Public Act 097-0507
 
HB2955 EnrolledLRB097 08285 HLH 48412 b


  
    AN ACT concerning revenue.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  







 
    Section 5. The Illinois Income Tax Act is amended  by 
changing Sections 203, 204, 205, 207, 214, 220, 304, 502, 506, 
601, 701, 702, 703, 704A, 709.5, 804, 909, 911, 1002, 1101, 
1402, 1405.4, and 1501 as follows:

 
    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
    Sec. 203. Base income defined. 
    (a) Individuals.
        (1) In general.  In the case of an individual, base 
    income means an
amount equal to the taxpayer's adjusted 
    gross income for the taxable
year as modified by paragraph 
    (2).
        (2) Modifications.  The adjusted gross income referred 
    to in
paragraph (1) shall be modified by adding thereto the 
    sum of the
following amounts:
            (A) An amount equal to all amounts paid or accrued 
        to the taxpayer
as interest or dividends during the 
        taxable year to the extent excluded
from gross income 
        in the computation of adjusted gross income, except 
        stock
dividends of qualified public utilities 
        described in Section 305(e) of the
Internal Revenue 
        Code;
            (B) An amount equal to the amount of tax imposed by 
        this Act to the
extent deducted from gross income in 
        the computation of adjusted gross
income for the 
        taxable year;
            (C) An amount equal to the amount received during 
        the taxable year
as a recovery or refund of real 
        property taxes paid with respect to the
taxpayer's 
        principal residence under the Revenue Act of
1939 and 
        for which a deduction was previously taken under 
        subparagraph (L) of
this paragraph (2) prior to July 1, 
        1991, the retrospective application date of
Article 4 
        of Public Act 87-17.  In the case of multi-unit or 
        multi-use
structures and farm dwellings, the taxes on 
        the taxpayer's principal residence
shall be that 
        portion of the total taxes for the entire property 
        which is
attributable to such principal residence;
            (D) An amount equal to the amount of the capital 
        gain deduction
allowable under the Internal Revenue 
        Code, to the extent deducted from gross
income in the 
        computation of adjusted gross income;
            (D-5) An amount, to the extent not included in 
        adjusted gross income,
equal to the amount of money 
        withdrawn by the taxpayer in the taxable year from
a 
        medical care savings account and the interest earned on 
        the account in the
taxable year of a withdrawal 
        pursuant to subsection (b) of Section 20 of the
Medical 
        Care Savings Account Act or subsection (b) of Section 
        20 of the
Medical Care Savings Account Act of 2000;
            (D-10) For taxable years ending after December 31, 
        1997, an
amount equal to any eligible remediation costs 
        that the individual
deducted in computing adjusted 
        gross income and for which the
individual claims a 
        credit under subsection (l) of Section 201;
            (D-15) For taxable years 2001 and thereafter, an 
        amount equal to the
bonus depreciation deduction taken 
        on the taxpayer's federal income tax return for the 
        taxable
year under subsection (k) of Section 168 of the 
        Internal Revenue Code;
            (D-16) If the taxpayer sells, transfers, abandons, 
        or otherwise disposes of property for which the 
        taxpayer was required in any taxable year to
make an 
        addition modification under subparagraph (D-15), then 
        an amount equal
to the aggregate amount of the 
        deductions taken in all taxable
years under 
        subparagraph (Z) with respect to that property.
            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was allowed in any taxable year to make a subtraction 
        modification under subparagraph (Z), then an amount 
        equal to that subtraction modification.

            The taxpayer is required to make the addition 
        modification under this
subparagraph
only once with 
        respect to any one piece of property;
            (D-17) An amount equal to the amount otherwise 
        allowed as a deduction in computing base income for 
        interest paid, accrued, or incurred, directly or 
        indirectly, (i) for taxable years ending on or after 
        December 31, 2004, to a foreign person who would be a 
        member of the same unitary business group but for the 
        fact that foreign person's business activity outside 
        the United States is 80% or more of the foreign 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304. The addition modification 
        required by this subparagraph shall be reduced to the 
        extent that dividends were included in base income of 
        the unitary group for the same taxable year and 
        received by the taxpayer or by a member of the 
        taxpayer's unitary business group (including amounts 
        included in gross income under Sections 951 through 964 
        of the Internal Revenue Code and amounts included in 
        gross income under Section 78 of the Internal Revenue 
        Code) with respect to the stock of the same person to 
        whom the interest was paid, accrued, or incurred.
            This paragraph shall not apply to the following:

                (i) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person who 
            is subject in a foreign country or state, other 
            than a state which requires mandatory unitary 
            reporting, to a tax on or measured by net income 
            with respect to such interest; or
                (ii) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer can establish, based on a 
            preponderance of the evidence, both of the 
            following:
                    (a) the person, during the same taxable 
                year, paid, accrued, or incurred, the interest 
                to a person that is not a related member, and
                    (b) the transaction giving rise to the 
                interest expense between the taxpayer and the 
                person did not have as a principal purpose the 
                avoidance of Illinois income tax, and is paid 
                pursuant to a contract or agreement that 
                reflects an arm's-length interest rate and 
                terms; or

                (iii) the taxpayer can establish, based on 
            clear and convincing evidence, that the interest 
            paid, accrued, or incurred relates to a contract or 
            agreement entered into at arm's-length rates and 
            terms and the principal purpose for the payment is 
            not federal or Illinois tax avoidance; or

                (iv) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer establishes by clear and convincing 
            evidence that the adjustments are unreasonable; or 
            if the taxpayer and the Director agree in writing 
            to the application or use of an alternative method 
            of apportionment under Section 304(f).

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act;

            (D-18) An amount equal to the amount of intangible 
        expenses and costs otherwise allowed as a deduction in 
        computing base income, and that were paid, accrued, or 
        incurred, directly or indirectly, (i) for taxable 
        years ending on or after December 31, 2004, to a 
        foreign person who would be a member of the same 
        unitary business group but for the fact that the 
        foreign person's business activity outside the United 
        States is 80% or more of that person's total business 
        activity and (ii) for taxable years ending on or after 
        December 31, 2008, to a person who would be a member of 
        the same unitary business group but for the fact that 
        the person is prohibited under Section 1501(a)(27) 
        from being included in the unitary business group 
        because he or she is ordinarily required to apportion 
        business income under different subsections of Section 
        304. The addition modification required by this 
        subparagraph shall be reduced to the extent that 
        dividends were included in base income of the unitary 
        group for the same taxable year and received by the 
        taxpayer or by a member of the taxpayer's unitary 
        business group (including amounts included in gross 
        income under Sections 951 through 964 of the Internal 
        Revenue Code and amounts included in gross income under 
        Section 78 of the Internal Revenue Code) with respect 
        to the stock of the same person to whom the intangible 
        expenses and costs were directly or indirectly paid, 
        incurred, or accrued. The preceding sentence does not 
        apply to the extent that the same dividends caused a 
        reduction to the addition modification required under 
        Section 203(a)(2)(D-17) of this Act. As used in this 
        subparagraph, the term "intangible expenses and costs" 
        includes (1) expenses, losses, and costs for, or 
        related to, the direct or indirect acquisition, use, 
        maintenance or management, ownership, sale, exchange, 
        or any other disposition of intangible property; (2) 
        losses incurred, directly or indirectly, from 
        factoring transactions or discounting transactions; 
        (3) royalty, patent, technical, and copyright fees; 
        (4) licensing fees; and (5) other similar expenses and 
        costs.
For purposes of this subparagraph, "intangible 
        property" includes patents, patent applications, trade 
        names, trademarks, service marks, copyrights, mask 
        works, trade secrets, and similar types of intangible 
        assets.
            This paragraph shall not apply to the following:
                (i)         any item of intangible expenses or costs 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person who is 
            subject in a foreign country or state, other than a 
            state which requires mandatory unitary reporting, 
            to a tax on or measured by net income with respect 
            to such item; or
                (ii)        any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, if the taxpayer can establish, based 
            on a preponderance of the evidence, both of the 
            following:
                    (a) the person during the same taxable 
                year paid, accrued, or incurred, the 
                intangible expense or cost to a person that is 
                not a related member, and
                    (b) the transaction giving rise to the 
                intangible expense or cost between the 
                taxpayer and the person did not have as a 
                principal purpose the avoidance of Illinois 
                income tax, and is paid pursuant to a contract 
                or agreement that reflects arm's-length terms; 
                or
                (iii)       any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person if the 
            taxpayer establishes by clear and convincing 
            evidence, that the adjustments are unreasonable; 
            or if the taxpayer and the Director agree in 
            writing to the application or use of an alternative 
            method of apportionment under Section 304(f);

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act;

            (D-19) For taxable years ending on or after 
        December 31, 2008, an amount equal to the amount of 
        insurance premium expenses and costs otherwise allowed 
        as a deduction in computing base income, and that were 
        paid, accrued, or incurred, directly or indirectly, to 
        a person who would be a member of the same unitary 
        business group but for the fact that the person is 
        prohibited under Section 1501(a)(27) from being 
        included in the unitary business group because he or 
        she is ordinarily required to apportion business 
        income under different subsections of Section 304.  The 
        addition modification required by this subparagraph 
        shall be reduced to the extent that dividends were 
        included in base income of the unitary group for the 
        same taxable year and received by the taxpayer or by a 
        member of the taxpayer's unitary business group 
        (including amounts included in gross income under 
        Sections 951 through 964 of the Internal Revenue Code 
        and amounts included in gross income under Section 78 
        of the Internal Revenue Code) with respect to the stock 
        of the same person to whom the premiums and costs were 
        directly or indirectly paid, incurred, or accrued. The 
        preceding sentence does not apply to the extent that 
        the same dividends caused a reduction to the addition 
        modification required under Section 203(a)(2)(D-17) or 
        Section 203(a)(2)(D-18) of this Act.

            (D-20) For taxable years beginning on or after 
        January 1,
2002 and ending on or before December 31, 
        2006, in
the
case of a distribution from a qualified 
        tuition program under Section 529 of
the Internal 
        Revenue Code, other than (i) a distribution from a 
        College Savings
Pool created under Section 16.5 of the 
        State Treasurer Act or (ii) a
distribution from the 
        Illinois Prepaid Tuition Trust Fund, an amount equal to

        the amount excluded from gross income under Section 
        529(c)(3)(B). For taxable years beginning on or after 
        January 1, 2007, in the case of a distribution from a 
        qualified tuition program under Section 529 of the 
        Internal Revenue Code, other than (i) a distribution 
        from a College Savings Pool created under Section 16.5 
        of the State Treasurer Act, (ii) a distribution from 
        the Illinois Prepaid Tuition Trust Fund, or (iii) a 
        distribution from a qualified tuition program under 
        Section 529 of the Internal Revenue Code that (I) 
        adopts and determines that its offering materials 
        comply with the College Savings Plans Network's 
        disclosure principles and (II) has made reasonable 
        efforts to inform in-state residents of the existence 
        of in-state qualified tuition programs by informing 
        Illinois residents directly and, where applicable, to 
        inform financial intermediaries distributing the 
        program to inform in-state residents of the existence 
        of in-state qualified tuition programs at least 
        annually, an amount equal to the amount excluded from 
        gross income under Section 529(c)(3)(B).
            For the purposes of this subparagraph (D-20), a 
        qualified tuition program has made reasonable efforts 
        if it makes disclosures (which may use the term 
        "in-state program" or "in-state plan" and need not 
        specifically refer to Illinois or its qualified 
        programs by name) (i) directly to prospective 
        participants in its offering materials or makes a 
        public disclosure, such as a website posting; and (ii) 
        where applicable, to intermediaries selling the 
        out-of-state program in the same manner that the 
        out-of-state program distributes its offering 
        materials;
            (D-21) For taxable years beginning on or after 
        January 1, 2007, in the case of transfer of moneys from 
        a qualified tuition program under Section 529 of the 
        Internal Revenue Code that is administered by the State 
        to an out-of-state program, an amount equal to the 
        amount of moneys previously deducted from base income 
        under subsection (a)(2)(Y) of this Section;
            (D-22) For taxable years beginning on or after 
        January 1, 2009, in the case of a nonqualified 
        withdrawal or refund of moneys from a qualified tuition 
        program under Section 529 of the Internal Revenue Code 
        administered by the State that is not used for 
        qualified expenses at an eligible education 
        institution, an amount equal to the contribution 
        component of the nonqualified withdrawal or refund 
        that was previously deducted from base income under 
        subsection (a)(2)(y) of this Section, provided that 
        the withdrawal or refund did not result from the 
        beneficiary's death or disability;
            (D-23)  An amount equal to the credit allowable to 
        the taxpayer under Section 218(a) of this Act, 
        determined without regard to Section 218(c) of this 
        Act;
    and by deducting from the total so obtained the
sum of the 
    following amounts:
            (E) For taxable years ending before December 31, 
        2001,
any amount included in such total in respect of 
        any compensation
(including but not limited to any 
        compensation paid or accrued to a
serviceman while a 
        prisoner of war or missing in action) paid to a 
        resident
by reason of being on active duty in the Armed 
        Forces of the United States
and in respect of any 
        compensation paid or accrued to a resident who as a

        governmental employee was a prisoner of war or missing 
        in action, and in
respect of any compensation paid to a 
        resident in 1971 or thereafter for
annual training 
        performed pursuant to Sections 502 and 503, Title 32,

        United States Code as a member of the Illinois National 
        Guard or, beginning with taxable years ending on or 
        after December 31, 2007, the National Guard of any 
        other state.
For taxable years ending on or after 
        December 31, 2001, any amount included in
such total in 
        respect of any compensation (including but not limited 
        to any
compensation paid or accrued to a serviceman 
        while a prisoner of war or missing
in action) paid to a 
        resident by reason of being a member of any component 
        of
the Armed Forces of the United States and in respect 
        of any compensation paid
or accrued to a resident who 
        as a governmental employee was a prisoner of war
or 
        missing in action, and in respect of any compensation 
        paid to a resident in
2001 or thereafter by reason of 
        being a member of the Illinois National Guard or, 
        beginning with taxable years ending on or after 
        December 31, 2007, the National Guard of any other 
        state.
The provisions of this subparagraph (E) 
        amendatory Act of the 92nd General Assembly are exempt

        from the provisions of Section 250;
            (F) An amount equal to all amounts included in such 
        total pursuant
to the provisions of Sections 402(a), 
        402(c), 403(a), 403(b), 406(a), 407(a),
and 408 of the 
        Internal Revenue Code, or included in such total as

        distributions under the provisions of any retirement 
        or disability plan for
employees of any governmental 
        agency or unit, or retirement payments to
retired 
        partners, which payments are excluded in computing net 
        earnings
from self employment by Section 1402 of the 
        Internal Revenue Code and
regulations adopted pursuant 
        thereto;
            (G) The valuation limitation amount;
            (H) An amount equal to the amount of any tax 
        imposed by this Act
which was refunded to the taxpayer 
        and included in such total for the
taxable year;
            (I) An amount equal to all amounts included in such 
        total pursuant
to the provisions of Section 111 of the 
        Internal Revenue Code as a
recovery of items previously 
        deducted from adjusted gross income in the
computation 
        of taxable income;
            (J) An amount equal to those dividends included in 
        such total which were
paid by a corporation which 
        conducts business operations in an Enterprise
Zone or 
        zones created under the Illinois Enterprise Zone Act or 
        a River Edge Redevelopment Zone or zones created under 
        the River Edge Redevelopment Zone Act, and conducts

        substantially all of its operations in an Enterprise 
        Zone or zones or a River Edge Redevelopment Zone or 
        zones. This subparagraph (J) is exempt from the 
        provisions of Section 250;
            (K) An amount equal to those dividends included in 
        such total that
were paid by a corporation that 
        conducts business operations in a federally
designated 
        Foreign Trade Zone or Sub-Zone and that is designated a 
        High Impact
Business located in Illinois; provided 
        that dividends eligible for the
deduction provided in 
        subparagraph (J) of paragraph (2) of this subsection

        shall not be eligible for the deduction provided under 
        this subparagraph
(K);
            (L) For taxable years ending after December 31, 
        1983, an amount equal to
all social security benefits 
        and railroad retirement benefits included in
such 
        total pursuant to Sections 72(r) and 86 of the Internal 
        Revenue Code;
            (M) With the exception of any amounts subtracted 
        under subparagraph
(N), an amount equal to the sum of 
        all amounts disallowed as
deductions by (i) Sections 
        171(a) (2), and 265(2) of the Internal Revenue Code
of 
        1954, as now or hereafter amended, and all amounts of 
        expenses allocable
to interest and  disallowed as 
        deductions by Section 265(1) of the Internal
Revenue 
        Code of 1954, as now or hereafter amended;
and (ii) for 
        taxable years
ending on or after August 13, 1999, 
        Sections 171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of 
        the Internal Revenue Code, plus, for taxable years 
        ending on or after December 31, 2011, Section 45G(e)(3) 
        of the Internal Revenue Code and, for taxable years 
        ending on or after December 31, 2008, any amount 
        included in gross income under Section 87 of the 
        Internal Revenue Code; the provisions of this

        subparagraph are exempt from the provisions of Section 
        250;
            (N) An amount equal to all amounts included in such 
        total which are
exempt from taxation by this State 
        either by reason of its statutes or
Constitution
or by 
        reason of the Constitution, treaties or statutes of the 
        United States;
provided that, in the case of any 
        statute of this State that exempts income
derived from 
        bonds or other obligations from the tax imposed under 
        this Act,
the amount exempted shall be the interest net 
        of bond premium amortization;
            (O) An amount equal to any contribution made to a 
        job training
project established pursuant to the Tax 
        Increment Allocation Redevelopment Act;
            (P) An amount equal to the amount of the deduction 
        used to compute the
federal income tax credit for 
        restoration of substantial amounts held under
claim of 
        right for the taxable year pursuant to Section 1341 of 
        the
Internal Revenue Code or of any itemized deduction 
        taken from adjusted gross income in the computation of 
        taxable income for restoration of substantial amounts 
        held under claim of right for the taxable year of 1986;
            (Q) An amount equal to any amounts included in such 
        total, received by
the taxpayer as an acceleration in 
        the payment of life, endowment or annuity
benefits in 
        advance of the time they would otherwise be payable as 
        an indemnity
for a terminal illness;
            (R) An amount equal to the amount of any federal or 
        State bonus paid
to veterans of the Persian Gulf War;
            (S) An amount, to the extent included in adjusted 
        gross income, equal
to the amount of a contribution 
        made in the taxable year on behalf of the
taxpayer to a 
        medical care savings account established under the 
        Medical Care
Savings Account Act or the Medical Care 
        Savings Account Act of 2000 to the
extent the 
        contribution is accepted by the account
administrator 
        as provided in that Act;
            (T) An amount, to the extent included in adjusted 
        gross income, equal to
the amount of interest earned in 
        the taxable year on a medical care savings
account 
        established under the Medical Care Savings Account Act 
        or the Medical
Care Savings Account Act of 2000 on 
        behalf of the
taxpayer, other than interest added 
        pursuant to item (D-5) of this paragraph
(2);
            (U) For one taxable year beginning on or after 
        January 1,
1994, an
amount equal to the total amount of 
        tax imposed and paid under subsections (a)
and (b) of 
        Section 201 of this Act on grant amounts received by 
        the taxpayer
under the Nursing Home Grant Assistance 
        Act during the taxpayer's taxable years
1992 and 1993;
            (V) Beginning with tax years ending on or after 
        December 31, 1995 and
ending with tax years ending on 
        or before December 31, 2004, an amount equal to
the 
        amount paid by a taxpayer who is a
self-employed 
        taxpayer, a partner of a partnership, or a
shareholder 
        in a Subchapter S corporation for health insurance or 
        long-term
care insurance for that taxpayer or that 
        taxpayer's spouse or dependents, to
the extent that the 
        amount paid for that health insurance or long-term care

        insurance may be deducted under Section 213 of the 
        Internal Revenue Code of
1986, has not been deducted on 
        the federal income tax return of the taxpayer,
and does 
        not exceed the taxable income attributable to that 
        taxpayer's income,
self-employment income, or 
        Subchapter S corporation income; except that no

        deduction shall be allowed under this item (V) if the 
        taxpayer is eligible to
participate in any health 
        insurance or long-term care insurance plan of an

        employer of the taxpayer or the taxpayer's
spouse.  The 
        amount of the health insurance and long-term care 
        insurance
subtracted under this item (V) shall be 
        determined by multiplying total
health insurance and 
        long-term care insurance premiums paid by the taxpayer

        times a number that represents the fractional 
        percentage of eligible medical
expenses under Section 
        213 of the Internal Revenue Code of 1986 not actually

        deducted on the taxpayer's federal income tax return;
            (W) For taxable years beginning on or after January 
        1, 1998,
all amounts included in the taxpayer's federal 
        gross income
in the taxable year from amounts converted 
        from a regular IRA to a Roth IRA.
This paragraph is 
        exempt from the provisions of Section
250;
            (X) For taxable year 1999 and thereafter, an amount 
        equal to the
amount of any (i) distributions, to the 
        extent includible in gross income for
federal income 
        tax purposes, made to the taxpayer because of his or 
        her status
as a victim of persecution for racial or 
        religious reasons by Nazi Germany or
any other Axis 
        regime or as an heir of the victim and (ii) items
of 
        income, to the extent
includible in gross income for 
        federal income tax purposes, attributable to,
derived 
        from or in any way related to assets stolen from, 
        hidden from, or
otherwise lost to a victim of

        persecution for racial or religious reasons by Nazi 
        Germany or any other Axis
regime immediately prior to, 
        during, and immediately after World War II,
including, 
        but
not limited to, interest on the proceeds receivable 
        as insurance
under policies issued to a victim of 
        persecution for racial or religious
reasons
by Nazi 
        Germany or any other Axis regime by European insurance 
        companies
immediately prior to and during World War II;

        provided, however, this subtraction from federal 
        adjusted gross income does not
apply to assets acquired 
        with such assets or with the proceeds from the sale of

        such assets; provided, further, this paragraph shall 
        only apply to a taxpayer
who was the first recipient of 
        such assets after their recovery and who is a
victim of 
        persecution for racial or religious reasons
by Nazi 
        Germany or any other Axis regime or as an heir of the 
        victim.  The
amount of and the eligibility for any 
        public assistance, benefit, or
similar entitlement is 
        not affected by the inclusion of items (i) and (ii) of

        this paragraph in gross income for federal income tax 
        purposes.
This paragraph is exempt from the provisions 
        of Section 250;
            (Y) For taxable years beginning on or after January 
        1, 2002
and ending
on or before December 31, 2004, 
        moneys contributed in the taxable year to a College 
        Savings Pool account under
Section 16.5 of the State 
        Treasurer Act, except that amounts excluded from
gross 
        income under Section 529(c)(3)(C)(i) of the Internal 
        Revenue Code
shall not be considered moneys 
        contributed under this subparagraph (Y).  For taxable 
        years beginning on or after January 1, 2005, a maximum 
        of $10,000
contributed
in the
taxable year to (i) a 
        College Savings Pool account under Section 16.5 of the

        State
Treasurer Act or (ii) the Illinois Prepaid 
        Tuition Trust Fund,
except that
amounts excluded from 
        gross income under Section 529(c)(3)(C)(i) of the

        Internal
Revenue Code shall not be considered moneys 
        contributed under this subparagraph
(Y). For purposes 
        of this subparagraph, contributions made by an 
        employer on behalf of an employee, or matching 
        contributions made by an employee, shall be treated as 
        made by the employee. This
subparagraph (Y) is exempt 
        from the provisions of Section 250;
            (Z) For taxable years 2001 and thereafter, for the 
        taxable year in
which the bonus depreciation deduction

        is taken on the taxpayer's federal income tax return 
        under
subsection (k) of Section 168 of the Internal 
        Revenue Code and for each
applicable taxable year 
        thereafter, an amount equal to "x", where:
                (1) "y" equals the amount of the depreciation 
            deduction taken for the
taxable year
on the 
            taxpayer's federal income tax return on property 
            for which the bonus
depreciation deduction
was 
            taken in any year under subsection (k) of Section 
            168 of the Internal
Revenue Code, but not including 
            the bonus depreciation deduction;
                (2) for taxable years ending on or before 
            December 31, 2005, "x" equals "y" multiplied by 30 
            and then divided by 70 (or "y"
multiplied by 
            0.429); and
                (3) for taxable years ending after December 
            31, 2005:
                    (i) for property on which a bonus 
                depreciation deduction of 30% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                30 and then divided by 70 (or "y"
multiplied by 
                0.429); and
                    (ii) for property on which a bonus 
                depreciation deduction of 50% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                1.0.
            The aggregate amount deducted under this 
        subparagraph in all taxable
years for any one piece of 
        property may not exceed the amount of the bonus

        depreciation deduction
taken on that property on the 
        taxpayer's federal income tax return under
subsection 
        (k) of Section 168 of the Internal Revenue Code. This 
        subparagraph (Z) is exempt from the provisions of 
        Section 250;
            (AA) If the taxpayer sells, transfers, abandons, 
        or otherwise disposes of

property for which the 
        taxpayer was required in any taxable year to make an

        addition modification under subparagraph (D-15), then 
        an amount equal to that
addition modification.

            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was required in any taxable year to make an addition 
        modification under subparagraph (D-15), then an amount 
        equal to that addition modification.

            The taxpayer is allowed to take the deduction under 
        this subparagraph
only once with respect to any one 
        piece of property.
            This subparagraph (AA) is exempt from the 
        provisions of Section 250;
            (BB) Any amount included in adjusted gross income, 
        other
than
salary,
received by a driver in a 
        ridesharing arrangement using a motor vehicle;
            (CC) The amount of (i) any interest income (net of 
        the deductions allocable thereto) taken into account 
        for the taxable year with respect to a transaction with 
        a taxpayer that is required to make an addition 
        modification with respect to such transaction under 
        Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
        the amount of that addition modification, and

(ii) any 
        income from intangible property (net of the deductions 
        allocable thereto) taken into account for the taxable 
        year with respect to a transaction with a taxpayer that 
        is required to make an addition modification with 
        respect to such transaction under Section 
        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
        203(d)(2)(D-8), but not to exceed the amount of that 
        addition modification. This subparagraph (CC) is 
        exempt from the provisions of Section 250;
            (DD) An amount equal to the interest income taken 
        into account for the taxable year (net of the 
        deductions allocable thereto) with respect to 
        transactions with (i) a foreign person who would be a 
        member of the taxpayer's unitary business group but for 
        the fact that the foreign person's business activity 
        outside the United States is 80% or more of that 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304, but not to exceed the 
        addition modification required to be made for the same 
        taxable year under Section 203(a)(2)(D-17) for 
        interest paid, accrued, or incurred, directly or 
        indirectly, to the same person. This subparagraph (DD) 
        is exempt from the provisions of Section 250; 
            (EE) An amount equal to the income from intangible 
        property taken into account for the taxable year (net 
        of the deductions allocable thereto) with respect to 
        transactions with (i) a foreign person who would be a 
        member of the taxpayer's unitary business group but for 
        the fact that the foreign person's business activity 
        outside the United States is 80% or more of that 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304, but not to exceed the 
        addition modification required to be made for the same 
        taxable year under Section 203(a)(2)(D-18) for 
        intangible expenses and costs paid, accrued, or 
        incurred, directly or indirectly, to the same foreign 
        person. This subparagraph (EE) is exempt from the 
        provisions of Section 250; and
            (FF) An amount equal to any amount awarded to the 
        taxpayer during the taxable year by the Court of Claims 
        under subsection (c) of Section 8 of the Court of 
        Claims Act for time unjustly served in a State prison.  
        This subparagraph (FF) is exempt from the provisions of 
        Section 250; and . 
            (GG)  For taxable years ending on or after December 
        31, 2011, in the case of a taxpayer who was required to 
        add back any insurance premiums under Section 
        203(a)(2)(D-19), such taxpayer may elect to subtract 
        that part of a reimbursement received from the 
        insurance company equal to the amount of the expense or 
        loss (including expenses incurred by the insurance 
        company) that would have been taken into account as a 
        deduction for federal income tax purposes if the 
        expense or loss had been uninsured. If a taxpayer makes 
        the election provided for by this subparagraph (GG), 
        the insurer to which the premiums were paid must add 
        back to income the amount subtracted by the taxpayer 
        pursuant to this subparagraph (GG).  This subparagraph 
        (GG) is exempt from the provisions of Section 250. 
 
