Sen. Toi W. Hutchinson

Filed: 5/27/2014

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 353

2    AMENDMENT NO. ______. Amend Senate Bill 353 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5changing Section 203 as follows:
 
6    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7    Sec. 203. Base income defined.
8    (a) Individuals.
9        (1) In general. In the case of an individual, base
10    income means an amount equal to the taxpayer's adjusted
11    gross income for the taxable year as modified by paragraph
12    (2).
13        (2) Modifications. The adjusted gross income referred
14    to in paragraph (1) shall be modified by adding thereto the
15    sum of the following amounts:
16            (A) An amount equal to all amounts paid or accrued

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            to a tax on or measured by net income with respect
2            to such item; or
3                (ii) any item of intangible expense or cost
4            paid, accrued, or incurred, directly or
5            indirectly, if the taxpayer can establish, based
6            on a preponderance of the evidence, both of the
7            following:
8                    (a) the person during the same taxable
9                year paid, accrued, or incurred, the
10                intangible expense or cost to a person that is
11                not a related member, and
12                    (b) the transaction giving rise to the
13                intangible expense or cost between the
14                taxpayer and the person did not have as a
15                principal purpose the avoidance of Illinois
16                income tax, and is paid pursuant to a contract
17                or agreement that reflects arm's-length terms;
18                or
19                (iii) any item of intangible expense or cost
20            paid, accrued, or incurred, directly or
21            indirectly, from a transaction with a person if the
22            taxpayer establishes by clear and convincing
23            evidence, that the adjustments are unreasonable;
24            or if the taxpayer and the Director agree in
25            writing to the application or use of an alternative
26            method of apportionment under Section 304(f);

 

 

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

 

 

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

 

 

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1        Section 529 of the Internal Revenue Code that (I)
2        adopts and determines that its offering materials
3        comply with the College Savings Plans Network's
4        disclosure principles and (II) has made reasonable
5        efforts to inform in-state residents of the existence
6        of in-state qualified tuition programs by informing
7        Illinois residents directly and, where applicable, to
8        inform financial intermediaries distributing the
9        program to inform in-state residents of the existence
10        of in-state qualified tuition programs at least
11        annually, an amount equal to the amount excluded from
12        gross income under Section 529(c)(3)(B).
13            For the purposes of this subparagraph (D-20), a
14        qualified tuition program has made reasonable efforts
15        if it makes disclosures (which may use the term
16        "in-state program" or "in-state plan" and need not
17        specifically refer to Illinois or its qualified
18        programs by name) (i) directly to prospective
19        participants in its offering materials or makes a
20        public disclosure, such as a website posting; and (ii)
21        where applicable, to intermediaries selling the
22        out-of-state program in the same manner that the
23        out-of-state program distributes its offering
24        materials;
25            (D-21) For taxable years beginning on or after
26        January 1, 2007, in the case of transfer of moneys from

 

 

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1        a qualified tuition program under Section 529 of the
2        Internal Revenue Code that is administered by the State
3        to an out-of-state program, an amount equal to the
4        amount of moneys previously deducted from base income
5        under subsection (a)(2)(Y) of this Section;
6            (D-22) For taxable years beginning on or after
7        January 1, 2009, in the case of a nonqualified
8        withdrawal or refund of moneys from a qualified tuition
9        program under Section 529 of the Internal Revenue Code
10        administered by the State that is not used for
11        qualified expenses at an eligible education
12        institution, an amount equal to the contribution
13        component of the nonqualified withdrawal or refund
14        that was previously deducted from base income under
15        subsection (a)(2)(y) of this Section, provided that
16        the withdrawal or refund did not result from the
17        beneficiary's death or disability;
18            (D-23) 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            (D-24) For taxable years ending on or after
23        December 31, 2014, an amount equal to the deduction
24        allowed under Section 199 of the Internal Revenue Code
25        for the taxable year;
26    and by deducting from the total so obtained the sum of the

 

 

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

 

 

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1        paid to a resident in 2001 or thereafter by reason of
2        being a member of the Illinois National Guard or,
3        beginning with taxable years ending on or after
4        December 31, 2007, the National Guard of any other
5        state. The provisions of this subparagraph (E) are
6        exempt from the provisions of Section 250;
7            (F) An amount equal to all amounts included in such
8        total pursuant to the provisions of Sections 402(a),
9        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
10        Internal Revenue Code, or included in such total as
11        distributions under the provisions of any retirement
12        or disability plan for employees of any governmental
13        agency or unit, or retirement payments to retired
14        partners, which payments are excluded in computing net
15        earnings from self employment by Section 1402 of the
16        Internal Revenue Code and regulations adopted pursuant
17        thereto;
18            (G) The valuation limitation amount;
19            (H) An amount equal to the amount of any tax
20        imposed by this Act which was refunded to the taxpayer
21        and included in such total for the taxable year;
22            (I) An amount equal to all amounts included in such
23        total pursuant to the provisions of Section 111 of the
24        Internal Revenue Code as a recovery of items previously
25        deducted from adjusted gross income in the computation
26        of taxable income;

