | whom the interest was paid, accrued, or incurred. | ||||||
3 | This paragraph shall not apply to the following:
| ||||||
4 | (i) an item of interest paid, accrued, or | ||||||
5 | incurred, directly or indirectly, to a person who | ||||||
6 | is subject in a foreign country or state, other | ||||||
7 | than a state which requires mandatory unitary | ||||||
8 | reporting, to a tax on or measured by net income | ||||||
9 | with respect to such interest; or | ||||||
10 | (ii) an item of interest paid, accrued, or | ||||||
11 | incurred, directly or indirectly, to a person if | ||||||
12 | the taxpayer can establish, based on a | ||||||
13 | preponderance of the evidence, both of the | ||||||
14 | following: | ||||||
15 | (a) the person, during the same taxable | ||||||
16 | year, paid, accrued, or incurred, the interest | ||||||
17 | to a person that is not a related member, and | ||||||
18 | (b) the transaction giving rise to the | ||||||
19 | interest expense between the taxpayer and the | ||||||
20 | person did not have as a principal purpose the | ||||||
21 | avoidance of Illinois income tax, and is paid | ||||||
22 | pursuant to a contract or agreement that | ||||||
23 | reflects an arm's-length interest rate and | ||||||
24 | terms; or
| ||||||
25 | (iii) the taxpayer can establish, based on | ||||||
26 | clear and convincing evidence, that the interest |
| |||||||
| |||||||
1 | paid, accrued, or incurred relates to a contract or | ||||||
2 | agreement entered into at arm's-length rates and | ||||||
3 | terms and the principal purpose for the payment is | ||||||
4 | not federal or Illinois tax avoidance; or
| ||||||
5 | (iv) an item of interest paid, accrued, or | ||||||
6 | incurred, directly or indirectly, to a person if | ||||||
7 | the taxpayer establishes by clear and convincing | ||||||
8 | evidence that the adjustments are unreasonable; or | ||||||
9 | if the taxpayer and the Director agree in writing | ||||||
10 | to the application or use of an alternative method | ||||||
11 | of apportionment under Section 304(f).
| ||||||
12 | Nothing in this subsection shall preclude the | ||||||
13 | Director from making any other adjustment | ||||||
14 | otherwise allowed under Section 404 of this Act for | ||||||
15 | any tax year beginning after the effective date of | ||||||
16 | this amendment provided such adjustment is made | ||||||
17 | pursuant to regulation adopted by the Department | ||||||
18 | and such regulations provide methods and standards | ||||||
19 | by which the Department will utilize its authority | ||||||
20 | under Section 404 of this Act;
| ||||||
21 | (D-18) An amount equal to the amount of intangible | ||||||
22 | expenses and costs otherwise allowed as a deduction in | ||||||
23 | computing base income, and that were paid, accrued, or | ||||||
24 | incurred, directly or indirectly, (i) for taxable | ||||||
25 | years ending on or after December 31, 2004, to a | ||||||
26 | foreign person who would be a member of the same |
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| |||||||
1 | unitary business group but for the fact that the | ||||||
2 | foreign person's business activity outside the United | ||||||
3 | States is 80% or more of that person's total business | ||||||
4 | activity and (ii) for taxable years ending on or after | ||||||
5 | December 31, 2008, to a person who would be a member of | ||||||
6 | the same unitary business group but for the fact that | ||||||
7 | the person is prohibited under Section 1501(a)(27) | ||||||
8 | from being included in the unitary business group | ||||||
9 | because he or she is ordinarily required to apportion | ||||||
10 | business income under different subsections of Section | ||||||
11 | 304. The addition modification required by this | ||||||
12 | subparagraph shall be reduced to the extent that | ||||||
13 | dividends were included in base income of the unitary | ||||||
14 | group for the same taxable year and received by the | ||||||
15 | taxpayer or by a member of the taxpayer's unitary | ||||||
16 | business group (including amounts included in gross | ||||||
17 | income under Sections 951 through 964 of the Internal | ||||||
18 | Revenue Code and amounts included in gross income under | ||||||
19 | Section 78 of the Internal Revenue Code) with respect | ||||||
20 | to the stock of the same person to whom the intangible | ||||||
21 | expenses and costs were directly or indirectly paid, | ||||||
22 | incurred, or accrued. The preceding sentence does not | ||||||
23 | apply to the extent that the same dividends caused a | ||||||
24 | reduction to the addition modification required under | ||||||
25 | Section 203(a)(2)(D-17) of this Act. As used in this | ||||||
26 | subparagraph, the term "intangible expenses and costs" |
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| |||||||
1 | includes (1) expenses, losses, and costs for, or | ||||||
2 | related to, the direct or indirect acquisition, use, | ||||||
3 | maintenance or management, ownership, sale, exchange, | ||||||
4 | or any other disposition of intangible property; (2) | ||||||
5 | losses incurred, directly or indirectly, from | ||||||
6 | factoring transactions or discounting transactions; | ||||||
7 | (3) royalty, patent, technical, and copyright fees; | ||||||
8 | (4) licensing fees; and (5) other similar expenses and | ||||||
9 | costs.
For purposes of this subparagraph, "intangible | ||||||
10 | property" includes patents, patent applications, trade | ||||||
11 | names, trademarks, service marks, copyrights, mask | ||||||
12 | works, trade secrets, and similar types of intangible | ||||||
13 | assets. | ||||||
14 | This paragraph shall not apply to the following: | ||||||
15 | (i) any item of intangible expenses or costs | ||||||
16 | paid, accrued, or incurred, directly or | ||||||
17 | indirectly, from a transaction with a person who is | ||||||
18 | subject in a foreign country or state, other than a | ||||||
19 | state which requires mandatory unitary reporting, | ||||||
20 | to a tax on or measured by net income with respect | ||||||
21 | to such item; or | ||||||
22 | (ii) any item of intangible expense or cost | ||||||
23 | paid, accrued, or incurred, directly or | ||||||
24 | indirectly, if the taxpayer can establish, based | ||||||
25 | on a preponderance of the evidence, both of the | ||||||
26 | following: |
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| |||||||
1 | (a) the person during the same taxable | ||||||
2 | year paid, accrued, or incurred, the | ||||||
3 | intangible expense or cost to a person that is | ||||||
4 | not a related member, and | ||||||
5 | (b) the transaction giving rise to the | ||||||
6 | intangible expense or cost between the | ||||||
7 | taxpayer and the person did not have as a | ||||||
8 | principal purpose the avoidance of Illinois | ||||||
9 | income tax, and is paid pursuant to a contract | ||||||
10 | or agreement that reflects arm's-length terms; | ||||||
11 | or | ||||||
12 | (iii) any item of intangible expense or cost | ||||||
13 | paid, accrued, or incurred, directly or | ||||||
14 | indirectly, from a transaction with a person if the | ||||||
15 | taxpayer establishes by clear and convincing | ||||||
16 | evidence, that the adjustments are unreasonable; | ||||||
17 | or if the taxpayer and the Director agree in | ||||||
18 | writing to the application or use of an alternative | ||||||
19 | method of apportionment under Section 304(f);
| ||||||
20 | Nothing in this subsection shall preclude the | ||||||
21 | Director from making any other adjustment | ||||||
22 | otherwise allowed under Section 404 of this Act for | ||||||
23 | any tax year beginning after the effective date of | ||||||
24 | this amendment provided such adjustment is made | ||||||
25 | pursuant to regulation adopted by the Department | ||||||
26 | and such regulations provide methods and standards |
| |||||||
| |||||||
1 | by which the Department will utilize its authority | ||||||
2 | under Section 404 of this Act;
| ||||||
3 | (D-19) For taxable years ending on or after | ||||||
4 | December 31, 2008, an amount equal to the amount of | ||||||
5 | insurance premium expenses and costs otherwise allowed | ||||||
6 | as a deduction in computing base income, and that were | ||||||
7 | paid, accrued, or incurred, directly or indirectly, to | ||||||
8 | a person who would be a member of the same unitary | ||||||
9 | business group but for the fact that the person is | ||||||
10 | prohibited under Section 1501(a)(27) from being | ||||||
11 | included in the unitary business group because he or | ||||||
12 | she is ordinarily required to apportion business | ||||||
13 | income under different subsections of Section 304. The | ||||||
14 | addition modification required by this subparagraph | ||||||
15 | shall be reduced to the extent that dividends were | ||||||
16 | included in base income of the unitary group for the | ||||||
17 | same taxable year and received by the taxpayer or by a | ||||||
18 | member of the taxpayer's unitary business group | ||||||
19 | (including amounts included in gross income under | ||||||
20 | Sections 951 through 964 of the Internal Revenue Code | ||||||
21 | and amounts included in gross income under Section 78 | ||||||
22 | of the Internal Revenue Code) with respect to the stock | ||||||
23 | of the same person to whom the premiums and costs were | ||||||
24 | directly or indirectly paid, incurred, or accrued. The | ||||||
25 | preceding sentence does not apply to the extent that | ||||||
26 | the same dividends caused a reduction to the addition |
| |||||||
| |||||||
1 | modification required under Section 203(a)(2)(D-17) or | ||||||
2 | Section 203(a)(2)(D-18) of this Act.
| ||||||
3 | (D-20) For taxable years beginning on or after | ||||||
4 | January 1,
2002 and ending on or before December 31, | ||||||
5 | 2006, in
the
case of a distribution from a qualified | ||||||
6 | tuition program under Section 529 of
the Internal | ||||||
7 | Revenue Code, other than (i) a distribution from a | ||||||
8 | College Savings
Pool created under Section 16.5 of the | ||||||
9 | State Treasurer Act or (ii) a
distribution from the | ||||||
10 | Illinois Prepaid Tuition Trust Fund, an amount equal to
| ||||||
11 | the amount excluded from gross income under Section | ||||||
12 | 529(c)(3)(B). For taxable years beginning on or after | ||||||
13 | January 1, 2007, in the case of a distribution from a | ||||||
14 | qualified tuition program under Section 529 of the | ||||||
15 | Internal Revenue Code, other than (i) a distribution | ||||||
16 | from a College Savings Pool created under Section 16.5 | ||||||
17 | of the State Treasurer Act, (ii) a distribution from | ||||||
18 | the Illinois Prepaid Tuition Trust Fund, or (iii) a | ||||||
19 | distribution from a qualified tuition program under | ||||||
20 | Section 529 of the Internal Revenue Code that (I) | ||||||
21 | adopts and determines that its offering materials | ||||||
22 | comply with the College Savings Plans Network's | ||||||
23 | disclosure principles and (II) has made reasonable | ||||||
24 | efforts to inform in-state residents of the existence | ||||||
25 | of in-state qualified tuition programs by informing | ||||||
26 | Illinois residents directly and, where applicable, to |
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| |||||||
1 | inform financial intermediaries distributing the | ||||||
2 | program to inform in-state residents of the existence | ||||||
3 | of in-state qualified tuition programs at least | ||||||
4 | annually, an amount equal to the amount excluded from | ||||||
5 | gross income under Section 529(c)(3)(B). | ||||||
6 | For the purposes of this subparagraph (D-20), a | ||||||
7 | qualified tuition program has made reasonable efforts | ||||||
8 | if it makes disclosures (which may use the term | ||||||
9 | "in-state program" or "in-state plan" and need not | ||||||
10 | specifically refer to Illinois or its qualified | ||||||
11 | programs by name) (i) directly to prospective | ||||||
12 | participants in its offering materials or makes a | ||||||
13 | public disclosure, such as a website posting; and (ii) | ||||||
14 | where applicable, to intermediaries selling the | ||||||
15 | out-of-state program in the same manner that the | ||||||
16 | out-of-state program distributes its offering | ||||||
17 | materials; | ||||||
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 State | ||||||
22 | to an out-of-state program, an amount equal to the | ||||||
23 | amount of moneys previously deducted from base income | ||||||
24 | under subsection (a)(2)(Y) of this Section; | ||||||
25 | (D-22) For taxable years beginning on or after | ||||||
26 | January 1, 2009, in the case of a nonqualified |
| |||||||
| |||||||
1 | withdrawal or refund of moneys from a qualified tuition | ||||||
2 | program under Section 529 of the Internal Revenue Code | ||||||
3 | administered by the State that is not used for | ||||||
4 | qualified expenses at an eligible education | ||||||
5 | institution, an amount equal to the contribution | ||||||
6 | component of the nonqualified withdrawal or refund | ||||||
7 | that was previously deducted from base income under | ||||||
8 | subsection (a)(2)(y) of this Section, provided that | ||||||
9 | the withdrawal or refund did not result from the | ||||||
10 | beneficiary's death or disability; | ||||||
11 | (D-23) 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 | and by deducting from the total so obtained the
sum of the | ||||||
16 | following amounts: | ||||||
17 | (E) For taxable years ending before December 31, | ||||||
18 | 2001,
any amount included in such total in respect of | ||||||
19 | any compensation
(including but not limited to any | ||||||
20 | compensation paid or accrued to a
serviceman while a | ||||||
21 | prisoner of war or missing in action) paid to a | ||||||
22 | resident
by reason of being on active duty in the Armed | ||||||
23 | Forces of the United States
and in respect of any | ||||||
24 | compensation paid or accrued to a resident who as a
| ||||||
25 | governmental employee was a prisoner of war or missing | ||||||
26 | in action, and in
respect of any compensation paid to a |
| |||||||
| |||||||
1 | resident in 1971 or thereafter for
annual training | ||||||
2 | performed pursuant to Sections 502 and 503, Title 32,
| ||||||
3 | United States Code as a member of the Illinois National | ||||||
4 | Guard or, beginning with taxable years ending on or | ||||||
5 | after December 31, 2007, the National Guard of any | ||||||
6 | other state.
For taxable years ending on or after | ||||||
7 | December 31, 2001, any amount included in
such total in | ||||||
8 | respect of any compensation (including but not limited | ||||||
9 | to any
compensation paid or accrued to a serviceman | ||||||
10 | while a prisoner of war or missing
in action) paid to a | ||||||
11 | resident by reason of being a member of any component | ||||||
12 | of
the Armed Forces of the United States and in respect | ||||||
13 | of any compensation paid
or accrued to a resident who | ||||||
14 | as a governmental employee was a prisoner of war
or | ||||||
15 | missing in action, and in respect of any compensation | ||||||
16 | paid to a resident in
2001 or thereafter by reason of | ||||||
17 | being a member of the Illinois National Guard or, | ||||||
18 | beginning with taxable years ending on or after | ||||||
19 | December 31, 2007, the National Guard of any other | ||||||
20 | state.