    (b) Corporations.
        (1) In general.  In the case of a corporation, base 
    income means an
amount equal to the taxpayer's taxable 
    income for the taxable year as
modified by paragraph (2).
        (2) Modifications.  The taxable income referred to in 
    paragraph (1)
shall be modified by adding thereto the sum 
    of the following amounts:
            (A) An amount equal to all amounts paid or accrued 
        to the taxpayer
as interest and all distributions 
        received from regulated investment
companies during 
        the taxable year to the extent excluded from gross

        income in the computation of taxable income;
            (B) An amount equal to the amount of tax imposed by 
        this Act to the
extent deducted from gross income in 
        the computation of taxable income
for the taxable year;
            (C) In the case of a regulated investment company, 
        an amount equal to
the excess of (i) the net long-term 
        capital gain for the taxable year, over
(ii) the amount 
        of the capital gain dividends designated as such in 
        accordance
with Section 852(b)(3)(C) of the Internal 
        Revenue Code and any amount
designated under Section 
        852(b)(3)(D) of the Internal Revenue Code,

        attributable to the taxable year (this amendatory Act 
        of 1995
(Public Act 89-89) is declarative of existing 
        law and is not a new
enactment);
            (D) The amount of any net operating loss deduction 
        taken in arriving
at taxable income, other than a net 
        operating loss carried forward from a
taxable year 
        ending prior to December 31, 1986;
            (E) For taxable years in which a net operating loss 
        carryback or
carryforward from a taxable year ending 
        prior to December 31, 1986 is an
element of taxable 
        income under paragraph (1) of subsection (e) or

        subparagraph (E) of paragraph (2) of subsection (e), 
        the amount by which
addition modifications other than 
        those provided by this subparagraph (E)
exceeded 
        subtraction modifications in such earlier taxable 
        year, with the
following limitations applied in the 
        order that they are listed:
                (i) the addition modification relating to the 
            net operating loss
carried back or forward to the 
            taxable year from any taxable year ending
prior to 
            December 31, 1986 shall be reduced by the amount of 
            addition
modification under this subparagraph (E) 
            which related to that net operating
loss and which 
            was taken into account in calculating the base 
            income of an
earlier taxable year, and
                (ii) the addition modification relating to the 
            net operating loss
carried back or forward to the 
            taxable year from any taxable year ending
prior to 
            December 31, 1986 shall not exceed the amount of 
            such carryback or
carryforward;
            For taxable years in which there is a net operating 
        loss carryback or
carryforward from more than one other 
        taxable year ending prior to December
31, 1986, the 
        addition modification provided in this subparagraph 
        (E) shall
be the sum of the amounts computed 
        independently under the preceding
provisions of this 
        subparagraph (E) for each such taxable year;
            (E-5) For taxable years ending after December 31, 
        1997, an
amount equal to any eligible remediation costs 
        that the corporation
deducted in computing adjusted 
        gross income and for which the
corporation claims a 
        credit under subsection (l) of Section 201;
            (E-10) For taxable years 2001 and thereafter, an 
        amount equal to the
bonus depreciation deduction taken 
        on the taxpayer's federal income tax return for the 
        taxable
year under subsection (k) of Section 168 of the 
        Internal Revenue Code;
            (E-11) If the taxpayer sells, transfers, abandons, 
        or otherwise disposes of property for which the 
        taxpayer was required in any taxable year to
make an 
        addition modification under subparagraph (E-10), then 
        an amount equal
to the aggregate amount of the 
        deductions taken in all taxable
years under 
        subparagraph (T) with respect to that property.
            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was allowed in any taxable year to make a subtraction 
        modification under subparagraph (T), then an amount 
        equal to that subtraction modification.

            The taxpayer is required to make the addition 
        modification under this
subparagraph
only once with 
        respect to any one piece of property;
            (E-12) An amount equal to the amount otherwise 
        allowed as a deduction in computing base income for 
        interest paid, accrued, or incurred, directly or 
        indirectly, (i) for taxable years ending on or after 
        December 31, 2004, to a foreign person who would be a 
        member of the same unitary business group but for the 
        fact the foreign person's business activity outside 
        the United States is 80% or more of the foreign 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304. The addition modification 
        required by this subparagraph shall be reduced to the 
        extent that dividends were included in base income of 
        the unitary group for the same taxable year and 
        received by the taxpayer or by a member of the 
        taxpayer's unitary business group (including amounts 
        included in gross income pursuant to Sections 951 
        through 964 of the Internal Revenue Code and amounts 
        included in gross income under Section 78 of the 
        Internal Revenue Code) with respect to the stock of the 
        same person to whom the interest was paid, accrued, or 
        incurred.

            This paragraph shall not apply to the following:

                (i) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person who 
            is subject in a foreign country or state, other 
            than a state which requires mandatory unitary 
            reporting, to a tax on or measured by net income 
            with respect to such interest; or
                (ii) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer can establish, based on a 
            preponderance of the evidence, both of the 
            following:
                    (a) the person, during the same taxable 
                year, paid, accrued, or incurred, the interest 
                to a person that is not a related member, and
                    (b) the transaction giving rise to the 
                interest expense between the taxpayer and the 
                person did not have as a principal purpose the 
                avoidance of Illinois income tax, and is paid 
                pursuant to a contract or agreement that 
                reflects an arm's-length interest rate and 
                terms; or

                (iii) the taxpayer can establish, based on 
            clear and convincing evidence, that the interest 
            paid, accrued, or incurred relates to a contract or 
            agreement entered into at arm's-length rates and 
            terms and the principal purpose for the payment is 
            not federal or Illinois tax avoidance; or

                (iv) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer establishes by clear and convincing 
            evidence that the adjustments are unreasonable; or 
            if the taxpayer and the Director agree in writing 
            to the application or use of an alternative method 
            of apportionment under Section 304(f).

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act;

            (E-13) An amount equal to the amount of intangible 
        expenses and costs otherwise allowed as a deduction in 
        computing base income, and that were paid, accrued, or 
        incurred, directly or indirectly, (i) for taxable 
        years ending on or after December 31, 2004, to a 
        foreign person who would be a member of the same 
        unitary business group but for the fact that the 
        foreign person's business activity outside the United 
        States is 80% or more of that person's total business 
        activity and (ii) for taxable years ending on or after 
        December 31, 2008, to a person who would be a member of 
        the same unitary business group but for the fact that 
        the person is prohibited under Section 1501(a)(27) 
        from being included in the unitary business group 
        because he or she is ordinarily required to apportion 
        business income under different subsections of Section 
        304. The addition modification required by this 
        subparagraph shall be reduced to the extent that 
        dividends were included in base income of the unitary 
        group for the same taxable year and received by the 
        taxpayer or by a member of the taxpayer's unitary 
        business group (including amounts included in gross 
        income pursuant to Sections 951 through 964 of the 
        Internal Revenue Code and amounts included in gross 
        income under Section 78 of the Internal Revenue Code) 
        with respect to the stock of the same person to whom 
        the intangible expenses and costs were directly or 
        indirectly paid, incurred, or accrued. The preceding 
        sentence shall not apply to the extent that the same 
        dividends caused a reduction to the addition 
        modification required under Section 203(b)(2)(E-12) of 
        this Act.
As used in this subparagraph, the term 
        "intangible expenses and costs" includes (1) expenses, 
        losses, and costs for, or related to, the direct or 
        indirect acquisition, use, maintenance or management, 
        ownership, sale, exchange, or any other disposition of 
        intangible property; (2) losses incurred, directly or 
        indirectly, from factoring transactions or discounting 
        transactions; (3) royalty, patent, technical, and 
        copyright fees; (4) licensing fees; and (5) other 
        similar expenses and costs.
For purposes of this 
        subparagraph, "intangible property" includes patents, 
        patent applications, trade names, trademarks, service 
        marks, copyrights, mask works, trade secrets, and 
        similar types of intangible assets.
            This paragraph shall not apply to the following:
                (i)         any item of intangible expenses or costs 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person who is 
            subject in a foreign country or state, other than a 
            state which requires mandatory unitary reporting, 
            to a tax on or measured by net income with respect 
            to such item; or
                (ii)        any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, if the taxpayer can establish, based 
            on a preponderance of the evidence, both of the 
            following:
                    (a) the person during the same taxable 
                year paid, accrued, or incurred, the 
                intangible expense or cost to a person that is 
                not a related member, and
                    (b) the transaction giving rise to the 
                intangible expense or cost between the 
                taxpayer and the person did not have as a 
                principal purpose the avoidance of Illinois 
                income tax, and is paid pursuant to a contract 
                or agreement that reflects arm's-length terms; 
                or
                (iii)       any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person if the 
            taxpayer establishes by clear and convincing 
            evidence, that the adjustments are unreasonable; 
            or if the taxpayer and the Director agree in 
            writing to the application or use of an alternative 
            method of apportionment under Section 304(f);

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act;

            (E-14) For taxable years ending on or after 
        December 31, 2008, an amount equal to the amount of 
        insurance premium expenses and costs otherwise allowed 
        as a deduction in computing base income, and that were 
        paid, accrued, or incurred, directly or indirectly, to 
        a person who would be a member of the same unitary 
        business group but for the fact that the person is 
        prohibited under Section 1501(a)(27) from being 
        included in the unitary business group because he or 
        she is ordinarily required to apportion business 
        income under different subsections of Section 304.  The 
        addition modification required by this subparagraph 
        shall be reduced to the extent that dividends were 
        included in base income of the unitary group for the 
        same taxable year and received by the taxpayer or by a 
        member of the taxpayer's unitary business group 
        (including amounts included in gross income under 
        Sections 951 through 964 of the Internal Revenue Code 
        and amounts included in gross income under Section 78 
        of the Internal Revenue Code) with respect to the stock 
        of the same person to whom the premiums and costs were 
        directly or indirectly paid, incurred, or accrued. The 
        preceding sentence does not apply to the extent that 
        the same dividends caused a reduction to the addition 
        modification required under Section 203(b)(2)(E-12) or 
        Section 203(b)(2)(E-13) of this Act;

            (E-15) For taxable years beginning after December 
        31, 2008, any deduction for dividends paid by a captive 
        real estate investment trust that is allowed to a real 
        estate investment trust under Section 857(b)(2)(B) of 
        the Internal Revenue Code for dividends paid;
            (E-16)  An amount equal to the credit allowable to 
        the taxpayer under Section 218(a) of this Act, 
        determined without regard to Section 218(c) of this 
        Act;
    and by deducting from the total so obtained the sum of the 
    following
amounts:
            (F) An amount equal to the amount of any tax 
        imposed by this Act
which was refunded to the taxpayer 
        and included in such total for the
taxable year;
            (G) An amount equal to any amount included in such 
        total under
Section 78 of the Internal Revenue Code;
            (H) In the case of a regulated investment company, 
        an amount equal
to the amount of exempt interest 
        dividends as defined in subsection (b)
(5) of Section 
        852 of the Internal Revenue Code, paid to shareholders

        for the taxable year;
            (I) With the exception of any amounts subtracted 
        under subparagraph
(J),
an amount equal to the sum of 
        all amounts disallowed as
deductions by (i) Sections 
        171(a) (2), and 265(a)(2) and amounts disallowed as

        interest expense by Section 291(a)(3) of the Internal 
        Revenue Code, as now
or hereafter amended, and all 
        amounts of expenses allocable to interest and

        disallowed as deductions by Section 265(a)(1) of the 
        Internal Revenue Code,
as now or hereafter amended;
and 
        (ii) for taxable years
ending on or after August 13, 
        1999, Sections
171(a)(2), 265,
280C, 291(a)(3), and 
        832(b)(5)(B)(i) of the Internal Revenue Code, plus, 
        for tax years ending on or after December 31, 2011, 
        amounts disallowed as deductions by Section 45G(e)(3) 
        of the Internal Revenue Code and, for taxable years 
        ending on or after December 31, 2008, any amount 
        included in gross income under Section 87 of the 
        Internal Revenue Code and the policyholders' share of 
        tax-exempt interest of a life insurance company under 
        Section 807(a)(2)(B) of the Internal Revenue Code (in 
        the case of a life insurance company with gross income 
        from a decrease in reserves for the tax year) or 
        Section 807(b)(1)(B) of the Internal Revenue Code (in 
        the case of a life insurance company allowed a 
        deduction for an increase in reserves for the tax 
        year); the
provisions of this
subparagraph are exempt 
        from the provisions of Section 250;
            (J) An amount equal to all amounts included in such 
        total which are
exempt from taxation by this State 
        either by reason of its statutes or
Constitution
or by 
        reason of the Constitution, treaties or statutes of the 
        United States;
provided that, in the case of any 
        statute of this State that exempts income
derived from 
        bonds or other obligations from the tax imposed under 
        this Act,
the amount exempted shall be the interest net 
        of bond premium amortization;
            (K) An amount equal to those dividends included in 
        such total
which were paid by a corporation which 
        conducts
business operations in an Enterprise Zone or 
        zones created under
the Illinois Enterprise Zone Act or 
        a River Edge Redevelopment Zone or zones created under 
        the River Edge Redevelopment Zone Act and conducts 
        substantially all of its
operations in an Enterprise 
        Zone or zones or a River Edge Redevelopment Zone or 
        zones. This subparagraph (K) is exempt from the 
        provisions of Section 250;
            (L) An amount equal to those dividends included in 
        such total that
were paid by a corporation that 
        conducts business operations in a federally
designated 
        Foreign Trade Zone or Sub-Zone and that is designated a 
        High Impact
Business located in Illinois; provided 
        that dividends eligible for the
deduction provided in 
        subparagraph (K) of paragraph 2 of this subsection

        shall not be eligible for the deduction provided under 
        this subparagraph
(L);
            (M) For any taxpayer that is a financial 
        organization within the meaning
of Section 304(c) of 
        this Act, an amount included in such total as interest

        income from a loan or loans made by such taxpayer to a 
        borrower, to the extent
that such a loan is secured by 
        property which is eligible for the Enterprise
Zone 
        Investment Credit or the River Edge Redevelopment Zone 
        Investment Credit.   To determine the portion of a loan 
        or loans that is
secured by property eligible for a 
        Section 201(f) investment
credit to the borrower, the 
        entire principal amount of the loan or loans
between 
        the taxpayer and the borrower should be divided into 
        the basis of the
Section 201(f) investment credit 
        property which secures the
loan or loans, using for 
        this purpose the original basis of such property on
the 
        date that it was placed in service in the
Enterprise 
        Zone or the River Edge Redevelopment Zone.  The 
        subtraction modification available to taxpayer in any

        year under this subsection shall be that portion of the 
        total interest paid
by the borrower with respect to 
        such loan attributable to the eligible
property as 
        calculated under the previous sentence. This 
        subparagraph (M) is exempt from the provisions of 
        Section 250;
            (M-1) For any taxpayer that is a financial 
        organization within the
meaning of Section 304(c) of 
        this Act, an amount included in such total as
interest 
        income from a loan or loans made by such taxpayer to a 
        borrower,
to the extent that such a loan is secured by 
        property which is eligible for
the High Impact Business 
        Investment Credit.  To determine the portion of a
loan 
        or loans that is secured by property eligible for a 
        Section 201(h) investment credit to the borrower, the 
        entire principal amount of
the loan or loans between 
        the taxpayer and the borrower should be divided into

        the basis of the Section 201(h) investment credit 
        property which
secures the loan or loans, using for 
        this purpose the original basis of such
property on the 
        date that it was placed in service in a federally 
        designated
Foreign Trade Zone or Sub-Zone located in 
        Illinois.  No taxpayer that is
eligible for the 
        deduction provided in subparagraph (M) of paragraph 
        (2) of
this subsection shall be eligible for the 
        deduction provided under this
subparagraph (M-1).  The 
        subtraction modification available to taxpayers in
any 
        year under this subsection shall be that portion of the 
        total interest
paid by the borrower with respect to 
        such loan attributable to the eligible
property as 
        calculated under the previous sentence;
            (N) Two times any contribution made during the 
        taxable year to a
designated zone organization to the 
        extent that the contribution (i)
qualifies as a 
        charitable contribution under subsection (c) of 
        Section 170
of the Internal Revenue Code and (ii) must, 
        by its terms, be used for a
project approved by the 
        Department of Commerce and Economic Opportunity under 
        Section 11 of the Illinois Enterprise Zone Act or under 
        Section 10-10 of the River Edge Redevelopment Zone Act.  
        This subparagraph (N) is exempt from the provisions of 
        Section 250;
            (O) An amount equal to: (i) 85% for taxable years 
        ending on or before
December 31, 1992, or, a percentage 
        equal to the percentage allowable under
Section 
        243(a)(1) of the Internal Revenue Code of 1986 for 
        taxable years ending
after December 31, 1992, of the 
        amount by which dividends included in taxable
income 
        and received from a corporation that is not created or 
        organized under
the laws of the United States or any 
        state or political subdivision thereof,
including, for 
        taxable years ending on or after December 31, 1988, 
        dividends
received or deemed received or paid or deemed 
        paid under Sections 951 through
965 964 of the Internal 
        Revenue Code, exceed the amount of the modification

        provided under subparagraph (G) of paragraph (2) of 
        this subsection (b) which
is related to such dividends, 
        and including, for taxable years ending on or after 
        December 31, 2008, dividends received from a captive 
        real estate investment trust; plus (ii) 100% of the 
        amount by which dividends,
included in taxable income 
        and received, including, for taxable years ending on
or 
        after December 31, 1988, dividends received or deemed 
        received or paid or
deemed paid under Sections 951 
        through 964 of the Internal Revenue Code and including, 
        for taxable years ending on or after December 31, 2008, 
        dividends received from a captive real estate 
        investment trust, from
any such corporation specified 
        in clause (i) that would but for the provisions
of 
        Section 1504 (b) (3) of the Internal Revenue Code be 
        treated as a member of
the affiliated group which 
        includes the dividend recipient, exceed the amount
of 
        the modification provided under subparagraph (G) of 
        paragraph (2) of this
subsection (b) which is related 
        to such dividends. This subparagraph (O) is exempt from 
        the provisions of Section 250 of this Act;
            (P) An amount equal to any contribution made to a 
        job training project
established pursuant to the Tax 
        Increment Allocation Redevelopment Act;
            (Q) An amount equal to the amount of the deduction 
        used to compute the
federal income tax credit for 
        restoration of substantial amounts held under
claim of 
        right for the taxable year pursuant to Section 1341 of 
        the
Internal Revenue Code of 1986;
            (R) On and after July 20, 1999, in the case of an 
        attorney-in-fact with respect to whom an
interinsurer 
        or a reciprocal insurer has made the election under 
        Section 835 of
the Internal Revenue Code, 26 U.S.C. 
        835, an amount equal to the excess, if
any, of the 
        amounts paid or incurred by that interinsurer or 
        reciprocal insurer
in the taxable year to the 
        attorney-in-fact over the deduction allowed to that

        interinsurer or reciprocal insurer with respect to the 
        attorney-in-fact under
Section 835(b) of the Internal 
        Revenue Code for the taxable year; the provisions of 
        this subparagraph are exempt from the provisions of 
        Section 250;
            (S) For taxable years ending on or after December 
        31, 1997, in the
case of a Subchapter
S corporation, an 
        amount equal to all amounts of income allocable to a

        shareholder subject to the Personal Property Tax 
        Replacement Income Tax imposed
by subsections (c) and 
        (d) of Section 201 of this Act, including amounts

        allocable to organizations exempt from federal income 
        tax by reason of Section
501(a) of the Internal Revenue 
        Code.  This subparagraph (S) is exempt from
the 
        provisions of Section 250;
            (T) For taxable years 2001 and thereafter, for the 
        taxable year in
which the bonus depreciation deduction

        is taken on the taxpayer's federal income tax return 
        under
subsection (k) of Section 168 of the Internal 
        Revenue Code and for each
applicable taxable year 
        thereafter, an amount equal to "x", where:
                (1) "y" equals the amount of the depreciation 
            deduction taken for the
taxable year
on the 
            taxpayer's federal income tax return on property 
            for which the bonus
depreciation deduction
was 
            taken in any year under subsection (k) of Section 
            168 of the Internal
Revenue Code, but not including 
            the bonus depreciation deduction;
                (2) for taxable years ending on or before 
            December 31, 2005, "x" equals "y" multiplied by 30 
            and then divided by 70 (or "y"
multiplied by 
            0.429); and
                (3) for taxable years ending after December 
            31, 2005:
                    (i) for property on which a bonus 
                depreciation deduction of 30% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                30 and then divided by 70 (or "y"
multiplied by 
                0.429); and
                    (ii) for property on which a bonus 
                depreciation deduction of 50% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                1.0.
            The aggregate amount deducted under this 
        subparagraph in all taxable
years for any one piece of 
        property may not exceed the amount of the bonus

        depreciation deduction
taken on that property on the 
        taxpayer's federal income tax return under
subsection 
        (k) of Section 168 of the Internal Revenue Code. This 
        subparagraph (T) is exempt from the provisions of 
        Section 250;
            (U) If the taxpayer sells, transfers, abandons, or 
        otherwise disposes of

property for which the taxpayer 
        was required in any taxable year to make an
addition 
        modification under subparagraph (E-10), then an amount 
        equal to that
addition modification.
            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was required in any taxable year to make an addition 
        modification under subparagraph (E-10), then an amount 
        equal to that addition modification.

            The taxpayer is allowed to take the deduction under 
        this subparagraph
only once with respect to any one 
        piece of property.
            This subparagraph (U) is exempt from the 
        provisions of Section 250;
            (V) The amount of: (i) any interest income (net of 
        the deductions allocable thereto) taken into account 
        for the taxable year with respect to a transaction with 
        a taxpayer that is required to make an addition 
        modification with respect to such transaction under 
        Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
        the amount of such addition modification,

(ii) any 
        income from intangible property (net of the deductions 
        allocable thereto) taken into account for the taxable 
        year with respect to a transaction with a taxpayer that 
        is required to make an addition modification with 
        respect to such transaction under Section 
        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
        203(d)(2)(D-8), but not to exceed the amount of such 
        addition modification, and (iii) any insurance premium 
        income (net of deductions allocable thereto) taken 
        into account for the taxable year with respect to a 
        transaction with a taxpayer that is required to make an 
        addition modification with respect to such transaction 
        under Section 203(a)(2)(D-19), Section 
        203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section 
        203(d)(2)(D-9), but not to exceed the amount of that 
        addition modification. This subparagraph (V) is exempt 
        from the provisions of Section 250;

            (W) An amount equal to the interest income taken 
        into account for the taxable year (net of the 
        deductions allocable thereto) with respect to 
        transactions with (i) a foreign person who would be a 
        member of the taxpayer's unitary business group but for 
        the fact that the foreign person's business activity 
        outside the United States is 80% or more of that 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304, but not to exceed the 
        addition modification required to be made for the same 
        taxable year under Section 203(b)(2)(E-12) for 
        interest paid, accrued, or incurred, directly or 
        indirectly, to the same person. This subparagraph (W) 
        is exempt from the provisions of Section 250; and

            (X) An amount equal to the income from intangible 
        property taken into account for the taxable year (net 
        of the deductions allocable thereto) with respect to 
        transactions with (i) a foreign person who would be a 
        member of the taxpayer's unitary business group but for 
        the fact that the foreign person's business activity 
        outside the United States is 80% or more of that 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304, but not to exceed the 
        addition modification required to be made for the same 
        taxable year under Section 203(b)(2)(E-13) for 
        intangible expenses and costs paid, accrued, or 
        incurred, directly or indirectly, to the same foreign 
        person. This subparagraph (X) is exempt from the 
        provisions of Section 250; .

            (Y) For taxable years ending on or after December 
        31, 2011, in the case of a taxpayer who was required to 
        add back any insurance premiums under Section 
        203(b)(2)(E-14), such taxpayer may elect to subtract 
        that part of a reimbursement received from the 
        insurance company equal to the amount of the expense or 
        loss (including expenses incurred by the insurance 
        company) that would have been taken into account as a 
        deduction for federal income tax purposes if the 
        expense or loss had been uninsured. If a taxpayer makes 
        the election provided for by this subparagraph (Y), the 
        insurer to which the premiums were paid must add back 
        to income the amount subtracted by the taxpayer 
        pursuant to this subparagraph (Y).  This subparagraph 
        (Y) is exempt from the provisions of Section 250; and 
            (Z)  The difference between the nondeductible 
        controlled foreign corporation dividends under Section 
        965(e)(3) of the Internal Revenue Code over the taxable 
        income of the taxpayer, computed without regard to 
        Section 965(e)(2)(A) of the Internal Revenue Code, and 
        without regard to any net operating loss deduction. 
        This subparagraph (Z) is exempt from the provisions of 
        Section 250. 
        (3) Special rule.  For purposes of paragraph (2) (A), 
    "gross income"
in the case of a life insurance company, for 
    tax years ending on and after
December 31, 1994,
and prior 
    to December 31, 2011, shall mean the gross investment 
    income for the taxable year and, for tax years ending on or 
    after December 31, 2011, shall mean all amounts included in 
    life insurance gross income under Section 803(a)(3) of the 
    Internal Revenue Code.
 