 

 

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1            (J) An amount equal to those dividends included in
2        such total which were paid by a corporation which
3        conducts business operations in a River Edge
4        Redevelopment Zone or zones created under the River
5        Edge Redevelopment Zone Act, and conducts
6        substantially all of its operations in a River Edge
7        Redevelopment Zone or zones. This subparagraph (J) is
8        exempt from the provisions of Section 250;
9            (K) An amount equal to those dividends included in
10        such total that were paid by a corporation that
11        conducts business operations in a federally designated
12        Foreign Trade Zone or Sub-Zone and that is designated a
13        High Impact Business located in Illinois; provided
14        that dividends eligible for the deduction provided in
15        subparagraph (J) of paragraph (2) of this subsection
16        shall not be eligible for the deduction provided under
17        this subparagraph (K);
18            (L) For taxable years ending after December 31,
19        1983, an amount equal to all social security benefits
20        and railroad retirement benefits included in such
21        total pursuant to Sections 72(r) and 86 of the Internal
22        Revenue Code;
23            (M) With the exception of any amounts subtracted
24        under subparagraph (N), an amount equal to the sum of
25        all amounts disallowed as deductions by (i) Sections
26        171(a) (2), and 265(2) of the Internal Revenue Code,

 

 

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

 

 

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

 

 

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1        behalf of the taxpayer, other than interest added
2        pursuant to item (D-5) of this paragraph (2);
3            (U) For one taxable year beginning on or after
4        January 1, 1994, an amount equal to the total amount of
5        tax imposed and paid under subsections (a) and (b) of
6        Section 201 of this Act on grant amounts received by
7        the taxpayer under the Nursing Home Grant Assistance
8        Act during the taxpayer's taxable years 1992 and 1993;
9            (V) Beginning with tax years ending on or after
10        December 31, 1995 and ending with tax years ending on
11        or before December 31, 2004, an amount equal to the
12        amount paid by a taxpayer who is a self-employed
13        taxpayer, a partner of a partnership, or a shareholder
14        in a Subchapter S corporation for health insurance or
15        long-term care insurance for that taxpayer or that
16        taxpayer's spouse or dependents, to the extent that the
17        amount paid for that health insurance or long-term care
18        insurance may be deducted under Section 213 of the
19        Internal Revenue Code, has not been deducted on the
20        federal income tax return of the taxpayer, and does not
21        exceed the taxable income attributable to that
22        taxpayer's income, self-employment income, or
23        Subchapter S corporation income; except that no
24        deduction shall be allowed under this item (V) if the
25        taxpayer is eligible to participate in any health
26        insurance or long-term care insurance plan of an

 

 

09800SB0353sam001- 20 -LRB098 04567 HLH 60286 a

1        employer of the taxpayer or the taxpayer's spouse. The
2        amount of the health insurance and long-term care
3        insurance subtracted under this item (V) shall be
4        determined by multiplying total health insurance and
5        long-term care insurance premiums paid by the taxpayer
6        times a number that represents the fractional
7        percentage of eligible medical expenses under Section
8        213 of the Internal Revenue Code of 1986 not actually
9        deducted on the taxpayer's federal income tax return;
10            (W) For taxable years beginning on or after January
11        1, 1998, all amounts included in the taxpayer's federal
12        gross income in the taxable year from amounts converted
13        from a regular IRA to a Roth IRA. This paragraph is
14        exempt from the provisions of Section 250;
15            (X) For taxable year 1999 and thereafter, an amount
16        equal to the amount of any (i) distributions, to the
17        extent includible in gross income for federal income
18        tax purposes, made to the taxpayer because of his or
19        her status as a victim of persecution for racial or
20        religious reasons by Nazi Germany or any other Axis
21        regime or as an heir of the victim and (ii) items of
22        income, to the extent includible in gross income for
23        federal income tax purposes, attributable to, derived
24        from or in any way related to assets stolen from,
25        hidden from, or otherwise lost to a victim of
26        persecution for racial or religious reasons by Nazi

 

 

09800SB0353sam001- 21 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 22 -LRB098 04567 HLH 60286 a

