Full Text of HB3748 94th General Assembly
HB3748 94TH GENERAL ASSEMBLY
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94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006 HB3748
Introduced 2/25/2005, by Rep. James H. Meyer SYNOPSIS AS INTRODUCED: |
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35 ILCS 5/203 |
from Ch. 120, par. 2-203 |
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Amends the Illinois Income Tax Act. Provides that for taxable years beginning on or after January 1, 2005,
the taxpayer may deduct from base income all amounts distributed from a qualified cash or deferred arrangement under Section 401(k) of the Internal Revenue Code if those amounts were distributed on or after the date that the taxpayer attained the age of 59.5.
Effective immediately.
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| FISCAL NOTE ACT MAY APPLY | |
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A BILL FOR
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HB3748 |
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LRB094 09141 BDD 39372 b |
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| AN ACT concerning revenue.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Income Tax Act is amended by | 5 |
| changing Section 203 as follows:
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| (35 ILCS 5/203) (from Ch. 120, par. 2-203)
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| Sec. 203. Base income defined.
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| (a) Individuals.
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| (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).
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| (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:
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| (A) An amount equal to all amounts paid or accrued | 17 |
| to the taxpayer
as interest or dividends during the | 18 |
| taxable year to the extent excluded
from gross income | 19 |
| in the computation of adjusted gross income, except | 20 |
| stock
dividends of qualified public utilities | 21 |
| described in Section 305(e) of the
Internal Revenue | 22 |
| Code;
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| (B) An amount equal to the amount of tax imposed by | 24 |
| this Act to the
extent deducted from gross income in | 25 |
| the computation of adjusted gross
income for the | 26 |
| taxable year;
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| (C) An amount equal to the amount received during | 28 |
| the taxable year
as a recovery or refund of real | 29 |
| property taxes paid with respect to the
taxpayer's | 30 |
| principal residence under the Revenue Act of
1939 and | 31 |
| for which a deduction was previously taken under | 32 |
| subparagraph (L) of
this paragraph (2) prior to July 1, |
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| 1991, the retrospective application date of
Article 4 | 2 |
| of Public Act 87-17. In the case of multi-unit or | 3 |
| multi-use
structures and farm dwellings, the taxes on | 4 |
| the taxpayer's principal residence
shall be that | 5 |
| portion of the total taxes for the entire property | 6 |
| which is
attributable to such principal residence;
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| (D) An amount equal to the amount of the capital | 8 |
| gain deduction
allowable under the Internal Revenue | 9 |
| Code, to the extent deducted from gross
income in the | 10 |
| computation of adjusted gross income;
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| (D-5) An amount, to the extent not included in | 12 |
| adjusted gross income,
equal to the amount of money | 13 |
| withdrawn by the taxpayer in the taxable year from
a | 14 |
| medical care savings account and the interest earned on | 15 |
| the account in the
taxable year of a withdrawal | 16 |
| pursuant to subsection (b) of Section 20 of the
Medical | 17 |
| Care Savings Account Act or subsection (b) of Section | 18 |
| 20 of the
Medical Care Savings Account Act of 2000;
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| (D-10) For taxable years ending after December 31, | 20 |
| 1997, an
amount equal to any eligible remediation costs | 21 |
| that the individual
deducted in computing adjusted | 22 |
| gross income and for which the
individual claims a | 23 |
| credit under subsection (l) of Section 201;
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| (D-15) For taxable years 2001 and thereafter, an | 25 |
| amount equal to the
bonus depreciation deduction (30% | 26 |
| of the adjusted basis of the qualified
property) taken | 27 |
| on the taxpayer's federal income tax return for the | 28 |
| taxable
year under subsection (k) of Section 168 of the | 29 |
| Internal Revenue Code;
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| (D-16) If the taxpayer reports a capital gain or | 31 |
| loss on the
taxpayer's federal income tax return for | 32 |
| the taxable year based on a sale or
transfer of | 33 |
| property for which the taxpayer was required in any | 34 |
| taxable year to
make an addition modification under | 35 |
| subparagraph (D-15), then an amount equal
to the | 36 |
| aggregate amount of the deductions taken in all taxable
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| years under subparagraph (Z) with respect to that | 2 |
| property.
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| The taxpayer is required to make the addition | 4 |
| modification under this
subparagraph
only once with | 5 |
| respect to any one piece of property;
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| (D-17) For taxable years ending on or after | 7 |
| December 31, 2004, an amount equal to the amount | 8 |
| otherwise allowed as a deduction in computing base | 9 |
| income for interest paid, accrued, or incurred, | 10 |
| directly or indirectly, to a foreign person who would | 11 |
| be a member of the same unitary business group but for | 12 |
| the fact that foreign person's business activity | 13 |
| outside the United States is 80% or more of the foreign | 14 |
| person's total business activity. The addition | 15 |
| modification required by this subparagraph shall be | 16 |
| reduced to the extent that dividends were included in | 17 |
| base income of the unitary group for the same taxable | 18 |
| year and received by the taxpayer or by a member of the | 19 |
| taxpayer's unitary business group (including amounts | 20 |
| included in gross income under Sections 951 through 964 | 21 |
| of the Internal Revenue Code and amounts included in | 22 |
| gross income under Section 78 of the Internal Revenue | 23 |
| Code) with respect to the stock of the same person to | 24 |
| whom the interest was paid, accrued, or incurred. | 25 |
| This paragraph shall not apply to the following:
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| (i) an item of interest paid, accrued, or | 27 |
| incurred, directly or indirectly, to a foreign | 28 |
| person who is subject in a foreign country or | 29 |
| state, other than a state which requires mandatory | 30 |
| unitary reporting, to a tax on or measured by net | 31 |
| income with respect to such interest; or | 32 |
| (ii) an item of interest paid, accrued, or | 33 |
| incurred, directly or indirectly, to a foreign | 34 |
| person if the taxpayer can establish, based on a | 35 |
| preponderance of the evidence, both of the | 36 |
| following: |
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| (a) the foreign person, during the same | 2 |
| taxable year, paid, accrued, or incurred, the | 3 |
| interest to a person that is not a related | 4 |
| member, and | 5 |
| (b) the transaction giving rise to the | 6 |
| interest expense between the taxpayer and the | 7 |
| foreign person did not have as a principal | 8 |
| purpose the avoidance of Illinois income tax, | 9 |
| and is paid pursuant to a contract or agreement | 10 |
| that reflects an arm's-length interest rate | 11 |
| and terms; or
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| (iii) the taxpayer can establish, based on | 13 |
| clear and convincing evidence, that the interest | 14 |
| paid, accrued, or incurred relates to a contract or | 15 |
| agreement entered into at arm's-length rates and | 16 |
| terms and the principal purpose for the payment is | 17 |
| not federal or Illinois tax avoidance; or
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| (iv) an item of interest paid, accrued, or | 19 |
| incurred, directly or indirectly, to a foreign | 20 |
| person if the taxpayer establishes by clear and | 21 |
| convincing evidence that the adjustments are | 22 |
| unreasonable; or if the taxpayer and the Director | 23 |
| agree in writing to the application or use of an | 24 |
| alternative method of apportionment under Section | 25 |
| 304(f).
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| Nothing in this subsection shall preclude the | 27 |
| Director from making any other adjustment | 28 |
| otherwise allowed under Section 404 of this Act for | 29 |
| any tax year beginning after the effective date of | 30 |
| this amendment provided such adjustment is made | 31 |
| pursuant to regulation adopted by the Department | 32 |
| and such regulations provide methods and standards | 33 |
| by which the Department will utilize its authority | 34 |
| under Section 404 of this Act;
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| (D-18) For taxable years ending on or after | 36 |
| December 31, 2004, an amount equal to the amount of |
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| intangible expenses and costs otherwise allowed as a | 2 |
| deduction in computing base income, and that were paid, | 3 |
| accrued, or incurred, directly or indirectly, to a | 4 |
| foreign person who would be a member of the same | 5 |
| unitary business group but for the fact that the | 6 |
| foreign person's business activity outside the United | 7 |
| States is 80% or more of that person's total business | 8 |
| activity. The addition modification required by this | 9 |
| subparagraph shall be reduced to the extent that | 10 |
| dividends were included in base income of the unitary | 11 |
| group for the same taxable year and received by the | 12 |
| taxpayer or by a member of the taxpayer's unitary | 13 |
| business group (including amounts included in gross | 14 |
| income under Sections 951 through 964 of the Internal | 15 |
| Revenue Code and amounts included in gross income under | 16 |
| Section 78 of the Internal Revenue Code) with respect | 17 |
| to the stock of the same person to whom the intangible | 18 |
| expenses and costs were directly or indirectly paid, | 19 |
| incurred, or accrued. The preceding sentence does not | 20 |
| apply to the extent that the same dividends caused a | 21 |
| reduction to the addition modification required under | 22 |
| Section 203(a)(2)(D-17) of this Act. As used in this | 23 |
| subparagraph, the term "intangible expenses and costs" | 24 |
| includes (1) expenses, losses, and costs for, or | 25 |
| related to, the direct or indirect acquisition, use, | 26 |
| maintenance or management, ownership, sale, exchange, | 27 |
| or any other disposition of intangible property; (2) | 28 |
| losses incurred, directly or indirectly, from | 29 |
| factoring transactions or discounting transactions; | 30 |
| (3) royalty, patent, technical, and copyright fees; | 31 |
| (4) licensing fees; and (5) other similar expenses and | 32 |
| costs.
For purposes of this subparagraph, "intangible | 33 |
| property" includes patents, patent applications, trade | 34 |
| names, trademarks, service marks, copyrights, mask | 35 |
| works, trade secrets, and similar types of intangible | 36 |
| assets. |
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| This paragraph shall not apply to the following: | 2 |
| (i) any item of intangible expenses or costs | 3 |
| paid, accrued, or incurred, directly or | 4 |
| indirectly, from a transaction with a foreign | 5 |
| person who is subject in a foreign country or | 6 |
| state, other than a state which requires mandatory | 7 |
| unitary reporting, to a tax on or measured by net | 8 |
| income with respect to such item; or | 9 |
| (ii) any item of intangible expense or cost | 10 |
| paid, accrued, or incurred, directly or | 11 |
| indirectly, if the taxpayer can establish, based | 12 |
| on a preponderance of the evidence, both of the | 13 |
| following: | 14 |
| (a) the foreign person during the same | 15 |
| taxable year paid, accrued, or incurred, the | 16 |
| intangible expense or cost to a person that is | 17 |
| not a related member, and | 18 |
| (b) the transaction giving rise to the | 19 |
| intangible expense or cost between the | 20 |
| taxpayer and the foreign person did not have as | 21 |
| a principal purpose the avoidance of Illinois | 22 |
| income tax, and is paid pursuant to a contract | 23 |
| or agreement that reflects arm's-length terms; | 24 |
| or | 25 |
| (iii) any item of intangible expense or cost | 26 |
| paid, accrued, or incurred, directly or | 27 |
| indirectly, from a transaction with a foreign | 28 |
| person if the taxpayer establishes by clear and | 29 |
| convincing evidence, that the adjustments are | 30 |
| unreasonable; or if the taxpayer and the Director | 31 |
| agree in writing to the application or use of an | 32 |
| alternative method of apportionment under Section | 33 |
| 304(f);
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| Nothing in this subsection shall preclude the | 35 |
| Director from making any other adjustment | 36 |
| otherwise allowed under Section 404 of this Act for |
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| any tax year beginning after the effective date of | 2 |
| this amendment provided such adjustment is made | 3 |
| pursuant to regulation adopted by the Department | 4 |
| and such regulations provide methods and standards | 5 |
| by which the Department will utilize its authority | 6 |
| under Section 404 of this Act;
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| (D-20) For taxable years beginning on or after | 8 |
| January 1,
2002, in
the
case of a distribution from a | 9 |
| qualified tuition program under Section 529 of
the | 10 |
| Internal Revenue Code, other than (i) a distribution | 11 |
| from a College Savings
Pool created under Section 16.5 | 12 |
| of the State Treasurer Act or (ii) a
distribution from | 13 |
| the Illinois Prepaid Tuition Trust Fund, an amount | 14 |
| equal to
the amount excluded from gross income under | 15 |
| Section 529(c)(3)(B);
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| and by deducting from the total so obtained the
sum of the | 17 |
| following amounts:
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| (E) For taxable years ending before December 31, | 19 |
| 2001,
any amount included in such total in respect of | 20 |
| any compensation
(including but not limited to any | 21 |
| compensation paid or accrued to a
serviceman while a | 22 |
| prisoner of war or missing in action) paid to a | 23 |
| resident
by reason of being on active duty in the Armed | 24 |
| Forces of the United States
and in respect of any | 25 |
| compensation paid or accrued to a resident who as a
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| governmental employee was a prisoner of war or missing | 27 |
| in action, and in
respect of any compensation paid to a | 28 |
| resident in 1971 or thereafter for
annual training | 29 |
| performed pursuant to Sections 502 and 503, Title 32,
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| United States Code as a member of the Illinois National | 31 |
| Guard.
