Full Text of HB0581 95th General Assembly
HB0581 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 HB0581
Introduced 2/5/2007, by Rep. Patricia R. Bellock SYNOPSIS AS INTRODUCED: |
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35 ILCS 5/203 |
from Ch. 120, par. 2-203 |
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Amends the Illinois Income Tax Act. Provides income tax deductions for contributions to and interest on a health savings account, established under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Effective July 1, 2007.
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A BILL FOR
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HB0581 |
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LRB095 04338 BDD 24381 b |
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| AN ACT concerning revenue.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Income Tax Act is amended by | 5 |
| changing Section 203 as follows:
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| (35 ILCS 5/203) (from Ch. 120, par. 2-203)
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| Sec. 203. Base income defined.
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| (a) Individuals.
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| (1) In general. In the case of an individual, base | 10 |
| income means an
amount equal to the taxpayer's adjusted | 11 |
| gross income for the taxable
year as modified by paragraph | 12 |
| (2).
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| (2) Modifications. The adjusted gross income referred | 14 |
| to in
paragraph (1) shall be modified by adding thereto the | 15 |
| sum of the
following amounts:
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| (A) An amount equal to all amounts paid or accrued | 17 |
| to the taxpayer
as interest or dividends during the | 18 |
| taxable year to the extent excluded
from gross income | 19 |
| in the computation of adjusted gross income, except | 20 |
| stock
dividends of qualified public utilities | 21 |
| described in Section 305(e) of the
Internal Revenue | 22 |
| Code;
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| (B) An amount equal to the amount of tax imposed by |
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| this Act to the
extent deducted from gross income in | 2 |
| the computation of adjusted gross
income for the | 3 |
| taxable year;
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| (C) An amount equal to the amount received during | 5 |
| the taxable year
as a recovery or refund of real | 6 |
| property taxes paid with respect to the
taxpayer's | 7 |
| principal residence under the Revenue Act of
1939 and | 8 |
| for which a deduction was previously taken under | 9 |
| subparagraph (L) of
this paragraph (2) prior to July 1, | 10 |
| 1991, the retrospective application date of
Article 4 | 11 |
| of Public Act 87-17. In the case of multi-unit or | 12 |
| multi-use
structures and farm dwellings, the taxes on | 13 |
| the taxpayer's principal residence
shall be that | 14 |
| portion of the total taxes for the entire property | 15 |
| which is
attributable to such principal residence;
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| (D) An amount equal to the amount of the capital | 17 |
| gain deduction
allowable under the Internal Revenue | 18 |
| Code, to the extent deducted from gross
income in the | 19 |
| computation of adjusted gross income;
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| (D-5) An amount, to the extent not included in | 21 |
| adjusted gross income,
equal to the amount of money | 22 |
| withdrawn by the taxpayer in the taxable year from
a | 23 |
| medical care savings account and the interest earned on | 24 |
| the account in the
taxable year of a withdrawal | 25 |
| pursuant to subsection (b) of Section 20 of the
Medical | 26 |
| Care Savings Account Act or subsection (b) of Section |
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| 20 of the
Medical Care Savings Account Act of 2000;
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| (D-10) For taxable years ending after December 31, | 3 |
| 1997, an
amount equal to any eligible remediation costs | 4 |
| that the individual
deducted in computing adjusted | 5 |
| gross income and for which the
individual claims a | 6 |
| credit under subsection (l) of Section 201;
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| (D-15) For taxable years 2001 and thereafter, an | 8 |
| amount equal to the
bonus depreciation deduction taken | 9 |
| on the taxpayer's federal income tax return for the | 10 |
| taxable
year under subsection (k) of Section 168 of the | 11 |
| Internal Revenue Code;
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| (D-16) If the taxpayer sells, transfers, abandons, | 13 |
| or otherwise disposes of property for which the | 14 |
| taxpayer was required in any taxable year to
make an | 15 |
| addition modification under subparagraph (D-15), then | 16 |
| an amount equal
to the aggregate amount of the | 17 |
| deductions taken in all taxable
years under | 18 |
| subparagraph (Z) with respect to that property.
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| If the taxpayer continues to own property through | 20 |
| the last day of the last tax year for which the | 21 |
| taxpayer may claim a depreciation deduction for | 22 |
| federal income tax purposes and for which the taxpayer | 23 |
| was allowed in any taxable year to make a subtraction | 24 |
| modification under subparagraph (Z), then an amount | 25 |
| equal to that subtraction modification.
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| The taxpayer is required to make the addition |
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| modification under this
subparagraph
only once with | 2 |
| respect to any one piece of property;
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| (D-17) For taxable years ending on or after | 4 |
| December 31, 2004, an amount equal to the amount | 5 |
| otherwise allowed as a deduction in computing base | 6 |
| income for interest paid, accrued, or incurred, | 7 |
| directly or indirectly, to a foreign person who would | 8 |
| be a member of the same unitary business group but for | 9 |
| the fact that foreign person's business activity | 10 |
| outside the United States is 80% or more of the foreign | 11 |
| person's total business activity. The addition | 12 |
| modification required by this subparagraph shall be | 13 |
| reduced to the extent that dividends were included in | 14 |
| base income of the unitary group for the same taxable | 15 |
| year and received by the taxpayer or by a member of the | 16 |
| taxpayer's unitary business group (including amounts | 17 |
| included in gross income under Sections 951 through 964 | 18 |
| of the Internal Revenue Code and amounts included in | 19 |
| gross income under Section 78 of the Internal Revenue | 20 |
| Code) with respect to the stock of the same person to | 21 |
| whom the interest was paid, accrued, or incurred. | 22 |
| This paragraph shall not apply to the following:
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| (i) an item of interest paid, accrued, or | 24 |
| incurred, directly or indirectly, to a foreign | 25 |
| person who is subject in a foreign country or | 26 |
| state, other than a state which requires mandatory |
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| unitary reporting, to a tax on or measured by net | 2 |
| income with respect to such interest; or | 3 |
| (ii) an item of interest paid, accrued, or | 4 |
| incurred, directly or indirectly, to a foreign | 5 |
| person if the taxpayer can establish, based on a | 6 |
| preponderance of the evidence, both of the | 7 |
| following: | 8 |
| (a) the foreign person, during the same | 9 |
| taxable year, paid, accrued, or incurred, the | 10 |
| interest to a person that is not a related | 11 |
| member, and | 12 |
| (b) the transaction giving rise to the | 13 |
| interest expense between the taxpayer and the | 14 |
| foreign person did not have as a principal | 15 |
| purpose the avoidance of Illinois income tax, | 16 |
| and is paid pursuant to a contract or agreement | 17 |
| that reflects an arm's-length interest rate | 18 |
| and terms; or
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| (iii) the taxpayer can establish, based on | 20 |
| clear and convincing evidence, that the interest | 21 |
| paid, accrued, or incurred relates to a contract or | 22 |
| agreement entered into at arm's-length rates and | 23 |
| terms and the principal purpose for the payment is | 24 |
| not federal or Illinois tax avoidance; or
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| (iv) an item of interest paid, accrued, or | 26 |
| incurred, directly or indirectly, to a foreign |
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| person if the taxpayer establishes by clear and | 2 |
| convincing evidence that the adjustments are | 3 |
| unreasonable; or if the taxpayer and the Director | 4 |
| agree in writing to the application or use of an | 5 |
| alternative method of apportionment under Section | 6 |
| 304(f).
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| Nothing in this subsection shall preclude the | 8 |
| Director from making any other adjustment | 9 |
| otherwise allowed under Section 404 of this Act for | 10 |
| any tax year beginning after the effective date of | 11 |
| this amendment provided such adjustment is made | 12 |
| pursuant to regulation adopted by the Department | 13 |
| and such regulations provide methods and standards | 14 |
| by which the Department will utilize its authority | 15 |
| under Section 404 of this Act;
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| (D-18) For taxable years ending on or after | 17 |
| December 31, 2004, an amount equal to the amount of | 18 |
| intangible expenses and costs otherwise allowed as a | 19 |
| deduction in computing base income, and that were paid, | 20 |
| accrued, or incurred, directly or indirectly, to a | 21 |
| foreign person who would be a member of the same | 22 |
| unitary business group but for the fact that the | 23 |
| foreign person's business activity outside the United | 24 |
| States is 80% or more of that person's total business | 25 |
| activity. The addition modification required by this | 26 |
| subparagraph shall be reduced to the extent that |
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| dividends were included in base income of the unitary | 2 |
| group for the same taxable year and received by the | 3 |
| taxpayer or by a member of the taxpayer's unitary | 4 |
| business group (including amounts included in gross | 5 |
| income under Sections 951 through 964 of the Internal | 6 |
| Revenue Code and amounts included in gross income under | 7 |
| Section 78 of the Internal Revenue Code) with respect | 8 |
| to the stock of the same person to whom the intangible | 9 |
| expenses and costs were directly or indirectly paid, | 10 |
| incurred, or accrued. The preceding sentence does not | 11 |
| apply to the extent that the same dividends caused a | 12 |
| reduction to the addition modification required under | 13 |
| Section 203(a)(2)(D-17) of this Act. As used in this | 14 |
| subparagraph, the term "intangible expenses and costs" | 15 |
| includes (1) expenses, losses, and costs for, or | 16 |
| related to, the direct or indirect acquisition, use, | 17 |
| maintenance or management, ownership, sale, exchange, | 18 |
| or any other disposition of intangible property; (2) | 19 |
| losses incurred, directly or indirectly, from | 20 |
| factoring transactions or discounting transactions; | 21 |
| (3) royalty, patent, technical, and copyright fees; | 22 |
| (4) licensing fees; and (5) other similar expenses and | 23 |
| costs.
For purposes of this subparagraph, "intangible | 24 |
| property" includes patents, patent applications, trade | 25 |
| names, trademarks, service marks, copyrights, mask | 26 |
| works, trade secrets, and similar types of intangible |
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| assets. | 2 |
| This paragraph shall not apply to the following: | 3 |
| (i) any item of intangible expenses or costs | 4 |
| paid, accrued, or incurred, directly or | 5 |
| indirectly, from a transaction with a foreign | 6 |
| person who is subject in a foreign country or | 7 |
| state, other than a state which requires mandatory | 8 |
| unitary reporting, to a tax on or measured by net | 9 |
| income with respect to such item; or | 10 |
| (ii) any item of intangible expense or cost | 11 |
| paid, accrued, or incurred, directly or | 12 |
| indirectly, if the taxpayer can establish, based | 13 |
| on a preponderance of the evidence, both of the | 14 |
| following: | 15 |
| (a) the foreign person during the same | 16 |
| taxable year paid, accrued, or incurred, the | 17 |
| intangible expense or cost to a person that is | 18 |
| not a related member, and | 19 |
| (b) the transaction giving rise to the | 20 |
| intangible expense or cost between the | 21 |
| taxpayer and the foreign person did not have as | 22 |
| a principal purpose the avoidance of Illinois | 23 |
| income tax, and is paid pursuant to a contract | 24 |
| or agreement that reflects arm's-length terms; | 25 |
| or | 26 |
| (iii) any item of intangible expense or cost |
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| paid, accrued, or incurred, directly or | 2 |
| indirectly, from a transaction with a foreign | 3 |
| person if the taxpayer establishes by clear and | 4 |
| convincing evidence, that the adjustments are | 5 |
| unreasonable; or if the taxpayer and the Director | 6 |
| agree in writing to the application or use of an | 7 |
| alternative method of apportionment under Section | 8 |
| 304(f);
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| Nothing in this subsection shall preclude the | 10 |
| Director from making any other adjustment | 11 |
| otherwise allowed under Section 404 of this Act for | 12 |
| any tax year beginning after the effective date of | 13 |
| this amendment provided such adjustment is made | 14 |
| pursuant to regulation adopted by the Department | 15 |
| and such regulations provide methods and standards | 16 |
| by which the Department will utilize its authority | 17 |
| under Section 404 of this Act;
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| (D-20) For taxable years beginning on or after | 19 |
| January 1,
2002, in
the
case of a distribution from a | 20 |
| qualified tuition program under Section 529 of
the | 21 |
| Internal Revenue Code, other than (i) a distribution | 22 |
| from a College Savings
Pool created under Section 16.5 | 23 |
| of the State Treasurer Act or (ii) a
distribution from | 24 |
| the Illinois Prepaid Tuition Trust Fund, an amount | 25 |
| equal to
the amount excluded from gross income under | 26 |
| Section 529(c)(3)(B);
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| and by deducting from the total so obtained the
sum of the | 2 |
| following amounts:
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| (E) For taxable years ending before December 31, | 4 |
| 2001,
any amount included in such total in respect of | 5 |
| any compensation
(including but not limited to any | 6 |
| compensation paid or accrued to a
serviceman while a | 7 |
| prisoner of war or missing in action) paid to a | 8 |
| resident
by reason of being on active duty in the Armed | 9 |
| Forces of the United States
and in respect of any | 10 |
| compensation paid or accrued to a resident who as a
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| governmental employee was a prisoner of war or missing | 12 |
| in action, and in
respect of any compensation paid to a | 13 |
| resident in 1971 or thereafter for
annual training | 14 |
| performed pursuant to Sections 502 and 503, Title 32,
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| United States Code as a member of the Illinois National | 16 |
| Guard.