1        income under Section 529(c)(3)(C)(i) of the Internal
2        Revenue Code shall not be considered moneys
3        contributed under this subparagraph (Y). For taxable
4        years beginning on or after January 1, 2005, a maximum
5        of $10,000 contributed in the taxable year to (i) a
6        College Savings Pool account under Section 16.5 of the
7        State Treasurer Act or (ii) the Illinois Prepaid
8        Tuition Trust Fund, except that amounts excluded from
9        gross income under Section 529(c)(3)(C)(i) of the
10        Internal Revenue Code shall not be considered moneys
11        contributed under this subparagraph (Y). For purposes
12        of this subparagraph, contributions made by an
13        employer on behalf of an employee, or matching
14        contributions made by an employee, shall be treated as
15        made by the employee. This subparagraph (Y) is exempt
16        from the provisions of Section 250;
17            (Z) For taxable years 2001 and thereafter, for the
18        taxable year in which the bonus depreciation deduction
19        is taken on the taxpayer's federal income tax return
20        under subsection (k) of Section 168 of the Internal
21        Revenue Code and for each applicable taxable year
22        thereafter, an amount equal to "x", where:
23                (1) "y" equals the amount of the depreciation
24            deduction taken for the taxable year on the
25            taxpayer's federal income tax return on property
26            for which the bonus depreciation deduction was

 

 

09800SB0353sam001- 23 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 24 -LRB098 04567 HLH 60286 a

1            (AA) If the taxpayer sells, transfers, abandons,
2        or otherwise disposes of property for which the
3        taxpayer was required in any taxable year to make an
4        addition modification under subparagraph (D-15), then
5        an amount equal to that addition modification.
6            If the taxpayer continues to own property through
7        the last day of the last tax year for which the
8        taxpayer may claim a depreciation deduction for
9        federal income tax purposes and for which the taxpayer
10        was required in any taxable year to make an addition
11        modification under subparagraph (D-15), then an amount
12        equal to that addition modification.
13            The taxpayer is allowed to take the deduction under
14        this subparagraph only once with respect to any one
15        piece of property.
16            This subparagraph (AA) is exempt from the
17        provisions of Section 250;
18            (BB) Any amount included in adjusted gross income,
19        other than salary, received by a driver in a
20        ridesharing arrangement using a motor vehicle;
21            (CC) The amount of (i) any interest income (net of
22        the deductions allocable thereto) taken into account
23        for the taxable year with respect to a transaction with
24        a taxpayer that is required to make an addition
25        modification with respect to such transaction under
26        Section 203(a)(2)(D-17), 203(b)(2)(E-12),

 

 

09800SB0353sam001- 25 -LRB098 04567 HLH 60286 a

1        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
2        the amount of that addition modification, and (ii) any
3        income from intangible property (net of the deductions
4        allocable thereto) taken into account for the taxable
5        year with respect to a transaction with a taxpayer that
6        is required to make an addition modification with
7        respect to such transaction under Section
8        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
9        203(d)(2)(D-8), but not to exceed the amount of that
10        addition modification. This subparagraph (CC) is
11        exempt from the provisions of Section 250;
12            (DD) An amount equal to the interest income taken
13        into account for the taxable year (net of the
14        deductions allocable thereto) with respect to
15        transactions with (i) a foreign person who would be a
16        member of the taxpayer's unitary business group but 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

 

 

09800SB0353sam001- 26 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 27 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 28 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 29 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 30 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 31 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 32 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 33 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 34 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 35 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 36 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 37 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 38 -LRB098 04567 HLH 60286 a

1        directly or indirectly paid, incurred, or accrued. The
2        preceding sentence does not apply to the extent that
3        the same dividends caused a reduction to the addition
4        modification required under Section 203(b)(2)(E-12) or
5        Section 203(b)(2)(E-13) of this Act;
6            (E-15) For taxable years beginning after December
7        31, 2008, any deduction for dividends paid by a captive
8        real estate investment trust that is allowed to a real
9        estate investment trust under Section 857(b)(2)(B) of
10        the Internal Revenue Code for dividends paid;
11            (E-16) 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            (E-17) For taxable years ending on or after
16        December 31, 2014, an amount equal to the deduction
17        allowed under Section 199 of the Internal Revenue Code
18        for the taxable year;
19    and by deducting from the total so obtained the sum of the
20    following amounts:
21            (F) An amount equal to the amount of any tax
22        imposed by this Act which was refunded to the taxpayer
23        and included in such total for the taxable year;
24            (G) An amount equal to any amount included in such
25        total under Section 78 of the Internal Revenue Code;
26            (H) In the case of a regulated investment company,