For taxable years ending on or after December | 32 |
| 31, 2001, any amount included in
such total in respect | 33 |
| of any compensation (including but not limited to any
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| compensation paid or accrued to a serviceman while a | 35 |
| prisoner of war or missing
in action) paid to a | 36 |
| resident by reason of being a member of any component |
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| of
the Armed Forces of the United States and in respect | 2 |
| of any compensation paid
or accrued to a resident who | 3 |
| as a governmental employee was a prisoner of war
or | 4 |
| missing in action, and in respect of any compensation | 5 |
| paid to a resident in
2001 or thereafter by reason of | 6 |
| being a member of the Illinois National Guard.
The | 7 |
| provisions of this amendatory Act of the 92nd General | 8 |
| Assembly are exempt
from the provisions of Section 250;
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| (F) An amount equal to all amounts included in such | 10 |
| total pursuant
to the provisions of Sections 402(a), | 11 |
| 402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the | 12 |
| Internal Revenue Code, or included in such total as
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| distributions under the provisions of any retirement | 14 |
| or disability plan for
employees of any governmental | 15 |
| agency or unit, or retirement payments to
retired | 16 |
| partners, which payments are excluded in computing net | 17 |
| earnings
from self employment by Section 1402 of the | 18 |
| Internal Revenue Code and
regulations adopted pursuant | 19 |
| thereto;
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| (G) The valuation limitation amount;
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| (H) 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;
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| (I) An amount equal to all amounts included in such | 25 |
| total pursuant
to the provisions of Section 111 of the | 26 |
| Internal Revenue Code as a
recovery of items previously | 27 |
| deducted from adjusted gross income in the
computation | 28 |
| of taxable income;
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| (J) An amount equal to those dividends included in | 30 |
| such total which were
paid by a corporation which | 31 |
| conducts business operations in an Enterprise
Zone or | 32 |
| zones created under the Illinois Enterprise Zone Act, | 33 |
| and conducts
substantially all of its operations in an | 34 |
| Enterprise Zone or zones;
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| (K) An amount equal to those dividends included in | 36 |
| such total that
were paid by a corporation that |
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| conducts business operations in a federally
designated | 2 |
| Foreign Trade Zone or Sub-Zone and that is designated a | 3 |
| High Impact
Business located in Illinois; provided | 4 |
| that dividends eligible for the
deduction provided in | 5 |
| subparagraph (J) of paragraph (2) of this subsection
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| shall not be eligible for the deduction provided under | 7 |
| this subparagraph
(K);
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| (L) For taxable years ending after December 31, | 9 |
| 1983, an amount equal to
all social security benefits | 10 |
| and railroad retirement benefits included in
such | 11 |
| total pursuant to Sections 72(r) and 86 of the Internal | 12 |
| Revenue Code;
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| (M) With the exception of any amounts subtracted | 14 |
| under subparagraph
(N), an amount equal to the sum of | 15 |
| all amounts disallowed as
deductions by (i) Sections | 16 |
| 171(a) (2), and 265(2) of the Internal Revenue Code
of | 17 |
| 1954, as now or hereafter amended, and all amounts of | 18 |
| expenses allocable
to interest and disallowed as | 19 |
| deductions by Section 265(1) of the Internal
Revenue | 20 |
| Code of 1954, as now or hereafter amended;
and (ii) for | 21 |
| taxable years
ending on or after August 13, 1999, | 22 |
| Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | 23 |
| the Internal Revenue Code; the provisions of this
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| subparagraph are exempt from the provisions of Section | 25 |
| 250;
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| (N) An amount equal to all amounts included in such | 27 |
| total which are
exempt from taxation by this State | 28 |
| either by reason of its statutes or
Constitution
or by | 29 |
| reason of the Constitution, treaties or statutes of the | 30 |
| United States;
provided that, in the case of any | 31 |
| statute of this State that exempts income
derived from | 32 |
| bonds or other obligations from the tax imposed under | 33 |
| this Act,
the amount exempted shall be the interest net | 34 |
| of bond premium amortization;
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| (O) An amount equal to any contribution made to a | 36 |
| job training
project established pursuant to the Tax |
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| Increment Allocation Redevelopment Act;
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| (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 of 1986;
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| (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;
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| (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;
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| (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 | 27 |
| behalf of the
taxpayer, other than interest added | 28 |
| pursuant to item (D-5) of this paragraph
(2);
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| (U) For one taxable year beginning on or after | 30 |
| January 1,
1994, an
amount equal to the total amount of | 31 |
| tax imposed and paid under subsections (a)
and (b) of | 32 |
| Section 201 of this Act on grant amounts received by | 33 |
| the taxpayer
under the Nursing Home Grant Assistance | 34 |
| Act during the taxpayer's taxable years
1992 and 1993;
| 35 |
| (V) Beginning with tax years ending on or after | 36 |
| December 31, 1995 and
ending with tax years ending on |
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| or before December 31, 2004, an amount equal to
the | 2 |
| amount paid by a taxpayer who is a
self-employed | 3 |
| taxpayer, a partner of a partnership, or a
shareholder | 4 |
| in a Subchapter S corporation for health insurance or | 5 |
| long-term
care insurance for that taxpayer or that | 6 |
| taxpayer's spouse or dependents, to
the extent that the | 7 |
| amount paid for that health insurance or long-term care
| 8 |
| insurance may be deducted under Section 213 of the | 9 |
| Internal Revenue Code of
1986, has not been deducted on | 10 |
| the federal income tax return of the taxpayer,
and does | 11 |
| not exceed the taxable income attributable to that | 12 |
| taxpayer's income,
self-employment income, or | 13 |
| Subchapter S corporation income; except that no
| 14 |
| deduction shall be allowed under this item (V) if the | 15 |
| taxpayer is eligible to
participate in any health | 16 |
| insurance or long-term care insurance plan of an
| 17 |
| employer of the taxpayer or the taxpayer's
spouse. The | 18 |
| amount of the health insurance and long-term care | 19 |
| insurance
subtracted under this item (V) shall be | 20 |
| determined by multiplying total
health insurance and | 21 |
| long-term care insurance premiums paid by the taxpayer
| 22 |
| times a number that represents the fractional | 23 |
| percentage of eligible medical
expenses under Section | 24 |
| 213 of the Internal Revenue Code of 1986 not actually
| 25 |
| deducted on the taxpayer's federal income tax return;
| 26 |
| (W) For taxable years beginning on or after January | 27 |
| 1, 1998,
all amounts included in the taxpayer's federal | 28 |
| gross income
in the taxable year from amounts converted | 29 |
| from a regular IRA to a Roth IRA.
This paragraph is | 30 |
| exempt from the provisions of Section
250;
| 31 |
| (X) For taxable year 1999 and thereafter, an amount | 32 |
| equal to the
amount of any (i) distributions, to the | 33 |
| extent includible in gross income for
federal income | 34 |
| tax purposes, made to the taxpayer because of his or | 35 |
| her status
as a victim of persecution for racial or | 36 |
| religious reasons by Nazi Germany or
any other Axis |
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| regime or as an heir of the victim and (ii) items
of | 2 |
| income, to the extent
includible in gross income for | 3 |
| federal income tax purposes, attributable to,
derived | 4 |
| from or in any way related to assets stolen from, | 5 |
| hidden from, or
otherwise lost to a victim of
| 6 |
| persecution for racial or religious reasons by Nazi | 7 |
| Germany or any other Axis
regime immediately prior to, | 8 |
| during, and immediately after World War II,
including, | 9 |
| but
not limited to, interest on the proceeds receivable | 10 |
| as insurance
under policies issued to a victim of | 11 |
| persecution for racial or religious
reasons
by Nazi | 12 |
| Germany or any other Axis regime by European insurance | 13 |
| companies
immediately prior to and during World War II;
| 14 |
| provided, however, this subtraction from federal | 15 |
| adjusted gross income does not
apply to assets acquired | 16 |
| with such assets or with the proceeds from the sale of
| 17 |
| such assets; provided, further, this paragraph shall | 18 |
| only apply to a taxpayer
who was the first recipient of | 19 |
| such assets after their recovery and who is a
victim of | 20 |
| persecution for racial or religious reasons
by Nazi | 21 |
| Germany or any other Axis regime or as an heir of the | 22 |
| victim. The
amount of and the eligibility for any | 23 |
| public assistance, benefit, or
similar entitlement is | 24 |
| not affected by the inclusion of items (i) and (ii) of
| 25 |
| this paragraph in gross income for federal income tax | 26 |
| purposes.
This paragraph is exempt from the provisions | 27 |
| of Section 250;
| 28 |
| (Y) For taxable years beginning on or after January | 29 |
| 1, 2002
and ending
on or before December 31, 2004, | 30 |
| moneys contributed in the taxable year to a College | 31 |
| Savings Pool account under
Section 16.5 of the State | 32 |
| Treasurer Act, except that amounts excluded from
gross | 33 |
| income under Section 529(c)(3)(C)(i) of the Internal | 34 |
| Revenue Code
shall not be considered moneys | 35 |
| contributed under this subparagraph (Y). For taxable | 36 |
| years beginning on or after January 1, 2005, a maximum |
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| of $10,000
contributed
in the
taxable year to (i) a | 2 |
| College Savings Pool account under Section 16.5 of the
| 3 |
| State
Treasurer Act or (ii) the Illinois Prepaid | 4 |
| Tuition Trust Fund,
except that
amounts excluded from | 5 |
| gross income under Section 529(c)(3)(C)(i) of the
| 6 |
| Internal
Revenue Code shall not be considered moneys | 7 |
| contributed under this subparagraph
(Y). This
| 8 |
| subparagraph (Y) is exempt from the provisions of | 9 |
| Section 250;
| 10 |
| (Z) For taxable years 2001 and thereafter, for the | 11 |
| taxable year in
which the bonus depreciation deduction | 12 |
| (30% of the adjusted basis of the
qualified property) | 13 |
| is taken on the taxpayer's federal income tax return | 14 |
| under
subsection (k) of Section 168 of the Internal | 15 |
| Revenue Code and for each
applicable taxable year | 16 |
| thereafter, an amount equal to "x", where:
| 17 |
| (1) "y" equals the amount of the depreciation | 18 |
| deduction taken for the
taxable year
on the | 19 |
| taxpayer's federal income tax return on property | 20 |
| for which the bonus
depreciation deduction (30% of | 21 |
| the adjusted basis of the qualified property)
was | 22 |
| taken in any year under subsection (k) of Section | 23 |
| 168 of the Internal
Revenue Code, but not including | 24 |
| the bonus depreciation deduction; and
| 25 |
| (2) "x" equals "y" multiplied by 30 and then | 26 |
| divided by 70 (or "y"
multiplied by 0.429).
| 27 |
| The aggregate amount deducted under this | 28 |
| subparagraph in all taxable
years for any one piece of | 29 |
| property may not exceed the amount of the bonus
| 30 |
| depreciation deduction (30% of the adjusted basis of | 31 |
| the qualified property)
taken on that property on the | 32 |
| taxpayer's federal income tax return under
subsection | 33 |
| (k) of Section 168 of the Internal Revenue Code;
| 34 |
| (AA) If the taxpayer reports a capital gain or loss | 35 |
| on the taxpayer's
federal income tax return for the | 36 |
| taxable year based on a sale or transfer of
property |
|
|
|
HB3748 |
- 14 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| for which the taxpayer was required in any taxable year | 2 |
| to make an
addition modification under subparagraph | 3 |
| (D-15), then an amount equal to that
addition | 4 |
| modification.
