97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3074

 

Introduced 2/23/2011, by Rep. David Harris

 

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

    Amends the Illinois Income Tax Act. Creates a deduction in an amount equal to 20% of the purchase price of alternative fuel equipment purchased by the taxpayer during the taxable year. Effective immediately.


LRB097 10873 HLH 51382 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3074LRB097 10873 HLH 51382 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 203 as follows:
 
6    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7    Sec. 203. Base income defined.
8    (a) Individuals.
9        (1) In general. In the case of an individual, base
10    income means an amount equal to the taxpayer's adjusted
11    gross income for the taxable year as modified by paragraph
12    (2).
13        (2) Modifications. The adjusted gross income referred
14    to in paragraph (1) shall be modified by adding thereto 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

 

 

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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

 

 

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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

 

 

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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

 

 

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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

 

 

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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

 

 

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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

 

 

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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

 

 

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1        resident in 1971 or thereafter for annual training
2        performed pursuant to Sections 502 and 503, Title 32,
3        United States Code as a member of the Illinois 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) An amount equal to all amounts included in such
24        total pursuant to the provisions of Sections 402(a),
25        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
26        Internal Revenue Code, or included in such total as

 

 

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

 

 

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1            (K) An amount equal to those dividends included in
2        such total that were paid by a corporation that
3        conducts business operations in a federally designated
4        Foreign Trade Zone or Sub-Zone and that is designated a
5        High Impact Business located in Illinois; provided
6        that dividends eligible for the deduction provided in
7        subparagraph (J) of paragraph (2) of this subsection
8        shall not be eligible for the deduction provided under
9        this subparagraph (K);
10            (L) For taxable years ending after December 31,
11        1983, an amount equal to all social security benefits
12        and railroad retirement benefits included in such
13        total pursuant to Sections 72(r) and 86 of the Internal
14        Revenue Code;
15            (M) With the exception of any amounts subtracted
16        under subparagraph (N), an amount equal to the sum of
17        all amounts disallowed as deductions by (i) Sections
18        171(a) (2), and 265(2) of the Internal Revenue Code of
19        1954, as now or hereafter amended, and all amounts of
20        expenses allocable to interest and disallowed as
21        deductions by Section 265(1) of the Internal Revenue
22        Code of 1954, as now or hereafter amended; and (ii) for
23        taxable years ending on or after August 13, 1999,
24        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
25        the Internal Revenue Code; the provisions of this
26        subparagraph are exempt from the provisions of Section

 

 

HB3074- 17 -LRB097 10873 HLH 51382 b

1        250;
2            (N) An amount equal to all amounts included in such
3        total which are exempt from taxation by this State
4        either by reason of its statutes or Constitution or by
5        reason of the Constitution, treaties or statutes of the
6        United States; provided that, in the case of any
7        statute of this State that exempts income derived from
8        bonds or other obligations from the tax imposed under
9        this Act, the amount exempted shall be the interest net
10        of bond premium amortization;
11            (O) An amount equal to any contribution made to a
12        job training project established pursuant to the Tax
13        Increment Allocation Redevelopment Act;
14            (P) An amount equal to the amount of the deduction
15        used to compute the federal income tax credit for
16        restoration of substantial amounts held under claim of
17        right for the taxable year pursuant to Section 1341 of
18        the Internal Revenue Code of 1986;
19            (Q) An amount equal to any amounts included in such
20        total, received by the taxpayer as an acceleration in
21        the payment of life, endowment or annuity benefits in
22        advance of the time they would otherwise be payable as
23        an indemnity for a terminal illness;
24            (R) An amount equal to the amount of any federal or
25        State bonus paid to veterans of the Persian Gulf War;
26            (S) An amount, to the extent included in adjusted

 

 

HB3074- 18 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 19 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 20 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 21 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 22 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 23 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 24 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 25 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 26 -LRB097 10873 HLH 51382 b