 

 

09800SB0353sam001- 39 -LRB098 04567 HLH 60286 a

1        an amount equal to the amount of exempt interest
2        dividends as defined in subsection (b) (5) of Section
3        852 of the Internal Revenue Code, paid to shareholders
4        for the taxable year;
5            (I) With the exception of any amounts subtracted
6        under subparagraph (J), an amount equal to the sum of
7        all amounts disallowed as deductions by (i) Sections
8        171(a) (2), and 265(a)(2) and amounts disallowed as
9        interest expense by Section 291(a)(3) of the Internal
10        Revenue Code, and all amounts of expenses allocable to
11        interest and disallowed as deductions by Section
12        265(a)(1) of the Internal Revenue Code; and (ii) for
13        taxable years ending on or after August 13, 1999,
14        Sections 171(a)(2), 265, 280C, 291(a)(3), and
15        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
16        for tax years ending on or after December 31, 2011,
17        amounts disallowed as deductions by Section 45G(e)(3)
18        of the Internal Revenue Code and, for taxable years
19        ending on or after December 31, 2008, any amount
20        included in gross income under Section 87 of the
21        Internal Revenue Code and the policyholders' share of
22        tax-exempt interest of a life insurance company under
23        Section 807(a)(2)(B) of the Internal Revenue Code (in
24        the case of a life insurance company with gross income
25        from a decrease in reserves for the tax year) or
26        Section 807(b)(1)(B) of the Internal Revenue Code (in

 

 

09800SB0353sam001- 40 -LRB098 04567 HLH 60286 a

1        the case of a life insurance company allowed a
2        deduction for an increase in reserves for the tax
3        year); the provisions of this subparagraph are exempt
4        from the provisions of Section 250;
5            (J) An amount equal to all amounts included in such
6        total which are exempt from taxation by this State
7        either by reason of its statutes or Constitution or by
8        reason of the Constitution, treaties or statutes of the
9        United States; provided that, in the case of any
10        statute of this State that exempts income derived from
11        bonds or other obligations from the tax imposed under
12        this Act, the amount exempted shall be the interest net
13        of bond premium amortization;
14            (K) An amount equal to those dividends included in
15        such total which were paid by a corporation which
16        conducts business operations in a River Edge
17        Redevelopment Zone or zones created under the River
18        Edge Redevelopment Zone Act and conducts substantially
19        all of its operations in a River Edge Redevelopment
20        Zone or zones. This subparagraph (K) is exempt from the
21        provisions of Section 250;
22            (L) An amount equal to those dividends included in
23        such total that were paid by a corporation that
24        conducts business operations in a federally designated
25        Foreign Trade Zone or Sub-Zone and that is designated a
26        High Impact Business located in Illinois; provided

 

 

09800SB0353sam001- 41 -LRB098 04567 HLH 60286 a

1        that dividends eligible for the deduction provided in
2        subparagraph (K) of paragraph 2 of this subsection
3        shall not be eligible for the deduction provided under
4        this subparagraph (L);
5            (M) For any taxpayer that is a financial
6        organization within the meaning of Section 304(c) of
7        this Act, an amount included in such total as interest
8        income from a loan or loans made by such taxpayer to a
9        borrower, to the extent that such a loan is secured by
10        property which is eligible for the River Edge
11        Redevelopment Zone Investment Credit. To determine the
12        portion of a loan or loans that is secured by property
13        eligible for a Section 201(f) investment credit to the
14        borrower, the entire principal amount of the loan or
15        loans between the taxpayer and the borrower should be
16        divided into the basis of the Section 201(f) investment
17        credit property which secures the loan or loans, using
18        for this purpose the original basis of such property on
19        the date that it was placed in service in the River
20        Edge Redevelopment Zone. The subtraction modification
21        available to taxpayer in any year under this subsection
22        shall be that portion of the total interest paid by the
23        borrower with respect to such loan attributable to the
24        eligible property as calculated under the previous
25        sentence. This subparagraph (M) is exempt from the
26        provisions of Section 250;

 

 

