Full Text of HB0709 94th General Assembly
HB0709sam004 94TH GENERAL ASSEMBLY
|
Sen. Chris Lauzen
Filed: 5/13/2005
|
|
09400HB0709sam004 |
|
LRB094 08094 BDD 46165 a |
|
| 1 |
| AMENDMENT TO HOUSE BILL 709
| 2 |
| AMENDMENT NO. ______. Amend House Bill 709 by replacing | 3 |
| everything after the enacting clause with the following:
| 4 |
| "Section 5. The Illinois Income Tax Act is amended by | 5 |
| changing Section 203 as follows:
| 6 |
| (35 ILCS 5/203) (from Ch. 120, par. 2-203)
| 7 |
| Sec. 203. Base income defined.
| 8 |
| (a) Individuals.
| 9 |
| (1) In general. In the case of an individual, base | 10 |
| income means an
amount equal to the taxpayer's adjusted | 11 |
| gross income for the taxable
year as modified by paragraph | 12 |
| (2).
| 13 |
| (2) Modifications. The adjusted gross income referred | 14 |
| to in
paragraph (1) shall be modified by adding thereto the | 15 |
| sum of the
following amounts:
| 16 |
| (A) An amount equal to all amounts paid or accrued | 17 |
| to the taxpayer
as interest or dividends during the | 18 |
| taxable year to the extent excluded
from gross income | 19 |
| in the computation of adjusted gross income, except | 20 |
| stock
dividends of qualified public utilities | 21 |
| described in Section 305(e) of the
Internal Revenue | 22 |
| Code;
| 23 |
| (B) An amount equal to the amount of tax imposed by | 24 |
| this Act to the
extent deducted from gross income in |
|
|
|
09400HB0709sam004 |
- 2 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| the computation of adjusted gross
income for the | 2 |
| taxable year;
| 3 |
| (C) An amount equal to the amount received during | 4 |
| the taxable year
as a recovery or refund of real | 5 |
| property taxes paid with respect to the
taxpayer's | 6 |
| principal residence under the Revenue Act of
1939 and | 7 |
| for which a deduction was previously taken under | 8 |
| subparagraph (L) of
this paragraph (2) prior to July 1, | 9 |
| 1991, the retrospective application date of
Article 4 | 10 |
| of Public Act 87-17. In the case of multi-unit or | 11 |
| multi-use
structures and farm dwellings, the taxes on | 12 |
| the taxpayer's principal residence
shall be that | 13 |
| portion of the total taxes for the entire property | 14 |
| which is
attributable to such principal residence;
| 15 |
| (D) An amount equal to the amount of the capital | 16 |
| gain deduction
allowable under the Internal Revenue | 17 |
| Code, to the extent deducted from gross
income in the | 18 |
| computation of adjusted gross income;
| 19 |
| (D-5) An amount, to the extent not included in | 20 |
| adjusted gross income,
equal to the amount of money | 21 |
| withdrawn by the taxpayer in the taxable year from
a | 22 |
| medical care savings account and the interest earned on | 23 |
| the account in the
taxable year of a withdrawal | 24 |
| pursuant to subsection (b) of Section 20 of the
Medical | 25 |
| Care Savings Account Act or subsection (b) of Section | 26 |
| 20 of the
Medical Care Savings Account Act of 2000;
| 27 |
| (D-10) For taxable years ending after December 31, | 28 |
| 1997, an
amount equal to any eligible remediation costs | 29 |
| that the individual
deducted in computing adjusted | 30 |
| gross income and for which the
individual claims a | 31 |
| credit under subsection (l) of Section 201;
| 32 |
| (D-15) For taxable years 2001 and thereafter, an | 33 |
| amount equal to the
bonus depreciation deduction (30% | 34 |
| of the adjusted basis of the qualified
property) taken |
|
|
|
09400HB0709sam004 |
- 3 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| on the taxpayer's federal income tax return for the | 2 |
| taxable
year under subsection (k) of Section 168 of the | 3 |
| Internal Revenue Code;
| 4 |
| (D-16) If the taxpayer sells, transfers, abandons, | 5 |
| or otherwise disposes of
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 |
| (D-15), then an amount equal
to the aggregate amount of | 11 |
| the deductions taken in all taxable
years under | 12 |
| subparagraph (Z) with respect to that property.
| 13 |
| The taxpayer is required to make the addition | 14 |
| modification under this
subparagraph
only once with | 15 |
| respect to any one piece of property;
| 16 |
| (D-17) For taxable years ending on or after | 17 |
| December 31, 2004, an amount equal to the amount | 18 |
| otherwise allowed as a deduction in computing base | 19 |
| income for interest paid, accrued, or incurred, | 20 |
| directly or indirectly, to a foreign person who would | 21 |
| be a member of the same unitary business group but for | 22 |
| the fact that foreign person's business activity | 23 |
| outside the United States is 80% or more of the foreign | 24 |
| person's total business activity. The addition | 25 |
| modification required by this subparagraph shall be | 26 |
| reduced to the extent that dividends were included in | 27 |
| base income of the unitary group for the same taxable | 28 |
| year and received by the taxpayer or by a member of the | 29 |
| taxpayer's unitary business group (including amounts | 30 |
| included in gross income under Sections 951 through 964 | 31 |
| of the Internal Revenue Code and amounts included in | 32 |
| gross income under Section 78 of the Internal Revenue | 33 |
| Code) with respect to the stock of the same person to | 34 |
| whom the interest was paid, accrued, or incurred. |
|
|
|
09400HB0709sam004 |
- 4 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| This paragraph shall not apply to the following:
| 2 |
| (i) an item of interest paid, accrued, or | 3 |
| incurred, directly or indirectly, to a foreign | 4 |
| person who is subject in a foreign country or | 5 |
| state, other than a state which requires mandatory | 6 |
| unitary reporting, to a tax on or measured by net | 7 |
| income with respect to such interest; or | 8 |
| (ii) an item of interest paid, accrued, or | 9 |
| incurred, directly or indirectly, to a foreign | 10 |
| person if the taxpayer can establish, based on a | 11 |
| preponderance of the evidence, both of the | 12 |
| following: | 13 |
| (a) the foreign person, during the same | 14 |
| taxable year, paid, accrued, or incurred, the | 15 |
| interest to a person that is not a related | 16 |
| member, and | 17 |
| (b) the transaction giving rise to the | 18 |
| interest expense between the taxpayer and the | 19 |
| foreign person did not have as a principal | 20 |
| purpose the avoidance of Illinois income tax, | 21 |
| and is paid pursuant to a contract or agreement | 22 |
| that reflects an arm's-length interest rate | 23 |
| and terms; or
| 24 |
| (iii) the taxpayer can establish, based on | 25 |
| clear and convincing evidence, that the interest | 26 |
| paid, accrued, or incurred relates to a contract or | 27 |
| agreement entered into at arm's-length rates and | 28 |
| terms and the principal purpose for the payment is | 29 |
| not federal or Illinois tax avoidance; or
| 30 |
| (iv) an item of interest paid, accrued, or | 31 |
| incurred, directly or indirectly, to 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 |
|
|
|
09400HB0709sam004 |
- 5 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| agree in writing to the application or use of an | 2 |
| alternative method of apportionment under Section | 3 |
| 304(f).
| 4 |
| Nothing in this subsection shall preclude the | 5 |
| Director from making any other adjustment | 6 |
| otherwise allowed under Section 404 of this Act for | 7 |
| any tax year beginning after the effective date of | 8 |
| this amendment provided such adjustment is made | 9 |
| pursuant to regulation adopted by the Department | 10 |
| and such regulations provide methods and standards | 11 |
| by which the Department will utilize its authority | 12 |
| under Section 404 of this Act;
| 13 |
| (D-18) For taxable years ending on or after | 14 |
| December 31, 2004, an amount equal to the amount of | 15 |
| intangible expenses and costs otherwise allowed as a | 16 |
| deduction in computing base income, and that were paid, | 17 |
| accrued, or incurred, directly or indirectly, to a | 18 |
| foreign person who would be a member of the same | 19 |
| unitary business group but for the fact that the | 20 |
| foreign person's business activity outside the United | 21 |
| States is 80% or more of that person's total business | 22 |
| activity. The addition modification required by this | 23 |
| subparagraph shall be reduced to the extent that | 24 |
| dividends were included in base income of the unitary | 25 |
| group for the same taxable year and received by the | 26 |
| taxpayer or by a member of the taxpayer's unitary | 27 |
| business group (including amounts included in gross | 28 |
| income under Sections 951 through 964 of the Internal | 29 |
| Revenue Code and amounts included in gross income under | 30 |
| Section 78 of the Internal Revenue Code) with respect | 31 |
| to the stock of the same person to whom the intangible | 32 |
| expenses and costs were directly or indirectly paid, | 33 |
| incurred, or accrued. The preceding sentence does not | 34 |
| apply to the extent that the same dividends caused a |
|
|
|
09400HB0709sam004 |
- 6 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| reduction to the addition modification required under | 2 |
| Section 203(a)(2)(D-17) of this Act. As used in this | 3 |
| subparagraph, the term "intangible expenses and costs" | 4 |
| includes (1) expenses, losses, and costs for, or | 5 |
| related to, the direct or indirect acquisition, use, | 6 |
| maintenance or management, ownership, sale, exchange, | 7 |
| or any other disposition of intangible property; (2) | 8 |
| losses incurred, directly or indirectly, from | 9 |
| factoring transactions or discounting transactions; | 10 |
| (3) royalty, patent, technical, and copyright fees; | 11 |
| (4) licensing fees; and (5) other similar expenses and | 12 |
| costs.
For purposes of this subparagraph, "intangible | 13 |
| property" includes patents, patent applications, trade | 14 |
| names, trademarks, service marks, copyrights, mask | 15 |
| works, trade secrets, and similar types of intangible | 16 |
| assets. | 17 |
| This paragraph shall not apply to the following: | 18 |
| (i) any item of intangible expenses or costs | 19 |
| paid, accrued, or incurred, directly or | 20 |
| indirectly, from a transaction with a foreign | 21 |
| person who is subject in a foreign country or | 22 |
| state, other than a state which requires mandatory | 23 |
| unitary reporting, to a tax on or measured by net | 24 |
| income with respect to such item; or | 25 |
| (ii) any item of intangible expense or cost | 26 |
| paid, accrued, or incurred, directly or | 27 |
| indirectly, if the taxpayer can establish, based | 28 |
| on a preponderance of the evidence, both of the | 29 |
| following: | 30 |
| (a) the foreign person during the same | 31 |
| taxable year paid, accrued, or incurred, the | 32 |
| intangible expense or cost to a person that is | 33 |
| not a related member, and | 34 |
| (b) the transaction giving rise to the |
|
|
|
09400HB0709sam004 |
- 7 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| intangible expense or cost between the | 2 |
| taxpayer and the foreign person did not have as | 3 |
| a principal purpose the avoidance of Illinois | 4 |
| income tax, and is paid pursuant to a contract | 5 |
| or agreement that reflects arm's-length terms; | 6 |
| or | 7 |
| (iii) any item of intangible expense or cost | 8 |
| paid, accrued, or incurred, directly or | 9 |
| indirectly, from a transaction with a foreign | 10 |
| person if the taxpayer establishes by clear and | 11 |
| convincing evidence, that the adjustments are | 12 |
| unreasonable; or if the taxpayer and the Director | 13 |
| agree in writing to the application or use of an | 14 |
| alternative method of apportionment under Section | 15 |
| 304(f);
| 16 |
| Nothing in this subsection shall preclude the | 17 |
| Director from making any other adjustment | 18 |
| otherwise allowed under Section 404 of this Act for | 19 |
| any tax year beginning after the effective date of | 20 |
| this amendment provided such adjustment is made | 21 |
| pursuant to regulation adopted by the Department | 22 |
| and such regulations provide methods and standards | 23 |
| by which the Department will utilize its authority | 24 |
| under Section 404 of this Act;
| 25 |
| (D-20) For taxable years beginning on or after | 26 |
| January 1,
2002, in
the
case of a distribution from a | 27 |
| qualified tuition program under Section 529 of
the | 28 |
| Internal Revenue Code, other than (i) a distribution | 29 |
| from a College Savings
Pool created under Section 16.5 | 30 |
| of the State Treasurer Act or (ii) a
distribution from | 31 |
| the Illinois Prepaid Tuition Trust Fund, an amount | 32 |
| equal to
the amount excluded from gross income under | 33 |
| Section 529(c)(3)(B);
| 34 |
| and by deducting from the total so obtained the
sum of the |
|
|
|
09400HB0709sam004 |
- 8 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| following amounts:
| 2 |
| (E) For taxable years ending before December 31, | 3 |
| 2001,
any amount included in such total in respect of | 4 |
| any compensation
(including but not limited to any | 5 |
| compensation paid or accrued to a
serviceman while a | 6 |
| prisoner of war or missing in action) paid to a | 7 |
| resident
by reason of being on active duty in the Armed | 8 |
| Forces of the United States
and in respect of any | 9 |
| compensation paid or accrued to a resident who as a
| 10 |
| governmental employee was a prisoner of war or missing | 11 |
| in action, and in
respect of any compensation paid to a | 12 |
| resident in 1971 or thereafter for
annual training | 13 |
| performed pursuant to Sections 502 and 503, Title 32,
| 14 |
| United States Code as a member of the Illinois National | 15 |
| Guard.