    (c) Trusts and estates.
        (1) In general.  In the case of a trust or estate, base 
    income means
an amount equal to the taxpayer's taxable 
    income for the taxable year as
modified by paragraph (2).
        (2) Modifications.  Subject to the provisions of 
    paragraph (3), the
taxable income referred to in paragraph 
    (1) shall be modified by adding
thereto the sum of the 
    following amounts:
            (A) An amount equal to all amounts paid or accrued 
        to the taxpayer
as interest or dividends during the 
        taxable year to the extent excluded
from gross income 
        in the computation of taxable income;
            (B) In the case of (i) an estate, $600; (ii) a 
        trust which, under
its governing instrument, is 
        required to distribute all of its income
currently, 
        $300; and (iii) any other trust, $100, but in each such 
        case,
only to the extent such amount was deducted in 
        the computation of
taxable income;
            (C) An amount equal to the amount of tax imposed by 
        this Act to the
extent deducted from gross income in 
        the computation of taxable income
for the taxable year;
            (D) The amount of any net operating loss deduction 
        taken in arriving at
taxable income, other than a net 
        operating loss carried forward from a
taxable year 
        ending prior to December 31, 1986;
            (E) For taxable years in which a net operating loss 
        carryback or
carryforward from a taxable year ending 
        prior to December 31, 1986 is an
element of taxable 
        income under paragraph (1) of subsection (e) or 
        subparagraph
(E) of paragraph (2) of subsection (e), 
        the amount by which addition
modifications other than 
        those provided by this subparagraph (E) exceeded

        subtraction modifications in such taxable year, with 
        the following limitations
applied in the order that 
        they are listed:
                (i) the addition modification relating to the 
            net operating loss
carried back or forward to the 
            taxable year from any taxable year ending
prior to 
            December 31, 1986 shall be reduced by the amount of 
            addition
modification under this subparagraph (E) 
            which related to that net
operating loss and which 
            was taken into account in calculating the base

            income of an earlier taxable year, and
                (ii) the addition modification relating to the 
            net operating loss
carried back or forward to the 
            taxable year from any taxable year ending
prior to 
            December 31, 1986 shall not exceed the amount of 
            such carryback or
carryforward;
            For taxable years in which there is a net operating 
        loss carryback or
carryforward from more than one other 
        taxable year ending prior to December
31, 1986, the 
        addition modification provided in this subparagraph 
        (E) shall
be the sum of the amounts computed 
        independently under the preceding
provisions of this 
        subparagraph (E) for each such taxable year;
            (F) For taxable years ending on or after January 1, 
        1989, an amount
equal to the tax deducted pursuant to 
        Section 164 of the Internal Revenue
Code if the trust 
        or estate is claiming the same tax for purposes of the

        Illinois foreign tax credit under Section 601 of this 
        Act;
            (G) An amount equal to the amount of the capital 
        gain deduction
allowable under the Internal Revenue 
        Code, to the extent deducted from
gross income in the 
        computation of taxable income;
            (G-5) For taxable years ending after December 31, 
        1997, an
amount equal to any eligible remediation costs 
        that the trust or estate
deducted in computing adjusted 
        gross income and for which the trust
or estate claims a 
        credit under subsection (l) of Section 201;
            (G-10) For taxable years 2001 and thereafter, an 
        amount equal to the
bonus depreciation deduction taken 
        on the taxpayer's federal income tax return for the 
        taxable
year under subsection (k) of Section 168 of the 
        Internal Revenue Code; and
            (G-11) If the taxpayer sells, transfers, abandons, 
        or otherwise disposes of property for which the 
        taxpayer was required in any taxable year to
make an 
        addition modification under subparagraph (G-10), then 
        an amount equal
to the aggregate amount of the 
        deductions taken in all taxable
years under 
        subparagraph (R) with respect to that property.
            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was allowed in any taxable year to make a subtraction 
        modification under subparagraph (R), then an amount 
        equal to that subtraction modification.

            The taxpayer is required to make the addition 
        modification under this
subparagraph
only once with 
        respect to any one piece of property;
            (G-12) An amount equal to the amount otherwise 
        allowed as a deduction in computing base income for 
        interest paid, accrued, or incurred, directly or 
        indirectly, (i) for taxable years ending on or after 
        December 31, 2004, to a foreign person who would be a 
        member of the same unitary business group but for the 
        fact that the foreign person's business activity 
        outside the United States is 80% or more of the foreign 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304. The addition modification 
        required by this subparagraph shall be reduced to the 
        extent that dividends were included in base income of 
        the unitary group for the same taxable year and 
        received by the taxpayer or by a member of the 
        taxpayer's unitary business group (including amounts 
        included in gross income pursuant to Sections 951 
        through 964 of the Internal Revenue Code and amounts 
        included in gross income under Section 78 of the 
        Internal Revenue Code) with respect to the stock of the 
        same person to whom the interest was paid, accrued, or 
        incurred.

            This paragraph shall not apply to the following:

                (i) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person who 
            is subject in a foreign country or state, other 
            than a state which requires mandatory unitary 
            reporting, to a tax on or measured by net income 
            with respect to such interest; or
                (ii) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer can establish, based on a 
            preponderance of the evidence, both of the 
            following:
                    (a) the person, during the same taxable 
                year, paid, accrued, or incurred, the interest 
                to a person that is not a related member, and
                    (b) the transaction giving rise to the 
                interest expense between the taxpayer and the 
                person did not have as a principal purpose the 
                avoidance of Illinois income tax, and is paid 
                pursuant to a contract or agreement that 
                reflects an arm's-length interest rate and 
                terms; or

                (iii) the taxpayer can establish, based on 
            clear and convincing evidence, that the interest 
            paid, accrued, or incurred relates to a contract or 
            agreement entered into at arm's-length rates and 
            terms and the principal purpose for the payment is 
            not federal or Illinois tax avoidance; or

                (iv) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer establishes by clear and convincing 
            evidence that the adjustments are unreasonable; or 
            if the taxpayer and the Director agree in writing 
            to the application or use of an alternative method 
            of apportionment under Section 304(f).

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act;

            (G-13) An amount equal to the amount of intangible 
        expenses and costs otherwise allowed as a deduction in 
        computing base income, and that were paid, accrued, or 
        incurred, directly or indirectly, (i) for taxable 
        years ending on or after December 31, 2004, to a 
        foreign person who would be a member of the same 
        unitary business group but for the fact that the 
        foreign person's business activity outside the United 
        States is 80% or more of that person's total business 
        activity and (ii) for taxable years ending on or after 
        December 31, 2008, to a person who would be a member of 
        the same unitary business group but for the fact that 
        the person is prohibited under Section 1501(a)(27) 
        from being included in the unitary business group 
        because he or she is ordinarily required to apportion 
        business income under different subsections of Section 
        304. The addition modification required by this 
        subparagraph shall be reduced to the extent that 
        dividends were included in base income of the unitary 
        group for the same taxable year and received by the 
        taxpayer or by a member of the taxpayer's unitary 
        business group (including amounts included in gross 
        income pursuant to Sections 951 through 964 of the 
        Internal Revenue Code and amounts included in gross 
        income under Section 78 of the Internal Revenue Code) 
        with respect to the stock of the same person to whom 
        the intangible expenses and costs were directly or 
        indirectly paid, incurred, or accrued. The preceding 
        sentence shall not apply to the extent that the same 
        dividends caused a reduction to the addition 
        modification required under Section 203(c)(2)(G-12) of 
        this Act. As used in this subparagraph, the term 
        "intangible expenses and costs" includes: (1) 
        expenses, losses, and costs for or related to the 
        direct or indirect acquisition, use, maintenance or 
        management, ownership, sale, exchange, or any other 
        disposition of intangible property; (2) losses 
        incurred, directly or indirectly, from factoring 
        transactions or discounting transactions; (3) royalty, 
        patent, technical, and copyright fees; (4) licensing 
        fees; and (5) other similar expenses and costs. For 
        purposes of this subparagraph, "intangible property" 
        includes patents, patent applications, trade names, 
        trademarks, service marks, copyrights, mask works, 
        trade secrets, and similar types of intangible assets.
            This paragraph shall not apply to the following:
                (i)         any item of intangible expenses or costs 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person who is 
            subject in a foreign country or state, other than a 
            state which requires mandatory unitary reporting, 
            to a tax on or measured by net income with respect 
            to such item; or
                (ii)        any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, if the taxpayer can establish, based 
            on a preponderance of the evidence, both of the 
            following:
                    (a) the person during the same taxable 
                year paid, accrued, or incurred, the 
                intangible expense or cost to a person that is 
                not a related member, and
                    (b) the transaction giving rise to the 
                intangible expense or cost between the 
                taxpayer and the person did not have as a 
                principal purpose the avoidance of Illinois 
                income tax, and is paid pursuant to a contract 
                or agreement that reflects arm's-length terms; 
                or
                (iii)       any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person if the 
            taxpayer establishes by clear and convincing 
            evidence, that the adjustments are unreasonable; 
            or if the taxpayer and the Director agree in 
            writing to the application or use of an alternative 
            method of apportionment under Section 304(f);

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act;

            (G-14) For taxable years ending on or after 
        December 31, 2008, an amount equal to the amount of 
        insurance premium expenses and costs otherwise allowed 
        as a deduction in computing base income, and that were 
        paid, accrued, or incurred, directly or indirectly, to 
        a person who would be a member of the same unitary 
        business group but for the fact that the person is 
        prohibited under Section 1501(a)(27) from being 
        included in the unitary business group because he or 
        she is ordinarily required to apportion business 
        income under different subsections of Section 304.  The 
        addition modification required by this subparagraph 
        shall be reduced to the extent that dividends were 
        included in base income of the unitary group for the 
        same taxable year and received by the taxpayer or by a 
        member of the taxpayer's unitary business group 
        (including amounts included in gross income under 
        Sections 951 through 964 of the Internal Revenue Code 
        and amounts included in gross income under Section 78 
        of the Internal Revenue Code) with respect to the stock 
        of the same person to whom the premiums and costs were 
        directly or indirectly paid, incurred, or accrued. The 
        preceding sentence does not apply to the extent that 
        the same dividends caused a reduction to the addition 
        modification required under Section 203(c)(2)(G-12) or 
        Section 203(c)(2)(G-13) of this Act;
            (G-15)  An amount equal to the credit allowable to 
        the taxpayer under Section 218(a) of this Act, 
        determined without regard to Section 218(c) of this 
        Act;
    and by deducting from the total so obtained the sum of the 
    following
amounts:
            (H) An amount equal to all amounts included in such 
        total pursuant
to the provisions of Sections 402(a), 
        402(c), 403(a), 403(b), 406(a), 407(a)
and 408 of the 
        Internal Revenue Code or included in such total as

        distributions under the provisions of any retirement 
        or disability plan for
employees of any governmental 
        agency or unit, or retirement payments to
retired 
        partners, which payments are excluded in computing net 
        earnings
from self employment by Section 1402 of the 
        Internal Revenue Code and
regulations adopted pursuant 
        thereto;
            (I) The valuation limitation amount;
            (J) An amount equal to the amount of any tax 
        imposed by this Act
which was refunded to the taxpayer 
        and included in such total for the
taxable year;
            (K) An amount equal to all amounts included in 
        taxable income as
modified by subparagraphs (A), (B), 
        (C), (D), (E), (F) and (G) which
are exempt from 
        taxation by this State either by reason of its statutes 
        or
Constitution
or by reason of the Constitution, 
        treaties or statutes of the United States;
provided 
        that, in the case of any statute of this State that 
        exempts income
derived from bonds or other obligations 
        from the tax imposed under this Act,
the amount 
        exempted shall be the interest net of bond premium 
        amortization;
            (L) With the exception of any amounts subtracted 
        under subparagraph
(K),
an amount equal to the sum of 
        all amounts disallowed as
deductions by (i) Sections 
        171(a) (2) and 265(a)(2) of the Internal Revenue
Code, 
        as now or hereafter amended, and all amounts of 
        expenses allocable
to interest and disallowed as 
        deductions by Section 265(1) of the Internal
Revenue 
        Code of 1954, as now or hereafter amended;
and (ii) for 
        taxable years
ending on or after August 13, 1999, 
        Sections
171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of 
        the Internal Revenue Code, plus, (iii) for taxable 
        years ending on or after December 31, 2011, Section 
        45G(e)(3) of the Internal Revenue Code and, for taxable 
        years ending on or after December 31, 2008, any amount 
        included in gross income under Section 87 of the 
        Internal Revenue Code; the provisions of this

        subparagraph are exempt from the provisions of Section 
        250;
            (M) An amount equal to those dividends included in 
        such total
which were paid by a corporation which 
        conducts business operations in an
Enterprise Zone or 
        zones created under the Illinois Enterprise Zone Act or 
        a River Edge Redevelopment Zone or zones created under 
        the River Edge Redevelopment Zone Act and
conducts 
        substantially all of its operations in an Enterprise 
        Zone or Zones or a River Edge Redevelopment Zone or 
        zones. This subparagraph (M) is exempt from the 
        provisions of Section 250;
            (N) An amount equal to any contribution made to a 
        job training
project established pursuant to the Tax 
        Increment Allocation
Redevelopment Act;
            (O) An amount equal to those dividends included in 
        such total
that were paid by a corporation that 
        conducts business operations in a
federally designated 
        Foreign Trade Zone or Sub-Zone and that is designated
a 
        High Impact Business located in Illinois; provided 
        that dividends eligible
for the deduction provided in 
        subparagraph (M) of paragraph (2) of this
subsection 
        shall not be eligible for the deduction provided under 
        this
subparagraph (O);
            (P) An amount equal to the amount of the deduction 
        used to compute the
federal income tax credit for 
        restoration of substantial amounts held under
claim of 
        right for the taxable year pursuant to Section 1341 of 
        the
Internal Revenue Code of 1986;
            (Q) For taxable year 1999 and thereafter, an amount 
        equal to the
amount of any
(i) distributions, to the 
        extent includible in gross income for
federal income 
        tax purposes, made to the taxpayer because of
his or 
        her status as a victim of
persecution for racial or 
        religious reasons by Nazi Germany or any other Axis

        regime or as an heir of the victim and (ii) items
of 
        income, to the extent
includible in gross income for 
        federal income tax purposes, attributable to,
derived 
        from or in any way related to assets stolen from, 
        hidden from, or
otherwise lost to a victim of

        persecution for racial or religious reasons by Nazi

        Germany or any other Axis regime
immediately prior to, 
        during, and immediately after World War II, including,

        but
not limited to, interest on the proceeds receivable 
        as insurance
under policies issued to a victim of 
        persecution for racial or religious
reasons by Nazi 
        Germany or any other Axis regime by European insurance

        companies
immediately prior to and during World War II;

        provided, however, this subtraction from federal 
        adjusted gross income does not
apply to assets acquired 
        with such assets or with the proceeds from the sale of

        such assets; provided, further, this paragraph shall 
        only apply to a taxpayer
who was the first recipient of 
        such assets after their recovery and who is a
victim of

        persecution for racial or religious reasons
by Nazi 
        Germany or any other Axis regime or as an heir of the 
        victim.  The
amount of and the eligibility for any 
        public assistance, benefit, or
similar entitlement is 
        not affected by the inclusion of items (i) and (ii) of

        this paragraph in gross income for federal income tax 
        purposes.
This paragraph is exempt from the provisions 
        of Section 250;
            (R) For taxable years 2001 and thereafter, for the 
        taxable year in
which the bonus depreciation deduction

        is taken on the taxpayer's federal income tax return 
        under
subsection (k) of Section 168 of the Internal 
        Revenue Code and for each
applicable taxable year 
        thereafter, an amount equal to "x", where:
                (1) "y" equals the amount of the depreciation 
            deduction taken for the
taxable year
on the 
            taxpayer's federal income tax return on property 
            for which the bonus
depreciation deduction
was 
            taken in any year under subsection (k) of Section 
            168 of the Internal
Revenue Code, but not including 
            the bonus depreciation deduction;
                (2) for taxable years ending on or before 
            December 31, 2005, "x" equals "y" multiplied by 30 
            and then divided by 70 (or "y"
multiplied by 
            0.429); and
                (3) for taxable years ending after December 
            31, 2005:
                    (i) for property on which a bonus 
                depreciation deduction of 30% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                30 and then divided by 70 (or "y"
multiplied by 
                0.429); and
                    (ii) for property on which a bonus 
                depreciation deduction of 50% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                1.0.
            The aggregate amount deducted under this 
        subparagraph in all taxable
years for any one piece of 
        property may not exceed the amount of the bonus

        depreciation deduction
taken on that property on the 
        taxpayer's federal income tax return under
subsection 
        (k) of Section 168 of the Internal Revenue Code. This 
        subparagraph (R) is exempt from the provisions of 
        Section 250;
            (S) If the taxpayer sells, transfers, abandons, or 
        otherwise disposes of

property for which the taxpayer 
        was required in any taxable year to make an
addition 
        modification under subparagraph (G-10), then an amount 
        equal to that
addition modification.
            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was required in any taxable year to make an addition 
        modification under subparagraph (G-10), then an amount 
        equal to that addition modification.

            The taxpayer is allowed to take the deduction under 
        this subparagraph
only once with respect to any one 
        piece of property.
            This subparagraph (S) is exempt from the 
        provisions of Section 250;
            (T) The amount of (i) any interest income (net of 
        the deductions allocable thereto) taken into account 
        for the taxable year with respect to a transaction with 
        a taxpayer that is required to make an addition 
        modification with respect to such transaction under 
        Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
        the amount of such addition modification and

(ii) any 
        income from intangible property (net of the deductions 
        allocable thereto) taken into account for the taxable 
        year with respect to a transaction with a taxpayer that 
        is required to make an addition modification with 
        respect to such transaction under Section 
        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
        203(d)(2)(D-8), but not to exceed the amount of such 
        addition modification. This subparagraph (T) is exempt 
        from the provisions of Section 250;

            (U) An amount equal to the interest income taken 
        into account for the taxable year (net of the 
        deductions allocable thereto) with respect to 
        transactions with (i) a foreign person who would be a 
        member of the taxpayer's unitary business group but for 
        the fact the foreign person's business activity 
        outside the United States is 80% or more of that 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304, but not to exceed the 
        addition modification required to be made for the same 
        taxable year under Section 203(c)(2)(G-12) for 
        interest paid, accrued, or incurred, directly or 
        indirectly, to the same person. This subparagraph (U) 
        is exempt from the provisions of Section 250; and 
            (V) An amount equal to the income from intangible 
        property taken into account for the taxable year (net 
        of the deductions allocable thereto) with respect to 
        transactions with (i) a foreign person who would be a 
        member of the taxpayer's unitary business group but for 
        the fact that the foreign person's business activity 
        outside the United States is 80% or more of that 
        person's total business activity and (ii) for taxable 
        years ending on or after December 31, 2008, to a person 
        who would be a member of the same unitary business 
        group but for the fact that the person is prohibited 
        under Section 1501(a)(27) from being included in the 
        unitary business group because he or she is ordinarily 
        required to apportion business income under different 
        subsections of Section 304, but not to exceed the 
        addition modification required to be made for the same 
        taxable year under Section 203(c)(2)(G-13) for 
        intangible expenses and costs paid, accrued, or 
        incurred, directly or indirectly, to the same foreign 
        person. This subparagraph (V) is exempt from the 
        provisions of Section 250; .

            (W)  in the case of an estate, an amount equal to 
        all amounts included in such total pursuant to the 
        provisions of Section 111 of the  Internal Revenue Code 
        as a recovery of items previously deducted by the 
        decedent from adjusted gross income in the computation 
        of taxable income.  This subparagraph (W) is exempt from 
        Section 250; 
            (X) an amount equal to the refund included in such 
        total of any tax deducted for federal income tax 
        purposes, to the extent that deduction was added back 
        under subparagraph (F). This subparagraph (X) is 
        exempt from the provisions of Section 250; and
            (Y) For taxable years ending on or after December 
        31, 2011, in the case of a taxpayer who was required to 
        add back any insurance premiums under Section 
        203(c)(2)(G-14), such taxpayer may elect to subtract 
        that part of a reimbursement received from the 
        insurance company equal to the amount of the expense or 
        loss (including expenses incurred by the insurance 
        company) that would have been taken into account as a 
        deduction for federal income tax purposes if the 
        expense or loss had been uninsured. If a taxpayer makes 
        the election provided for by this subparagraph (Y), the 
        insurer to which the premiums were paid must add back 
        to income the amount subtracted by the taxpayer 
        pursuant to this subparagraph (Y).  This subparagraph 
        (Y) is exempt from the provisions of Section 250.
        (3) Limitation.  The amount of any modification 
    otherwise required
under this subsection shall, under 
    regulations prescribed by the
Department, be adjusted by 
    any amounts included therein which were
properly paid, 
    credited, or required to be distributed, or permanently set

    aside for charitable purposes pursuant  to Internal Revenue 
    Code Section
642(c) during the taxable year.
 
    (d) Partnerships.
        (1) In general. In the case of a partnership, base 
    income means an
amount equal to the taxpayer's taxable 
    income for the taxable year as
modified by paragraph (2).
        (2) Modifications. The taxable income referred to in 
    paragraph (1)
shall be modified by adding thereto the sum 
    of the following amounts:
            (A) An amount equal to all amounts paid or accrued 
        to the taxpayer as
interest or dividends during the 
        taxable year to the extent excluded from
gross income 
        in the computation of taxable income;
            (B) An amount equal to the amount of tax imposed by 
        this Act to the
extent deducted from gross income for 
        the taxable year;
            (C) The amount of deductions allowed to the 
        partnership pursuant to
Section 707 (c) of the Internal 
        Revenue Code in calculating its taxable income;
            (D) An amount equal to the amount of the capital 
        gain deduction
allowable under the Internal Revenue 
        Code, to the extent deducted from
gross income in the 
        computation of taxable income;
            (D-5) For taxable years 2001 and thereafter, an 
        amount equal to the
bonus depreciation deduction taken 
        on the taxpayer's federal income tax return for the 
        taxable
year under subsection (k) of Section 168 of the 
        Internal Revenue Code;
            (D-6) If the taxpayer sells, transfers, abandons, 
        or otherwise disposes of

property for which the 
        taxpayer was required in any taxable year to make an

        addition modification under subparagraph (D-5), then 
        an amount equal to the
aggregate amount of the 
        deductions taken in all taxable years
under 
        subparagraph (O) with respect to that property.
            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was allowed in any taxable year to make a subtraction 
        modification under subparagraph (O), then an amount 
        equal to that subtraction modification.

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

            This paragraph shall not apply to the following:

                (i) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person who 
            is subject in a foreign country or state, other 
            than a state which requires mandatory unitary 
            reporting, to a tax on or measured by net income 
            with respect to such interest; or
                (ii) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer can establish, based on a 
            preponderance of the evidence, both of the 
            following:
                    (a) the person, during the same taxable 
                year, paid, accrued, or incurred, the interest 
                to a person that is not a related member, and
                    (b) the transaction giving rise to the 
                interest expense between the taxpayer and the 
                person did not have as a principal purpose the 
                avoidance of Illinois income tax, and is paid 
                pursuant to a contract or agreement that 
                reflects an arm's-length interest rate and 
                terms; or

                (iii) the taxpayer can establish, based on 
            clear and convincing evidence, that the interest 
            paid, accrued, or incurred relates to a contract or 
            agreement entered into at arm's-length rates and 
            terms and the principal purpose for the payment is 
            not federal or Illinois tax avoidance; or

                (iv) an item of interest paid, accrued, or 
            incurred, directly or indirectly, to a person if 
            the taxpayer establishes by clear and convincing 
            evidence that the adjustments are unreasonable; or 
            if the taxpayer and the Director agree in writing 
            to the application or use of an alternative method 
            of apportionment under Section 304(f).