09800SB0353sam001- 42 -LRB098 04567 HLH 60286 a

1            (M-1) For any taxpayer that is a financial
2        organization within the meaning of Section 304(c) of
3        this Act, an amount included in such total as interest
4        income from a loan or loans made by such taxpayer to a
5        borrower, to the extent that such a loan is secured by
6        property which is eligible for the High Impact Business
7        Investment Credit. To determine the portion of a loan
8        or loans that is secured by property eligible for a
9        Section 201(h) investment credit to the borrower, the
10        entire principal amount of the loan or loans between
11        the taxpayer and the borrower should be divided into
12        the basis of the Section 201(h) investment credit
13        property which secures the loan or loans, using for
14        this purpose the original basis of such property on the
15        date that it was placed in service in a federally
16        designated Foreign Trade Zone or Sub-Zone located in
17        Illinois. No taxpayer that is eligible for the
18        deduction provided in subparagraph (M) of paragraph
19        (2) of this subsection shall be eligible for the
20        deduction provided under this subparagraph (M-1). The
21        subtraction modification available to taxpayers in any
22        year under this subsection shall be that portion of the
23        total interest paid by the borrower with respect to
24        such loan attributable to the eligible property as
25        calculated under the previous sentence;
26            (N) Two times any contribution made during the

 

 

09800SB0353sam001- 43 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 44 -LRB098 04567 HLH 60286 a

1        December 31, 2008, dividends received from a captive
2        real estate investment trust; plus (ii) 100% of the
3        amount by which dividends, included in taxable income
4        and received, including, for taxable years ending on or
5        after December 31, 1988, dividends received or deemed
6        received or paid or deemed paid under Sections 951
7        through 964 of the Internal Revenue Code and including,
8        for taxable years ending on or after December 31, 2008,
9        dividends received from a captive real estate
10        investment trust, from any such corporation specified
11        in clause (i) that would but for the provisions of
12        Section 1504 (b) (3) of the Internal Revenue Code be
13        treated as a member of the affiliated group which
14        includes the dividend recipient, exceed the amount of
15        the modification provided under subparagraph (G) of
16        paragraph (2) of this subsection (b) which is related
17        to such dividends. This subparagraph (O) is exempt from
18        the provisions of Section 250 of this Act;
19            (P) An amount equal to any contribution made to a
20        job training project established pursuant to the Tax
21        Increment Allocation Redevelopment Act;
22            (Q) An amount equal to the amount of the deduction
23        used to compute the federal income tax credit for
24        restoration of substantial amounts held under claim of
25        right for the taxable year pursuant to Section 1341 of
26        the Internal Revenue Code;

 

 

09800SB0353sam001- 45 -LRB098 04567 HLH 60286 a

1            (R) On and after July 20, 1999, in the case of an
2        attorney-in-fact with respect to whom an interinsurer
3        or a reciprocal insurer has made the election under
4        Section 835 of the Internal Revenue Code, 26 U.S.C.
5        835, an amount equal to the excess, if any, of the
6        amounts paid or incurred by that interinsurer or
7        reciprocal insurer in the taxable year to the
8        attorney-in-fact over the deduction allowed to that
9        interinsurer or reciprocal insurer with respect to the
10        attorney-in-fact under Section 835(b) of the Internal
11        Revenue Code for the taxable year; the provisions of
12        this subparagraph are exempt from the provisions of
13        Section 250;
14            (S) For taxable years ending on or after December
15        31, 1997, in the case of a Subchapter S corporation, an
16        amount equal to all amounts of income allocable to a
17        shareholder subject to the Personal Property Tax
18        Replacement Income Tax imposed by subsections (c) and
19        (d) of Section 201 of this Act, including amounts
20        allocable to organizations exempt from federal income
21        tax by reason of Section 501(a) of the Internal Revenue
22        Code. This subparagraph (S) is exempt from the
23        provisions of Section 250;
24            (T) For taxable years 2001 and thereafter, for the
25        taxable year in which the bonus depreciation deduction
26        is taken on the taxpayer's federal income tax return

 

 

09800SB0353sam001- 46 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 47 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 48 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 49 -LRB098 04567 HLH 60286 a

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(b)(2)(E-12) for
15        interest paid, accrued, or incurred, directly or
16        indirectly, to the same person. This subparagraph (W)
17        is exempt from the provisions of Section 250;
18            (X) An amount equal to the income from intangible
19        property taken into account for the taxable year (net
20        of the deductions allocable thereto) with respect to
21        transactions with (i) a foreign person who would be a
22        member of the taxpayer's unitary business group but 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

 

 