For taxable years ending on or after December | 16 |
| 31, 2001, any amount included in
such total in respect | 17 |
| of any compensation (including but not limited to any
| 18 |
| compensation paid or accrued to a serviceman while a | 19 |
| prisoner of war or missing
in action) paid to a | 20 |
| resident by reason of being a member of any component | 21 |
| of
the Armed Forces of the United States and in respect | 22 |
| of any compensation paid
or accrued to a resident who | 23 |
| as a governmental employee was a prisoner of war
or | 24 |
| missing in action, and in respect of any compensation | 25 |
| paid to a resident in
2001 or thereafter by reason of | 26 |
| being a member of the Illinois National Guard.
The | 27 |
| provisions of this amendatory Act of the 92nd General | 28 |
| Assembly are exempt
from the provisions of Section 250;
| 29 |
| (F) An amount equal to all amounts included in such | 30 |
| total pursuant
to the provisions of Sections 402(a), | 31 |
| 402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the | 32 |
| Internal Revenue Code, or included in such total as
| 33 |
| distributions under the provisions of any retirement | 34 |
| or disability plan for
employees of any governmental |
|
|
|
09400HB0709sam004 |
- 9 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| agency or unit, or retirement payments to
retired | 2 |
| partners, which payments are excluded in computing net | 3 |
| earnings
from self employment by Section 1402 of the | 4 |
| Internal Revenue Code and
regulations adopted pursuant | 5 |
| thereto;
| 6 |
| (G) The valuation limitation amount;
| 7 |
| (H) An amount equal to the amount of any tax | 8 |
| imposed by this Act
which was refunded to the taxpayer | 9 |
| and included in such total for the
taxable year;
| 10 |
| (I) An amount equal to all amounts included in such | 11 |
| total pursuant
to the provisions of Section 111 of the | 12 |
| Internal Revenue Code as a
recovery of items previously | 13 |
| deducted from adjusted gross income in the
computation | 14 |
| of taxable income;
| 15 |
| (J) An amount equal to those dividends included in | 16 |
| such total which were
paid by a corporation which | 17 |
| conducts business operations in an Enterprise
Zone or | 18 |
| zones created under the Illinois Enterprise Zone Act, | 19 |
| and conducts
substantially all of its operations in an | 20 |
| Enterprise Zone or zones;
| 21 |
| (K) 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 (J) of paragraph (2) of this subsection
| 28 |
| shall not be eligible for the deduction provided under | 29 |
| this subparagraph
(K);
| 30 |
| (L) For taxable years ending after December 31, | 31 |
| 1983, an amount equal to
all social security benefits | 32 |
| and railroad retirement benefits included in
such | 33 |
| total pursuant to Sections 72(r) and 86 of the Internal | 34 |
| Revenue Code;
|
|
|
|
09400HB0709sam004 |
- 10 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| (M) With the exception of any amounts subtracted | 2 |
| under subparagraph
(N), an amount equal to the sum of | 3 |
| all amounts disallowed as
deductions by (i) Sections | 4 |
| 171(a) (2), and 265(2) of the Internal Revenue Code
of | 5 |
| 1954, as now or hereafter amended, and all amounts of | 6 |
| expenses allocable
to interest and disallowed as | 7 |
| deductions by Section 265(1) of the Internal
Revenue | 8 |
| Code of 1954, as now or hereafter amended;
and (ii) for | 9 |
| taxable years
ending on or after August 13, 1999, | 10 |
| Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | 11 |
| the Internal Revenue Code; the provisions of this
| 12 |
| subparagraph are exempt from the provisions of Section | 13 |
| 250;
| 14 |
| (N) An amount equal to all amounts included in such | 15 |
| total which are
exempt from taxation by this State | 16 |
| either by reason of its statutes or
Constitution
or by | 17 |
| reason of the Constitution, treaties or statutes of the | 18 |
| United States;
provided that, in the case of any | 19 |
| statute of this State that exempts income
derived from | 20 |
| bonds or other obligations from the tax imposed under | 21 |
| this Act,
the amount exempted shall be the interest net | 22 |
| of bond premium amortization;
| 23 |
| (O) An amount equal to any contribution made to a | 24 |
| job training
project established pursuant to the Tax | 25 |
| Increment Allocation Redevelopment Act;
| 26 |
| (P) An amount equal to the amount of the deduction | 27 |
| used to compute the
federal income tax credit for | 28 |
| restoration of substantial amounts held under
claim of | 29 |
| right for the taxable year pursuant to Section 1341 of | 30 |
| the
Internal Revenue Code of 1986;
| 31 |
| (Q) An amount equal to any amounts included in such | 32 |
| total, received by
the taxpayer as an acceleration in | 33 |
| the payment of life, endowment or annuity
benefits in | 34 |
| advance of the time they would otherwise be payable as |
|
|
|
09400HB0709sam004 |
- 11 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| an indemnity
for a terminal illness;
| 2 |
| (R) An amount equal to the amount of any federal or | 3 |
| State bonus paid
to veterans of the Persian Gulf War;
| 4 |
| (S) An amount, to the extent included in adjusted | 5 |
| gross income, equal
to the amount of a contribution | 6 |
| made in the taxable year on behalf of the
taxpayer to a | 7 |
| medical care savings account established under the | 8 |
| Medical Care
Savings Account Act or the Medical Care | 9 |
| Savings Account Act of 2000 to the
extent the | 10 |
| contribution is accepted by the account
administrator | 11 |
| as provided in that Act;
| 12 |
| (T) An amount, to the extent included in adjusted | 13 |
| gross income, equal to
the amount of interest earned in | 14 |
| the taxable year on a medical care savings
account | 15 |
| established under the Medical Care Savings Account Act | 16 |
| or the Medical
Care Savings Account Act of 2000 on | 17 |
| behalf of the
taxpayer, other than interest added | 18 |
| pursuant to item (D-5) of this paragraph
(2);
| 19 |
| (U) For one taxable year beginning on or after | 20 |
| January 1,
1994, an
amount equal to the total amount of | 21 |
| tax imposed and paid under subsections (a)
and (b) of | 22 |
| Section 201 of this Act on grant amounts received by | 23 |
| the taxpayer
under the Nursing Home Grant Assistance | 24 |
| Act during the taxpayer's taxable years
1992 and 1993;
| 25 |
| (V) Beginning with tax years ending on or after | 26 |
| December 31, 1995 and
ending with tax years ending on | 27 |
| or before December 31, 2004, an amount equal to
the | 28 |
| amount paid by a taxpayer who is a
self-employed | 29 |
| taxpayer, a partner of a partnership, or a
shareholder | 30 |
| in a Subchapter S corporation for health insurance or | 31 |
| long-term
care insurance for that taxpayer or that | 32 |
| taxpayer's spouse or dependents, to
the extent that the | 33 |
| amount paid for that health insurance or long-term care
| 34 |
| insurance may be deducted under Section 213 of the |
|
|
|
09400HB0709sam004 |
- 12 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| Internal Revenue Code of
1986, has not been deducted on | 2 |
| the federal income tax return of the taxpayer,
and does | 3 |
| not exceed the taxable income attributable to that | 4 |
| taxpayer's income,
self-employment income, or | 5 |
| Subchapter S corporation income; except that no
| 6 |
| deduction shall be allowed under this item (V) if the | 7 |
| taxpayer is eligible to
participate in any health | 8 |
| insurance or long-term care insurance plan of an
| 9 |
| employer of the taxpayer or the taxpayer's
spouse. The | 10 |
| amount of the health insurance and long-term care | 11 |
| insurance
subtracted under this item (V) shall be | 12 |
| determined by multiplying total
health insurance and | 13 |
| long-term care insurance premiums paid by the taxpayer
| 14 |
| times a number that represents the fractional | 15 |
| percentage of eligible medical
expenses under Section | 16 |
| 213 of the Internal Revenue Code of 1986 not actually
| 17 |
| deducted on the taxpayer's federal income tax return;
| 18 |
| (W) For taxable years beginning on or after January | 19 |
| 1, 1998,
all amounts included in the taxpayer's federal | 20 |
| gross income
in the taxable year from amounts converted | 21 |
| from a regular IRA to a Roth IRA.
This paragraph is | 22 |
| exempt from the provisions of Section
250;
| 23 |
| (X) For taxable year 1999 and thereafter, an amount | 24 |
| equal to the
amount of any (i) distributions, to the | 25 |
| extent includible in gross income for
federal income | 26 |
| tax purposes, made to the taxpayer because of his or | 27 |
| her status
as a victim of persecution for racial or | 28 |
| religious reasons by Nazi Germany or
any other Axis | 29 |
| regime or as an heir of the victim and (ii) items
of | 30 |
| income, to the extent
includible in gross income for | 31 |
| federal income tax purposes, attributable to,
derived | 32 |
| from or in any way related to assets stolen from, | 33 |
| hidden from, or
otherwise lost to a victim of
| 34 |
| persecution for racial or religious reasons by Nazi |
|
|
|
09400HB0709sam004 |
- 13 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| Germany or any other Axis
regime immediately prior to, | 2 |
| during, and immediately after World War II,
including, | 3 |
| but
not limited to, interest on the proceeds receivable | 4 |
| as insurance
under policies issued to a victim of | 5 |
| persecution for racial or religious
reasons
by Nazi | 6 |
| Germany or any other Axis regime by European insurance | 7 |
| companies
immediately prior to and during World War II;
| 8 |
| provided, however, this subtraction from federal | 9 |
| adjusted gross income does not
apply to assets acquired | 10 |
| with such assets or with the proceeds from the sale of
| 11 |
| such assets; provided, further, this paragraph shall | 12 |
| only apply to a taxpayer
who was the first recipient of | 13 |
| such assets after their recovery and who is a
victim of | 14 |
| persecution for racial or religious reasons
by Nazi | 15 |
| Germany or any other Axis regime or as an heir of the | 16 |
| victim. The
amount of and the eligibility for any | 17 |
| public assistance, benefit, or
similar entitlement is | 18 |
| not affected by the inclusion of items (i) and (ii) of
| 19 |
| this paragraph in gross income for federal income tax | 20 |
| purposes.
This paragraph is exempt from the provisions | 21 |
| of Section 250;
| 22 |
| (Y) For taxable years beginning on or after January | 23 |
| 1, 2002
and ending
on or before December 31, 2004, | 24 |
| moneys contributed in the taxable year to a College | 25 |
| Savings Pool account under
Section 16.5 of the State | 26 |
| Treasurer Act, except that amounts excluded from
gross | 27 |
| income under Section 529(c)(3)(C)(i) of the Internal | 28 |
| Revenue Code
shall not be considered moneys | 29 |
| contributed under this subparagraph (Y). For taxable | 30 |
| years beginning on or after January 1, 2005, a maximum | 31 |
| of $10,000
contributed
in the
taxable year to (i) a | 32 |
| College Savings Pool account under Section 16.5 of the
| 33 |
| State
Treasurer Act or (ii) the Illinois Prepaid | 34 |
| Tuition Trust Fund,
except that
amounts excluded from |
|
|
|
09400HB0709sam004 |
- 14 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| gross income under Section 529(c)(3)(C)(i) of the
| 2 |
| Internal
Revenue Code shall not be considered moneys | 3 |
| contributed under this subparagraph
(Y). This
| 4 |
| subparagraph (Y) is exempt from the provisions of | 5 |
| Section 250;
| 6 |
| (Z) For taxable years 2001 and thereafter, for the | 7 |
| taxable year in
which the bonus depreciation deduction | 8 |
| (30% of the adjusted basis of the
qualified property) | 9 |
| is taken on the taxpayer's federal income tax return | 10 |
| under
subsection (k) of Section 168 of the Internal | 11 |
| Revenue Code and for each
applicable taxable year | 12 |
| thereafter, an amount equal to "x", where:
| 13 |
| (1) "y" equals the amount of the depreciation | 14 |
| deduction taken for the
taxable year
on the | 15 |
| taxpayer's federal income tax return on property | 16 |
| for which the bonus
depreciation deduction (30% of | 17 |
| the adjusted basis of the qualified property)
was | 18 |
| taken in any year under subsection (k) of Section | 19 |
| 168 of the Internal
Revenue Code, but not including | 20 |
| the bonus depreciation deduction; and
| 21 |
| (2) for property on which a bonus depreciation | 22 |
| deduction of 30% of the adjusted basis was taken, | 23 |
| "x" equals "y" multiplied by 30 and then divided by | 24 |
| 70 (or "y"
multiplied by 0.429) ; and | 25 |
| (3) for taxable years ending on or after | 26 |
| December 31, 2005, for property on which a bonus | 27 |
| depreciation deduction of 50% of the adjusted | 28 |
| basis was taken, "x" equals "y" multiplied by 1.0 .
| 29 |
| For the first taxable year ending on or after | 30 |
| December 31, 2005, an additional subtraction is | 31 |
| allowed for each item of property for which a bonus | 32 |
| depreciation of 50% was taken equal to the difference | 33 |
| between the subtraction that would have been allowed if | 34 |
| subparagraph (3) had applied to all prior taxable years |
|
|
|
09400HB0709sam004 |
- 15 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| and the subtraction allowed under this subparagraph | 2 |
| (Z) in all prior years. The aggregate amount deducted | 3 |
| under this subparagraph in all taxable
years for any | 4 |
| one piece of property may not exceed the amount of the | 5 |
| bonus
depreciation deduction (30% of the adjusted | 6 |
| basis of the qualified property)
taken on that property | 7 |
| on the taxpayer's federal income tax return under
| 8 |
| subsection (k) of Section 168 of the Internal Revenue | 9 |
| Code . This subparagraph (Z) is exempt from the | 10 |
| provisions of Section 250 ;
| 11 |
| (AA) If the taxpayer sells, transfers, abandons, | 12 |
| or otherwise disposes of
reports a capital gain or loss | 13 |
| on the taxpayer's
federal income tax return for the | 14 |
| taxable year based on a sale or transfer of
property | 15 |
| for which the taxpayer was required in any taxable year | 16 |
| to make an
addition modification under subparagraph | 17 |
| (D-15), then an amount equal to that
addition | 18 |
| modification.