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act; and

            (D-8) An amount equal to the amount of intangible 
        expenses and costs otherwise allowed as a deduction in 
        computing base income, and that were paid, accrued, or 
        incurred, directly or indirectly, (i) for taxable 
        years ending on or after December 31, 2004, to a 
        foreign person who would be a member of the same 
        unitary business group but for the fact that the 
        foreign person's business activity outside the United 
        States is 80% or more of that person's total business 
        activity and (ii) for taxable years ending on or after 
        December 31, 2008, to a person who would be a member of 
        the same unitary business group but for the fact that 
        the person is prohibited under Section 1501(a)(27) 
        from being included in the unitary business group 
        because he or she is ordinarily required to apportion 
        business income under different subsections of Section 
        304. The addition modification required by this 
        subparagraph shall be reduced to the extent that 
        dividends were included in base income of the unitary 
        group for the same taxable year and received by the 
        taxpayer or by a member of the taxpayer's unitary 
        business group (including amounts included in gross 
        income pursuant to Sections 951 through 964 of the 
        Internal Revenue Code and amounts included in gross 
        income under Section 78 of the Internal Revenue Code) 
        with respect to the stock of the same person to whom 
        the intangible expenses and costs were directly or 
        indirectly paid, incurred or accrued. The preceding 
        sentence shall not apply to the extent that the same 
        dividends caused a reduction to the addition 
        modification required under Section 203(d)(2)(D-7) of 
        this Act. As used in this subparagraph, the term 
        "intangible expenses and costs" includes (1) expenses, 
        losses, and costs for, or related to, the direct or 
        indirect acquisition, use, maintenance or management, 
        ownership, sale, exchange, or any other disposition of 
        intangible property; (2) losses incurred, directly or 
        indirectly, from factoring transactions or discounting 
        transactions; (3) royalty, patent, technical, and 
        copyright fees; (4) licensing fees; and (5) other 
        similar expenses and costs. For purposes of this 
        subparagraph, "intangible property" includes patents, 
        patent applications, trade names, trademarks, service 
        marks, copyrights, mask works, trade secrets, and 
        similar types of intangible assets;
            This paragraph shall not apply to the following:
                (i)         any item of intangible expenses or costs 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person who is 
            subject in a foreign country or state, other than a 
            state which requires mandatory unitary reporting, 
            to a tax on or measured by net income with respect 
            to such item; or
                (ii)        any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, if the taxpayer can establish, based 
            on a preponderance of the evidence, both of the 
            following:
                    (a) the person during the same taxable 
                year paid, accrued, or incurred, the 
                intangible expense or cost to a person that is 
                not a related member, and
                    (b) the transaction giving rise to the 
                intangible expense or cost between the 
                taxpayer and the person did not have as a 
                principal purpose the avoidance of Illinois 
                income tax, and is paid pursuant to a contract 
                or agreement that reflects arm's-length terms; 
                or
                (iii)       any item of intangible expense or cost 
            paid, accrued, or incurred, directly or 
            indirectly, from a transaction with a person if the 
            taxpayer establishes by clear and convincing 
            evidence, that the adjustments are unreasonable; 
            or if the taxpayer and the Director agree in 
            writing to the application or use of an alternative 
            method of apportionment under Section 304(f);

                Nothing in this subsection shall preclude the 
            Director from making any other adjustment 
            otherwise allowed under Section 404 of this Act for 
            any tax year beginning after the effective date of 
            this amendment provided such adjustment is made 
            pursuant to regulation adopted by the Department 
            and such regulations provide methods and standards 
            by which the Department will utilize its authority 
            under Section 404 of this Act;

            (D-9) For taxable years ending on or after December 
        31, 2008, an amount equal to the amount of insurance 
        premium expenses and costs otherwise allowed as a 
        deduction in computing base income, and that were paid, 
        accrued, or incurred, directly or indirectly, to a 
        person who would be a member of the same unitary 
        business group but for the fact that the person is 
        prohibited under Section 1501(a)(27) from being 
        included in the unitary business group because he or 
        she is ordinarily required to apportion business 
        income under different subsections of Section 304.  The 
        addition modification required by this subparagraph 
        shall be reduced to the extent that dividends were 
        included in base income of the unitary group for the 
        same taxable year and received by the taxpayer or by a 
        member of the taxpayer's unitary business group 
        (including amounts included in gross income under 
        Sections 951 through 964 of the Internal Revenue Code 
        and amounts included in gross income under Section 78 
        of the Internal Revenue Code) with respect to the stock 
        of the same person to whom the premiums and costs were 
        directly or indirectly paid, incurred, or accrued. The 
        preceding sentence does not apply to the extent that 
        the same dividends caused a reduction to the addition 
        modification required under Section 203(d)(2)(D-7) or 
        Section 203(d)(2)(D-8) of this Act;
            (D-10) An amount equal to the credit allowable to 
        the taxpayer under Section 218(a) of this Act, 
        determined without regard to Section 218(c) of this 
        Act;
    and by deducting from the total so obtained the following 
    amounts:
            (E) The valuation limitation amount;
            (F) An amount equal to the amount of any tax 
        imposed by this Act which
was refunded to the taxpayer 
        and included in such total for the taxable year;
            (G) An amount equal to all amounts included in 
        taxable income as
modified by subparagraphs (A), (B), 
        (C) and (D) which are exempt from
taxation by this 
        State either by reason of its statutes or Constitution 
        or
by reason of
the Constitution, treaties or statutes 
        of the United States;
provided that, in the case of any 
        statute of this State that exempts income
derived from 
        bonds or other obligations from the tax imposed under 
        this Act,
the amount exempted shall be the interest net 
        of bond premium amortization;
            (H) Any income of the partnership which 
        constitutes personal service
income as defined in 
        Section 1348 (b) (1) of the Internal Revenue Code (as

        in effect December 31, 1981) or a reasonable allowance 
        for compensation
paid or accrued for services rendered 
        by partners to the partnership,
whichever is greater; 
        this subparagraph (H) is exempt from the provisions of 
        Section 250;
            (I) An amount equal to all amounts of income 
        distributable to an entity
subject to the Personal 
        Property Tax Replacement Income Tax imposed by

        subsections (c) and (d) of Section 201 of this Act 
        including amounts
distributable to organizations 
        exempt from federal income tax by reason of
Section 
        501(a) of the Internal Revenue Code; this subparagraph 
        (I) is exempt from the provisions of Section 250;
            (J) With the exception of any amounts subtracted 
        under subparagraph
(G),
an amount equal to the sum of 
        all amounts disallowed as deductions
by (i) Sections 
        171(a) (2), and 265(2) of the Internal Revenue Code of 
        1954,
as now or hereafter amended, and all amounts of 
        expenses allocable to
interest and disallowed as 
        deductions by Section 265(1) of the Internal
Revenue 
        Code, as now or hereafter amended;
and (ii) for taxable 
        years
ending on or after August 13, 1999, Sections

        171(a)(2), 265,
280C, and 832(b)(5)(B)(i) of the 
        Internal Revenue Code, plus, (iii) for taxable years 
        ending on or after December 31, 2011, Section 45G(e)(3) 
        of the Internal Revenue Code and, for taxable years 
        ending on or after December 31, 2008, any amount 
        included in gross income under Section 87 of the 
        Internal Revenue Code; the provisions of this

        subparagraph are exempt from the provisions of Section 
        250;
            (K) An amount equal to those dividends included in 
        such total which were
paid by a corporation which 
        conducts business operations in an Enterprise
Zone or 
        zones created under the Illinois Enterprise Zone Act, 
        enacted by
the 82nd General Assembly, or a River Edge 
        Redevelopment Zone or zones created under the River 
        Edge Redevelopment Zone Act and
conducts substantially 
        all of its operations
in an Enterprise Zone or Zones or 
        from a River Edge Redevelopment Zone or zones.  This 
        subparagraph (K) is exempt from the provisions of 
        Section 250;
            (L) An amount equal to any contribution made to a 
        job training project
established pursuant to the Real 
        Property Tax Increment Allocation
Redevelopment Act;
            (M) An amount equal to those dividends included in 
        such total
that were paid by a corporation that 
        conducts business operations in a
federally designated 
        Foreign Trade Zone or Sub-Zone and that is designated a

        High Impact Business located in Illinois; provided 
        that dividends eligible
for the deduction provided in 
        subparagraph (K) of paragraph (2) of this
subsection 
        shall not be eligible for the deduction provided under 
        this
subparagraph (M);
            (N) An amount equal to the amount of the deduction 
        used to compute the
federal income tax credit for 
        restoration of substantial amounts held under
claim of 
        right for the taxable year pursuant to Section 1341 of 
        the
Internal Revenue Code of 1986;
            (O) For taxable years 2001 and thereafter, for the 
        taxable year in
which the bonus depreciation deduction

        is taken on the taxpayer's federal income tax return 
        under
subsection (k) of Section 168 of the Internal 
        Revenue Code and for each
applicable taxable year 
        thereafter, an amount equal to "x", where:
                (1) "y" equals the amount of the depreciation 
            deduction taken for the
taxable year
on the 
            taxpayer's federal income tax return on property 
            for which the bonus
depreciation deduction
was 
            taken in any year under subsection (k) of Section 
            168 of the Internal
Revenue Code, but not including 
            the bonus depreciation deduction;
                (2) for taxable years ending on or before 
            December 31, 2005, "x" equals "y" multiplied by 30 
            and then divided by 70 (or "y"
multiplied by 
            0.429); and
                (3) for taxable years ending after December 
            31, 2005:
                    (i) for property on which a bonus 
                depreciation deduction of 30% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                30 and then divided by 70 (or "y"
multiplied by 
                0.429); and
                    (ii) for property on which a bonus 
                depreciation deduction of 50% of the adjusted 
                basis was taken, "x" equals "y" multiplied by 
                1.0.
            The aggregate amount deducted under this 
        subparagraph in all taxable
years for any one piece of 
        property may not exceed the amount of the bonus

        depreciation deduction
taken on that property on the 
        taxpayer's federal income tax return under
subsection 
        (k) of Section 168 of the Internal Revenue Code. This 
        subparagraph (O) is exempt from the provisions of 
        Section 250;
            (P) If the taxpayer sells, transfers, abandons, or 
        otherwise disposes of

property for which the taxpayer 
        was required in any taxable year to make an
addition 
        modification under subparagraph (D-5), then an amount 
        equal to that
addition modification.
            If the taxpayer continues to own property through 
        the last day of the last tax year for which the 
        taxpayer may claim a depreciation deduction for 
        federal income tax purposes and for which the taxpayer 
        was required in any taxable year to make an addition 
        modification under subparagraph (D-5), then an amount 
        equal to that addition modification.

            The taxpayer is allowed to take the deduction under 
        this subparagraph
only once with respect to any one 
        piece of property.
            This subparagraph (P) is exempt from the 
        provisions of Section 250;
            (Q) The amount of (i) any interest income (net of 
        the deductions allocable thereto) taken into account 
        for the taxable year with respect to a transaction with 
        a taxpayer that is required to make an addition 
        modification with respect to such transaction under 
        Section 203(a)(2)(D-17), 203(b)(2)(E-12), 
        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed 
        the amount of such addition modification and

(ii) any 
        income from intangible property (net of the deductions 
        allocable thereto) taken into account for the taxable 
        year with respect to a transaction with a taxpayer that 
        is required to make an addition modification with 
        respect to such transaction under Section 
        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or 
        203(d)(2)(D-8), but not to exceed the amount of such 
        addition modification. This subparagraph (Q) is exempt 
        from Section 250;

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

            (T)  For taxable years ending on or after December 
        31, 2011, in the case of a taxpayer who was required to 
        add back any insurance premiums under Section 
        203(d)(2)(D-9), such taxpayer may elect to subtract 
        that part of a reimbursement received from the 
        insurance company equal to the amount of the expense or 
        loss (including expenses incurred by the insurance 
        company) that would have been taken into account as a 
        deduction for federal income tax purposes if the 
        expense or loss had been uninsured. If a taxpayer makes 
        the election provided for by this subparagraph (T), the 
        insurer to which the premiums were paid must add back 
        to income the amount subtracted by the taxpayer 
        pursuant to this subparagraph (T).  This subparagraph 
        (T) is exempt from the provisions of Section 250. 
 
    (e) Gross income; adjusted gross income; taxable income.
        (1) In general.  Subject to the provisions of paragraph 
    (2) and
subsection (b) (3), for purposes of this Section 
    and Section 803(e), a
taxpayer's gross income, adjusted 
    gross income, or taxable income for
the taxable year shall 
    mean the amount of gross income, adjusted gross
income or 
    taxable income properly reportable for federal income tax

    purposes for the taxable year under the provisions of the 
    Internal
Revenue Code. Taxable income may be less than 
    zero. However, for taxable
years ending on or after 
    December 31, 1986, net operating loss
carryforwards from 
    taxable years ending prior to December 31, 1986, may not

    exceed the sum of federal taxable income for the taxable 
    year before net
operating loss deduction, plus the excess 
    of addition modifications over
subtraction modifications 
    for the taxable year.  For taxable years ending
prior to 
    December 31, 1986, taxable income may never be an amount in 
    excess
of the net operating loss for the taxable year as 
    defined in subsections
(c) and (d) of Section 172 of the 
    Internal Revenue Code, provided that when
taxable income of 
    a corporation (other than a Subchapter S corporation),

    trust, or estate is less than zero and addition 
    modifications, other than
those provided by subparagraph 
    (E) of paragraph (2) of subsection (b) for
corporations or 
    subparagraph (E) of paragraph (2) of subsection (c) for

    trusts and estates, exceed subtraction modifications, an 
    addition
modification must be made under those 
    subparagraphs for any other taxable
year to which the 
    taxable income less than zero (net operating loss) is

    applied under Section 172 of the Internal Revenue Code or 
    under
subparagraph (E) of paragraph (2) of this subsection 
    (e) applied in
conjunction with Section 172 of the Internal 
    Revenue Code.
        (2) Special rule.  For purposes of paragraph (1) of this 
    subsection,
the taxable income properly reportable for 
    federal income tax purposes
shall mean:
            (A) Certain life insurance companies.  In the case 
        of a life
insurance company subject to the tax imposed 
        by Section 801 of the
Internal Revenue Code, life 
        insurance company taxable income, plus the
amount of 
        distribution from pre-1984 policyholder surplus 
        accounts as
calculated under Section 815a of the 
        Internal Revenue Code;
            (B) Certain other insurance companies.  In the case 
        of mutual
insurance companies subject to the tax 
        imposed by Section 831 of the
Internal Revenue Code, 
        insurance company taxable income;
            (C) Regulated investment companies.  In the case of 
        a regulated
investment company subject to the tax 
        imposed by Section 852 of the
Internal Revenue Code, 
        investment company taxable income;
            (D) Real estate investment trusts.  In the case of a 
        real estate
investment trust subject to the tax imposed 
        by Section 857 of the
Internal Revenue Code, real 
        estate investment trust taxable income;
            (E) Consolidated corporations.  In the case of a 
        corporation which
is a member of an affiliated group of 
        corporations filing a consolidated
income tax return 
        for the taxable year for federal income tax purposes,

        taxable income determined as if such corporation had 
        filed a separate
return for federal income tax purposes 
        for the taxable year and each
preceding taxable year 
        for which it was a member of an affiliated group.
For 
        purposes of this subparagraph, the taxpayer's separate 
        taxable
income shall be determined as if the election 
        provided by Section
243(b) (2) of the Internal Revenue 
        Code had been in effect for all such years;
            (F) Cooperatives.  In the case of a cooperative 
        corporation or
association, the taxable income of such 
        organization determined in
accordance with the 
        provisions of Section 1381 through 1388 of the
Internal 
        Revenue Code, but without regard to the prohibition 
        against offsetting losses from patronage activities 
        against income from nonpatronage activities; except 
        that a cooperative corporation or association may make 
        an election to follow its federal income tax treatment 
        of patronage losses and  nonpatronage losses.  In the 
        event such election is made, such losses shall be 
        computed and carried over in a manner consistent with 
        subsection (a) of Section 207 of this Act and 
        apportioned by the apportionment factor reported by 
        the cooperative on its Illinois income tax return filed 
        for the taxable year in which the losses are incurred.  
        The election shall be effective for all taxable years 
        with original returns due on or after the date of the 
        election.  In addition, the cooperative may file an 
        amended return or returns, as allowed under this Act, 
        to provide that the election shall be effective for 
        losses incurred or carried forward for taxable years 
        occurring prior to the date of the election.  Once made, 
        the election may only be revoked upon approval of the 
        Director.  The Department shall adopt rules setting 
        forth requirements for documenting the elections and 
        any resulting Illinois net loss and the standards to be 
        used by the Director in evaluating requests to revoke 
        elections.  Public Act 96-932 This amendatory Act of the 
        96th General Assembly  is declaratory of existing law; 
            (G) Subchapter S corporations.  In the case of: (i) 
        a Subchapter S
corporation for which there is in effect 
        an election for the taxable year
under Section 1362 of 
        the Internal Revenue Code, the taxable income of such

        corporation determined in accordance with Section 
        1363(b) of the Internal
Revenue Code, except that 
        taxable income shall take into
account those items 
        which are required by Section 1363(b)(1) of the

        Internal Revenue Code to be separately stated; and (ii) 
        a Subchapter
S corporation for which there is in effect 
        a federal election to opt out of
the provisions of the 
        Subchapter S Revision Act of 1982 and have applied

        instead the prior federal Subchapter S rules as in 
        effect on July 1, 1982,
the taxable income of such 
        corporation determined in accordance with the
federal 
        Subchapter S rules as in effect on July 1, 1982; and
            (H) Partnerships.  In the case of a partnership, 
        taxable income
determined in accordance with Section 
        703 of the Internal Revenue Code,
except that taxable 
        income shall take into account those items which are

        required by Section 703(a)(1) to be separately stated 
        but which would be
taken into account by an individual 
        in calculating his taxable income.
        (3) Recapture of business expenses on disposition of 
    asset or business. Notwithstanding any other law to the 
    contrary, if in prior years income from an asset or 
    business has been classified as business income and in a 
    later year is demonstrated to be non-business income, then 
    all expenses, without limitation, deducted in such later 
    year and in the 2 immediately preceding taxable years 
    related to that asset or business that generated the 
    non-business income shall be added back and recaptured as 
    business income in the year of the disposition of the asset 
    or business. Such amount shall be apportioned to Illinois 
    using the greater of the apportionment fraction computed 
    for the business under Section 304 of this Act for the 
    taxable year or the average of the apportionment fractions 
    computed for the business under Section 304 of this Act for 
    the taxable year and for the 2 immediately preceding 
    taxable years.

 
    (f) Valuation limitation amount.
        (1) In general.  The valuation limitation amount 
    referred to in
subsections (a) (2) (G), (c) (2) (I) and 
    (d)(2) (E) is an amount equal to:
            (A) The sum of the pre-August 1, 1969 appreciation 
        amounts (to the
extent consisting of gain reportable 
        under the provisions of Section
1245 or 1250 of the 
        Internal Revenue Code) for all property in respect
of 
        which such gain was reported for the taxable year; plus
            (B) The lesser of (i) the sum of the pre-August 1, 
        1969 appreciation
amounts (to the extent consisting of 
        capital gain) for all property in
respect of which such 
        gain was reported for federal income tax purposes
for 
        the taxable year, or (ii) the net capital gain for the 
        taxable year,
reduced in either case by any amount of 
        such gain included in the amount
determined under 
        subsection (a) (2) (F) or (c) (2) (H).
        (2) Pre-August 1, 1969 appreciation amount.
            (A) If the fair market value of property referred 
        to in paragraph
(1) was readily ascertainable on August 
        1, 1969, the pre-August 1, 1969
appreciation amount for 
        such property is the lesser of (i) the excess of
such 
        fair market value over the taxpayer's basis (for 
        determining gain)
for such property on that date 
        (determined under the Internal Revenue
Code as in 
        effect on that date), or (ii) the total gain realized 
        and
reportable for federal income tax purposes in 
        respect of the sale,
exchange or other disposition of 
        such property.
            (B) If the fair market value of property referred 
        to in paragraph
(1) was not readily ascertainable on 
        August 1, 1969, the pre-August 1,
1969 appreciation 
        amount for such property is that amount which bears
the 
        same ratio to the total gain reported in respect of the 
        property for
federal income tax purposes for the 
        taxable year, as the number of full
calendar months in 
        that part of the taxpayer's holding period for the

        property ending July 31, 1969 bears to the number of 
        full calendar
months in the taxpayer's entire holding 
        period for the
property.
            (C) The Department shall prescribe such 
        regulations as may be
necessary to carry out the 
        purposes of this paragraph.
 
    (g) Double deductions.  Unless specifically provided 
otherwise, nothing
in this Section shall permit the same item 
to be deducted more than once.
 
    (h) Legislative intention.  Except as expressly provided by 
this
Section there shall be no modifications or limitations on 
the amounts
of income, gain, loss or deduction taken into 
account in determining
gross income, adjusted gross income or 
taxable income for federal income
tax purposes for the taxable 
year, or in the amount of such items
entering into the 
computation of base income and net income under this
Act for 
such taxable year, whether in respect of property values as of

August 1, 1969 or otherwise.
(Source: P.A. 95-23, eff. 8-3-07; 95-233, eff. 8-16-07; 95-286, 
eff. 8-20-07; 95-331, eff. 8-21-07; 95-707, eff. 1-11-08; 
95-876, eff. 8-21-08; 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 
96-198, eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 
8-14-09; 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, 
eff. 6-21-10; 96-1214, eff. 7-22-10; revised 9-16-10.)
 



    (35 ILCS 5/204)  (from Ch. 120, par. 2-204)


    Sec. 204. Standard Exemption. 

    (a) Allowance of exemption. In computing net income under 
this Act, there
shall be allowed as an exemption the sum of the 
amounts determined under
subsections (b), (c) and (d), 
multiplied by a fraction the numerator of which
is the amount 
of the taxpayer's base income allocable to this State for the

taxable year and the denominator of which is the taxpayer's 
total base income
for the taxable year.

    (b) Basic amount. For the purpose of subsection (a) of this 
Section,
except as provided by subsection (a) of Section 205 
and in this
subsection, each taxpayer shall be allowed a basic 
amount of $1000, except
that for corporations the basic amount 
shall be zero for tax years ending on
or
after December 31, 
2003, and for individuals the basic amount shall be:


        (1) for taxable years ending on or after December 31, 
    1998 and prior to
December 31, 1999, $1,300;


        (2) for taxable years ending on or after December 31, 
    1999 and prior to
December 31, 2000, $1,650;


        (3) for taxable years ending on or after December 31, 
    2000, $2,000.

For taxable years ending on or after December 31, 1992, a 
taxpayer whose
Illinois base income exceeds the basic amount 
and who is claimed as a dependent
on another person's tax 
return under the Internal Revenue Code of 1986 shall
not be 
allowed any basic amount under this subsection.

    (c) Additional amount for individuals. In the case of an 
individual
taxpayer, there shall be allowed for the purpose of 
subsection (a), in
addition to the basic amount provided by 
subsection (b), an additional
exemption equal to the basic 
amount for each
exemption in excess of one
allowable to such 
individual taxpayer for the taxable year under Section
151 of 
the Internal Revenue Code.

    (d) Additional exemptions for an individual taxpayer and 
his or her
spouse.  In the case of an individual taxpayer and 
his or her spouse, he or
she shall each be allowed additional 
exemptions as follows:


        (1) Additional exemption for taxpayer or spouse 65 
    years of age or older.


            (A) For taxpayer.  An additional exemption of 
        $1,000 for the taxpayer if
he or she has attained the 
        age of 65 before the end of the taxable year.


            (B) For spouse when a joint return is not filed.  An 
        additional
exemption of $1,000 for the spouse of the 
        taxpayer if a joint return is not
made by the taxpayer 
        and his spouse, and if the spouse has attained the age

        of 65 before the end of such taxable year, and, for the 
        calendar year in
which the taxable year of the taxpayer 
        begins, has no gross income and is
not the dependent of 
        another taxpayer.


        (2) Additional exemption for blindness of taxpayer or 
    spouse.


            (A) For taxpayer.  An additional exemption of 
        $1,000 for the taxpayer if
he or she is blind at the 
        end of the taxable year.


            (B) For spouse when a joint return is not filed.  An 
        additional
exemption of $1,000 for the spouse of the 
        taxpayer if a separate return is made
by the taxpayer, 
        and if the spouse is blind and, for the calendar year 
        in which
the taxable year of the taxpayer begins, has 
        no gross income and is not the
dependent of another 
        taxpayer. For purposes of this paragraph, the

        determination of whether the spouse is blind shall be 
        made as of the end of the
taxable year of the taxpayer; 
        except that if the spouse dies during such
taxable year 
        such determination shall be made as of the time of such 
        death.


            (C) Blindness defined.  For purposes of this 
        subsection, an individual
is blind only if his or her 
        central visual acuity does not exceed 20/200 in
the 
        better eye with correcting lenses, or if his or her 
        visual acuity is
greater than 20/200 but is accompanied 
        by a limitation in the fields of
vision such that the 
        widest diameter of the visual fields subtends an angle

        no greater than 20 degrees.

    (e) Cross reference. See Article 3 for the manner of 
determining
base income allocable to this State.

    (f) Application of Section 250.  Section 250 does not apply 
to the
amendments to this Section made by Public Act 90-613.

(Source: P.A. 93-29, eff. 6-20-03.)

 



    (35 ILCS 5/205)  (from Ch. 120, par. 2-205)


    Sec. 205. Exempt organizations. 

    (a) Charitable, etc. organizations. The base income of an

organization which is exempt from the federal income tax by 
reason of
Section 501(a) of the Internal Revenue Code shall not 
be determined
under section 203 of this Act, but shall be its 
unrelated business
taxable income as determined under section 
512 of the Internal Revenue
Code, without any deduction for the 
tax imposed by this Act. The
standard exemption provided by 
section 204 of this Act shall not be
allowed in determining the 
net income of an organization to which this
subsection applies.

    (b) Partnerships.  A partnership as such shall not be 
subject to
the tax imposed by subsection 201 (a) and (b) of 
this Act, but shall be
subject to the replacement tax imposed 
by subsection 201 (c) and (d) of
this Act and shall compute its 
base income as described in subsection (d)
of Section 203 of 
this Act.  For taxable years ending on or after December 31, 
2004, an investment partnership, as defined in Section 
1501(a)(11.5) of this Act, shall not be subject to the tax 
imposed by subsections (c) and (d) of Section 201 of this Act.

A partnership shall file such returns and other
information at 
such
time and in such manner as may be required under Article 5 
of this Act.
The partners in a partnership shall be liable for 
the replacement tax imposed
by subsection 201 (c) and (d) of 
this Act on such partnership, to the extent
such tax is not 
paid by the partnership, as provided under the laws of Illinois

governing the liability of partners for the obligations of a 
partnership.
Persons carrying on business as partners shall be 
liable for the tax
imposed by subsection 201 (a) and (b) of 
this Act only in their separate
or individual capacities.

    (c) Subchapter S corporations. A Subchapter S corporation 
shall not
be subject to the tax imposed by subsection 201 (a) 
and
(b) of this Act but shall be subject to the replacement tax 
imposed by subsection
201 (c) and (d) of this Act and shall 
file such returns
and other information
at such time and in 
such manner as may be required under Article 5 of this Act. 

    (d) Combat zone, terrorist attack, and certain other deaths 
death. An individual relieved from the federal
income tax for 
any taxable year by reason of section 692 of the Internal

Revenue Code shall not be subject to the tax imposed by this 
Act for
such taxable year.

    (e) Certain trusts. A common trust fund described in 
Section 584
of the Internal Revenue Code, and any other trust 
to the extent that the
grantor is treated as the owner thereof 
under sections 671 through 678
of the Internal Revenue Code 
shall not be subject to the tax imposed by
this Act.

    (f) Certain business activities. A person not otherwise 
subject to the tax
imposed by this Act shall not become subject 
to the tax imposed by this Act by
reason of:


        (1) that person's ownership of tangible personal 
    property located at the
premises of
a printer in this State 
    with which the person has contracted for printing, or


        (2) activities of the person's employees or agents 
    located solely at the
premises of a printer and related to 
    quality control, distribution, or printing
services 
    performed by a printer in the State with which the person 
    has
contracted for printing.

    (g) A nonprofit risk organization that holds a certificate 
of authority under Article VIID of the Illinois Insurance Code 
is exempt from the tax imposed under this Act with respect to 
its activities or operations in furtherance of the powers 
conferred upon it under that Article VIID of the Illinois 
Insurance Code.

(Source: P.A. 95-233, eff. 8-16-07; 95-331, eff. 8-21-07.)

 



    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)



    Sec. 207. Net Losses. 

    (a) If after applying all of the (i) modifications
provided 
for in paragraph (2) of Section 203(b), paragraph (2) of 
Section
203(c) and paragraph (2) of Section 203(d) and (ii) the 
allocation and
apportionment provisions of Article 3 of this

Act and subsection (c) of this Section, the taxpayer's net 
income results in a loss;


        (1) for any taxable year ending prior to December 31, 
    1999, such loss
shall be allowed
as a carryover or 
    carryback deduction in the manner allowed under Section
172 
    of the Internal Revenue Code;


        (2) for any taxable year ending on or after December 
    31, 1999 and prior
to December 31, 2003, such loss
shall be 
    allowed as a carryback to each of the 2 taxable years 
    preceding the
taxable year of such loss and shall be a net 
    operating loss carryover to each of the
20 taxable years 
    following the taxable year of such loss; and


        (3) for any taxable year ending on or after December 
    31, 2003, such loss
shall be allowed as a net operating 
    loss carryover to each of the 12 taxable years
following 
    the taxable year of such loss, except as provided in 
    subsection (d).

    (a-5) Election to relinquish carryback and order of 
application of
losses.


            (A) For losses incurred in tax years ending prior 
        to December 31,
2003, the taxpayer may elect to 
        relinquish the entire carryback period
with respect to 
        such loss.  Such election shall be made in the form and 
        manner
prescribed by the Department and shall be made 
        by the due date (including
extensions of time) for 
        filing the taxpayer's return for the taxable year in

        which such loss is incurred, and such election, once 
        made, shall be
irrevocable.