For taxable years ending on or after December | 17 |
| 31, 2001, any amount included in
such total in respect | 18 |
| of any compensation (including but not limited to any
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| compensation paid or accrued to a serviceman while a | 20 |
| prisoner of war or missing
in action) paid to a | 21 |
| resident by reason of being a member of any component | 22 |
| of
the Armed Forces of the United States and in respect | 23 |
| of any compensation paid
or accrued to a resident who | 24 |
| as a governmental employee was a prisoner of war
or | 25 |
| missing in action, and in respect of any compensation | 26 |
| paid to a resident in
2001 or thereafter by reason of |
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| being a member of the Illinois National Guard.
The | 2 |
| provisions of this amendatory Act of the 92nd General | 3 |
| Assembly are exempt
from the provisions of Section 250;
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| (F) An amount equal to all amounts included in such | 5 |
| total pursuant
to the provisions of Sections 402(a), | 6 |
| 402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the | 7 |
| Internal Revenue Code, or included in such total as
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| distributions under the provisions of any retirement | 9 |
| or disability plan for
employees of any governmental | 10 |
| agency or unit, or retirement payments to
retired | 11 |
| partners, which payments are excluded in computing net | 12 |
| earnings
from self employment by Section 1402 of the | 13 |
| Internal Revenue Code and
regulations adopted pursuant | 14 |
| thereto;
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| (G) The valuation limitation amount;
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| (H) An amount equal to the amount of any tax | 17 |
| imposed by this Act
which was refunded to the taxpayer | 18 |
| and included in such total for the
taxable year;
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| (I) An amount equal to all amounts included in such | 20 |
| total pursuant
to the provisions of Section 111 of the | 21 |
| Internal Revenue Code as a
recovery of items previously | 22 |
| deducted from adjusted gross income in the
computation | 23 |
| of taxable income;
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| (J) An amount equal to those dividends included in | 25 |
| such total which were
paid by a corporation which | 26 |
| conducts business operations in an Enterprise
Zone or |
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| zones created under the Illinois Enterprise Zone Act or | 2 |
| a River Edge Redevelopment Zone or zones created under | 3 |
| the River Edge Redevelopment Zone Act, and conducts
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| substantially all of its operations in an Enterprise | 5 |
| Zone or zones or a River Edge Redevelopment Zone or | 6 |
| zones. This subparagraph (J) is exempt from the | 7 |
| provisions of Section 250;
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| (K) An amount equal to those dividends included in | 9 |
| such total that
were paid by a corporation that | 10 |
| conducts business operations in a federally
designated | 11 |
| Foreign Trade Zone or Sub-Zone and that is designated a | 12 |
| High Impact
Business located in Illinois; provided | 13 |
| that dividends eligible for the
deduction provided in | 14 |
| subparagraph (J) of paragraph (2) of this subsection
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| shall not be eligible for the deduction provided under | 16 |
| this subparagraph
(K);
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| (L) For taxable years ending after December 31, | 18 |
| 1983, an amount equal to
all social security benefits | 19 |
| and railroad retirement benefits included in
such | 20 |
| total pursuant to Sections 72(r) and 86 of the Internal | 21 |
| Revenue Code;
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| (M) With the exception of any amounts subtracted | 23 |
| under subparagraph
(N), an amount equal to the sum of | 24 |
| all amounts disallowed as
deductions by (i) Sections | 25 |
| 171(a) (2), and 265(2) of the Internal Revenue Code
of | 26 |
| 1954, as now or hereafter amended, and all amounts of |
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| expenses allocable
to interest and disallowed as | 2 |
| deductions by Section 265(1) of the Internal
Revenue | 3 |
| Code of 1954, as now or hereafter amended;
and (ii) for | 4 |
| taxable years
ending on or after August 13, 1999, | 5 |
| Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | 6 |
| the Internal Revenue Code; the provisions of this
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| subparagraph are exempt from the provisions of Section | 8 |
| 250;
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| (N) An amount equal to all amounts included in such | 10 |
| total which are
exempt from taxation by this State | 11 |
| either by reason of its statutes or
Constitution
or by | 12 |
| reason of the Constitution, treaties or statutes of the | 13 |
| United States;
provided that, in the case of any | 14 |
| statute of this State that exempts income
derived from | 15 |
| bonds or other obligations from the tax imposed under | 16 |
| this Act,
the amount exempted shall be the interest net | 17 |
| of bond premium amortization;
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| (O) An amount equal to any contribution made to a | 19 |
| job training
project established pursuant to the Tax | 20 |
| Increment Allocation Redevelopment Act;
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| (P) An amount equal to the amount of the deduction | 22 |
| used to compute the
federal income tax credit for | 23 |
| restoration of substantial amounts held under
claim of | 24 |
| right for the taxable year pursuant to Section 1341 of | 25 |
| the
Internal Revenue Code of 1986;
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| (Q) An amount equal to any amounts included in such |
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| total, received by
the taxpayer as an acceleration in | 2 |
| the payment of life, endowment or annuity
benefits in | 3 |
| advance of the time they would otherwise be payable as | 4 |
| an indemnity
for a terminal illness;
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| (R) An amount equal to the amount of any federal or | 6 |
| State bonus paid
to veterans of the Persian Gulf War;
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| (S) An amount, to the extent included in adjusted | 8 |
| gross income, equal
to the amount of a contribution | 9 |
| made in the taxable year on behalf of the
taxpayer to a | 10 |
| medical care savings account established under the | 11 |
| Medical Care
Savings Account Act or the Medical Care | 12 |
| Savings Account Act of 2000 and, beginning in taxable | 13 |
| year 2007, to a health savings account, as defined in | 14 |
| the Medicare Prescription Drug, Improvement and | 15 |
| Modernization Act of 2003 to the
extent the | 16 |
| contribution is accepted by the account
administrator | 17 |
| as provided in that Act;
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| (T) An amount, to the extent included in adjusted | 19 |
| gross income, equal to
the amount of interest earned in | 20 |
| the taxable year on a medical care savings
account | 21 |
| established under the Medical Care Savings Account Act | 22 |
| or the Medical
Care Savings Account Act of 2000 and, | 23 |
| beginning in taxable year 2007, on a health savings | 24 |
| account, established under the Medicare Prescription | 25 |
| Drug, Improvement and Modernization Act of 2003 on | 26 |
| behalf of the
taxpayer, other than interest added |
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| pursuant to item (D-5) of this paragraph
(2);
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| (U) For one taxable year beginning on or after | 3 |
| January 1,
1994, an
amount equal to the total amount of | 4 |
| tax imposed and paid under subsections (a)
and (b) of | 5 |
| Section 201 of this Act on grant amounts received by | 6 |
| the taxpayer
under the Nursing Home Grant Assistance | 7 |
| Act during the taxpayer's taxable years
1992 and 1993;
| 8 |
| (V) Beginning with tax years ending on or after | 9 |
| December 31, 1995 and
ending with tax years ending on | 10 |
| or before December 31, 2004, an amount equal to
the | 11 |
| amount paid by a taxpayer who is a
self-employed | 12 |
| taxpayer, a partner of a partnership, or a
shareholder | 13 |
| in a Subchapter S corporation for health insurance or | 14 |
| long-term
care insurance for that taxpayer or that | 15 |
| taxpayer's spouse or dependents, to
the extent that the | 16 |
| amount paid for that health insurance or long-term care
| 17 |
| insurance may be deducted under Section 213 of the | 18 |
| Internal Revenue Code of
1986, has not been deducted on | 19 |
| the federal income tax return of the taxpayer,
and does | 20 |
| not exceed the taxable income attributable to that | 21 |
| taxpayer's income,
self-employment income, or | 22 |
| Subchapter S corporation income; except that no
| 23 |
| deduction shall be allowed under this item (V) if the | 24 |
| taxpayer is eligible to
participate in any health | 25 |
| insurance or long-term care insurance plan of an
| 26 |
| employer of the taxpayer or the taxpayer's
spouse. The |
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| amount of the health insurance and long-term care | 2 |
| insurance
subtracted under this item (V) shall be | 3 |
| determined by multiplying total
health insurance and | 4 |
| long-term care insurance premiums paid by the taxpayer
| 5 |
| times a number that represents the fractional | 6 |
| percentage of eligible medical
expenses under Section | 7 |
| 213 of the Internal Revenue Code of 1986 not actually
| 8 |
| deducted on the taxpayer's federal income tax return;
| 9 |
| (W) For taxable years beginning on or after January | 10 |
| 1, 1998,
all amounts included in the taxpayer's federal | 11 |
| gross income
in the taxable year from amounts converted | 12 |
| from a regular IRA to a Roth IRA.
This paragraph is | 13 |
| exempt from the provisions of Section
250;
| 14 |
| (X) For taxable year 1999 and thereafter, an amount | 15 |
| equal to the
amount of any (i) distributions, to the | 16 |
| extent includible in gross income for
federal income | 17 |
| tax purposes, made to the taxpayer because of his or | 18 |
| her status
as a victim of persecution for racial or | 19 |
| religious reasons by Nazi Germany or
any other Axis | 20 |
| regime or as an heir of the victim and (ii) items
of | 21 |
| income, to the extent
includible in gross income for | 22 |
| federal income tax purposes, attributable to,
derived | 23 |
| from or in any way related to assets stolen from, | 24 |
| hidden from, or
otherwise lost to a victim of
| 25 |
| persecution for racial or religious reasons by Nazi | 26 |
| Germany or any other Axis
regime immediately prior to, |
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| during, and immediately after World War II,
including, | 2 |
| but
not limited to, interest on the proceeds receivable | 3 |
| as insurance
under policies issued to a victim of | 4 |
| persecution for racial or religious
reasons
by Nazi | 5 |
| Germany or any other Axis regime by European insurance | 6 |
| companies
immediately prior to and during World War II;
| 7 |
| provided, however, this subtraction from federal | 8 |
| adjusted gross income does not
apply to assets acquired | 9 |
| with such assets or with the proceeds from the sale of
| 10 |
| such assets; provided, further, this paragraph shall | 11 |
| only apply to a taxpayer
who was the first recipient of | 12 |
| such assets after their recovery and who is a
victim of | 13 |
| persecution for racial or religious reasons
by Nazi | 14 |
| Germany or any other Axis regime or as an heir of the | 15 |
| victim. The
amount of and the eligibility for any | 16 |
| public assistance, benefit, or
similar entitlement is | 17 |
| not affected by the inclusion of items (i) and (ii) of
| 18 |
| this paragraph in gross income for federal income tax | 19 |
| purposes.
This paragraph is exempt from the provisions | 20 |
| of Section 250;
| 21 |
| (Y) For taxable years beginning on or after January | 22 |
| 1, 2002
and ending
on or before December 31, 2004, | 23 |
| moneys contributed in the taxable year to a College | 24 |
| Savings Pool account under
Section 16.5 of the State | 25 |
| Treasurer Act, except that amounts excluded from
gross | 26 |
| income under Section 529(c)(3)(C)(i) of the Internal |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| Revenue Code
shall not be considered moneys | 2 |
| contributed under this subparagraph (Y). For taxable | 3 |
| years beginning on or after January 1, 2005, a maximum | 4 |
| of $10,000
contributed
in the
taxable year to (i) a | 5 |
| College Savings Pool account under Section 16.5 of the
| 6 |
| State
Treasurer Act or (ii) the Illinois Prepaid | 7 |
| Tuition Trust Fund,
except that
amounts excluded from | 8 |
| gross income under Section 529(c)(3)(C)(i) of the
| 9 |
| Internal
Revenue Code shall not be considered moneys | 10 |
| contributed under this subparagraph
(Y). This
| 11 |
| subparagraph (Y) is exempt from the provisions of | 12 |
| Section 250;
| 13 |
| (Z) For taxable years 2001 and thereafter, for the | 14 |
| taxable year in
which the bonus depreciation deduction
| 15 |
| is taken on the taxpayer's federal income tax return | 16 |
| under
subsection (k) of Section 168 of the Internal | 17 |
| Revenue Code and for each
applicable taxable year | 18 |
| thereafter, an amount equal to "x", where:
| 19 |
| (1) "y" equals the amount of the depreciation | 20 |
| deduction taken for the
taxable year
on the | 21 |
| taxpayer's federal income tax return on property | 22 |
| for which the bonus
depreciation deduction
was | 23 |
| taken in any year under subsection (k) of Section | 24 |
| 168 of the Internal
Revenue Code, but not including | 25 |
| the bonus depreciation deduction;
| 26 |
| (2) for taxable years ending on or before |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| December 31, 2005, "x" equals "y" multiplied by 30 | 2 |
| and then divided by 70 (or "y"
multiplied by | 3 |
| 0.429); and | 4 |
| (3) for taxable years ending after December | 5 |
| 31, 2005: | 6 |
| (i) for property on which a bonus | 7 |
| depreciation deduction of 30% of the adjusted | 8 |
| basis was taken, "x" equals "y" multiplied by | 9 |
| 30 and then divided by 70 (or "y"
multiplied by | 10 |
| 0.429); and | 11 |
| (ii) for property on which a bonus | 12 |
| depreciation deduction of 50% of the adjusted | 13 |
| basis was taken, "x" equals "y" multiplied by | 14 |
| 1.0.