| 19 |
| The taxpayer is allowed to take the deduction under | 20 |
| this subparagraph
only once with respect to any one | 21 |
| piece of property . | 22 |
| This subparagraph (AA) is exempt from the | 23 |
| provisions of Section 250 ;
| 24 |
| (BB) Any amount included in adjusted gross income, | 25 |
| other
than
salary,
received by a driver in a | 26 |
| ridesharing arrangement using a motor vehicle;
| 27 |
| (CC) The amount of (i) any interest income (net of | 28 |
| the deductions allocable thereto) taken into account | 29 |
| for the taxable year with respect to a transaction with | 30 |
| a taxpayer that is required to make an addition | 31 |
| modification with respect to such transaction under | 32 |
| Section 203(a)(2)(D-17), 203(b)(2) (E-12) (E-13) , | 33 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 34 |
| the amount of that addition modification, and
(ii) any |
|
|
|
09400HB0709sam004 |
- 16 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| income from intangible property (net of the deductions | 2 |
| allocable thereto) taken into account for the taxable | 3 |
| year with respect to a transaction with a taxpayer that | 4 |
| is required to make an addition modification with | 5 |
| respect to such transaction under Section | 6 |
| 203(a)(2)(D-18), 203(b)(2) (E-13) (E-14) , | 7 |
| 203(c)(2)(G-13), or 203(d)(2)(D-8), but not to exceed | 8 |
| the amount of that addition modification; | 9 |
| (DD) An amount equal to the interest income taken | 10 |
| into account for the taxable year (net of the | 11 |
| deductions allocable thereto) with respect to | 12 |
| transactions with a foreign person who would be a | 13 |
| member of the taxpayer's unitary business group but for | 14 |
| the fact that the foreign person's business activity | 15 |
| outside the United States is 80% or more of that | 16 |
| person's total business activity, but not to exceed the | 17 |
| addition modification required to be made for the same | 18 |
| taxable year under Section 203(a)(2)(D-17) for | 19 |
| interest paid, accrued, or incurred, directly or | 20 |
| indirectly, to the same foreign person; and | 21 |
| (EE) An amount equal to the income from intangible | 22 |
| property taken into account for the taxable year (net | 23 |
| of the deductions allocable thereto) with respect to | 24 |
| transactions with a foreign person who would be a | 25 |
| member of the taxpayer's unitary business group but for | 26 |
| the fact that the foreign person's business activity | 27 |
| outside the United States is 80% or more of that | 28 |
| person's total business activity, but not to exceed the | 29 |
| addition modification required to be made for the same | 30 |
| taxable year under Section 203(a)(2)(D-18) for | 31 |
| intangible expenses and costs paid, accrued, or | 32 |
| incurred, directly or indirectly, to the same foreign | 33 |
| person.
|
|
|
|
09400HB0709sam004 |
- 17 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| (b) Corporations.
| 2 |
| (1) In general. In the case of a corporation, base | 3 |
| income means an
amount equal to the taxpayer's taxable | 4 |
| income for the taxable year as
modified by paragraph (2).
| 5 |
| (2) Modifications. The taxable income referred to in | 6 |
| paragraph (1)
shall be modified by adding thereto the sum | 7 |
| of the following amounts:
| 8 |
| (A) An amount equal to all amounts paid or accrued | 9 |
| to the taxpayer
as interest and all distributions | 10 |
| received from regulated investment
companies during | 11 |
| the taxable year to the extent excluded from gross
| 12 |
| income in the computation of taxable income;
| 13 |
| (B) An amount equal to the amount of tax imposed by | 14 |
| this Act to the
extent deducted from gross income in | 15 |
| the computation of taxable income
for the taxable year;
| 16 |
| (C) In the case of a regulated investment company, | 17 |
| an amount equal to
the excess of (i) the net long-term | 18 |
| capital gain for the taxable year, over
(ii) the amount | 19 |
| of the capital gain dividends designated as such in | 20 |
| accordance
with Section 852(b)(3)(C) of the Internal | 21 |
| Revenue Code and any amount
designated under Section | 22 |
| 852(b)(3)(D) of the Internal Revenue Code,
| 23 |
| attributable to the taxable year (this amendatory Act | 24 |
| of 1995
(Public Act 89-89) is declarative of existing | 25 |
| law and is not a new
enactment);
| 26 |
| (D) The amount of any net operating loss deduction | 27 |
| taken in arriving
at taxable income, other than a net | 28 |
| operating loss carried forward from a
taxable year | 29 |
| ending prior to December 31, 1986;
| 30 |
| (E) For taxable years in which a net operating loss | 31 |
| carryback or
carryforward from a taxable year ending | 32 |
| prior to December 31, 1986 is an
element of taxable | 33 |
| income under paragraph (1) of subsection (e) or
| 34 |
| subparagraph (E) of paragraph (2) of subsection (e), |
|
|
|
09400HB0709sam004 |
- 18 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| the amount by which
addition modifications other than | 2 |
| those provided by this subparagraph (E)
exceeded | 3 |
| subtraction modifications in such earlier taxable | 4 |
| year, with the
following limitations applied in the | 5 |
| order that they are listed:
| 6 |
| (i) the addition modification relating to the | 7 |
| net operating loss
carried back or forward to the | 8 |
| taxable year from any taxable year ending
prior to | 9 |
| December 31, 1986 shall be reduced by the amount of | 10 |
| addition
modification under this subparagraph (E) | 11 |
| which related to that net operating
loss and which | 12 |
| was taken into account in calculating the base | 13 |
| income of an
earlier taxable year, and
| 14 |
| (ii) the addition modification relating to the | 15 |
| net operating loss
carried back or forward to the | 16 |
| taxable year from any taxable year ending
prior to | 17 |
| December 31, 1986 shall not exceed the amount of | 18 |
| such carryback or
carryforward;
| 19 |
| For taxable years in which there is a net operating | 20 |
| loss carryback or
carryforward from more than one other | 21 |
| taxable year ending prior to December
31, 1986, the | 22 |
| addition modification provided in this subparagraph | 23 |
| (E) shall
be the sum of the amounts computed | 24 |
| independently under the preceding
provisions of this | 25 |
| subparagraph (E) for each such taxable year;
| 26 |
| (E-5) For taxable years ending after December 31, | 27 |
| 1997, an
amount equal to any eligible remediation costs | 28 |
| that the corporation
deducted in computing adjusted | 29 |
| gross income and for which the
corporation claims a | 30 |
| credit under subsection (l) of Section 201;
| 31 |
| (E-10) For taxable years 2001 and thereafter, an | 32 |
| amount equal to the
bonus depreciation deduction (30% | 33 |
| of the adjusted basis of the qualified
property) taken | 34 |
| on the taxpayer's federal income tax return for the |
|
|
|
09400HB0709sam004 |
- 19 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| taxable
year under subsection (k) of Section 168 of the | 2 |
| Internal Revenue Code; and
| 3 |
| (E-11) If the taxpayer sells, transfers, abandons, | 4 |
| or otherwise disposes of
reports a capital gain or loss | 5 |
| on the
taxpayer's federal income tax return for the | 6 |
| taxable year based on a sale or
transfer of property | 7 |
| for which the taxpayer was required in any taxable year | 8 |
| to
make an addition modification under subparagraph | 9 |
| (E-10), then an amount equal
to the aggregate amount of | 10 |
| the deductions taken in all taxable
years under | 11 |
| subparagraph (T) with respect to that property.
| 12 |
| The taxpayer is required to make the addition | 13 |
| modification under this
subparagraph
only once with | 14 |
| respect to any one piece of property;
| 15 |
| (E-12) For taxable years ending on or after | 16 |
| December 31, 2004, an amount equal to the amount | 17 |
| otherwise allowed as a deduction in computing base | 18 |
| income for interest paid, accrued, or incurred, | 19 |
| directly or indirectly, to a foreign person who would | 20 |
| be a member of the same unitary business group but for | 21 |
| the fact the foreign person's business activity | 22 |
| outside the United States is 80% or more of the foreign | 23 |
| person's total business activity. The addition | 24 |
| modification required by this subparagraph shall be | 25 |
| reduced to the extent that dividends were included in | 26 |
| base income of the unitary group for the same taxable | 27 |
| year and received by the taxpayer or by a member of the | 28 |
| taxpayer's unitary business group (including amounts | 29 |
| included in gross income pursuant to Sections 951 | 30 |
| through 964 of the Internal Revenue Code and amounts | 31 |
| included in gross income under Section 78 of the | 32 |
| Internal Revenue Code) with respect to the stock of the | 33 |
| same person to whom the interest was paid, accrued, or | 34 |
| incurred.
|
|
|
|
09400HB0709sam004 |
- 20 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| This paragraph shall not apply to the following:
| 2 |
| (i) an item of interest paid, accrued, or | 3 |
| incurred, directly or indirectly, to a foreign | 4 |
| person who is subject in a foreign country or | 5 |
| state, other than a state which requires mandatory | 6 |
| unitary reporting, to a tax on or measured by net | 7 |
| income with respect to such interest; or | 8 |
| (ii) an item of interest paid, accrued, or | 9 |
| incurred, directly or indirectly, to a foreign | 10 |
| person if the taxpayer can establish, based on a | 11 |
| preponderance of the evidence, both of the | 12 |
| following: | 13 |
| (a) the foreign person, during the same | 14 |
| taxable year, paid, accrued, or incurred, the | 15 |
| interest to a person that is not a related | 16 |
| member, and | 17 |
| (b) the transaction giving rise to the | 18 |
| interest expense between the taxpayer and the | 19 |
| foreign person did not have as a principal | 20 |
| purpose the avoidance of Illinois income tax, | 21 |
| and is paid pursuant to a contract or agreement | 22 |
| that reflects an arm's-length interest rate | 23 |
| and terms; or
| 24 |
| (iii) the taxpayer can establish, based on | 25 |
| clear and convincing evidence, that the interest | 26 |
| paid, accrued, or incurred relates to a contract or | 27 |
| agreement entered into at arm's-length rates and | 28 |
| terms and the principal purpose for the payment is | 29 |
| not federal or Illinois tax avoidance; or
| 30 |
| (iv) an item of interest paid, accrued, or | 31 |
| incurred, directly or indirectly, to 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 |
|
|
|
09400HB0709sam004 |
- 21 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| agree in writing to the application or use of an | 2 |
| alternative method of apportionment under Section | 3 |
| 304(f).
| 4 |
| Nothing in this subsection shall preclude the | 5 |
| Director from making any other adjustment | 6 |
| otherwise allowed under Section 404 of this Act for | 7 |
| any tax year beginning after the effective date of | 8 |
| this amendment provided such adjustment is made | 9 |
| pursuant to regulation adopted by the Department | 10 |
| and such regulations provide methods and standards | 11 |
| by which the Department will utilize its authority | 12 |
| under Section 404 of this Act;
| 13 |
| (E-13) For taxable years ending on or after | 14 |
| December 31, 2004, an amount equal to the amount of | 15 |
| intangible expenses and costs otherwise allowed as a | 16 |
| deduction in computing base income, and that were paid, | 17 |
| accrued, or incurred, directly or indirectly, to a | 18 |
| foreign person who would be a member of the same | 19 |
| unitary business group but for the fact that the | 20 |
| foreign person's business activity outside the United | 21 |
| States is 80% or more of that person's total business | 22 |
| activity. The addition modification required by this | 23 |
| subparagraph shall be reduced to the extent that | 24 |
| dividends were included in base income of the unitary | 25 |
| group for the same taxable year and received by the | 26 |
| taxpayer or by a member of the taxpayer's unitary | 27 |
| business group (including amounts included in gross | 28 |
| income pursuant to Sections 951 through 964 of the | 29 |
| Internal Revenue Code and amounts included in gross | 30 |
| income under Section 78 of the Internal Revenue Code) | 31 |
| with respect to the stock of the same person to whom | 32 |
| the intangible expenses and costs were directly or | 33 |
| indirectly paid, incurred, or accrued. The preceding | 34 |
| sentence shall not apply to the extent that the same |
|
|
|
09400HB0709sam004 |
- 22 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| dividends caused a reduction to the addition | 2 |
| modification required under Section 203(b)(2)(E-12) of | 3 |
| this Act.
As used in this subparagraph, the term | 4 |
| "intangible expenses and costs" includes (1) expenses, | 5 |
| losses, and costs for, or related to, the direct or | 6 |
| indirect acquisition, use, maintenance or management, | 7 |
| ownership, sale, exchange, or any other disposition of | 8 |
| intangible property; (2) losses incurred, directly or | 9 |
| indirectly, from factoring transactions or discounting | 10 |
| transactions; (3) royalty, patent, technical, and | 11 |
| copyright fees; (4) licensing fees; and (5) other | 12 |
| similar expenses and costs.