1        who would be a member of the same unitary business
2        group but for the fact that the person is prohibited
3        under Section 1501(a)(27) from being included in the
4        unitary business group because he or she is ordinarily
5        required to apportion business income under different
6        subsections of Section 304, but not to exceed the
7        addition modification required to be made for the same
8        taxable year under Section 203(a)(2)(D-18) for
9        intangible expenses and costs paid, accrued, or
10        incurred, directly or indirectly, to the same foreign
11        person. This subparagraph (EE) is exempt from the
12        provisions of Section 250; and
13            (FF) An amount equal to any amount awarded to the
14        taxpayer during the taxable year by the Court of Claims
15        under subsection (c) of Section 8 of the Court of
16        Claims Act for time unjustly served in a State prison.
17        This subparagraph (FF) is exempt from the provisions of
18        Section 250; and .
19            (GG) For taxable years beginning on or after
20        January 1, 2012, an amount equal to 20% of the purchase
21        price of alternative fuel equipment purchased by the
22        taxpayer during the taxable year; for the purposes of
23        this subparagraph (GG), "alternative fuel vehicle"
24        means a motor vehicle that runs on compressed natural
25        gas, liquefied natural gas, or liquefied petroleum gas
26        and "alternative fuel equipment" means equipment used

 

 

HB3074- 27 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 28 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 29 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 30 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 31 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 32 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 33 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 34 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 35 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 36 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 37 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 38 -LRB097 10873 HLH 51382 b

1            (G) An amount equal to any amount included in such
2        total under Section 78 of the Internal Revenue Code;
3            (H) In the case of a regulated investment company,
4        an amount equal to the amount of exempt interest
5        dividends as defined in subsection (b) (5) of Section
6        852 of the Internal Revenue Code, paid to shareholders
7        for the taxable year;
8            (I) With the exception of any amounts subtracted
9        under subparagraph (J), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a) (2), and 265(a)(2) and amounts disallowed as
12        interest expense by Section 291(a)(3) of the Internal
13        Revenue Code, as now or hereafter amended, and all
14        amounts of expenses allocable to interest and
15        disallowed as deductions by Section 265(a)(1) of the
16        Internal Revenue Code, as now or hereafter amended; and
17        (ii) for taxable years ending on or after August 13,
18        1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
19        832(b)(5)(B)(i) of the Internal Revenue Code; the
20        provisions of this subparagraph are exempt from the
21        provisions of Section 250;
22            (J) An amount equal to all amounts included in such
23        total which are exempt from taxation by this State
24        either by reason of its statutes or Constitution or by
25        reason of the Constitution, treaties or statutes of the
26        United States; provided that, in the case of any

 

 

HB3074- 39 -LRB097 10873 HLH 51382 b

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

 

 

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

 

 

HB3074- 41 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 42 -LRB097 10873 HLH 51382 b

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

 

 

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1        received or paid or deemed paid under Sections 951
2        through 964 of the Internal Revenue Code and including,
3        for taxable years ending on or after December 31, 2008,
4        dividends received from a captive real estate
5        investment trust, from any such corporation specified
6        in clause (i) that would but for the provisions of
7        Section 1504 (b) (3) of the Internal Revenue Code be
8        treated as a member of the affiliated group which
9        includes the dividend recipient, exceed the amount of
10        the modification provided under subparagraph (G) of
11        paragraph (2) of this subsection (b) which is related
12        to such dividends. This subparagraph (O) is exempt from
13        the provisions of Section 250 of this Act;
14            (P) An amount equal to any contribution made to a
15        job training project established pursuant to the Tax
16        Increment Allocation Redevelopment Act;
17            (Q) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code of 1986;
22            (R) On and after July 20, 1999, in the case of an
23        attorney-in-fact with respect to whom an interinsurer
24        or a reciprocal insurer has made the election under
25        Section 835 of the Internal Revenue Code, 26 U.S.C.
26        835, an amount equal to the excess, if any, of the

 

 

HB3074- 44 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 45 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 46 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 47 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 48 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 49 -LRB097 10873 HLH 51382 b

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(b)(2)(E-13) for
4        intangible expenses and costs paid, accrued, or
5        incurred, directly or indirectly, to the same foreign
6        person. This subparagraph (X) is exempt from the
7        provisions of Section 250; and .
8            (Y) For taxable years beginning on or after January
9        1, 2012, an amount equal to 20% of the purchase price
10        of alternative fuel equipment purchased by the
11        taxpayer during the taxable year; for the purposes of
12        this subparagraph (Y), "alternative fuel vehicle"
13        means a motor vehicle that runs on compressed natural
14        gas, liquefied natural gas, or liquefied petroleum gas
15        and "alternative fuel equipment" means equipment used
16        to refuel alternative fuel vehicles or electric
17        vehicles.
18        (3) Special rule. For purposes of paragraph (2) (A),
19    "gross income" in the case of a life insurance company, for
20    tax years ending on and after December 31, 1994, shall mean
21    the gross investment income for the taxable year.
 