| 15 |
| The aggregate amount deducted under this | 16 |
| subparagraph in all taxable
years for any one piece of | 17 |
| property may not exceed the amount of the bonus
| 18 |
| depreciation deduction
taken on that property on the | 19 |
| taxpayer's federal income tax return under
subsection | 20 |
| (k) of Section 168 of the Internal Revenue Code. This | 21 |
| subparagraph (Z) is exempt from the provisions of | 22 |
| Section 250;
| 23 |
| (AA) If the taxpayer sells, transfers, abandons, | 24 |
| or otherwise disposes of
property for which the | 25 |
| taxpayer was required in any taxable year to make an
| 26 |
| addition modification under subparagraph (D-15), then |
|
|
|
HB0581 |
- 20 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| an amount equal to that
addition modification.
| 2 |
| If the taxpayer continues to own property through | 3 |
| the last day of the last tax year for which the | 4 |
| taxpayer may claim a depreciation deduction for | 5 |
| federal income tax purposes and for which the taxpayer | 6 |
| was required in any taxable year to make an addition | 7 |
| modification under subparagraph (D-15), then an amount | 8 |
| equal to that addition modification.
| 9 |
| The taxpayer is allowed to take the deduction under | 10 |
| this subparagraph
only once with respect to any one | 11 |
| piece of property. | 12 |
| This subparagraph (AA) is exempt from the | 13 |
| provisions of Section 250;
| 14 |
| (BB) Any amount included in adjusted gross income, | 15 |
| other
than
salary,
received by a driver in a | 16 |
| ridesharing arrangement using a motor vehicle;
| 17 |
| (CC) The amount of (i) any interest income (net of | 18 |
| the deductions allocable thereto) taken into account | 19 |
| for the taxable year with respect to a transaction with | 20 |
| a taxpayer that is required to make an addition | 21 |
| modification with respect to such transaction under | 22 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 23 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 24 |
| the amount of that addition modification, and
(ii) any | 25 |
| income from intangible property (net of the deductions | 26 |
| allocable thereto) taken into account for the taxable |
|
|
|
HB0581 |
- 21 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| year with respect to a transaction with a taxpayer that | 2 |
| is required to make an addition modification with | 3 |
| respect to such transaction under Section | 4 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 5 |
| 203(d)(2)(D-8), but not to exceed the amount of that | 6 |
| addition modification; | 7 |
| (DD) An amount equal to the interest income taken | 8 |
| into account for the taxable year (net of the | 9 |
| deductions allocable thereto) with respect to | 10 |
| transactions with a foreign person who would be a | 11 |
| member of the taxpayer's unitary business group but for | 12 |
| the fact that the foreign person's business activity | 13 |
| outside the United States is 80% or more of that | 14 |
| person's total business activity, but not to exceed the | 15 |
| addition modification required to be made for the same | 16 |
| taxable year under Section 203(a)(2)(D-17) for | 17 |
| interest paid, accrued, or incurred, directly or | 18 |
| indirectly, to the same foreign person; and | 19 |
| (EE) An amount equal to the income from intangible | 20 |
| property taken into account for the taxable year (net | 21 |
| of the deductions allocable thereto) with respect to | 22 |
| transactions with a foreign person who would be a | 23 |
| member of the taxpayer's unitary business group but for | 24 |
| the fact that the foreign person's business activity | 25 |
| outside the United States is 80% or more of that | 26 |
| person's total business activity, but not to exceed the |
|
|
|
HB0581 |
- 22 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| addition modification required to be made for the same | 2 |
| taxable year under Section 203(a)(2)(D-18) for | 3 |
| intangible expenses and costs paid, accrued, or | 4 |
| incurred, directly or indirectly, to the same foreign | 5 |
| person.
| 6 |
| (b) Corporations.
| 7 |
| (1) In general. In the case of a corporation, base | 8 |
| income means an
amount equal to the taxpayer's taxable | 9 |
| income for the taxable year as
modified by paragraph (2).
| 10 |
| (2) Modifications. The taxable income referred to in | 11 |
| paragraph (1)
shall be modified by adding thereto the sum | 12 |
| of the following amounts:
| 13 |
| (A) An amount equal to all amounts paid or accrued | 14 |
| to the taxpayer
as interest and all distributions | 15 |
| received from regulated investment
companies during | 16 |
| the taxable year to the extent excluded from gross
| 17 |
| income in the computation of taxable income;
| 18 |
| (B) An amount equal to the amount of tax imposed by | 19 |
| this Act to the
extent deducted from gross income in | 20 |
| the computation of taxable income
for the taxable year;
| 21 |
| (C) In the case of a regulated investment company, | 22 |
| an amount equal to
the excess of (i) the net long-term | 23 |
| capital gain for the taxable year, over
(ii) the amount | 24 |
| of the capital gain dividends designated as such in | 25 |
| accordance
with Section 852(b)(3)(C) of the Internal |
|
|
|
HB0581 |
- 23 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| Revenue Code and any amount
designated under Section | 2 |
| 852(b)(3)(D) of the Internal Revenue Code,
| 3 |
| attributable to the taxable year (this amendatory Act | 4 |
| of 1995
(Public Act 89-89) is declarative of existing | 5 |
| law and is not a new
enactment);
| 6 |
| (D) The amount of any net operating loss deduction | 7 |
| taken in arriving
at taxable income, other than a net | 8 |
| operating loss carried forward from a
taxable year | 9 |
| ending prior to December 31, 1986;
| 10 |
| (E) For taxable years in which a net operating loss | 11 |
| carryback or
carryforward from a taxable year ending | 12 |
| prior to December 31, 1986 is an
element of taxable | 13 |
| income under paragraph (1) of subsection (e) or
| 14 |
| subparagraph (E) of paragraph (2) of subsection (e), | 15 |
| the amount by which
addition modifications other than | 16 |
| those provided by this subparagraph (E)
exceeded | 17 |
| subtraction modifications in such earlier taxable | 18 |
| year, with the
following limitations applied in the | 19 |
| order that they are listed:
| 20 |
| (i) the addition modification relating to the | 21 |
| net operating loss
carried back or forward to the | 22 |
| taxable year from any taxable year ending
prior to | 23 |
| December 31, 1986 shall be reduced by the amount of | 24 |
| addition
modification under this subparagraph (E) | 25 |
| which related to that net operating
loss and which | 26 |
| was taken into account in calculating the base |
|
|
|
HB0581 |
- 24 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| income of an
earlier taxable year, and
| 2 |
| (ii) the addition modification relating to the | 3 |
| net operating loss
carried back or forward to the | 4 |
| taxable year from any taxable year ending
prior to | 5 |
| December 31, 1986 shall not exceed the amount of | 6 |
| such carryback or
carryforward;
| 7 |
| For taxable years in which there is a net operating | 8 |
| loss carryback or
carryforward from more than one other | 9 |
| taxable year ending prior to December
31, 1986, the | 10 |
| addition modification provided in this subparagraph | 11 |
| (E) shall
be the sum of the amounts computed | 12 |
| independently under the preceding
provisions of this | 13 |
| subparagraph (E) for each such taxable year;
| 14 |
| (E-5) For taxable years ending after December 31, | 15 |
| 1997, an
amount equal to any eligible remediation costs | 16 |
| that the corporation
deducted in computing adjusted | 17 |
| gross income and for which the
corporation claims a | 18 |
| credit under subsection (l) of Section 201;
| 19 |
| (E-10) For taxable years 2001 and thereafter, an | 20 |
| amount equal to the
bonus depreciation deduction taken | 21 |
| on the taxpayer's federal income tax return for the | 22 |
| taxable
year under subsection (k) of Section 168 of the | 23 |
| Internal Revenue Code; and
| 24 |
| (E-11) If the taxpayer sells, transfers, abandons, | 25 |
| or otherwise disposes of property for which the | 26 |
| taxpayer was required in any taxable year to
make an |
|
|
|
HB0581 |
- 25 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| addition modification under subparagraph (E-10), then | 2 |
| an amount equal
to the aggregate amount of the | 3 |
| deductions taken in all taxable
years under | 4 |
| subparagraph (T) with respect to that property.
| 5 |
| If the taxpayer continues to own property through | 6 |
| the last day of the last tax year for which the | 7 |
| taxpayer may claim a depreciation deduction for | 8 |
| federal income tax purposes and for which the taxpayer | 9 |
| was allowed in any taxable year to make a subtraction | 10 |
| modification under subparagraph (T), then an amount | 11 |
| equal to that subtraction modification.
| 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 |
|
|
|
HB0581 |
- 26 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| year and received by the taxpayer or by a member of the | 2 |
| taxpayer's unitary business group (including amounts | 3 |
| included in gross income pursuant to Sections 951 | 4 |
| through 964 of the Internal Revenue Code and amounts | 5 |
| included in gross income under Section 78 of the | 6 |
| Internal Revenue Code) with respect to the stock of the | 7 |
| same person to whom the interest was paid, accrued, or | 8 |
| incurred.
| 9 |
| This paragraph shall not apply to the following:
| 10 |
| (i) an item of interest paid, accrued, or | 11 |
| incurred, directly or indirectly, to a foreign | 12 |
| person who is subject in a foreign country or | 13 |
| state, other than a state which requires mandatory | 14 |
| unitary reporting, to a tax on or measured by net | 15 |
| income with respect to such interest; or | 16 |
| (ii) an item of interest paid, accrued, or | 17 |
| incurred, directly or indirectly, to a foreign | 18 |
| person if the taxpayer can establish, based on a | 19 |
| preponderance of the evidence, both of the | 20 |
| following: | 21 |
| (a) the foreign person, during the same | 22 |
| taxable year, paid, accrued, or incurred, the | 23 |
| interest to a person that is not a related | 24 |
| member, and | 25 |
| (b) the transaction giving rise to the | 26 |
| interest expense between the taxpayer and the |
|
|
|
HB0581 |
- 27 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| foreign person did not have as a principal | 2 |
| purpose the avoidance of Illinois income tax, | 3 |
| and is paid pursuant to a contract or agreement | 4 |
| that reflects an arm's-length interest rate | 5 |
| and terms; or
| 6 |
| (iii) the taxpayer can establish, based on | 7 |
| clear and convincing evidence, that the interest | 8 |
| paid, accrued, or incurred relates to a contract or | 9 |
| agreement entered into at arm's-length rates and | 10 |
| terms and the principal purpose for the payment is | 11 |
| not federal or Illinois tax avoidance; or
| 12 |
| (iv) an item of interest paid, accrued, or | 13 |
| incurred, directly or indirectly, to a foreign | 14 |
| person if the taxpayer establishes by clear and | 15 |
| convincing evidence that the adjustments are | 16 |
| unreasonable; or if the taxpayer and the Director | 17 |
| agree in writing to the application or use of an | 18 |
| alternative method of apportionment under Section | 19 |
| 304(f).
| 20 |
| Nothing in this subsection shall preclude the | 21 |
| Director from making any other adjustment | 22 |
| otherwise allowed under Section 404 of this Act for | 23 |
| any tax year beginning after the effective date of | 24 |
| this amendment provided such adjustment is made | 25 |
| pursuant to regulation adopted by the Department | 26 |
| and such regulations provide methods and standards |
|
|
|
HB0581 |
- 28 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| by which the Department will utilize its authority | 2 |
| under Section 404 of this Act;
| 3 |
| (E-13) For taxable years ending on or after | 4 |
| December 31, 2004, an amount equal to the amount of | 5 |
| intangible expenses and costs otherwise allowed as a | 6 |
| deduction in computing base income, and that were paid, | 7 |
| accrued, or incurred, directly or indirectly, to a | 8 |
| foreign person who would be a member of the same | 9 |
| unitary business group but for the fact that the | 10 |
| foreign person's business activity outside the United | 11 |
| States is 80% or more of that person's total business | 12 |
| activity. The addition modification required by this | 13 |
| subparagraph shall be reduced to the extent that | 14 |
| dividends were included in base income of the unitary | 15 |
| group for the same taxable year and received by the | 16 |
| taxpayer or by a member of the taxpayer's unitary | 17 |
| business group (including amounts included in gross | 18 |
| income pursuant to Sections 951 through 964 of the | 19 |
| Internal Revenue Code and amounts included in gross | 20 |
| income under Section 78 of the Internal Revenue Code) | 21 |
| with respect to the stock of the same person to whom | 22 |
| the intangible expenses and costs were directly or | 23 |
| indirectly paid, incurred, or accrued. The preceding | 24 |
| sentence shall not apply to the extent that the same | 25 |
| dividends caused a reduction to the addition | 26 |
| modification required under Section 203(b)(2)(E-12) of |
|
|
|
HB0581 |
- 29 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| this Act.
As used in this subparagraph, the term | 2 |
| "intangible expenses and costs" includes (1) expenses, | 3 |
| losses, and costs for, or related to, the direct or | 4 |
| indirect acquisition, use, maintenance or management, | 5 |
| ownership, sale, exchange, or any other disposition of | 6 |
| intangible property; (2) losses incurred, directly or | 7 |
| indirectly, from factoring transactions or discounting | 8 |
| transactions; (3) royalty, patent, technical, and | 9 |
| copyright fees; (4) licensing fees; and (5) other | 10 |
| similar expenses and costs.