For purposes of this | 13 |
| subparagraph, "intangible property" includes patents, | 14 |
| patent applications, trade names, trademarks, service | 15 |
| marks, copyrights, mask works, trade secrets, and | 16 |
| similar types of intangible assets. | 17 |
| This paragraph shall not apply to the following: | 18 |
| (i) any item of intangible expenses or costs | 19 |
| paid, accrued, or incurred, directly or | 20 |
| indirectly, from a transaction with a foreign | 21 |
| person who is subject in a foreign country or | 22 |
| state, other than a state which requires mandatory | 23 |
| unitary reporting, to a tax on or measured by net | 24 |
| income with respect to such item; or | 25 |
| (ii) any item of intangible expense or cost | 26 |
| paid, accrued, or incurred, directly or | 27 |
| indirectly, if the taxpayer can establish, based | 28 |
| on a preponderance of the evidence, both of the | 29 |
| following: | 30 |
| (a) the foreign person during the same | 31 |
| taxable year paid, accrued, or incurred, the | 32 |
| intangible expense or cost to a person that is | 33 |
| not a related member, and | 34 |
| (b) the transaction giving rise to the |
|
|
|
09400HB0709sam004 |
- 23 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| intangible expense or cost between the | 2 |
| taxpayer and the foreign person did not have as | 3 |
| a principal purpose the avoidance of Illinois | 4 |
| income tax, and is paid pursuant to a contract | 5 |
| or agreement that reflects arm's-length terms; | 6 |
| or | 7 |
| (iii) any item of intangible expense or cost | 8 |
| paid, accrued, or incurred, directly or | 9 |
| indirectly, from a transaction with a foreign | 10 |
| person if the taxpayer establishes by clear and | 11 |
| convincing evidence, that the adjustments are | 12 |
| unreasonable; or if the taxpayer and the Director | 13 |
| agree in writing to the application or use of an | 14 |
| alternative method of apportionment under Section | 15 |
| 304(f);
| 16 |
| Nothing in this subsection shall preclude the | 17 |
| Director from making any other adjustment | 18 |
| otherwise allowed under Section 404 of this Act for | 19 |
| any tax year beginning after the effective date of | 20 |
| this amendment provided such adjustment is made | 21 |
| pursuant to regulation adopted by the Department | 22 |
| and such regulations provide methods and standards | 23 |
| by which the Department will utilize its authority | 24 |
| under Section 404 of this Act;
| 25 |
| and by deducting from the total so obtained the sum of the | 26 |
| following
amounts:
| 27 |
| (F) An amount equal to the amount of any tax | 28 |
| imposed by this Act
which was refunded to the taxpayer | 29 |
| and included in such total for the
taxable year;
| 30 |
| (G) An amount equal to any amount included in such | 31 |
| total under
Section 78 of the Internal Revenue Code;
| 32 |
| (H) In the case of a regulated investment company, | 33 |
| an amount equal
to the amount of exempt interest | 34 |
| dividends as defined in subsection (b)
(5) of Section |
|
|
|
09400HB0709sam004 |
- 24 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| 852 of the Internal Revenue Code, paid to shareholders
| 2 |
| for the taxable year;
| 3 |
| (I) With the exception of any amounts subtracted | 4 |
| under subparagraph
(J),
an amount equal to the sum of | 5 |
| all amounts disallowed as
deductions by (i) Sections | 6 |
| 171(a) (2), and 265(a)(2) and amounts disallowed as
| 7 |
| interest expense by Section 291(a)(3) of the Internal | 8 |
| Revenue Code, as now
or hereafter amended, and all | 9 |
| amounts of expenses allocable to interest and
| 10 |
| disallowed as deductions by Section 265(a)(1) of the | 11 |
| Internal Revenue Code,
as now or hereafter amended;
and | 12 |
| (ii) for taxable years
ending on or after August 13, | 13 |
| 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and | 14 |
| 832(b)(5)(B)(i) of the Internal Revenue Code; the
| 15 |
| provisions of this
subparagraph are exempt from the | 16 |
| provisions of Section 250;
| 17 |
| (J) An amount equal to all amounts included in such | 18 |
| total which are
exempt from taxation by this State | 19 |
| either by reason of its statutes or
Constitution
or by | 20 |
| reason of the Constitution, treaties or statutes of the | 21 |
| United States;
provided that, in the case of any | 22 |
| statute of this State that exempts income
derived from | 23 |
| bonds or other obligations from the tax imposed under | 24 |
| this Act,
the amount exempted shall be the interest net | 25 |
| of bond premium amortization;
| 26 |
| (K) An amount equal to those dividends included in | 27 |
| such total
which were paid by a corporation which | 28 |
| conducts
business operations in an Enterprise Zone or | 29 |
| zones created under
the Illinois Enterprise Zone Act | 30 |
| and conducts substantially all of its
operations in an | 31 |
| Enterprise Zone or zones;
| 32 |
| (L) An amount equal to those dividends included in | 33 |
| such total that
were paid by a corporation that | 34 |
| conducts business operations in a federally
designated |
|
|
|
09400HB0709sam004 |
- 25 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| Foreign Trade Zone or Sub-Zone and that is designated a | 2 |
| High Impact
Business located in Illinois; provided | 3 |
| that dividends eligible for the
deduction provided in | 4 |
| subparagraph (K) of paragraph 2 of this subsection
| 5 |
| shall not be eligible for the deduction provided under | 6 |
| this subparagraph
(L);
| 7 |
| (M) For any taxpayer that is a financial | 8 |
| organization within the meaning
of Section 304(c) of | 9 |
| this Act, an amount included in such total as interest
| 10 |
| income from a loan or loans made by such taxpayer to a | 11 |
| borrower, to the extent
that such a loan is secured by | 12 |
| property which is eligible for the Enterprise
Zone | 13 |
| Investment Credit. To determine the portion of a loan | 14 |
| or loans that is
secured by property eligible for a | 15 |
| Section 201(f) investment
credit to the borrower, the | 16 |
| entire principal amount of the loan or loans
between | 17 |
| the taxpayer and the borrower should be divided into | 18 |
| the basis of the
Section 201(f) investment credit | 19 |
| property which secures the
loan or loans, using for | 20 |
| this purpose the original basis of such property on
the | 21 |
| date that it was placed in service in the
Enterprise | 22 |
| Zone. The subtraction modification available to | 23 |
| taxpayer in any
year under this subsection shall be | 24 |
| that portion of the total interest paid
by the borrower | 25 |
| with respect to such loan attributable to the eligible
| 26 |
| property as calculated under the previous sentence;
| 27 |
| (M-1) For any taxpayer that is a financial | 28 |
| organization within the
meaning of Section 304(c) of | 29 |
| this Act, an amount included in such total as
interest | 30 |
| income from a loan or loans made by such taxpayer to a | 31 |
| borrower,
to the extent that such a loan is secured by | 32 |
| property which is eligible for
the High Impact Business | 33 |
| Investment Credit. To determine the portion of a
loan | 34 |
| or loans that is secured by property eligible for a |
|
|
|
09400HB0709sam004 |
- 26 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| Section 201(h) investment credit to the borrower, the | 2 |
| entire principal amount of
the loan or loans between | 3 |
| the taxpayer and the borrower should be divided into
| 4 |
| the basis of the Section 201(h) investment credit | 5 |
| property which
secures the loan or loans, using for | 6 |
| this purpose the original basis of such
property on the | 7 |
| date that it was placed in service in a federally | 8 |
| designated
Foreign Trade Zone or Sub-Zone located in | 9 |
| Illinois. No taxpayer that is
eligible for the | 10 |
| deduction provided in subparagraph (M) of paragraph | 11 |
| (2) of
this subsection shall be eligible for the | 12 |
| deduction provided under this
subparagraph (M-1). The | 13 |
| subtraction modification available to taxpayers in
any | 14 |
| year under this subsection shall be that portion of the | 15 |
| total interest
paid by the borrower with respect to | 16 |
| such loan attributable to the eligible
property as | 17 |
| calculated under the previous sentence;
| 18 |
| (N) Two times any contribution made during the | 19 |
| taxable year to a
designated zone organization to the | 20 |
| extent that the contribution (i)
qualifies as a | 21 |
| charitable contribution under subsection (c) of | 22 |
| Section 170
of the Internal Revenue Code and (ii) must, | 23 |
| by its terms, be used for a
project approved by the | 24 |
| Department of Commerce and Economic Opportunity under | 25 |
| Section 11 of the Illinois Enterprise Zone Act;
| 26 |
| (O) An amount equal to: (i) 85% for taxable years | 27 |
| ending on or before
December 31, 1992, or, a percentage | 28 |
| equal to the percentage allowable under
Section | 29 |
| 243(a)(1) of the Internal Revenue Code of 1986 for | 30 |
| taxable years ending
after December 31, 1992, of the | 31 |
| amount by which dividends included in taxable
income | 32 |
| and received from a corporation that is not created or | 33 |
| organized under
the laws of the United States or any | 34 |
| state or political subdivision thereof,
including, for |
|
|
|
09400HB0709sam004 |
- 27 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| taxable years ending on or after December 31, 1988, | 2 |
| dividends
received or deemed received or paid or deemed | 3 |
| paid under Sections 951 through
964 of the Internal | 4 |
| Revenue Code, exceed the amount of the modification
| 5 |
| provided under subparagraph (G) of paragraph (2) of | 6 |
| this subsection (b) which
is related to such dividends; | 7 |
| plus (ii) 100% of the amount by which dividends,
| 8 |
| included in taxable income and received, including, | 9 |
| for taxable years ending on
or after December 31, 1988, | 10 |
| dividends received or deemed received or paid or
deemed | 11 |
| paid under Sections 951 through 964 of the Internal | 12 |
| Revenue Code, from
any such corporation specified in | 13 |
| clause (i) that would but for the provisions
of Section | 14 |
| 1504 (b) (3) of the Internal Revenue Code be treated as | 15 |
| a member of
the affiliated group which includes the | 16 |
| dividend recipient, exceed the amount
of the | 17 |
| modification provided under subparagraph (G) of | 18 |
| paragraph (2) of this
subsection (b) which is related | 19 |
| to such dividends;
| 20 |
| (P) An amount equal to any contribution made to a | 21 |
| job training project
established pursuant to the Tax | 22 |
| Increment Allocation Redevelopment Act;
| 23 |
| (Q) An amount equal to the amount of the deduction | 24 |
| used to compute the
federal income tax credit for | 25 |
| restoration of substantial amounts held under
claim of | 26 |
| right for the taxable year pursuant to Section 1341 of | 27 |
| the
Internal Revenue Code of 1986;
| 28 |
| (R) In the case of an attorney-in-fact with respect | 29 |
| to whom an
interinsurer or a reciprocal insurer has | 30 |
| made the election under Section 835 of
the Internal | 31 |
| Revenue Code, 26 U.S.C. 835, an amount equal to the | 32 |
| excess, if
any, of the amounts paid or incurred by that | 33 |
| interinsurer or reciprocal insurer
in the taxable year | 34 |
| to the attorney-in-fact over the deduction allowed to |
|
|
|
09400HB0709sam004 |
- 28 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| that
interinsurer or reciprocal insurer with respect | 2 |
| to the attorney-in-fact under
Section 835(b) of the | 3 |
| Internal Revenue Code for the taxable year;
| 4 |
| (S) For taxable years ending on or after December | 5 |
| 31, 1997, in the
case of a Subchapter
S corporation, an | 6 |
| amount equal to all amounts of income allocable to a
| 7 |
| shareholder subject to the Personal Property Tax | 8 |
| Replacement Income Tax imposed
by subsections (c) and | 9 |
| (d) of Section 201 of this Act, including amounts
| 10 |
| allocable to organizations exempt from federal income | 11 |
| tax by reason of Section
501(a) of the Internal Revenue | 12 |
| Code. This subparagraph (S) is exempt from
the | 13 |
| provisions of Section 250;
| 14 |
| (T) For taxable years 2001 and thereafter, for the | 15 |
| taxable year in
which the bonus depreciation deduction | 16 |
| (30% of the adjusted basis of the
qualified property) | 17 |
| is taken on the taxpayer's federal income tax return | 18 |
| under
subsection (k) of Section 168 of the Internal | 19 |
| Revenue Code and for each
applicable taxable year | 20 |
| thereafter, an amount equal to "x", where:
| 21 |
| (1) "y" equals the amount of the depreciation | 22 |
| deduction taken for the
taxable year
on the | 23 |
| taxpayer's federal income tax return on property | 24 |
| for which the bonus
depreciation deduction (30% of | 25 |
| the adjusted basis of the qualified property)
was | 26 |
| taken in any year under subsection (k) of Section | 27 |
| 168 of the Internal
Revenue Code, but not including | 28 |
| the bonus depreciation deduction; and
| 29 |
| (2) for property on which a bonus depreciation | 30 |
| deduction of 30% of the adjusted basis was taken, | 31 |
| "x" equals "y" multiplied by 30 and then divided by | 32 |
| 70 (or "y"
multiplied by 0.429) ; and | 33 |
| (3) for taxable years ending on or after | 34 |
| December 31, 2005, for property on which a bonus |
|
|
|
09400HB0709sam004 |
- 29 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| depreciation deduction of 50% of the adjusted | 2 |
| basis was taken, "x" equals "y" multiplied by 1.0 .