The provisions of this amendatory Act of the | ||||||
21 | 92nd General Assembly are exempt
from the provisions of | ||||||
22 | Section 250; | ||||||
23 | (F) For taxable years beginning before January 1, | ||||||
24 | 2011, an An amount equal to all amounts included in | ||||||
25 | such total pursuant
to the provisions of Sections | ||||||
26 | 402(a), 402(c), 403(a), 403(b), 406(a), 407(a),
and |
| |||||||
| |||||||
1 | 408 of the Internal Revenue Code, or included in such | ||||||
2 | total as
distributions under the provisions of any | ||||||
3 | retirement or disability plan for
employees of any | ||||||
4 | governmental agency or unit, or retirement payments to
| ||||||
5 | retired partners, which payments are excluded in | ||||||
6 | computing net earnings
from self employment by Section | ||||||
7 | 1402 of the Internal Revenue Code and
regulations | ||||||
8 | adopted pursuant thereto; for taxable years beginning | ||||||
9 | on or after January 1, 2011, for those individuals who | ||||||
10 | report an adjusted gross income of less than $100,000, | ||||||
11 | an amount equal to all amounts included in such total | ||||||
12 | pursuant to the provisions of Sections 402(a), 402(c), | ||||||
13 | 403(a), 403(b), 406(a), 407(a), and 408 of the Internal | ||||||
14 | Revenue Code, or included in such total as | ||||||
15 | distributions under the provisions of any retirement | ||||||
16 | or disability plan for employees of any governmental | ||||||
17 | agency or unit, or retirement payments to retired | ||||||
18 | partners, which payments are excluded in 1402 of the | ||||||
19 | Internal Revenue Code and regulations adopted pursuant | ||||||
20 | thereto; for taxable years beginning on or after | ||||||
21 | January 1, 2011, for individuals who report an adjusted | ||||||
22 | gross income of $100,000 or more but less than | ||||||
23 | $125,000, 25% of the income otherwise excluded under | ||||||
24 | this item shall be subject to income taxation; for | ||||||
25 | individuals who report an adjusted gross income of | ||||||
26 | $125,000 or more but less than $150,000, 50% of the |
| |||||||
| |||||||
1 | income otherwise excluded under this item shall be | ||||||
2 | subject to income taxation; for individuals who report | ||||||
3 | an adjusted gross income of $150,000 or more but less | ||||||
4 | than $175,000, 75% of the income otherwise excluded | ||||||
5 | under this item shall be subject to income taxation; | ||||||
6 | and for individuals who report an adjusted gross income | ||||||
7 | of $175,000 or greater, 100% of the income otherwise | ||||||
8 | excluded under this item shall be subject to income | ||||||
9 | taxation; | ||||||
10 | (G) The valuation limitation amount; | ||||||
11 | (H) An amount equal to the amount of any tax | ||||||
12 | imposed by this Act
which was refunded to the taxpayer | ||||||
13 | and included in such total for the
taxable year; | ||||||
14 | (I) An amount equal to all amounts included in such | ||||||
15 | total pursuant
to the provisions of Section 111 of the | ||||||
16 | Internal Revenue Code as a
recovery of items previously | ||||||
17 | deducted from adjusted gross income in the
computation | ||||||
18 | of taxable income; | ||||||
19 | (J) An amount equal to those dividends included in | ||||||
20 | such total which were
paid by a corporation which | ||||||
21 | conducts business operations in an Enterprise
Zone or | ||||||
22 | zones created under the Illinois Enterprise Zone Act or | ||||||
23 | a River Edge Redevelopment Zone or zones created under | ||||||
24 | the River Edge Redevelopment Zone Act, and conducts
| ||||||
25 | substantially all of its operations in an Enterprise | ||||||
26 | Zone or zones or a River Edge Redevelopment Zone or |
| |||||||
| |||||||
1 | zones. This subparagraph (J) is exempt from the | ||||||
2 | provisions of Section 250; | ||||||
3 | (K) An amount equal to those dividends included in | ||||||
4 | such total that
were paid by a corporation that | ||||||
5 | conducts business operations in a federally
designated | ||||||
6 | Foreign Trade Zone or Sub-Zone and that is designated a | ||||||
7 | High Impact
Business located in Illinois; provided | ||||||
8 | that dividends eligible for the
deduction provided in | ||||||
9 | subparagraph (J) of paragraph (2) of this subsection
| ||||||
10 | shall not be eligible for the deduction provided under | ||||||
11 | this subparagraph
(K); | ||||||
12 | (L) For taxable years ending after December 31, | ||||||
13 | 1983, an amount equal to
all social security benefits | ||||||
14 | and railroad retirement benefits included in
such | ||||||
15 | total pursuant to Sections 72(r) and 86 of the Internal | ||||||
16 | Revenue Code; | ||||||
17 | (M) With the exception of any amounts subtracted | ||||||
18 | under subparagraph
(N), an amount equal to the sum of | ||||||
19 | all amounts disallowed as
deductions by (i) Sections | ||||||
20 | 171(a) (2), and 265(2) of the Internal Revenue Code
of | ||||||
21 | 1954, as now or hereafter amended, and all amounts of | ||||||
22 | expenses allocable
to interest and disallowed as | ||||||
23 | deductions by Section 265(1) of the Internal
Revenue | ||||||
24 | Code of 1954, as now or hereafter amended;
and (ii) for | ||||||
25 | taxable years
ending on or after August 13, 1999, | ||||||
26 | Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of |
| |||||||
| |||||||
1 | the Internal Revenue Code; the provisions of this
| ||||||
2 | subparagraph are exempt from the provisions of Section | ||||||
3 | 250; | ||||||
4 | (N) An amount equal to all amounts included in such | ||||||
5 | total which are
exempt from taxation by this State | ||||||
6 | either by reason of its statutes or
Constitution
or by | ||||||
7 | reason of the Constitution, treaties or statutes of the | ||||||
8 | United States;
provided that, in the case of any | ||||||
9 | statute of this State that exempts income
derived from | ||||||
10 | bonds or other obligations from the tax imposed under | ||||||
11 | this Act,
the amount exempted shall be the interest net | ||||||
12 | of bond premium amortization; | ||||||
13 | (O) An amount equal to any contribution made to a | ||||||
14 | job training
project established pursuant to the Tax | ||||||
15 | Increment Allocation Redevelopment Act; | ||||||
16 | (P) An amount equal to the amount of the deduction | ||||||
17 | used to compute the
federal income tax credit for | ||||||
18 | restoration of substantial amounts held under
claim of | ||||||
19 | right for the taxable year pursuant to Section 1341 of | ||||||
20 | the
Internal Revenue Code of 1986; | ||||||
21 | (Q) An amount equal to any amounts included in such | ||||||
22 | total, received by
the taxpayer as an acceleration in | ||||||
23 | the payment of life, endowment or annuity
benefits in | ||||||
24 | advance of the time they would otherwise be payable as | ||||||
25 | an indemnity
for a terminal illness; | ||||||
26 | (R) An amount equal to the amount of any federal or |
| |||||||
| |||||||
1 | State bonus paid
to veterans of the Persian Gulf War; | ||||||
2 | (S) An amount, to the extent included in adjusted | ||||||
3 | gross income, equal
to the amount of a contribution | ||||||
4 | made in the taxable year on behalf of the
taxpayer to a | ||||||
5 | medical care savings account established under the | ||||||
6 | Medical Care
Savings Account Act or the Medical Care | ||||||
7 | Savings Account Act of 2000 to the
extent the | ||||||
8 | contribution is accepted by the account
administrator | ||||||
9 | as provided in that Act; | ||||||
10 | (T) An amount, to the extent included in adjusted | ||||||
11 | gross income, equal to
the amount of interest earned in | ||||||
12 | the taxable year on a medical care savings
account | ||||||
13 | established under the Medical Care Savings Account Act | ||||||
14 | or the Medical
Care Savings Account Act of 2000 on | ||||||
15 | behalf of the
taxpayer, other than interest added | ||||||
16 | pursuant to item (D-5) of this paragraph
(2); | ||||||
17 | (U) For one taxable year beginning on or after | ||||||
18 | January 1,
1994, an
amount equal to the total amount of | ||||||
19 | tax imposed and paid under subsections (a)
and (b) of | ||||||
20 | Section 201 of this Act on grant amounts received by | ||||||
21 | the taxpayer
under the Nursing Home Grant Assistance | ||||||
22 | Act during the taxpayer's taxable years
1992 and 1993; | ||||||
23 | (V) Beginning with tax years ending on or after | ||||||
24 | December 31, 1995 and
ending with tax years ending on | ||||||
25 | or before December 31, 2004, an amount equal to
the | ||||||
26 | amount paid by a taxpayer who is a
self-employed |
| |||||||
| |||||||
1 | taxpayer, a partner of a partnership, or a
shareholder | ||||||
2 | in a Subchapter S corporation for health insurance or | ||||||
3 | long-term
care insurance for that taxpayer or that | ||||||
4 | taxpayer's spouse or dependents, to
the extent that the | ||||||
5 | amount paid for that health insurance or long-term care
| ||||||
6 | insurance may be deducted under Section 213 of the | ||||||
7 | Internal Revenue Code of
1986, has not been deducted on | ||||||
8 | the federal income tax return of the taxpayer,
and does | ||||||
9 | not exceed the taxable income attributable to that | ||||||
10 | taxpayer's income,
self-employment income, or | ||||||
11 | Subchapter S corporation income; except that no
| ||||||
12 | deduction shall be allowed under this item (V) if the | ||||||
13 | taxpayer is eligible to
participate in any health | ||||||
14 | insurance or long-term care insurance plan of an
| ||||||
15 | employer of the taxpayer or the taxpayer's
spouse. The | ||||||
16 | amount of the health insurance and long-term care | ||||||
17 | insurance
subtracted under this item (V) shall be | ||||||
18 | determined by multiplying total
health insurance and | ||||||
19 | long-term care insurance premiums paid by the taxpayer
| ||||||
20 | times a number that represents the fractional | ||||||
21 | percentage of eligible medical
expenses under Section | ||||||
22 | 213 of the Internal Revenue Code of 1986 not actually
| ||||||
23 | deducted on the taxpayer's federal income tax return; | ||||||
24 | (W) For taxable years beginning on or after January | ||||||
25 | 1, 1998,
all amounts included in the taxpayer's federal | ||||||
26 | gross income
in the taxable year from amounts converted |
| |||||||
| |||||||
1 | from a regular IRA to a Roth IRA.
This paragraph is | ||||||
2 | exempt from the provisions of Section
250; | ||||||
3 | (X) For taxable year 1999 and thereafter, an amount | ||||||
4 | equal to the
amount of any (i) distributions, to the | ||||||
5 | extent includible in gross income for
federal income | ||||||
6 | tax purposes, made to the taxpayer because of his or | ||||||
7 | her status
as a victim of persecution for racial or | ||||||
8 | religious reasons by Nazi Germany or
any other Axis | ||||||
9 | regime or as an heir of the victim and (ii) items
of | ||||||
10 | income, to the extent
includible in gross income for | ||||||
11 | federal income tax purposes, attributable to,
derived | ||||||
12 | from or in any way related to assets stolen from, | ||||||
13 | hidden from, or
otherwise lost to a victim of
| ||||||
14 | persecution for racial or religious reasons by Nazi | ||||||
15 | Germany or any other Axis
regime immediately prior to, | ||||||
16 | during, and immediately after World War II,
including, | ||||||
17 | but
not limited to, interest on the proceeds receivable | ||||||
18 | as insurance
under policies issued to a victim of | ||||||
19 | persecution for racial or religious
reasons
by Nazi | ||||||
20 | Germany or any other Axis regime by European insurance | ||||||
21 | companies
immediately prior to and during World War II;
| ||||||
22 | provided, however, this subtraction from federal | ||||||
23 | adjusted gross income does not
apply to assets acquired | ||||||
24 | with such assets or with the proceeds from the sale of
| ||||||
25 | such assets; provided, further, this paragraph shall | ||||||
26 | only apply to a taxpayer
who was the first recipient of |
| |||||||
| |||||||
1 | such assets after their recovery and who is a
victim of | ||||||
2 | persecution for racial or religious reasons
by Nazi | ||||||
3 | Germany or any other Axis regime or as an heir of the | ||||||
4 | victim. The
amount of and the eligibility for any | ||||||
5 | public assistance, benefit, or
similar entitlement is | ||||||
6 | not affected by the inclusion of items (i) and (ii) of
| ||||||
7 | this paragraph in gross income for federal income tax | ||||||
8 | purposes.
This paragraph is exempt from the provisions | ||||||
9 | of Section 250; | ||||||
10 | (Y) For taxable years beginning on or after January | ||||||
11 | 1, 2002
and ending
on or before December 31, 2004, | ||||||
12 | moneys contributed in the taxable year to a College | ||||||
13 | Savings Pool account under
Section 16.5 of the State | ||||||
14 | Treasurer Act, except that amounts excluded from
gross | ||||||
15 | income under Section 529(c)(3)(C)(i) of the Internal | ||||||
16 | Revenue Code
shall not be considered moneys | ||||||
17 | contributed under this subparagraph (Y). For taxable | ||||||
18 | years beginning on or after January 1, 2005, a maximum | ||||||
19 | of $10,000
contributed
in the
taxable year to (i) a | ||||||
20 | College Savings Pool account under Section 16.5 of the
| ||||||
21 | State
Treasurer Act or (ii) the Illinois Prepaid | ||||||
22 | Tuition Trust Fund,
except that
amounts excluded from | ||||||
23 | gross income under Section 529(c)(3)(C)(i) of the
| ||||||
24 | Internal
Revenue Code shall not be considered moneys | ||||||
25 | contributed under this subparagraph
(Y). For purposes | ||||||
26 | of this subparagraph, contributions made by an |
| |||||||
| |||||||
1 | employer on behalf of an employee, or matching | ||||||
2 | contributions made by an employee, shall be treated as | ||||||
3 | made by the employee. This
subparagraph (Y) is exempt | ||||||
4 | from the provisions of Section 250; | ||||||
5 | (Z) For taxable years 2001 and thereafter, for the | ||||||
6 | taxable year in
which the bonus depreciation deduction
| ||||||
7 | is taken on the taxpayer's federal income tax return | ||||||
8 | under
subsection (k) of Section 168 of the Internal | ||||||
9 | Revenue Code and for each
applicable taxable year | ||||||
10 | thereafter, an amount equal to "x", where: | ||||||
11 | (1) "y" equals the amount of the depreciation | ||||||
12 | deduction taken for the
taxable year
on the | ||||||
13 | taxpayer's federal income tax return on property | ||||||
14 | for which the bonus
depreciation deduction
was | ||||||
15 | taken in any year under subsection (k) of Section | ||||||
16 | 168 of the Internal
Revenue Code, but not including | ||||||
17 | the bonus depreciation deduction; | ||||||
18 | (2) for taxable years ending on or before | ||||||
19 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
20 | and then divided by 70 (or "y"
multiplied by | ||||||
21 | 0.429); and | ||||||
22 | (3) for taxable years ending after December | ||||||
23 | 31, 2005: | ||||||
24 | (i) for property on which a bonus | ||||||
25 | depreciation deduction of 30% of the adjusted | ||||||
26 | basis was taken, "x" equals "y" multiplied by |
| |||||||
| |||||||
1 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
2 | 0.429); and | ||||||
3 | (ii) for property on which a bonus | ||||||
4 | depreciation deduction of 50% of the adjusted | ||||||
5 | basis was taken, "x" equals "y" multiplied by | ||||||
6 | 1.0. | ||||||
7 | The aggregate amount deducted under this | ||||||
8 | subparagraph in all taxable
years for any one piece of | ||||||
9 | property may not exceed the amount of the bonus
| ||||||
10 | depreciation deduction
taken on that property on the | ||||||
11 | taxpayer's federal income tax return under
subsection | ||||||
12 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
13 | subparagraph (Z) is exempt from the provisions of | ||||||
14 | Section 250; | ||||||
15 | (AA) If the taxpayer sells, transfers, abandons, | ||||||
16 | or otherwise disposes of
property for which the | ||||||
17 | taxpayer was required in any taxable year to make an
| ||||||
18 | addition modification under subparagraph (D-15), then | ||||||
19 | an amount equal to that
addition modification.
| ||||||
20 | If the taxpayer continues to own property through | ||||||
21 | the last day of the last tax year for which the | ||||||
22 | taxpayer may claim a depreciation deduction for | ||||||
23 | federal income tax purposes and for which the taxpayer | ||||||
24 | was required in any taxable year to make an addition | ||||||
25 | modification under subparagraph (D-15), then an amount | ||||||
26 | equal to that addition modification.