| 5 |
| The taxpayer is allowed to take the deduction under | 6 |
| this subparagraph
only once with respect to any one | 7 |
| piece of property;
| 8 |
| (BB) Any amount included in adjusted gross income, | 9 |
| other
than
salary,
received by a driver in a | 10 |
| ridesharing arrangement using a motor vehicle;
| 11 |
| (CC) The amount of (i) any interest income (net of | 12 |
| the deductions allocable thereto) taken into account | 13 |
| for the taxable year with respect to a transaction with | 14 |
| a taxpayer that is required to make an addition | 15 |
| modification with respect to such transaction under | 16 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-13), | 17 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 18 |
| the amount of that addition modification, and
(ii) any | 19 |
| income from intangible property (net of the deductions | 20 |
| allocable thereto) taken into account for the taxable | 21 |
| year with respect to a transaction with a taxpayer that | 22 |
| is required to make an addition modification with | 23 |
| respect to such transaction under Section | 24 |
| 203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or | 25 |
| 203(d)(2)(D-8), but not to exceed the amount of that | 26 |
| addition modification; | 27 |
| (DD) An amount equal to the interest income taken | 28 |
| into account for the taxable year (net of the | 29 |
| deductions allocable thereto) with respect to | 30 |
| transactions with a foreign person who would be a | 31 |
| member of the taxpayer's unitary business group but for | 32 |
| the fact that the foreign person's business activity | 33 |
| outside the United States is 80% or more of that | 34 |
| person's total business activity, but not to exceed the | 35 |
| addition modification required to be made for the same | 36 |
| taxable year under Section 203(a)(2)(D-17) for |
|
|
|
HB3748 |
- 15 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| interest paid, accrued, or incurred, directly or | 2 |
| indirectly, to the same foreign person; and | 3 |
| (EE) An amount equal to the income from intangible | 4 |
| property taken into account for the taxable year (net | 5 |
| of the deductions allocable thereto) with respect to | 6 |
| transactions with a foreign person who would be a | 7 |
| member of the taxpayer's unitary business group but for | 8 |
| the fact that the foreign person's business activity | 9 |
| outside the United States is 80% or more of that | 10 |
| person's total business activity, but not to exceed the | 11 |
| addition modification required to be made for the same | 12 |
| taxable year under Section 203(a)(2)(D-18) for | 13 |
| intangible expenses and costs paid, accrued, or | 14 |
| incurred, directly or indirectly, to the same foreign | 15 |
| person ; and .
| 16 |
| (FF) For taxable years beginning on or after | 17 |
| January 1, 2005,
all amounts included in the taxpayer's | 18 |
| federal gross income
in the taxable year from amounts | 19 |
| distributed from a qualified cash or deferred | 20 |
| arrangement under Section 401(k) of the Internal | 21 |
| Revenue Code if those amounts were distributed on or | 22 |
| after the date that the taxpayer attained the age of | 23 |
| 59.5.
This paragraph is exempt from the provisions of | 24 |
| Section
250.
| 25 |
| (b) Corporations.
| 26 |
| (1) In general. In the case of a corporation, base | 27 |
| income means an
amount equal to the taxpayer's taxable | 28 |
| income for the taxable year as
modified by paragraph (2).
| 29 |
| (2) Modifications. The taxable income referred to in | 30 |
| paragraph (1)
shall be modified by adding thereto the sum | 31 |
| of the following amounts:
| 32 |
| (A) An amount equal to all amounts paid or accrued | 33 |
| to the taxpayer
as interest and all distributions | 34 |
| received from regulated investment
companies during | 35 |
| the taxable year to the extent excluded from gross
|
|
|
|
HB3748 |
- 16 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| income in the computation of taxable income;
| 2 |
| (B) An amount equal to the amount of tax imposed by | 3 |
| this Act to the
extent deducted from gross income in | 4 |
| the computation of taxable income
for the taxable year;
| 5 |
| (C) In the case of a regulated investment company, | 6 |
| an amount equal to
the excess of (i) the net long-term | 7 |
| capital gain for the taxable year, over
(ii) the amount | 8 |
| of the capital gain dividends designated as such in | 9 |
| accordance
with Section 852(b)(3)(C) of the Internal | 10 |
| Revenue Code and any amount
designated under Section | 11 |
| 852(b)(3)(D) of the Internal Revenue Code,
| 12 |
| attributable to the taxable year (this amendatory Act | 13 |
| of 1995
(Public Act 89-89) is declarative of existing | 14 |
| law and is not a new
enactment);
| 15 |
| (D) The amount of any net operating loss deduction | 16 |
| taken in arriving
at taxable income, other than a net | 17 |
| operating loss carried forward from a
taxable year | 18 |
| ending prior to December 31, 1986;
| 19 |
| (E) For taxable years in which a net operating loss | 20 |
| carryback or
carryforward from a taxable year ending | 21 |
| prior to December 31, 1986 is an
element of taxable | 22 |
| income under paragraph (1) of subsection (e) or
| 23 |
| subparagraph (E) of paragraph (2) of subsection (e), | 24 |
| the amount by which
addition modifications other than | 25 |
| those provided by this subparagraph (E)
exceeded | 26 |
| subtraction modifications in such earlier taxable | 27 |
| year, with the
following limitations applied in the | 28 |
| order that they are listed:
| 29 |
| (i) the addition modification relating to the | 30 |
| net operating loss
carried back or forward to the | 31 |
| taxable year from any taxable year ending
prior to | 32 |
| December 31, 1986 shall be reduced by the amount of | 33 |
| addition
modification under this subparagraph (E) | 34 |
| which related to that net operating
loss and which | 35 |
| was taken into account in calculating the base | 36 |
| income of an
earlier taxable year, and
|
|
|
|
HB3748 |
- 17 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| (ii) the addition modification relating to the | 2 |
| net operating loss
carried back or forward to the | 3 |
| taxable year from any taxable year ending
prior to | 4 |
| December 31, 1986 shall not exceed the amount of | 5 |
| such carryback or
carryforward;
| 6 |
| For taxable years in which there is a net operating | 7 |
| loss carryback or
carryforward from more than one other | 8 |
| taxable year ending prior to December
31, 1986, the | 9 |
| addition modification provided in this subparagraph | 10 |
| (E) shall
be the sum of the amounts computed | 11 |
| independently under the preceding
provisions of this | 12 |
| subparagraph (E) for each such taxable year;
| 13 |
| (E-5) For taxable years ending after December 31, | 14 |
| 1997, an
amount equal to any eligible remediation costs | 15 |
| that the corporation
deducted in computing adjusted | 16 |
| gross income and for which the
corporation claims a | 17 |
| credit under subsection (l) of Section 201;
| 18 |
| (E-10) For taxable years 2001 and thereafter, an | 19 |
| amount equal to the
bonus depreciation deduction (30% | 20 |
| of the adjusted basis of the qualified
property) taken | 21 |
| on the taxpayer's federal income tax return for the | 22 |
| taxable
year under subsection (k) of Section 168 of the | 23 |
| Internal Revenue Code; and
| 24 |
| (E-11) If the taxpayer reports a capital gain or | 25 |
| loss on the
taxpayer's federal income tax return for | 26 |
| the taxable year based on a sale or
transfer of | 27 |
| property for which the taxpayer was required in any | 28 |
| taxable year to
make an addition modification under | 29 |
| subparagraph (E-10), then an amount equal
to the | 30 |
| aggregate amount of the deductions taken in all taxable
| 31 |
| years under subparagraph (T) with respect to that | 32 |
| property.
| 33 |
| The taxpayer is required to make the addition | 34 |
| modification under this
subparagraph
only once with | 35 |
| respect to any one piece of property;
| 36 |
| (E-12) For taxable years ending on or after |
|
|
|
HB3748 |
- 18 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| December 31, 2004, an amount equal to the amount | 2 |
| otherwise allowed as a deduction in computing base | 3 |
| income for interest paid, accrued, or incurred, | 4 |
| directly or indirectly, to a foreign person who would | 5 |
| be a member of the same unitary business group but for | 6 |
| the fact the foreign person's business activity | 7 |
| outside the United States is 80% or more of the foreign | 8 |
| person's total business activity. The addition | 9 |
| modification required by this subparagraph shall be | 10 |
| reduced to the extent that dividends were included in | 11 |
| base income of the unitary group for the same taxable | 12 |
| year and received by the taxpayer or by a member of the | 13 |
| taxpayer's unitary business group (including amounts | 14 |
| included in gross income pursuant to Sections 951 | 15 |
| through 964 of the Internal Revenue Code and amounts | 16 |
| included in gross income under Section 78 of the | 17 |
| Internal Revenue Code) with respect to the stock of the | 18 |
| same person to whom the interest was paid, accrued, or | 19 |
| incurred.
| 20 |
| This paragraph shall not apply to the following:
| 21 |
| (i) an item of interest paid, accrued, or | 22 |
| incurred, directly or indirectly, to a foreign | 23 |
| person who is subject in a foreign country or | 24 |
| state, other than a state which requires mandatory | 25 |
| unitary reporting, to a tax on or measured by net | 26 |
| income with respect to such interest; or | 27 |
| (ii) an item of interest paid, accrued, or | 28 |
| incurred, directly or indirectly, to a foreign | 29 |
| person if the taxpayer can establish, based on a | 30 |
| preponderance of the evidence, both of the | 31 |
| following: | 32 |
| (a) the foreign person, during the same | 33 |
| taxable year, paid, accrued, or incurred, the | 34 |
| interest to a person that is not a related | 35 |
| member, and | 36 |
| (b) the transaction giving rise to the |
|
|
|
HB3748 |
- 19 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| interest expense between the taxpayer and the | 2 |
| foreign person did not have as a principal | 3 |
| purpose the avoidance of Illinois income tax, | 4 |
| and is paid pursuant to a contract or agreement | 5 |
| that reflects an arm's-length interest rate | 6 |
| and terms; or
| 7 |
| (iii) the taxpayer can establish, based on | 8 |
| clear and convincing evidence, that the interest | 9 |
| paid, accrued, or incurred relates to a contract or | 10 |
| agreement entered into at arm's-length rates and | 11 |
| terms and the principal purpose for the payment is | 12 |
| not federal or Illinois tax avoidance; or
| 13 |
| (iv) an item of interest paid, accrued, or | 14 |
| incurred, directly or indirectly, to a foreign | 15 |
| person if the taxpayer establishes by clear and | 16 |
| convincing evidence that the adjustments are | 17 |
| unreasonable; or if the taxpayer and the Director | 18 |
| agree in writing to the application or use of an | 19 |
| alternative method of apportionment under Section | 20 |
| 304(f).
| 21 |
| Nothing in this subsection shall preclude the | 22 |
| Director from making any other adjustment | 23 |
| otherwise allowed under Section 404 of this Act for | 24 |
| any tax year beginning after the effective date of | 25 |
| this amendment provided such adjustment is made | 26 |
| pursuant to regulation adopted by the Department | 27 |
| and such regulations provide methods and standards | 28 |
| by which the Department will utilize its authority | 29 |
| under Section 404 of this Act;
| 30 |
| (E-13) For taxable years ending on or after | 31 |
| December 31, 2004, an amount equal to the amount of | 32 |
| intangible expenses and costs otherwise allowed as a | 33 |
| deduction in computing base income, and that were paid, | 34 |
| accrued, or incurred, directly or indirectly, to a | 35 |
| foreign person who would be a member of the same | 36 |
| unitary business group but for the fact that the |
|
|
|
HB3748 |
- 20 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| foreign person's business activity outside the United | 2 |
| States is 80% or more of that person's total business | 3 |
| activity. The addition modification required by this | 4 |
| subparagraph shall be reduced to the extent that | 5 |
| dividends were included in base income of the unitary | 6 |
| group for the same taxable year and received by the | 7 |
| taxpayer or by a member of the taxpayer's unitary | 8 |
| business group (including amounts included in gross | 9 |
| income pursuant to Sections 951 through 964 of the | 10 |
| Internal Revenue Code and amounts included in gross | 11 |
| income under Section 78 of the Internal Revenue Code) | 12 |
| with respect to the stock of the same person to whom | 13 |
| the intangible expenses and costs were directly or | 14 |
| indirectly paid, incurred, or accrued. The preceding | 15 |
| sentence shall not apply to the extent that the same | 16 |
| dividends caused a reduction to the addition | 17 |
| modification required under Section 203(b)(2)(E-12) of | 18 |
| this Act.
As used in this subparagraph, the term | 19 |
| "intangible expenses and costs" includes (1) expenses, | 20 |
| losses, and costs for, or related to, the direct or | 21 |
| indirect acquisition, use, maintenance or management, | 22 |
| ownership, sale, exchange, or any other disposition of | 23 |
| intangible property; (2) losses incurred, directly or | 24 |
| indirectly, from factoring transactions or discounting | 25 |
| transactions; (3) royalty, patent, technical, and | 26 |
| copyright fees; (4) licensing fees; and (5) other | 27 |
| similar expenses and costs.