| 3 |
| For the first taxable year ending on or after | 4 |
| December 31, 2005, an additional subtraction is | 5 |
| allowed for each item of property for which a bonus | 6 |
| depreciation of 50% was taken equal to the difference | 7 |
| between the subtraction that would have been allowed if | 8 |
| subparagraph (3) had applied to all prior taxable years | 9 |
| and the subtraction allowed under this subparagraph | 10 |
| (T) in all prior years. The aggregate amount deducted | 11 |
| under this subparagraph in all taxable
years for any | 12 |
| one piece of property may not exceed the amount of the | 13 |
| bonus
depreciation deduction (30% of the adjusted | 14 |
| basis of the qualified property)
taken on that property | 15 |
| on the taxpayer's federal income tax return under
| 16 |
| subsection (k) of Section 168 of the Internal Revenue | 17 |
| Code . This subparagraph (T) is exempt from the | 18 |
| provisions of Section 250 ;
| 19 |
| (U) If the taxpayer sells, transfers, abandons, or | 20 |
| otherwise disposes of
reports a capital gain or loss on | 21 |
| 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 |
| (E-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 |
| This subparagraph (U) is exempt from the | 31 |
| provisions of Section 250 ;
| 32 |
| (V) The amount of: (i) any interest income (net of | 33 |
| the deductions allocable thereto) taken into account | 34 |
| for the taxable year with respect to a transaction with |
|
|
|
09400HB0709sam004 |
- 30 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| a taxpayer that is required to make an addition | 2 |
| modification with respect to such transaction under | 3 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 4 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 5 |
| the amount of such addition modification and
(ii) any | 6 |
| income from intangible property (net of the deductions | 7 |
| allocable thereto) taken into account for the taxable | 8 |
| year with respect to a transaction with a taxpayer that | 9 |
| is required to make an addition modification with | 10 |
| respect to such transaction under Section | 11 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 12 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 13 |
| addition modification;
| 14 |
| (W) An amount equal to the interest income taken | 15 |
| into account for the taxable year (net of the | 16 |
| deductions allocable thereto) with respect to | 17 |
| transactions with a foreign person who would be a | 18 |
| member of the taxpayer's unitary business group but for | 19 |
| the fact that the foreign person's business activity | 20 |
| outside the United States is 80% or more of that | 21 |
| person's total business activity, but not to exceed the | 22 |
| addition modification required to be made for the same | 23 |
| taxable year under Section 203(b)(2)(E-12) for | 24 |
| interest paid, accrued, or incurred, directly or | 25 |
| indirectly, to the same foreign person; and
| 26 |
| (X) An amount equal to the income from intangible | 27 |
| property taken into account for the taxable year (net | 28 |
| of the deductions allocable thereto) with respect to | 29 |
| transactions with a foreign person who would be a | 30 |
| member of the taxpayer's unitary business group but for | 31 |
| the fact that the foreign person's business activity | 32 |
| outside the United States is 80% or more of that | 33 |
| person's total business activity, but not to exceed the | 34 |
| addition modification required to be made for the same |
|
|
|
09400HB0709sam004 |
- 31 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| taxable year under Section 203(b)(2)(E-13) for | 2 |
| intangible expenses and costs paid, accrued, or | 3 |
| incurred, directly or indirectly, to the same foreign | 4 |
| person.
| 5 |
| (3) Special rule. For purposes of paragraph (2) (A), | 6 |
| "gross income"
in the case of a life insurance company, for | 7 |
| tax years ending on and after
December 31, 1994,
shall mean | 8 |
| the gross investment income for the taxable year.
| 9 |
| (c) Trusts and estates.
| 10 |
| (1) In general. In the case of a trust or estate, base | 11 |
| income means
an amount equal to the taxpayer's taxable | 12 |
| income for the taxable year as
modified by paragraph (2).
| 13 |
| (2) Modifications. Subject to the provisions of | 14 |
| paragraph (3), the
taxable income referred to in paragraph | 15 |
| (1) shall be modified by adding
thereto the sum of the | 16 |
| following amounts:
| 17 |
| (A) An amount equal to all amounts paid or accrued | 18 |
| to the taxpayer
as interest or dividends during the | 19 |
| taxable year to the extent excluded
from gross income | 20 |
| in the computation of taxable income;
| 21 |
| (B) In the case of (i) an estate, $600; (ii) a | 22 |
| trust which, under
its governing instrument, is | 23 |
| required to distribute all of its income
currently, | 24 |
| $300; and (iii) any other trust, $100, but in each such | 25 |
| case,
only to the extent such amount was deducted in | 26 |
| the computation of
taxable income;
| 27 |
| (C) An amount equal to the amount of tax imposed by | 28 |
| this Act to the
extent deducted from gross income in | 29 |
| the computation of taxable income
for the taxable year;
| 30 |
| (D) The amount of any net operating loss deduction | 31 |
| taken in arriving at
taxable income, other than a net | 32 |
| operating loss carried forward from a
taxable year | 33 |
| ending prior to December 31, 1986;
|
|
|
|
09400HB0709sam004 |
- 32 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| (E) For taxable years in which a net operating loss | 2 |
| carryback or
carryforward from a taxable year ending | 3 |
| prior to December 31, 1986 is an
element of taxable | 4 |
| income under paragraph (1) of subsection (e) or | 5 |
| subparagraph
(E) of paragraph (2) of subsection (e), | 6 |
| the amount by which addition
modifications other than | 7 |
| those provided by this subparagraph (E) exceeded
| 8 |
| subtraction modifications in such taxable year, with | 9 |
| the following limitations
applied in the order that | 10 |
| they are listed:
| 11 |
| (i) the addition modification relating to the | 12 |
| net operating loss
carried back or forward to the | 13 |
| taxable year from any taxable year ending
prior to | 14 |
| December 31, 1986 shall be reduced by the amount of | 15 |
| addition
modification under this subparagraph (E) | 16 |
| which related to that net
operating loss and which | 17 |
| was taken into account in calculating the base
| 18 |
| income of an earlier taxable year, and
| 19 |
| (ii) the addition modification relating to the | 20 |
| net operating loss
carried back or forward to the | 21 |
| taxable year from any taxable year ending
prior to | 22 |
| December 31, 1986 shall not exceed the amount of | 23 |
| such carryback or
carryforward;
| 24 |
| For taxable years in which there is a net operating | 25 |
| loss carryback or
carryforward from more than one other | 26 |
| taxable year ending prior to December
31, 1986, the | 27 |
| addition modification provided in this subparagraph | 28 |
| (E) shall
be the sum of the amounts computed | 29 |
| independently under the preceding
provisions of this | 30 |
| subparagraph (E) for each such taxable year;
| 31 |
| (F) For taxable years ending on or after January 1, | 32 |
| 1989, an amount
equal to the tax deducted pursuant to | 33 |
| Section 164 of the Internal Revenue
Code if the trust | 34 |
| or estate is claiming the same tax for purposes of the
|
|
|
|
09400HB0709sam004 |
- 33 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| Illinois foreign tax credit under Section 601 of this | 2 |
| Act;
| 3 |
| (G) An amount equal to the amount of the capital | 4 |
| gain deduction
allowable under the Internal Revenue | 5 |
| Code, to the extent deducted from
gross income in the | 6 |
| computation of taxable income;
| 7 |
| (G-5) For taxable years ending after December 31, | 8 |
| 1997, an
amount equal to any eligible remediation costs | 9 |
| that the trust or estate
deducted in computing adjusted | 10 |
| gross income and for which the trust
or estate claims a | 11 |
| credit under subsection (l) of Section 201;
| 12 |
| (G-10) For taxable years 2001 and thereafter, an | 13 |
| amount equal to the
bonus depreciation deduction (30% | 14 |
| of the adjusted basis of the qualified
property) taken | 15 |
| on the taxpayer's federal income tax return for the | 16 |
| taxable
year under subsection (k) of Section 168 of the | 17 |
| Internal Revenue Code; and
| 18 |
| (G-11) If the taxpayer sells, transfers, abandons, | 19 |
| or otherwise disposes of
reports a capital gain or loss | 20 |
| on the
taxpayer's federal income tax return for the | 21 |
| taxable year based on a sale or
transfer of property | 22 |
| for which the taxpayer was required in any taxable year | 23 |
| to
make an addition modification under subparagraph | 24 |
| (G-10), then an amount equal
to the aggregate amount of | 25 |
| the deductions taken in all taxable
years under | 26 |
| subparagraph (R) with respect to that property.
| 27 |
| The taxpayer is required to make the addition | 28 |
| modification under this
subparagraph
only once with | 29 |
| respect to any one piece of property;
| 30 |
| (G-12) For taxable years ending on or after | 31 |
| December 31, 2004, an amount equal to the amount | 32 |
| otherwise allowed as a deduction in computing base | 33 |
| income for interest paid, accrued, or incurred, | 34 |
| directly or indirectly, to a foreign person who would |
|
|
|
09400HB0709sam004 |
- 34 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| be a member of the same unitary business group but for | 2 |
| the fact that the foreign person's business activity | 3 |
| outside the United States is 80% or more of the foreign | 4 |
| person's total business activity. The addition | 5 |
| modification required by this subparagraph shall be | 6 |
| reduced to the extent that dividends were included in | 7 |
| base income of the unitary group for the same taxable | 8 |
| year and received by the taxpayer or by a member of the | 9 |
| taxpayer's unitary business group (including amounts | 10 |
| included in gross income pursuant to Sections 951 | 11 |
| through 964 of the Internal Revenue Code and amounts | 12 |
| included in gross income under Section 78 of the | 13 |
| Internal Revenue Code) with respect to the stock of the | 14 |
| same person to whom the interest was paid, accrued, or | 15 |
| incurred.
| 16 |
| This paragraph shall not apply to the following:
| 17 |
| (i) an item of interest paid, accrued, or | 18 |
| incurred, directly or indirectly, to a foreign | 19 |
| person who is subject in a foreign country or | 20 |
| state, other than a state which requires mandatory | 21 |
| unitary reporting, to a tax on or measured by net | 22 |
| income with respect to such interest; or | 23 |
| (ii) an item of interest paid, accrued, or | 24 |
| incurred, directly or indirectly, to a foreign | 25 |
| person if the taxpayer can establish, based on a | 26 |
| preponderance of the evidence, both of the | 27 |
| following: | 28 |
| (a) the foreign person, during the same | 29 |
| taxable year, paid, accrued, or incurred, the | 30 |
| interest to a person that is not a related | 31 |
| member, and | 32 |
| (b) the transaction giving rise to the | 33 |
| interest expense between the taxpayer and the | 34 |
| foreign person did not have as a principal |
|
|
|
09400HB0709sam004 |
- 35 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| purpose the avoidance of Illinois income tax, | 2 |
| and is paid pursuant to a contract or agreement | 3 |
| that reflects an arm's-length interest rate | 4 |
| and terms; or
| 5 |
| (iii) the taxpayer can establish, based on | 6 |
| clear and convincing evidence, that the interest | 7 |
| paid, accrued, or incurred relates to a contract or | 8 |
| agreement entered into at arm's-length rates and | 9 |
| terms and the principal purpose for the payment is | 10 |
| not federal or Illinois tax avoidance; or
| 11 |
| (iv) an item of interest paid, accrued, or | 12 |
| incurred, directly or indirectly, to a foreign | 13 |
| person if the taxpayer establishes by clear and | 14 |
| convincing evidence that the adjustments are | 15 |
| unreasonable; or if the taxpayer and the Director | 16 |
| agree in writing to the application or use of an | 17 |
| alternative method of apportionment under Section | 18 |
| 304(f).