|
| |||||||
| |||||||
1 | The taxpayer is allowed to take the deduction under | ||||||
2 | this subparagraph
only once with respect to any one | ||||||
3 | piece of property. | ||||||
4 | This subparagraph (AA) is exempt from the | ||||||
5 | provisions of Section 250; | ||||||
6 | (BB) Any amount included in adjusted gross income, | ||||||
7 | other
than
salary,
received by a driver in a | ||||||
8 | ridesharing arrangement using a motor vehicle; | ||||||
9 | (CC) The amount of (i) any interest income (net of | ||||||
10 | the deductions allocable thereto) taken into account | ||||||
11 | for the taxable year with respect to a transaction with | ||||||
12 | a taxpayer that is required to make an addition | ||||||
13 | modification with respect to such transaction under | ||||||
14 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
15 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
16 | the amount of that addition modification, and
(ii) any | ||||||
17 | income from intangible property (net of the deductions | ||||||
18 | allocable thereto) taken into account for the taxable | ||||||
19 | year with respect to a transaction with a taxpayer that | ||||||
20 | is required to make an addition modification with | ||||||
21 | respect to such transaction under Section | ||||||
22 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
23 | 203(d)(2)(D-8), but not to exceed the amount of that | ||||||
24 | addition modification. This subparagraph (CC) is | ||||||
25 | exempt from the provisions of Section 250; | ||||||
26 | (DD) An amount equal to the interest income taken |
| |||||||
| |||||||
1 | into account for the taxable year (net of the | ||||||
2 | deductions allocable thereto) with respect to | ||||||
3 | transactions with (i) a foreign person who would be a | ||||||
4 | member of the taxpayer's unitary business group but for | ||||||
5 | the fact that the foreign person's business activity | ||||||
6 | outside the United States is 80% or more of that | ||||||
7 | person's total business activity and (ii) for taxable | ||||||
8 | years ending on or after December 31, 2008, to a person | ||||||
9 | who would be a member of the same unitary business | ||||||
10 | group but for the fact that the person is prohibited | ||||||
11 | under Section 1501(a)(27) from being included in the | ||||||
12 | unitary business group because he or she is ordinarily | ||||||
13 | required to apportion business income under different | ||||||
14 | subsections of Section 304, but not to exceed the | ||||||
15 | addition modification required to be made for the same | ||||||
16 | taxable year under Section 203(a)(2)(D-17) for | ||||||
17 | interest paid, accrued, or incurred, directly or | ||||||
18 | indirectly, to the same person. This subparagraph (DD) | ||||||
19 | is exempt from the provisions of Section 250; | ||||||
20 | (EE) An amount equal to the income from intangible | ||||||
21 | property taken into account for the taxable year (net | ||||||
22 | of the deductions allocable thereto) with respect to | ||||||
23 | transactions with (i) a foreign person who would be a | ||||||
24 | member of the taxpayer's unitary business group but for | ||||||
25 | the fact that the foreign person's business activity | ||||||
26 | outside the United States is 80% or more of that |
| |||||||
| |||||||
1 | person's total business activity and (ii) for taxable | ||||||
2 | years ending on or after December 31, 2008, to a person | ||||||
3 | who would be a member of the same unitary business | ||||||
4 | group but for the fact that the person is prohibited | ||||||
5 | under Section 1501(a)(27) from being included in the | ||||||
6 | unitary business group because he or she is ordinarily | ||||||
7 | required to apportion business income under different | ||||||
8 | subsections of Section 304, but not to exceed the | ||||||
9 | addition modification required to be made for the same | ||||||
10 | taxable year under Section 203(a)(2)(D-18) for | ||||||
11 | intangible expenses and costs paid, accrued, or | ||||||
12 | incurred, directly or indirectly, to the same foreign | ||||||
13 | person. This subparagraph (EE) is exempt from the | ||||||
14 | provisions of Section 250; and | ||||||
15 | (FF) An amount equal to any amount awarded to the | ||||||
16 | taxpayer during the taxable year by the Court of Claims | ||||||
17 | under subsection (c) of Section 8 of the Court of | ||||||
18 | Claims Act for time unjustly served in a State prison. | ||||||
19 | This subparagraph (FF) is exempt from the provisions of | ||||||
20 | Section 250. | ||||||
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 |
| |||||||
| |||||||
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 year; | ||||||
11 | (C) In the case of a regulated investment company, | ||||||
12 | an amount equal to
the excess of (i) the net long-term | ||||||
13 | capital gain for the taxable year, over
(ii) the amount | ||||||
14 | of the capital gain dividends designated as such in | ||||||
15 | accordance
with Section 852(b)(3)(C) of the Internal | ||||||
16 | Revenue Code and any amount
designated under Section | ||||||
17 | 852(b)(3)(D) of the Internal Revenue Code,
| ||||||
18 | attributable to the taxable year (this amendatory Act | ||||||
19 | of 1995
(Public Act 89-89) is declarative of existing | ||||||
20 | law and is not a new
enactment); | ||||||
21 | (D) The amount of any net operating loss deduction | ||||||
22 | taken in arriving
at taxable income, other than a net | ||||||
23 | operating loss carried forward from a
taxable year | ||||||
24 | ending prior to December 31, 1986; | ||||||
25 | (E) For taxable years in which a net operating loss | ||||||
26 | carryback or
carryforward from a taxable year ending |
| |||||||
| |||||||
1 | prior to December 31, 1986 is an
element of taxable | ||||||
2 | income under paragraph (1) of subsection (e) or
| ||||||
3 | subparagraph (E) of paragraph (2) of subsection (e), | ||||||
4 | the amount by which
addition modifications other than | ||||||
5 | those provided by this subparagraph (E)
exceeded | ||||||
6 | subtraction modifications in such earlier taxable | ||||||
7 | year, with the
following limitations applied in the | ||||||
8 | order that they are listed: | ||||||
9 | (i) the addition modification relating to the | ||||||
10 | net operating loss
carried back or forward to the | ||||||
11 | taxable year from any taxable year ending
prior to | ||||||
12 | December 31, 1986 shall be reduced by the amount of | ||||||
13 | addition
modification under this subparagraph (E) | ||||||
14 | which related to that net operating
loss and which | ||||||
15 | was taken into account in calculating the base | ||||||
16 | income of an
earlier taxable year, and | ||||||
17 | (ii) the addition modification relating to the | ||||||
18 | net operating loss
carried back or forward to the | ||||||
19 | taxable year from any taxable year ending
prior to | ||||||
20 | December 31, 1986 shall not exceed the amount of | ||||||
21 | such carryback or
carryforward; | ||||||
22 | For taxable years in which there is a net operating | ||||||
23 | loss carryback or
carryforward from more than one other | ||||||
24 | taxable year ending prior to December
31, 1986, the | ||||||
25 | addition modification provided in this subparagraph | ||||||
26 | (E) shall
be the sum of the amounts computed |
| |||||||
| |||||||
1 | independently under the preceding
provisions of this | ||||||
2 | subparagraph (E) for each such taxable year; | ||||||
3 | (E-5) For taxable years ending after December 31, | ||||||
4 | 1997, an
amount equal to any eligible remediation costs | ||||||
5 | that the corporation
deducted in computing adjusted | ||||||
6 | gross income and for which the
corporation claims a | ||||||
7 | credit under subsection (l) of Section 201; | ||||||
8 | (E-10) For taxable years 2001 and thereafter, an | ||||||
9 | amount equal to the
bonus depreciation deduction taken | ||||||
10 | on the taxpayer's federal income tax return for the | ||||||
11 | taxable
year under subsection (k) of Section 168 of the | ||||||
12 | Internal Revenue Code; | ||||||
13 | (E-11) If the taxpayer sells, transfers, abandons, | ||||||
14 | or otherwise disposes of property for which the | ||||||
15 | taxpayer was required in any taxable year to
make an | ||||||
16 | addition modification under subparagraph (E-10), then | ||||||
17 | an amount equal
to the aggregate amount of the | ||||||
18 | deductions taken in all taxable
years under | ||||||
19 | subparagraph (T) with respect to that property. | ||||||
20 | If the taxpayer continues to own property through | ||||||
21 | the last day of the last tax year for which the | ||||||
22 | taxpayer may claim a depreciation deduction for | ||||||
23 | federal income tax purposes and for which the taxpayer | ||||||
24 | was allowed in any taxable year to make a subtraction | ||||||
25 | modification under subparagraph (T), then an amount | ||||||
26 | equal to that subtraction modification.
|
| |||||||
| |||||||
1 | The taxpayer is required to make the addition | ||||||
2 | modification under this
subparagraph
only once with | ||||||
3 | respect to any one piece of property; | ||||||
4 | (E-12) An amount equal to the amount otherwise | ||||||
5 | allowed as a deduction in computing base income for | ||||||
6 | interest paid, accrued, or incurred, directly or | ||||||
7 | indirectly, (i) for taxable years ending on or after | ||||||
8 | December 31, 2004, to a foreign person who would be a | ||||||
9 | member of the same unitary business group but for the | ||||||
10 | fact the foreign person's business activity outside | ||||||
11 | the United States is 80% or more of the foreign | ||||||
12 | person's total business activity and (ii) for taxable | ||||||
13 | years ending on or after December 31, 2008, to a person | ||||||
14 | who would be a member of the same unitary business | ||||||
15 | group but for the fact that the person is prohibited | ||||||
16 | under Section 1501(a)(27) from being included in the | ||||||
17 | unitary business group because he or she is ordinarily | ||||||
18 | required to apportion business income under different | ||||||
19 | subsections of Section 304. The addition modification | ||||||
20 | required by this subparagraph shall be reduced to the | ||||||
21 | extent that dividends were included in base income of | ||||||
22 | the unitary group for the same taxable year and | ||||||
23 | received by the taxpayer or by a member of the | ||||||
24 | taxpayer's unitary business group (including amounts | ||||||
25 | included in gross income pursuant to Sections 951 | ||||||
26 | through 964 of the Internal Revenue Code and amounts |
| |||||||
| |||||||
1 | included in gross income under Section 78 of the | ||||||
2 | Internal Revenue Code) with respect to the stock of the | ||||||
3 | same person to whom the interest was paid, accrued, or | ||||||
4 | incurred.
| ||||||
5 | This paragraph shall not apply to the following:
| ||||||
6 | (i) an item of interest paid, accrued, or | ||||||
7 | incurred, directly or indirectly, to a person who | ||||||
8 | is subject in a foreign country or state, other | ||||||
9 | than a state which requires mandatory unitary | ||||||
10 | reporting, to a tax on or measured by net income | ||||||
11 | with respect to such interest; or | ||||||
12 | (ii) an item of interest paid, accrued, or | ||||||
13 | incurred, directly or indirectly, to a person if | ||||||
14 | the taxpayer can establish, based on a | ||||||
15 | preponderance of the evidence, both of the | ||||||
16 | following: | ||||||
17 | (a) the person, during the same taxable | ||||||
18 | year, paid, accrued, or incurred, the interest | ||||||
19 | to a person that is not a related member, and | ||||||
20 | (b) the transaction giving rise to the | ||||||
21 | interest expense between the taxpayer and the | ||||||
22 | person did not have as a principal purpose the | ||||||
23 | avoidance of Illinois income tax, and is paid | ||||||
24 | pursuant to a contract or agreement that | ||||||
25 | reflects an arm's-length interest rate and | ||||||
26 | terms; or
|
| |||||||
| |||||||
1 | (iii) the taxpayer can establish, based on | ||||||
2 | clear and convincing evidence, that the interest | ||||||
3 | paid, accrued, or incurred relates to a contract or | ||||||
4 | agreement entered into at arm's-length rates and | ||||||
5 | terms and the principal purpose for the payment is | ||||||
6 | not federal or Illinois tax avoidance; or
| ||||||
7 | (iv) an item of interest paid, accrued, or | ||||||
8 | incurred, directly or indirectly, to a person if | ||||||
9 | the taxpayer establishes by clear and convincing | ||||||
10 | evidence that the adjustments are unreasonable; or | ||||||
11 | if the taxpayer and the Director agree in writing | ||||||
12 | to the application or use of an alternative method | ||||||
13 | of apportionment under Section 304(f).
| ||||||
14 | Nothing in this subsection shall preclude the | ||||||
15 | Director from making any other adjustment | ||||||
16 | otherwise allowed under Section 404 of this Act for | ||||||
17 | any tax year beginning after the effective date of | ||||||
18 | this amendment provided such adjustment is made | ||||||
19 | pursuant to regulation adopted by the Department | ||||||
20 | and such regulations provide methods and standards | ||||||
21 | by which the Department will utilize its authority | ||||||
22 | under Section 404 of this Act;
| ||||||
23 | (E-13) An amount equal to the amount of intangible | ||||||
24 | expenses and costs otherwise allowed as a deduction in | ||||||
25 | computing base income, and that were paid, accrued, or | ||||||
26 | incurred, directly or indirectly, (i) for taxable |
| |||||||
| |||||||
1 | years ending on or after December 31, 2004, to a | ||||||
2 | foreign person who would be a member of the same | ||||||
3 | unitary business group but for the fact that the | ||||||
4 | foreign person's business activity outside the United | ||||||
5 | States is 80% or more of that person's total business | ||||||
6 | activity and (ii) for taxable years ending on or after | ||||||
7 | December 31, 2008, to a person who would be a member of | ||||||
8 | the same unitary business group but for the fact that | ||||||
9 | the person is prohibited under Section 1501(a)(27) | ||||||
10 | from being included in the unitary business group | ||||||
11 | because he or she is ordinarily required to apportion | ||||||
12 | business income under different subsections of Section | ||||||
13 | 304. The addition modification required by this | ||||||
14 | subparagraph shall be reduced to the extent that | ||||||
15 | dividends were included in base income of the unitary | ||||||
16 | group for the same taxable year and received by the | ||||||
17 | taxpayer or by a member of the taxpayer's unitary | ||||||
18 | business group (including amounts included in gross | ||||||
19 | income pursuant to Sections 951 through 964 of the | ||||||
20 | Internal Revenue Code and amounts included in gross | ||||||
21 | income under Section 78 of the Internal Revenue Code) | ||||||
22 | with respect to the stock of the same person to whom | ||||||
23 | the intangible expenses and costs were directly or | ||||||
24 | indirectly paid, incurred, or accrued. The preceding | ||||||
25 | sentence shall not apply to the extent that the same | ||||||
26 | dividends caused a reduction to the addition |
| |||||||
| |||||||
1 | modification required under Section 203(b)(2)(E-12) of | ||||||
2 | this Act.
As used in this subparagraph, the term | ||||||
3 | "intangible expenses and costs" includes (1) expenses, | ||||||
4 | losses, and costs for, or related to, the direct or | ||||||
5 | indirect acquisition, use, maintenance or management, | ||||||
6 | ownership, sale, exchange, or any other disposition of | ||||||
7 | intangible property; (2) losses incurred, directly or | ||||||
8 | indirectly, from factoring transactions or discounting | ||||||
9 | transactions; (3) royalty, patent, technical, and | ||||||
10 | copyright fees; (4) licensing fees; and (5) other | ||||||
11 | similar expenses and costs.