For purposes of this | 11 |
| subparagraph, "intangible property" includes patents, | 12 |
| patent applications, trade names, trademarks, service | 13 |
| marks, copyrights, mask works, trade secrets, and | 14 |
| similar types of intangible assets. | 15 |
| This paragraph shall not apply to the following: | 16 |
| (i) any item of intangible expenses or costs | 17 |
| paid, accrued, or incurred, directly or | 18 |
| indirectly, from a transaction with a 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 item; or | 23 |
| (ii) any item of intangible expense or cost | 24 |
| paid, accrued, or incurred, directly or | 25 |
| indirectly, if the taxpayer can establish, based | 26 |
| on a preponderance of the evidence, both of the |
|
|
|
HB0581 |
- 30 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| following: | 2 |
| (a) the foreign person during the same | 3 |
| taxable year paid, accrued, or incurred, the | 4 |
| intangible expense or cost to a person that is | 5 |
| not a related member, and | 6 |
| (b) the transaction giving rise to the | 7 |
| intangible expense or cost between the | 8 |
| taxpayer and the foreign person did not have as | 9 |
| a principal purpose the avoidance of Illinois | 10 |
| income tax, and is paid pursuant to a contract | 11 |
| or agreement that reflects arm's-length terms; | 12 |
| or | 13 |
| (iii) any item of intangible expense or cost | 14 |
| paid, accrued, or incurred, directly or | 15 |
| indirectly, from a transaction with a foreign | 16 |
| person if the taxpayer establishes by clear and | 17 |
| convincing evidence, that the adjustments are | 18 |
| unreasonable; or if the taxpayer and the Director | 19 |
| agree in writing to the application or use of an | 20 |
| alternative method of apportionment under Section | 21 |
| 304(f);
| 22 |
| Nothing in this subsection shall preclude the | 23 |
| Director from making any other adjustment | 24 |
| otherwise allowed under Section 404 of this Act for | 25 |
| any tax year beginning after the effective date of | 26 |
| this amendment provided such adjustment is made |
|
|
|
HB0581 |
- 31 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| pursuant to regulation adopted by the Department | 2 |
| and such regulations provide methods and standards | 3 |
| by which the Department will utilize its authority | 4 |
| under Section 404 of this Act;
| 5 |
| and by deducting from the total so obtained the sum of the | 6 |
| following
amounts:
| 7 |
| (F) An amount equal to the amount of any tax | 8 |
| imposed by this Act
which was refunded to the taxpayer | 9 |
| and included in such total for the
taxable year;
| 10 |
| (G) An amount equal to any amount included in such | 11 |
| total under
Section 78 of the Internal Revenue Code;
| 12 |
| (H) In the case of a regulated investment company, | 13 |
| an amount equal
to the amount of exempt interest | 14 |
| dividends as defined in subsection (b)
(5) of Section | 15 |
| 852 of the Internal Revenue Code, paid to shareholders
| 16 |
| for the taxable year;
| 17 |
| (I) With the exception of any amounts subtracted | 18 |
| under subparagraph
(J),
an amount equal to the sum of | 19 |
| all amounts disallowed as
deductions by (i) Sections | 20 |
| 171(a) (2), and 265(a)(2) and amounts disallowed as
| 21 |
| interest expense by Section 291(a)(3) of the Internal | 22 |
| Revenue Code, as now
or hereafter amended, and all | 23 |
| amounts of expenses allocable to interest and
| 24 |
| disallowed as deductions by Section 265(a)(1) of the | 25 |
| Internal Revenue Code,
as now or hereafter amended;
and | 26 |
| (ii) for taxable years
ending on or after August 13, |
|
|
|
HB0581 |
- 32 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| 1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and | 2 |
| 832(b)(5)(B)(i) of the Internal Revenue Code; the
| 3 |
| provisions of this
subparagraph are exempt from the | 4 |
| provisions of Section 250;
| 5 |
| (J) An amount equal to all amounts included in such | 6 |
| total which are
exempt from taxation by this State | 7 |
| either by reason of its statutes or
Constitution
or by | 8 |
| reason of the Constitution, treaties or statutes of the | 9 |
| United States;
provided that, in the case of any | 10 |
| statute of this State that exempts income
derived from | 11 |
| bonds or other obligations from the tax imposed under | 12 |
| this Act,
the amount exempted shall be the interest net | 13 |
| of bond premium amortization;
| 14 |
| (K) An amount equal to those dividends included in | 15 |
| such total
which were paid by a corporation which | 16 |
| conducts
business operations in an Enterprise Zone or | 17 |
| zones created under
the Illinois Enterprise Zone Act or | 18 |
| a River Edge Redevelopment Zone or zones created under | 19 |
| the River Edge Redevelopment Zone Act and conducts | 20 |
| substantially all of its
operations in an Enterprise | 21 |
| Zone or zones or a River Edge Redevelopment Zone or | 22 |
| zones. This subparagraph (K) is exempt from the | 23 |
| provisions of Section 250;
| 24 |
| (L) An amount equal to those dividends included in | 25 |
| such total that
were paid by a corporation that | 26 |
| conducts business operations in a federally
designated |
|
|
|
HB0581 |
- 33 - |
LRB095 04338 BDD 24381 b |
|
| 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 or the River Edge Redevelopment Zone | 14 |
| Investment Credit. To determine the portion of a loan | 15 |
| or loans that is
secured by property eligible for a | 16 |
| Section 201(f) investment
credit to the borrower, the | 17 |
| entire principal amount of the loan or loans
between | 18 |
| the taxpayer and the borrower should be divided into | 19 |
| the basis of the
Section 201(f) investment credit | 20 |
| property which secures the
loan or loans, using for | 21 |
| this purpose the original basis of such property on
the | 22 |
| date that it was placed in service in the
Enterprise | 23 |
| Zone or the River Edge Redevelopment Zone. The | 24 |
| subtraction modification available to taxpayer in any
| 25 |
| year under this subsection shall be that portion of the | 26 |
| total interest paid
by the borrower with respect to |
|
|
|
HB0581 |
- 34 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| such loan attributable to the eligible
property as | 2 |
| calculated under the previous sentence. This | 3 |
| subparagraph (M) is exempt from the provisions of | 4 |
| Section 250;
| 5 |
| (M-1) For any taxpayer that is a financial | 6 |
| organization within the
meaning of Section 304(c) of | 7 |
| this Act, an amount included in such total as
interest | 8 |
| income from a loan or loans made by such taxpayer to a | 9 |
| borrower,
to the extent that such a loan is secured by | 10 |
| property which is eligible for
the High Impact Business | 11 |
| Investment Credit. To determine the portion of a
loan | 12 |
| or loans that is secured by property eligible for a | 13 |
| Section 201(h) investment credit to the borrower, the | 14 |
| entire principal amount of
the loan or loans between | 15 |
| the taxpayer and the borrower should be divided into
| 16 |
| the basis of the Section 201(h) investment credit | 17 |
| property which
secures the loan or loans, using for | 18 |
| this purpose the original basis of such
property on the | 19 |
| date that it was placed in service in a federally | 20 |
| designated
Foreign Trade Zone or Sub-Zone located in | 21 |
| Illinois. No taxpayer that is
eligible for the | 22 |
| deduction provided in subparagraph (M) of paragraph | 23 |
| (2) of
this subsection shall be eligible for the | 24 |
| deduction provided under this
subparagraph (M-1). The | 25 |
| subtraction modification available to taxpayers in
any | 26 |
| year under this subsection shall be that portion of the |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| total interest
paid by the borrower with respect to | 2 |
| such loan attributable to the eligible
property as | 3 |
| calculated under the previous sentence;
| 4 |
| (N) Two times any contribution made during the | 5 |
| taxable year to a
designated zone organization to the | 6 |
| extent that the contribution (i)
qualifies as a | 7 |
| charitable contribution under subsection (c) of | 8 |
| Section 170
of the Internal Revenue Code and (ii) must, | 9 |
| by its terms, be used for a
project approved by the | 10 |
| Department of Commerce and Economic Opportunity under | 11 |
| Section 11 of the Illinois Enterprise Zone Act or under | 12 |
| Section 10-10 of the Illinois River Edge Redevelopment | 13 |
| Zone Act. This subparagraph (N) is exempt from the | 14 |
| provisions of Section 250;
| 15 |
| (O) An amount equal to: (i) 85% for taxable years | 16 |
| ending on or before
December 31, 1992, or, a percentage | 17 |
| equal to the percentage allowable under
Section | 18 |
| 243(a)(1) of the Internal Revenue Code of 1986 for | 19 |
| taxable years ending
after December 31, 1992, of the | 20 |
| amount by which dividends included in taxable
income | 21 |
| and received from a corporation that is not created or | 22 |
| organized under
the laws of the United States or any | 23 |
| state or political subdivision thereof,
including, for | 24 |
| taxable years ending on or after December 31, 1988, | 25 |
| dividends
received or deemed received or paid or deemed | 26 |
| paid under Sections 951 through
964 of the Internal |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| Revenue Code, exceed the amount of the modification
| 2 |
| provided under subparagraph (G) of paragraph (2) of | 3 |
| this subsection (b) which
is related to such dividends; | 4 |
| plus (ii) 100% of the amount by which dividends,
| 5 |
| included in taxable income and received, including, | 6 |
| for taxable years ending on
or after December 31, 1988, | 7 |
| dividends received or deemed received or paid or
deemed | 8 |
| paid under Sections 951 through 964 of the Internal | 9 |
| Revenue Code, from
any such corporation specified in | 10 |
| clause (i) that would but for the provisions
of Section | 11 |
| 1504 (b) (3) of the Internal Revenue Code be treated as | 12 |
| a member of
the affiliated group which includes the | 13 |
| dividend recipient, exceed the amount
of the | 14 |
| modification provided under subparagraph (G) of | 15 |
| paragraph (2) of this
subsection (b) which is related | 16 |
| to such dividends;
| 17 |
| (P) An amount equal to any contribution made to a | 18 |
| job training project
established pursuant to the Tax | 19 |
| Increment Allocation Redevelopment Act;
| 20 |
| (Q) An amount equal to the amount of the deduction | 21 |
| used to compute the
federal income tax credit for | 22 |
| restoration of substantial amounts held under
claim of | 23 |
| right for the taxable year pursuant to Section 1341 of | 24 |
| the
Internal Revenue Code of 1986;
| 25 |
| (R) On and after July 20, 1999, in the case of an | 26 |
| attorney-in-fact with respect to whom an
interinsurer |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| or a reciprocal insurer has made the election under | 2 |
| Section 835 of
the Internal Revenue Code, 26 U.S.C. | 3 |
| 835, an amount equal to the excess, if
any, of the | 4 |
| amounts paid or incurred by that interinsurer or | 5 |
| reciprocal insurer
in the taxable year to the | 6 |
| attorney-in-fact over the deduction allowed to that
| 7 |
| interinsurer or reciprocal insurer with respect to the | 8 |
| attorney-in-fact under
Section 835(b) of the Internal | 9 |
| Revenue Code for the taxable year; the provisions of | 10 |
| this subparagraph are exempt from the provisions of | 11 |
| Section 250;
| 12 |
| (S) For taxable years ending on or after December | 13 |
| 31, 1997, in the
case of a Subchapter
S corporation, an | 14 |
| amount equal to all amounts of income allocable to a
| 15 |
| shareholder subject to the Personal Property Tax | 16 |
| Replacement Income Tax imposed
by subsections (c) and | 17 |
| (d) of Section 201 of this Act, including amounts
| 18 |
| allocable to organizations exempt from federal income | 19 |
| tax by reason of Section
501(a) of the Internal Revenue | 20 |
| Code. This subparagraph (S) is exempt from
the | 21 |
| provisions of Section 250;
| 22 |
| (T) For taxable years 2001 and thereafter, for the | 23 |
| taxable year in
which the bonus depreciation deduction
| 24 |
| is taken on the taxpayer's federal income tax return | 25 |
| under
subsection (k) of Section 168 of the Internal | 26 |
| Revenue Code and for each
applicable taxable year |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| thereafter, an amount equal to "x", where:
| 2 |
| (1) "y" equals the amount of the depreciation | 3 |
| deduction taken for the
taxable year
on the | 4 |
| taxpayer's federal income tax return on property | 5 |
| for which the bonus
depreciation deduction
was | 6 |
| taken in any year under subsection (k) of Section | 7 |
| 168 of the Internal
Revenue Code, but not including | 8 |
| the bonus depreciation deduction;
| 9 |
| (2) for taxable years ending on or before | 10 |
| December 31, 2005, "x" equals "y" multiplied by 30 | 11 |
| and then divided by 70 (or "y"
multiplied by | 12 |
| 0.429); and | 13 |
| (3) for taxable years ending after December | 14 |
| 31, 2005: | 15 |
| (i) for property on which a bonus | 16 |
| depreciation deduction of 30% of the adjusted | 17 |
| basis was taken, "x" equals "y" multiplied by | 18 |
| 30 and then divided by 70 (or "y"
multiplied by | 19 |
| 0.429); and | 20 |
| (ii) for property on which a bonus | 21 |
| depreciation deduction of 50% of the adjusted | 22 |
| basis was taken, "x" equals "y" multiplied by | 23 |
| 1.0.