| 19 |
| Nothing in this subsection shall preclude the | 20 |
| Director from making any other adjustment | 21 |
| otherwise allowed under Section 404 of this Act for | 22 |
| any tax year beginning after the effective date of | 23 |
| this amendment provided such adjustment is made | 24 |
| pursuant to regulation adopted by the Department | 25 |
| and such regulations provide methods and standards | 26 |
| by which the Department will utilize its authority | 27 |
| under Section 404 of this Act;
| 28 |
| (G-13) For taxable years ending on or after | 29 |
| December 31, 2004, an amount equal to the amount of | 30 |
| intangible expenses and costs otherwise allowed as a | 31 |
| deduction in computing base income, and that were paid, | 32 |
| accrued, or incurred, directly or indirectly, to a | 33 |
| foreign person who would be a member of the same | 34 |
| unitary business group but for the fact that the |
|
|
|
09400HB0709sam004 |
- 36 - |
LRB094 08094 BDD 46165 a |
|
| 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(c)(2)(G-12) of | 18 |
| this Act. As used in this subparagraph, the term | 19 |
| "intangible expenses and costs" includes: (1) | 20 |
| expenses, losses, and costs for or related to the | 21 |
| direct or indirect acquisition, use, maintenance or | 22 |
| management, ownership, sale, exchange, or any other | 23 |
| disposition of intangible property; (2) losses | 24 |
| incurred, directly or indirectly, from factoring | 25 |
| transactions or discounting transactions; (3) royalty, | 26 |
| patent, technical, and copyright fees; (4) licensing | 27 |
| fees; and (5) other similar expenses and costs. For | 28 |
| purposes of this subparagraph, "intangible property" | 29 |
| includes patents, patent applications, trade names, | 30 |
| trademarks, service marks, copyrights, mask works, | 31 |
| trade secrets, and 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 |
|
|
|
09400HB0709sam004 |
- 37 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| indirectly, from a transaction with a foreign | 2 |
| person who is subject in a foreign country or | 3 |
| state, other than a state which requires mandatory | 4 |
| unitary reporting, to a tax on or measured by net | 5 |
| income with respect to such item; or | 6 |
| (ii) any item of intangible expense or cost | 7 |
| paid, accrued, or incurred, directly or | 8 |
| indirectly, if the taxpayer can establish, based | 9 |
| on a preponderance of the evidence, both of the | 10 |
| following: | 11 |
| (a) the foreign person during the same | 12 |
| taxable year paid, accrued, or incurred, the | 13 |
| intangible expense or cost to a person that is | 14 |
| not a related member, and | 15 |
| (b) the transaction giving rise to the | 16 |
| intangible expense or cost between the | 17 |
| taxpayer and the foreign person did not have as | 18 |
| a principal purpose the avoidance of Illinois | 19 |
| income tax, and is paid pursuant to a contract | 20 |
| or agreement that reflects arm's-length terms; | 21 |
| or | 22 |
| (iii) any item of intangible expense or cost | 23 |
| paid, accrued, or incurred, directly or | 24 |
| indirectly, from a transaction with a foreign | 25 |
| person if the taxpayer establishes by clear and | 26 |
| convincing evidence, that the adjustments are | 27 |
| unreasonable; or if the taxpayer and the Director | 28 |
| agree in writing to the application or use of an | 29 |
| alternative method of apportionment under Section | 30 |
| 304(f);
| 31 |
| Nothing in this subsection shall preclude the | 32 |
| Director from making any other adjustment | 33 |
| otherwise allowed under Section 404 of this Act for | 34 |
| any tax year beginning after the effective date of |
|
|
|
09400HB0709sam004 |
- 38 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| this amendment provided such adjustment is made | 2 |
| pursuant to regulation adopted by the Department | 3 |
| and such regulations provide methods and standards | 4 |
| by which the Department will utilize its authority | 5 |
| under Section 404 of this Act;
| 6 |
| and by deducting from the total so obtained the sum of the | 7 |
| following
amounts:
| 8 |
| (H) An amount equal to all amounts included in such | 9 |
| total pursuant
to the provisions of Sections 402(a), | 10 |
| 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the | 11 |
| Internal Revenue Code or included in such total as
| 12 |
| distributions under the provisions of any retirement | 13 |
| or disability plan for
employees of any governmental | 14 |
| agency or unit, or retirement payments to
retired | 15 |
| partners, which payments are excluded in computing net | 16 |
| earnings
from self employment by Section 1402 of the | 17 |
| Internal Revenue Code and
regulations adopted pursuant | 18 |
| thereto;
| 19 |
| (I) The valuation limitation amount;
| 20 |
| (J) An amount equal to the amount of any tax | 21 |
| imposed by this Act
which was refunded to the taxpayer | 22 |
| and included in such total for the
taxable year;
| 23 |
| (K) An amount equal to all amounts included in | 24 |
| taxable income as
modified by subparagraphs (A), (B), | 25 |
| (C), (D), (E), (F) and (G) which
are exempt from | 26 |
| taxation by this State either by reason of its statutes | 27 |
| or
Constitution
or by reason of the Constitution, | 28 |
| treaties or statutes of the United States;
provided | 29 |
| that, in the case of any statute of this State that | 30 |
| exempts income
derived from bonds or other obligations | 31 |
| from the tax imposed under this Act,
the amount | 32 |
| exempted shall be the interest net of bond premium | 33 |
| amortization;
| 34 |
| (L) With the exception of any amounts subtracted |
|
|
|
09400HB0709sam004 |
- 39 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| under subparagraph
(K),
an amount equal to the sum of | 2 |
| all amounts disallowed as
deductions by (i) Sections | 3 |
| 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, | 4 |
| as now or hereafter amended, and all amounts of | 5 |
| expenses allocable
to interest and disallowed as | 6 |
| deductions by Section 265(1) of the Internal
Revenue | 7 |
| Code of 1954, as now or hereafter amended;
and (ii) for | 8 |
| taxable years
ending on or after August 13, 1999, | 9 |
| Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | 10 |
| the Internal Revenue Code; the provisions of this
| 11 |
| subparagraph are exempt from the provisions of Section | 12 |
| 250;
| 13 |
| (M) An amount equal to those dividends included in | 14 |
| such total
which were paid by a corporation which | 15 |
| conducts business operations in an
Enterprise Zone or | 16 |
| zones created under the Illinois Enterprise Zone Act | 17 |
| and
conducts substantially all of its operations in an | 18 |
| Enterprise Zone or Zones;
| 19 |
| (N) An amount equal to any contribution made to a | 20 |
| job training
project established pursuant to the Tax | 21 |
| Increment Allocation
Redevelopment Act;
| 22 |
| (O) An amount equal to those dividends included in | 23 |
| such total
that were paid by a corporation that | 24 |
| conducts business operations in a
federally designated | 25 |
| Foreign Trade Zone or Sub-Zone and that is designated
a | 26 |
| High Impact Business located in Illinois; provided | 27 |
| that dividends eligible
for the deduction provided in | 28 |
| subparagraph (M) of paragraph (2) of this
subsection | 29 |
| shall not be eligible for the deduction provided under | 30 |
| this
subparagraph (O);
| 31 |
| (P) An amount equal to the amount of the deduction | 32 |
| used to compute the
federal income tax credit for | 33 |
| restoration of substantial amounts held under
claim of | 34 |
| right for the taxable year pursuant to Section 1341 of |
|
|
|
09400HB0709sam004 |
- 40 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| the
Internal Revenue Code of 1986;
| 2 |
| (Q) For taxable year 1999 and thereafter, an amount | 3 |
| equal to the
amount of any
(i) distributions, to the | 4 |
| extent includible in gross income for
federal income | 5 |
| tax purposes, made to the taxpayer because of
his or | 6 |
| her status as a victim of
persecution for racial or | 7 |
| religious reasons by Nazi Germany or any other Axis
| 8 |
| regime or as an heir of the victim and (ii) items
of | 9 |
| income, to the extent
includible in gross income for | 10 |
| federal income tax purposes, attributable to,
derived | 11 |
| from or in any way related to assets stolen from, | 12 |
| hidden from, or
otherwise lost to a victim of
| 13 |
| persecution for racial or religious reasons by Nazi
| 14 |
| Germany or any other Axis regime
immediately prior to, | 15 |
| during, and immediately after World War II, including,
| 16 |
| but
not limited to, interest on the proceeds receivable | 17 |
| as insurance
under policies issued to a victim of | 18 |
| persecution for racial or religious
reasons by Nazi | 19 |
| Germany or any other Axis regime by European insurance
| 20 |
| companies
immediately prior to and during World War II;
| 21 |
| provided, however, this subtraction from federal | 22 |
| adjusted gross income does not
apply to assets acquired | 23 |
| with such assets or with the proceeds from the sale of
| 24 |
| such assets; provided, further, this paragraph shall | 25 |
| only apply to a taxpayer
who was the first recipient of | 26 |
| such assets after their recovery and who is a
victim of
| 27 |
| persecution for racial or religious reasons
by Nazi | 28 |
| Germany or any other Axis regime or as an heir of the | 29 |
| victim. The
amount of and the eligibility for any | 30 |
| public assistance, benefit, or
similar entitlement is | 31 |
| not affected by the inclusion of items (i) and (ii) of
| 32 |
| this paragraph in gross income for federal income tax | 33 |
| purposes.
This paragraph is exempt from the provisions | 34 |
| of Section 250;
|
|
|
|
09400HB0709sam004 |
- 41 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| (R) For taxable years 2001 and thereafter, for the | 2 |
| taxable year in
which the bonus depreciation deduction | 3 |
| (30% of the adjusted basis of the
qualified property) | 4 |
| is taken on the taxpayer's federal income tax return | 5 |
| under
subsection (k) of Section 168 of the Internal | 6 |
| Revenue Code and for each
applicable taxable year | 7 |
| thereafter, an amount equal to "x", where:
| 8 |
| (1) "y" equals the amount of the depreciation | 9 |
| deduction taken for the
taxable year
on the | 10 |
| taxpayer's federal income tax return on property | 11 |
| for which the bonus
depreciation deduction (30% of | 12 |
| the adjusted basis of the qualified property)
was | 13 |
| taken in any year under subsection (k) of Section | 14 |
| 168 of the Internal
Revenue Code, but not including | 15 |
| the bonus depreciation deduction; and
| 16 |
| (2) for property on which a bonus depreciation | 17 |
| deduction of 30% of the adjusted basis was taken, | 18 |
| "x" equals "y" multiplied by 30 and then divided by | 19 |
| 70 (or "y"
multiplied by 0.429) ; and | 20 |
| (3) for taxable years ending on or after | 21 |
| December 31, 2005, for property on which a bonus | 22 |
| depreciation deduction of 50% of the adjusted | 23 |
| basis was taken, "x" equals "y" multiplied by 1.0 .
| 24 |
| For the first taxable year ending on or after | 25 |
| December 31, 2005, an additional subtraction is | 26 |
| allowed for each item of property for which a bonus | 27 |
| depreciation of 50% was taken equal to the difference | 28 |
| between the subtraction that would have been allowed if | 29 |
| subparagraph (3) had applied to all prior taxable years | 30 |
| and the subtraction allowed under this subparagraph | 31 |
| (R) in all prior years. The aggregate amount deducted | 32 |
| under this subparagraph in all taxable
years for any | 33 |
| one piece of property may not exceed the amount of the | 34 |
| bonus
depreciation deduction (30% of the adjusted |
|
|
|
09400HB0709sam004 |
- 42 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| basis of the qualified property)
taken on that property | 2 |
| on the taxpayer's federal income tax return under
| 3 |
| subsection (k) of Section 168 of the Internal Revenue | 4 |
| Code . This subparagraph (R) is exempt from the | 5 |
| provisions of Section 250 ;
| 6 |
| (S) If the taxpayer sells, transfers, abandons, or | 7 |
| otherwise disposes of
reports a capital gain or loss on | 8 |
| the taxpayer's
federal income tax return for the | 9 |
| taxable year based on a sale or transfer of
property | 10 |
| for which the taxpayer was required in any taxable year | 11 |
| to make an
addition modification under subparagraph | 12 |
| (G-10), then an amount equal to that
addition | 13 |
| modification.
| 14 |
| The taxpayer is allowed to take the deduction under | 15 |
| this subparagraph
only once with respect to any one | 16 |
| piece of property . | 17 |
| This subparagraph (S) is exempt from the | 18 |
| provisions of Section 250 ;
| 19 |
| (T) The amount of (i) any interest income (net of | 20 |
| the deductions allocable thereto) taken into account | 21 |
| for the taxable year with respect to a transaction with | 22 |
| a taxpayer that is required to make an addition | 23 |
| modification with respect to such transaction under | 24 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 25 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 26 |
| the amount of such addition modification and
(ii) any | 27 |
| income from intangible property (net of the deductions | 28 |
| allocable thereto) taken into account for the taxable | 29 |
| year with respect to a transaction with a taxpayer that | 30 |
| is required to make an addition modification with | 31 |
| respect to such transaction under Section | 32 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 33 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 34 |
| addition modification;
|
|
|
|
09400HB0709sam004 |
- 43 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| (U) An amount equal to the interest income taken | 2 |
| into account for the taxable year (net of the | 3 |
| deductions allocable thereto) with respect to | 4 |
| transactions with a foreign person who would be a | 5 |
| member of the taxpayer's unitary business group but for | 6 |
| the fact the foreign person's business activity | 7 |
| outside the United States is 80% or more of that | 8 |
| person's total business activity, but not to exceed the | 9 |
| addition modification required to be made for the same | 10 |
| taxable year under Section 203(c)(2)(G-12) for | 11 |
| interest paid, accrued, or incurred, directly or | 12 |
| indirectly, to the same foreign person; and
| 13 |
| (V) An amount equal to the income from intangible | 14 |
| property taken into account for the taxable year (net | 15 |
| of the deductions allocable thereto) with respect to | 16 |
| transactions with a foreign person who would be a | 17 |
| member of the taxpayer's unitary business group but for | 18 |
| the fact that the foreign person's business activity | 19 |
| outside the United States is 80% or more of that | 20 |
| person's total business activity, but not to exceed the | 21 |
| addition modification required to be made for the same | 22 |
| taxable year under Section 203(c)(2)(G-13) for | 23 |
| intangible expenses and costs paid, accrued, or | 24 |
| incurred, directly or indirectly, to the same foreign | 25 |
| person.
| 26 |
| (3) Limitation. The amount of any modification | 27 |
| otherwise required
under this subsection shall, under | 28 |
| regulations prescribed by the
Department, be adjusted by | 29 |
| any amounts included therein which were
properly paid, | 30 |
| credited, or required to be distributed, or permanently set
| 31 |
| aside for charitable purposes pursuant to Internal Revenue | 32 |
| Code Section
642(c) during the taxable year.
| 33 |
| (d) Partnerships.
|
|
|
|
09400HB0709sam004 |
- 44 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| (1) In general. In the case of a partnership, base | 2 |
| income means an
amount equal to the taxpayer's taxable | 3 |
| income for the taxable year as
modified by paragraph (2).
| 4 |
| (2) Modifications. The taxable income referred to in | 5 |
| paragraph (1)
shall be modified by adding thereto the sum | 6 |
| of the following amounts:
| 7 |
| (A) An amount equal to all amounts paid or accrued | 8 |
| to the taxpayer as
interest or dividends during the | 9 |
| taxable year to the extent excluded from
gross income | 10 |
| in the computation of taxable income;
| 11 |
| (B) An amount equal to the amount of tax imposed by | 12 |
| this Act to the
extent deducted from gross income for | 13 |
| the taxable year;
| 14 |
| (C) The amount of deductions allowed to the | 15 |
| partnership pursuant to
Section 707 (c) of the Internal | 16 |
| Revenue Code in calculating its taxable income;
| 17 |
| (D) An amount equal to the amount of the capital | 18 |
| gain deduction
allowable under the Internal Revenue | 19 |
| Code, to the extent deducted from
gross income in the | 20 |
| computation of taxable income;
| 21 |
| (D-5) For taxable years 2001 and thereafter, an | 22 |
| amount equal to the
bonus depreciation deduction (30% | 23 |
| of the adjusted basis of the qualified
property) taken | 24 |
| on the taxpayer's federal income tax return for the | 25 |
| taxable
year under subsection (k) of Section 168 of the | 26 |
| Internal Revenue Code;
| 27 |
| (D-6) If the taxpayer sells, transfers, abandons, | 28 |
| or otherwise disposes of
reports a capital gain or loss | 29 |
| on the taxpayer's
federal income tax return for the | 30 |
| taxable year based on a sale or transfer of
property | 31 |
| for which the taxpayer was required in any taxable year | 32 |
| to make an
addition modification under subparagraph | 33 |
| (D-5), then an amount equal to the
aggregate amount of | 34 |
| the deductions taken in all taxable years
under |
|
|
|
09400HB0709sam004 |
- 45 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| subparagraph (O) with respect to that 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 |
| (D-7) For taxable years ending on or after December | 6 |
| 31, 2004, an amount equal to the amount otherwise | 7 |
| allowed as a deduction in computing base income for | 8 |
| interest paid, accrued, or incurred, directly or | 9 |
| indirectly, to a foreign person who would be a member | 10 |
| of the same unitary business group but for the fact the | 11 |
| foreign person's business activity outside the United | 12 |
| States is 80% or more of the foreign person's total | 13 |
| business activity. The addition modification required | 14 |
| by this subparagraph shall be reduced to the extent | 15 |
| that dividends were included in base income of the | 16 |
| unitary group for the same taxable year and received by | 17 |
| the taxpayer or by a member of the taxpayer's unitary | 18 |
| business group (including amounts included in gross | 19 |
| income pursuant to Sections 951 through 964 of the | 20 |
| Internal Revenue Code and amounts included in gross | 21 |
| income under Section 78 of the Internal Revenue Code) | 22 |
| with respect to the stock of the same person to whom | 23 |
| the interest was paid, accrued, or incurred.