            (B) The entire amount of such loss shall be carried 
        to the earliest
taxable year to which such loss may be 
        carried.  The amount of such loss which
shall be carried 
        to each of the other taxable years shall be the excess, 
        if
any, of the amount of such loss over the sum of the 
        deductions for carryback or
carryover of such loss 
        allowable for each of the prior taxable years to which

        such loss may be carried.

    (b) Any loss determined under subsection (a) of this 
Section must be carried
back or carried forward in the same 
manner for purposes of subsections (a)
and (b) of Section 201 
of this Act as for purposes of subsections (c) and
(d) of 
Section 201 of this Act.

    (c) Notwithstanding any other provision of this Act, for 
each taxable year ending on or after December 31, 2008, for 
purposes of computing the loss for the taxable year under 
subsection (a) of this Section and the deduction taken into 
account for the taxable year for a net operating loss carryover 
under paragraphs (1), (2), and (3) of subsection (a) of this 
Section, the loss and net operating loss carryover shall be 
reduced in an amount equal to the reduction to the net 
operating loss and net operating loss carryover to the taxable 
year, respectively, required under Section 108(b)(2)(A) of the 
Internal Revenue Code, multiplied by a fraction, the numerator 
of which is the amount of discharge of indebtedness income that 
is excluded from gross income for the taxable year (but only if 
the taxable year ends on or after December 31, 2008) under 
Section 108(a) of the Internal Revenue Code and that would have 
been allocated and apportioned to this State under Article 3 of 
this Act but for that exclusion, and the denominator of which 
is the total amount of discharge of indebtedness income 
excluded from gross income under Section 108(a) of the Internal 
Revenue Code for the taxable year. The reduction required under 
this subsection (c) shall be made after the determination of 
Illinois net income for the taxable year in which the 
indebtedness is discharged.

    (d) In the case of a corporation (other than a Subchapter S 
corporation), no carryover deduction shall be allowed under 
this Section for any taxable year ending after December 31, 
2010 and prior to December 31, 2014; provided that, for 
purposes of determining the taxable years to which a net loss 
may be carried under subsection (a) of this Section, no taxable 
year for which a deduction is disallowed under this subsection 
shall be counted. 
    (e)  In the case of a residual interest holder in a real 
estate mortgage investment conduit subject to Section 860E of 
the Internal Revenue Code, the net loss in subsection (a) shall 
be equal to: 
        (1)  the amount computed under subsection (a), without 
    regard to this subsection (e), or if that amount is 
    positive, zero; 
        (2) minus an amount equal to the amount computed under 
    subsection (a), without regard to this subsection (e), 
    minus the amount that would be computed under subsection 
    (a) if the taxpayer's federal taxable income were computed 
    without regard to Section 860E of the Internal Revenue Code 
    and without regard to this subsection (e). 
    The modification in this subsection (e) is exempt from the 
provisions of Section 250. 
(Source: P.A. 95-233, eff. 8-16-07; 96-1496, eff. 1-13-11.)

 



    (35 ILCS 5/214)



    Sec. 214. Tax credit for affordable housing donations. 

    (a) Beginning with taxable years ending on or after 
December 31, 2001 and
until the taxable year ending on December 
31, 2016, a taxpayer who makes a
donation under Section 7.28 of 
the Illinois Housing Development Act is entitled to a credit

against the tax imposed by subsections (a) and (b) of Section 
201 in an amount
equal
to 50% of the value of the donation. 
Partners, shareholders of subchapter S
corporations, and 
owners of limited liability companies (if the limited
liability 
company is treated as a partnership for purposes of federal and 
State
income
taxation) are entitled to a credit under this 
Section to be determined in
accordance with the determination 
of income and distributive share of income
under Sections 702 
and 703 and subchapter S of the Internal Revenue Code.
Persons 
or entities not subject to the tax imposed by subsections (a) 
and (b)
of Section 201 and who make a donation under Section 
7.28 of the Illinois
Housing Development Act are entitled to a 
credit as described in this
subsection and may transfer that 
credit as described in subsection (c).

    (b) If the amount of the credit exceeds the tax liability 
for the year, the
excess may be carried forward and applied to 
the tax liability of the 5 taxable
years following the excess 
credit year.  The tax credit shall be applied to the
earliest 
year for which there is a tax liability.  If there are credits 
for
more than one year that are available to offset a 
liability, the earlier credit
shall be applied first.

    (c) The transfer of the tax credit allowed under this 
Section may be made
(i) to the purchaser of land that has been 
designated solely for affordable
housing projects in 
accordance with the Illinois Housing Development Act or
(ii) to 
another donor who has also made a donation in accordance with 
Section 7.28 of the
Illinois Housing
Development Act.

    (d) A taxpayer claiming the credit provided by this Section 
must maintain
and record any information that the Department 
may require by regulation
regarding the project for which the 
credit is claimed.
When
claiming the credit provided by this 
Section, the taxpayer must provide
information regarding the 
taxpayer's donation to the project under the Illinois Housing 
Development Act.

(Source: P.A. 96-1276, eff. 7-26-10.)

 
    (35 ILCS 5/220)
    Sec. 220. Angel investment credit.
    (a)  As used in this Section: 
    "Applicant" means a corporation, partnership, limited 
liability company, or a natural person that makes an investment 
in a qualified new business venture.  The term "applicant" does 
not include a corporation, partnership, limited liability 
company, or a natural person who has a direct or indirect 
ownership interest of at least 51% in the profits, capital, or 
value of the investment or a related member. 
    "Claimant" means an a applicant certified by the Department 
who files a claim for a credit under this Section. 
    "Department" means the Department of Commerce and Economic 
Opportunity. 
    "Qualified new business venture" means a business that is 
registered with the Department under this Section. 
    "Related member" means a person that, with respect to the

investment, is any one of the following: 
        (1)  An individual, if the individual and the members of 
    the individual's family (as defined in Section 318 of the 
    Internal Revenue Code) own directly, indirectly,

    beneficially, or constructively, in the aggregate, at 
    least 50% of the value of the outstanding profits, capital, 
    stock, or other ownership interest in the applicant. 
        (2)  A partnership, estate, or trust and any partner or 
    beneficiary, if the partnership, estate, or trust and its 
    partners or beneficiaries own directly, indirectly, 
    beneficially, or constructively, in the aggregate, at 
    least 50% of the profits, capital, stock, or other 
    ownership interest in the applicant. 
        (3)  A corporation, and any party related to the 
    corporation in a manner that would require an attribution 
    of stock from the corporation under the attribution rules

    of Section 318 of the Internal Revenue Code, if the 
    applicant and any other related member own, in the 
    aggregate, directly, indirectly, beneficially, or 
    constructively, at least 50% of the value of the 
    corporation's outstanding stock. 
        (4) A corporation and any party related to that 
    corporation in a manner that would require an attribution 
    of stock from the corporation to the party or from the

    party to the corporation under the attribution rules of 
    Section 318 of the Internal Revenue Code, if the 
    corporation and all such related parties own, in the 
    aggregate, at least 50% of the profits, capital, stock, or 
    other ownership interest in the applicant. 
        (5)  A person to or from whom there is attribution of 
    stock ownership in accordance with Section 1563(e) of the 
    Internal Revenue Code, except that for purposes of 
    determining whether a person is a related member under this 
    paragraph, "20%" shall be substituted for "5%" whenever 
    "5%" appears in Section 1563(e) of the Internal Revenue 
    Code. 
    (b) For taxable years beginning after December 31, 2010, 
and ending on or before December 31, 2016,  subject to the 
limitations provided in this Section, a claimant  may claim, as 
a credit against the tax imposed under subsections (a) and (b) 
of Section 201 of this Act, an amount equal to 25% of the 
claimant's investment made directly in a qualified new business 
venture. The credit under this Section may not exceed the 
taxpayer's Illinois income tax liability for the taxable year. 
If the amount of the credit exceeds the tax liability for the 
year, the excess may be carried forward and applied to the tax 
liability of the 5 taxable years following the excess credit 
year. The credit shall be applied to the earliest year for 
which there is a tax liability. If there are credits from more 
than one tax year that are available to offset a liability, the 
earlier credit shall be applied first. In the case of a 
partnership or Subchapter S Corporation, the credit is allowed 
to the partners or shareholders in accordance with the 
determination of income and distributive share of income under 
Sections 702 and 704 and Subchapter S of the Internal Revenue 
Code. 
    (c) The maximum amount of an  applicant's investment that 
may be used as the basis for a credit under this Section is 
$2,000,000 for each investment made directly in a qualified new 
business venture. 
    (d) The Department shall implement a program to certify an 
applicant for an angel investment credit.  Upon satisfactory 
review, the Department shall issue a tax credit certificate 
stating the amount of the tax credit to which the applicant is 
entitled.  The Department shall annually certify that the 
claimant's investment has been made and remains in the 
qualified new business venture for no less than 3 years. If an 
investment  for which a claimant is allowed a credit under 
subsection (b) is held  by the claimant for less than 3 years, 
or, if within that period of time the qualified new business 
venture is moved from the State of Illinois, the claimant  shall 
pay to  the Department of Revenue, in the manner prescribed by 
the Department of Revenue, the amount of the credit that the 
claimant received related to  the investment. 
    (e) The Department shall implement a program to register 
qualified new business ventures for purposes of this Section. A 
business desiring registration shall submit an application to 
the Department in each taxable year for which the business 
desires registration. The Department may register the business 
only if the business satisfies all of the following conditions: 
        (1) it has its headquarters in this State; 
        (2) at least 51% of the employees employed by the 
    business are employed in this State; 
        (3) it has the potential for increasing jobs in this 
    State, increasing capital investment in this State, or 
    both, and either of the following apply: 
            (A)  it is principally engaged in innovation in any 
        of the following: manufacturing; biotechnology; 
        nanotechnology; communications; agricultural sciences;  
        clean energy creation or storage technology; 
        processing or assembling products, including medical 
        devices, pharmaceuticals, computer software, computer 
        hardware, semiconductors, other innovative technology 
        products, or other products that are produced using 
        manufacturing methods that are enabled by applying 
        proprietary technology; or providing services that are 
        enabled by applying proprietary technology; or 
            (B) it is undertaking pre-commercialization 
        activity related to proprietary technology that 
        includes conducting research, developing a new product 
        or business process, or developing a service that is 
        principally reliant on applying proprietary 
        technology; 
        (4) it is not  principally engaged in real estate 
    development, insurance, banking, lending, lobbying, 
    political consulting, professional services provided by 
    attorneys, accountants, business consultants, physicians, 
    or health care consultants, wholesale or retail trade, 
    leisure, hospitality, transportation, or construction, 
    except construction of power production plants that derive 
    energy from a renewable energy resource, as defined in 
    Section 1 of the Illinois Power Agency Act; 
        (5) it has fewer than 100 employees; 
        (6) it has been in operation in Illinois for not more 
    than 10 consecutive years prior to the year of 
    certification; and 
        (7) it has received not more than (i) $10,000,000 in 
    aggregate private equity investment in cash or (ii) 
    $4,000,000 in investments that qualified for tax credits 
    under this Section. 
    (f) The Department, in consultation with the Department of 
Revenue, shall adopt rules to administer this Section. The 
aggregate amount of the tax credits that may be claimed under 
this Section for investments made in qualified new business 
ventures shall be limited at $10,000,000 per calendar year. 
    (g) A claimant may not sell or otherwise transfer a credit 
awarded under this Section to another person. 
    (h) On or before March 1 of each year, the Department shall 
report to the Governor and to the General Assembly on the tax 
credit certificates awarded under this Section for the prior 
calendar year. 
        (1) This report must include, for each tax credit 
    certificate awarded: 
            (A) the name of the claimant and the amount of 
        credit awarded or allocated to that claimant; 
            (B) the name and address of the qualified new 
        business venture that received the investment giving 
        rise to the credit and the county in which the 
        qualified new business venture is located; and 
            (C) the date of approval by the Department of the 
        applications for the tax credit certificate. 
        (2) The report must also include: 
            (A) the total number of applicants and amount for 
        tax credit certificates awarded under this Section in 
        the prior calendar year; 
            (B) the total number of applications and amount for 
        which tax credit certificates were issued in the prior 
        calendar year; and 
            (C) the total tax credit certificates and amount 
        authorized under this Section for all calendar years. 

(Source: P.A. 96-939, eff. 1-1-11.)
 



    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)


    Sec. 304. Business income of persons other than residents. 

    (a) In general. The business income of a person other than 
a
resident shall be allocated to this State if such person's 
business
income is derived solely from this State. If a person 
other than a
resident derives business income from this State 
and one or more other
states, then, for tax years ending on or 
before December 30, 1998, and
except as otherwise provided by 
this Section, such
person's business income shall be 
apportioned to this State by
multiplying the income by a 
fraction, the numerator of which is the sum
of the property 
factor (if any), the payroll factor (if any) and 200% of the

sales factor (if any), and the denominator of which is 4 
reduced by the
number of factors other than the sales factor 
which have a denominator
of zero and by an additional 2 if the 
sales factor has a denominator of zero.
For tax years ending on 
or after December 31, 1998, and except as otherwise
provided by 
this Section, persons other than
residents who derive business 
income from this State and one or more other
states shall 
compute their apportionment factor by weighting their 
property,
payroll, and sales factors as provided in
subsection 
(h) of this Section.

    (1) Property factor.


        (A) The property factor is a fraction, the numerator of 
    which is the
average value of the person's real and 
    tangible personal property owned
or rented and used in the 
    trade or business in this State during the
taxable year and 
    the denominator of which is the average value of all
the 
    person's real and tangible personal property owned or 
    rented and
used in the trade or business during the taxable 
    year.


        (B) Property owned by the person is valued at its 
    original cost.
Property rented by the person is valued at 8 
    times the net annual rental
rate. Net annual rental rate is 
    the annual rental rate paid by the
person less any annual 
    rental rate received by the person from
sub-rentals.


        (C) The average value of property shall be determined 
    by averaging
the values at the beginning and ending of the 
    taxable year but the
Director may require the averaging of 
    monthly values during the taxable
year if reasonably 
    required to reflect properly the average value of the

    person's property.

    (2) Payroll factor.


        (A) The payroll factor is a fraction, the numerator of 
    which is the
total amount paid in this State during the 
    taxable year by the person
for compensation, and the 
    denominator of which is the total compensation
paid 
    everywhere during the taxable year.


        (B) Compensation is paid in this State if:


            (i) The individual's service is performed entirely 
        within this
State;


            (ii) The individual's service is performed both 
        within and without
this State, but the service 
        performed without this State is incidental
to the 
        individual's service performed within this State; or


            (iii) Some of the service is performed within this 
        State and either
the base of operations, or if there is 
        no base of operations, the place
from which the service 
        is directed or controlled is within this State,
or the 
        base of operations or the place from which the service 
        is
directed or controlled is not in any state in which 
        some part of the
service is performed, but the 
        individual's residence is in this State.

            (iv) Compensation paid to nonresident professional 
        athletes.
            (a)  General.  The Illinois source income of a 
        nonresident individual who is a member of a 
        professional athletic team includes the portion of the 
        individual's total compensation for services performed 
        as a member of a professional athletic team during the 
        taxable year which the number of duty days spent within 
        this State performing services for the team in any 
        manner during the taxable year bears to the total 
        number of duty days spent both within and without this 
        State during the taxable year.
            (b) Travel days.  Travel days that do not involve 
        either a game, practice, team meeting, or other similar 
        team event are not considered duty days spent in this 
        State.  However, such travel days are considered in the 
        total duty days spent both within and without this 
        State.
            (c) Definitions.  For purposes of this subpart 
        (iv):
                (1) The term "professional athletic team" 
            includes, but is not limited to, any professional 
            baseball, basketball, football, soccer, or hockey 
            team.
                (2) The term "member of a professional 
            athletic team" includes those employees who are 
            active players, players on the disabled list, and 
            any other persons required to travel and who travel 
            with and perform services on behalf of a 
            professional athletic team on a regular basis.  
            This includes, but is not limited to, coaches, 
            managers, and trainers.
                (3) Except as provided in items (C) and (D) of 
            this subpart (3), the term "duty days" means all 
            days during the taxable year from the beginning of 
            the professional athletic team's official 
            pre-season training period through the last game 
            in which the team competes or is scheduled to 
            compete.  Duty days shall be counted for the year in 
            which they occur, including where a team's 
            official pre-season training period through the 
            last game in which the team competes or is 
            scheduled to compete, occurs during more than one 
            tax year.
                    (A) Duty days shall also include days on 
                which a member of a professional athletic team 
                performs service for a team on a date that does 
                not fall within the foregoing period (e.g., 
                participation in instructional leagues, the 
                "All Star Game", or promotional "caravans").  
                Performing a service for a professional 
                athletic team includes conducting training and 
                rehabilitation activities, when such 
                activities are conducted at team facilities.
                    (B) Also included in duty days are game 
                days, practice days, days spent at team 
                meetings, promotional caravans, preseason 
                training camps, and days served with the team 
                through all post-season games in which the team 
                competes or is scheduled to compete.
                    (C) Duty days for any person who joins a 
                team during the period from the beginning of 
                the professional athletic team's official 
                pre-season training period through the last 
                game in which the team competes, or is 
                scheduled to compete, shall begin on the day 
                that person joins the team. Conversely, duty 
                days for any person who leaves a team during 
                this period shall end on the day that person 
                leaves the team. Where a person switches teams 
                during a taxable year, a separate duty-day 
                calculation shall be made for the period the 
                person was with each team.
                    (D) Days for which a member of a 
                professional athletic team is not compensated 
                and is not performing services for the team in 
                any manner, including days when such member of 
                a professional athletic team has been 
                suspended without pay and prohibited from 
                performing any services for the team, shall not 
                be treated as duty days.
                    (E) Days for which a member of a 
                professional athletic team is on the disabled 
                list and does not conduct rehabilitation 
                activities at facilities of the team, and is 
                not otherwise performing services for the team 
                in Illinois, shall not be considered duty days 
                spent in this State. All days on the disabled 
                list, however, are considered to be included in 
                total duty days spent both within and without 
                this State.
                (4) The term "total compensation for services 
            performed as a member of a professional athletic 
            team" means the total compensation received during 
            the taxable year for services performed:
                    (A) from the beginning of the official 
                pre-season training period through the last 
                game in which the team competes or is scheduled 
                to compete during that taxable year; and
                    (B) during the taxable year on a date which 
                does not fall within the foregoing period 
                (e.g., participation in instructional leagues, 
                the "All Star Game", or promotional caravans).
                This compensation shall include, but is not 
            limited to, salaries, wages, bonuses as described 
            in this subpart, and any other type of compensation 
            paid during the taxable year to a member of a 
            professional athletic team for services performed 
            in that year.  This compensation does not include 
            strike benefits, severance pay, termination pay, 
            contract or option year buy-out payments, 
            expansion or relocation payments, or any other 
            payments not related to services performed for the 
            team.
                For purposes of this subparagraph, "bonuses" 
            included in "total compensation for services 
            performed as a member of a professional athletic 
            team" subject to the allocation described in 
            Section 302(c)(1) are: bonuses earned as a result 
            of play (i.e., performance bonuses) during the 
            season, including bonuses paid for championship, 
            playoff or "bowl" games played by a team, or for 
            selection to all-star league or other honorary 
            positions; and bonuses paid for signing a 
            contract, unless the payment of the signing bonus 
            is not conditional upon the signee playing any 
            games for the team or performing any subsequent 
            services for the team or even making the team, the 
            signing bonus is payable separately from the 
            salary and any other compensation, and the signing 
            bonus is nonrefundable.


    (3) Sales factor.


        (A) The sales factor is a fraction, the numerator of 
    which is the
total sales of the person in this State during 
    the taxable year, and the
denominator of which is the total 
    sales of the person everywhere during
the taxable year.


        (B) Sales of tangible personal property are in this 
    State if:


            (i) The property is delivered or shipped to a 
        purchaser, other than
the United States government, 
        within this State regardless of the f. o.
b. point or 
        other conditions of the sale; or


            (ii) The property is shipped from an office, store, 
        warehouse,
factory or other place of storage in this 
        State and either the purchaser
is the United States 
        government or the person is not taxable in the
state of 
        the purchaser; provided, however, that premises owned 
        or leased
by a person who has independently contracted 
        with the seller for the printing
of newspapers, 
        periodicals or books shall not be deemed to be an 
        office,
store, warehouse, factory or other place of 
        storage for purposes of this
Section.
Sales of tangible 
        personal property are not in this State if the
seller 
        and purchaser would be members of the same unitary 
        business group
but for the fact that either the seller 
        or purchaser is a person with 80%
or more of total 
        business activity outside of the United States and the

        property is purchased for resale.


        (B-1) Patents, copyrights, trademarks, and similar 
    items of intangible
personal property.


            (i) Gross receipts from the licensing, sale, or 
        other disposition of a
patent, copyright, trademark, 
        or similar item of intangible personal property, other 
        than gross receipts governed by paragraph (B-7) of this 
        item (3),
are in this State to the extent the item is 
        utilized in this State during the
year the gross 
        receipts are included in gross income.


            (ii) Place of utilization.


                (I) A patent is utilized in a state to the 
            extent that it is employed
in production, 
            fabrication, manufacturing, or other processing in 
            the state or
to the extent that a patented product 
            is produced in the state.  If a patent is
utilized 
            in
more than one state, the extent to which it is 
            utilized in any one state shall
be a fraction equal 
            to the gross receipts of the licensee or purchaser 
            from
sales or leases of items produced, 
            fabricated, manufactured, or processed
within that 
            state using the patent and of patented items 
            produced within that
state, divided by the total of 
            such gross receipts for all states in which the

            patent is utilized.


                (II) A copyright is utilized in a state to the 
            extent that printing or
other publication 
            originates in the state.  If a copyright is utilized 
            in more
than one state, the extent to which it is 
            utilized in any one state shall be a
fraction equal 
            to the gross receipts from sales or licenses of 
            materials
printed or published in that state 
            divided by the total of such gross receipts
for all 
            states in which the copyright is utilized.


                (III) Trademarks and other items of intangible 
            personal property
governed by this paragraph (B-1) 
            are utilized in the state in which the
commercial 
            domicile of the licensee or purchaser is located.


            (iii) If the state of utilization of an item of 
        property governed by
this paragraph (B-1) cannot be 
        determined from the taxpayer's books and
records or 
        from the books and records of any person related to the 
        taxpayer
within the meaning of Section 267(b) of the 
        Internal Revenue Code, 26 U.S.C.
267, the gross

        receipts attributable to that item shall be excluded 
        from both the numerator
and the denominator of the 
        sales factor.


        (B-2) Gross receipts from the license, sale, or other 
    disposition of
patents, copyrights, trademarks, and 
    similar items of intangible personal
property, other than 
    gross receipts governed by paragraph (B-7) of this item 
    (3), may be included in the numerator or denominator of the 
    sales factor
only if gross receipts from licenses, sales, 
    or other disposition of such items
comprise more than 50% 
    of the taxpayer's total gross receipts included in gross

    income during the tax year and during each of the 2 
    immediately preceding tax
years; provided that, when a 
    taxpayer is a member of a unitary business group,
such 
    determination shall be made on the basis of the gross 
    receipts of the
entire unitary business group.