22    (c) Trusts and estates.
23        (1) In general. In the case of a trust or estate, base
24    income means an amount equal to the taxpayer's taxable
25    income for the taxable year as modified by paragraph (2).

 

 

HB3074- 50 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 51 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 52 -LRB097 10873 HLH 51382 b

1        1989, an amount equal to the tax deducted pursuant to
2        Section 164 of the Internal Revenue Code if the trust
3        or estate is claiming the same tax for purposes of the
4        Illinois foreign tax credit under Section 601 of this
5        Act;
6            (G) An amount equal to the amount of the capital
7        gain deduction allowable under the Internal Revenue
8        Code, to the extent deducted from gross income in the
9        computation of taxable income;
10            (G-5) For taxable years ending after December 31,
11        1997, an amount equal to any eligible remediation costs
12        that the trust or estate deducted in computing adjusted
13        gross income and for which the trust or estate claims a
14        credit under subsection (l) of Section 201;
15            (G-10) For taxable years 2001 and thereafter, an
16        amount equal to the bonus depreciation deduction taken
17        on the taxpayer's federal income tax return for the
18        taxable year under subsection (k) of Section 168 of the
19        Internal Revenue Code; and
20            (G-11) If the taxpayer sells, transfers, abandons,
21        or otherwise disposes of property for which the
22        taxpayer was required in any taxable year to make an
23        addition modification under subparagraph (G-10), then
24        an amount equal to the aggregate amount of the
25        deductions taken in all taxable years under
26        subparagraph (R) with respect to that property.

 

 

HB3074- 53 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 54 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 55 -LRB097 10873 HLH 51382 b

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

 

 

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

 

 

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

 

 

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

 

 

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1            writing to the application or use of an alternative
2            method 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-14) For taxable years ending on or after
13        December 31, 2008, an amount equal to the amount of
14        insurance premium expenses and costs otherwise allowed
15        as a deduction in computing base income, and that were
16        paid, accrued, or incurred, directly or indirectly, to
17        a person who would be a member of the same unitary
18        business group but for the fact that the person is
19        prohibited under Section 1501(a)(27) from being
20        included in the unitary business group because he or
21        she is ordinarily required to apportion business
22        income under different subsections of Section 304. The
23        addition modification required by this subparagraph
24        shall be reduced to the extent that dividends were
25        included in base income of the unitary group for the
26        same taxable year and received by the taxpayer or by a

 

 

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1        member of the taxpayer's unitary business group
2        (including amounts included in gross income under
3        Sections 951 through 964 of the Internal Revenue Code
4        and amounts included in gross income under Section 78
5        of the Internal Revenue Code) with respect to the stock
6        of the same person to whom the premiums and costs were
7        directly or indirectly paid, incurred, or accrued. The
8        preceding sentence does not apply to the extent that
9        the same dividends caused a reduction to the addition
10        modification required under Section 203(c)(2)(G-12) or
11        Section 203(c)(2)(G-13) of this Act;
12            (G-15) An amount equal to the credit allowable to
13        the taxpayer under Section 218(a) of this Act,
14        determined without regard to Section 218(c) of this
15        Act;
16    and by deducting from the total so obtained the sum of the
17    following amounts:
18            (H) An amount equal to all amounts included in such
19        total pursuant to the provisions of Sections 402(a),
20        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
21        Internal Revenue Code or included in such total as
22        distributions under the provisions of any retirement
23        or disability plan for employees of any governmental
24        agency or unit, or retirement payments to retired
25        partners, which payments are excluded in computing net
26        earnings from self employment by Section 1402 of the

 

 