| 24 |
| This paragraph shall not apply to the following:
| 25 |
| (i) an item of interest paid, accrued, or | 26 |
| incurred, directly or indirectly, to a foreign | 27 |
| person who is subject in a foreign country or | 28 |
| state, other than a state which requires mandatory | 29 |
| unitary reporting, to a tax on or measured by net | 30 |
| income with respect to such interest; or | 31 |
| (ii) an item of interest paid, accrued, or | 32 |
| incurred, directly or indirectly, to a foreign | 33 |
| person if the taxpayer can establish, based on a | 34 |
| preponderance of the evidence, both of the |
|
|
|
09400HB0709sam004 |
- 46 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| following: | 2 |
| (a) the foreign person, during the same | 3 |
| taxable year, paid, accrued, or incurred, the | 4 |
| interest to a person that is not a related | 5 |
| member, and | 6 |
| (b) the transaction giving rise to the | 7 |
| interest expense between the taxpayer and the | 8 |
| foreign person did not have as a principal | 9 |
| purpose the avoidance of Illinois income tax, | 10 |
| and is paid pursuant to a contract or agreement | 11 |
| that reflects an arm's-length interest rate | 12 |
| and terms; or
| 13 |
| (iii) the taxpayer can establish, based on | 14 |
| clear and convincing evidence, that the interest | 15 |
| paid, accrued, or incurred relates to a contract or | 16 |
| agreement entered into at arm's-length rates and | 17 |
| terms and the principal purpose for the payment is | 18 |
| not federal or Illinois tax avoidance; or
| 19 |
| (iv) an item of interest paid, accrued, or | 20 |
| incurred, directly or indirectly, to a foreign | 21 |
| person if the taxpayer establishes by clear and | 22 |
| convincing evidence that the adjustments are | 23 |
| unreasonable; or if the taxpayer and the Director | 24 |
| agree in writing to the application or use of an | 25 |
| alternative method of apportionment under Section | 26 |
| 304(f).
| 27 |
| Nothing in this subsection shall preclude the | 28 |
| Director from making any other adjustment | 29 |
| otherwise allowed under Section 404 of this Act for | 30 |
| any tax year beginning after the effective date of | 31 |
| this amendment provided such adjustment is made | 32 |
| pursuant to regulation adopted by the Department | 33 |
| and such regulations provide methods and standards | 34 |
| by which the Department will utilize its authority |
|
|
|
09400HB0709sam004 |
- 47 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| under Section 404 of this Act; and
| 2 |
| (D-8) For taxable years ending on or after December | 3 |
| 31, 2004, an amount equal to the amount of intangible | 4 |
| expenses and costs otherwise allowed as a deduction in | 5 |
| computing base income, and that were paid, accrued, or | 6 |
| incurred, directly or indirectly, to a foreign person | 7 |
| who would be a member of the same unitary business | 8 |
| group but for the fact that the foreign person's | 9 |
| business activity outside the United States is 80% or | 10 |
| more of that person's total business activity. The | 11 |
| addition modification required by this subparagraph | 12 |
| shall be reduced to the extent that dividends were | 13 |
| included in base income of the unitary group for the | 14 |
| same taxable year and received by the taxpayer or by a | 15 |
| member of the taxpayer's unitary business group | 16 |
| (including amounts included in gross income pursuant | 17 |
| to Sections 951 through 964 of the Internal Revenue | 18 |
| Code and amounts included in gross income under Section | 19 |
| 78 of the Internal Revenue Code) with respect to the | 20 |
| stock of the same person to whom the intangible | 21 |
| expenses and costs were directly or indirectly paid, | 22 |
| incurred or accrued. The preceding sentence shall not | 23 |
| apply to the extent that the same dividends caused a | 24 |
| reduction to the addition modification required under | 25 |
| Section 203(d)(2)(D-7) of this Act. As used in this | 26 |
| subparagraph, the term "intangible expenses and costs" | 27 |
| includes (1) expenses, losses, and costs for, or | 28 |
| related to, the direct or indirect acquisition, use, | 29 |
| maintenance or management, ownership, sale, exchange, | 30 |
| or any other disposition of intangible property; (2) | 31 |
| losses incurred, directly or indirectly, from | 32 |
| factoring transactions or discounting transactions; | 33 |
| (3) royalty, patent, technical, and copyright fees; | 34 |
| (4) licensing fees; and (5) other similar expenses and |
|
|
|
09400HB0709sam004 |
- 48 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| costs. For purposes of this subparagraph, "intangible | 2 |
| property" includes patents, patent applications, trade | 3 |
| names, trademarks, service marks, copyrights, mask | 4 |
| works, trade secrets, and similar types of intangible | 5 |
| assets; | 6 |
| This paragraph shall not apply to the following: | 7 |
| (i) any item of intangible expenses or costs | 8 |
| paid, accrued, or incurred, directly or | 9 |
| indirectly, from a transaction with a foreign | 10 |
| person who is subject in a foreign country or | 11 |
| state, other than a state which requires mandatory | 12 |
| unitary reporting, to a tax on or measured by net | 13 |
| income with respect to such item; or | 14 |
| (ii) any item of intangible expense or cost | 15 |
| paid, accrued, or incurred, directly or | 16 |
| indirectly, if the taxpayer can establish, based | 17 |
| on a preponderance of the evidence, both of the | 18 |
| following: | 19 |
| (a) the foreign person during the same | 20 |
| taxable year paid, accrued, or incurred, the | 21 |
| intangible expense or cost to a person that is | 22 |
| not a related member, and | 23 |
| (b) the transaction giving rise to the | 24 |
| intangible expense or cost between the | 25 |
| taxpayer and the foreign person did not have as | 26 |
| a principal purpose the avoidance of Illinois | 27 |
| income tax, and is paid pursuant to a contract | 28 |
| or agreement that reflects arm's-length terms; | 29 |
| or | 30 |
| (iii) any item of intangible expense or cost | 31 |
| paid, accrued, or incurred, directly or | 32 |
| indirectly, from a transaction with a foreign | 33 |
| person if the taxpayer establishes by clear and | 34 |
| convincing evidence, that the adjustments are |
|
|
|
09400HB0709sam004 |
- 49 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| unreasonable; or if the taxpayer and the Director | 2 |
| agree in writing to the application or use of an | 3 |
| alternative method of apportionment under Section | 4 |
| 304(f);
| 5 |
| Nothing in this subsection shall preclude the | 6 |
| Director from making any other adjustment | 7 |
| otherwise allowed under Section 404 of this Act for | 8 |
| any tax year beginning after the effective date of | 9 |
| this amendment provided such adjustment is made | 10 |
| pursuant to regulation adopted by the Department | 11 |
| and such regulations provide methods and standards | 12 |
| by which the Department will utilize its authority | 13 |
| under Section 404 of this Act;
| 14 |
| and by deducting from the total so obtained the following | 15 |
| amounts:
| 16 |
| (E) The valuation limitation amount;
| 17 |
| (F) An amount equal to the amount of any tax | 18 |
| imposed by this Act which
was refunded to the taxpayer | 19 |
| and included in such total for the taxable year;
| 20 |
| (G) An amount equal to all amounts included in | 21 |
| taxable income as
modified by subparagraphs (A), (B), | 22 |
| (C) and (D) which are exempt from
taxation by this | 23 |
| State either by reason of its statutes or Constitution | 24 |
| or
by reason of
the Constitution, treaties or statutes | 25 |
| of the United States;
provided that, in the case of any | 26 |
| statute of this State that exempts income
derived from | 27 |
| bonds or other obligations from the tax imposed under | 28 |
| this Act,
the amount exempted shall be the interest net | 29 |
| of bond premium amortization;
| 30 |
| (H) Any income of the partnership which | 31 |
| constitutes personal service
income as defined in | 32 |
| Section 1348 (b) (1) of the Internal Revenue Code (as
| 33 |
| in effect December 31, 1981) or a reasonable allowance | 34 |
| for compensation
paid or accrued for services rendered |
|
|
|
09400HB0709sam004 |
- 50 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| by partners to the partnership,
whichever is greater;
| 2 |
| (I) An amount equal to all amounts of income | 3 |
| distributable to an entity
subject to the Personal | 4 |
| Property Tax Replacement Income Tax imposed by
| 5 |
| subsections (c) and (d) of Section 201 of this Act | 6 |
| including amounts
distributable to organizations | 7 |
| exempt from federal income tax by reason of
Section | 8 |
| 501(a) of the Internal Revenue Code;
| 9 |
| (J) With the exception of any amounts subtracted | 10 |
| under subparagraph
(G),
an amount equal to the sum of | 11 |
| all amounts disallowed as deductions
by (i) Sections | 12 |
| 171(a) (2), and 265(2) of the Internal Revenue Code of | 13 |
| 1954,
as now or hereafter amended, and all amounts of | 14 |
| expenses allocable to
interest and disallowed as | 15 |
| deductions by Section 265(1) of the Internal
Revenue | 16 |
| Code, as now or hereafter amended;
and (ii) for taxable | 17 |
| years
ending on or after August 13, 1999, Sections
| 18 |
| 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the | 19 |
| Internal Revenue Code; the provisions of this
| 20 |
| subparagraph are exempt from the provisions of Section | 21 |
| 250;
| 22 |
| (K) An amount equal to those dividends included in | 23 |
| such total which were
paid by a corporation which | 24 |
| conducts business operations in an Enterprise
Zone or | 25 |
| zones created under the Illinois Enterprise Zone Act, | 26 |
| enacted by
the 82nd General Assembly, and
conducts | 27 |
| substantially all of its operations
in an Enterprise | 28 |
| Zone or Zones;
| 29 |
| (L) An amount equal to any contribution made to a | 30 |
| job training project
established pursuant to the Real | 31 |
| Property Tax Increment Allocation
Redevelopment Act;
| 32 |
| (M) An amount equal to those dividends included in | 33 |
| such total
that were paid by a corporation that | 34 |
| conducts business operations in a
federally designated |
|
|
|
09400HB0709sam004 |
- 51 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| Foreign Trade Zone or Sub-Zone and that is designated a
| 2 |
| High Impact Business located in Illinois; provided | 3 |
| that dividends eligible
for the deduction provided in | 4 |
| subparagraph (K) of paragraph (2) of this
subsection | 5 |
| shall not be eligible for the deduction provided under | 6 |
| this
subparagraph (M);
| 7 |
| (N) An amount equal to the amount of the deduction | 8 |
| used to compute the
federal income tax credit for | 9 |
| restoration of substantial amounts held under
claim of | 10 |
| right for the taxable year pursuant to Section 1341 of | 11 |
| the
Internal Revenue Code of 1986;
| 12 |
| (O) For taxable years 2001 and thereafter, for the | 13 |
| taxable year in
which the bonus depreciation deduction | 14 |
| (30% of the adjusted basis of the
qualified property) | 15 |
| is taken on the taxpayer's federal income tax return | 16 |
| under
subsection (k) of Section 168 of the Internal | 17 |
| Revenue Code and for each
applicable taxable year | 18 |
| thereafter, an amount equal to "x", where:
| 19 |
| (1) "y" equals the amount of the depreciation | 20 |
| deduction taken for the
taxable year
on the | 21 |
| taxpayer's federal income tax return on property | 22 |
| for which the bonus
depreciation deduction (30% of | 23 |
| the adjusted basis of the qualified property)
was | 24 |
| taken in any year under subsection (k) of Section | 25 |
| 168 of the Internal
Revenue Code, but not including | 26 |
| the bonus depreciation deduction; and
| 27 |
| (2) for property on which a bonus depreciation | 28 |
| deduction of 30% of the adjusted basis was taken, | 29 |
| "x" equals "y" multiplied by 30 and then divided by | 30 |
| 70 (or "y"
multiplied by 0.429) ; and | 31 |
| (3) for taxable years ending on or after | 32 |
| December 31, 2005, for property on which a bonus | 33 |
| depreciation deduction of 50% of the adjusted | 34 |
| basis was taken, "x" equals "y" multiplied by 1.0 .