For purposes of this | ||||||
12 | subparagraph, "intangible property" includes patents, | ||||||
13 | patent applications, trade names, trademarks, service | ||||||
14 | marks, copyrights, mask works, trade secrets, and | ||||||
15 | similar types of intangible assets. | ||||||
16 | This paragraph shall not apply to the following: | ||||||
17 | (i) any item of intangible expenses or costs | ||||||
18 | paid, accrued, or incurred, directly or | ||||||
19 | indirectly, from a transaction with a person who is | ||||||
20 | subject in a foreign country or state, other than a | ||||||
21 | state which requires mandatory unitary reporting, | ||||||
22 | to a tax on or measured by net income with respect | ||||||
23 | to such item; or | ||||||
24 | (ii) any item of intangible expense or cost | ||||||
25 | paid, accrued, or incurred, directly or | ||||||
26 | indirectly, if the taxpayer can establish, based |
| |||||||
| |||||||
1 | on a preponderance of the evidence, both of the | ||||||
2 | following: | ||||||
3 | (a) the person during the same taxable | ||||||
4 | year paid, accrued, or incurred, the | ||||||
5 | intangible expense or cost to a person that is | ||||||
6 | not a related member, and | ||||||
7 | (b) the transaction giving rise to the | ||||||
8 | intangible expense or cost between the | ||||||
9 | taxpayer and the person did not have as a | ||||||
10 | principal purpose the avoidance of Illinois | ||||||
11 | income tax, and is paid pursuant to a contract | ||||||
12 | or agreement that reflects arm's-length terms; | ||||||
13 | or | ||||||
14 | (iii) any item of intangible expense or cost | ||||||
15 | paid, accrued, or incurred, directly or | ||||||
16 | indirectly, from a transaction with a person if the | ||||||
17 | taxpayer establishes by clear and convincing | ||||||
18 | evidence, that the adjustments are unreasonable; | ||||||
19 | or if the taxpayer and the Director agree in | ||||||
20 | writing to the application or use of an alternative | ||||||
21 | method of apportionment under Section 304(f);
| ||||||
22 | Nothing in this subsection shall preclude the | ||||||
23 | Director from making any other adjustment | ||||||
24 | otherwise allowed under Section 404 of this Act for | ||||||
25 | any tax year beginning after the effective date of | ||||||
26 | this amendment provided such adjustment is made |
| |||||||
| |||||||
1 | pursuant to regulation adopted by the Department | ||||||
2 | and such regulations provide methods and standards | ||||||
3 | by which the Department will utilize its authority | ||||||
4 | under Section 404 of this Act;
| ||||||
5 | (E-14) For taxable years ending on or after | ||||||
6 | December 31, 2008, an amount equal to the amount of | ||||||
7 | insurance premium expenses and costs otherwise allowed | ||||||
8 | as a deduction in computing base income, and that were | ||||||
9 | paid, accrued, or incurred, directly or indirectly, to | ||||||
10 | a person who would be a member of the same unitary | ||||||
11 | business group but for the fact that the person is | ||||||
12 | prohibited under Section 1501(a)(27) from being | ||||||
13 | included in the unitary business group because he or | ||||||
14 | she is ordinarily required to apportion business | ||||||
15 | income under different subsections of Section 304. The | ||||||
16 | addition modification required by this subparagraph | ||||||
17 | shall be reduced to the extent that dividends were | ||||||
18 | included in base income of the unitary group for the | ||||||
19 | same taxable year and received by the taxpayer or by a | ||||||
20 | member of the taxpayer's unitary business group | ||||||
21 | (including amounts included in gross income under | ||||||
22 | Sections 951 through 964 of the Internal Revenue Code | ||||||
23 | and amounts included in gross income under Section 78 | ||||||
24 | of the Internal Revenue Code) with respect to the stock | ||||||
25 | of the same person to whom the premiums and costs were | ||||||
26 | directly or indirectly paid, incurred, or accrued. The |
| |||||||
| |||||||
1 | preceding sentence does not apply to the extent that | ||||||
2 | the same dividends caused a reduction to the addition | ||||||
3 | modification required under Section 203(b)(2)(E-12) or | ||||||
4 | Section 203(b)(2)(E-13) of this Act;
| ||||||
5 | (E-15) For taxable years beginning after December | ||||||
6 | 31, 2008, any deduction for dividends paid by a captive | ||||||
7 | real estate investment trust that is allowed to a real | ||||||
8 | estate investment trust under Section 857(b)(2)(B) of | ||||||
9 | the Internal Revenue Code for dividends paid; | ||||||
10 | (E-16) An amount equal to the credit allowable to | ||||||
11 | the taxpayer under Section 218(a) of this Act, | ||||||
12 | determined without regard to Section 218(c) of this | ||||||
13 | Act; | ||||||
14 | and by deducting from the total so obtained the sum of the | ||||||
15 | following
amounts: | ||||||
16 | (F) 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 | (G) An amount equal to any amount included in such | ||||||
20 | total under
Section 78 of the Internal Revenue Code; | ||||||
21 | (H) In the case of a regulated investment company, | ||||||
22 | an amount equal
to the amount of exempt interest | ||||||
23 | dividends as defined in subsection (b)
(5) of Section | ||||||
24 | 852 of the Internal Revenue Code, paid to shareholders
| ||||||
25 | for the taxable year; | ||||||
26 | (I) With the exception of any amounts subtracted |
| |||||||
| |||||||
1 | under subparagraph
(J),
an amount equal to the sum of | ||||||
2 | all amounts disallowed as
deductions by (i) Sections | ||||||
3 | 171(a) (2), and 265(a)(2) and amounts disallowed as
| ||||||
4 | interest expense by Section 291(a)(3) of the Internal | ||||||
5 | Revenue Code, as now
or hereafter amended, and all | ||||||
6 | amounts of expenses allocable to interest and
| ||||||
7 | disallowed as deductions by Section 265(a)(1) of the | ||||||
8 | Internal Revenue Code,
as now or hereafter amended;
and | ||||||
9 | (ii) for taxable years
ending on or after August 13, | ||||||
10 | 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and | ||||||
11 | 832(b)(5)(B)(i) of the Internal Revenue Code; the
| ||||||
12 | provisions of this
subparagraph are exempt from the | ||||||
13 | provisions of Section 250; | ||||||
14 | (J) An amount equal to all amounts included in such | ||||||
15 | total which are
exempt from taxation by this State | ||||||
16 | either by reason of its statutes or
Constitution
or by | ||||||
17 | reason of the Constitution, treaties or statutes of the | ||||||
18 | United States;
provided that, in the case of any | ||||||
19 | statute of this State that exempts income
derived from | ||||||
20 | bonds or other obligations from the tax imposed under | ||||||
21 | this Act,
the amount exempted shall be the interest net | ||||||
22 | of bond premium amortization; | ||||||
23 | (K) An amount equal to those dividends included in | ||||||
24 | such total
which were paid by a corporation which | ||||||
25 | conducts
business operations in an Enterprise Zone or | ||||||
26 | zones created under
the Illinois Enterprise Zone Act or |
| |||||||
| |||||||
1 | a River Edge Redevelopment Zone or zones created under | ||||||
2 | the River Edge Redevelopment Zone Act and conducts | ||||||
3 | substantially all of its
operations in an Enterprise | ||||||
4 | Zone or zones or a River Edge Redevelopment Zone or | ||||||
5 | zones. This subparagraph (K) is exempt from the | ||||||
6 | provisions of Section 250; | ||||||
7 | (L) 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 a | ||||||
11 | 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
(L); | ||||||
16 | (M) For any taxpayer that is a financial | ||||||
17 | organization within the meaning
of Section 304(c) of | ||||||
18 | this Act, an amount included in such total as interest
| ||||||
19 | income from a loan or loans made by such taxpayer to a | ||||||
20 | borrower, to the extent
that such a loan is secured by | ||||||
21 | property which is eligible for the Enterprise
Zone | ||||||
22 | Investment Credit or the River Edge Redevelopment Zone | ||||||
23 | Investment Credit. To determine the portion of a loan | ||||||
24 | or loans that is
secured by property eligible for a | ||||||
25 | Section 201(f) investment
credit to the borrower, the | ||||||
26 | entire principal amount of the loan or loans
between |
| |||||||
| |||||||
1 | the taxpayer and the borrower should be divided into | ||||||
2 | the basis of the
Section 201(f) investment credit | ||||||
3 | property which secures the
loan or loans, using for | ||||||
4 | this purpose the original basis of such property on
the | ||||||
5 | date that it was placed in service in the
Enterprise | ||||||
6 | Zone or the River Edge Redevelopment Zone. The | ||||||
7 | subtraction modification available to taxpayer in any
| ||||||
8 | year under this subsection shall be that portion of the | ||||||
9 | total interest paid
by the borrower with respect to | ||||||
10 | such loan attributable to the eligible
property as | ||||||
11 | calculated under the previous sentence. This | ||||||
12 | subparagraph (M) is exempt from the provisions of | ||||||
13 | Section 250; | ||||||
14 | (M-1) For any taxpayer that is a financial | ||||||
15 | organization within the
meaning of Section 304(c) of | ||||||
16 | this Act, an amount included in such total as
interest | ||||||
17 | income from a loan or loans made by such taxpayer to a | ||||||
18 | borrower,
to the extent that such a loan is secured by | ||||||
19 | property which is eligible for
the High Impact Business | ||||||
20 | Investment Credit. To determine the portion of a
loan | ||||||
21 | or loans that is secured by property eligible for a | ||||||
22 | Section 201(h) investment credit to the borrower, the | ||||||
23 | entire principal amount of
the loan or loans between | ||||||
24 | the taxpayer and the borrower should be divided into
| ||||||
25 | the basis of the Section 201(h) investment credit | ||||||
26 | property which
secures the loan or loans, using for |
| |||||||
| |||||||
1 | this purpose the original basis of such
property on the | ||||||
2 | date that it was placed in service in a federally | ||||||
3 | designated
Foreign Trade Zone or Sub-Zone located in | ||||||
4 | Illinois. No taxpayer that is
eligible for the | ||||||
5 | deduction provided in subparagraph (M) of paragraph | ||||||
6 | (2) of
this subsection shall be eligible for the | ||||||
7 | deduction provided under this
subparagraph (M-1). The | ||||||
8 | subtraction modification available to taxpayers in
any | ||||||
9 | year under this subsection shall be that portion of the | ||||||
10 | total interest
paid by the borrower with respect to | ||||||
11 | such loan attributable to the eligible
property as | ||||||
12 | calculated under the previous sentence; | ||||||
13 | (N) Two times any contribution made during the | ||||||
14 | taxable year to a
designated zone organization to the | ||||||
15 | extent that the contribution (i)
qualifies as a | ||||||
16 | charitable contribution under subsection (c) of | ||||||
17 | Section 170
of the Internal Revenue Code and (ii) must, | ||||||
18 | by its terms, be used for a
project approved by the | ||||||
19 | Department of Commerce and Economic Opportunity under | ||||||
20 | Section 11 of the Illinois Enterprise Zone Act or under | ||||||
21 | Section 10-10 of the River Edge Redevelopment Zone Act. | ||||||
22 | This subparagraph (N) is exempt from the provisions of | ||||||
23 | Section 250; | ||||||
24 | (O) An amount equal to: (i) 85% for taxable years | ||||||
25 | ending on or before
December 31, 1992, or, a percentage | ||||||
26 | equal to the percentage allowable under
Section |
| |||||||
| |||||||
1 | 243(a)(1) of the Internal Revenue Code of 1986 for | ||||||
2 | taxable years ending
after December 31, 1992, of the | ||||||
3 | amount by which dividends included in taxable
income | ||||||
4 | and received from a corporation that is not created or | ||||||
5 | organized under
the laws of the United States or any | ||||||
6 | state or political subdivision thereof,
including, for | ||||||
7 | taxable years ending on or after December 31, 1988, | ||||||
8 | dividends
received or deemed received or paid or deemed | ||||||
9 | paid under Sections 951 through
964 of the Internal | ||||||
10 | Revenue Code, exceed the amount of the modification
| ||||||
11 | provided under subparagraph (G) of paragraph (2) of | ||||||
12 | this subsection (b) which
is related to such dividends, | ||||||
13 | and including, for taxable years ending on or after | ||||||
14 | December 31, 2008, dividends received from a captive | ||||||
15 | real estate investment trust; plus (ii) 100% of the | ||||||
16 | amount by which dividends,
included in taxable income | ||||||
17 | and received, including, for taxable years ending on
or | ||||||
18 | after December 31, 1988, dividends received or deemed | ||||||
19 | received or paid or
deemed paid under Sections 951 | ||||||
20 | through 964 of the Internal Revenue Code and including, | ||||||
21 | for taxable years ending on or after December 31, 2008, | ||||||
22 | dividends received from a captive real estate | ||||||
23 | investment trust, from
any such corporation specified | ||||||
24 | in clause (i) that would but for the provisions
of | ||||||
25 | Section 1504 (b) (3) of the Internal Revenue Code be | ||||||
26 | treated as a member of
the affiliated group which |
| |||||||
| |||||||
1 | includes the dividend recipient, exceed the amount
of | ||||||
2 | the modification provided under subparagraph (G) of | ||||||
3 | paragraph (2) of this
subsection (b) which is related | ||||||
4 | to such dividends. This subparagraph (O) is exempt from | ||||||
5 | the provisions of Section 250 of this Act; | ||||||
6 | (P) An amount equal to any contribution made to a | ||||||
7 | job training project
established pursuant to the Tax | ||||||
8 | Increment Allocation Redevelopment Act; | ||||||
9 | (Q) An amount equal to the amount of the deduction | ||||||
10 | used to compute the
federal income tax credit for | ||||||
11 | restoration of substantial amounts held under
claim of | ||||||
12 | right for the taxable year pursuant to Section 1341 of | ||||||
13 | the
Internal Revenue Code of 1986; | ||||||
14 | (R) On and after July 20, 1999, in the case of an | ||||||
15 | attorney-in-fact with respect to whom an
interinsurer | ||||||
16 | or a reciprocal insurer has made the election under | ||||||
17 | Section 835 of
the Internal Revenue Code, 26 U.S.C. | ||||||
18 | 835, an amount equal to the excess, if
any, of the | ||||||
19 | amounts paid or incurred by that interinsurer or | ||||||
20 | reciprocal insurer
in the taxable year to the | ||||||
21 | attorney-in-fact over the deduction allowed to that
| ||||||
22 | interinsurer or reciprocal insurer with respect to the | ||||||
23 | attorney-in-fact under
Section 835(b) of the Internal | ||||||
24 | Revenue Code for the taxable year; the provisions of | ||||||
25 | this subparagraph are exempt from the provisions of | ||||||
26 | Section 250; |
| |||||||
| |||||||
1 | (S) For taxable years ending on or after December | ||||||
2 | 31, 1997, in the
case of a Subchapter
S corporation, an | ||||||
3 | amount equal to all amounts of income allocable to a
| ||||||
4 | shareholder subject to the Personal Property Tax | ||||||
5 | Replacement Income Tax imposed
by subsections (c) and | ||||||
6 | (d) of Section 201 of this Act, including amounts
| ||||||
7 | allocable to organizations exempt from federal income | ||||||
8 | tax by reason of Section
501(a) of the Internal Revenue | ||||||
9 | Code. This subparagraph (S) is exempt from
the | ||||||
10 | provisions of Section 250; | ||||||
11 | (T) For taxable years 2001 and thereafter, for the | ||||||
12 | taxable year in
which the bonus depreciation deduction
| ||||||
13 | is taken on the taxpayer's federal income tax return | ||||||
14 | under
subsection (k) of Section 168 of the Internal | ||||||
15 | Revenue Code and for each
applicable taxable year | ||||||
16 | thereafter, an amount equal to "x", where: | ||||||
17 | (1) "y" equals the amount of the depreciation | ||||||
18 | deduction taken for the
taxable year
on the | ||||||
19 | taxpayer's federal income tax return on property | ||||||
20 | for which the bonus
depreciation deduction
was | ||||||
21 | taken in any year under subsection (k) of Section | ||||||
22 | 168 of the Internal
Revenue Code, but not including | ||||||
23 | the bonus depreciation deduction; | ||||||
24 | (2) for taxable years ending on or before | ||||||
25 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
26 | and then divided by 70 (or "y"
multiplied by |
| |||||||
| |||||||
1 | 0.429); and | ||||||
2 | (3) for taxable years ending after December | ||||||
3 | 31, 2005: | ||||||
4 | (i) for property on which a bonus | ||||||
5 | depreciation deduction of 30% of the adjusted | ||||||
6 | basis was taken, "x" equals "y" multiplied by | ||||||
7 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
8 | 0.429); and | ||||||
9 | (ii) for property on which a bonus | ||||||
10 | depreciation deduction of 50% of the adjusted | ||||||
11 | basis was taken, "x" equals "y" multiplied by | ||||||
12 | 1.0. | ||||||
13 | The aggregate amount deducted under this | ||||||
14 | subparagraph in all taxable
years for any one piece of | ||||||
15 | property may not exceed the amount of the bonus
| ||||||
16 | depreciation deduction
taken on that property on the | ||||||
17 | taxpayer's federal income tax return under
subsection | ||||||
18 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
19 | subparagraph (T) is exempt from the provisions of | ||||||
20 | Section 250; | ||||||
21 | (U) If the taxpayer sells, transfers, abandons, or | ||||||
22 | otherwise disposes of
property for which the taxpayer | ||||||
23 | was required in any taxable year to make an
addition | ||||||
24 | modification under subparagraph (E-10), then an amount | ||||||
25 | equal to that
addition modification. | ||||||
26 | If the taxpayer continues to own property through |
| |||||||
| |||||||
1 | the last day of the last tax year for which the | ||||||
2 | taxpayer may claim a depreciation deduction for | ||||||
3 | federal income tax purposes and for which the taxpayer | ||||||
4 | was required in any taxable year to make an addition | ||||||
5 | modification under subparagraph (E-10), then an amount | ||||||
6 | equal to that addition modification.