HB3074- 61 -LRB097 10873 HLH 51382 b

1        Internal Revenue Code and regulations adopted pursuant
2        thereto;
3            (I) The valuation limitation amount;
4            (J) An amount equal to the amount of any tax
5        imposed by this Act which was refunded to the taxpayer
6        and included in such total for the taxable year;
7            (K) An amount equal to all amounts included in
8        taxable income as modified by subparagraphs (A), (B),
9        (C), (D), (E), (F) and (G) which are exempt from
10        taxation by this State either by reason of its statutes
11        or Constitution or by reason of the Constitution,
12        treaties or statutes of the United States; provided
13        that, in the case of any statute of this State that
14        exempts income derived from bonds or other obligations
15        from the tax imposed under this Act, the amount
16        exempted shall be the interest net of bond premium
17        amortization;
18            (L) With the exception of any amounts subtracted
19        under subparagraph (K), an amount equal to the sum of
20        all amounts disallowed as deductions by (i) Sections
21        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
22        as now or hereafter amended, and all amounts of
23        expenses allocable to interest and disallowed as
24        deductions by Section 265(1) of the Internal Revenue
25        Code of 1954, as now or hereafter amended; and (ii) for
26        taxable years ending on or after August 13, 1999,

 

 

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1        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
2        the Internal Revenue Code; the provisions of this
3        subparagraph are exempt from the provisions of Section
4        250;
5            (M) An amount equal to those dividends included in
6        such total which were paid by a corporation which
7        conducts business operations in an Enterprise Zone or
8        zones created under the Illinois Enterprise Zone Act or
9        a River Edge Redevelopment Zone or zones created under
10        the River Edge Redevelopment Zone Act and conducts
11        substantially all of its operations in an Enterprise
12        Zone or Zones or a River Edge Redevelopment Zone or
13        zones. This subparagraph (M) is exempt from the
14        provisions of Section 250;
15            (N) An amount equal to any contribution made to a
16        job training project established pursuant to the Tax
17        Increment Allocation Redevelopment Act;
18            (O) An amount equal to those dividends included in
19        such total that were paid by a corporation that
20        conducts business operations in a federally designated
21        Foreign Trade Zone or Sub-Zone and that is designated a
22        High Impact Business located in Illinois; provided
23        that dividends eligible for the deduction provided in
24        subparagraph (M) of paragraph (2) of this subsection
25        shall not be eligible for the deduction provided under
26        this subparagraph (O);

 

 

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1            (P) An amount equal to the amount of the deduction
2        used to compute the federal income tax credit for
3        restoration of substantial amounts held under claim of
4        right for the taxable year pursuant to Section 1341 of
5        the Internal Revenue Code of 1986;
6            (Q) For taxable year 1999 and thereafter, an amount
7        equal to the amount of any (i) distributions, to the
8        extent includible in gross income for federal income
9        tax purposes, made to the taxpayer because of his or
10        her status as a victim of persecution for racial or
11        religious reasons by Nazi Germany or any other Axis
12        regime or as an heir of the victim and (ii) items of
13        income, to the extent includible in gross income for
14        federal income tax purposes, attributable to, derived
15        from or in any way related to assets stolen from,
16        hidden from, or otherwise lost to a victim of
17        persecution for racial or religious reasons by Nazi
18        Germany or any other Axis regime immediately prior to,
19        during, and immediately after World War II, including,
20        but not limited to, interest on the proceeds receivable
21        as insurance under policies issued to a victim of
22        persecution for racial or religious reasons by Nazi
23        Germany or any other Axis regime by European insurance
24        companies immediately prior to and during World War II;
25        provided, however, this subtraction from federal
26        adjusted gross income does not apply to assets acquired

 

 

HB3074- 64 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 65 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 66 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 67 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 68 -LRB097 10873 HLH 51382 b