        (B-5) For taxable years ending on or after December 31, 
    2008, except as provided in subsections (ii) through (vii), 
    receipts from the sale of telecommunications service or 
    mobile telecommunications service are in this State if the 
    customer's service address is in this State.
            (i) For purposes of this subparagraph (B-5), the 
        following follow terms have the following meanings:
            "Ancillary services" means services that are 
        associated with or incidental to the provision of 
        "telecommunications services", including but not 
        limited to "detailed telecommunications billing", 
        "directory assistance", "vertical service", and "voice 
        mail services".
            "Air-to-Ground Radiotelephone service" means a 
        radio service, as that term is defined in 47 CFR 22.99, 
        in which common carriers are authorized to offer and 
        provide radio telecommunications service for hire to 
        subscribers in aircraft.
            "Call-by-call Basis" means any method of charging 
        for telecommunications services where the price is 
        measured by individual calls.
            "Communications Channel" means a physical or 
        virtual path of communications over which signals are 
        transmitted between or among customer channel 
        termination points.
            "Conference bridging service" means an "ancillary 
        service" that links two or more participants of an 
        audio or video conference call and may include the 
        provision of a telephone number. "Conference bridging 
        service" does not include the "telecommunications 
        services" used to reach the conference bridge.
            "Customer Channel Termination Point" means the 
        location where the customer either inputs or receives 
        the communications.
            "Detailed telecommunications billing service" 
        means an "ancillary service" of separately stating 
        information pertaining to individual calls on a 
        customer's billing statement.
            "Directory assistance" means an "ancillary 
        service" of providing telephone number information, 
        and/or address information.
            "Home service provider" means the facilities based 
        carrier or reseller with which the customer contracts 
        for the provision of mobile telecommunications 
        services.
            "Mobile telecommunications service" means 
        commercial mobile radio service, as defined in Section 
        20.3 of Title 47 of the Code of Federal Regulations as 
        in effect on June 1, 1999.
            "Place of primary use" means the street address 
        representative of where the customer's use of the 
        telecommunications service primarily occurs, which 
        must be the residential street address or the primary 
        business street address of the customer. In the case of 
        mobile telecommunications services, "place of primary 
        use" must be within the licensed service area of the 
        home service provider.
            "Post-paid telecommunication service" means the 
        telecommunications service obtained by making a 
        payment on a call-by-call basis either through the use 
        of a credit card or payment mechanism such as a bank 
        card, travel card, credit card, or debit card, or by 
        charge made to a telephone number which is not 
        associated with the origination or termination of the 
        telecommunications service. A post-paid calling 
        service includes telecommunications service, except a 
        prepaid wireless calling service, that would be a 
        prepaid calling service except it is not exclusively a 
        telecommunication service.
            "Prepaid telecommunication service" means the 
        right to access exclusively telecommunications 
        services, which must be paid for in advance and which 
        enables the origination of calls using an access number 
        or authorization code, whether manually or 
        electronically dialed, and that is sold in 
        predetermined units or dollars of which the number 
        declines with use in a known amount.
            "Prepaid Mobile telecommunication service" means a 
        telecommunications service that provides the right to 
        utilize mobile wireless service as well as other 
        non-telecommunication services, including but not 
        limited to ancillary services, which must be paid for 
        in advance that is sold in predetermined units or 
        dollars of which the number declines with use in a 
        known amount.
            "Private communication service" means a 
        telecommunication service that entitles the customer 
        to exclusive or priority use of a communications 
        channel or group of channels between or among 
        termination points, regardless of the manner in which 
        such channel or channels are connected, and includes 
        switching capacity, extension lines, stations, and any 
        other associated services that are provided in 
        connection with the use of such channel or channels.
            "Service address" means:
                (a) The location of the telecommunications 
            equipment to which a customer's call is charged and 
            from which the call originates or terminates, 
            regardless of where the call is billed or paid;
                (b) If the location in line (a) is not known, 
            service address means the origination point of the 
            signal of the telecommunications services first 
            identified by either the seller's 
            telecommunications system or in information 
            received by the seller from its service provider 
            where the system used to transport such signals is 
            not that of the seller; and
                (c) If the locations in line (a) and line (b) 
            are not known, the service address means the 
            location of the customer's place of primary use.
            "Telecommunications service" means the electronic 
        transmission, conveyance, or routing of voice, data, 
        audio, video, or any other information or signals to a 
        point, or between or among points. The term 
        "telecommunications service" includes such 
        transmission, conveyance, or routing in which computer 
        processing applications are used to act on the form, 
        code or protocol of the content for purposes of 
        transmission, conveyance or routing without regard to 
        whether such service is referred to as voice over 
        Internet protocol services or is classified by the 
        Federal Communications Commission as enhanced or value 
        added. "Telecommunications service" does not include:
                (a) Data processing and information services 
            that allow data to be generated, acquired, stored, 
            processed, or retrieved and delivered by an 
            electronic transmission to a purchaser when such 
            purchaser's primary purpose for the underlying 
            transaction is the processed data or information;
                (b) Installation or maintenance of wiring or 
            equipment on a customer's premises;
                (c) Tangible personal property;
                (d) Advertising, including but not limited to 
            directory advertising.
                (e) Billing and collection services provided 
            to third parties;
                (f) Internet access service;
                (g) Radio and television audio and video 
            programming services, regardless of the medium, 
            including the furnishing of transmission, 
            conveyance and routing of such services by the 
            programming service provider. Radio and television 
            audio and video programming services shall include 
            but not be limited to cable service as defined in 
            47 USC 522(6) and audio and video programming 
            services delivered by commercial mobile radio 
            service providers, as defined in 47 CFR 20.3;
                (h) "Ancillary services"; or
                (i) Digital products "delivered 
            electronically", including but not limited to 
            software, music, video, reading materials or ring 
            tones.
            "Vertical service" means an "ancillary service" 
        that is offered in connection with one or more 
        "telecommunications services", which offers advanced 
        calling features that allow customers to identify 
        callers and to manage multiple calls and call 
        connections, including "conference bridging services".
            "Voice mail service" means an "ancillary service" 
        that enables the customer to store, send or receive 
        recorded messages. "Voice mail service" does not 
        include any "vertical services" that the customer may 
        be required to have in order to utilize the "voice mail 
        service".
            (ii) Receipts from the sale of telecommunications 
        service sold on an individual call-by-call basis are in 
        this State if either of the following applies:
                (a) The call both originates and terminates in 
            this State.
                (b) The call either originates or terminates 
            in this State and the service address is located in 
            this State.
            (iii) Receipts from the sale of postpaid 
        telecommunications service at retail are in this State 
        if the origination point of the telecommunication 
        signal, as first identified by the service provider's 
        telecommunication system or as identified by 
        information received by the seller from its service 
        provider if the system used to transport 
        telecommunication signals is not the seller's, is 
        located in this State.
            (iv) Receipts from the sale of prepaid 
        telecommunications service or prepaid mobile 
        telecommunications service at retail are in this State 
        if the purchaser obtains the prepaid card or similar 
        means of conveyance at a location in this State. 
        Receipts from recharging a prepaid telecommunications 
        service or mobile telecommunications service is in 
        this State if the purchaser's billing information 
        indicates a location in this State.
            (v) Receipts from the sale of private 
        communication services are in this State as follows:
                (a) 100% of receipts from charges imposed at 
            each channel termination point in this State.
                (b) 100% of receipts from charges for the total 
            channel mileage between each channel termination 
            point in this State.
                (c) 50% of the total receipts from charges for 
            service segments when those segments are between 2 
            customer channel termination points, 1 of which is 
            located in this State and the other is located 
            outside of this State, which segments are 
            separately charged.
                (d) The receipts from charges for service 
            segments with a channel termination point located 
            in this State and in two or more other states, and 
            which segments are not separately billed, are in 
            this State based on a percentage determined by 
            dividing the number of customer channel 
            termination points in this State by the total 
            number of customer channel termination points.
            (vi) Receipts from charges for ancillary services 
        for telecommunications service sold to customers at 
        retail are in this State if the customer's primary 
        place of use of telecommunications services associated 
        with those ancillary services is in this State. If the 
        seller of those ancillary services cannot determine 
        where the associated telecommunications are located, 
        then the ancillary services shall be based on the 
        location of the purchaser. 
            (vii) Receipts to access a carrier's network or 
        from the sale of telecommunication services or 
        ancillary services for resale are in this State as 
        follows:
                (a) 100% of the receipts from access fees 
            attributable to intrastate telecommunications 
            service that both originates and terminates in 
            this State.
                (b) 50% of the receipts from access fees 
            attributable to interstate telecommunications 
            service if the interstate call either originates 
            or terminates in this State.
                (c) 100% of the receipts from interstate end 
            user access line charges, if the customer's 
            service address is in this State. As used in this 
            subdivision, "interstate end user access line 
            charges" includes, but is not limited to, the 
            surcharge approved by the federal communications 
            commission and levied pursuant to 47 CFR 69.
                (d) Gross receipts from sales of 
            telecommunication services or from ancillary 
            services for telecommunications services sold to 
            other telecommunication service providers for 
            resale shall be sourced to this State using the 
            apportionment concepts used for non-resale 
            receipts of telecommunications services if the 
            information is readily available to make that 
            determination. If the information is not readily 
            available, then the taxpayer may use any other 
            reasonable and consistent method. 
        (B-7) For taxable years ending on or after December 31, 
    2008, receipts from the sale of broadcasting services are 
    in this State if the broadcasting services are received in 
    this State.  For purposes of this paragraph (B-7), the 
    following terms have the following meanings:
            "Advertising revenue" means consideration received 
        by the taxpayer in exchange for broadcasting services 
        or allowing the broadcasting of commercials or 
        announcements in connection with the broadcasting of 
        film or radio programming, from sponsorships of the 
        programming, or from product placements in the 
        programming.
            "Audience factor" means the ratio that the 
        audience or subscribers located in this State of a 
        station, a network, or a cable system bears to the 
        total audience or total subscribers for that station, 
        network, or cable system.  The audience factor for film 
        or radio programming shall be determined by reference 
        to the books and records of the taxpayer or by 
        reference to published rating statistics provided the 
        method used by the taxpayer is consistently used from 
        year to year for this purpose and fairly represents the 
        taxpayer's activity in this State.
            "Broadcast" or "broadcasting" or "broadcasting 
        services" means the transmission or provision of film 
        or radio programming, whether through the public 
        airwaves, by cable, by direct or indirect satellite 
        transmission, or by any other means of communication, 
        either through a station, a network, or a cable system.
            "Film" or "film programming" means the broadcast 
        on television of any and all performances, events, or 
        productions, including but not limited to news, 
        sporting events, plays, stories, or other literary, 
        commercial, educational, or artistic works, either 
        live or through the use of video tape, disc, or any 
        other type of format or medium.  Each episode of a 
        series of films produced for television shall 
        constitute separate "film" notwithstanding that the 
        series relates to the same principal subject and is 
        produced during one or more tax periods.
            "Radio" or "radio programming" means the broadcast 
        on radio of any and all performances, events, or 
        productions, including but not limited to news, 
        sporting events, plays, stories, or other literary, 
        commercial, educational, or artistic works, either 
        live or through the use of an audio tape, disc, or any 
        other format or medium.  Each episode in a series of 
        radio programming produced for radio broadcast shall 
        constitute a separate "radio programming" 
        notwithstanding that the series relates to the same 
        principal subject and is produced during one or more 
        tax periods.
                (i) In the case of advertising revenue from 
            broadcasting, the customer is the advertiser and 
            the service is received in this State if the 
            commercial domicile of the advertiser is in this 
            State.
                (ii) In the case where film or radio 
            programming is broadcast by a station, a network, 
            or a cable system for a fee or other remuneration 
            received from the recipient  of the broadcast, the 
            portion of the service that is received in this 
            State is measured by the portion of the recipients 
            of the broadcast located in this State.  
            Accordingly, the fee or other remuneration for 
            such service that is included in the Illinois 
            numerator of the sales factor is the total of those 
            fees or other remuneration received from 
            recipients in Illinois.  For purposes of this 
            paragraph, a taxpayer may determine the location 
            of the recipients of its broadcast using the 
            address of the recipient shown in its contracts 
            with the recipient or using the billing address of 
            the recipient in the taxpayer's records.
                (iii) In the case where film or radio 
            programming is broadcast by a station, a network, 
            or a cable system for a fee or other remuneration 
            from the person providing the programming, the 
            portion of the broadcast service that is received 
            by such station, network, or cable system in this 
            State is measured by the portion of recipients of 
            the broadcast located in this State. Accordingly, 
            the amount of revenue related to such an 
            arrangement that is included in the Illinois 
            numerator of the sales factor is the total fee or 
            other total remuneration from the person providing 
            the programming related to that broadcast 
            multiplied by the Illinois audience factor for 
            that broadcast.
                (iv) In the case where film or radio 
            programming is provided by a taxpayer that is a 
            network or station to a customer for broadcast in 
            exchange for a fee or other remuneration from that 
            customer the broadcasting service is received at 
            the location of the office of the customer from 
            which the services were ordered in the regular 
            course of the customer's trade or business.  
            Accordingly, in such a case the revenue derived by 
            the taxpayer that is included in the taxpayer's 
            Illinois numerator of the sales factor is the 
            revenue from such customers who receive the 
            broadcasting service in Illinois.
                (v) In the case where film or radio programming 
            is provided by a taxpayer that is not a network or 
            station to another person for broadcasting in 
            exchange for a fee or other remuneration from that 
            person, the broadcasting service is received at 
            the location of the office of the customer from 
            which the services were ordered in the regular 
            course of the customer's trade or business.  
            Accordingly, in such a case the revenue derived by 
            the taxpayer that is included in the taxpayer's 
            Illinois numerator of the sales factor is the 
            revenue from such customers who receive the 
            broadcasting service in Illinois.

        (C) For taxable years ending before December 31, 2008, 
    sales, other than sales governed by paragraphs (B), (B-1), 
    and (B-2), are in
this State if:


            (i) The income-producing activity is performed in 
        this State; or


            (ii) The income-producing activity is performed 
        both within and
without this State and a greater 
        proportion of the income-producing
activity is 
        performed within this State than without this State, 
        based
on performance costs.

        (C-5) For taxable years ending on or after December 31, 
    2008, sales, other than sales governed by paragraphs (B), 
    (B-1), (B-2), (B-5), and (B-7), are in this State if any of 
    the following criteria are met:
            (i) Sales from the sale or lease of real property 
        are in this State if the property is located in this 
        State.
            (ii) Sales from the lease or rental of tangible 
        personal property are in this State if the property is 
        located in this State during the rental period. Sales 
        from the lease or rental of tangible personal property 
        that is characteristically moving property, including, 
        but not limited to, motor vehicles, rolling stock, 
        aircraft, vessels, or mobile equipment are in this 
        State to the extent that the property is used in this 
        State.
            (iii) In the case of interest, net gains (but not 
        less than zero) and other items of income from 
        intangible personal property, the sale is in this State 
        if:
                (a) in the case of a taxpayer who is a dealer 
            in the item of intangible personal property within 
            the meaning of Section 475 of the Internal Revenue 
            Code, the income or gain is received from a 
            customer in this State.  For purposes of this 
            subparagraph, a customer is in this State if the 
            customer is an individual, trust or estate who is a 
            resident of this State and, for all other 
            customers, if the customer's commercial domicile 
            is in this State.  Unless the dealer has actual 
            knowledge of the residence or commercial domicile 
            of a customer during a taxable year, the customer 
            shall be deemed to be a customer in this State if 
            the billing address of the customer, as shown in 
            the records of the dealer, is in this State; or
                (b) in all other cases, if the 
            income-producing activity of the taxpayer is 
            performed in this State or, if the 
            income-producing activity of the taxpayer is 
            performed both within and without this State, if a 
            greater proportion of the income-producing 
            activity of the taxpayer is performed within this 
            State than in any other state, based on performance 
            costs.
            (iv) Sales of services are in this State if the 
        services are received in this State. For the purposes 
        of this section, gross receipts from the performance of 
        services provided to a corporation, partnership, or 
        trust may only be attributed to a state where that 
        corporation, partnership, or trust has a fixed place of 
        business. If the state where the services are received 
        is not readily determinable or is a state where the 
        corporation, partnership, or trust receiving the 
        service does not have a fixed place of business, the 
        services shall be deemed to be received at the location 
        of the office of the customer from which the services 
        were ordered in the regular course of the customer's 
        trade or business. If the ordering office cannot be 
        determined, the services shall be deemed to be received 
        at the office of the customer to which the services are 
        billed.  If the taxpayer is not taxable in the state in 
        which the services are received, the sale must be 
        excluded from both the numerator and the denominator of 
        the sales factor. The Department shall adopt rules 
        prescribing where  specific types of service are 
        received, including, but not limited to, publishing, 
        and utility service.


        (D) For taxable years ending on or after December 31, 
    1995, the following
items of income shall not be included 
    in the numerator or denominator of the
sales factor: 
    dividends; amounts included under Section 78 of the 
    Internal
Revenue Code; and Subpart F income as defined in 
    Section 952 of the Internal
Revenue Code.
No inference 
    shall be drawn from the enactment of this paragraph (D) in

    construing this Section for taxable years ending before 
    December 31, 1995.


        (E) Paragraphs (B-1) and (B-2) shall apply to tax years 
    ending on or
after December 31, 1999, provided that a 
    taxpayer may elect to apply the
provisions of these 
    paragraphs to prior tax years.  Such election shall be made

    in the form and manner prescribed by the Department, shall 
    be irrevocable, and
shall apply to all tax years; provided 
    that, if a taxpayer's Illinois income
tax liability for any 
    tax year, as assessed under Section 903 prior to January
1, 
    1999, was computed in a manner contrary to the provisions 
    of paragraphs
(B-1) or (B-2), no refund shall be payable to 
    the taxpayer for that tax year to
the extent such refund is 
    the result of applying the provisions of paragraph
(B-1) or 
    (B-2) retroactively.  In the case of a unitary business 
    group, such
election shall apply to all members of such 
    group for every tax year such group
is in existence, but 
    shall not apply to any taxpayer for any period during
which 
    that taxpayer is not a member of such group.

    (b) Insurance companies.


        (1) In general. Except as otherwise
provided by 
    paragraph (2), business income of an insurance company for 
    a
taxable year shall be apportioned to this State by 
    multiplying such
income by a fraction, the numerator of 
    which is the direct premiums
written for insurance upon 
    property or risk in this State, and the
denominator of 
    which is the direct premiums written for insurance upon

    property or risk everywhere. For purposes of this 
    subsection, the term
"direct premiums written" means the 
    total amount of direct premiums
written, assessments and 
    annuity considerations as reported for the
taxable year on 
    the annual statement filed by the company with the
Illinois 
    Director of Insurance in the form approved by the National

    Convention of Insurance Commissioners
or such other form as 
    may be
prescribed in lieu thereof.


        (2) Reinsurance. If the principal source of premiums 
    written by an
insurance company consists of premiums for 
    reinsurance accepted by it,
the business income of such 
    company shall be apportioned to this State
by multiplying 
    such income by a fraction, the numerator of which is the

    sum of (i) direct premiums written for insurance upon 
    property or risk
in this State, plus (ii) premiums written 
    for reinsurance accepted in
respect of property or risk in 
    this State, and the denominator of which
is the sum of 
    (iii) direct premiums written for insurance upon property

    or risk everywhere, plus (iv) premiums written for 
    reinsurance accepted
in respect of property or risk 
    everywhere. For taxable years ending before December 31, 
    2008, for purposes of this
paragraph, premiums written for 
    reinsurance accepted in respect of
property or risk in this 
    State, whether or not otherwise determinable,
may, at the 
    election of the company, be determined on the basis of the

    proportion which premiums written for reinsurance accepted 
    from
companies commercially domiciled in Illinois bears to 
    premiums written
for reinsurance accepted from all 
    sources, or, alternatively, in the
proportion which the sum 
    of the direct premiums written for insurance
upon property 
    or risk in this State by each ceding company from which

    reinsurance is accepted bears to the sum of the total 
    direct premiums
written by each such ceding company for the 
    taxable year. The election made by a company under this 
    paragraph for its first taxable year ending on or after 
    December 31, 2011, shall be binding for that company for 
    that taxable year and for all subsequent taxable years, and 
    may be altered only with the written permission of the 
    Department, which shall not be unreasonably withheld.

    (c) Financial organizations.


        (1) In general. For taxable years ending before 
    December 31, 2008, business income of a financial

    organization shall be apportioned to this State by 
    multiplying such
income by a fraction, the numerator of 
    which is its business income from
sources within this 
    State, and the denominator of which is its business
income 
    from all sources. For the purposes of this subsection, the

    business income of a financial organization from sources 
    within this
State is the sum of the amounts referred to in 
    subparagraphs (A) through
(E) following, but excluding the 
    adjusted income of an international banking
facility as 
    determined in paragraph (2):


            (A) Fees, commissions or other compensation for 
        financial services
rendered within this State;


            (B) Gross profits from trading in stocks, bonds or 
        other securities
managed within this State;


            (C) Dividends, and interest from Illinois 
        customers, which are received
within this State;


            (D) Interest charged to customers at places of 
        business maintained
within this State for carrying 
        debit balances of margin accounts,
without deduction 
        of any costs incurred in carrying such accounts; and


            (E) Any other gross income resulting from the 
        operation as a
financial organization within this 
        State. In computing the amounts
referred to in 
        paragraphs (A) through (E) of this subsection, any 
        amount
received by a member of an affiliated group 
        (determined under Section
1504(a) of the Internal 
        Revenue Code but without reference to whether
any such 
        corporation is an "includible corporation" under 
        Section
1504(b) of the Internal Revenue Code) from 
        another member of such group
shall be included only to 
        the extent such amount exceeds expenses of the

        recipient directly related thereto.


        (2) International Banking Facility. For taxable years 
    ending before December 31, 2008:


            (A) Adjusted Income.  The adjusted income of an 
        international banking
facility is its income reduced 
        by the amount of the floor amount.


            (B) Floor Amount.  The floor amount shall be the 
        amount, if any,
determined
by multiplying the income of 
        the international banking facility by a fraction,
not 
        greater than one, which is determined as follows:


                (i) The numerator shall be:


                The average aggregate, determined on a 
            quarterly basis, of the
financial
organization's 
            loans to banks in foreign countries, to foreign 
            domiciled
borrowers (except where secured 
            primarily by real estate) and to foreign

            governments and other foreign official 
            institutions, as reported for its
branches, 
            agencies and offices within the state on its 
            "Consolidated Report
of Condition", Schedule A, 
            Lines 2.c., 5.b., and 7.a., which was filed with

            the Federal Deposit Insurance Corporation and 
            other regulatory authorities,
for the year 1980, 
            minus


                The average aggregate, determined on a 
            quarterly basis, of such loans
(other
than loans of 
            an international banking facility), as reported by 
            the financial
institution for its branches, 
            agencies and offices within the state, on
the 
            corresponding Schedule and lines of the 
            Consolidated Report of Condition
for the current 
            taxable year, provided, however, that in no case 
            shall the
amount determined in this clause (the 
            subtrahend) exceed the amount determined
in the 
            preceding clause (the minuend); and


                (ii) the denominator shall be the average 
            aggregate, determined on a
quarterly basis, of the 
            international banking facility's loans to banks in

            foreign countries, to foreign domiciled borrowers 
            (except where secured
primarily by real estate) 
            and to foreign governments and other foreign

            official institutions, which were recorded in its 
            financial accounts for
the current taxable year.


            (C) Change to Consolidated Report of Condition and 
        in Qualification.
In the event the Consolidated Report 
        of Condition which is filed with the
Federal Deposit 
        Insurance Corporation and other regulatory authorities 
        is
altered so that the information required for 
        determining the floor amount
is not found on Schedule 
        A, lines 2.c., 5.b. and 7.a., the financial
institution 
        shall notify the Department and the Department may, by

        regulations or otherwise, prescribe or authorize the 
        use of an alternative
source for such information. The 
        financial institution shall also notify
the Department 
        should its international banking facility fail to 
        qualify as
such, in whole or in part, or should there 
        be any amendment or change to
the Consolidated Report 
        of Condition, as originally filed, to the extent
such 
        amendment or change alters the information used in 
        determining the floor
amount.

        (3) For taxable years ending on or after December 31, 
    2008, the business income of a financial organization shall 
    be apportioned to this State by multiplying such income by 
    a fraction, the numerator of which is its gross receipts 
    from sources in this State or otherwise attributable to 
    this State's marketplace and the denominator of which is 
    its gross receipts everywhere during the taxable year. 
    "Gross receipts" for purposes of this subparagraph (3) 
    means gross income, including net taxable gain on 
    disposition of assets, including securities and money 
    market instruments, when derived from transactions and 
    activities in the regular course of the financial 
    organization's trade or business. The following examples 
    are illustrative:

            (i) Receipts from the lease or rental of real or 
        tangible personal property are in this State if the 
        property is located in this State during the rental 
        period.  Receipts from the lease or rental of tangible 
        personal property that is characteristically moving 
        property, including, but not limited to, motor 
        vehicles, rolling stock, aircraft, vessels, or mobile 
        equipment are from sources in this State to the extent 
        that the property is used in this State.
            (ii) Interest income, commissions, fees, gains on 
        disposition, and other receipts from assets in the 
        nature of loans that are secured primarily by real 
        estate or tangible personal property are from sources 
        in this State  if the security is located in this State.
            (iii) Interest income, commissions, fees, gains on 
        disposition, and other receipts from consumer loans 
        that are not secured by real or tangible personal 
        property are from sources in this State if the debtor 
        is a resident of this State.
            (iv) Interest income, commissions, fees, gains on 
        disposition, and other receipts from commercial loans 
        and installment obligations that are not secured by 
        real or tangible personal property are from sources in 
        this State if the proceeds of the loan are to be 
        applied in this State. If it cannot be determined where 
        the funds are to be applied, the income and receipts 
        are from sources in this State if the office of the 
        borrower from which the loan was negotiated in the 
        regular course of business is located in this State. If 
        the location of this office cannot be determined, the 
        income and receipts shall be excluded from the 
        numerator and denominator of the sales factor.

            (v) Interest income, fees, gains on disposition, 
        service charges, merchant discount income, and other 
        receipts from credit card receivables are from sources 
        in this State if the card charges are regularly billed 
        to a customer in this State.
            (vi) Receipts from the performance of services, 
        including, but not limited to, fiduciary, advisory, 
        and brokerage services,  are in this State if the 
        services are received in this State within the meaning 
        of subparagraph (a)(3)(C-5)(iv) of this Section.
            (vii) Receipts from the issuance of travelers 
        checks and money orders are from sources in this State 
        if the checks and money orders are issued from a 
        location within this State.
            (viii) Receipts from investment assets and 
        activities and trading assets and activities are 
        included in the receipts factor as follows:
                (1) Interest, dividends, net gains (but not 
            less than zero) and other income from investment 
            assets and activities from trading assets and 
            activities shall be included in the receipts 
            factor. Investment assets and activities and 
            trading assets and activities include but are not 
            limited to: investment securities; trading account 
            assets; federal funds; securities purchased and 
            sold under agreements to resell or repurchase; 
            options; futures contracts; forward contracts; 
            notional principal contracts such as swaps; 
            equities; and foreign currency transactions. With 
            respect to the investment and trading assets and 
            activities described in subparagraphs (A) and (B) 
            of this paragraph, the receipts factor shall 
            include the amounts described in such 
            subparagraphs.
                    (A) The receipts factor shall include the 
                amount by which interest from federal funds 
                sold and securities purchased under resale 
                agreements exceeds interest expense on federal 
                funds purchased and securities sold under 
                repurchase agreements.
                    (B) The receipts factor shall include the 
                amount by which interest, dividends, gains and 
                other income from trading assets and 
                activities, including but not limited to 
                assets and activities in the matched book, in 
                the arbitrage book, and foreign currency 
                transactions, exceed amounts paid in lieu of 
                interest, amounts paid in lieu of dividends, 
                and losses from such assets and activities.
                (2) The numerator of the receipts factor 
            includes interest, dividends, net gains (but not 
            less than zero), and other income from investment 
            assets and activities and from trading assets and 
            activities described in paragraph (1) of this 
            subsection that are attributable to this State.
                    (A) The amount of interest, dividends, net 
                gains (but not less than zero), and other 
                income from investment assets and activities 
                in the investment account to be attributed to 
                this State and included in the numerator is 
                determined by multiplying all such income from 
                such assets and activities by a fraction, the 
                numerator of which is the gross income from 
                such assets and activities which are properly 
                assigned to a fixed place of business of the 
                taxpayer within this State and the denominator 
                of which is the gross income from all such 
                assets and activities.
                    (B) The amount of interest from federal 
                funds sold and purchased and from securities 
                purchased under resale agreements and 
                securities sold under repurchase agreements 
                attributable to this State and included in the 
                numerator is determined by multiplying the 
                amount described in subparagraph (A) of 
                paragraph (1) of this subsection from such 
                funds and such securities by a fraction, the 
                numerator of which is the gross income from 
                such funds and such securities which are 
                properly assigned to a fixed place of business 
                of the taxpayer within this State and the 
                denominator of which is the gross income from 
                all such funds and such securities.
                    (C) The amount of interest, dividends, 
                gains, and other income from trading assets and 
                activities, including but not limited to 
                assets and activities in the matched book, in 
                the arbitrage book and foreign currency 
                transactions (but excluding amounts described 
                in subparagraphs (A) or (B) of this paragraph), 
                attributable to this State and included in the 
                numerator is determined by multiplying the 
                amount described in subparagraph (B) of 
                paragraph (1) of this subsection by a fraction, 
                the numerator of which is the gross income from 
                such trading assets and activities which are 
                properly assigned to a fixed place of business 
                of the taxpayer within this State and the 
                denominator of which is the gross income from 
                all such assets and activities.
                    (D) Properly assigned, for purposes of 
                this paragraph (2) of this subsection, means 
                the investment or trading asset or activity is 
                assigned to the fixed place of business with 
                which it has a preponderance of substantive 
                contacts.  An investment or trading asset or 
                activity assigned by the taxpayer to a fixed 
                place of business without the State shall be 
                presumed to have been properly assigned if:
                        (i) the taxpayer has assigned, in the 
                    regular course of its business, such asset 
                    or activity on its records to a fixed place 
                    of business consistent with federal or 
                    state regulatory requirements;
                        (ii) such assignment on its records is 
                    based upon substantive contacts of the 
                    asset or activity to such fixed place of 
                    business; and
                        (iii) the taxpayer uses such records 
                    reflecting assignment of such assets or 
                    activities for the filing of all state and 
                    local tax returns for which an assignment 
                    of such assets or activities to a fixed 
                    place of business is required.
                    (E) The presumption of proper assignment 
                of an investment or trading asset or activity 
                provided in subparagraph (D) of paragraph (2) 
                of this subsection may be rebutted upon a 
                showing by the Department, supported by a 
                preponderance of the evidence, that the 
                preponderance of substantive contacts 
                regarding such asset or activity did not occur 
                at the fixed place of business to which it was 
                assigned on the taxpayer's records.  If the 
                fixed place of business that has a 
                preponderance of substantive contacts cannot 
                be determined for an investment or trading 
                asset or activity to which the presumption in 
                subparagraph (D) of paragraph (2) of this 
                subsection does not apply or with respect to 
                which that presumption has been rebutted, that 
                asset or activity is properly assigned to the 
                state in which the taxpayer's commercial 
                domicile is located.  For purposes of this 
                subparagraph (E), it shall be presumed, 
                subject to rebuttal, that taxpayer's 
                commercial domicile is in the state of the 
                United States or the District of Columbia to 
                which the greatest number of employees are 
                regularly connected with the management of the 
                investment or trading income or out of which 
                they are working, irrespective of where the 
                services of such employees are performed, as of 
                the last day of the taxable year.