| ||||||
7 | The taxpayer is allowed to take the deduction under | ||||||
8 | this subparagraph
only once with respect to any one | ||||||
9 | piece of property. | ||||||
10 | This subparagraph (U) is exempt from the | ||||||
11 | provisions of Section 250; | ||||||
12 | (V) The amount of: (i) any interest income (net of | ||||||
13 | the deductions allocable thereto) taken into account | ||||||
14 | for the taxable year with respect to a transaction with | ||||||
15 | a taxpayer that is required to make an addition | ||||||
16 | modification with respect to such transaction under | ||||||
17 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
18 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
19 | the amount of such addition modification,
(ii) any | ||||||
20 | income from intangible property (net of the deductions | ||||||
21 | allocable thereto) taken into account for the taxable | ||||||
22 | year with respect to a transaction with a taxpayer that | ||||||
23 | is required to make an addition modification with | ||||||
24 | respect to such transaction under Section | ||||||
25 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
26 | 203(d)(2)(D-8), but not to exceed the amount of such |
| |||||||
| |||||||
1 | addition modification, and (iii) any insurance premium | ||||||
2 | income (net of deductions allocable thereto) taken | ||||||
3 | into account for the taxable year with respect to a | ||||||
4 | transaction with a taxpayer that is required to make an | ||||||
5 | addition modification with respect to such transaction | ||||||
6 | under Section 203(a)(2)(D-19), Section | ||||||
7 | 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section | ||||||
8 | 203(d)(2)(D-9), but not to exceed the amount of that | ||||||
9 | addition modification. This subparagraph (V) is exempt | ||||||
10 | from the provisions of Section 250;
| ||||||
11 | (W) An amount equal to the interest income taken | ||||||
12 | into account for the taxable year (net of the | ||||||
13 | deductions allocable thereto) with respect to | ||||||
14 | transactions with (i) a foreign person who would be a | ||||||
15 | member of the taxpayer's unitary business group but for | ||||||
16 | the fact that the foreign person's business activity | ||||||
17 | outside the United States is 80% or more of that | ||||||
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, but not to exceed the | ||||||
26 | addition modification required to be made for the same |
| |||||||
| |||||||
1 | taxable year under Section 203(b)(2)(E-12) for | ||||||
2 | interest paid, accrued, or incurred, directly or | ||||||
3 | indirectly, to the same person. This subparagraph (W) | ||||||
4 | is exempt from the provisions of Section 250; and
| ||||||
5 | (X) An amount equal to the income from intangible | ||||||
6 | property taken into account for the taxable year (net | ||||||
7 | of the deductions allocable thereto) with respect to | ||||||
8 | transactions with (i) a foreign person who would be a | ||||||
9 | member of the taxpayer's unitary business group but for | ||||||
10 | the fact that the foreign person's business activity | ||||||
11 | outside the United States is 80% or more of that | ||||||
12 | person's total business activity and (ii) for taxable | ||||||
13 | years ending on or after December 31, 2008, to a person | ||||||
14 | who would be a member of the same unitary business | ||||||
15 | group but for the fact that the person is prohibited | ||||||
16 | under Section 1501(a)(27) from being included in the | ||||||
17 | unitary business group because he or she is ordinarily | ||||||
18 | required to apportion business income under different | ||||||
19 | subsections of Section 304, but not to exceed the | ||||||
20 | addition modification required to be made for the same | ||||||
21 | taxable year under Section 203(b)(2)(E-13) for | ||||||
22 | intangible expenses and costs paid, accrued, or | ||||||
23 | incurred, directly or indirectly, to the same foreign | ||||||
24 | person. This subparagraph (X) is exempt from the | ||||||
25 | provisions of Section 250.
| ||||||
26 | (3) Special rule. For purposes of paragraph (2) (A), |
| |||||||
| |||||||
1 | "gross income"
in the case of a life insurance company, for | ||||||
2 | tax years ending on and after
December 31, 1994,
shall mean | ||||||
3 | the gross investment income for the taxable year. | ||||||
4 | (c) Trusts and estates. | ||||||
5 | (1) In general. In the case of a trust or estate, base | ||||||
6 | income means
an amount equal to the taxpayer's taxable | ||||||
7 | income for the taxable year as
modified by paragraph (2). | ||||||
8 | (2) Modifications. Subject to the provisions of | ||||||
9 | paragraph (3), the
taxable income referred to in paragraph | ||||||
10 | (1) shall be modified by adding
thereto the sum of the | ||||||
11 | following amounts: | ||||||
12 | (A) An amount equal to all amounts paid or accrued | ||||||
13 | to the taxpayer
as interest or dividends during the | ||||||
14 | taxable year to the extent excluded
from gross income | ||||||
15 | in the computation of taxable income; | ||||||
16 | (B) In the case of (i) an estate, $600; (ii) a | ||||||
17 | trust which, under
its governing instrument, is | ||||||
18 | required to distribute all of its income
currently, | ||||||
19 | $300; and (iii) any other trust, $100, but in each such | ||||||
20 | case,
only to the extent such amount was deducted in | ||||||
21 | the computation of
taxable income; | ||||||
22 | (C) An amount equal to the amount of tax imposed by | ||||||
23 | this Act to the
extent deducted from gross income in | ||||||
24 | the computation of taxable income
for the taxable year; | ||||||
25 | (D) The amount of any net operating loss deduction |
| |||||||
| |||||||
1 | taken in arriving at
taxable income, other than a net | ||||||
2 | operating loss carried forward from a
taxable year | ||||||
3 | ending prior to December 31, 1986; | ||||||
4 | (E) For taxable years in which a net operating loss | ||||||
5 | carryback or
carryforward from a taxable year ending | ||||||
6 | prior to December 31, 1986 is an
element of taxable | ||||||
7 | income under paragraph (1) of subsection (e) or | ||||||
8 | subparagraph
(E) of paragraph (2) of subsection (e), | ||||||
9 | the amount by which addition
modifications other than | ||||||
10 | those provided by this subparagraph (E) exceeded
| ||||||
11 | subtraction modifications in such taxable year, with | ||||||
12 | the following limitations
applied in the order that | ||||||
13 | they are listed: | ||||||
14 | (i) the addition modification relating to the | ||||||
15 | net operating loss
carried back or forward to the | ||||||
16 | taxable year from any taxable year ending
prior to | ||||||
17 | December 31, 1986 shall be reduced by the amount of | ||||||
18 | addition
modification under this subparagraph (E) | ||||||
19 | which related to that net
operating loss and which | ||||||
20 | was taken into account in calculating the base
| ||||||
21 | income of an earlier taxable year, and | ||||||
22 | (ii) the addition modification relating to the | ||||||
23 | net operating loss
carried back or forward to the | ||||||
24 | taxable year from any taxable year ending
prior to | ||||||
25 | December 31, 1986 shall not exceed the amount of | ||||||
26 | such carryback or
carryforward; |
| |||||||
| |||||||
1 | For taxable years in which there is a net operating | ||||||
2 | loss carryback or
carryforward from more than one other | ||||||
3 | taxable year ending prior to December
31, 1986, the | ||||||
4 | addition modification provided in this subparagraph | ||||||
5 | (E) shall
be the sum of the amounts computed | ||||||
6 | independently under the preceding
provisions of this | ||||||
7 | subparagraph (E) for each such taxable year; | ||||||
8 | (F) For taxable years ending on or after January 1, | ||||||
9 | 1989, an amount
equal to the tax deducted pursuant to | ||||||
10 | Section 164 of the Internal Revenue
Code if the trust | ||||||
11 | or estate is claiming the same tax for purposes of the
| ||||||
12 | Illinois foreign tax credit under Section 601 of this | ||||||
13 | Act; | ||||||
14 | (G) An amount equal to the amount of the capital | ||||||
15 | gain deduction
allowable under the Internal Revenue | ||||||
16 | Code, to the extent deducted from
gross income in the | ||||||
17 | computation of taxable income; | ||||||
18 | (G-5) For taxable years ending after December 31, | ||||||
19 | 1997, an
amount equal to any eligible remediation costs | ||||||
20 | that the trust or estate
deducted in computing adjusted | ||||||
21 | gross income and for which the trust
or estate claims a | ||||||
22 | credit under subsection (l) of Section 201; | ||||||
23 | (G-10) For taxable years 2001 and thereafter, an | ||||||
24 | amount equal to the
bonus depreciation deduction taken | ||||||
25 | on the taxpayer's federal income tax return for the | ||||||
26 | taxable
year under subsection (k) of Section 168 of the |
| |||||||
| |||||||
1 | Internal Revenue Code; and | ||||||
2 | (G-11) 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 (G-10), then | ||||||
6 | an amount equal
to the aggregate amount of the | ||||||
7 | deductions taken in all taxable
years under | ||||||
8 | subparagraph (R) with respect to that property. | ||||||
9 | If the taxpayer continues to own property through | ||||||
10 | the last day of the last tax year for which the | ||||||
11 | taxpayer may claim a depreciation deduction for | ||||||
12 | federal income tax purposes and for which the taxpayer | ||||||
13 | was allowed in any taxable year to make a subtraction | ||||||
14 | modification under subparagraph (R), then an amount | ||||||
15 | equal to that subtraction modification.
| ||||||
16 | The taxpayer is required to make the addition | ||||||
17 | modification under this
subparagraph
only once with | ||||||
18 | respect to any one piece of property; | ||||||
19 | (G-12) An amount equal to the amount otherwise | ||||||
20 | allowed as a deduction in computing base income for | ||||||
21 | interest paid, accrued, or incurred, directly or | ||||||
22 | indirectly, (i) for taxable years ending on or after | ||||||
23 | December 31, 2004, to a foreign person who would be a | ||||||
24 | member of the same unitary business group but for the | ||||||
25 | fact that the foreign person's business activity | ||||||
26 | outside the United States is 80% or more of the foreign |
| |||||||
| |||||||
1 | person's total business activity and (ii) for taxable | ||||||
2 | years ending on or after December 31, 2008, to a person | ||||||
3 | who would be a member of the same unitary business | ||||||
4 | group but for the fact that the person is prohibited | ||||||
5 | under Section 1501(a)(27) from being included in the | ||||||
6 | unitary business group because he or she is ordinarily | ||||||
7 | required to apportion business income under different | ||||||
8 | subsections of Section 304. The addition modification | ||||||
9 | required by this subparagraph shall be reduced to the | ||||||
10 | extent that dividends were included in base income of | ||||||
11 | the unitary group for the same taxable year and | ||||||
12 | received by the taxpayer or by a member of the | ||||||
13 | taxpayer's unitary business group (including amounts | ||||||
14 | included in gross income pursuant to Sections 951 | ||||||
15 | through 964 of the Internal Revenue Code and amounts | ||||||
16 | included in gross income under Section 78 of the | ||||||
17 | Internal Revenue Code) with respect to the stock of the | ||||||
18 | same person to whom the interest was paid, accrued, or | ||||||
19 | incurred.
| ||||||
20 | This paragraph shall not apply to the following:
| ||||||
21 | (i) an item of interest paid, accrued, or | ||||||
22 | incurred, directly or indirectly, to a person who | ||||||
23 | is subject in a foreign country or state, other | ||||||
24 | than a state which requires mandatory unitary | ||||||
25 | reporting, to a tax on or measured by net income | ||||||
26 | with respect to such interest; or |
| |||||||
| |||||||
1 | (ii) an item of interest paid, accrued, or | ||||||
2 | incurred, directly or indirectly, to a person if | ||||||
3 | the taxpayer can establish, based on a | ||||||
4 | preponderance of the evidence, both of the | ||||||
5 | following: | ||||||
6 | (a) the person, during the same taxable | ||||||
7 | year, paid, accrued, or incurred, the interest | ||||||
8 | to a person that is not a related member, and | ||||||
9 | (b) the transaction giving rise to the | ||||||
10 | interest expense between the taxpayer and the | ||||||
11 | person did not have as a principal purpose the | ||||||
12 | avoidance of Illinois income tax, and is paid | ||||||
13 | pursuant to a contract or agreement that | ||||||
14 | reflects an arm's-length interest rate and | ||||||
15 | terms; or
| ||||||
16 | (iii) the taxpayer can establish, based on | ||||||
17 | clear and convincing evidence, that the interest | ||||||
18 | paid, accrued, or incurred relates to a contract or | ||||||
19 | agreement entered into at arm's-length rates and | ||||||
20 | terms and the principal purpose for the payment is | ||||||
21 | not federal or Illinois tax avoidance; or
| ||||||
22 | (iv) an item of interest paid, accrued, or | ||||||
23 | incurred, directly or indirectly, to a person if | ||||||
24 | the taxpayer establishes by clear and convincing | ||||||
25 | evidence that the adjustments are unreasonable; or | ||||||
26 | if the taxpayer and the Director agree in writing |
| |||||||
| |||||||
1 | to the application or use of an alternative method | ||||||
2 | of apportionment under Section 304(f).