| 24 |
| The aggregate amount deducted under this | 25 |
| subparagraph in all taxable
years for any one piece of | 26 |
| property may not exceed the amount of the bonus
|
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| depreciation deduction
taken on that property on the | 2 |
| taxpayer's federal income tax return under
subsection | 3 |
| (k) of Section 168 of the Internal Revenue Code. This | 4 |
| subparagraph (T) is exempt from the provisions of | 5 |
| Section 250;
| 6 |
| (U) If the taxpayer sells, transfers, abandons, or | 7 |
| otherwise disposes of
property for which the taxpayer | 8 |
| was required in any taxable year to make an
addition | 9 |
| modification under subparagraph (E-10), then an amount | 10 |
| equal to that
addition modification.
| 11 |
| If the taxpayer continues to own property through | 12 |
| the last day of the last tax year for which the | 13 |
| taxpayer may claim a depreciation deduction for | 14 |
| federal income tax purposes and for which the taxpayer | 15 |
| was required in any taxable year to make an addition | 16 |
| modification under subparagraph (E-10), then an amount | 17 |
| equal to that addition modification.
| 18 |
| The taxpayer is allowed to take the deduction under | 19 |
| this subparagraph
only once with respect to any one | 20 |
| piece of property. | 21 |
| This subparagraph (U) is exempt from the | 22 |
| provisions of Section 250;
| 23 |
| (V) The amount of: (i) any interest income (net of | 24 |
| the deductions allocable thereto) taken into account | 25 |
| for the taxable year with respect to a transaction with | 26 |
| a taxpayer that is required to make an addition |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| modification with respect to such transaction under | 2 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 3 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 4 |
| the amount of such addition modification and
(ii) any | 5 |
| income from intangible property (net of the deductions | 6 |
| allocable thereto) taken into account for the taxable | 7 |
| year with respect to a transaction with a taxpayer that | 8 |
| is required to make an addition modification with | 9 |
| respect to such transaction under Section | 10 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 11 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 12 |
| addition modification;
| 13 |
| (W) An amount equal to the interest income taken | 14 |
| into account for the taxable year (net of the | 15 |
| deductions allocable thereto) with respect to | 16 |
| transactions with 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(b)(2)(E-12) for | 23 |
| interest paid, accrued, or incurred, directly or | 24 |
| indirectly, to the same foreign person; and
| 25 |
| (X) An amount equal to the income from intangible | 26 |
| property taken into account for the taxable year (net |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| of the deductions allocable thereto) with respect to | 2 |
| transactions with a foreign person who would be a | 3 |
| member of the taxpayer's unitary business group but for | 4 |
| the fact that the foreign person's business activity | 5 |
| outside the United States is 80% or more of that | 6 |
| person's total business activity, but not to exceed the | 7 |
| addition modification required to be made for the same | 8 |
| taxable year under Section 203(b)(2)(E-13) for | 9 |
| intangible expenses and costs paid, accrued, or | 10 |
| incurred, directly or indirectly, to the same foreign | 11 |
| person.
| 12 |
| (3) Special rule. For purposes of paragraph (2) (A), | 13 |
| "gross income"
in the case of a life insurance company, for | 14 |
| tax years ending on and after
December 31, 1994,
shall mean | 15 |
| the gross investment income for the taxable year.
| 16 |
| (c) Trusts and estates.
| 17 |
| (1) In general. In the case of a trust or estate, base | 18 |
| income means
an amount equal to the taxpayer's taxable | 19 |
| income for the taxable year as
modified by paragraph (2).
| 20 |
| (2) Modifications. Subject to the provisions of | 21 |
| paragraph (3), the
taxable income referred to in paragraph | 22 |
| (1) shall be modified by adding
thereto the sum of the | 23 |
| following amounts:
| 24 |
| (A) An amount equal to all amounts paid or accrued | 25 |
| to the taxpayer
as interest or dividends during the |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| taxable year to the extent excluded
from gross income | 2 |
| in the computation of taxable income;
| 3 |
| (B) In the case of (i) an estate, $600; (ii) a | 4 |
| trust which, under
its governing instrument, is | 5 |
| required to distribute all of its income
currently, | 6 |
| $300; and (iii) any other trust, $100, but in each such | 7 |
| case,
only to the extent such amount was deducted in | 8 |
| the computation of
taxable income;
| 9 |
| (C) An amount equal to the amount of tax imposed by | 10 |
| this Act to the
extent deducted from gross income in | 11 |
| the computation of taxable income
for the taxable year;
| 12 |
| (D) The amount of any net operating loss deduction | 13 |
| taken in arriving at
taxable income, other than a net | 14 |
| operating loss carried forward from a
taxable year | 15 |
| ending prior to December 31, 1986;
| 16 |
| (E) For taxable years in which a net operating loss | 17 |
| carryback or
carryforward from a taxable year ending | 18 |
| prior to December 31, 1986 is an
element of taxable | 19 |
| income under paragraph (1) of subsection (e) or | 20 |
| subparagraph
(E) of paragraph (2) of subsection (e), | 21 |
| the amount by which addition
modifications other than | 22 |
| those provided by this subparagraph (E) exceeded
| 23 |
| subtraction modifications in such taxable year, with | 24 |
| the following limitations
applied in the order that | 25 |
| they are listed:
| 26 |
| (i) the addition modification relating to the |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| net operating loss
carried back or forward to the | 2 |
| taxable year from any taxable year ending
prior to | 3 |
| December 31, 1986 shall be reduced by the amount of | 4 |
| addition
modification under this subparagraph (E) | 5 |
| which related to that net
operating loss and which | 6 |
| was taken into account in calculating the base
| 7 |
| income of an earlier taxable year, and
| 8 |
| (ii) the addition modification relating to the | 9 |
| net operating loss
carried back or forward to the | 10 |
| taxable year from any taxable year ending
prior to | 11 |
| December 31, 1986 shall not exceed the amount of | 12 |
| such carryback or
carryforward;
| 13 |
| For taxable years in which there is a net operating | 14 |
| loss carryback or
carryforward from more than one other | 15 |
| taxable year ending prior to December
31, 1986, the | 16 |
| addition modification provided in this subparagraph | 17 |
| (E) shall
be the sum of the amounts computed | 18 |
| independently under the preceding
provisions of this | 19 |
| subparagraph (E) for each such taxable year;
| 20 |
| (F) For taxable years ending on or after January 1, | 21 |
| 1989, an amount
equal to the tax deducted pursuant to | 22 |
| Section 164 of the Internal Revenue
Code if the trust | 23 |
| or estate is claiming the same tax for purposes of the
| 24 |
| Illinois foreign tax credit under Section 601 of this | 25 |
| Act;
| 26 |
| (G) An amount equal to the amount of the capital |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| gain deduction
allowable under the Internal Revenue | 2 |
| Code, to the extent deducted from
gross income in the | 3 |
| computation of taxable income;
| 4 |
| (G-5) For taxable years ending after December 31, | 5 |
| 1997, an
amount equal to any eligible remediation costs | 6 |
| that the trust or estate
deducted in computing adjusted | 7 |
| gross income and for which the trust
or estate claims a | 8 |
| credit under subsection (l) of Section 201;
| 9 |
| (G-10) For taxable years 2001 and thereafter, an | 10 |
| amount equal to the
bonus depreciation deduction taken | 11 |
| on the taxpayer's federal income tax return for the | 12 |
| taxable
year under subsection (k) of Section 168 of the | 13 |
| Internal Revenue Code; and
| 14 |
| (G-11) If the taxpayer sells, transfers, abandons, | 15 |
| or otherwise disposes of property for which the | 16 |
| taxpayer was required in any taxable year to
make an | 17 |
| addition modification under subparagraph (G-10), then | 18 |
| an amount equal
to the aggregate amount of the | 19 |
| deductions taken in all taxable
years under | 20 |
| subparagraph (R) with respect to that property.
| 21 |
| If the taxpayer continues to own property through | 22 |
| the last day of the last tax year for which the | 23 |
| taxpayer may claim a depreciation deduction for | 24 |
| federal income tax purposes and for which the taxpayer | 25 |
| was allowed in any taxable year to make a subtraction | 26 |
| modification under subparagraph (R), then an amount |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| equal to that subtraction modification.
| 2 |
| The taxpayer is required to make the addition | 3 |
| modification under this
subparagraph
only once with | 4 |
| respect to any one piece of property;
| 5 |
| (G-12) For taxable years ending on or after | 6 |
| December 31, 2004, an amount equal to the amount | 7 |
| otherwise allowed as a deduction in computing base | 8 |
| income for interest paid, accrued, or incurred, | 9 |
| directly or indirectly, to a foreign person who would | 10 |
| be a member of the same unitary business group but for | 11 |
| the fact that the foreign person's business activity | 12 |
| outside the United States is 80% or more of the foreign | 13 |
| person's total business activity. The addition | 14 |
| modification required by this subparagraph shall be | 15 |
| reduced to the extent that dividends were included in | 16 |
| base income of the unitary group for the same taxable | 17 |
| year and received by the taxpayer or by a member of the | 18 |
| taxpayer's unitary business group (including amounts | 19 |
| included in gross income pursuant to Sections 951 | 20 |
| through 964 of the Internal Revenue Code and amounts | 21 |
| included in gross income under Section 78 of the | 22 |
| Internal Revenue Code) with respect to the stock of the | 23 |
| same person to whom the interest was paid, accrued, or | 24 |
| incurred.
| 25 |
| This paragraph shall not apply to the following:
| 26 |
| (i) an item of interest paid, accrued, or |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| incurred, directly or indirectly, to 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 interest; or | 6 |
| (ii) an item of interest paid, accrued, or | 7 |
| incurred, directly or indirectly, to a foreign | 8 |
| person if the taxpayer can establish, based on a | 9 |
| 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 |
| interest to a person that is not a related | 14 |
| member, and | 15 |
| (b) the transaction giving rise to the | 16 |
| interest expense between the taxpayer and the | 17 |
| foreign person did not have as a principal | 18 |
| purpose the avoidance of Illinois income tax, | 19 |
| and is paid pursuant to a contract or agreement | 20 |
| that reflects an arm's-length interest rate | 21 |
| and terms; or
| 22 |
| (iii) the taxpayer can establish, based on | 23 |
| clear and convincing evidence, that the interest | 24 |
| paid, accrued, or incurred relates to a contract or | 25 |
| agreement entered into at arm's-length rates and | 26 |
| terms and the principal purpose for the payment is |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| not federal or Illinois tax avoidance; or
| 2 |
| (iv) an item of interest paid, accrued, or | 3 |
| incurred, directly or indirectly, to a foreign | 4 |
| person if the taxpayer establishes by clear and | 5 |
| convincing evidence that the adjustments are | 6 |
| unreasonable; or if the taxpayer and the Director | 7 |
| agree in writing to the application or use of an | 8 |
| alternative method of apportionment under Section | 9 |
| 304(f).