09800SB0353sam001- 50 -LRB098 04567 HLH 60286 a

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(b)(2)(E-13) for
9        intangible expenses and costs paid, accrued, or
10        incurred, directly or indirectly, to the same foreign
11        person. This subparagraph (X) is exempt from the
12        provisions of Section 250;
13            (Y) For taxable years ending on or after December
14        31, 2011, in the case of a taxpayer who was required to
15        add back any insurance premiums under Section
16        203(b)(2)(E-14), such taxpayer may elect to subtract
17        that part of a reimbursement received from the
18        insurance company equal to the amount of the expense or
19        loss (including expenses incurred by the insurance
20        company) that would have been taken into account as a
21        deduction for federal income tax purposes if the
22        expense or loss had been uninsured. If a taxpayer makes
23        the election provided for by this subparagraph (Y), the
24        insurer to which the premiums were paid must add back
25        to income the amount subtracted by the taxpayer
26        pursuant to this subparagraph (Y). This subparagraph

 

 

09800SB0353sam001- 51 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 52 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 53 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 54 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 55 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 56 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 57 -LRB098 04567 HLH 60286 a

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

 

 

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

 

 

09800SB0353sam001- 59 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 60 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 61 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 62 -LRB098 04567 HLH 60286 a

1        of the Internal Revenue Code) with respect to the stock
2        of the same person to whom the premiums and costs were
3        directly or indirectly paid, incurred, or accrued. The
4        preceding sentence does not apply to the extent that
5        the same dividends caused a reduction to the addition
6        modification required under Section 203(c)(2)(G-12) or
7        Section 203(c)(2)(G-13) of this Act;
8            (G-15) An amount equal to the credit allowable to
9        the taxpayer under Section 218(a) of this Act,
10        determined without regard to Section 218(c) of this
11        Act;
12            (G-16) For taxable years ending on or after
13        December 31, 2014, an amount equal to the deduction
14        allowed under Section 199 of the Internal Revenue Code
15        for the taxable year;
16    and by deducting from the total so obtained the sum of the
17    following amounts:
18            (H) An amount equal to all amounts included in 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

 

 

09800SB0353sam001- 63 -LRB098 04567 HLH 60286 a

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        and all amounts of expenses allocable to interest and
23        disallowed as deductions by Section 265(1) of the
24        Internal Revenue Code; and (ii) for taxable years
25        ending on or after August 13, 1999, Sections 171(a)(2),
26        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

 

 

09800SB0353sam001- 64 -LRB098 04567 HLH 60286 a

1        Code, plus, (iii) for taxable years ending on or after
2        December 31, 2011, Section 45G(e)(3) of the Internal
3        Revenue Code and, for taxable years ending on or after
4        December 31, 2008, any amount included in gross income
5        under Section 87 of the Internal Revenue Code; the
6        provisions of this subparagraph are exempt from the
7        provisions of Section 250;
8            (M) An amount equal to those dividends included in
9        such total which were paid by a corporation which
10        conducts business operations in a River Edge
11        Redevelopment Zone or zones created under the River
12        Edge Redevelopment Zone Act and conducts substantially
13        all of its operations in a River Edge Redevelopment
14        Zone or zones. This subparagraph (M) is exempt from the
15        provisions of Section 250;
16            (N) An amount equal to any contribution made to a
17        job training project established pursuant to the Tax
18        Increment Allocation Redevelopment Act;
19            (O) An amount equal to those dividends included in
20        such total that were paid by a corporation that
21        conducts business operations in a federally designated
22        Foreign Trade Zone or Sub-Zone and that is designated a
23        High Impact Business located in Illinois; provided
24        that dividends eligible for the deduction provided in
25        subparagraph (M) of paragraph (2) of this subsection
26        shall not be eligible for the deduction provided under

 

 

09800SB0353sam001- 65 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 66 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 67 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 68 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 69 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 70 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 71 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 72 -LRB098 04567 HLH 60286 a

1    aside for charitable purposes pursuant to Internal Revenue
2    Code Section 642(c) during the taxable year.
 
3    (d) Partnerships.
4        (1) In general. In the case of a partnership, 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 or dividends during the
12        taxable year to the extent excluded from gross income
13        in the computation of taxable income;
14            (B) An amount equal to the amount of tax imposed by
15        this Act to the extent deducted from gross income for
16        the taxable year;
17            (C) The amount of deductions allowed to the
18        partnership pursuant to Section 707 (c) of the Internal
19        Revenue Code in calculating its taxable income;
20            (D) An amount equal to the amount of the capital
21        gain deduction allowable under the Internal Revenue
22        Code, to the extent deducted from gross income in the
23        computation of taxable income;
24            (D-5) For taxable years 2001 and thereafter, an
25        amount equal to the bonus depreciation deduction taken

 

 