1        of the deductions allocable thereto) with respect to
2        transactions with (i) a foreign person who would be a
3        member of the taxpayer's unitary business group but for
4        the fact that the foreign person's business activity
5        outside the United States is 80% or more of that
6        person's total business activity and (ii) for taxable
7        years ending on or after December 31, 2008, to a person
8        who would be a member of the same unitary business
9        group but for the fact that the person is prohibited
10        under Section 1501(a)(27) from being included in the
11        unitary business group because he or she is ordinarily
12        required to apportion business income under different
13        subsections of Section 304, but not to exceed the
14        addition modification required to be made for the same
15        taxable year under Section 203(c)(2)(G-13) for
16        intangible expenses and costs paid, accrued, or
17        incurred, directly or indirectly, to the same foreign
18        person. This subparagraph (V) is exempt from the
19        provisions of Section 250; and .
20            (W) For taxable years beginning on or after January
21        1, 2012, an amount equal to 20% of the purchase price
22        of alternative fuel equipment purchased by the
23        taxpayer during the taxable year; for the purposes of
24        this subparagraph (W), "alternative fuel vehicle"
25        means a motor vehicle that runs on compressed natural
26        gas, liquefied natural gas, or liquefied petroleum gas

 

 

HB3074- 69 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 70 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 71 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 72 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 73 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 74 -LRB097 10873 HLH 51382 b

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

 

 

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

 

 

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

 

 

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

 

 

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1        the same dividends caused a reduction to the addition
2        modification required under Section 203(d)(2)(D-7) or
3        Section 203(d)(2)(D-8) of this Act;
4            (D-10) An amount equal to the credit allowable to
5        the taxpayer under Section 218(a) of this Act,
6        determined without regard to Section 218(c) of this
7        Act;
8    and by deducting from the total so obtained the following
9    amounts:
10            (E) The valuation limitation amount;
11            (F) An amount equal to the amount of any tax
12        imposed by this Act which was refunded to the taxpayer
13        and included in such total for the taxable year;
14            (G) An amount equal to all amounts included in
15        taxable income as modified by subparagraphs (A), (B),
16        (C) and (D) which are exempt from taxation by this
17        State either by reason of its statutes or Constitution
18        or by reason of the Constitution, treaties or statutes
19        of the United States; provided that, in the case of any
20        statute of this State that exempts income derived from
21        bonds or other obligations from the tax imposed under
22        this Act, the amount exempted shall be the interest net
23        of bond premium amortization;
24            (H) Any income of the partnership which
25        constitutes personal service income as defined in
26        Section 1348 (b) (1) of the Internal Revenue Code (as

 

 

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1        in effect December 31, 1981) or a reasonable allowance
2        for compensation paid or accrued for services rendered
3        by partners to the partnership, whichever is greater;
4            (I) An amount equal to all amounts of income
5        distributable to an entity subject to the Personal
6        Property Tax Replacement Income Tax imposed by
7        subsections (c) and (d) of Section 201 of this Act
8        including amounts distributable to organizations
9        exempt from federal income tax by reason of Section
10        501(a) of the Internal Revenue Code;
11            (J) With the exception of any amounts subtracted
12        under subparagraph (G), an amount equal to the sum of
13        all amounts disallowed as deductions by (i) Sections
14        171(a) (2), and 265(2) of the Internal Revenue Code of
15        1954, as now or hereafter amended, and all amounts of
16        expenses allocable to interest and disallowed as
17        deductions by Section 265(1) of the Internal Revenue
18        Code, as now or hereafter amended; and (ii) for taxable
19        years ending on or after August 13, 1999, Sections
20        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
21        Internal Revenue Code; the provisions of this
22        subparagraph are exempt from the provisions of Section
23        250;
24            (K) An amount equal to those dividends included in
25        such total which were paid by a corporation which
26        conducts business operations in an Enterprise Zone or

 

 