For purposes of this | 28 |
| subparagraph, "intangible property" includes patents, | 29 |
| patent applications, trade names, trademarks, service | 30 |
| marks, copyrights, mask works, trade secrets, and | 31 |
| similar types of intangible assets. | 32 |
| This paragraph shall not apply to the following: | 33 |
| (i) any item of intangible expenses or costs | 34 |
| paid, accrued, or incurred, directly or | 35 |
| indirectly, from a transaction with a foreign | 36 |
| person who is subject in a foreign country or |
|
|
|
HB3748 |
- 21 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| state, other than a state which requires mandatory | 2 |
| unitary reporting, to a tax on or measured by net | 3 |
| income with respect to such item; or | 4 |
| (ii) any item of intangible expense or cost | 5 |
| paid, accrued, or incurred, directly or | 6 |
| indirectly, if the taxpayer can establish, based | 7 |
| on a preponderance of the evidence, both of the | 8 |
| following: | 9 |
| (a) the foreign person during the same | 10 |
| taxable year paid, accrued, or incurred, the | 11 |
| intangible expense or cost to a person that is | 12 |
| not a related member, and | 13 |
| (b) the transaction giving rise to the | 14 |
| intangible expense or cost between the | 15 |
| taxpayer and the foreign person did not have as | 16 |
| a principal purpose the avoidance of Illinois | 17 |
| income tax, and is paid pursuant to a contract | 18 |
| or agreement that reflects arm's-length terms; | 19 |
| or | 20 |
| (iii) any item of intangible expense or cost | 21 |
| paid, accrued, or incurred, directly or | 22 |
| indirectly, from a transaction with a foreign | 23 |
| person if the taxpayer establishes by clear and | 24 |
| convincing evidence, that the adjustments are | 25 |
| unreasonable; or if the taxpayer and the Director | 26 |
| agree in writing to the application or use of an | 27 |
| alternative method of apportionment under Section | 28 |
| 304(f);
| 29 |
| Nothing in this subsection shall preclude the | 30 |
| Director from making any other adjustment | 31 |
| otherwise allowed under Section 404 of this Act for | 32 |
| any tax year beginning after the effective date of | 33 |
| this amendment provided such adjustment is made | 34 |
| pursuant to regulation adopted by the Department | 35 |
| and such regulations provide methods and standards | 36 |
| by which the Department will utilize its authority |
|
|
|
HB3748 |
- 22 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| under Section 404 of this Act;
| 2 |
| and by deducting from the total so obtained the sum of the | 3 |
| following
amounts:
| 4 |
| (F) 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 |
| (G) An amount equal to any amount included in such | 8 |
| total under
Section 78 of the Internal Revenue Code;
| 9 |
| (H) In the case of a regulated investment company, | 10 |
| an amount equal
to the amount of exempt interest | 11 |
| dividends as defined in subsection (b)
(5) of Section | 12 |
| 852 of the Internal Revenue Code, paid to shareholders
| 13 |
| for the taxable year;
| 14 |
| (I) With the exception of any amounts subtracted | 15 |
| under subparagraph
(J),
an amount equal to the sum of | 16 |
| all amounts disallowed as
deductions by (i) Sections | 17 |
| 171(a) (2), and 265(a)(2) and amounts disallowed as
| 18 |
| interest expense by Section 291(a)(3) of the Internal | 19 |
| Revenue Code, as now
or hereafter amended, and all | 20 |
| amounts of expenses allocable to interest and
| 21 |
| disallowed as deductions by Section 265(a)(1) of the | 22 |
| Internal Revenue Code,
as now or hereafter amended;
and | 23 |
| (ii) for taxable years
ending on or after August 13, | 24 |
| 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and | 25 |
| 832(b)(5)(B)(i) of the Internal Revenue Code; the
| 26 |
| provisions of this
subparagraph are exempt from the | 27 |
| provisions of Section 250;
| 28 |
| (J) An amount equal to all amounts included in such | 29 |
| total which are
exempt from taxation by this State | 30 |
| either by reason of its statutes or
Constitution
or by | 31 |
| reason of the Constitution, treaties or statutes of the | 32 |
| United States;
provided that, in the case of any | 33 |
| statute of this State that exempts income
derived from | 34 |
| bonds or other obligations from the tax imposed under | 35 |
| this Act,
the amount exempted shall be the interest net | 36 |
| of bond premium amortization;
|
|
|
|
HB3748 |
- 23 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| (K) An amount equal to those dividends included in | 2 |
| such total
which were paid by a corporation which | 3 |
| conducts
business operations in an Enterprise Zone or | 4 |
| zones created under
the Illinois Enterprise Zone Act | 5 |
| and conducts substantially all of its
operations in an | 6 |
| Enterprise Zone or zones;
| 7 |
| (L) An amount equal to those dividends included in | 8 |
| such total that
were paid by a corporation that | 9 |
| conducts business operations in a federally
designated | 10 |
| Foreign Trade Zone or Sub-Zone and that is designated a | 11 |
| High Impact
Business located in Illinois; provided | 12 |
| that dividends eligible for the
deduction provided in | 13 |
| subparagraph (K) of paragraph 2 of this subsection
| 14 |
| shall not be eligible for the deduction provided under | 15 |
| this subparagraph
(L);
| 16 |
| (M) For any taxpayer that is a financial | 17 |
| organization within the meaning
of Section 304(c) of | 18 |
| this Act, an amount included in such total as interest
| 19 |
| income from a loan or loans made by such taxpayer to a | 20 |
| borrower, to the extent
that such a loan is secured by | 21 |
| property which is eligible for the Enterprise
Zone | 22 |
| Investment Credit. To determine the portion of a loan | 23 |
| or loans that is
secured by property eligible for a | 24 |
| Section 201(f) investment
credit to the borrower, the | 25 |
| entire principal amount of the loan or loans
between | 26 |
| the taxpayer and the borrower should be divided into | 27 |
| the basis of the
Section 201(f) investment credit | 28 |
| property which secures the
loan or loans, using for | 29 |
| this purpose the original basis of such property on
the | 30 |
| date that it was placed in service in the
Enterprise | 31 |
| Zone. The subtraction modification available to | 32 |
| taxpayer in any
year under this subsection shall be | 33 |
| that portion of the total interest paid
by the borrower | 34 |
| with respect to such loan attributable to the eligible
| 35 |
| property as calculated under the previous sentence;
| 36 |
| (M-1) For any taxpayer that is a financial |
|
|
|
HB3748 |
- 24 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| organization within the
meaning of Section 304(c) of | 2 |
| this Act, an amount included in such total as
interest | 3 |
| income from a loan or loans made by such taxpayer to a | 4 |
| borrower,
to the extent that such a loan is secured by | 5 |
| property which is eligible for
the High Impact Business | 6 |
| Investment Credit. To determine the portion of a
loan | 7 |
| or loans that is secured by property eligible for a | 8 |
| Section 201(h) investment credit to the borrower, the | 9 |
| entire principal amount of
the loan or loans between | 10 |
| the taxpayer and the borrower should be divided into
| 11 |
| the basis of the Section 201(h) investment credit | 12 |
| property which
secures the loan or loans, using for | 13 |
| this purpose the original basis of such
property on the | 14 |
| date that it was placed in service in a federally | 15 |
| designated
Foreign Trade Zone or Sub-Zone located in | 16 |
| Illinois. No taxpayer that is
eligible for the | 17 |
| deduction provided in subparagraph (M) of paragraph | 18 |
| (2) of
this subsection shall be eligible for the | 19 |
| deduction provided under this
subparagraph (M-1). The | 20 |
| subtraction modification available to taxpayers in
any | 21 |
| year under this subsection shall be that portion of the | 22 |
| total interest
paid by the borrower with respect to | 23 |
| such loan attributable to the eligible
property as | 24 |
| calculated under the previous sentence;
| 25 |
| (N) Two times any contribution made during the | 26 |
| taxable year to a
designated zone organization to the | 27 |
| extent that the contribution (i)
qualifies as a | 28 |
| charitable contribution under subsection (c) of | 29 |
| Section 170
of the Internal Revenue Code and (ii) must, | 30 |
| by its terms, be used for a
project approved by the | 31 |
| Department of Commerce and Economic Opportunity under | 32 |
| Section 11 of the Illinois Enterprise Zone Act;
| 33 |
| (O) An amount equal to: (i) 85% for taxable years | 34 |
| ending on or before
December 31, 1992, or, a percentage | 35 |
| equal to the percentage allowable under
Section | 36 |
| 243(a)(1) of the Internal Revenue Code of 1986 for |
|
|
|
HB3748 |
- 25 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| taxable years ending
after December 31, 1992, of the | 2 |
| amount by which dividends included in taxable
income | 3 |
| and received from a corporation that is not created or | 4 |
| organized under
the laws of the United States or any | 5 |
| state or political subdivision thereof,
including, for | 6 |
| taxable years ending on or after December 31, 1988, | 7 |
| dividends
received or deemed received or paid or deemed | 8 |
| paid under Sections 951 through
964 of the Internal | 9 |
| Revenue Code, exceed the amount of the modification
| 10 |
| provided under subparagraph (G) of paragraph (2) of | 11 |
| this subsection (b) which
is related to such dividends; | 12 |
| plus (ii) 100% of the amount by which dividends,
| 13 |
| included in taxable income and received, including, | 14 |
| for taxable years ending on
or after December 31, 1988, | 15 |
| dividends received or deemed received or paid or
deemed | 16 |
| paid under Sections 951 through 964 of the Internal | 17 |
| Revenue Code, from
any such corporation specified in | 18 |
| clause (i) that would but for the provisions
of Section | 19 |
| 1504 (b) (3) of the Internal Revenue Code be treated as | 20 |
| a member of
the affiliated group which includes the | 21 |
| dividend recipient, exceed the amount
of the | 22 |
| modification provided under subparagraph (G) of | 23 |
| paragraph (2) of this
subsection (b) which is related | 24 |
| to such dividends;
| 25 |
| (P) An amount equal to any contribution made to a | 26 |
| job training project
established pursuant to the Tax | 27 |
| Increment Allocation Redevelopment Act;
| 28 |
| (Q) An amount equal to the amount of the deduction | 29 |
| used to compute the
federal income tax credit for | 30 |
| restoration of substantial amounts held under
claim of | 31 |
| right for the taxable year pursuant to Section 1341 of | 32 |
| the
Internal Revenue Code of 1986;
| 33 |
| (R) In the case of an attorney-in-fact with respect | 34 |
| to whom an
interinsurer or a reciprocal insurer has | 35 |
| made the election under Section 835 of
the Internal | 36 |
| Revenue Code, 26 U.S.C. 835, an amount equal to the |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| excess, if
any, of the amounts paid or incurred by that | 2 |
| interinsurer or reciprocal insurer
in the taxable year | 3 |
| to the attorney-in-fact over the deduction allowed to | 4 |
| that
interinsurer or reciprocal insurer with respect | 5 |
| to the attorney-in-fact under
Section 835(b) of the | 6 |
| Internal Revenue Code for the taxable year;
| 7 |
| (S) For taxable years ending on or after December | 8 |
| 31, 1997, in the
case of a Subchapter
S corporation, an | 9 |
| amount equal to all amounts of income allocable to a
| 10 |
| shareholder subject to the Personal Property Tax | 11 |
| Replacement Income Tax imposed
by subsections (c) and | 12 |
| (d) of Section 201 of this Act, including amounts
| 13 |
| allocable to organizations exempt from federal income | 14 |
| tax by reason of Section
501(a) of the Internal Revenue | 15 |
| Code. This subparagraph (S) is exempt from
the | 16 |
| provisions of Section 250;
| 17 |
| (T) For taxable years 2001 and thereafter, for the | 18 |
| taxable year in
which the bonus depreciation deduction | 19 |
| (30% of the adjusted basis of the
qualified property) | 20 |
| is taken on the taxpayer's federal income tax return | 21 |
| under
subsection (k) of Section 168 of the Internal | 22 |
| Revenue Code and for each
applicable taxable year | 23 |
| thereafter, an amount equal to "x", where:
| 24 |
| (1) "y" equals the amount of the depreciation | 25 |
| deduction taken for the
taxable year
on the | 26 |
| taxpayer's federal income tax return on property | 27 |
| for which the bonus
depreciation deduction (30% of | 28 |
| the adjusted basis of the qualified property)
was | 29 |
| taken in any year under subsection (k) of Section | 30 |
| 168 of the Internal
Revenue Code, but not including | 31 |
| the bonus depreciation deduction; and
| 32 |
| (2) "x" equals "y" multiplied by 30 and then | 33 |
| divided by 70 (or "y"
multiplied by 0.429).