| 10 |
| Nothing in this subsection shall preclude the | 11 |
| Director from making any other adjustment | 12 |
| otherwise allowed under Section 404 of this Act for | 13 |
| any tax year beginning after the effective date of | 14 |
| this amendment provided such adjustment is made | 15 |
| pursuant to regulation adopted by the Department | 16 |
| and such regulations provide methods and standards | 17 |
| by which the Department will utilize its authority | 18 |
| under Section 404 of this Act;
| 19 |
| (G-13) For taxable years ending on or after | 20 |
| December 31, 2004, an amount equal to the amount of | 21 |
| intangible expenses and costs otherwise allowed as a | 22 |
| deduction in computing base income, and that were paid, | 23 |
| accrued, or incurred, directly or indirectly, to a | 24 |
| foreign person who would be a member of the same | 25 |
| unitary business group but for the fact that the | 26 |
| foreign person's business activity outside the United |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| States is 80% or more of that person's total business | 2 |
| activity. The addition modification required by this | 3 |
| subparagraph shall be reduced to the extent that | 4 |
| dividends were included in base income of the unitary | 5 |
| group for the same taxable year and received by the | 6 |
| taxpayer or by a member of the taxpayer's unitary | 7 |
| business group (including amounts included in gross | 8 |
| income pursuant to Sections 951 through 964 of the | 9 |
| Internal Revenue Code and amounts included in gross | 10 |
| income under Section 78 of the Internal Revenue Code) | 11 |
| with respect to the stock of the same person to whom | 12 |
| the intangible expenses and costs were directly or | 13 |
| indirectly paid, incurred, or accrued. The preceding | 14 |
| sentence shall not apply to the extent that the same | 15 |
| dividends caused a reduction to the addition | 16 |
| modification required under Section 203(c)(2)(G-12) of | 17 |
| this Act. As used in this subparagraph, the term | 18 |
| "intangible expenses and costs" includes: (1) | 19 |
| expenses, losses, and costs for or related to the | 20 |
| direct or indirect acquisition, use, maintenance or | 21 |
| management, ownership, sale, exchange, or any other | 22 |
| disposition of intangible property; (2) losses | 23 |
| incurred, directly or indirectly, from factoring | 24 |
| transactions or discounting transactions; (3) royalty, | 25 |
| patent, technical, and copyright fees; (4) licensing | 26 |
| fees; and (5) other similar expenses and costs. For |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| purposes of this subparagraph, "intangible property" | 2 |
| includes patents, patent applications, trade names, | 3 |
| trademarks, service marks, copyrights, mask works, | 4 |
| trade secrets, and similar types of intangible assets. | 5 |
| This paragraph shall not apply to the following: | 6 |
| (i) any item of intangible expenses or costs | 7 |
| paid, accrued, or incurred, directly or | 8 |
| indirectly, from a transaction with a foreign | 9 |
| person who is subject in a foreign country or | 10 |
| state, other than a state which requires mandatory | 11 |
| unitary reporting, to a tax on or measured by net | 12 |
| income with respect to such item; or | 13 |
| (ii) any item of intangible expense or cost | 14 |
| paid, accrued, or incurred, directly or | 15 |
| indirectly, if the taxpayer can establish, based | 16 |
| on a preponderance of the evidence, both of the | 17 |
| following: | 18 |
| (a) the foreign person during the same | 19 |
| taxable year paid, accrued, or incurred, the | 20 |
| intangible expense or cost to a person that is | 21 |
| not a related member, and | 22 |
| (b) the transaction giving rise to the | 23 |
| intangible expense or cost between the | 24 |
| taxpayer and the foreign person did not have as | 25 |
| a principal purpose the avoidance of Illinois | 26 |
| income tax, and is paid pursuant to a contract |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| or agreement that reflects arm's-length terms; | 2 |
| or | 3 |
| (iii) any item of intangible expense or cost | 4 |
| paid, accrued, or incurred, directly or | 5 |
| indirectly, from a transaction with a foreign | 6 |
| person if the taxpayer establishes by clear and | 7 |
| convincing evidence, that the adjustments are | 8 |
| unreasonable; or if the taxpayer and the Director | 9 |
| agree in writing to the application or use of an | 10 |
| alternative method of apportionment under Section | 11 |
| 304(f);
| 12 |
| Nothing in this subsection shall preclude the | 13 |
| Director from making any other adjustment | 14 |
| otherwise allowed under Section 404 of this Act for | 15 |
| any tax year beginning after the effective date of | 16 |
| this amendment provided such adjustment is made | 17 |
| pursuant to regulation adopted by the Department | 18 |
| and such regulations provide methods and standards | 19 |
| by which the Department will utilize its authority | 20 |
| under Section 404 of this Act;
| 21 |
| and by deducting from the total so obtained the sum of the | 22 |
| following
amounts:
| 23 |
| (H) An amount equal to all amounts included in such | 24 |
| total pursuant
to the provisions of Sections 402(a), | 25 |
| 402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the | 26 |
| Internal Revenue Code or included in such total as
|
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| distributions under the provisions of any retirement | 2 |
| or disability plan for
employees of any governmental | 3 |
| agency or unit, or retirement payments to
retired | 4 |
| partners, which payments are excluded in computing net | 5 |
| earnings
from self employment by Section 1402 of the | 6 |
| Internal Revenue Code and
regulations adopted pursuant | 7 |
| thereto;
| 8 |
| (I) The valuation limitation amount;
| 9 |
| (J) An amount equal to the amount of any tax | 10 |
| imposed by this Act
which was refunded to the taxpayer | 11 |
| and included in such total for the
taxable year;
| 12 |
| (K) An amount equal to all amounts included in | 13 |
| taxable income as
modified by subparagraphs (A), (B), | 14 |
| (C), (D), (E), (F) and (G) which
are exempt from | 15 |
| taxation by this State either by reason of its statutes | 16 |
| or
Constitution
or by reason of the Constitution, | 17 |
| treaties or statutes of the United States;
provided | 18 |
| that, in the case of any statute of this State that | 19 |
| exempts income
derived from bonds or other obligations | 20 |
| from the tax imposed under this Act,
the amount | 21 |
| exempted shall be the interest net of bond premium | 22 |
| amortization;
| 23 |
| (L) With the exception of any amounts subtracted | 24 |
| under subparagraph
(K),
an amount equal to the sum of | 25 |
| all amounts disallowed as
deductions by (i) Sections | 26 |
| 171(a) (2) and 265(a)(2) of the Internal Revenue
Code, |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| as now or hereafter amended, and all amounts of | 2 |
| expenses allocable
to interest and disallowed as | 3 |
| deductions by Section 265(1) of the Internal
Revenue | 4 |
| Code of 1954, as now or hereafter amended;
and (ii) for | 5 |
| taxable years
ending on or after August 13, 1999, | 6 |
| Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of | 7 |
| the Internal Revenue Code; the provisions of this
| 8 |
| subparagraph are exempt from the provisions of Section | 9 |
| 250;
| 10 |
| (M) An amount equal to those dividends included in | 11 |
| such total
which were paid by a corporation which | 12 |
| conducts business operations in an
Enterprise Zone or | 13 |
| zones created under the Illinois Enterprise Zone Act or | 14 |
| a River Edge Redevelopment Zone or zones created under | 15 |
| the River Edge Redevelopment Zone Act and
conducts | 16 |
| substantially all of its operations in an Enterprise | 17 |
| Zone or Zones or a River Edge Redevelopment Zone or | 18 |
| zones. This subparagraph (M) is exempt from the | 19 |
| provisions of Section 250;
| 20 |
| (N) An amount equal to any contribution made to a | 21 |
| job training
project established pursuant to the Tax | 22 |
| Increment Allocation
Redevelopment Act;
| 23 |
| (O) An amount equal to those dividends included in | 24 |
| such total
that were paid by a corporation that | 25 |
| conducts business operations in a
federally designated | 26 |
| Foreign Trade Zone or Sub-Zone and that is designated
a |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| High Impact Business located in Illinois; provided | 2 |
| that dividends eligible
for the deduction provided in | 3 |
| subparagraph (M) of paragraph (2) of this
subsection | 4 |
| shall not be eligible for the deduction provided under | 5 |
| this
subparagraph (O);
| 6 |
| (P) An amount equal to the amount of the deduction | 7 |
| used to compute the
federal income tax credit for | 8 |
| restoration of substantial amounts held under
claim of | 9 |
| right for the taxable year pursuant to Section 1341 of | 10 |
| the
Internal Revenue Code of 1986;
| 11 |
| (Q) For taxable year 1999 and thereafter, an amount | 12 |
| equal to the
amount of any
(i) distributions, to the | 13 |
| extent includible in gross income for
federal income | 14 |
| tax purposes, made to the taxpayer because of
his or | 15 |
| her status as a victim of
persecution for racial or | 16 |
| religious reasons by Nazi Germany or any other Axis
| 17 |
| regime or as an heir of the victim and (ii) items
of | 18 |
| income, to the extent
includible in gross income for | 19 |
| federal income tax purposes, attributable to,
derived | 20 |
| from or in any way related to assets stolen from, | 21 |
| hidden from, or
otherwise lost to a victim of
| 22 |
| persecution for racial or religious reasons by Nazi
| 23 |
| Germany or any other Axis regime
immediately prior to, | 24 |
| during, and immediately after World War II, including,
| 25 |
| but
not limited to, interest on the proceeds receivable | 26 |
| as insurance
under policies issued to a victim of |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| persecution for racial or religious
reasons by Nazi | 2 |
| Germany or any other Axis regime by European insurance
| 3 |
| companies
immediately prior to and during World War II;
| 4 |
| provided, however, this subtraction from federal | 5 |
| adjusted gross income does not
apply to assets acquired | 6 |
| with such assets or with the proceeds from the sale of
| 7 |
| such assets; provided, further, this paragraph shall | 8 |
| only apply to a taxpayer
who was the first recipient of | 9 |
| such assets after their recovery and who is a
victim of
| 10 |
| persecution for racial or religious reasons
by Nazi | 11 |
| Germany or any other Axis regime or as an heir of the | 12 |
| victim. The
amount of and the eligibility for any | 13 |
| public assistance, benefit, or
similar entitlement is | 14 |
| not affected by the inclusion of items (i) and (ii) of
| 15 |
| this paragraph in gross income for federal income tax | 16 |
| purposes.
This paragraph is exempt from the provisions | 17 |
| of Section 250;
| 18 |
| (R) For taxable years 2001 and thereafter, for the | 19 |
| taxable year in
which the bonus depreciation deduction
| 20 |
| is taken on the taxpayer's federal income tax return | 21 |
| under
subsection (k) of Section 168 of the Internal | 22 |
| Revenue Code and for each
applicable taxable year | 23 |
| thereafter, an amount equal to "x", where:
| 24 |
| (1) "y" equals the amount of the depreciation | 25 |
| deduction taken for the
taxable year
on the | 26 |
| taxpayer's federal income tax return on property |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 1 |
| for which the bonus
depreciation deduction
was | 2 |
| taken in any year under subsection (k) of Section | 3 |
| 168 of the Internal
Revenue Code, but not including | 4 |
| the bonus depreciation deduction;
| 5 |
| (2) for taxable years ending on or before | 6 |
| December 31, 2005, "x" equals "y" multiplied by 30 | 7 |
| and then divided by 70 (or "y"
multiplied by | 8 |
| 0.429); and | 9 |
| (3) for taxable years ending after December | 10 |
| 31, 2005: | 11 |
| (i) for property on which a bonus | 12 |
| depreciation deduction of 30% of the adjusted | 13 |
| basis was taken, "x" equals "y" multiplied by | 14 |
| 30 and then divided by 70 (or "y"
multiplied by | 15 |
| 0.429); and | 16 |
| (ii) for property on which a bonus | 17 |
| depreciation deduction of 50% of the adjusted | 18 |
| basis was taken, "x" equals "y" multiplied by | 19 |
| 1.0.
| 20 |
| The aggregate amount deducted under this | 21 |
| subparagraph in all taxable
years for any one piece of | 22 |
| property may not exceed the amount of the bonus
| 23 |
| depreciation deduction
taken on that property on the | 24 |
| taxpayer's federal income tax return under
subsection | 25 |
| (k) of Section 168 of the Internal Revenue Code. This | 26 |
| subparagraph (R) is exempt from the provisions of |
|
|
|
HB0581 |
- 56 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| Section 250;
| 2 |
| (S) If the taxpayer sells, transfers, abandons, or | 3 |
| otherwise disposes of
property for which the taxpayer | 4 |
| was required in any taxable year to make an
addition | 5 |
| modification under subparagraph (G-10), then an amount | 6 |
| equal to that
addition modification.
| 7 |
| If the taxpayer continues to own property through | 8 |
| the last day of the last tax year for which the | 9 |
| taxpayer may claim a depreciation deduction for | 10 |
| federal income tax purposes and for which the taxpayer | 11 |
| was required in any taxable year to make an addition | 12 |
| modification under subparagraph (G-10), then an amount | 13 |
| equal to that addition 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 |
|
|
|
HB0581 |
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LRB095 04338 BDD 24381 b |
|
| 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), 203(c)(2)(G-13), or | 7 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 8 |
| addition modification;
| 9 |
| (U) 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 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(c)(2)(G-12) for | 19 |
| interest paid, accrued, or incurred, directly or | 20 |
| indirectly, to the same foreign person; and
| 21 |
| (V) 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 |
|
|
|
HB0581 |
- 58 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| outside the United States is 80% or more of that | 2 |
| person's total business activity, but not to exceed the | 3 |
| addition modification required to be made for the same | 4 |
| taxable year under Section 203(c)(2)(G-13) for | 5 |
| intangible expenses and costs paid, accrued, or | 6 |
| incurred, directly or indirectly, to the same foreign | 7 |
| person.
| 8 |
| (3) Limitation. The amount of any modification | 9 |
| otherwise required
under this subsection shall, under | 10 |
| regulations prescribed by the
Department, be adjusted by | 11 |
| any amounts included therein which were
properly paid, | 12 |
| credited, or required to be distributed, or permanently set
| 13 |
| aside for charitable purposes pursuant to Internal Revenue | 14 |
| Code Section
642(c) during the taxable year.
| 15 |
| (d) Partnerships.
| 16 |
| (1) In general. In the case of a partnership, base | 17 |
| income means an
amount equal to the taxpayer's taxable | 18 |
| income for the taxable year as
modified by paragraph (2).
| 19 |
| (2) Modifications. The taxable income referred to in | 20 |
| paragraph (1)
shall be modified by adding thereto the sum | 21 |
| of the following amounts:
| 22 |
| (A) An amount equal to all amounts paid or accrued | 23 |
| to the taxpayer as
interest or dividends during the | 24 |
| taxable year to the extent excluded from
gross income | 25 |
| in the computation of taxable income;
|
|
|
|
HB0581 |
- 59 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| (B) An amount equal to the amount of tax imposed by | 2 |
| this Act to the
extent deducted from gross income for | 3 |
| the taxable year;
| 4 |
| (C) The amount of deductions allowed to the | 5 |
| partnership pursuant to
Section 707 (c) of the Internal | 6 |
| Revenue Code in calculating its taxable income;
| 7 |
| (D) An amount equal to the amount of the capital | 8 |
| gain deduction
allowable under the Internal Revenue | 9 |
| Code, to the extent deducted from
gross income in the | 10 |
| computation of taxable income;
| 11 |
| (D-5) For taxable years 2001 and thereafter, an | 12 |
| amount equal to the
bonus depreciation deduction taken | 13 |
| on the taxpayer's federal income tax return for the | 14 |
| taxable
year under subsection (k) of Section 168 of the | 15 |
| Internal Revenue Code;
| 16 |
| (D-6) If the taxpayer sells, transfers, abandons, | 17 |
| or otherwise disposes of
property for which the | 18 |
| taxpayer was required in any taxable year to make an
| 19 |
| addition modification under subparagraph (D-5), then | 20 |
| an amount equal to the
aggregate amount of the | 21 |
| deductions taken in all taxable years
under | 22 |
| subparagraph (O) with respect to that property.