09800SB0353sam001- 73 -LRB098 04567 HLH 60286 a

1        on the taxpayer's federal income tax return for the
2        taxable year under subsection (k) of Section 168 of the
3        Internal Revenue Code;
4            (D-6) If the taxpayer sells, transfers, abandons,
5        or otherwise disposes of property for which the
6        taxpayer was required in any taxable year to make an
7        addition modification under subparagraph (D-5), then
8        an amount equal to the aggregate amount of the
9        deductions taken in all taxable years under
10        subparagraph (O) with respect to that property.
11            If the taxpayer continues to own property through
12        the last day of the last tax year for which the
13        taxpayer may claim a depreciation deduction for
14        federal income tax purposes and for which the taxpayer
15        was allowed in any taxable year to make a subtraction
16        modification under subparagraph (O), then an amount
17        equal to that subtraction modification.
18            The taxpayer is required to make the addition
19        modification under this subparagraph only once with
20        respect to any one piece of property;
21            (D-7) An amount equal to the amount otherwise
22        allowed as a deduction in computing base income for
23        interest paid, accrued, or incurred, directly or
24        indirectly, (i) for taxable years ending on or after
25        December 31, 2004, to a foreign person who would be a
26        member of the same unitary business group but for the

 

 

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

 

 

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

 

 

09800SB0353sam001- 76 -LRB098 04567 HLH 60286 a

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

 

 

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

 

 

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

 

 

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1                principal purpose the avoidance of Illinois
2                income tax, and is paid pursuant to a contract
3                or agreement that reflects arm's-length terms;
4                or
5                (iii) any item of intangible expense or cost
6            paid, accrued, or incurred, directly or
7            indirectly, from a transaction with a person if the
8            taxpayer establishes by clear and convincing
9            evidence, that the adjustments are unreasonable;
10            or if the taxpayer and the Director agree in
11            writing to the application or use of an alternative
12            method 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;
22            (D-9) For taxable years ending on or after December
23        31, 2008, an amount equal to the amount of insurance
24        premium expenses and costs otherwise allowed as a
25        deduction in computing base income, and that were paid,
26        accrued, or incurred, directly or indirectly, to a

 

 

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1        person who would be a member of the same unitary
2        business group but for the fact that the person is
3        prohibited under Section 1501(a)(27) from being
4        included in the unitary business group because he or
5        she is ordinarily required to apportion business
6        income under different subsections of Section 304. The
7        addition modification required by this subparagraph
8        shall be reduced to the extent that dividends were
9        included in base income of the unitary group for the
10        same taxable year and received by the taxpayer or by a
11        member of the taxpayer's unitary business group
12        (including amounts included in gross income under
13        Sections 951 through 964 of the Internal Revenue Code
14        and amounts included in gross income under Section 78
15        of the Internal Revenue Code) with respect to the stock
16        of the same person to whom the premiums and costs were
17        directly or indirectly paid, incurred, or accrued. The
18        preceding sentence does not apply to the extent that
19        the same dividends caused a reduction to the addition
20        modification required under Section 203(d)(2)(D-7) or
21        Section 203(d)(2)(D-8) of this Act;
22            (D-10) An amount equal to the credit allowable to
23        the taxpayer under Section 218(a) of this Act,
24        determined without regard to Section 218(c) of this
25        Act;
26            (D-11) For taxable years ending on or after

 

 

09800SB0353sam001- 81 -LRB098 04567 HLH 60286 a

1        December 31, 2014, an amount equal to the deduction
2        allowed under Section 199 of the Internal Revenue Code
3        for the taxable year;
4    and by deducting from the total so obtained the following
5    amounts:
6            (E) The valuation limitation amount;
7            (F) An amount equal to the amount of any tax
8        imposed by this Act which was refunded to the taxpayer
9        and included in such total for the taxable year;
10            (G) An amount equal to all amounts included in
11        taxable income as modified by subparagraphs (A), (B),
12        (C) and (D) which are exempt from taxation by this
13        State either by reason of its statutes or Constitution
14        or by reason of the Constitution, treaties or statutes
15        of the United States; provided that, in the case of any
16        statute of this State that exempts income derived from
17        bonds or other obligations from the tax imposed under
18        this Act, the amount exempted shall be the interest net
19        of bond premium amortization;
20            (H) Any income of the partnership which
21        constitutes personal service income as defined in
22        Section 1348 (b) (1) of the Internal Revenue Code (as
23        in effect December 31, 1981) or a reasonable allowance
24        for compensation paid or accrued for services rendered
25        by partners to the partnership, whichever is greater;
26        this subparagraph (H) is exempt from the provisions of

 

 