| 34 |
| The aggregate amount deducted under this | 35 |
| subparagraph in all taxable
years for any one piece of | 36 |
| property may not exceed the amount of the bonus
|
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| depreciation deduction (30% of the adjusted basis of | 2 |
| the qualified property)
taken on that property on the | 3 |
| taxpayer's federal income tax return under
subsection | 4 |
| (k) of Section 168 of the Internal Revenue Code;
| 5 |
| (U) If the taxpayer reports a capital gain or loss | 6 |
| on the taxpayer's
federal income tax return for the | 7 |
| taxable year based on a sale or transfer of
property | 8 |
| for which the taxpayer was required in any taxable year | 9 |
| to make an
addition modification under subparagraph | 10 |
| (E-10), then an amount equal to that
addition | 11 |
| modification.
| 12 |
| The taxpayer is allowed to take the deduction under | 13 |
| this subparagraph
only once with respect to any one | 14 |
| piece of property;
| 15 |
| (V) 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 | 27 |
| respect to such transaction under Section | 28 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 29 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 30 |
| addition modification;
| 31 |
| (W) An amount equal to the interest income taken | 32 |
| into account for the taxable year (net of the | 33 |
| deductions allocable thereto) with respect to | 34 |
| transactions with a foreign person who would be a | 35 |
| member of the taxpayer's unitary business group but for | 36 |
| the fact that the foreign person's business activity |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| outside the United States is 80% or more of that | 2 |
| person's total business activity, but not to exceed the | 3 |
| addition modification required to be made for the same | 4 |
| taxable year under Section 203(b)(2)(E-12) for | 5 |
| interest paid, accrued, or incurred, directly or | 6 |
| indirectly, to the same foreign person; and
| 7 |
| (X) An amount equal to the income from intangible | 8 |
| property taken into account for the taxable year (net | 9 |
| of the deductions allocable thereto) with respect to | 10 |
| transactions with a foreign person who would be a | 11 |
| member of the taxpayer's unitary business group but for | 12 |
| the fact that the foreign person's business activity | 13 |
| outside the United States is 80% or more of that | 14 |
| person's total business activity, but not to exceed the | 15 |
| addition modification required to be made for the same | 16 |
| taxable year under Section 203(b)(2)(E-13) for | 17 |
| intangible expenses and costs paid, accrued, or | 18 |
| incurred, directly or indirectly, to the same foreign | 19 |
| person.
| 20 |
| (3) Special rule. For purposes of paragraph (2) (A), | 21 |
| "gross income"
in the case of a life insurance company, for | 22 |
| tax years ending on and after
December 31, 1994,
shall mean | 23 |
| the gross investment income for the taxable year.
| 24 |
| (c) Trusts and estates.
| 25 |
| (1) In general. In the case of a trust or estate, base | 26 |
| income means
an amount equal to the taxpayer's taxable | 27 |
| income for the taxable year as
modified by paragraph (2).
| 28 |
| (2) Modifications. Subject to the provisions of | 29 |
| paragraph (3), the
taxable income referred to in paragraph | 30 |
| (1) shall be modified by adding
thereto the sum of the | 31 |
| following amounts:
| 32 |
| (A) An amount equal to all amounts paid or accrued | 33 |
| to the taxpayer
as interest or dividends during the | 34 |
| taxable year to the extent excluded
from gross income | 35 |
| in the computation of taxable income;
|
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| (B) In the case of (i) an estate, $600; (ii) a | 2 |
| trust which, under
its governing instrument, is | 3 |
| required to distribute all of its income
currently, | 4 |
| $300; and (iii) any other trust, $100, but in each such | 5 |
| case,
only to the extent such amount was deducted in | 6 |
| the computation of
taxable income;
| 7 |
| (C) 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 taxable income
for the taxable year;
| 10 |
| (D) The amount of any net operating loss deduction | 11 |
| taken in arriving at
taxable income, other than a net | 12 |
| operating loss carried forward from a
taxable year | 13 |
| ending prior to December 31, 1986;
| 14 |
| (E) For taxable years in which a net operating loss | 15 |
| carryback or
carryforward from a taxable year ending | 16 |
| prior to December 31, 1986 is an
element of taxable | 17 |
| income under paragraph (1) of subsection (e) or | 18 |
| subparagraph
(E) of paragraph (2) of subsection (e), | 19 |
| the amount by which addition
modifications other than | 20 |
| those provided by this subparagraph (E) exceeded
| 21 |
| subtraction modifications in such taxable year, with | 22 |
| the following limitations
applied in the order that | 23 |
| they are listed:
| 24 |
| (i) the addition modification relating to the | 25 |
| net operating loss
carried back or forward to the | 26 |
| taxable year from any taxable year ending
prior to | 27 |
| December 31, 1986 shall be reduced by the amount of | 28 |
| addition
modification under this subparagraph (E) | 29 |
| which related to that net
operating loss and which | 30 |
| was taken into account in calculating the base
| 31 |
| income of an earlier taxable year, and
| 32 |
| (ii) the addition modification relating to the | 33 |
| net operating loss
carried back or forward to the | 34 |
| taxable year from any taxable year ending
prior to | 35 |
| December 31, 1986 shall not exceed the amount of | 36 |
| such carryback or
carryforward;
|
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| For taxable years in which there is a net operating | 2 |
| loss carryback or
carryforward from more than one other | 3 |
| taxable year ending prior to December
31, 1986, the | 4 |
| addition modification provided in this subparagraph | 5 |
| (E) shall
be the sum of the amounts computed | 6 |
| independently under the preceding
provisions of this | 7 |
| subparagraph (E) for each such taxable year;
| 8 |
| (F) For taxable years ending on or after January 1, | 9 |
| 1989, an amount
equal to the tax deducted pursuant to | 10 |
| Section 164 of the Internal Revenue
Code if the trust | 11 |
| or estate is claiming the same tax for purposes of the
| 12 |
| Illinois foreign tax credit under Section 601 of this | 13 |
| Act;
| 14 |
| (G) An amount equal to the amount of the capital | 15 |
| gain deduction
allowable under the Internal Revenue | 16 |
| Code, to the extent deducted from
gross income in the | 17 |
| computation of taxable income;
| 18 |
| (G-5) For taxable years ending after December 31, | 19 |
| 1997, an
amount equal to any eligible remediation costs | 20 |
| that the trust or estate
deducted in computing adjusted | 21 |
| gross income and for which the trust
or estate claims a | 22 |
| credit under subsection (l) of Section 201;
| 23 |
| (G-10) For taxable years 2001 and thereafter, an | 24 |
| amount equal to the
bonus depreciation deduction (30% | 25 |
| of the adjusted basis of the qualified
property) taken | 26 |
| on the taxpayer's federal income tax return for the | 27 |
| taxable
year under subsection (k) of Section 168 of the | 28 |
| Internal Revenue Code; and
| 29 |
| (G-11) If the taxpayer reports a capital gain or | 30 |
| loss on the
taxpayer's federal income tax return for | 31 |
| the taxable year based on a sale or
transfer of | 32 |
| property for which the taxpayer was required in any | 33 |
| taxable year to
make an addition modification under | 34 |
| subparagraph (G-10), then an amount equal
to the | 35 |
| aggregate amount of the deductions taken in all taxable
| 36 |
| years under subparagraph (R) with respect to that |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| property.
| 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 |
| (G-12) For taxable years ending on or after | 6 |
| December 31, 2004, an amount equal to the amount | 7 |
| otherwise allowed as a deduction in computing base | 8 |
| income for interest paid, accrued, or incurred, | 9 |
| directly or indirectly, to a foreign person who would | 10 |
| be a member of the same 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 the foreign | 13 |
| person's total business activity. The addition | 14 |
| modification required by this subparagraph shall be | 15 |
| reduced to the extent that dividends were included in | 16 |
| base income of the unitary group for the same taxable | 17 |
| year and received by the taxpayer or by a member of the | 18 |
| taxpayer's unitary business group (including amounts | 19 |
| included in gross income pursuant to Sections 951 | 20 |
| through 964 of the Internal Revenue Code and amounts | 21 |
| included in gross income under Section 78 of the | 22 |
| Internal Revenue Code) with respect to the stock of the | 23 |
| same person to whom the interest was paid, accrued, or | 24 |
| incurred.
| 25 |
| This paragraph shall not apply to the following:
| 26 |
| (i) an item of interest paid, accrued, or | 27 |
| incurred, directly or indirectly, to a foreign | 28 |
| person who is subject in a foreign country or | 29 |
| state, other than a state which requires mandatory | 30 |
| unitary reporting, to a tax on or measured by net | 31 |
| income with respect to such interest; or | 32 |
| (ii) an item of interest paid, accrued, or | 33 |
| incurred, directly or indirectly, to a foreign | 34 |
| person if the taxpayer can establish, based on a | 35 |
| preponderance of the evidence, both of the | 36 |
| following: |
|
|
|
HB3748 |
- 32 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| (a) the foreign person, during the same | 2 |
| taxable year, paid, accrued, or incurred, the | 3 |
| interest to a person that is not a related | 4 |
| member, and | 5 |
| (b) the transaction giving rise to the | 6 |
| interest expense between the taxpayer and the | 7 |
| foreign person did not have as a principal | 8 |
| purpose the avoidance of Illinois income tax, | 9 |
| and is paid pursuant to a contract or agreement | 10 |
| that reflects an arm's-length interest rate | 11 |
| and terms; or
| 12 |
| (iii) the taxpayer can establish, based on | 13 |
| clear and convincing evidence, that the interest | 14 |
| paid, accrued, or incurred relates to a contract or | 15 |
| agreement entered into at arm's-length rates and | 16 |
| terms and the principal purpose for the payment is | 17 |
| not federal or Illinois tax avoidance; or
| 18 |
| (iv) an item of interest paid, accrued, or | 19 |
| incurred, directly or indirectly, to a foreign | 20 |
| person if the taxpayer establishes by clear and | 21 |
| convincing evidence that the adjustments are | 22 |
| unreasonable; or if the taxpayer and the Director | 23 |
| agree in writing to the application or use of an | 24 |
| alternative method of apportionment under Section | 25 |
| 304(f).