        (4) (Blank).
        (5) (Blank).
    (d) Transportation services. For taxable years ending 
before December 31, 2008, business income derived from 
furnishing
transportation services shall be apportioned to 
this State in accordance
with paragraphs (1) and (2):


        (1) Such business income (other than that derived from

    transportation by pipeline) shall be apportioned to this 
    State by
multiplying such income by a fraction, the 
    numerator of which is the
revenue miles of the person in 
    this State, and the denominator of which
is the revenue 
    miles of the person everywhere. For purposes of this

    paragraph, a revenue mile is the transportation of 1 
    passenger or 1 net
ton of freight the distance of 1 mile 
    for a consideration. Where a
person is engaged in the 
    transportation of both passengers and freight,
the 
    fraction above referred to shall be determined by means of 
    an
average of the passenger revenue mile fraction and the 
    freight revenue
mile fraction, weighted to reflect the 
    person's


            (A) relative railway operating income from total 
        passenger and total
freight service, as reported to the 
        Interstate Commerce Commission, in
the case of 
        transportation by railroad, and


            (B) relative gross receipts from passenger and 
        freight
transportation, in case of transportation 
        other than by railroad.


        (2) Such business income derived from transportation 
    by pipeline
shall be apportioned to this State by 
    multiplying such income by a
fraction, the numerator of 
    which is the revenue miles of the person in
this State, and 
    the denominator of which is the revenue miles of the
person 
    everywhere. For the purposes of this paragraph, a revenue 
    mile is
the transportation by pipeline of 1 barrel of oil, 
    1,000 cubic feet of
gas, or of any specified quantity of 
    any other substance, the distance
of 1 mile for a 
    consideration.

        (3) For taxable years ending on or after December 31, 
    2008, business income derived from providing 
    transportation services other than airline services shall 
    be apportioned to this State by using a fraction, (a) the 
    numerator of which shall be (i) all receipts from any 
    movement or shipment of people, goods, mail, oil, gas, or 
    any other substance (other than by airline) that both 
    originates and terminates in this State, plus (ii) that 
    portion of the person's gross receipts from movements or 
    shipments of people, goods, mail, oil, gas, or any other 
    substance (other than by airline) that originates in one 
    state or jurisdiction and terminates in another state or 
    jurisdiction, that is determined by the ratio that the 
    miles traveled in this State bears to total miles 
    everywhere and (b) the denominator of which shall be all 
    revenue derived from the movement or shipment of people, 
    goods, mail, oil, gas, or any other substance (other than 
    by airline). Where a taxpayer is engaged in the 
    transportation of both passengers and freight, the 
    fraction above referred to shall first be determined 
    separately for passenger miles and freight miles.  Then an 
    average of the passenger miles fraction and the freight 
    miles fraction shall be weighted to reflect the taxpayer's:
            (A) relative railway operating income from total 
        passenger and total freight service, as reported to the 
        Surface Transportation Board, in the case of 
        transportation by railroad; and

            (B) relative gross receipts from passenger and 
        freight transportation, in case of transportation 
        other than by railroad.

        (4) For taxable years ending on or after December 31, 
    2008, business income derived from furnishing airline

    transportation services shall be apportioned to this State 
    by
multiplying such income by a fraction, the numerator of 
    which is the
revenue miles of the person in this State, and 
    the denominator of which
is the revenue miles of the person 
    everywhere. For purposes of this
paragraph, a revenue mile 
    is the transportation of one passenger or one net
ton of 
    freight the distance of one mile for a consideration. If a

    person is engaged in the transportation of both passengers 
    and freight,
the fraction above referred to shall be 
    determined by means of an
average of the passenger revenue 
    mile fraction and the freight revenue
mile fraction, 
    weighted to reflect the person's relative gross receipts 
    from passenger and freight
airline transportation.

    (e) Combined apportionment.  Where 2 or more persons are 
engaged in
a unitary business as described in subsection 
(a)(27) of
Section 1501,
a part of which is conducted in this 
State by one or more members of the
group, the business income 
attributable to this State by any such member
or members shall 
be apportioned by means of the combined apportionment method.

    (f) Alternative allocation. If the allocation and 
apportionment
provisions of subsections (a) through (e) and of 
subsection (h) do not
fairly represent the
extent of a person's 
business activity in this State, the person may
petition for, 
or the Director may, without a petition, permit or require, in 
respect of all or any part
of the person's business activity, 
if reasonable:


        (1) Separate accounting;


        (2) The exclusion of any one or more factors;


        (3) The inclusion of one or more additional factors 
    which will
fairly represent the person's business 
    activities in this State; or


        (4) The employment of any other method to effectuate an 
    equitable
allocation and apportionment of the person's 
    business income.

    (g) Cross reference. For allocation of business income by 
residents,
see Section 301(a).

    (h) For tax years ending on or after December 31, 1998, the 
apportionment
factor of persons who apportion their business 
income to this State under
subsection (a) shall be equal to:


        (1) for tax years ending on or after December 31, 1998 
    and before December
31, 1999, 16 2/3% of the property 
    factor plus 16 2/3% of the payroll factor
plus
66 2/3% of 
    the sales factor;


        (2) for tax years ending on or after December 31, 1999 
    and before December
31,
2000, 8 1/3% of the property factor 
    plus 8 1/3% of the payroll factor plus 83
1/3%
of the sales 
    factor;


        (3) for tax years ending on or after December 31, 2000, 
    the sales factor.

If, in any tax year ending on or after December 31, 1998 and 
before December
31, 2000, the denominator of the payroll, 
property, or sales factor is zero,
the apportionment
factor 
computed in paragraph (1) or (2) of this subsection for that 
year shall
be divided by an amount equal to 100% minus the 
percentage weight given to each
factor whose denominator is 
equal to zero.

(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08; 
96-763, eff. 8-25-09.)

 



    (35 ILCS 5/502)  (from Ch. 120, par. 5-502)



    Sec. 502. Returns and notices. 

    (a) In general. A return with respect to the taxes imposed 
by this
Act shall be made by every person for any taxable year:


        (1) for which such person is liable for a tax imposed 
    by this Act,
or


        (2) in the case of a resident or in the case of a 
    corporation which
is qualified to do business in this 
    State, for which such person is
required to make a federal 
    income tax return, regardless of whether such
person is 
    liable for a tax imposed by this Act.  However, this 
    paragraph
shall not require a resident to make a return if 
    such person has
an
Illinois base income of the basic amount 
    in Section 204(b) or
less and is either claimed as a 
    dependent on
another person's tax return under the Internal 
    Revenue Code of 1986, or is
claimed as a dependent on 
    another person's tax return under this Act.

    Notwithstanding the provisions of paragraph (1), a 
nonresident (other than, for taxable years ending on or after 
December 31, 2011, a nonresident required to withhold tax under 
Section 709.5) whose Illinois income tax liability under 
subsections (a), (b), (c), and (d) of Section 201 of this Act 
is paid in full after taking into account the credits allowed 
under subsection (f) of this Section or allowed under Section 
709.5 of this Act shall not be required to file a return under 
this subsection (a).

    (b) Fiduciaries and receivers.


        (1) Decedents. If an individual is deceased, any return 
    or notice
required of such individual under this Act shall 
    be made by his
executor, administrator, or other person 
    charged with the property of
such decedent.


        (2) Individuals under a disability. If an individual is 
    unable
to make a return or notice required under this Act, 
    the return or notice
required of such individual shall be 
    made by his duly authorized agent,
guardian, fiduciary or 
    other person charged with the care
of the person or 
    property of such individual.


        (3) Estates and trusts. Returns or notices required of 
    an estate
or a trust shall be made by the fiduciary 
    thereof.


        (4) Receivers, trustees and assignees for 
    corporations. In a
case where a receiver, trustee in 
    bankruptcy, or assignee, by order of a
court of competent 
    jurisdiction, by operation of law, or otherwise, has

    possession of or holds title to all or substantially all 
    the property or
business of a corporation, whether or not 
    such property or business is
being operated, such receiver, 
    trustee, or assignee shall make the
returns and notices 
    required of such corporation in the same manner and
form as 
    corporations are required to make such returns and notices.

    (c) Joint returns by husband and wife.


        (1) Except as provided in paragraph (3):
            (A) if a husband and wife file a
joint federal 
        income tax return for a taxable year ending before 
        December 31, 2009, they shall file a joint
return under 
        this Act for such taxable year and their liabilities 
        shall be
joint and several;
            (B) if a husband and wife file a joint federal 
        income tax return for a taxable year ending on or after 
        December 31, 2009, they may elect to file separate 
        returns under this Act for such taxable year. The 
        election under this paragraph must be made on or before 
        the due date (including extensions) of the return and, 
        once made, shall be irrevocable.  If no election is 
        timely made under this paragraph for a taxable year:
                (i) the couple must file a joint return under 
            this Act for such taxable year,
                (ii) their liabilities shall be joint and 
            several, and
                (iii) any overpayment for that taxable year 
            may be withheld under Section 909 of this Act or 
            under Section 2505-275 of the Civil Administrative 
            Code of Illinois and applied against a debt of 
            either spouse without regard to the amount of the 
            overpayment attributable to the other spouse; and
            (C) if the federal income tax liability of either 
        spouse is
determined on a separate federal income tax 
        return, they shall file separate
returns under this 
        Act.


        (2) If neither spouse is required to file a federal 
    income tax
return and either or both are required to file a 
    return under this Act,
they may elect to file separate or 
    joint returns and pursuant to such
election their 
    liabilities shall be separate or joint and several.


        (3) If either husband or wife is a resident and the 
    other is a
nonresident, they shall file separate returns in 
    this State on such
forms as may be required by the 
    Department in which event their tax
liabilities shall be 
    separate; but if they file a joint federal income tax 
    return for a taxable year, they may elect to determine 
    their
joint net income and file a joint return for that 
    taxable year under the provisions of paragraph (1) of this 
    subsection as if both were residents and
in such case, 
    their liabilities shall be joint and several.


        (4) Innocent spouses.


            (A) However, for tax liabilities arising and paid 
        prior to August 13,
1999, an innocent spouse shall be 
        relieved of
liability for tax
(including interest and 
        penalties) for any taxable year for which a joint

        return has been made, upon submission of proof that the 
        Internal Revenue
Service has made a determination 
        under Section 6013(e) of the Internal
Revenue Code, for 
        the same taxable year, which determination relieved 
        the
spouse from liability for federal income taxes.
If 
        there is no federal income tax liability at issue for 
        the
same taxable year, the Department shall rely on the 
        provisions of Section
6013(e) to determine whether the 
        person requesting innocent spouse abatement of
tax, 
        penalty, and interest is entitled to that relief.


            (B) For tax liabilities arising on and after August 
        13, 1999 or which arose prior to that date, but remain 
        unpaid as of that date, if
an individual
who filed a 
        joint return for any taxable year has made an election 
        under this
paragraph, the individual's liability for 
        any tax shown on the joint return
shall not exceed the 
        individual's separate return amount and the 
        individual's
liability for any deficiency assessed for 
        that taxable year shall not exceed
the portion of the 
        deficiency properly allocable to the individual.  For

        purposes of this paragraph:


                (i) An election properly made pursuant to 
            Section 6015 of the Internal
Revenue Code shall 
            constitute an election under this paragraph, 
            provided that
the election shall not be effective 
            until the individual has notified the
Department 
            of the election in the form and manner prescribed 
            by the Department.


                (ii) If no election has been made under Section 
            6015, the individual
may make an election under 
            this paragraph in the form and manner prescribed by

            the Department, provided that no election may be 
            made if the Department finds
that assets were 
            transferred
between individuals filing a joint 
            return as part of a scheme by such
individuals to 
            avoid payment of Illinois income tax and the 
            election shall not
eliminate the individual's 
            liability for any portion of a deficiency

            attributable to an error on the return of which the 
            individual had actual
knowledge as of the date of 
            filing.


                (iii) In determining the separate return 
            amount or portion of any
deficiency attributable 
            to an individual, the Department shall follow the

            provisions in subsections (c) and (d) of Section 
            6015 of the Internal Revenue Code.


                (iv) In determining the validity of an 
            individual's election under
subparagraph (ii) and 
            in determining an electing individual's separate 
            return
amount or portion of any deficiency under 
            subparagraph (iii), any determination
made by the 
            Secretary of the Treasury, by the United States Tax 
            Court on
petition for review of a determination by 
            the Secretary of the Treasury, or on
appeal from 
            the United States Tax Court under Section 6015 of

            the Internal
Revenue Code regarding criteria for 
            eligibility or under subsection (d) of
Section 
            6015
of the Internal Revenue Code regarding the 
            allocation of any item of income,
deduction, 
            payment, or credit between an individual making 
            the federal election
and that individual's spouse 
            shall be conclusively presumed to be correct.
With 
            respect to any item that is not the subject of a 
            determination by the
Secretary of the Treasury or 
            the federal courts, in any proceeding
involving 
            this subsection, the
individual making the 
            election shall have the burden of proof with 
            respect to
any item except that the Department 
            shall have the burden of proof with respect
to 
            items in subdivision (ii).


                (v) Any election made by an individual under 
            this subsection shall
apply to all years for which 
            that individual and the spouse named in the

            election have filed a joint return.


                (vi) After receiving a notice that the federal 
            election has been made
or after receiving an 
            election under subdivision (ii), the Department 
            shall
take no collection action against the 
            electing individual for any liability
arising from 
            a joint return covered by the election until the 
            Department has
notified the electing individual in 
            writing that the election is invalid or of
the 
            portion of the liability the Department has 
            allocated to the electing
individual.  Within 60 
            days (150 days if the individual is outside the 
            United
States) after the issuance of such 
            notification, the individual may file a
written 
            protest of the denial of the election or of the 
            Department's
determination of the liability 
            allocated to him or her and shall be granted a

            hearing within the Department under the provisions 
            of Section 908.  If a
protest is filed, the 
            Department shall take no collection action against 
            the
electing individual until the decision 
            regarding the protest has become final
under 
            subsection (d) of Section 908 or, if 
            administrative review of the
Department's decision

            is requested under Section 1201, until the 
            decision of the court becomes
final.

    (d) Partnerships. Every partnership having any base income

allocable to this State in accordance with section 305(c) shall 
retain
information concerning all items of income, gain, loss 
and
deduction; the names and addresses of all of the partners, 
or names and
addresses of members of a limited liability 
company, or other
persons who would be entitled to share in the 
base income of the
partnership if distributed; the amount of 
the distributive share of
each; and such other pertinent 
information as the Department may by
forms or regulations 
prescribe. The partnership shall make that information

available to the Department when requested by the Department.

    (e) For taxable years ending on or after December 31, 1985, 
and before
December 31, 1993, taxpayers
that are corporations 
(other than Subchapter S corporations) having the
same taxable 
year and that are members of the same unitary business group

may elect to be treated as one taxpayer for purposes of any 
original return,
amended return which includes the same 
taxpayers of the unitary group which
joined in the election to 
file the original return, extension, claim for
refund, 
assessment, collection and payment and determination of the

group's tax liability under this Act. This subsection (e) does 
not permit the
election to be made for some, but not all, of 
the purposes enumerated above.
For taxable years ending on or 
after December 31, 1987, corporate members
(other than 
Subchapter S corporations) of the same unitary business group

making this subsection (e) election are not required to have 
the same taxable
year.

    For taxable years ending on or after December 31, 1993, 
taxpayers that are
corporations (other than Subchapter S 
corporations) and that are members  of
the same unitary business 
group shall be treated as one taxpayer for purposes
of any 
original return, amended return which includes the same 
taxpayers of the
unitary group which joined in filing the 
original return, extension, claim for
refund, assessment, 
collection and payment and determination of the group's tax

liability under this Act.

    (f) The Department may promulgate regulations to permit 
nonresident
individual partners of the same partnership, 
nonresident Subchapter S
corporation shareholders of the same 
Subchapter S corporation, and
nonresident individuals 
transacting an insurance business in Illinois under
a Lloyds 
plan of operation, and nonresident individual members of the 
same
limited liability company that is treated as a partnership 
under Section 1501
(a)(16) of this Act, to file composite 
individual income tax returns
reflecting the composite income 
of such individuals allocable to Illinois
and to make composite 
individual income tax payments.  The Department may
by 
regulation also permit such composite returns to include the 
income tax
owed by Illinois residents attributable to their 
income from partnerships,
Subchapter S corporations, insurance 
businesses organized under a Lloyds
plan of operation, or 
limited liability companies that are treated as
partnership 
under Section 1501(a)(16) of this Act, in which case such

Illinois residents will be permitted to claim credits on their 
individual
returns for their shares of the composite tax 
payments.  This paragraph of
subsection (f) applies to taxable 
years ending on or after December 31, 1987.

    For taxable years ending on or after December 31, 1999, the 
Department may,
by regulation, also permit any persons 
transacting an insurance business
organized under a Lloyds plan 
of operation to file composite returns reflecting
the income of 
such persons allocable to Illinois and the tax rates applicable

to such persons under Section 201 and to make composite tax 
payments and shall,
by regulation, also provide that the income 
and apportionment factors
attributable to the transaction of an 
insurance business organized under a
Lloyds plan of operation 
by any person joining in the filing of a composite
return 
shall, for purposes of allocating and apportioning income under 
Article
3 of this Act and computing net income under Section 
202 of this Act, be
excluded from any other income and 
apportionment factors of that person or of
any unitary business 
group, as defined in subdivision (a)(27) of Section 1501,
to 
which that person may belong.

    For taxable years ending on or after December 31, 2008, 
every nonresident shall be allowed a credit against his or her 
liability under subsections (a) and (b) of Section 201 for any 
amount of tax reported on a composite return and paid on his or 
her behalf under this subsection (f).  Residents (other than 
persons transacting an insurance business organized under a 
Lloyds plan of operation) may claim a credit for taxes reported 
on a composite return and paid on their behalf under this 
subsection (f) only as permitted by the Department by rule.

    (f-5) For taxable years ending on or after December 31, 
2008, the Department may adopt rules to provide that, when a 
partnership or Subchapter S corporation has made an error in 
determining the amount of any item of income, deduction, 
addition, subtraction, or credit required to be reported on its 
return that affects the liability imposed under this Act on a 
partner or shareholder, the partnership or Subchapter S 
corporation may report the changes in liabilities of its 
partners or shareholders and claim a refund of the resulting 
overpayments, or pay the resulting underpayments, on behalf of 
its partners and shareholders.

    (g) The Department may adopt rules to authorize the 
electronic filing of
any return required to be filed under this 
Section.

(Source: P.A. 95-233, eff. 8-16-07; 96-520, eff. 8-14-09.)

 



    (35 ILCS 5/506)  (from Ch. 120, par. 5-506)


    Sec. 506. Federal Returns. 

    (a) In general.  Any person required to make a return for a 
taxable
year under this Act may, at any time that a deficiency 
could be assessed or
a refund claimed under this Act in respect 
of any item reported or properly
reportable on such return or 
any amendment thereof, be required to furnish
to the Department 
a true and correct copy of any return which may pertain
to such 
item and which was filed by such person under the provisions of 
the
Internal Revenue Code.

    (b) Changes affecting federal income tax.
A person shall 
notify the Department if:


        (1) the taxable
income, any item of income or 
    deduction, the income tax liability, or
any tax credit 
    reported in an original or amended a federal income tax 
    return of that
person for any
year or as determined by the 
    Internal Revenue Service or the courts is
altered by 
    amendment of such return or as a result of any other

    recomputation or redetermination of federal taxable income 
    or loss, and
such alteration reflects a change or 
    settlement with respect to any item or
items, affecting the 
    computation of such person's net income, net loss, or of

    any credit provided by Article 2 of this Act for any
year 
    under this Act, or in the number
of personal exemptions 
    allowable to
such person under Section 151 of the Internal 
    Revenue Code, or


        (2) the amount of tax required to be withheld by that 
    person from
compensation paid to employees and required to 
    be reported by that person on a
federal return is altered 
    by amendment of the return or by any other
recomputation or 
    redetermination that is agreed to or finally determined on 
    or
after January 1, 2003, and the alteration affects the 
    amount of compensation
subject to withholding by that 
    person under Section 701 of this Act.

Such notification shall be
in the form of an amended return or 
such other form as the Department may
by regulations prescribe, 
shall contain the person's name and address and
such other 
information as the Department may by regulations prescribe,

shall be signed by such person or his duly authorized 
representative, and
shall be filed not later than 120 days 
after such alteration has been agreed
to or finally determined 
for federal income tax purposes or any federal
income tax 
deficiency or refund, tentative carryback adjustment, 
abatement
or credit resulting therefrom has been assessed or 
paid, whichever shall
first occur.

(Source: P.A. 92-846, eff. 8-23-02.)



 



    (35 ILCS 5/601)  (from Ch. 120, par. 6-601)



    Sec. 601. Payment on Due Date of Return. 

    (a) In general. Every taxpayer required to file a return 
under
this Act shall, without assessment, notice or demand, pay 
any tax due
thereon to the Department, at the place fixed for 
filing, on or before
the date fixed for filing such return 
(determined without regard to any
extension of time for filing 
the return) pursuant to regulations
prescribed by the 
Department.
If, however, the due date for payment of a 
taxpayer's federal income tax
liability for a tax year (as 
provided in the Internal Revenue Code or by
Treasury 
regulation, or as extended by the Internal Revenue Service) is 
later
than the date fixed for filing the taxpayer's Illinois 
income tax return for
that tax year, the Department may, by 
rule, prescribe a due date for payment
that is not later than 
the due date for payment of the taxpayer's federal
income tax 
liability. For purposes of the Illinois Administrative 
Procedure
Act, the adoption of rules to prescribe a later due 
date for payment shall be
deemed an emergency and necessary for 
the public interest, safety, and
welfare.

    (b) Amount payable. In making payment as provided in this

section there shall remain payable only the balance of such tax

remaining due after giving effect to the following:


        (1) Withheld tax. Any amount withheld during any 
    calendar year
pursuant to Article 7 from compensation paid 
    to a taxpayer shall be
deemed to have been paid on account 
    of any tax imposed by subsections 201(a)
and (b) of this 
    Act on
such taxpayer for his taxable year beginning in such 
    calendar year. If
more than one taxable year begins in a 
    calendar year, such amount shall
be deemed to have been 
    paid on account of such tax for the last taxable
year so 
    beginning.


        (2) Estimated and tentative tax payments. Any amount of 
    estimated tax
paid by a taxpayer pursuant to Article 8 for 
    a taxable year shall be deemed to
have been paid on account 
    of the tax imposed by this Act for such
taxable year.


        (3) Foreign tax. The aggregate amount of tax which is 
    imposed
upon or measured by income and which is paid by a 
    resident for a taxable
year to another state or states on 
    income which is also subject to the tax
imposed by 
    subsections 201(a) and (b) of this Act shall be credited 
    against
the tax imposed by subsections 201(a) and (b) 
    otherwise due under
this Act for such taxable year. For 
    taxable years ending prior to December 31, 2009, the 
    aggregate credit provided under this
paragraph shall not 
    exceed that amount which bears the same ratio to the tax

    imposed by subsections 201(a) and (b) otherwise due under 
    this Act as the
amount of the taxpayer's base income 
    subject to tax both by such other state or
states and by 
    this State bears to his total base income subject to tax by 
    this
State for the taxable year. For taxable years ending 
    on or after December 31, 2009, the credit provided under 
    this paragraph for tax paid to other states shall not 
    exceed that amount which bears the same ratio to  the tax 
    imposed by subsections 201(a) and (b) otherwise due under 
    this Act as the amount of the taxpayer's base income that 
    would be allocated or apportioned to other states if all 
    other states had adopted the provisions in Article 3 of 
    this Act bears to the taxpayer's total base income subject 
    to tax by this State for the taxable year.  The credit 
    provided by this paragraph shall
not be allowed if any 
    creditable tax was deducted in determining base income
for 
    the taxable year. Any person claiming such credit shall 
    attach a
statement in support thereof and shall notify the 
    Director of any refund
or reductions in the amount of tax 
    claimed as a credit hereunder all in
such manner and at 
    such time as the Department shall by regulations prescribe.


        (4) Accumulation and capital gain distributions. If 
    the net
income of a taxpayer includes amounts included in 
    his base income by
reason of Section 667 668 or 669 of the 
    Internal Revenue Code (relating to
accumulation and 
    capital gain distributions by a trust, respectively),
the 
    tax imposed on such taxpayer by this Act shall be credited 
    with his
pro rata portion of the taxes imposed by this Act 
    on such trust for
preceding taxable years which would not 
    have been payable for such
preceding years if the trust had 
    in fact made distributions to its
beneficiaries at the 
    times and in the amounts specified in Sections 666
and 669 
    of the Internal Revenue Code. The credit provided by this

    paragraph shall not reduce the tax otherwise due from the 
    taxpayer to an
amount less than that which would be due if 
    the amounts included by
reason of Section 667 Sections 668 
    and 669 of the Internal Revenue Code were
excluded from his 
    or her base income.

    (c) Cross reference. For application against tax due of

overpayments of tax for a prior year, see Section 909.

(Source: P.A. 96-468, eff. 8-14-09.)

 
    (35 ILCS 5/701)  (from Ch. 120, par. 7-701)
    Sec. 701. Requirement and Amount of Withholding.