| ||||||
3 | Nothing in this subsection shall preclude the | ||||||
4 | Director from making any other adjustment | ||||||
5 | otherwise allowed under Section 404 of this Act for | ||||||
6 | any tax year beginning after the effective date of | ||||||
7 | this amendment provided such adjustment is made | ||||||
8 | pursuant to regulation adopted by the Department | ||||||
9 | and such regulations provide methods and standards | ||||||
10 | by which the Department will utilize its authority | ||||||
11 | under Section 404 of this Act;
| ||||||
12 | (G-13) An amount equal to the amount of intangible | ||||||
13 | expenses and costs otherwise allowed as a deduction in | ||||||
14 | computing base income, and that were paid, accrued, or | ||||||
15 | incurred, directly or indirectly, (i) for taxable | ||||||
16 | years ending on or after December 31, 2004, to a | ||||||
17 | foreign person who would be a member of the same | ||||||
18 | unitary business group but for the fact that the | ||||||
19 | foreign person's business activity outside the United | ||||||
20 | States is 80% or more of that person's total business | ||||||
21 | activity and (ii) for taxable years ending on or after | ||||||
22 | December 31, 2008, to a person who would be a member of | ||||||
23 | the same unitary business group but for the fact that | ||||||
24 | the person is prohibited under Section 1501(a)(27) | ||||||
25 | from being included in the unitary business group | ||||||
26 | because he or she is ordinarily required to apportion |
| |||||||
| |||||||
1 | business income under different subsections of Section | ||||||
2 | 304. The addition modification required by this | ||||||
3 | subparagraph shall be reduced to the extent that | ||||||
4 | dividends were included in base income of the unitary | ||||||
5 | group for the same taxable year and received by the | ||||||
6 | taxpayer or by a member of the taxpayer's unitary | ||||||
7 | business group (including amounts included in gross | ||||||
8 | income pursuant to Sections 951 through 964 of the | ||||||
9 | Internal Revenue Code and amounts included in gross | ||||||
10 | income under Section 78 of the Internal Revenue Code) | ||||||
11 | with respect to the stock of the same person to whom | ||||||
12 | the intangible expenses and costs were directly or | ||||||
13 | indirectly paid, incurred, or accrued. The preceding | ||||||
14 | sentence shall not apply to the extent that the same | ||||||
15 | dividends caused a reduction to the addition | ||||||
16 | modification required under Section 203(c)(2)(G-12) of | ||||||
17 | this Act. As used in this subparagraph, the term | ||||||
18 | "intangible expenses and costs" includes: (1) | ||||||
19 | expenses, losses, and costs for or related to the | ||||||
20 | direct or indirect acquisition, use, maintenance or | ||||||
21 | management, ownership, sale, exchange, or any other | ||||||
22 | disposition of intangible property; (2) losses | ||||||
23 | incurred, directly or indirectly, from factoring | ||||||
24 | transactions or discounting transactions; (3) royalty, | ||||||
25 | patent, technical, and copyright fees; (4) licensing | ||||||
26 | fees; and (5) other similar expenses and costs. For |
| |||||||
| |||||||
1 | purposes of this subparagraph, "intangible property" | ||||||
2 | includes patents, patent applications, trade names, | ||||||
3 | trademarks, service marks, copyrights, mask works, | ||||||
4 | trade secrets, and similar types of intangible assets. | ||||||
5 | This paragraph shall not apply to the following: | ||||||
6 | (i) any item of intangible expenses or costs | ||||||
7 | paid, accrued, or incurred, directly or | ||||||
8 | indirectly, from a transaction with a person who is | ||||||
9 | subject in a foreign country or state, other than a | ||||||
10 | state which requires mandatory unitary reporting, | ||||||
11 | to a tax on or measured by net income with respect | ||||||
12 | to such item; or | ||||||
13 | (ii) any item of intangible expense or cost | ||||||
14 | paid, accrued, or incurred, directly or | ||||||
15 | indirectly, if the taxpayer can establish, based | ||||||
16 | on a preponderance of the evidence, both of the | ||||||
17 | following: | ||||||
18 | (a) the person during the same taxable | ||||||
19 | year paid, accrued, or incurred, the | ||||||
20 | intangible expense or cost to a person that is | ||||||
21 | not a related member, and | ||||||
22 | (b) the transaction giving rise to the | ||||||
23 | intangible expense or cost between the | ||||||
24 | taxpayer and the person did not have as a | ||||||
25 | principal purpose the avoidance of Illinois | ||||||
26 | income tax, and is paid pursuant to a contract |
| |||||||
| |||||||
1 | or agreement that reflects arm's-length terms; | ||||||
2 | or | ||||||
3 | (iii) any item of intangible expense or cost | ||||||
4 | paid, accrued, or incurred, directly or | ||||||
5 | indirectly, from a transaction with a person if the | ||||||
6 | taxpayer establishes by clear and convincing | ||||||
7 | evidence, that the adjustments are unreasonable; | ||||||
8 | or if the taxpayer and the Director agree in | ||||||
9 | writing to the application or use of an alternative | ||||||
10 | method of apportionment under Section 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 for | ||||||
14 | any tax year beginning after the effective date of | ||||||
15 | this amendment provided such adjustment is made | ||||||
16 | pursuant to regulation adopted by the Department | ||||||
17 | and such regulations provide methods and standards | ||||||
18 | by which the Department will utilize its authority | ||||||
19 | under Section 404 of this Act;
| ||||||
20 | (G-14) 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 |
| |||||||
| |||||||
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 stock | ||||||
14 | of the same person to whom the premiums and costs were | ||||||
15 | directly or indirectly paid, incurred, or accrued. The | ||||||
16 | preceding sentence does not apply to the extent that | ||||||
17 | the same dividends caused a reduction to the addition | ||||||
18 | modification required under Section 203(c)(2)(G-12) or | ||||||
19 | Section 203(c)(2)(G-13) of this Act; | ||||||
20 | (G-15) An amount equal to the credit allowable to | ||||||
21 | the taxpayer under Section 218(a) of this Act, | ||||||
22 | determined without regard to Section 218(c) of this | ||||||
23 | Act; | ||||||
24 | and by deducting from the total so obtained the sum of the | ||||||
25 | following
amounts: | ||||||
26 | (H) An amount equal to all amounts included in such |
| |||||||
| |||||||
1 | total pursuant
to the provisions of Sections 402(a), | ||||||
2 | 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the | ||||||
3 | Internal Revenue Code or included in such total as
| ||||||
4 | distributions under the provisions of any retirement | ||||||
5 | or disability plan for
employees of any governmental | ||||||
6 | agency or unit, or retirement payments to
retired | ||||||
7 | partners, which payments are excluded in computing net | ||||||
8 | earnings
from self employment by Section 1402 of the | ||||||
9 | Internal Revenue Code and
regulations adopted pursuant | ||||||
10 | thereto; | ||||||
11 | (I) The valuation limitation amount; | ||||||
12 | (J) An amount equal to the amount of any tax | ||||||
13 | imposed by this Act
which was refunded to the taxpayer | ||||||
14 | and included in such total for the
taxable year; | ||||||
15 | (K) An amount equal to all amounts included in | ||||||
16 | taxable income as
modified by subparagraphs (A), (B), | ||||||
17 | (C), (D), (E), (F) and (G) which
are exempt from | ||||||
18 | taxation by this State either by reason of its statutes | ||||||
19 | or
Constitution
or by reason of the Constitution, | ||||||
20 | treaties or statutes of the United States;
provided | ||||||
21 | that, in the case of any statute of this State that | ||||||
22 | exempts income
derived from bonds or other obligations | ||||||
23 | from the tax imposed under this Act,
the amount | ||||||
24 | exempted shall be the interest net of bond premium | ||||||
25 | amortization; | ||||||
26 | (L) With the exception of any amounts subtracted |
| |||||||
| |||||||
1 | under subparagraph
(K),
an amount equal to the sum of | ||||||
2 | all amounts disallowed as
deductions by (i) Sections | ||||||
3 | 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, | ||||||
4 | as now or hereafter amended, and all amounts of | ||||||
5 | expenses allocable
to interest and disallowed as | ||||||
6 | deductions by Section 265(1) of the Internal
Revenue | ||||||
7 | Code of 1954, as now or hereafter amended;
and (ii) for | ||||||
8 | taxable years
ending on or after August 13, 1999, | ||||||
9 | Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | ||||||
10 | the Internal Revenue Code; the provisions of this
| ||||||
11 | subparagraph are exempt from the provisions of Section | ||||||
12 | 250; | ||||||
13 | (M) An amount equal to those dividends included in | ||||||
14 | such total
which were paid by a corporation which | ||||||
15 | conducts business operations in an
Enterprise Zone or | ||||||
16 | zones created under the Illinois Enterprise Zone Act or | ||||||
17 | a River Edge Redevelopment Zone or zones created under | ||||||
18 | the River Edge Redevelopment Zone Act and
conducts | ||||||
19 | substantially all of its operations in an Enterprise | ||||||
20 | Zone or Zones or a River Edge Redevelopment Zone or | ||||||
21 | zones. This subparagraph (M) is exempt from the | ||||||
22 | provisions of Section 250; | ||||||
23 | (N) An amount equal to any contribution made to a | ||||||
24 | job training
project established pursuant to the Tax | ||||||
25 | Increment Allocation
Redevelopment Act; | ||||||
26 | (O) An amount equal to those dividends included in |
| |||||||
| |||||||
1 | such total
that were paid by a corporation that | ||||||
2 | conducts business operations in a
federally designated | ||||||
3 | Foreign Trade Zone or Sub-Zone and that is designated
a | ||||||
4 | High Impact Business located in Illinois; provided | ||||||
5 | that dividends eligible
for the deduction provided in | ||||||
6 | subparagraph (M) of paragraph (2) of this
subsection | ||||||
7 | shall not be eligible for the deduction provided under | ||||||
8 | this
subparagraph (O); | ||||||
9 | (P) An amount equal to the amount of the deduction | ||||||
10 | used to compute the
federal income tax credit for | ||||||
11 | restoration of substantial amounts held under
claim of | ||||||
12 | right for the taxable year pursuant to Section 1341 of | ||||||
13 | the
Internal Revenue Code of 1986; | ||||||
14 | (Q) For taxable year 1999 and thereafter, an amount | ||||||
15 | equal to the
amount of any
(i) distributions, to the | ||||||
16 | extent includible in gross income for
federal income | ||||||
17 | tax purposes, made to the taxpayer because of
his or | ||||||
18 | her status as a victim of
persecution for racial or | ||||||
19 | religious reasons by Nazi Germany or any other Axis
| ||||||
20 | regime or as an heir of the victim and (ii) items
of | ||||||
21 | income, to the extent
includible in gross income for | ||||||
22 | federal income tax purposes, attributable to,
derived | ||||||
23 | from or in any way related to assets stolen from, | ||||||
24 | hidden from, or
otherwise lost to a victim of
| ||||||
25 | persecution for racial or religious reasons by Nazi
| ||||||
26 | Germany or any other Axis regime
immediately prior to, |
| |||||||
| |||||||
1 | during, and immediately after World War II, including,
| ||||||
2 | but
not limited to, interest on the proceeds receivable | ||||||
3 | as insurance
under policies issued to a victim of | ||||||
4 | persecution for racial or religious
reasons by Nazi | ||||||
5 | Germany or any other Axis regime by European insurance
| ||||||
6 | companies
immediately prior to and during World War II;
| ||||||
7 | provided, however, this subtraction from federal | ||||||
8 | adjusted gross income does not
apply to assets acquired | ||||||
9 | with such assets or with the proceeds from the sale of
| ||||||
10 | such assets; provided, further, this paragraph shall | ||||||
11 | only apply to a taxpayer
who was the first recipient of | ||||||
12 | such assets after their recovery and who is a
victim of
| ||||||
13 | persecution for racial or religious reasons
by Nazi | ||||||
14 | Germany or any other Axis regime or as an heir of the | ||||||
15 | victim. The
amount of and the eligibility for any | ||||||
16 | public assistance, benefit, or
similar entitlement is | ||||||
17 | not affected by the inclusion of items (i) and (ii) of
| ||||||
18 | this paragraph in gross income for federal income tax | ||||||
19 | purposes.
This paragraph is exempt from the provisions | ||||||
20 | of Section 250; | ||||||
21 | (R) 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: |
| |||||||
| |||||||
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 including | ||||||
7 | 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 by | ||||||
18 | 0.429); and | ||||||
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 | The aggregate amount deducted under this | ||||||
24 | subparagraph in all taxable
years for any one piece of | ||||||
25 | property may not exceed the amount of the bonus
| ||||||
26 | depreciation deduction
taken on that property on the |
| |||||||
| |||||||
1 | taxpayer's federal income tax return under
subsection | ||||||
2 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
3 | subparagraph (R) is exempt from the provisions of | ||||||
4 | Section 250; | ||||||
5 | (S) If the taxpayer sells, transfers, abandons, or | ||||||
6 | otherwise disposes of
property for which the taxpayer | ||||||
7 | was required in any taxable year to make an
addition | ||||||
8 | modification under subparagraph (G-10), then an amount | ||||||
9 | equal to that
addition modification. | ||||||
10 | If the taxpayer continues to own property through | ||||||
11 | the last day of the last tax year for which the | ||||||
12 | taxpayer may claim a depreciation deduction for | ||||||
13 | federal income tax purposes and for which the taxpayer | ||||||
14 | was required in any taxable year to make an addition | ||||||
15 | modification under subparagraph (G-10), then an amount | ||||||
16 | equal to that addition modification.
| ||||||
17 | The taxpayer is allowed to take the deduction under | ||||||
18 | this subparagraph
only once with respect to any one | ||||||
19 | piece of property. | ||||||
20 | This subparagraph (S) is exempt from the | ||||||
21 | provisions of Section 250; | ||||||
22 | (T) 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 with | ||||||
25 | a taxpayer that is required to make an addition | ||||||
26 | modification with respect to such transaction under |
| |||||||
| |||||||
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 such 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 that | ||||||
7 | 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 such | ||||||
11 | addition modification. This subparagraph (T) is exempt | ||||||
12 | from the provisions of Section 250;
| ||||||
13 | (U) 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 for | ||||||
18 | the fact the foreign person's business activity | ||||||
19 | outside the United States is 80% or more of that | ||||||
20 | person's total business activity and (ii) for taxable | ||||||
21 | years ending on or after December 31, 2008, to a person | ||||||
22 | who would be a member of the same unitary business | ||||||
23 | group but for the fact that the person is prohibited | ||||||
24 | under Section 1501(a)(27) from being included in the | ||||||
25 | unitary business group because he or she is ordinarily | ||||||
26 | required to apportion business income under different |
| |||||||
| |||||||
1 | subsections of Section 304, but not to exceed the | ||||||
2 | addition modification required to be made for the same | ||||||
3 | taxable year under Section 203(c)(2)(G-12) for | ||||||
4 | interest paid, accrued, or incurred, directly or | ||||||
5 | indirectly, to the same person. This subparagraph (U) | ||||||
6 | is exempt from the provisions of Section 250; and | ||||||
7 | (V) An amount equal to the income from intangible | ||||||
8 | property taken into account for the taxable year (net | ||||||
9 | of the deductions allocable thereto) with respect to | ||||||
10 | transactions with (i) a foreign person who would be a | ||||||
11 | member of the taxpayer's unitary business group but for | ||||||
12 | the fact that the foreign person's business activity | ||||||
13 | outside the United States is 80% or more of that | ||||||
14 | person's total business activity and (ii) for taxable | ||||||
15 | years ending on or after December 31, 2008, to a person | ||||||
16 | who would be a member of the same unitary business | ||||||
17 | group but for the fact that the person is prohibited | ||||||
18 | under Section 1501(a)(27) from being included in the | ||||||
19 | unitary business group because he or she is ordinarily | ||||||
20 | required to apportion business income under different | ||||||
21 | subsections of Section 304, but not to exceed the | ||||||
22 | addition modification required to be made for the same | ||||||
23 | taxable year under Section 203(c)(2)(G-13) for | ||||||
24 | intangible expenses and costs paid, accrued, or | ||||||
25 | incurred, directly or indirectly, to the same foreign | ||||||
26 | person. This subparagraph (V) is exempt from the |
| |||||||
| |||||||
1 | provisions of Section 250.
| ||||||
2 | (3) Limitation. The amount of any modification | ||||||
3 | otherwise required
under this subsection shall, under | ||||||
4 | regulations prescribed by the
Department, be adjusted by | ||||||
5 | any amounts included therein which were
properly paid, | ||||||
6 | credited, or required to be distributed, or permanently set
| ||||||
7 | aside for charitable purposes pursuant to Internal Revenue | ||||||
8 | Code Section
642(c) during the taxable year. | ||||||
9 | (d) Partnerships. | ||||||
10 | (1) In general. In the case of a partnership, base | ||||||
11 | income means an
amount equal to the taxpayer's taxable | ||||||
12 | income for the taxable year as
modified by paragraph (2). | ||||||
13 | (2) Modifications. The taxable income referred to in | ||||||
14 | paragraph (1)
shall be modified by adding thereto the sum | ||||||
15 | of the following amounts: | ||||||
16 | (A) An amount equal to all amounts paid or accrued | ||||||
17 | to the taxpayer as
interest or dividends during the | ||||||
18 | taxable year to the extent excluded from
gross income | ||||||
19 | in the computation of taxable income; | ||||||
20 | (B) An amount equal to the amount of tax imposed by | ||||||
21 | this Act to the
extent deducted from gross income for | ||||||
22 | the taxable year; | ||||||
23 | (C) The amount of deductions allowed to the | ||||||
24 | partnership pursuant to
Section 707 (c) of the Internal | ||||||
25 | Revenue Code in calculating its taxable income; |
| |||||||
| |||||||
1 | (D) An amount equal to the amount of the capital | ||||||
2 | gain deduction
allowable under the Internal Revenue | ||||||
3 | Code, to the extent deducted from
gross income in the | ||||||
4 | computation of taxable income; | ||||||
5 | (D-5) For taxable years 2001 and thereafter, an | ||||||
6 | amount equal to the
bonus depreciation deduction taken | ||||||
7 | on the taxpayer's federal income tax return for the | ||||||
8 | taxable
year under subsection (k) of Section 168 of the | ||||||
9 | Internal Revenue Code; | ||||||
10 | (D-6) If the taxpayer sells, transfers, abandons, | ||||||
11 | or otherwise disposes of
property for which the | ||||||
12 | taxpayer was required in any taxable year to make an
| ||||||
13 | addition modification under subparagraph (D-5), then | ||||||
14 | an amount equal to the
aggregate amount of the | ||||||
15 | deductions taken in all taxable years
under | ||||||
16 | subparagraph (O) with respect to that property. | ||||||
17 | If the taxpayer continues to own property through | ||||||
18 | the last day of the last tax year for which the | ||||||
19 | taxpayer may claim a depreciation deduction for | ||||||
20 | federal income tax purposes and for which the taxpayer | ||||||
21 | was allowed in any taxable year to make a subtraction | ||||||
22 | modification under subparagraph (O), then an amount | ||||||
23 | equal to that subtraction modification.
| ||||||
24 | The taxpayer is required to make the addition | ||||||
25 | modification under this
subparagraph
only once with | ||||||
26 | respect to any one piece of property; |
| |||||||
| |||||||
1 | (D-7) An amount equal to the amount otherwise | ||||||
2 | allowed as a deduction in computing base income for | ||||||
3 | interest paid, accrued, or incurred, directly or | ||||||
4 | indirectly, (i) for taxable years ending on or after | ||||||
5 | December 31, 2004, to a foreign person who would be a | ||||||
6 | member of the same unitary business group but for the | ||||||
7 | fact the foreign person's business activity outside | ||||||
8 | the United States is 80% or more of the foreign | ||||||
9 | person's total business activity and (ii) for taxable | ||||||
10 | years ending on or after December 31, 2008, to a person | ||||||
11 | who would be a member of the same unitary business | ||||||
12 | group but for the fact that the person is prohibited | ||||||
13 | under Section 1501(a)(27) from being included in the | ||||||
14 | unitary business group because he or she is ordinarily | ||||||
15 | required to apportion business income under different | ||||||
16 | subsections of Section 304. The addition modification | ||||||
17 | required by this subparagraph shall be reduced to the | ||||||
18 | extent that dividends were included in base income of | ||||||
19 | the unitary group for the same taxable year and | ||||||
20 | received by the taxpayer or by a member of the | ||||||
21 | taxpayer's unitary business group (including amounts | ||||||
22 | included in gross income pursuant to Sections 951 | ||||||
23 | through 964 of the Internal Revenue Code and amounts | ||||||
24 | included in gross income under Section 78 of the | ||||||
25 | Internal Revenue Code) with respect to the stock of the | ||||||
26 | same person to whom the interest was paid, accrued, or |
| |||||||
| |||||||
1 | incurred.