| 26 |
| Nothing in this subsection shall preclude the | 27 |
| Director from making any other adjustment | 28 |
| otherwise allowed under Section 404 of this Act for | 29 |
| any tax year beginning after the effective date of | 30 |
| this amendment provided such adjustment is made | 31 |
| pursuant to regulation adopted by the Department | 32 |
| and such regulations provide methods and standards | 33 |
| by which the Department will utilize its authority | 34 |
| under Section 404 of this Act;
| 35 |
| (G-13) For taxable years ending on or after | 36 |
| December 31, 2004, an amount equal to the amount of |
|
|
|
HB3748 |
- 33 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| intangible expenses and costs otherwise allowed as a | 2 |
| deduction in computing base income, and that were paid, | 3 |
| accrued, or incurred, directly or indirectly, to a | 4 |
| foreign person who would be a member of the same | 5 |
| unitary business group but for the fact that the | 6 |
| foreign person's business activity outside the United | 7 |
| States is 80% or more of that person's total business | 8 |
| activity. The addition modification required by this | 9 |
| subparagraph shall be reduced to the extent that | 10 |
| dividends were included in base income of the unitary | 11 |
| group for the same taxable year and received by the | 12 |
| taxpayer or by a member of the taxpayer's unitary | 13 |
| business group (including amounts included in gross | 14 |
| income pursuant to Sections 951 through 964 of the | 15 |
| Internal Revenue Code and amounts included in gross | 16 |
| income under Section 78 of the Internal Revenue Code) | 17 |
| with respect to the stock of the same person to whom | 18 |
| the intangible expenses and costs were directly or | 19 |
| indirectly paid, incurred, or accrued. The preceding | 20 |
| sentence shall not apply to the extent that the same | 21 |
| dividends caused a reduction to the addition | 22 |
| modification required under Section 203(c)(2)(G-12) of | 23 |
| this Act. As used in this subparagraph, the term | 24 |
| "intangible expenses and costs" includes: (1) | 25 |
| expenses, losses, and costs for or related to the | 26 |
| direct or indirect acquisition, use, maintenance or | 27 |
| management, ownership, sale, exchange, or any other | 28 |
| disposition of intangible property; (2) losses | 29 |
| incurred, directly or indirectly, from factoring | 30 |
| transactions or discounting transactions; (3) royalty, | 31 |
| patent, technical, and copyright fees; (4) licensing | 32 |
| fees; and (5) other similar expenses and costs. For | 33 |
| purposes of this subparagraph, "intangible property" | 34 |
| includes patents, patent applications, trade names, | 35 |
| trademarks, service marks, copyrights, mask works, | 36 |
| trade secrets, and similar types of intangible assets. |
|
|
|
HB3748 |
- 34 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| This paragraph shall not apply to the following: | 2 |
| (i) any item of intangible expenses or costs | 3 |
| paid, accrued, or incurred, directly or | 4 |
| indirectly, from a transaction with a foreign | 5 |
| person who is subject in a foreign country or | 6 |
| state, other than a state which requires mandatory | 7 |
| unitary reporting, to a tax on or measured by net | 8 |
| income with respect to such item; or | 9 |
| (ii) any item of intangible expense or cost | 10 |
| paid, accrued, or incurred, directly or | 11 |
| indirectly, if the taxpayer can establish, based | 12 |
| on a preponderance of the evidence, both of the | 13 |
| following: | 14 |
| (a) the foreign person during the same | 15 |
| taxable year paid, accrued, or incurred, the | 16 |
| intangible expense or cost to a person that is | 17 |
| not a related member, and | 18 |
| (b) the transaction giving rise to the | 19 |
| intangible expense or cost between the | 20 |
| taxpayer and the foreign person did not have as | 21 |
| a principal purpose the avoidance of Illinois | 22 |
| income tax, and is paid pursuant to a contract | 23 |
| or agreement that reflects arm's-length terms; | 24 |
| or | 25 |
| (iii) any item of intangible expense or cost | 26 |
| paid, accrued, or incurred, directly or | 27 |
| indirectly, from a transaction with a foreign | 28 |
| person if the taxpayer establishes by clear and | 29 |
| convincing evidence, that the adjustments are | 30 |
| unreasonable; or if the taxpayer and the Director | 31 |
| agree in writing to the application or use of an | 32 |
| alternative method of apportionment under Section | 33 |
| 304(f);
| 34 |
| Nothing in this subsection shall preclude the | 35 |
| Director from making any other adjustment | 36 |
| otherwise allowed under Section 404 of this Act for |
|
|
|
HB3748 |
- 35 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| any tax year beginning after the effective date of | 2 |
| this amendment provided such adjustment is made | 3 |
| pursuant to regulation adopted by the Department | 4 |
| and such regulations provide methods and standards | 5 |
| by which the Department will utilize its authority | 6 |
| under Section 404 of this Act;
| 7 |
| and by deducting from the total so obtained the sum of the | 8 |
| following
amounts:
| 9 |
| (H) An amount equal to all amounts included in such | 10 |
| total pursuant
to the provisions of Sections 402(a), | 11 |
| 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the | 12 |
| Internal Revenue Code or included in such total as
| 13 |
| distributions under the provisions of any retirement | 14 |
| or disability plan for
employees of any governmental | 15 |
| agency or unit, or retirement payments to
retired | 16 |
| partners, which payments are excluded in computing net | 17 |
| earnings
from self employment by Section 1402 of the | 18 |
| Internal Revenue Code and
regulations adopted pursuant | 19 |
| thereto;
| 20 |
| (I) The valuation limitation amount;
| 21 |
| (J) 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 |
| (K) An amount equal to all amounts included in | 25 |
| taxable income as
modified by subparagraphs (A), (B), | 26 |
| (C), (D), (E), (F) and (G) which
are exempt from | 27 |
| taxation by this State either by reason of its statutes | 28 |
| or
Constitution
or by reason of the Constitution, | 29 |
| treaties or statutes of the United States;
provided | 30 |
| that, in the case of any statute of this State that | 31 |
| exempts income
derived from bonds or other obligations | 32 |
| from the tax imposed under this Act,
the amount | 33 |
| exempted shall be the interest net of bond premium | 34 |
| amortization;
| 35 |
| (L) With the exception of any amounts subtracted | 36 |
| under subparagraph
(K),
an amount equal to the sum of |
|
|
|
HB3748 |
- 36 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| all amounts disallowed as
deductions by (i) Sections | 2 |
| 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, | 3 |
| as now or hereafter amended, and all amounts of | 4 |
| expenses allocable
to interest and disallowed as | 5 |
| deductions by Section 265(1) of the Internal
Revenue | 6 |
| Code of 1954, as now or hereafter amended;
and (ii) for | 7 |
| taxable years
ending on or after August 13, 1999, | 8 |
| Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | 9 |
| the Internal Revenue Code; the provisions of this
| 10 |
| subparagraph are exempt from the provisions of Section | 11 |
| 250;
| 12 |
| (M) An amount equal to those dividends included in | 13 |
| such total
which were paid by a corporation which | 14 |
| conducts business operations in an
Enterprise Zone or | 15 |
| zones created under the Illinois Enterprise Zone Act | 16 |
| and
conducts substantially all of its operations in an | 17 |
| Enterprise Zone or Zones;
| 18 |
| (N) An amount equal to any contribution made to a | 19 |
| job training
project established pursuant to the Tax | 20 |
| Increment Allocation
Redevelopment Act;
| 21 |
| (O) An amount equal to those dividends included in | 22 |
| such total
that were paid by a corporation that | 23 |
| conducts business operations in a
federally designated | 24 |
| Foreign Trade Zone or Sub-Zone and that is designated
a | 25 |
| High Impact Business located in Illinois; provided | 26 |
| that dividends eligible
for the deduction provided in | 27 |
| subparagraph (M) of paragraph (2) of this
subsection | 28 |
| shall not be eligible for the deduction provided under | 29 |
| this
subparagraph (O);
| 30 |
| (P) An amount equal to the amount of the deduction | 31 |
| used to compute the
federal income tax credit for | 32 |
| restoration of substantial amounts held under
claim of | 33 |
| right for the taxable year pursuant to Section 1341 of | 34 |
| the
Internal Revenue Code of 1986;
| 35 |
| (Q) For taxable year 1999 and thereafter, an amount | 36 |
| equal to the
amount of any
(i) distributions, to the |
|
|
|
HB3748 |
- 37 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| extent includible in gross income for
federal income | 2 |
| tax purposes, made to the taxpayer because of
his or | 3 |
| her status as a victim of
persecution for racial or | 4 |
| religious reasons by Nazi Germany or any other Axis
| 5 |
| regime or as an heir of the victim and (ii) items
of | 6 |
| income, to the extent
includible in gross income for | 7 |
| federal income tax purposes, attributable to,
derived | 8 |
| from or in any way related to assets stolen from, | 9 |
| hidden from, or
otherwise lost to a victim of
| 10 |
| persecution for racial or religious reasons by Nazi
| 11 |
| Germany or any other Axis regime
immediately prior to, | 12 |
| during, and immediately after World War II, including,
| 13 |
| but
not limited to, interest on the proceeds receivable | 14 |
| as insurance
under policies issued to a victim of | 15 |
| persecution for racial or religious
reasons by Nazi | 16 |
| Germany or any other Axis regime by European insurance
| 17 |
| companies
immediately prior to and during World War II;
| 18 |
| provided, however, this subtraction from federal | 19 |
| adjusted gross income does not
apply to assets acquired | 20 |
| with such assets or with the proceeds from the sale of
| 21 |
| such assets; provided, further, this paragraph shall | 22 |
| only apply to a taxpayer
who was the first recipient of | 23 |
| such assets after their recovery and who is a
victim of
| 24 |
| persecution for racial or religious reasons
by Nazi | 25 |
| Germany or any other Axis regime or as an heir of the | 26 |
| victim. The
amount of and the eligibility for any | 27 |
| public assistance, benefit, or
similar entitlement is | 28 |
| not affected by the inclusion of items (i) and (ii) of
| 29 |
| this paragraph in gross income for federal income tax | 30 |
| purposes.
This paragraph is exempt from the provisions | 31 |
| of Section 250;
| 32 |
| (R) For taxable years 2001 and thereafter, for the | 33 |
| taxable year in
which the bonus depreciation deduction | 34 |
| (30% of the adjusted basis of the
qualified property) | 35 |
| is taken on the taxpayer's federal income tax return | 36 |
| under
subsection (k) of Section 168 of the Internal |
|
|
|
HB3748 |
- 38 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| Revenue Code and for each
applicable taxable year | 2 |
| thereafter, an amount equal to "x", where:
| 3 |
| (1) "y" equals the amount of the depreciation | 4 |
| deduction taken for the
taxable year
on the | 5 |
| taxpayer's federal income tax return on property | 6 |
| for which the bonus
depreciation deduction (30% of | 7 |
| the adjusted basis of the qualified property)
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; and
| 11 |
| (2) "x" equals "y" multiplied by 30 and then | 12 |
| divided by 70 (or "y"
multiplied by 0.429).
| 13 |
| The aggregate amount deducted under this | 14 |
| subparagraph in all taxable
years for any one piece of | 15 |
| property may not exceed the amount of the bonus
| 16 |
| depreciation deduction (30% of the adjusted basis of | 17 |
| the qualified property)
taken on that property on the | 18 |
| taxpayer's federal income tax return under
subsection | 19 |
| (k) of Section 168 of the Internal Revenue Code;
| 20 |
| (S) If the taxpayer reports a capital gain or loss | 21 |
| on the taxpayer's
federal income tax return for the | 22 |
| taxable year based on a sale or transfer of
property | 23 |
| for which the taxpayer was required in any taxable year | 24 |
| to make an
addition modification under subparagraph | 25 |
| (G-10), then an amount equal to that
addition | 26 |
| modification.
| 27 |
| The taxpayer is allowed to take the deduction under | 28 |
| this subparagraph
only once with respect to any one | 29 |
| piece of property;
| 30 |
| (T) The amount of (i) any interest income (net of | 31 |
| the deductions allocable thereto) taken into account | 32 |
| for the taxable year with respect to a transaction with | 33 |
| a taxpayer that is required to make an addition | 34 |
| modification with respect to such transaction under | 35 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 36 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| the amount of such addition modification and
(ii) any | 2 |
| income from intangible property (net of the deductions | 3 |
| allocable thereto) taken into account for the taxable | 4 |
| year with respect to a transaction with a taxpayer that | 5 |
| is required to make an addition modification with | 6 |
| respect to such transaction under Section | 7 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 8 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 9 |
| addition modification;
| 10 |
| (U) An amount equal to the interest income taken | 11 |
| into account for the taxable year (net of the | 12 |
| deductions allocable thereto) with respect to | 13 |
| transactions with a foreign person who would be a | 14 |
| member of the taxpayer's unitary business group but for | 15 |
| the fact the foreign person's business activity | 16 |
| outside the United States is 80% or more of that | 17 |
| person's total business activity, but not to exceed the | 18 |
| addition modification required to be made for the same | 19 |
| taxable year under Section 203(c)(2)(G-12) for | 20 |
| interest paid, accrued, or incurred, directly or | 21 |
| indirectly, to the same foreign person; and
| 22 |
| (V) An amount equal to the income from intangible | 23 |
| property taken into account for the taxable year (net | 24 |
| of the deductions allocable thereto) with respect to | 25 |
| transactions with a foreign person who would be a | 26 |
| member of the taxpayer's unitary business group but for | 27 |
| the fact that the foreign person's business activity | 28 |
| outside the United States is 80% or more of that | 29 |
| person's total business activity, but not to exceed the | 30 |
| addition modification required to be made for the same | 31 |
| taxable year under Section 203(c)(2)(G-13) for | 32 |
| intangible expenses and costs paid, accrued, or | 33 |
| incurred, directly or indirectly, to the same foreign | 34 |
| person.
| 35 |
| (3) Limitation. The amount of any modification | 36 |
| otherwise required
under this subsection shall, under |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| regulations prescribed by the
Department, be adjusted by | 2 |
| any amounts included therein which were
properly paid, | 3 |
| credited, or required to be distributed, or permanently set
| 4 |
| aside for charitable purposes pursuant to Internal Revenue | 5 |
| Code Section
642(c) during the taxable year.
| 6 |
| (d) Partnerships.
| 7 |
| (1) In general. In the case of a partnership, base | 8 |
| income means an
amount equal to the taxpayer's taxable | 9 |
| income for the taxable year as
modified by paragraph (2).
| 10 |
| (2) Modifications. The taxable income referred to in | 11 |
| paragraph (1)
shall be modified by adding thereto the sum | 12 |
| of the following amounts:
| 13 |
| (A) An amount equal to all amounts paid or accrued | 14 |
| to the taxpayer as
interest or dividends during the | 15 |
| taxable year to the extent excluded from
gross income | 16 |
| in the computation of taxable income;
| 17 |
| (B) An amount equal to the amount of tax imposed by | 18 |
| this Act to the
extent deducted from gross income for | 19 |
| the taxable year;
| 20 |
| (C) The amount of deductions allowed to the | 21 |
| partnership pursuant to
Section 707 (c) of the Internal | 22 |
| Revenue Code in calculating its taxable income;
| 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 taxable income;
| 27 |
| (D-5) For taxable years 2001 and thereafter, an | 28 |
| amount equal to the
bonus depreciation deduction (30% | 29 |
| of the adjusted basis of the qualified
property) taken | 30 |
| on the taxpayer's federal income tax return for the | 31 |
| taxable
year under subsection (k) of Section 168 of the | 32 |
| Internal Revenue Code;
| 33 |
| (D-6) If the taxpayer reports a capital gain or | 34 |
| loss on the taxpayer's
federal income tax return for | 35 |
| the taxable year based on a sale or transfer of
|
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| property for which the taxpayer was required in any | 2 |
| taxable year to make an
addition modification under | 3 |
| subparagraph (D-5), then an amount equal to the
| 4 |
| aggregate amount of the deductions taken in all taxable | 5 |
| years
under subparagraph (O) with respect to that | 6 |
| property.