|
|
|
|
09400HB0709sam004 |
- 52 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| For the first taxable year ending on or after | 2 |
| December 31, 2005, an additional subtraction is | 3 |
| allowed for each item of property for which a bonus | 4 |
| depreciation of 50% was taken equal to the difference | 5 |
| between the subtraction that would have been allowed if | 6 |
| subparagraph (3) had applied to all prior taxable years | 7 |
| and the subtraction allowed under this subparagraph | 8 |
| (O) in all prior years. The aggregate amount deducted | 9 |
| under this subparagraph in all taxable
years for any | 10 |
| one piece of property may not exceed the amount of the | 11 |
| bonus
depreciation deduction (30% of the adjusted | 12 |
| basis of the qualified property)
taken on that property | 13 |
| on the taxpayer's federal income tax return under
| 14 |
| subsection (k) of Section 168 of the Internal Revenue | 15 |
| Code . This subparagraph (O) is exempt from the | 16 |
| provisions of Section 250 ;
| 17 |
| (P) If the taxpayer sells, transfers, abandons, or | 18 |
| otherwise disposes of
reports a capital gain or loss on | 19 |
| the taxpayer's
federal income tax return for the | 20 |
| taxable year based on a sale or transfer of
property | 21 |
| for which the taxpayer was required in any taxable year | 22 |
| to make an
addition modification under subparagraph | 23 |
| (D-5), then an amount equal to that
addition | 24 |
| modification.
| 25 |
| The taxpayer is allowed to take the deduction under | 26 |
| this subparagraph
only once with respect to any one | 27 |
| piece of property . | 28 |
| This subparagraph (P) is exempt from the | 29 |
| provisions of Section 250 ;
| 30 |
| (Q) 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 |
|
|
|
09400HB0709sam004 |
- 53 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 2 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 3 |
| the amount of such addition modification and
(ii) any | 4 |
| income from intangible property (net of the deductions | 5 |
| allocable thereto) taken into account for the taxable | 6 |
| year with respect to a transaction with a taxpayer that | 7 |
| is required to make an addition modification with | 8 |
| respect to such transaction under Section | 9 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 10 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 11 |
| addition modification;
| 12 |
| (R) An amount equal to the interest income taken | 13 |
| into account for the taxable year (net of the | 14 |
| deductions allocable thereto) with respect to | 15 |
| transactions with a foreign person who would be a | 16 |
| member of the taxpayer's unitary business group but for | 17 |
| the fact that the foreign person's business activity | 18 |
| outside the United States is 80% or more of that | 19 |
| person's total business activity, but not to exceed the | 20 |
| addition modification required to be made for the same | 21 |
| taxable year under Section 203(d)(2)(D-7) for interest | 22 |
| paid, accrued, or incurred, directly or indirectly, to | 23 |
| the same foreign person; and
| 24 |
| (S) An amount equal to the income from intangible | 25 |
| property taken into account for the taxable year (net | 26 |
| of the deductions allocable thereto) with respect to | 27 |
| transactions with a foreign person who would be a | 28 |
| member of the taxpayer's unitary business group but for | 29 |
| the fact that the foreign person's business activity | 30 |
| outside the United States is 80% or more of that | 31 |
| person's total business activity, but not to exceed the | 32 |
| addition modification required to be made for the same | 33 |
| taxable year under Section 203(d)(2)(D-8) for | 34 |
| intangible expenses and costs paid, accrued, or |
|
|
|
09400HB0709sam004 |
- 54 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| incurred, directly or indirectly, to the same foreign | 2 |
| person.
| 3 |
| (e) Gross income; adjusted gross income; taxable income.
| 4 |
| (1) In general. Subject to the provisions of paragraph | 5 |
| (2) and
subsection (b) (3), for purposes of this Section | 6 |
| and Section 803(e), a
taxpayer's gross income, adjusted | 7 |
| gross income, or taxable income for
the taxable year shall | 8 |
| mean the amount of gross income, adjusted gross
income or | 9 |
| taxable income properly reportable for federal income tax
| 10 |
| purposes for the taxable year under the provisions of the | 11 |
| Internal
Revenue Code. Taxable income may be less than | 12 |
| zero. However, for taxable
years ending on or after | 13 |
| December 31, 1986, net operating loss
carryforwards from | 14 |
| taxable years ending prior to December 31, 1986, may not
| 15 |
| exceed the sum of federal taxable income for the taxable | 16 |
| year before net
operating loss deduction, plus the excess | 17 |
| of addition modifications over
subtraction modifications | 18 |
| for the taxable year. For taxable years ending
prior to | 19 |
| December 31, 1986, taxable income may never be an amount in | 20 |
| excess
of the net operating loss for the taxable year as | 21 |
| defined in subsections
(c) and (d) of Section 172 of the | 22 |
| Internal Revenue Code, provided that when
taxable income of | 23 |
| a corporation (other than a Subchapter S corporation),
| 24 |
| trust, or estate is less than zero and addition | 25 |
| modifications, other than
those provided by subparagraph | 26 |
| (E) of paragraph (2) of subsection (b) for
corporations or | 27 |
| subparagraph (E) of paragraph (2) of subsection (c) for
| 28 |
| trusts and estates, exceed subtraction modifications, an | 29 |
| addition
modification must be made under those | 30 |
| subparagraphs for any other taxable
year to which the | 31 |
| taxable income less than zero (net operating loss) is
| 32 |
| applied under Section 172 of the Internal Revenue Code or | 33 |
| under
subparagraph (E) of paragraph (2) of this subsection |
|
|
|
09400HB0709sam004 |
- 55 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| (e) applied in
conjunction with Section 172 of the Internal | 2 |
| Revenue Code.
| 3 |
| (2) Special rule. For purposes of paragraph (1) of this | 4 |
| subsection,
the taxable income properly reportable for | 5 |
| federal income tax purposes
shall mean:
| 6 |
| (A) Certain life insurance companies. In the case | 7 |
| of a life
insurance company subject to the tax imposed | 8 |
| by Section 801 of the
Internal Revenue Code, life | 9 |
| insurance company taxable income, plus the
amount of | 10 |
| distribution from pre-1984 policyholder surplus | 11 |
| accounts as
calculated under Section 815a of the | 12 |
| Internal Revenue Code;
| 13 |
| (B) Certain other insurance companies. In the case | 14 |
| of mutual
insurance companies subject to the tax | 15 |
| imposed by Section 831 of the
Internal Revenue Code, | 16 |
| insurance company taxable income;
| 17 |
| (C) Regulated investment companies. In the case of | 18 |
| a regulated
investment company subject to the tax | 19 |
| imposed by Section 852 of the
Internal Revenue Code, | 20 |
| investment company taxable income;
| 21 |
| (D) Real estate investment trusts. In the case of a | 22 |
| real estate
investment trust subject to the tax imposed | 23 |
| by Section 857 of the
Internal Revenue Code, real | 24 |
| estate investment trust taxable income;
| 25 |
| (E) Consolidated corporations. In the case of a | 26 |
| corporation which
is a member of an affiliated group of | 27 |
| corporations filing a consolidated
income tax return | 28 |
| for the taxable year for federal income tax purposes,
| 29 |
| taxable income determined as if such corporation had | 30 |
| filed a separate
return for federal income tax purposes | 31 |
| for the taxable year and each
preceding taxable year | 32 |
| for which it was a member of an affiliated group.
For | 33 |
| purposes of this subparagraph, the taxpayer's separate | 34 |
| taxable
income shall be determined as if the election |
|
|
|
09400HB0709sam004 |
- 56 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| provided by Section
243(b) (2) of the Internal Revenue | 2 |
| Code had been in effect for all such years;
| 3 |
| (F) Cooperatives. In the case of a cooperative | 4 |
| corporation or
association, the taxable income of such | 5 |
| organization determined in
accordance with the | 6 |
| provisions of Section 1381 through 1388 of the
Internal | 7 |
| Revenue Code;
| 8 |
| (G) Subchapter S corporations. In the case of: (i) | 9 |
| a Subchapter S
corporation for which there is in effect | 10 |
| an election for the taxable year
under Section 1362 of | 11 |
| the Internal Revenue Code, the taxable income of such
| 12 |
| corporation determined in accordance with Section | 13 |
| 1363(b) of the Internal
Revenue Code, except that | 14 |
| taxable income shall take into
account those items | 15 |
| which are required by Section 1363(b)(1) of the
| 16 |
| Internal Revenue Code to be separately stated; and (ii) | 17 |
| a Subchapter
S corporation for which there is in effect | 18 |
| a federal election to opt out of
the provisions of the | 19 |
| Subchapter S Revision Act of 1982 and have applied
| 20 |
| instead the prior federal Subchapter S rules as in | 21 |
| effect on July 1, 1982,
the taxable income of such | 22 |
| corporation determined in accordance with the
federal | 23 |
| Subchapter S rules as in effect on July 1, 1982; and
| 24 |
| (H) Partnerships. In the case of a partnership, | 25 |
| taxable income
determined in accordance with Section | 26 |
| 703 of the Internal Revenue Code,
except that taxable | 27 |
| income shall take into account those items which are
| 28 |
| required by Section 703(a)(1) to be separately stated | 29 |
| but which would be
taken into account by an individual | 30 |
| in calculating his taxable income.
| 31 |
| (3) Recapture of business expenses on disposition of | 32 |
| asset or business. Notwithstanding any other law to the | 33 |
| contrary, if in prior years income from an asset or | 34 |
| business has been classified as business income and in a |
|
|
|
09400HB0709sam004 |
- 57 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| later year is demonstrated to be non-business income, then | 2 |
| all expenses, without limitation, deducted in such later | 3 |
| year and in the 2 immediately preceding taxable years | 4 |
| related to that asset or business that generated the | 5 |
| non-business income shall be added back and recaptured as | 6 |
| business income in the year of the disposition of the asset | 7 |
| or business. Such amount shall be apportioned to Illinois | 8 |
| using the greater of the apportionment fraction computed | 9 |
| for the business under Section 304 of this Act for the | 10 |
| taxable year or the average of the apportionment fractions | 11 |
| computed for the business under Section 304 of this Act for | 12 |
| the taxable year and for the 2 immediately preceding | 13 |
| taxable years.
| 14 |
| (f) Valuation limitation amount.
| 15 |
| (1) In general. The valuation limitation amount | 16 |
| referred to in
subsections (a) (2) (G), (c) (2) (I) and | 17 |
| (d)(2) (E) is an amount equal to:
| 18 |
| (A) The sum of the pre-August 1, 1969 appreciation | 19 |
| amounts (to the
extent consisting of gain reportable | 20 |
| under the provisions of Section
1245 or 1250 of the | 21 |
| Internal Revenue Code) for all property in respect
of | 22 |
| which such gain was reported for the taxable year; plus
| 23 |
| (B) The lesser of (i) the sum of the pre-August 1, | 24 |
| 1969 appreciation
amounts (to the extent consisting of | 25 |
| capital gain) for all property in
respect of which such | 26 |
| gain was reported for federal income tax purposes
for | 27 |
| the taxable year, or (ii) the net capital gain for the | 28 |
| taxable year,
reduced in either case by any amount of | 29 |
| such gain included in the amount
determined under | 30 |
| subsection (a) (2) (F) or (c) (2) (H).
| 31 |
| (2) Pre-August 1, 1969 appreciation amount.
| 32 |
| (A) If the fair market value of property referred | 33 |
| to in paragraph
(1) was readily ascertainable on August | 34 |
| 1, 1969, the pre-August 1, 1969
appreciation amount for |
|
|
|
09400HB0709sam004 |
- 58 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| such property is the lesser of (i) the excess of
such | 2 |
| fair market value over the taxpayer's basis (for | 3 |
| determining gain)
for such property on that date | 4 |
| (determined under the Internal Revenue
Code as in | 5 |
| effect on that date), or (ii) the total gain realized | 6 |
| and
reportable for federal income tax purposes in | 7 |
| respect of the sale,
exchange or other disposition of | 8 |
| such property.
| 9 |
| (B) If the fair market value of property referred | 10 |
| to in paragraph
(1) was not readily ascertainable on | 11 |
| August 1, 1969, the pre-August 1,
1969 appreciation | 12 |
| amount for such property is that amount which bears
the | 13 |
| same ratio to the total gain reported in respect of the | 14 |
| property for
federal income tax purposes for the | 15 |
| taxable year, as the number of full
calendar months in | 16 |
| that part of the taxpayer's holding period for the
| 17 |
| property ending July 31, 1969 bears to the number of | 18 |
| full calendar
months in the taxpayer's entire holding | 19 |
| period for the
property.
| 20 |
| (C) The Department shall prescribe such | 21 |
| regulations as may be
necessary to carry out the | 22 |
| purposes of this paragraph.
| 23 |
| (g) Double deductions. Unless specifically provided | 24 |
| otherwise, nothing
in this Section shall permit the same item | 25 |
| to be deducted more than once.
| 26 |
| (h) Legislative intention. Except as expressly provided by | 27 |
| this
Section there shall be no modifications or limitations on | 28 |
| the amounts
of income, gain, loss or deduction taken into | 29 |
| account in determining
gross income, adjusted gross income or | 30 |
| taxable income for federal income
tax purposes for the taxable | 31 |
| year, or in the amount of such items
entering into the | 32 |
| computation of base income and net income under this
Act for |
|
|
|
09400HB0709sam004 |
- 59 - |
LRB094 08094 BDD 46165 a |
|
| 1 |
| such taxable year, whether in respect of property values as of
| 2 |
| August 1, 1969 or otherwise.
| 3 |
| (Source: P.A. 92-16, eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, | 4 |
| eff. 8-17-01; 92-603, eff. 6-28-02; 92-626, eff. 7-11-02; | 5 |
| 92-651, eff. 7-11-02; 92-846, eff. 8-23-02; 93-812, eff. | 6 |
| 7-26-04; 93-840, eff. 7-30-04; revised 10-12-04.)
| 7 |
| Section 99. Effective date. This Act takes effect upon | 8 |
| becoming law.".
|
|