| 23 |
| If the taxpayer continues to own property through | 24 |
| the last day of the last tax year for which the | 25 |
| taxpayer may claim a depreciation deduction for | 26 |
| federal income tax purposes and for which the taxpayer |
|
|
|
HB0581 |
- 60 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| was allowed in any taxable year to make a subtraction | 2 |
| modification under subparagraph (O), then an amount | 3 |
| equal to that subtraction modification.
| 4 |
| The taxpayer is required to make the addition | 5 |
| modification under this
subparagraph
only once with | 6 |
| respect to any one piece of property;
| 7 |
| (D-7) For taxable years ending on or after December | 8 |
| 31, 2004, an amount equal to the amount otherwise | 9 |
| allowed as a deduction in computing base income for | 10 |
| interest paid, accrued, or incurred, directly or | 11 |
| indirectly, to a foreign person who would be a member | 12 |
| of the same unitary business group but for the fact the | 13 |
| foreign person's business activity outside the United | 14 |
| States is 80% or more of the foreign person's total | 15 |
| business activity. The addition modification required | 16 |
| by this subparagraph shall be reduced to the extent | 17 |
| that dividends were included in base income of the | 18 |
| unitary group for the same taxable year and received by | 19 |
| the taxpayer or by a member of the taxpayer's unitary | 20 |
| business group (including amounts included in gross | 21 |
| income pursuant to Sections 951 through 964 of the | 22 |
| Internal Revenue Code and amounts included in gross | 23 |
| income under Section 78 of the Internal Revenue Code) | 24 |
| with respect to the stock of the same person to whom | 25 |
| the interest was paid, accrued, or incurred.
| 26 |
| This paragraph shall not apply to the following:
|
|
|
|
HB0581 |
- 61 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| (i) an item of interest paid, accrued, or | 2 |
| incurred, directly or indirectly, to a foreign | 3 |
| person who is subject in a foreign country or | 4 |
| state, other than a state which requires mandatory | 5 |
| unitary reporting, to a tax on or measured by net | 6 |
| income with respect to such interest; or | 7 |
| (ii) an item of interest paid, accrued, or | 8 |
| incurred, directly or indirectly, to a foreign | 9 |
| person if the taxpayer can establish, based on a | 10 |
| preponderance of the evidence, both of the | 11 |
| following: | 12 |
| (a) the foreign person, during the same | 13 |
| taxable year, paid, accrued, or incurred, the | 14 |
| interest to a person that is not a related | 15 |
| member, and | 16 |
| (b) the transaction giving rise to the | 17 |
| interest expense between the taxpayer and the | 18 |
| foreign person did not have as a principal | 19 |
| purpose the avoidance of Illinois income tax, | 20 |
| and is paid pursuant to a contract or agreement | 21 |
| that reflects an arm's-length interest rate | 22 |
| and terms; or
| 23 |
| (iii) the taxpayer can establish, based on | 24 |
| clear and convincing evidence, that the interest | 25 |
| paid, accrued, or incurred relates to a contract or | 26 |
| agreement entered into at arm's-length rates and |
|
|
|
HB0581 |
- 62 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| terms and the principal purpose for the payment is | 2 |
| not federal or Illinois tax avoidance; or
| 3 |
| (iv) an item of interest paid, accrued, or | 4 |
| incurred, directly or indirectly, to a foreign | 5 |
| person if the taxpayer establishes by clear and | 6 |
| convincing evidence that the adjustments are | 7 |
| unreasonable; or if the taxpayer and the Director | 8 |
| agree in writing to the application or use of an | 9 |
| alternative method of apportionment under Section | 10 |
| 304(f).
| 11 |
| Nothing in this subsection shall preclude the | 12 |
| Director from making any other adjustment | 13 |
| otherwise allowed under Section 404 of this Act for | 14 |
| any tax year beginning after the effective date of | 15 |
| this amendment provided such adjustment is made | 16 |
| pursuant to regulation adopted by the Department | 17 |
| and such regulations provide methods and standards | 18 |
| by which the Department will utilize its authority | 19 |
| under Section 404 of this Act; and
| 20 |
| (D-8) For taxable years ending on or after December | 21 |
| 31, 2004, an amount equal to the amount of intangible | 22 |
| expenses and costs otherwise allowed as a deduction in | 23 |
| computing base income, and that were paid, accrued, or | 24 |
| incurred, directly or indirectly, to a foreign person | 25 |
| who would be a member of the same unitary business | 26 |
| group but for the fact that the foreign person's |
|
|
|
HB0581 |
- 63 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| business activity outside the United States is 80% or | 2 |
| more of that person's total business activity. The | 3 |
| addition modification required by this subparagraph | 4 |
| shall be reduced to the extent that dividends were | 5 |
| included in base income of the unitary group for the | 6 |
| same taxable year and received by the taxpayer or by a | 7 |
| member of the taxpayer's unitary business group | 8 |
| (including amounts included in gross income pursuant | 9 |
| to Sections 951 through 964 of the Internal Revenue | 10 |
| Code and amounts included in gross income under Section | 11 |
| 78 of the Internal Revenue Code) with respect to the | 12 |
| stock of the same person to whom the intangible | 13 |
| expenses and costs were directly or indirectly paid, | 14 |
| incurred or accrued. The preceding sentence shall not | 15 |
| apply to the extent that the same dividends caused a | 16 |
| reduction to the addition modification required under | 17 |
| Section 203(d)(2)(D-7) of this Act. As used in this | 18 |
| subparagraph, the term "intangible expenses and costs" | 19 |
| includes (1) expenses, losses, and costs for, or | 20 |
| related to, the direct or indirect acquisition, use, | 21 |
| maintenance or management, ownership, sale, exchange, | 22 |
| or any other disposition of intangible property; (2) | 23 |
| losses incurred, directly or indirectly, from | 24 |
| factoring transactions or discounting transactions; | 25 |
| (3) royalty, patent, technical, and copyright fees; | 26 |
| (4) licensing fees; and (5) other similar expenses and |
|
|
|
HB0581 |
- 64 - |
LRB095 04338 BDD 24381 b |
|
| 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 |
|
|
|
HB0581 |
- 65 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| income tax, and is paid pursuant to a contract | 2 |
| or agreement that reflects arm's-length terms; | 3 |
| or | 4 |
| (iii) any item of intangible expense or cost | 5 |
| paid, accrued, or incurred, directly or | 6 |
| indirectly, from a transaction with a foreign | 7 |
| person if the taxpayer establishes by clear and | 8 |
| convincing evidence, that the adjustments are | 9 |
| unreasonable; or if the taxpayer and the Director | 10 |
| agree in writing to the application or use of an | 11 |
| alternative method of apportionment under Section | 12 |
| 304(f);
| 13 |
| Nothing in this subsection shall preclude the | 14 |
| Director from making any other adjustment | 15 |
| otherwise allowed under Section 404 of this Act for | 16 |
| any tax year beginning after the effective date of | 17 |
| this amendment provided such adjustment is made | 18 |
| pursuant to regulation adopted by the Department | 19 |
| and such regulations provide methods and standards | 20 |
| by which the Department will utilize its authority | 21 |
| under Section 404 of this Act;
| 22 |
| and by deducting from the total so obtained the following | 23 |
| amounts:
| 24 |
| (E) The valuation limitation amount;
| 25 |
| (F) An amount equal to the amount of any tax | 26 |
| imposed by this Act which
was refunded to the taxpayer |
|
|
|
HB0581 |
- 66 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| and included in such total for the taxable year;
| 2 |
| (G) An amount equal to all amounts included in | 3 |
| taxable income as
modified by subparagraphs (A), (B), | 4 |
| (C) and (D) which are exempt from
taxation by this | 5 |
| State either by reason of its statutes or Constitution | 6 |
| or
by reason of
the Constitution, treaties or statutes | 7 |
| of the United States;
provided that, in the case of any | 8 |
| statute of this State that exempts income
derived from | 9 |
| bonds or other obligations from the tax imposed under | 10 |
| this Act,
the amount exempted shall be the interest net | 11 |
| of bond premium amortization;
| 12 |
| (H) Any income of the partnership which | 13 |
| constitutes personal service
income as defined in | 14 |
| Section 1348 (b) (1) of the Internal Revenue Code (as
| 15 |
| in effect December 31, 1981) or a reasonable allowance | 16 |
| for compensation
paid or accrued for services rendered | 17 |
| by partners to the partnership,
whichever is greater;
| 18 |
| (I) An amount equal to all amounts of income | 19 |
| distributable to an entity
subject to the Personal | 20 |
| Property Tax Replacement Income Tax imposed by
| 21 |
| subsections (c) and (d) of Section 201 of this Act | 22 |
| including amounts
distributable to organizations | 23 |
| exempt from federal income tax by reason of
Section | 24 |
| 501(a) of the Internal Revenue Code;
| 25 |
| (J) With the exception of any amounts subtracted | 26 |
| under subparagraph
(G),
an amount equal to the sum of |
|
|
|
HB0581 |
- 67 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| all amounts disallowed as deductions
by (i) Sections | 2 |
| 171(a) (2), and 265(2) of the Internal Revenue Code of | 3 |
| 1954,
as now or hereafter amended, and all amounts of | 4 |
| expenses allocable to
interest and disallowed as | 5 |
| deductions by Section 265(1) of the Internal
Revenue | 6 |
| Code, as now or hereafter amended;
and (ii) for taxable | 7 |
| years
ending on or after August 13, 1999, Sections
| 8 |
| 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the | 9 |
| Internal Revenue Code; the provisions of this
| 10 |
| subparagraph are exempt from the provisions of Section | 11 |
| 250;
| 12 |
| (K) An amount equal to those dividends included in | 13 |
| such total which were
paid by a corporation which | 14 |
| conducts business operations in an Enterprise
Zone or | 15 |
| zones created under the Illinois Enterprise Zone Act, | 16 |
| enacted by
the 82nd General Assembly, or a River Edge | 17 |
| Redevelopment Zone or zones created under the River | 18 |
| Edge Redevelopment Zone Act and
conducts substantially | 19 |
| all of its operations
in an Enterprise Zone or Zones or | 20 |
| from a River Edge Redevelopment Zone or zones. This | 21 |
| subparagraph (K) is exempt from the provisions of | 22 |
| Section 250;
| 23 |
| (L) An amount equal to any contribution made to a | 24 |
| job training project
established pursuant to the Real | 25 |
| Property Tax Increment Allocation
Redevelopment Act;
| 26 |
| (M) An amount equal to those dividends included in |
|
|
|
HB0581 |
- 68 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| such total
that were paid by a corporation that | 2 |
| conducts business operations in a
federally designated | 3 |
| Foreign Trade Zone or Sub-Zone and that is designated a
| 4 |
| High Impact Business located in Illinois; provided | 5 |
| that dividends eligible
for the deduction provided in | 6 |
| subparagraph (K) of paragraph (2) of this
subsection | 7 |
| shall not be eligible for the deduction provided under | 8 |
| this
subparagraph (M);
| 9 |
| (N) An amount equal to the amount of the deduction | 10 |
| used to compute the
federal income tax credit for | 11 |
| restoration of substantial amounts held under
claim of | 12 |
| right for the taxable year pursuant to Section 1341 of | 13 |
| the
Internal Revenue Code of 1986;
| 14 |
| (O) For taxable years 2001 and thereafter, for the | 15 |
| taxable year in
which the bonus depreciation deduction
| 16 |
| is taken on the taxpayer's federal income tax return | 17 |
| under
subsection (k) of Section 168 of the Internal | 18 |
| Revenue Code and for each
applicable taxable year | 19 |
| thereafter, an amount equal to "x", where:
| 20 |
| (1) "y" equals the amount of the depreciation | 21 |
| deduction taken for the
taxable year
on the | 22 |
| taxpayer's federal income tax return on property | 23 |
| for which the bonus
depreciation deduction
was | 24 |
| taken in any year under subsection (k) of Section | 25 |
| 168 of the Internal
Revenue Code, but not including | 26 |
| the bonus depreciation deduction;
|
|
|
|
HB0581 |
- 69 - |
LRB095 04338 BDD 24381 b |
|
| 1 |
| (2) for taxable years ending on or before | 2 |
| December 31, 2005, "x" equals "y" multiplied by 30 | 3 |
| and then divided by 70 (or "y"
multiplied by | 4 |
| 0.429); and | 5 |
| (3) for taxable years ending after December | 6 |
| 31, 2005: | 7 |
| (i) for property on which a bonus | 8 |
| depreciation deduction of 30% of the adjusted | 9 |
| basis was taken, "x" equals "y" multiplied by | 10 |
| 30 and then divided by 70 (or "y"
multiplied by | 11 |
| 0.429); and | 12 |
| (ii) for property on which a bonus | 13 |
| depreciation deduction of 50% of the adjusted | 14 |
| basis was taken, "x" equals "y" multiplied by | 15 |
| 1.0.
| 16 |
| The aggregate amount deducted under this | 17 |
| subparagraph in all taxable
years for any one piece of | 18 |
| property may not exceed the amount of the bonus
| 19 |
| depreciation deduction
taken on that property on the | 20 |
| taxpayer's federal income tax return under
subsection | 21 |
| (k) of Section 168 of the Internal Revenue Code. This | 22 |
| subparagraph (O) is exempt from the provisions of | 23 |
| Section 250;
| 24 |
| (P) If the taxpayer sells, transfers, abandons, or | 25 |
| otherwise disposes of
property for which the taxpayer | 26 |
| was required in any taxable year to make an
addition |
|
|
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| modification under subparagraph (D-5), then an amount | 2 |
| equal to that
addition modification.