| ||||||
2 | This paragraph shall not apply to the following:
| ||||||
3 | (i) an item of interest paid, accrued, or | ||||||
4 | incurred, directly or indirectly, to a person who | ||||||
5 | is subject in a foreign country or state, other | ||||||
6 | than a state which requires mandatory unitary | ||||||
7 | reporting, to a tax on or measured by net income | ||||||
8 | with respect to such interest; or | ||||||
9 | (ii) an item of interest paid, accrued, or | ||||||
10 | incurred, directly or indirectly, to a person if | ||||||
11 | the taxpayer can establish, based on a | ||||||
12 | preponderance of the evidence, both of the | ||||||
13 | following: | ||||||
14 | (a) the person, during the same taxable | ||||||
15 | year, paid, accrued, or incurred, the interest | ||||||
16 | to a person that is not a related member, and | ||||||
17 | (b) the transaction giving rise to the | ||||||
18 | interest expense between the taxpayer and the | ||||||
19 | person did not have as a principal purpose the | ||||||
20 | avoidance of Illinois income tax, and is paid | ||||||
21 | pursuant to a contract or agreement that | ||||||
22 | reflects an arm's-length interest rate and | ||||||
23 | terms; or
| ||||||
24 | (iii) the taxpayer can establish, based on | ||||||
25 | clear and convincing evidence, that the interest | ||||||
26 | paid, accrued, or incurred relates to a contract or |
| |||||||
| |||||||
1 | agreement entered into at arm's-length rates and | ||||||
2 | terms and the principal purpose for the payment is | ||||||
3 | not federal or Illinois tax avoidance; or
| ||||||
4 | (iv) an item of interest paid, accrued, or | ||||||
5 | incurred, directly or indirectly, to a person if | ||||||
6 | the taxpayer establishes by clear and convincing | ||||||
7 | evidence that the adjustments are unreasonable; or | ||||||
8 | if the taxpayer and the Director agree in writing | ||||||
9 | to the application or use of an alternative method | ||||||
10 | of apportionment under Section 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 for | ||||||
14 | any tax year beginning after the effective date of | ||||||
15 | this amendment provided such adjustment is made | ||||||
16 | pursuant to regulation adopted by the Department | ||||||
17 | and such regulations provide methods and standards | ||||||
18 | by which the Department will utilize its authority | ||||||
19 | under Section 404 of this Act; and
| ||||||
20 | (D-8) An amount equal to the amount of intangible | ||||||
21 | expenses and costs otherwise allowed as a deduction in | ||||||
22 | computing base income, and that were paid, accrued, or | ||||||
23 | incurred, directly or indirectly, (i) for taxable | ||||||
24 | years ending on or after December 31, 2004, to a | ||||||
25 | foreign person who would be a member of the same | ||||||
26 | unitary business group but for the fact that the |
| |||||||
| |||||||
1 | foreign person's business activity outside the United | ||||||
2 | States is 80% or more of that person's total business | ||||||
3 | activity and (ii) for taxable years ending on or after | ||||||
4 | December 31, 2008, to a person who would be a member of | ||||||
5 | the same unitary business group but for the fact that | ||||||
6 | the person is prohibited under Section 1501(a)(27) | ||||||
7 | from being included in the unitary business group | ||||||
8 | because he or she is ordinarily required to apportion | ||||||
9 | business income under different subsections of Section | ||||||
10 | 304. The addition modification required by this | ||||||
11 | subparagraph shall be reduced to the extent that | ||||||
12 | dividends were included in base income of the unitary | ||||||
13 | group for the same taxable year and received by the | ||||||
14 | taxpayer or by a member of the taxpayer's unitary | ||||||
15 | business group (including amounts included in gross | ||||||
16 | income pursuant to Sections 951 through 964 of the | ||||||
17 | Internal Revenue Code and amounts included in gross | ||||||
18 | income under Section 78 of the Internal Revenue Code) | ||||||
19 | with respect to the stock of the same person to whom | ||||||
20 | the intangible expenses and costs were directly or | ||||||
21 | indirectly paid, incurred or accrued. The preceding | ||||||
22 | sentence shall not apply to the extent that the same | ||||||
23 | dividends caused a reduction to the addition | ||||||
24 | modification required under Section 203(d)(2)(D-7) of | ||||||
25 | this Act. As used in this subparagraph, the term | ||||||
26 | "intangible expenses and costs" includes (1) expenses, |
| |||||||
| |||||||
1 | losses, and costs for, or related to, the direct or | ||||||
2 | indirect acquisition, use, maintenance or management, | ||||||
3 | ownership, sale, exchange, or any other disposition of | ||||||
4 | intangible property; (2) losses incurred, directly or | ||||||
5 | indirectly, from factoring transactions or discounting | ||||||
6 | transactions; (3) royalty, patent, technical, and | ||||||
7 | copyright fees; (4) licensing fees; and (5) other | ||||||
8 | similar expenses and costs. For purposes of this | ||||||
9 | subparagraph, "intangible property" includes patents, | ||||||
10 | patent applications, trade names, trademarks, service | ||||||
11 | marks, copyrights, mask works, trade secrets, and | ||||||
12 | similar types of intangible assets; | ||||||
13 | This paragraph shall not apply to the following: | ||||||
14 | (i) any item of intangible expenses or costs | ||||||
15 | paid, accrued, or incurred, directly or | ||||||
16 | indirectly, from a transaction with a person who is | ||||||
17 | subject in a foreign country or state, other than a | ||||||
18 | state which requires mandatory unitary reporting, | ||||||
19 | to a tax on or measured by net income with respect | ||||||
20 | to such item; or | ||||||
21 | (ii) any item of intangible expense or cost | ||||||
22 | paid, accrued, or incurred, directly or | ||||||
23 | indirectly, if the taxpayer can establish, based | ||||||
24 | on a preponderance of the evidence, both of the | ||||||
25 | following: | ||||||
26 | (a) the person during the same taxable |
| |||||||
| |||||||
1 | year paid, accrued, or incurred, the | ||||||
2 | intangible expense or cost to a person that is | ||||||
3 | not a related member, and | ||||||
4 | (b) the transaction giving rise to the | ||||||
5 | intangible expense or cost between the | ||||||
6 | taxpayer and the person did not have as a | ||||||
7 | principal purpose the avoidance of Illinois | ||||||
8 | income tax, and is paid pursuant to a contract | ||||||
9 | or agreement that reflects arm's-length terms; | ||||||
10 | or | ||||||
11 | (iii) any item of intangible expense or cost | ||||||
12 | paid, accrued, or incurred, directly or | ||||||
13 | indirectly, from a transaction with a person if the | ||||||
14 | taxpayer establishes by clear and convincing | ||||||
15 | evidence, that the adjustments are unreasonable; | ||||||
16 | or if the taxpayer and the Director agree in | ||||||
17 | writing to the application or use of an alternative | ||||||
18 | method 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 for | ||||||
22 | any tax year beginning after the effective date of | ||||||
23 | this amendment provided such adjustment is made | ||||||
24 | pursuant to regulation adopted by the Department | ||||||
25 | and such regulations provide methods and standards | ||||||
26 | by which the Department will utilize its authority |
| |||||||
| |||||||
1 | under Section 404 of this Act;
| ||||||
2 | (D-9) For taxable years ending on or after December | ||||||
3 | 31, 2008, an amount equal to the amount of insurance | ||||||
4 | premium expenses and costs otherwise allowed as a | ||||||
5 | deduction in computing base income, and that were paid, | ||||||
6 | accrued, or incurred, directly or indirectly, to a | ||||||
7 | person who would be a member of the same unitary | ||||||
8 | business group but for the fact that the person is | ||||||
9 | prohibited under Section 1501(a)(27) from being | ||||||
10 | included in the unitary business group because he or | ||||||
11 | she is ordinarily required to apportion business | ||||||
12 | income under different subsections of Section 304. The | ||||||
13 | addition modification required by this subparagraph | ||||||
14 | shall be reduced to the extent that dividends were | ||||||
15 | included in base income of the unitary group for the | ||||||
16 | same taxable year and received by the taxpayer or by a | ||||||
17 | member of the taxpayer's unitary business group | ||||||
18 | (including amounts included in gross income under | ||||||
19 | Sections 951 through 964 of the Internal Revenue Code | ||||||
20 | and amounts included in gross income under Section 78 | ||||||
21 | of the Internal Revenue Code) with respect to the stock | ||||||
22 | of the same person to whom the premiums and costs were | ||||||
23 | directly or indirectly paid, incurred, or accrued. The | ||||||
24 | preceding sentence does not apply to the extent that | ||||||
25 | the same dividends caused a reduction to the addition | ||||||
26 | modification required under Section 203(d)(2)(D-7) or |
| |||||||
| |||||||
1 | Section 203(d)(2)(D-8) of this Act; | ||||||
2 | (D-10) An amount equal to the credit allowable to | ||||||
3 | the taxpayer under Section 218(a) of this Act, | ||||||
4 | determined without regard to Section 218(c) of this | ||||||
5 | Act; | ||||||
6 | and by deducting from the total so obtained the following | ||||||
7 | amounts: | ||||||
8 | (E) The valuation limitation amount; | ||||||
9 | (F) An amount equal to the amount of any tax | ||||||
10 | imposed by this Act which
was refunded to the taxpayer | ||||||
11 | and included in such total for the taxable year; | ||||||
12 | (G) An amount equal to all amounts included in | ||||||
13 | taxable income as
modified by subparagraphs (A), (B), | ||||||
14 | (C) and (D) which are exempt from
taxation by this | ||||||
15 | State either by reason of its statutes or Constitution | ||||||
16 | or
by reason of
the Constitution, treaties or statutes | ||||||
17 | of the United States;
provided that, in the case of any | ||||||
18 | statute of this State that exempts income
derived from | ||||||
19 | bonds or other obligations from the tax imposed under | ||||||
20 | this Act,
the amount exempted shall be the interest net | ||||||
21 | of bond premium amortization; | ||||||
22 | (H) Any income of the partnership which | ||||||
23 | constitutes personal service
income as defined in | ||||||
24 | Section 1348 (b) (1) of the Internal Revenue Code (as
| ||||||
25 | in effect December 31, 1981) or a reasonable allowance | ||||||
26 | for compensation
paid or accrued for services rendered |
| |||||||
| |||||||
1 | by partners to the partnership,
whichever is greater; | ||||||
2 | (I) An amount equal to all amounts of income | ||||||
3 | distributable to an entity
subject to the Personal | ||||||
4 | Property Tax Replacement Income Tax imposed by
| ||||||
5 | subsections (c) and (d) of Section 201 of this Act | ||||||
6 | including amounts
distributable to organizations | ||||||
7 | exempt from federal income tax by reason of
Section | ||||||
8 | 501(a) of the Internal Revenue Code; | ||||||
9 | (J) With the exception of any amounts subtracted | ||||||
10 | under subparagraph
(G),
an amount equal to the sum of | ||||||
11 | all amounts disallowed as deductions
by (i) Sections | ||||||
12 | 171(a) (2), and 265(2) of the Internal Revenue Code of | ||||||
13 | 1954,
as now or hereafter amended, and all amounts of | ||||||
14 | expenses allocable to
interest and disallowed as | ||||||
15 | deductions by Section 265(1) of the Internal
Revenue | ||||||
16 | Code, as now or hereafter amended;
and (ii) for taxable | ||||||
17 | years
ending on or after August 13, 1999, Sections
| ||||||
18 | 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the | ||||||
19 | 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 an Enterprise
Zone or | ||||||
25 | zones created under the Illinois Enterprise Zone Act, | ||||||
26 | enacted by
the 82nd General Assembly, or a River Edge |
| |||||||
| |||||||
1 | Redevelopment Zone or zones created under the River | ||||||
2 | Edge Redevelopment Zone Act and
conducts substantially | ||||||
3 | all of its operations
in an Enterprise Zone or Zones or | ||||||
4 | from a River Edge Redevelopment Zone or zones. This | ||||||
5 | subparagraph (K) is exempt from the provisions of | ||||||
6 | Section 250; | ||||||
7 | (L) An amount equal to any contribution made to a | ||||||
8 | job training project
established pursuant to the Real | ||||||
9 | Property Tax Increment Allocation
Redevelopment Act; | ||||||
10 | (M) An amount equal to those dividends included in | ||||||
11 | such total
that were paid by a corporation that | ||||||
12 | conducts business operations in a
federally designated | ||||||
13 | Foreign Trade Zone or Sub-Zone and that is designated a
| ||||||
14 | High Impact Business located in Illinois; provided | ||||||
15 | that dividends eligible
for the deduction provided in | ||||||
16 | subparagraph (K) of paragraph (2) of this
subsection | ||||||
17 | shall not be eligible for the deduction provided under | ||||||
18 | this
subparagraph (M); | ||||||
19 | (N) An amount equal to the amount of the deduction | ||||||
20 | used to compute the
federal income tax credit for | ||||||
21 | restoration of substantial amounts held under
claim of | ||||||
22 | right for the taxable year pursuant to Section 1341 of | ||||||
23 | the
Internal Revenue Code of 1986; | ||||||
24 | (O) For taxable years 2001 and thereafter, for the | ||||||
25 | taxable year in
which the bonus depreciation deduction
| ||||||
26 | is taken on the taxpayer's federal income tax return |
| |||||||
| |||||||
1 | under
subsection (k) of Section 168 of the Internal | ||||||
2 | Revenue Code and for each
applicable taxable year | ||||||
3 | thereafter, an amount equal to "x", where: | ||||||
4 | (1) "y" equals the amount of the depreciation | ||||||
5 | deduction taken for the
taxable year
on the | ||||||
6 | taxpayer's federal income tax return on property | ||||||
7 | for which the bonus
depreciation deduction
was | ||||||
8 | taken in any year under subsection (k) of Section | ||||||
9 | 168 of the Internal
Revenue Code, but not including | ||||||
10 | the bonus depreciation deduction; | ||||||
11 | (2) for taxable years ending on or before | ||||||
12 | December 31, 2005, "x" equals "y" multiplied by 30 | ||||||
13 | and then divided by 70 (or "y"
multiplied by | ||||||
14 | 0.429); and | ||||||
15 | (3) for taxable years ending after December | ||||||
16 | 31, 2005: | ||||||
17 | (i) for property on which a bonus | ||||||
18 | depreciation deduction of 30% of the adjusted | ||||||
19 | basis was taken, "x" equals "y" multiplied by | ||||||
20 | 30 and then divided by 70 (or "y"
multiplied by | ||||||
21 | 0.429); and | ||||||
22 | (ii) for property on which a bonus | ||||||
23 | depreciation deduction of 50% of the adjusted | ||||||
24 | basis was taken, "x" equals "y" multiplied by | ||||||
25 | 1.0. | ||||||
26 | The aggregate amount deducted under this |
| |||||||
| |||||||
1 | subparagraph in all taxable
years for any one piece of | ||||||
2 | property may not exceed the amount of the bonus
| ||||||
3 | depreciation deduction
taken on that property on the | ||||||
4 | taxpayer's federal income tax return under
subsection | ||||||
5 | (k) of Section 168 of the Internal Revenue Code. This | ||||||
6 | subparagraph (O) is exempt from the provisions of | ||||||
7 | Section 250; | ||||||
8 | (P) If the taxpayer sells, transfers, abandons, or | ||||||
9 | otherwise disposes of
property for which the taxpayer | ||||||
10 | was required in any taxable year to make an
addition | ||||||
11 | modification under subparagraph (D-5), then an amount | ||||||
12 | equal to that
addition modification. | ||||||
13 | If the taxpayer continues to own property through | ||||||
14 | the last day of the last tax year for which the | ||||||
15 | taxpayer may claim a depreciation deduction for | ||||||
16 | federal income tax purposes and for which the taxpayer | ||||||
17 | was required in any taxable year to make an addition | ||||||
18 | modification under subparagraph (D-5), then an amount | ||||||
19 | equal to that addition modification.