| 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-7) For taxable years ending on or after December | 11 |
| 31, 2004, an amount equal to the amount otherwise | 12 |
| allowed as a deduction in computing base income for | 13 |
| interest paid, accrued, or incurred, directly or | 14 |
| indirectly, to a foreign person who would be a member | 15 |
| of the same unitary business group but for the fact the | 16 |
| foreign person's business activity outside the United | 17 |
| States is 80% or more of the foreign person's total | 18 |
| business activity. The addition modification required | 19 |
| by this subparagraph shall be reduced to the extent | 20 |
| that dividends were included in base income of the | 21 |
| unitary group for the same taxable year and received by | 22 |
| the taxpayer or by a member of the taxpayer's unitary | 23 |
| business group (including amounts included in gross | 24 |
| income pursuant to Sections 951 through 964 of the | 25 |
| Internal Revenue Code and amounts included in gross | 26 |
| income under Section 78 of the Internal Revenue Code) | 27 |
| with respect to the stock of the same person to whom | 28 |
| the interest was paid, accrued, or incurred.
| 29 |
| This paragraph shall not apply to the following:
| 30 |
| (i) an item of interest paid, accrued, or | 31 |
| incurred, directly or indirectly, to a foreign | 32 |
| person who is subject in a foreign country or | 33 |
| state, other than a state which requires mandatory | 34 |
| unitary reporting, to a tax on or measured by net | 35 |
| income with respect to such interest; or | 36 |
| (ii) an item of interest paid, accrued, or |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| incurred, directly or indirectly, to a foreign | 2 |
| person if the taxpayer can establish, based on a | 3 |
| preponderance of the evidence, both of the | 4 |
| following: | 5 |
| (a) the foreign person, during the same | 6 |
| taxable year, paid, accrued, or incurred, the | 7 |
| interest to a person that is not a related | 8 |
| member, and | 9 |
| (b) the transaction giving rise to the | 10 |
| interest expense between the taxpayer and the | 11 |
| foreign person did not have as a principal | 12 |
| purpose the avoidance of Illinois income tax, | 13 |
| and is paid pursuant to a contract or agreement | 14 |
| that reflects an arm's-length interest rate | 15 |
| and terms; or
| 16 |
| (iii) the taxpayer can establish, based on | 17 |
| clear and convincing evidence, that the interest | 18 |
| paid, accrued, or incurred relates to a contract or | 19 |
| agreement entered into at arm's-length rates and | 20 |
| terms and the principal purpose for the payment is | 21 |
| not federal or Illinois tax avoidance; or
| 22 |
| (iv) an item of interest paid, accrued, or | 23 |
| incurred, directly or indirectly, to a foreign | 24 |
| person if the taxpayer establishes by clear and | 25 |
| convincing evidence that the adjustments are | 26 |
| unreasonable; or if the taxpayer and the Director | 27 |
| agree in writing to the application or use of an | 28 |
| alternative method of apportionment under Section | 29 |
| 304(f).
| 30 |
| Nothing in this subsection shall preclude the | 31 |
| Director from making any other adjustment | 32 |
| otherwise allowed under Section 404 of this Act for | 33 |
| any tax year beginning after the effective date of | 34 |
| this amendment provided such adjustment is made | 35 |
| pursuant to regulation adopted by the Department | 36 |
| and such regulations provide methods and standards |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| by which the Department will utilize its authority | 2 |
| under Section 404 of this Act; and
| 3 |
| (D-8) For taxable years ending on or after December | 4 |
| 31, 2004, an amount equal to the amount of intangible | 5 |
| expenses and costs otherwise allowed as a deduction in | 6 |
| computing base income, and that were paid, accrued, or | 7 |
| incurred, directly or indirectly, to a foreign person | 8 |
| who would be a member of the same unitary business | 9 |
| group but for the fact that the foreign person's | 10 |
| business activity outside the United States is 80% or | 11 |
| more of that person's total business activity. The | 12 |
| addition modification required by this subparagraph | 13 |
| shall be reduced to the extent that dividends were | 14 |
| included in base income of the unitary group for the | 15 |
| same taxable year and received by the taxpayer or by a | 16 |
| member of the taxpayer's unitary business group | 17 |
| (including amounts included in gross income pursuant | 18 |
| to Sections 951 through 964 of the Internal Revenue | 19 |
| Code and amounts included in gross income under Section | 20 |
| 78 of the Internal Revenue Code) with respect to the | 21 |
| stock of the same person to whom the intangible | 22 |
| expenses and costs were directly or indirectly paid, | 23 |
| incurred or accrued. The preceding sentence shall not | 24 |
| apply to the extent that the same dividends caused a | 25 |
| reduction to the addition modification required under | 26 |
| Section 203(d)(2)(D-7) of this Act. As used in this | 27 |
| subparagraph, the term "intangible expenses and costs" | 28 |
| includes (1) expenses, losses, and costs for, or | 29 |
| related to, the direct or indirect acquisition, use, | 30 |
| maintenance or management, ownership, sale, exchange, | 31 |
| or any other disposition of intangible property; (2) | 32 |
| losses incurred, directly or indirectly, from | 33 |
| factoring transactions or discounting transactions; | 34 |
| (3) royalty, patent, technical, and copyright fees; | 35 |
| (4) licensing fees; and (5) other similar expenses and | 36 |
| costs. For purposes of this subparagraph, "intangible |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| property" includes patents, patent applications, trade | 2 |
| names, trademarks, service marks, copyrights, mask | 3 |
| works, trade secrets, and similar types of intangible | 4 |
| assets; | 5 |
| This paragraph shall not apply to the following: | 6 |
| (i) any item of intangible expenses or costs | 7 |
| paid, accrued, or incurred, directly or | 8 |
| indirectly, from a transaction with a foreign | 9 |
| person who is subject in a foreign country or | 10 |
| state, other than a state which requires mandatory | 11 |
| unitary reporting, to a tax on or measured by net | 12 |
| income with respect to such item; or | 13 |
| (ii) any item of intangible expense or cost | 14 |
| paid, accrued, or incurred, directly or | 15 |
| indirectly, if the taxpayer can establish, based | 16 |
| on a preponderance of the evidence, both of the | 17 |
| following: | 18 |
| (a) the foreign person during the same | 19 |
| taxable year paid, accrued, or incurred, the | 20 |
| intangible expense or cost to a person that is | 21 |
| not a related member, and | 22 |
| (b) the transaction giving rise to the | 23 |
| intangible expense or cost between the | 24 |
| taxpayer and the foreign person did not have as | 25 |
| a principal purpose the avoidance of Illinois | 26 |
| income tax, and is paid pursuant to a contract | 27 |
| or agreement that reflects arm's-length terms; | 28 |
| or | 29 |
| (iii) any item of intangible expense or cost | 30 |
| paid, accrued, or incurred, directly or | 31 |
| indirectly, from a transaction with a foreign | 32 |
| person if the taxpayer establishes by clear and | 33 |
| convincing evidence, that the adjustments are | 34 |
| unreasonable; or if the taxpayer and the Director | 35 |
| agree in writing to the application or use of an | 36 |
| alternative method of apportionment under Section |
|
|
|
HB3748 |
- 45 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| 304(f);
| 2 |
| Nothing in this subsection shall preclude the | 3 |
| Director from making any other adjustment | 4 |
| otherwise allowed under Section 404 of this Act for | 5 |
| any tax year beginning after the effective date of | 6 |
| this amendment provided such adjustment is made | 7 |
| pursuant to regulation adopted by the Department | 8 |
| and such regulations provide methods and standards | 9 |
| by which the Department will utilize its authority | 10 |
| under Section 404 of this Act;
| 11 |
| and by deducting from the total so obtained the following | 12 |
| amounts:
| 13 |
| (E) The valuation limitation amount;
| 14 |
| (F) An amount equal to the amount of any tax | 15 |
| imposed by this Act which
was refunded to the taxpayer | 16 |
| and included in such total for the taxable year;
| 17 |
| (G) An amount equal to all amounts included in | 18 |
| taxable income as
modified by subparagraphs (A), (B), | 19 |
| (C) and (D) which are exempt from
taxation by this | 20 |
| State either by reason of its statutes or Constitution | 21 |
| or
by reason of
the Constitution, treaties or statutes | 22 |
| of the United States;
provided that, in the case of any | 23 |
| statute of this State that exempts income
derived from | 24 |
| bonds or other obligations from the tax imposed under | 25 |
| this Act,
the amount exempted shall be the interest net | 26 |
| of bond premium amortization;
| 27 |
| (H) Any income of the partnership which | 28 |
| constitutes personal service
income as defined in | 29 |
| Section 1348 (b) (1) of the Internal Revenue Code (as
| 30 |
| in effect December 31, 1981) or a reasonable allowance | 31 |
| for compensation
paid or accrued for services rendered | 32 |
| by partners to the partnership,
whichever is greater;
| 33 |
| (I) An amount equal to all amounts of income | 34 |
| distributable to an entity
subject to the Personal | 35 |
| Property Tax Replacement Income Tax imposed by
| 36 |
| subsections (c) and (d) of Section 201 of this Act |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| including amounts
distributable to organizations | 2 |
| exempt from federal income tax by reason of
Section | 3 |
| 501(a) of the Internal Revenue Code;
| 4 |
| (J) With the exception of any amounts subtracted | 5 |
| under subparagraph
(G),
an amount equal to the sum of | 6 |
| all amounts disallowed as deductions
by (i) Sections | 7 |
| 171(a) (2), and 265(2) of the Internal Revenue Code of | 8 |
| 1954,
as now or hereafter amended, and all amounts of | 9 |
| expenses allocable to
interest and disallowed as | 10 |
| deductions by Section 265(1) of the Internal
Revenue | 11 |
| Code, as now or hereafter amended;
and (ii) for taxable | 12 |
| years
ending on or after August 13, 1999, Sections
| 13 |
| 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the | 14 |
| Internal Revenue Code; the provisions of this
| 15 |
| subparagraph are exempt from the provisions of Section | 16 |
| 250;
| 17 |
| (K) An amount equal to those dividends included in | 18 |
| such total which were
paid by a corporation which | 19 |
| conducts business operations in an Enterprise
Zone or | 20 |
| zones created under the Illinois Enterprise Zone Act, | 21 |
| enacted by
the 82nd General Assembly, and
conducts | 22 |
| substantially all of its operations
in an Enterprise | 23 |
| Zone or Zones;
| 24 |
| (L) An amount equal to any contribution made to a | 25 |
| job training project
established pursuant to the Real | 26 |
| Property Tax Increment Allocation
Redevelopment Act;
| 27 |
| (M) An amount equal to those dividends included in | 28 |
| such total
that were paid by a corporation that | 29 |
| conducts business operations in a
federally designated | 30 |
| Foreign Trade Zone or Sub-Zone and that is designated a
| 31 |
| High Impact Business located in Illinois; provided | 32 |
| that dividends eligible
for the deduction provided in | 33 |
| subparagraph (K) of paragraph (2) of this
subsection | 34 |
| shall not be eligible for the deduction provided under | 35 |
| this
subparagraph (M);
| 36 |
| (N) An amount equal to the amount of the deduction |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| used to compute the
federal income tax credit for | 2 |
| restoration of substantial amounts held under
claim of | 3 |
| right for the taxable year pursuant to Section 1341 of | 4 |
| the
Internal Revenue Code of 1986;
| 5 |
| (O) For taxable years 2001 and thereafter, for the | 6 |
| taxable year in
which the bonus depreciation deduction | 7 |
| (30% of the adjusted basis of the
qualified property) | 8 |
| is taken on the taxpayer's federal income tax return | 9 |
| under
subsection (k) of Section 168 of the Internal | 10 |
| Revenue Code and for each
applicable taxable year | 11 |
| thereafter, an amount equal to "x", where:
| 12 |
| (1) "y" equals the amount of the depreciation | 13 |
| deduction taken for the
taxable year
on the | 14 |
| taxpayer's federal income tax return on property | 15 |
| for which the bonus
depreciation deduction (30% of | 16 |
| the adjusted basis of the qualified property)
was | 17 |
| taken in any year under subsection (k) of Section | 18 |
| 168 of the Internal
Revenue Code, but not including | 19 |
| the bonus depreciation deduction; and
| 20 |
| (2) "x" equals "y" multiplied by 30 and then | 21 |
| divided by 70 (or "y"
multiplied by 0.429).