09800SB0353sam001- 82 -LRB098 04567 HLH 60286 a

1        Section 250;
2            (I) An amount equal to all amounts of income
3        distributable to an entity subject to the Personal
4        Property Tax Replacement Income Tax imposed by
5        subsections (c) and (d) of Section 201 of this Act
6        including amounts distributable to organizations
7        exempt from federal income tax by reason of Section
8        501(a) of the Internal Revenue Code; this subparagraph
9        (I) is exempt from the provisions of Section 250;
10            (J) With the exception of any amounts subtracted
11        under subparagraph (G), an amount equal to the sum of
12        all amounts disallowed as deductions by (i) Sections
13        171(a) (2), and 265(2) of the Internal Revenue Code,
14        and all amounts of expenses allocable to interest and
15        disallowed as deductions by Section 265(1) of the
16        Internal Revenue Code; and (ii) for taxable years
17        ending on or after August 13, 1999, Sections 171(a)(2),
18        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
19        Code, plus, (iii) for taxable years ending on or after
20        December 31, 2011, Section 45G(e)(3) of the Internal
21        Revenue Code and, for taxable years ending on or after
22        December 31, 2008, any amount included in gross income
23        under Section 87 of the Internal Revenue Code; the
24        provisions of this subparagraph are exempt from the
25        provisions of Section 250;
26            (K) An amount equal to those dividends included in

 

 

09800SB0353sam001- 83 -LRB098 04567 HLH 60286 a

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

 

 

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

 

 

09800SB0353sam001- 85 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 86 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 87 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 88 -LRB098 04567 HLH 60286 a

1        taxable year under Section 203(d)(2)(D-8) for
2        intangible expenses and costs paid, accrued, or
3        incurred, directly or indirectly, to the same person.
4        This subparagraph (S) is exempt from Section 250; and
5            (T) For taxable years ending on or after December
6        31, 2011, in the case of a taxpayer who was required to
7        add back any insurance premiums under Section
8        203(d)(2)(D-9), such taxpayer may elect to subtract
9        that part of a reimbursement received from the
10        insurance company equal to the amount of the expense or
11        loss (including expenses incurred by the insurance
12        company) that would have been taken into account as a
13        deduction for federal income tax purposes if the
14        expense or loss had been uninsured. If a taxpayer makes
15        the election provided for by this subparagraph (T), the
16        insurer to which the premiums were paid must add back
17        to income the amount subtracted by the taxpayer
18        pursuant to this subparagraph (T). This subparagraph
19        (T) is exempt from the provisions of Section 250.
 
20    (e) Gross income; adjusted gross income; taxable income.
21        (1) In general. Subject to the provisions of paragraph
22    (2) and subsection (b) (3), for purposes of this Section
23    and Section 803(e), a taxpayer's gross income, adjusted
24    gross income, or taxable income for the taxable year shall
25    mean the amount of gross income, adjusted gross income or

 

 

09800SB0353sam001- 89 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 90 -LRB098 04567 HLH 60286 a

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

 

 

09800SB0353sam001- 91 -LRB098 04567 HLH 60286 a

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

 

 

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

 

 

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1        effect on July 1, 1982, the taxable income of such
2        corporation determined in accordance with the federal
3        Subchapter S rules as in effect on July 1, 1982; and
4            (H) Partnerships. In the case of a partnership,
5        taxable income determined in accordance with Section
6        703 of the Internal Revenue Code, except that taxable
7        income shall take into account those items which are
8        required by Section 703(a)(1) to be separately stated
9        but which would be taken into account by an individual
10        in calculating his taxable income.
11        (3) Recapture of business expenses on disposition of
12    asset or business. Notwithstanding any other law to the
13    contrary, if in prior years income from an asset or
14    business has been classified as business income and in a
15    later year is demonstrated to be non-business income, then
16    all expenses, without limitation, deducted in such later
17    year and in the 2 immediately preceding taxable years
18    related to that asset or business that generated the
19    non-business income shall be added back and recaptured as
20    business income in the year of the disposition of the asset
21    or business. Such amount shall be apportioned to Illinois
22    using the greater of the apportionment fraction computed
23    for the business under Section 304 of this Act for the
24    taxable year or the average of the apportionment fractions
25    computed for the business under Section 304 of this Act for
26    the taxable year and for the 2 immediately preceding

 

 

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

 

 

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

 

 

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1the amounts of income, gain, loss or deduction taken into
2account in determining gross income, adjusted gross income or
3taxable income for federal income tax purposes for the taxable
4year, or in the amount of such items entering into the
5computation of base income and net income under this Act for
6such taxable year, whether in respect of property values as of
7August 1, 1969 or otherwise.
8(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
9eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1096-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
116-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
12eff. 8-23-11; 97-905, eff. 8-7-12.)
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.".