| ||||||
20 | The taxpayer is allowed to take the deduction under | ||||||
21 | this subparagraph
only once with respect to any one | ||||||
22 | piece of property. | ||||||
23 | This subparagraph (P) is exempt from the | ||||||
24 | provisions of Section 250; | ||||||
25 | (Q) The amount of (i) any interest income (net of | ||||||
26 | the deductions allocable thereto) taken into account |
| |||||||
| |||||||
1 | for the taxable year with respect to a transaction with | ||||||
2 | a taxpayer that is required to make an addition | ||||||
3 | modification with respect to such transaction under | ||||||
4 | Section 203(a)(2)(D-17), 203(b)(2)(E-12), | ||||||
5 | 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | ||||||
6 | the amount of such addition modification and
(ii) any | ||||||
7 | income from intangible property (net of the deductions | ||||||
8 | allocable thereto) taken into account for the taxable | ||||||
9 | year with respect to a transaction with a taxpayer that | ||||||
10 | is required to make an addition modification with | ||||||
11 | respect to such transaction under Section | ||||||
12 | 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | ||||||
13 | 203(d)(2)(D-8), but not to exceed the amount of such | ||||||
14 | addition modification. This subparagraph (Q) is exempt | ||||||
15 | from Section 250;
| ||||||
16 | (R) An amount equal to the interest income taken | ||||||
17 | into account for the taxable year (net of the | ||||||
18 | deductions allocable thereto) with respect to | ||||||
19 | transactions with (i) a foreign person who would be a | ||||||
20 | member of the taxpayer's unitary business group but for | ||||||
21 | the fact that the foreign person's business activity | ||||||
22 | outside the United States is 80% or more of that | ||||||
23 | person's total business activity and (ii) for taxable | ||||||
24 | years ending on or after December 31, 2008, to a person | ||||||
25 | who would be a member of the same unitary business | ||||||
26 | group but for the fact that the person is prohibited |
| |||||||
| |||||||
1 | under Section 1501(a)(27) from being included in the | ||||||
2 | unitary business group because he or she is ordinarily | ||||||
3 | required to apportion business income under different | ||||||
4 | subsections of Section 304, but not to exceed the | ||||||
5 | addition modification required to be made for the same | ||||||
6 | taxable year under Section 203(d)(2)(D-7) for interest | ||||||
7 | paid, accrued, or incurred, directly or indirectly, to | ||||||
8 | the same person. This subparagraph (R) is exempt from | ||||||
9 | Section 250; and | ||||||
10 | (S) An amount equal to the income from intangible | ||||||
11 | property taken into account for the taxable year (net | ||||||
12 | of the deductions allocable thereto) with respect to | ||||||
13 | transactions with (i) a foreign person who would be a | ||||||
14 | member of the taxpayer's unitary business group but for | ||||||
15 | the fact that the foreign person's business activity | ||||||
16 | outside the United States is 80% or more of that | ||||||
17 | person's total business activity and (ii) for taxable | ||||||
18 | years ending on or after December 31, 2008, to a person | ||||||
19 | who would be a member of the same unitary business | ||||||
20 | group but for the fact that the person is prohibited | ||||||
21 | under Section 1501(a)(27) from being included in the | ||||||
22 | unitary business group because he or she is ordinarily | ||||||
23 | required to apportion business income under different | ||||||
24 | subsections of Section 304, but not to exceed the | ||||||
25 | addition modification required to be made for the same | ||||||
26 | taxable year under Section 203(d)(2)(D-8) for |
| |||||||
| |||||||
1 | intangible expenses and costs paid, accrued, or | ||||||
2 | incurred, directly or indirectly, to the same person. | ||||||
3 | This subparagraph (S) is exempt from Section 250.
| ||||||
4 | (e) Gross income; adjusted gross income; taxable income. | ||||||
5 | (1) In general. Subject to the provisions of paragraph | ||||||
6 | (2) and
subsection (b) (3), for purposes of this Section | ||||||
7 | and Section 803(e), a
taxpayer's gross income, adjusted | ||||||
8 | gross income, or taxable income for
the taxable year shall | ||||||
9 | mean the amount of gross income, adjusted gross
income or | ||||||
10 | taxable income properly reportable for federal income tax
| ||||||
11 | purposes for the taxable year under the provisions of the | ||||||
12 | Internal
Revenue Code. Taxable income may be less than | ||||||
13 | zero. However, for taxable
years ending on or after | ||||||
14 | December 31, 1986, net operating loss
carryforwards from | ||||||
15 | taxable years ending prior to December 31, 1986, may not
| ||||||
16 | exceed the sum of federal taxable income for the taxable | ||||||
17 | year before net
operating loss deduction, plus the excess | ||||||
18 | of addition modifications over
subtraction modifications | ||||||
19 | for the taxable year. For taxable years ending
prior to | ||||||
20 | December 31, 1986, taxable income may never be an amount in | ||||||
21 | excess
of the net operating loss for the taxable year as | ||||||
22 | defined in subsections
(c) and (d) of Section 172 of the | ||||||
23 | Internal Revenue Code, provided that when
taxable income of | ||||||
24 | a corporation (other than a Subchapter S corporation),
| ||||||
25 | trust, or estate is less than zero and addition |
| |||||||
| |||||||
1 | modifications, other than
those provided by subparagraph | ||||||
2 | (E) of paragraph (2) of subsection (b) for
corporations or | ||||||
3 | subparagraph (E) of paragraph (2) of subsection (c) for
| ||||||
4 | trusts and estates, exceed subtraction modifications, an | ||||||
5 | addition
modification must be made under those | ||||||
6 | subparagraphs for any other taxable
year to which the | ||||||
7 | taxable income less than zero (net operating loss) is
| ||||||
8 | applied under Section 172 of the Internal Revenue Code or | ||||||
9 | under
subparagraph (E) of paragraph (2) of this subsection | ||||||
10 | (e) applied in
conjunction with Section 172 of the Internal | ||||||
11 | Revenue Code. | ||||||
12 | (2) Special rule. For purposes of paragraph (1) of this | ||||||
13 | subsection,
the taxable income properly reportable for | ||||||
14 | federal income tax purposes
shall mean: | ||||||
15 | (A) Certain life insurance companies. In the case | ||||||
16 | of a life
insurance company subject to the tax imposed | ||||||
17 | by Section 801 of the
Internal Revenue Code, life | ||||||
18 | insurance company taxable income, plus the
amount of | ||||||
19 | distribution from pre-1984 policyholder surplus | ||||||
20 | accounts as
calculated under Section 815a of the | ||||||
21 | Internal Revenue Code; | ||||||
22 | (B) Certain other insurance companies. In the case | ||||||
23 | of mutual
insurance companies subject to the tax | ||||||
24 | imposed by Section 831 of the
Internal Revenue Code, | ||||||
25 | insurance company taxable income; | ||||||
26 | (C) Regulated investment companies. In the case of |
| |||||||
| |||||||
1 | a regulated
investment company subject to the tax | ||||||
2 | imposed by Section 852 of the
Internal Revenue Code, | ||||||
3 | investment company taxable income; | ||||||
4 | (D) Real estate investment trusts. In the case of a | ||||||
5 | real estate
investment trust subject to the tax imposed | ||||||
6 | by Section 857 of the
Internal Revenue Code, real | ||||||
7 | estate investment trust taxable income; | ||||||
8 | (E) Consolidated corporations. In the case of a | ||||||
9 | corporation which
is a member of an affiliated group of | ||||||
10 | corporations filing a consolidated
income tax return | ||||||
11 | for the taxable year for federal income tax purposes,
| ||||||
12 | taxable income determined as if such corporation had | ||||||
13 | filed a separate
return for federal income tax purposes | ||||||
14 | for the taxable year and each
preceding taxable year | ||||||
15 | for which it was a member of an affiliated group.
For | ||||||
16 | purposes of this subparagraph, the taxpayer's separate | ||||||
17 | taxable
income shall be determined as if the election | ||||||
18 | provided by Section
243(b) (2) of the Internal Revenue | ||||||
19 | Code had been in effect for all such years; | ||||||
20 | (F) Cooperatives. In the case of a cooperative | ||||||
21 | corporation or
association, the taxable income of such | ||||||
22 | organization determined in
accordance with the | ||||||
23 | provisions of Section 1381 through 1388 of the
Internal | ||||||
24 | Revenue Code, but without regard to the prohibition | ||||||
25 | against offsetting losses from patronage activities | ||||||
26 | against income from nonpatronage activities; except |
| |||||||
| |||||||
1 | that a cooperative corporation or association may make | ||||||
2 | an election to follow its federal income tax treatment | ||||||
3 | of patronage losses and nonpatronage losses. In the | ||||||
4 | event such election is made, such losses shall be | ||||||
5 | computed and carried over in a manner consistent with | ||||||
6 | subsection (a) of Section 207 of this Act and | ||||||
7 | apportioned by the apportionment factor reported by | ||||||
8 | the cooperative on its Illinois income tax return filed | ||||||
9 | for the taxable year in which the losses are incurred. | ||||||
10 | The election shall be effective for all taxable years | ||||||
11 | with original returns due on or after the date of the | ||||||
12 | election. In addition, the cooperative may file an | ||||||
13 | amended return or returns, as allowed under this Act, | ||||||
14 | to provide that the election shall be effective for | ||||||
15 | losses incurred or carried forward for taxable years | ||||||
16 | occurring prior to the date of the election. Once made, | ||||||
17 | the election may only be revoked upon approval of the | ||||||
18 | Director. The Department shall adopt rules setting | ||||||
19 | forth requirements for documenting the elections and | ||||||
20 | any resulting Illinois net loss and the standards to be | ||||||
21 | used by the Director in evaluating requests to revoke | ||||||
22 | elections. Public Act 96-932 This amendatory Act of the | ||||||
23 | 96th General Assembly is declaratory of existing law; | ||||||
24 | (G) Subchapter S corporations. In the case of: (i) | ||||||
25 | a Subchapter S
corporation for which there is in effect | ||||||
26 | an election for the taxable year
under Section 1362 of |
| |||||||
| |||||||
1 | the Internal Revenue Code, the taxable income of such
| ||||||
2 | corporation determined in accordance with Section | ||||||
3 | 1363(b) of the Internal
Revenue Code, except that | ||||||
4 | taxable income shall take into
account those items | ||||||
5 | which are required by Section 1363(b)(1) of the
| ||||||
6 | Internal Revenue Code to be separately stated; and (ii) | ||||||
7 | a Subchapter
S corporation for which there is in effect | ||||||
8 | a federal election to opt out of
the provisions of the | ||||||
9 | Subchapter S Revision Act of 1982 and have applied
| ||||||
10 | instead the prior federal Subchapter S rules as in | ||||||
11 | effect on July 1, 1982,
the taxable income of such | ||||||
12 | corporation determined in accordance with the
federal | ||||||
13 | Subchapter S rules as in effect on July 1, 1982; and | ||||||
14 | (H) Partnerships. In the case of a partnership, | ||||||
15 | taxable income
determined in accordance with Section | ||||||
16 | 703 of the Internal Revenue Code,
except that taxable | ||||||
17 | income shall take into account those items which are
| ||||||
18 | required by Section 703(a)(1) to be separately stated | ||||||
19 | but which would be
taken into account by an individual | ||||||
20 | in calculating his taxable income. | ||||||
21 | (3) Recapture of business expenses on disposition of | ||||||
22 | asset or business. Notwithstanding any other law to the | ||||||
23 | contrary, if in prior years income from an asset or | ||||||
24 | business has been classified as business income and in a | ||||||
25 | later year is demonstrated to be non-business income, then | ||||||
26 | all expenses, without limitation, deducted in such later |
| |||||||
| |||||||
1 | year and in the 2 immediately preceding taxable years | ||||||
2 | related to that asset or business that generated the | ||||||
3 | non-business income shall be added back and recaptured as | ||||||
4 | business income in the year of the disposition of the asset | ||||||
5 | or business. Such amount shall be apportioned to Illinois | ||||||
6 | using the greater of the apportionment fraction computed | ||||||
7 | for the business under Section 304 of this Act for the | ||||||
8 | taxable year or the average of the apportionment fractions | ||||||
9 | computed for the business under Section 304 of this Act for | ||||||
10 | the taxable year and for the 2 immediately preceding | ||||||
11 | taxable years.
| ||||||
12 | (f) Valuation limitation amount. | ||||||
13 | (1) In general. The valuation limitation amount | ||||||
14 | referred to in
subsections (a) (2) (G), (c) (2) (I) and | ||||||
15 | (d)(2) (E) is an amount equal to: | ||||||
16 | (A) The sum of the pre-August 1, 1969 appreciation | ||||||
17 | amounts (to the
extent consisting of gain reportable | ||||||
18 | under the provisions of Section
1245 or 1250 of the | ||||||
19 | Internal Revenue Code) for all property in respect
of | ||||||
20 | which such gain was reported for the taxable year; plus | ||||||
21 | (B) The lesser of (i) the sum of the pre-August 1, | ||||||
22 | 1969 appreciation
amounts (to the extent consisting of | ||||||
23 | capital gain) for all property in
respect of which such | ||||||
24 | gain was reported for federal income tax purposes
for | ||||||
25 | the taxable year, or (ii) the net capital gain for the |
| |||||||
| |||||||
1 | taxable year,
reduced in either case by any amount of | ||||||
2 | such gain included in the amount
determined under | ||||||
3 | subsection (a) (2) (F) or (c) (2) (H). | ||||||
4 | (2) Pre-August 1, 1969 appreciation amount. | ||||||
5 | (A) If the fair market value of property referred | ||||||
6 | to in paragraph
(1) was readily ascertainable on August | ||||||
7 | 1, 1969, the pre-August 1, 1969
appreciation amount for | ||||||
8 | such property is the lesser of (i) the excess of
such | ||||||
9 | fair market value over the taxpayer's basis (for | ||||||
10 | determining gain)
for such property on that date | ||||||
11 | (determined under the Internal Revenue
Code as in | ||||||
12 | effect on that date), or (ii) the total gain realized | ||||||
13 | and
reportable for federal income tax purposes in | ||||||
14 | respect of the sale,
exchange or other disposition of | ||||||
15 | such property. | ||||||
16 | (B) If the fair market value of property referred | ||||||
17 | to in paragraph
(1) was not readily ascertainable on | ||||||
18 | August 1, 1969, the pre-August 1,
1969 appreciation | ||||||
19 | amount for such property is that amount which bears
the | ||||||
20 | same ratio to the total gain reported in respect of the | ||||||
21 | property for
federal income tax purposes for the | ||||||
22 | taxable year, as the number of full
calendar months in | ||||||
23 | that part of the taxpayer's holding period for the
| ||||||
24 | property ending July 31, 1969 bears to the number of | ||||||
25 | full calendar
months in the taxpayer's entire holding | ||||||
26 | period for the
property. |
| |||||||
| |||||||
1 | (C) The Department shall prescribe such | ||||||
2 | regulations as may be
necessary to carry out the | ||||||
3 | purposes of this paragraph. | ||||||
4 | (g) Double deductions. Unless specifically provided | ||||||
5 | otherwise, nothing
in this Section shall permit the same item | ||||||
6 | to be deducted more than once. | ||||||
7 | (h) Legislative intention. Except as expressly provided by | ||||||
8 | this
Section there shall be no modifications or limitations on | ||||||
9 | the amounts
of income, gain, loss or deduction taken into | ||||||
10 | account in determining
gross income, adjusted gross income or | ||||||
11 | taxable income for federal income
tax purposes for the taxable | ||||||
12 | year, or in the amount of such items
entering into the | ||||||
13 | computation of base income and net income under this
Act for | ||||||
14 | such taxable year, whether in respect of property values as of
| ||||||
15 | August 1, 1969 or otherwise. | ||||||
16 | (Source: P.A. 95-23, eff. 8-3-07; 95-233, eff. 8-16-07; 95-286, | ||||||
17 | eff. 8-20-07; 95-331, eff. 8-21-07; 95-707, eff. 1-11-08; | ||||||
18 | 95-876, eff. 8-21-08; 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; | ||||||
19 | 96-198, eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. | ||||||
20 | 8-14-09; 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, | ||||||
21 | eff. 6-21-10; 96-1214, eff. 7-22-10; revised 9-16-10.)
| ||||||
22 | Section 99. Effective date. This Act takes effect upon | ||||||
23 | becoming law.
|