| 22 |
| The aggregate amount deducted under this | 23 |
| subparagraph in all taxable
years for any one piece of | 24 |
| property may not exceed the amount of the bonus
| 25 |
| depreciation deduction (30% of the adjusted basis of | 26 |
| the qualified property)
taken on that property on the | 27 |
| taxpayer's federal income tax return under
subsection | 28 |
| (k) of Section 168 of the Internal Revenue Code;
| 29 |
| (P) If the taxpayer reports a capital gain or loss | 30 |
| on the taxpayer's
federal income tax return for the | 31 |
| taxable year based on a sale or transfer of
property | 32 |
| for which the taxpayer was required in any taxable year | 33 |
| to make an
addition modification under subparagraph | 34 |
| (D-5), then an amount equal to that
addition | 35 |
| modification.
| 36 |
| The taxpayer is allowed to take the deduction under |
|
|
|
HB3748 |
- 48 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| this subparagraph
only once with respect to any one | 2 |
| piece of property;
| 3 |
| (Q) The amount of (i) any interest income (net of | 4 |
| the deductions allocable thereto) taken into account | 5 |
| for the taxable year with respect to a transaction with | 6 |
| a taxpayer that is required to make an addition | 7 |
| modification with respect to such transaction under | 8 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 9 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 10 |
| the amount of such addition modification and
(ii) any | 11 |
| income from intangible property (net of the deductions | 12 |
| allocable thereto) taken into account for the taxable | 13 |
| year with respect to a transaction with a taxpayer that | 14 |
| is required to make an addition modification with | 15 |
| respect to such transaction under Section | 16 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 17 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 18 |
| addition modification;
| 19 |
| (R) An amount equal to the interest income taken | 20 |
| into account for the taxable year (net of the | 21 |
| deductions allocable thereto) with respect to | 22 |
| transactions with a foreign person who would be a | 23 |
| member of the taxpayer's unitary business group but for | 24 |
| the fact that the foreign person's business activity | 25 |
| outside the United States is 80% or more of that | 26 |
| person's total business activity, but not to exceed the | 27 |
| addition modification required to be made for the same | 28 |
| taxable year under Section 203(d)(2)(D-7) for interest | 29 |
| paid, accrued, or incurred, directly or indirectly, to | 30 |
| the same foreign person; and
| 31 |
| (S) An amount equal to the income from intangible | 32 |
| property taken into account for the taxable year (net | 33 |
| of the deductions allocable thereto) with respect to | 34 |
| transactions with a foreign person who would be a | 35 |
| member of the taxpayer's unitary business group but for | 36 |
| the fact that the foreign person's business activity |
|
|
|
HB3748 |
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LRB094 09141 BDD 39372 b |
|
| 1 |
| outside the United States is 80% or more of that | 2 |
| person's total business activity, but not to exceed the | 3 |
| addition modification required to be made for the same | 4 |
| taxable year under Section 203(d)(2)(D-8) for | 5 |
| intangible expenses and costs paid, accrued, or | 6 |
| incurred, directly or indirectly, to the same foreign | 7 |
| person.
| 8 |
| (e) Gross income; adjusted gross income; taxable income.
| 9 |
| (1) In general. Subject to the provisions of paragraph | 10 |
| (2) and
subsection (b) (3), for purposes of this Section | 11 |
| and Section 803(e), a
taxpayer's gross income, adjusted | 12 |
| gross income, or taxable income for
the taxable year shall | 13 |
| mean the amount of gross income, adjusted gross
income or | 14 |
| taxable income properly reportable for federal income tax
| 15 |
| purposes for the taxable year under the provisions of the | 16 |
| Internal
Revenue Code. Taxable income may be less than | 17 |
| zero. However, for taxable
years ending on or after | 18 |
| December 31, 1986, net operating loss
carryforwards from | 19 |
| taxable years ending prior to December 31, 1986, may not
| 20 |
| exceed the sum of federal taxable income for the taxable | 21 |
| year before net
operating loss deduction, plus the excess | 22 |
| of addition modifications over
subtraction modifications | 23 |
| for the taxable year. For taxable years ending
prior to | 24 |
| December 31, 1986, taxable income may never be an amount in | 25 |
| excess
of the net operating loss for the taxable year as | 26 |
| defined in subsections
(c) and (d) of Section 172 of the | 27 |
| Internal Revenue Code, provided that when
taxable income of | 28 |
| a corporation (other than a Subchapter S corporation),
| 29 |
| trust, or estate is less than zero and addition | 30 |
| modifications, other than
those provided by subparagraph | 31 |
| (E) of paragraph (2) of subsection (b) for
corporations or | 32 |
| subparagraph (E) of paragraph (2) of subsection (c) for
| 33 |
| trusts and estates, exceed subtraction modifications, an | 34 |
| addition
modification must be made under those | 35 |
| subparagraphs for any other taxable
year to which the |
|
|
|
HB3748 |
- 50 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| taxable income less than zero (net operating loss) is
| 2 |
| applied under Section 172 of the Internal Revenue Code or | 3 |
| under
subparagraph (E) of paragraph (2) of this subsection | 4 |
| (e) applied in
conjunction with Section 172 of the Internal | 5 |
| Revenue Code.
| 6 |
| (2) Special rule. For purposes of paragraph (1) of this | 7 |
| subsection,
the taxable income properly reportable for | 8 |
| federal income tax purposes
shall mean:
| 9 |
| (A) Certain life insurance companies. In the case | 10 |
| of a life
insurance company subject to the tax imposed | 11 |
| by Section 801 of the
Internal Revenue Code, life | 12 |
| insurance company taxable income, plus the
amount of | 13 |
| distribution from pre-1984 policyholder surplus | 14 |
| accounts as
calculated under Section 815a of the | 15 |
| Internal Revenue Code;
| 16 |
| (B) Certain other insurance companies. In the case | 17 |
| of mutual
insurance companies subject to the tax | 18 |
| imposed by Section 831 of the
Internal Revenue Code, | 19 |
| insurance company taxable income;
| 20 |
| (C) Regulated investment companies. In the case of | 21 |
| a regulated
investment company subject to the tax | 22 |
| imposed by Section 852 of the
Internal Revenue Code, | 23 |
| investment company taxable income;
| 24 |
| (D) Real estate investment trusts. In the case of a | 25 |
| real estate
investment trust subject to the tax imposed | 26 |
| by Section 857 of the
Internal Revenue Code, real | 27 |
| estate investment trust taxable income;
| 28 |
| (E) Consolidated corporations. In the case of a | 29 |
| corporation which
is a member of an affiliated group of | 30 |
| corporations filing a consolidated
income tax return | 31 |
| for the taxable year for federal income tax purposes,
| 32 |
| taxable income determined as if such corporation had | 33 |
| filed a separate
return for federal income tax purposes | 34 |
| for the taxable year and each
preceding taxable year | 35 |
| for which it was a member of an affiliated group.
For | 36 |
| purposes of this subparagraph, the taxpayer's separate |
|
|
|
HB3748 |
- 51 - |
LRB094 09141 BDD 39372 b |
|
| 1 |
| taxable
income shall be determined as if the election | 2 |
| provided by Section
243(b) (2) of the Internal Revenue | 3 |
| Code had been in effect for all such years;
| 4 |
| (F) Cooperatives. In the case of a cooperative | 5 |
| corporation or
association, the taxable income of such | 6 |
| organization determined in
accordance with the | 7 |
| provisions of Section 1381 through 1388 of the
Internal | 8 |
| Revenue Code;
| 9 |
| (G) Subchapter S corporations. In the case of: (i) | 10 |
| a Subchapter S
corporation for which there is in effect | 11 |
| an election for the taxable year
under Section 1362 of | 12 |
| the Internal Revenue Code, the taxable income of such
| 13 |
| corporation determined in accordance with Section | 14 |
| 1363(b) of the Internal
Revenue Code, except that | 15 |
| taxable income shall take into
account those items | 16 |
| which are required by Section 1363(b)(1) of the
| 17 |
| Internal Revenue Code to be separately stated; and (ii) | 18 |
| a Subchapter
S corporation for which there is in effect | 19 |
| a federal election to opt out of
the provisions of the | 20 |
| Subchapter S Revision Act of 1982 and have applied
| 21 |
| instead the prior federal Subchapter S rules as in | 22 |
| effect on July 1, 1982,
the taxable income of such | 23 |
| corporation determined in accordance with the
federal | 24 |
| Subchapter S rules as in effect on July 1, 1982; and
| 25 |
| (H) Partnerships. In the case of a partnership, | 26 |
| taxable income
determined in accordance with Section | 27 |
| 703 of the Internal Revenue Code,
except that taxable | 28 |
| income shall take into account those items which are
| 29 |
| required by Section 703(a)(1) to be separately stated | 30 |
| but which would be
taken into account by an individual | 31 |
| in calculating his taxable income.
| 32 |
| (3) Recapture of business expenses on disposition of | 33 |
| asset or business. Notwithstanding any other law to the | 34 |
| contrary, if in prior years income from an asset or | 35 |
| business has been classified as business income and in a | 36 |
| later year is demonstrated to be non-business income, then |
|
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| all expenses, without limitation, deducted in such later | 2 |
| year and in the 2 immediately preceding taxable years | 3 |
| related to that asset or business that generated the | 4 |
| non-business income shall be added back and recaptured as | 5 |
| business income in the year of the disposition of the asset | 6 |
| or business. Such amount shall be apportioned to Illinois | 7 |
| using the greater of the apportionment fraction computed | 8 |
| for the business under Section 304 of this Act for the | 9 |
| taxable year or the average of the apportionment fractions | 10 |
| computed for the business under Section 304 of this Act for | 11 |
| the taxable year and for the 2 immediately preceding | 12 |
| taxable years.
| 13 |
| (f) Valuation limitation amount.
| 14 |
| (1) In general. The valuation limitation amount | 15 |
| referred to in
subsections (a) (2) (G), (c) (2) (I) and | 16 |
| (d)(2) (E) is an amount equal to:
| 17 |
| (A) The sum of the pre-August 1, 1969 appreciation | 18 |
| amounts (to the
extent consisting of gain reportable | 19 |
| under the provisions of Section
1245 or 1250 of the | 20 |
| Internal Revenue Code) for all property in respect
of | 21 |
| which such gain was reported for the taxable year; plus
| 22 |
| (B) The lesser of (i) the sum of the pre-August 1, | 23 |
| 1969 appreciation
amounts (to the extent consisting of | 24 |
| capital gain) for all property in
respect of which such | 25 |
| gain was reported for federal income tax purposes
for | 26 |
| the taxable year, or (ii) the net capital gain for the | 27 |
| taxable year,
reduced in either case by any amount of | 28 |
| such gain included in the amount
determined under | 29 |
| subsection (a) (2) (F) or (c) (2) (H).
| 30 |
| (2) Pre-August 1, 1969 appreciation amount.
| 31 |
| (A) If the fair market value of property referred | 32 |
| to in paragraph
(1) was readily ascertainable on August | 33 |
| 1, 1969, the pre-August 1, 1969
appreciation amount for | 34 |
| such property is the lesser of (i) the excess of
such | 35 |
| fair market value over the taxpayer's basis (for | 36 |
| determining gain)
for such property on that date |
|
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| (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 | 21 |
| otherwise, nothing
in this Section shall permit the same item | 22 |
| to be deducted more than once.
| 23 |
| (h) Legislative intention. Except as expressly provided by | 24 |
| this
Section there shall be no modifications or limitations on | 25 |
| the amounts
of income, gain, loss or deduction taken into | 26 |
| account in determining
gross income, adjusted gross income or | 27 |
| taxable income for federal income
tax purposes for the taxable | 28 |
| year, or in the amount of such items
entering into the | 29 |
| computation of base income and net income under this
Act for | 30 |
| such taxable year, whether in respect of property values as of
| 31 |
| August 1, 1969 or otherwise.
| 32 |
| (Source: P.A. 92-16, eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, | 33 |
| eff. 8-17-01; 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; | 34 |
| 92-651, eff. 7-11-02; 92-846, eff. 8-23-02; 93-812, eff. |
|
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HB3748 |
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LRB094 09141 BDD 39372 b |
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| 7-26-04; 93-840, eff. 7-30-04; revised 10-12-04.)
| 2 |
| Section 99. Effective date. This Act takes effect upon | 3 |
| becoming law.
|
|