| 3 |
| If the taxpayer continues to own property through | 4 |
| the last day of the last tax year for which the | 5 |
| taxpayer may claim a depreciation deduction for | 6 |
| federal income tax purposes and for which the taxpayer | 7 |
| was required in any taxable year to make an addition | 8 |
| modification under subparagraph (D-5), then an amount | 9 |
| equal to that addition modification.
| 10 |
| The taxpayer is allowed to take the deduction under | 11 |
| this subparagraph
only once with respect to any one | 12 |
| piece of property. | 13 |
| This subparagraph (P) is exempt from the | 14 |
| provisions of Section 250;
| 15 |
| (Q) The amount of (i) any interest income (net of | 16 |
| the deductions allocable thereto) taken into account | 17 |
| for the taxable year with respect to a transaction with | 18 |
| a taxpayer that is required to make an addition | 19 |
| modification with respect to such transaction under | 20 |
| Section 203(a)(2)(D-17), 203(b)(2)(E-12), | 21 |
| 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed | 22 |
| the amount of such addition modification and
(ii) any | 23 |
| income from intangible property (net of the deductions | 24 |
| allocable thereto) taken into account for the taxable | 25 |
| year with respect to a transaction with a taxpayer that | 26 |
| is required to make an addition modification with |
|
|
|
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| respect to such transaction under Section | 2 |
| 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or | 3 |
| 203(d)(2)(D-8), but not to exceed the amount of such | 4 |
| addition modification;
| 5 |
| (R) An amount equal to the interest income taken | 6 |
| into account for the taxable year (net of the | 7 |
| deductions allocable thereto) with respect to | 8 |
| transactions with a foreign person who would be a | 9 |
| member of the taxpayer's unitary business group but for | 10 |
| the fact that the foreign person's business activity | 11 |
| outside the United States is 80% or more of that | 12 |
| person's total business activity, but not to exceed the | 13 |
| addition modification required to be made for the same | 14 |
| taxable year under Section 203(d)(2)(D-7) for interest | 15 |
| paid, accrued, or incurred, directly or indirectly, to | 16 |
| the same foreign person; and
| 17 |
| (S) An amount equal to the income from intangible | 18 |
| property taken into account for the taxable year (net | 19 |
| of the deductions allocable thereto) with respect to | 20 |
| transactions with a foreign person who would be a | 21 |
| member of the taxpayer's unitary business group but for | 22 |
| the fact that the foreign person's business activity | 23 |
| outside the United States is 80% or more of that | 24 |
| person's total business activity, but not to exceed the | 25 |
| addition modification required to be made for the same | 26 |
| taxable year under Section 203(d)(2)(D-8) for |
|
|
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| intangible expenses and costs paid, accrued, or | 2 |
| incurred, directly or indirectly, to the same foreign | 3 |
| person.
| 4 |
| (e) Gross income; adjusted gross income; taxable income.
| 5 |
| (1) In general. Subject to the provisions of paragraph | 6 |
| (2) and
subsection (b) (3), for purposes of this Section | 7 |
| and Section 803(e), a
taxpayer's gross income, adjusted | 8 |
| gross income, or taxable income for
the taxable year shall | 9 |
| mean the amount of gross income, adjusted gross
income or | 10 |
| taxable income properly reportable for federal income tax
| 11 |
| purposes for the taxable year under the provisions of the | 12 |
| Internal
Revenue Code. Taxable income may be less than | 13 |
| zero. However, for taxable
years ending on or after | 14 |
| December 31, 1986, net operating loss
carryforwards from | 15 |
| taxable years ending prior to December 31, 1986, may not
| 16 |
| exceed the sum of federal taxable income for the taxable | 17 |
| year before net
operating loss deduction, plus the excess | 18 |
| of addition modifications over
subtraction modifications | 19 |
| for the taxable year. For taxable years ending
prior to | 20 |
| December 31, 1986, taxable income may never be an amount in | 21 |
| excess
of the net operating loss for the taxable year as | 22 |
| defined in subsections
(c) and (d) of Section 172 of the | 23 |
| Internal Revenue Code, provided that when
taxable income of | 24 |
| a corporation (other than a Subchapter S corporation),
| 25 |
| trust, or estate is less than zero and addition |
|
|
|
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| modifications, other than
those provided by subparagraph | 2 |
| (E) of paragraph (2) of subsection (b) for
corporations or | 3 |
| subparagraph (E) of paragraph (2) of subsection (c) for
| 4 |
| trusts and estates, exceed subtraction modifications, an | 5 |
| addition
modification must be made under those | 6 |
| subparagraphs for any other taxable
year to which the | 7 |
| taxable income less than zero (net operating loss) is
| 8 |
| applied under Section 172 of the Internal Revenue Code or | 9 |
| under
subparagraph (E) of paragraph (2) of this subsection | 10 |
| (e) applied in
conjunction with Section 172 of the Internal | 11 |
| Revenue Code.
| 12 |
| (2) Special rule. For purposes of paragraph (1) of this | 13 |
| subsection,
the taxable income properly reportable for | 14 |
| federal income tax purposes
shall mean:
| 15 |
| (A) Certain life insurance companies. In the case | 16 |
| of a life
insurance company subject to the tax imposed | 17 |
| by Section 801 of the
Internal Revenue Code, life | 18 |
| insurance company taxable income, plus the
amount of | 19 |
| distribution from pre-1984 policyholder surplus | 20 |
| accounts as
calculated under Section 815a of the | 21 |
| Internal Revenue Code;
| 22 |
| (B) Certain other insurance companies. In the case | 23 |
| of mutual
insurance companies subject to the tax | 24 |
| imposed by Section 831 of the
Internal Revenue Code, | 25 |
| insurance company taxable income;
| 26 |
| (C) Regulated investment companies. In the case of |
|
|
|
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| a regulated
investment company subject to the tax | 2 |
| imposed by Section 852 of the
Internal Revenue Code, | 3 |
| investment company taxable income;
| 4 |
| (D) Real estate investment trusts. In the case of a | 5 |
| real estate
investment trust subject to the tax imposed | 6 |
| by Section 857 of the
Internal Revenue Code, real | 7 |
| estate investment trust taxable income;
| 8 |
| (E) Consolidated corporations. In the case of a | 9 |
| corporation which
is a member of an affiliated group of | 10 |
| corporations filing a consolidated
income tax return | 11 |
| for the taxable year for federal income tax purposes,
| 12 |
| taxable income determined as if such corporation had | 13 |
| filed a separate
return for federal income tax purposes | 14 |
| for the taxable year and each
preceding taxable year | 15 |
| for which it was a member of an affiliated group.
For | 16 |
| purposes of this subparagraph, the taxpayer's separate | 17 |
| taxable
income shall be determined as if the election | 18 |
| provided by Section
243(b) (2) of the Internal Revenue | 19 |
| Code had been in effect for all such years;
| 20 |
| (F) Cooperatives. In the case of a cooperative | 21 |
| corporation or
association, the taxable income of such | 22 |
| organization determined in
accordance with the | 23 |
| provisions of Section 1381 through 1388 of the
Internal | 24 |
| Revenue Code;
| 25 |
| (G) Subchapter S corporations. In the case of: (i) | 26 |
| a Subchapter S
corporation for which there is in effect |
|
|
|
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| 1 |
| an election for the taxable year
under Section 1362 of | 2 |
| the Internal Revenue Code, the taxable income of such
| 3 |
| corporation determined in accordance with Section | 4 |
| 1363(b) of the Internal
Revenue Code, except that | 5 |
| taxable income shall take into
account those items | 6 |
| which are required by Section 1363(b)(1) of the
| 7 |
| Internal Revenue Code to be separately stated; and (ii) | 8 |
| a Subchapter
S corporation for which there is in effect | 9 |
| a federal election to opt out of
the provisions of the | 10 |
| Subchapter S Revision Act of 1982 and have applied
| 11 |
| instead the prior federal Subchapter S rules as in | 12 |
| effect on July 1, 1982,
the taxable income of such | 13 |
| corporation determined in accordance with the
federal | 14 |
| Subchapter S rules as in effect on July 1, 1982; and
| 15 |
| (H) Partnerships. In the case of a partnership, | 16 |
| taxable income
determined in accordance with Section | 17 |
| 703 of the Internal Revenue Code,
except that taxable | 18 |
| income shall take into account those items which are
| 19 |
| required by Section 703(a)(1) to be separately stated | 20 |
| but which would be
taken into account by an individual | 21 |
| in calculating his taxable income.
| 22 |
| (3) Recapture of business expenses on disposition of | 23 |
| asset or business. Notwithstanding any other law to the | 24 |
| contrary, if in prior years income from an asset or | 25 |
| business has been classified as business income and in a | 26 |
| later year is demonstrated to be non-business income, then |
|
|
|
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| 1 |
| all expenses, without limitation, deducted in such later | 2 |
| year and in the 2 immediately preceding taxable years | 3 |
| related to that asset or business that generated the | 4 |
| non-business income shall be added back and recaptured as | 5 |
| business income in the year of the disposition of the asset | 6 |
| or business. Such amount shall be apportioned to Illinois | 7 |
| using the greater of the apportionment fraction computed | 8 |
| for the business under Section 304 of this Act for the | 9 |
| taxable year or the average of the apportionment fractions | 10 |
| computed for the business under Section 304 of this Act for | 11 |
| the taxable year and for the 2 immediately preceding | 12 |
| taxable years.
| 13 |
| (f) Valuation limitation amount.
| 14 |
| (1) In general. The valuation limitation amount | 15 |
| referred to in
subsections (a) (2) (G), (c) (2) (I) and | 16 |
| (d)(2) (E) is an amount equal to:
| 17 |
| (A) The sum of the pre-August 1, 1969 appreciation | 18 |
| amounts (to the
extent consisting of gain reportable | 19 |
| under the provisions of Section
1245 or 1250 of the | 20 |
| Internal Revenue Code) for all property in respect
of | 21 |
| which such gain was reported for the taxable year; plus
| 22 |
| (B) The lesser of (i) the sum of the pre-August 1, | 23 |
| 1969 appreciation
amounts (to the extent consisting of | 24 |
| capital gain) for all property in
respect of which such | 25 |
| gain was reported for federal income tax purposes
for | 26 |
| the taxable year, or (ii) the net capital gain for the |
|
|
|
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| 1 |
| taxable year,
reduced in either case by any amount of | 2 |
| such gain included in the amount
determined under | 3 |
| subsection (a) (2) (F) or (c) (2) (H).
| 4 |
| (2) Pre-August 1, 1969 appreciation amount.
| 5 |
| (A) If the fair market value of property referred | 6 |
| to in paragraph
(1) was readily ascertainable on August | 7 |
| 1, 1969, the pre-August 1, 1969
appreciation amount for | 8 |
| such property is the lesser of (i) the excess of
such | 9 |
| fair market value over the taxpayer's basis (for | 10 |
| determining gain)
for such property on that date | 11 |
| (determined under the Internal Revenue
Code as in | 12 |
| effect on that date), or (ii) the total gain realized | 13 |
| and
reportable for federal income tax purposes in | 14 |
| respect of the sale,
exchange or other disposition of | 15 |
| such property.
| 16 |
| (B) If the fair market value of property referred | 17 |
| to in paragraph
(1) was not readily ascertainable on | 18 |
| August 1, 1969, the pre-August 1,
1969 appreciation | 19 |
| amount for such property is that amount which bears
the | 20 |
| same ratio to the total gain reported in respect of the | 21 |
| property for
federal income tax purposes for the | 22 |
| taxable year, as the number of full
calendar months in | 23 |
| that part of the taxpayer's holding period for the
| 24 |
| property ending July 31, 1969 bears to the number of | 25 |
| full calendar
months in the taxpayer's entire holding | 26 |
| period for the
property.
|
|
|
|
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| 1 |
| (C) The Department shall prescribe such | 2 |
| regulations as may be
necessary to carry out the | 3 |
| purposes of this paragraph.
| 4 |
| (g) Double deductions. Unless specifically provided | 5 |
| otherwise, nothing
in this Section shall permit the same item | 6 |
| to be deducted more than once.
| 7 |
| (h) Legislative intention. Except as expressly provided by | 8 |
| this
Section there shall be no modifications or limitations on | 9 |
| the amounts
of income, gain, loss or deduction taken into | 10 |
| account in determining
gross income, adjusted gross income or | 11 |
| taxable income for federal income
tax purposes for the taxable | 12 |
| year, or in the amount of such items
entering into the | 13 |
| computation of base income and net income under this
Act for | 14 |
| such taxable year, whether in respect of property values as of
| 15 |
| August 1, 1969 or otherwise.
| 16 |
| (Source: P.A. 93-812, eff. 7-26-04; 93-840, eff. 7-30-04; | 17 |
| 94-776, eff. 5-19-06; 94-789, eff. 5-19-06; 94-1021, eff. | 18 |
| 7-12-06; 94-1074, eff. 12-26-06; revised 1-2-07.)
| 19 |
| Section 99. Effective date. This Act takes effect July 1, | 20 |
| 2007.
|
|