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1        zones created under the Illinois Enterprise Zone Act,
2        enacted by the 82nd General Assembly, or a River Edge
3        Redevelopment Zone or zones created under the River
4        Edge Redevelopment Zone Act and conducts substantially
5        all of its operations in an Enterprise Zone or Zones or
6        from a River Edge Redevelopment Zone or zones. This
7        subparagraph (K) is exempt from the provisions of
8        Section 250;
9            (L) An amount equal to any contribution made to a
10        job training project established pursuant to the Real
11        Property Tax Increment Allocation Redevelopment Act;
12            (M) An amount equal to those dividends included in
13        such total that were paid by a corporation that
14        conducts business operations in a federally designated
15        Foreign Trade Zone or Sub-Zone and that is designated a
16        High Impact Business located in Illinois; provided
17        that dividends eligible for the deduction provided in
18        subparagraph (K) of paragraph (2) of this subsection
19        shall not be eligible for the deduction provided under
20        this subparagraph (M);
21            (N) An amount equal to the amount of the deduction
22        used to compute the federal income tax credit for
23        restoration of substantial amounts held under claim of
24        right for the taxable year pursuant to Section 1341 of
25        the Internal Revenue Code of 1986;
26            (O) For taxable years 2001 and thereafter, for the

 

 

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

 

 

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

 

 

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

 

 

HB3074- 84 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 85 -LRB097 10873 HLH 51382 b

1        addition modification required to be made for the same
2        taxable year under Section 203(d)(2)(D-8) for
3        intangible expenses and costs paid, accrued, or
4        incurred, directly or indirectly, to the same person.
5        This subparagraph (S) is exempt from Section 250; and .
6            (T) For taxable years beginning on or after January
7        1, 2012, an amount equal to 20% of the purchase price
8        of alternative fuel equipment purchased by the
9        taxpayer during the taxable year; for the purposes of
10        this subparagraph (T), "alternative fuel vehicle"
11        means a motor vehicle that runs on compressed natural
12        gas, liquefied natural gas, or liquefied petroleum gas
13        and "alternative fuel equipment" means equipment used
14        to refuel alternative fuel vehicles or electric
15        vehicles.
 
16    (e) Gross income; adjusted gross income; taxable income.
17        (1) In general. Subject to the provisions of paragraph
18    (2) and subsection (b) (3), for purposes of this Section
19    and Section 803(e), a taxpayer's gross income, adjusted
20    gross income, or taxable income for the taxable year shall
21    mean the amount of gross income, adjusted gross income or
22    taxable income properly reportable for federal income tax
23    purposes for the taxable year under the provisions of the
24    Internal Revenue Code. Taxable income may be less than
25    zero. However, for taxable years ending on or after

 

 

HB3074- 86 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 87 -LRB097 10873 HLH 51382 b

1            (A) Certain life insurance companies. In the case
2        of a life insurance company subject to the tax imposed
3        by Section 801 of the Internal Revenue Code, life
4        insurance company taxable income, plus the amount of
5        distribution from pre-1984 policyholder surplus
6        accounts as calculated under Section 815a of the
7        Internal Revenue Code;
8            (B) Certain other insurance companies. In the case
9        of mutual insurance companies subject to the tax
10        imposed by Section 831 of the Internal Revenue Code,
11        insurance company taxable income;
12            (C) Regulated investment companies. In the case of
13        a regulated investment company subject to the tax
14        imposed by Section 852 of the Internal Revenue Code,
15        investment company taxable income;
16            (D) Real estate investment trusts. In the case of a
17        real estate investment trust subject to the tax imposed
18        by Section 857 of the Internal Revenue Code, real
19        estate investment trust taxable income;
20            (E) Consolidated corporations. In the case of a
21        corporation which is a member of an affiliated group of
22        corporations filing a consolidated income tax return
23        for the taxable year for federal income tax purposes,
24        taxable income determined as if such corporation had
25        filed a separate return for federal income tax purposes
26        for the taxable year and each preceding taxable year

 

 

HB3074- 88 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 89 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 90 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 91 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 92 -LRB097 10873 HLH 51382 b

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

 

 

HB3074- 93 -LRB097 10873 HLH 51382 b

1computation of base income and net income under this Act for
2such taxable year, whether in respect of property values as of
3August 1, 1969 or otherwise.
4(Source: P.A. 95-23, eff. 8-3-07; 95-233, eff. 8-16-07; 95-286,
5eff. 8-20-07; 95-331, eff. 8-21-07; 95-707, eff. 1-11-08;
695-876, eff. 8-21-08; 96-45, eff. 7-15-09; 96-120, eff. 8-4-09;
796-198, eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff.
88-14-09; 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935,
9eff. 6-21-10; 96-1214, eff. 7-22-10; revised 9-16-10.)
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.