    (a) In General.  Every
employer maintaining an office or 
transacting business within this State
and required under the 
provisions of the Internal Revenue Code to
withhold a tax on:


        (1) compensation paid in this State (as determined 
    under Section
304(a)(2)(B) to an individual; or


        (2) payments described in subsection (b) shall deduct 
    and withhold from
such compensation for each payroll period 
    (as defined in Section 3401 of
the Internal Revenue Code) 
    an amount equal to the amount by which such
individual's

    compensation exceeds the proportionate part of this 
    withholding exemption
(computed as provided in Section 
    702) attributable to the payroll period
for which such 
    compensation is payable multiplied by a percentage equal
to 
    the percentage tax rate for individuals provided in 
    subsection (b) of
Section 201.


    (b) Payment to Residents.  Any payment (including 
compensation) to a
resident
by a payor maintaining an office or 
transacting business within this State
(including any agency, 
officer, or employee of this State or of any political

subdivision of this State) and on which withholding of tax is 
required under
the provisions of the
Internal Revenue Code 
shall be deemed to be compensation paid in this State
by an 
employer to an employee for the purposes of Article 7 and 
Section
601(b)(1) to the extent such payment is included in the 
recipient's base
income and not subjected to withholding by 
another state.
Notwithstanding any other provision to the 
contrary, no amount shall be
withheld from unemployment 
insurance benefit payments made to an individual
pursuant to 
the Unemployment Insurance Act unless the individual has

voluntarily elected the withholding pursuant to rules 
promulgated by the
Director of Employment Security.


    (c) Special Definitions.  Withholding shall be considered 
required under
the provisions of the Internal Revenue Code to 
the extent the Internal Revenue
Code either requires 
withholding or allows for voluntary withholding the
payor and 
recipient have entered into such a voluntary withholding 
agreement.
For the purposes of Article 7 and Section 1002(c) 
the term "employer" includes
any payor who is required to 
withhold tax pursuant to this Section.


    (d) Reciprocal Exemption.  The Director may enter into an 
agreement with
the taxing authorities of any state which 
imposes a tax on or measured by
income to provide that 
compensation paid in such state to residents of this
State 
shall be exempt from withholding of such tax; in such case, any

compensation paid in this State to residents of such state 
shall be exempt
from withholding.
All reciprocal agreements 
shall be subject to the requirements of Section
2505-575 of the 
Department of Revenue Law (20 ILCS
2505/2505-575).


    (e) Notwithstanding subsection (a)(2) of this Section, no 
withholding
is required on payments for which withholding is 
required under Section
3405 or 3406 of the Internal Revenue 
Code of 1954.


(Source: P.A. 92-846, eff. 8-23-02; 93-634, eff. 1-1-04.)

 



    (35 ILCS 5/702)  (from Ch. 120, par. 7-702)


    Sec. 702. Amount Exempt from Withholding. For purposes of 
this Section
an employee shall be entitled to a withholding 
exemption in an amount equal
to the basic amount in Section 
204(b) for each personal or
dependent exemption which he is

entitled to claim on his federal return pursuant to Section 151 
of the
Internal Revenue Code of 1986; plus an allowance equal 
to $1,000 for each
$1,000 he is entitled to deduct from gross 
income in arriving at adjusted
gross income pursuant to Section 
62 of the Internal Revenue Code of 1986;
plus an additional 
allowance equal to $1,000 for each $1,000 eligible for

subtraction on
his Illinois income tax return as Illinois real 
estate taxes paid during
the taxable year; or in any lesser 
amount claimed
by him. Every employee shall furnish to his 
employer such information as
is required for the employer to 
make an accurate withholding under this
Act. The employer may 
rely on this information for withholding purposes.
If any 
employee fails or refuses to furnish such information, the 
employer
shall withhold the full rate of tax from the 
employee's total compensation.

(Source: P.A. 90-613, eff. 7-9-98.)

 



    (35 ILCS 5/703)  (from Ch. 120, par. 7-703)


    Sec. 703. Information statement. Every employer required 
to deduct and withhold tax under this Act from
compensation of 
an employee, or who would have been required so to deduct
and 
withhold tax if the employee's withholding exemption were not 
in excess
of the basic amount in Section 204(b), shall furnish 
in
duplicate to each such employee in respect of
the 
compensation paid by such employer to such employee during the 
calendar
year on or before January 31 of the succeeding year, 
or, if his employment
is terminated before the close of such 
calendar year, on the date on which
the last payment of 
compensation is made, a written statement in such form
as the 
Department may by regulation prescribe showing the amount of

compensation paid by the employer to the employee, the amount 
deducted and
withheld as tax, the tax-exempt amount contributed 
to a medical savings
account, and such other information as the 
Department shall
prescribe. A copy of such statement shall be 
filed by the employee with his
return for his taxable year to 
which it relates (as determined under
Section 601(b)(1)).

(Source: P.A. 91-841, eff. 6-22-00; 92-16, eff. 6-28-01.)


 
    (35 ILCS 5/704A)
    Sec. 704A. Employer's return and payment of tax withheld.
    (a) In general, every employer who deducts and withholds or 
is required to deduct and withhold tax under this Act on or 
after January 1, 2008 shall make those payments and returns as 
provided in this Section.
    (b) Returns.  Every employer shall, in the form and manner 
required by the Department, make returns with respect to taxes 
withheld or required to be withheld under this Article 7 for 
each quarter beginning on or after January 1, 2008, on or 
before the last day of the first month following the close of 
that quarter.
    (c) Payments.  With respect to amounts withheld or required 
to be withheld on or after January 1, 2008:
        (1) Semi-weekly payments. For each calendar year, each 
    employer who withheld or was required to withhold more than 
    $12,000 during the one-year period ending on June 30 of the 
    immediately preceding calendar year, payment must be made:
            (A) on or before each Friday of the calendar year, 
        for taxes withheld or required to be withheld on the 
        immediately preceding Saturday, Sunday, Monday, or 
        Tuesday;
            (B) on or before each Wednesday of the calendar 
        year, for taxes withheld or required to be withheld on 
        the immediately preceding Wednesday, Thursday, or 
        Friday.
        Beginning with calendar year 2011, payments payment 
    made under this paragraph (1) of subsection (c) must be 
    made by electronic funds transfer. 
        (2) Semi-weekly payments. Any employer who withholds 
    or is required to withhold more than $12,000 in any quarter 
    of a calendar year is required to make payments on the 
    dates set forth under item (1)  of this subsection (c) for 
    each remaining quarter of that calendar year and for the 
    subsequent calendar year.

        (3) Monthly payments. Each employer, other than an 
    employer described in items (1) or (2) of this subsection, 
    shall pay to the Department, on or before the 15th day of 
    each month the taxes withheld or required to be withheld 
    during the immediately preceding month.
        (4) Payments with returns. Each employer shall pay to 
    the Department, on or before the due date for each return 
    required to be filed under this Section, any tax withheld 
    or required to be withheld during the period for which the 
    return is due and not previously paid to the Department.
    (d) Regulatory authority.  The Department may, by rule:
        (1) Permit employers, in lieu of the requirements of 
    subsections (b) and (c), to file annual returns due on or 
    before January 31 of the year for taxes withheld or 
    required to be withheld during the previous calendar year 
    and, if the aggregate amounts required to be withheld by 
    the employer under this Article 7 (other than amounts 
    required to be withheld under Section 709.5) do not exceed 
    $1,000 for the previous calendar year, to pay the taxes 
    required to be shown on each such return no later than the 
    due date for such return.
        (2) Provide that any payment required to be made under 
    subsection (c)(1) or (c)(2) is deemed to be timely to the 
    extent paid by electronic funds transfer on or before the 
    due date for deposit of federal income taxes withheld from, 
    or federal employment taxes due with respect to, the wages 
    from which the Illinois taxes were withheld.
        (3) Designate one or more depositories to which payment 
    of taxes required to be withheld under this Article 7 must 
    be paid by some or all employers.
        (4) Increase the threshold dollar amounts at which 
    employers are required to make semi-weekly payments under 
    subsection (c)(1) or (c)(2).
    (e) Annual return and payment.  Every employer who deducts 
and withholds or is required to deduct and withhold tax from a 
person engaged in domestic service employment, as that term is 
defined in Section 3510 of the Internal Revenue Code, may 
comply with the requirements of this Section with respect to 
such employees by filing an annual return and paying the taxes 
required to be deducted and withheld on or before the 15th day 
of the fourth month following the close of the employer's 
taxable year. The Department may allow the employer's return to 
be submitted with the employer's individual income tax return 
or to be submitted with a return due from the employer under 
Section 1400.2 of the Unemployment Insurance Act.
    (f) Magnetic media and electronic filing. Any W-2 Form 
that, under the Internal Revenue Code and regulations 
promulgated thereunder, is required to be submitted to the 
Internal Revenue Service on magnetic media or electronically 
must also be submitted to the Department on magnetic media or 
electronically for Illinois purposes, if required by the 
Department.
    (g) For amounts deducted or withheld after December 31, 
2009, a taxpayer who makes an election under subsection (f) of  
Section 5-15 of the Economic Development for a Growing Economy 
Tax Credit Act for a taxable  year shall be allowed a credit 
against payments due under this Section for amounts withheld 
during the first calendar year beginning after the end of that 
taxable year equal to the amount of the credit for the 
incremental income tax attributable to full-time employees of 
the taxpayer awarded to the taxpayer by the Department of 
Commerce and Economic Opportunity under the Economic 
Development for a Growing Economy Tax Credit Act for the 
taxable year and credits not previously claimed and allowed to 
be carried forward under Section 211(4) of this Act as provided 
in subsection (f) of Section 5-15 of the Economic Development 
for a Growing Economy Tax Credit Act.  The credit or credits may 
not reduce the taxpayer's obligation for any payment due under 
this Section to less than zero.  If the amount of the credit or 
credits exceeds the total payments due under this Section with 
respect to amounts withheld during the calendar year, the 
excess may be carried forward and applied against the 
taxpayer's liability under this Section in the succeeding 
calendar years as allowed to be carried forward under paragraph 
(4) of Section 211 of this Act.  The credit or credits shall be 
applied to the earliest year for which there is a tax 
liability.  If there are credits from more than one taxable year 
that are available to offset a liability, the earlier credit 
shall be applied first.  Each employer who deducts and withholds 
or is required to deduct and withhold tax under this Act and 
who retains income tax withholdings under subsection (f) of 
Section 5-15 of the Economic Development for a Growing Economy 
Tax Credit Act must make a return with respect to such taxes 
and retained amounts in the form and manner that the 
Department, by rule, requires and pay to the Department or to a 
depositary designated by the Department those withheld taxes 
not retained by the taxpayer.   For purposes of this subsection 
(g), the term taxpayer shall include taxpayer and members of 
the taxpayer's unitary business group as defined under 
paragraph (27) of subsection (a) of Section 1501 of this Act. 
This Section is exempt from the provisions of Section 250 of 
this Act. 
    (h) An employer may claim a credit against payments due 
under this Section for amounts withheld during the first 
calendar year ending after the date on which a tax credit 
certificate was issued under Section 35 of the Small Business 
Job Creation  Tax Credit Act.  The credit shall be equal to the 
amount shown on the certificate, but may not reduce the 
taxpayer's obligation for any payment due under this Section to 
less than zero. If the amount of the credit exceeds the total 
payments due under this Section with respect to amounts 
withheld during the calendar year, the excess may be carried 
forward and applied against the taxpayer's liability under this 
Section in the 5 succeeding calendar years. The credit shall be 
applied to the earliest year for which there is a tax 
liability. If there are credits from more than one calendar 
year that are available to offset a liability, the earlier 
credit shall be applied first. This Section is exempt from the 
provisions of Section 250 of this Act. 
(Source: P.A.  95-8, eff. 6-29-07; 95-707, eff. 1-11-08; 96-834, 
eff. 12-14-09; 96-888, eff. 4-13-10; 96-905, eff. 6-4-10; 
96-1027, eff. 7-12-10; revised 9-16-10.)
 
    (35 ILCS 5/709.5)

    Sec. 709.5. Withholding by partnerships, Subchapter S 
corporations, and trusts.
    (a) In general. For each taxable year ending on or after 
December 31, 2008, every partnership (other than a publicly 
traded partnership under Section 7704 of the Internal Revenue 
Code or investment partnership), Subchapter S corporation, and 
trust must withhold from each nonresident partner, 
shareholder, or beneficiary (other than a partner, 
shareholder, or beneficiary who is exempt from tax under 
Section 501(a) of the Internal Revenue Code or under Section 
205 of this Act, or who is included on a composite return filed 
by the partnership or Subchapter S corporation for the taxable 
year under subsection (f) of  Section 502 of this Act), or who 
is a retired partner, to the extent that partner's 
distributions are exempt from tax under Section 203(a)(2)(F) of 
this Act) an amount equal to the distributable share of the 
business income of the partnership, Subchapter S corporation, 
or trust apportionable to Illinois of that partner, 
shareholder, or beneficiary under Sections 702 and 704 and 
Subchapter S of the Internal Revenue Code, whether or not 
distributed, multiplied by the applicable rates of tax for that 
partner or shareholder under subsections (a) through (d) of 
Section 201 of this Act.
    (b) Credit for taxes withheld. Any amount withheld under 
subsection (a) of this Section and paid to the Department shall 
be treated as a payment of the estimated tax liability or of 
the liability for withholding under this Section of the 
partner, shareholder, or beneficiary to whom the income is 
distributable for the taxable year in which that person 
incurred a liability under this Act with respect to that 
income.
The Department shall adopt rules pursuant to which a 
partner, shareholder, or beneficiary may claim a credit against 
its obligation for withholding under this Section for amounts 
withheld under this Section with respect to income 
distributable to it by a partnership, Subchapter S corporation, 
or trust and allowing its partners, shareholders, or 
beneficiaries to claim a credit under this subsection (b) for 
those withheld amounts.

    (c) Exemption from withholding.
        (1) A partnership, Subchapter S corporation, or trust 
    shall not be required to withhold tax under subsection (a) 
    of this Section with respect to any nonresident partner, 
    shareholder, or beneficiary (other than an individual) 
    from whom the partnership, S corporation, or trust has 
    received a certificate, completed in the form and manner 
    prescribed by the Department, stating that such 
    nonresident partner, shareholder, or beneficiary shall:
            (A) file all returns that the partner, 
        shareholder, or beneficiary is required to file under 
        Section 502 of this Act and make timely payment of all 
        taxes imposed under Section 201 of this Act or under 
        this Section on the partner, shareholder, or 
        beneficiary with respect to income of the partnership, 
        S corporation, or trust; and
            (B) be subject to personal jurisdiction in this 
        State for purposes of the collection of income taxes, 
        together with related interest and penalties, imposed 
        on the partner, shareholder, or beneficiary with 
        respect to the income of the partnership, S 
        corporation, or trust.
        (2) The Department may revoke the exemption provided by 
    this subsection (c) at any time that it determines that the 
    nonresident partner, shareholder, or beneficiary is not 
    abiding by the terms of the certificate.  The Department 
    shall notify the partnership, S corporation, or trust that 
    it has revoked a certificate by notice left at the usual 
    place of business of the partnership, S corporation, or 
    trust or by mail to the last known address of the 
    partnership, S corporation, or trust.
        (3) A partnership, S corporation, or trust that 
    receives a certificate under this subsection (c) properly 
    completed by a nonresident partner, shareholder, or 
    beneficiary shall not be required to withhold any amount 
    from that partner, shareholder, or beneficiary, the 
    payment of which would be due under Section 711(a-5) of 
    this Act after the receipt of the certificate and no 
    earlier than 60 days after the Department has notified the 
    partnership, S corporation, or trust that the certificate 
    has been revoked.
        (4) Certificates received by a the partnership, S 
    corporation, or trust under this subsection (c) must be 
    retained by the partnership, S corporation, or trust and a 
    record of such certificates must be provided to the 
    Department, in a format in which the record is available 
    for review by the Department, upon request by the 
    Department.  The Department may, by rule, require the record 
    of certificates to be maintained and provided to the 
    Department electronically.

(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08.)

 



    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)


    Sec. 804. Failure to Pay Estimated Tax. 

    (a) In general. In case of any underpayment of estimated 
tax by a
taxpayer, except as provided in subsection (d) or (e), 
the taxpayer shall
be liable to a penalty in an amount 
determined at the rate prescribed by
Section 3-3 of the Uniform 
Penalty and Interest Act upon the amount of the
underpayment 
(determined under subsection (b)) for each required 
installment.

    (b) Amount of underpayment. For purposes of subsection (a), 
the
amount of the underpayment shall be the excess of:


        (1) the amount of the installment which would be 
    required to be paid
under subsection (c), over


        (2) the amount, if any, of the installment paid on or 
    before the
last date prescribed for payment.

    (c) Amount of Required Installments.


        (1) Amount.


            (A) In General.  Except as provided in paragraph 
        (2), the amount of any
required installment shall be 
        25% of the required annual payment.


            (B) Required Annual Payment.  For purposes of 
        subparagraph (A),
the term "required annual payment" 
        means the lesser of


                (i) 90% of the tax shown on the return for the 
            taxable year, or
if no return is filed, 90% of the 
            tax for such year,


                (ii) for installments due prior to February 1, 
            2011, and after January 31, 2012, 100% of the tax 
            shown on the return of the taxpayer for the

            preceding taxable year if a return showing a 
            liability for tax was filed by
the taxpayer for the 
            preceding taxable year and such preceding year was 
            a
taxable year of 12 months; or

                (iii) for installments due after January 31, 
            2011, and prior to February 1, 2012, 150% of the 
            tax shown on the return of the taxpayer for the 
            preceding taxable year if a return showing a 
            liability for tax was filed by the taxpayer for the 
            preceding taxable year and such preceding year was 
            a taxable year of 12 months. 

        (2) Lower Required Installment where Annualized Income 
    Installment is Less
Than Amount Determined Under Paragraph 
    (1).


            (A) In General.  In the case of any required 
        installment if a taxpayer
establishes that the 
        annualized income installment is less than the amount

        determined under paragraph (1),


                (i) the amount of such required installment 
            shall be the annualized
income installment, and


                (ii) any reduction in a required installment 
            resulting from the
application of this 
            subparagraph shall be recaptured by increasing the

            amount of the next required installment determined 
            under paragraph (1) by
the amount of such 
            reduction, and by increasing subsequent required

            installments to the extent that the reduction has 
            not previously been
recaptured under this clause.


            (B) Determination of Annualized Income 
        Installment.  In the case of
any required installment, 
        the annualized income installment is the
excess, if 
        any, of


                (i) an amount equal to the applicable 
            percentage of the tax for the
taxable year computed 
            by placing on an annualized basis the net income 
            for
months in the taxable year ending before the 
            due date for the installment, over


                (ii) the aggregate amount of any prior 
            required installments for
the taxable year.


            (C) Applicable Percentage.





















        In the case of the followingThe applicable
        required installments:percentage is:
        1st ...............................22.5%

















        2nd ...............................45%
        3rd ...............................67.5%
        4th ...............................90%
            (D) Annualized Net Income; Individuals.  For 
        individuals, net
income shall be placed on an 
        annualized basis by:


                (i) multiplying by 12, or in the case of a 
            taxable year of
less than 12 months, by the number 
            of months in the taxable year, the
net income 
            computed without regard to the standard exemption 
            for the months
in the taxable
year ending before 
            the month in which the installment is required to 
            be paid;


                (ii) dividing the resulting amount by the 
            number of months in the
taxable year ending before 
            the month in which such installment date falls; and


                (iii) deducting from such amount the standard 
            exemption allowable for
the taxable year, such 
            standard exemption being determined as of the last

            date prescribed for payment of the installment.


            (E) Annualized Net Income; Corporations.  For 
        corporations,
net income shall be placed on an 
        annualized basis by multiplying
by 12 the taxable 
        income 


                (i) for the first 3 months of the taxable year, 
            in the case of the
installment required to be paid 
            in the 4th month,


                (ii) for the first 3 months or for the first 5 
            months of the taxable
year, in the case of the 
            installment required to be paid in the 6th month,


                (iii) for the first 6 months or for the first 8 
            months of the taxable
year, in the case of the 
            installment required to be paid in the 9th month, 
            and


                (iv) for the first 9 months or for the first 11 
            months of the taxable
year, in the case of the 
            installment required to be paid in the 12th month

            of the taxable year,


        then dividing the resulting amount by the number of 
        months in the taxable
year (3, 5, 6, 8, 9, or 11 as the 
        case may be).

    (d) Exceptions. Notwithstanding the provisions of the 
preceding
subsections, the penalty imposed by subsection (a) 
shall not
be imposed if the taxpayer was not required to file 
an Illinois income
tax return for the preceding taxable year, 
or, for individuals, if the
taxpayer had no tax liability for 
the preceding taxable year and such year
was a taxable year of 
12 months.
The penalty imposed by subsection (a) shall
also not 
be imposed on any underpayments of estimated tax due before the

effective date of this amendatory Act of 1998 which 
underpayments are solely
attributable to the change in 
apportionment from subsection (a) to subsection
(h) of Section 
304.  The provisions of this amendatory Act of 1998 apply to tax

years ending on or after December 31, 1998.

    (e) The penalty imposed for underpayment of estimated tax 
by subsection
(a) of this Section shall not be imposed to the 
extent that the Director

or his or her designate determines, 
pursuant to Section 3-8 of the Uniform Penalty
and Interest Act 
that the penalty should not be imposed.

    (f) Definition of tax. For purposes of subsections (b) and 
(c),
the term "tax" means the excess of the tax imposed under 
Article 2 of
this Act, over the amounts credited against such 
tax under Sections
601(b) (3) and (4).

    (g) Application of Section in case of tax withheld under 
Article 7.
For purposes of applying this Section:

        (1) in the case of an individual, tax
withheld from 
    compensation for the taxable year shall be deemed a payment

    of estimated tax, and an equal part of such amount shall be 
    deemed paid
on each installment date for such taxable year, 
    unless the taxpayer
establishes the dates on which all 
    amounts were actually withheld, in
which case the amounts 
    so withheld shall be deemed payments of estimated
tax on 
    the dates on which such amounts were actually withheld;

        (2) amounts timely paid by a partnership, Subchapter S 
    corporation, or trust on behalf of a partner, shareholder, 
    or beneficiary pursuant to subsection (f) of Section 502 or 
    Section 709.5 and claimed as a payment of estimated tax 
    shall be deemed a payment of estimated tax made on the last 
    day of the taxable year of the partnership, Subchapter S 
    corporation, or trust for which the income from the 
    withholding is made was computed; and
        (3) all other amounts pursuant to Article 7 shall be 
    deemed a payment of estimated tax on the date the payment 
    is made to the taxpayer of the amount from which the tax is 
    withheld.

    (g-5) Amounts withheld under the State Salary and Annuity 
Withholding
Act.  An individual who has amounts withheld under 
paragraph (10) of Section 4
of the State Salary and Annuity 
Withholding Act may elect to have those amounts
treated as 
payments of estimated tax made on the dates on which those 
amounts
are actually withheld.

    (i) Short taxable year.  The application of this Section to

taxable years of less than 12 months shall be in accordance 
with
regulations prescribed by the Department.

    The changes in this Section made by Public Act 84-127 shall 
apply to
taxable years ending on or after January 1, 1986.

(Source: P.A. 95-233, eff. 8-16-07; 96-1496, eff. 1-13-11.)

 



    (35 ILCS 5/909)  (from Ch. 120, par. 9-909)


    Sec. 909. Credits and Refunds. 

    (a) In general. In the case of any overpayment, the 
Department, within the applicable period of limitations for a 
claim for refund, may
credit the amount of such overpayment, 
including any interest allowed
thereon, against any liability 
in respect of the tax imposed by this Act,
regardless of 
whether other collection remedies are closed to the
Department 
on the part of the person who made the overpayment and shall

refund any balance to such person.

    (b) Credits against estimated tax. The Department may

prescribe regulations providing for the crediting against the 
estimated tax
for any taxable year of the amount determined by 
the taxpayer or the
Department to be an overpayment of the tax 
imposed by this Act for a
preceding taxable year.

    (c) Interest on overpayment. Interest shall be allowed and 
paid at the
rate and in the manner prescribed in Section 3-2 of 
the Uniform Penalty and
Interest Act upon any overpayment in 
respect of the tax imposed by this
Act. For purposes of this 
subsection, no amount of tax, for any taxable
year, shall be 
treated as having been paid before the date on which the tax

return for such year was due under Section 505, without regard 
to any
extension of the time for filing such return.

    (d) Refund claim. Every claim for refund shall be filed 
with the
Department in writing in such form as the Department 
may by regulations
prescribe, and shall state the specific 
grounds upon which it is founded.

    (e) Notice of denial. As soon as practicable after a claim 
for refund
is filed, the Department shall examine it and either 
issue a notice of
refund, abatement or credit to the claimant 
or issue a notice of denial.
If the Department has failed to 
approve or deny the claim before the
expiration of 6 months 
from the date the claim was filed, the claimant may

nevertheless thereafter file with the Department a written 
protest in such
form as the Department may by regulation 
prescribe.  If a protest is filed,
the Department shall consider 
the claim and, if the taxpayer has so
requested, shall grant 
the taxpayer or the taxpayer's authorized
representative a 
hearing within 6 months after the date such request is filed.

    (f) Effect of denial. A denial of a claim for refund 
becomes final 60
days after the date of issuance of the notice 
of such denial except for
such amounts denied as to which the 
claimant has filed a protest with the
Department, as provided 
by Section 910.

    (g) An overpayment of tax shown on the face of an unsigned 
return
shall be considered forfeited to the State if after 
notice and demand for
signature by the Department the taxpayer 
fails to provide a signature and 3
years have passed from the 
date the return was filed.
An overpayment of tax refunded to a 
taxpayer whose return was filed
electronically shall be 
considered an erroneous refund under Section 912 of
this Act 
if, after proper notice and demand by the
Department, the 
taxpayer fails to provide a required signature document.
A 
notice and demand for signature in the case of a return 
reflecting an
overpayment may be made by first class mail.  This 
subsection (g) shall apply
to all returns filed pursuant to 
this Act since 1969.

    (h) This amendatory Act of 1983 applies to returns and 
claims for
refunds filed with the Department on and after July 
1, 1983.

(Source: P.A. 89-399, eff. 8-20-95.)

 



    (35 ILCS 5/911)  (from Ch. 120, par. 9-911)


    Sec. 911. Limitations on Claims for Refund. 

    (a) In general. Except
as otherwise provided in this Act:


        (1) A claim for refund shall be filed not later than 3 
    years after
the date the return was filed (in the case of 
    returns required under
Article 7 of this Act respecting any 
    amounts withheld as tax, not later
than 3 years after the 
    15th day of the 4th month following the close of
the 
    calendar year in which such withholding was made), or one 
    year after
the date the tax was paid, whichever is the 
    later; and


        (2) No credit or refund shall be allowed or made with 
    respect to the
year for which the claim was filed unless 
    such claim is filed within
such period.

    (b) Federal changes.


        (1) In general.  In any case where
notification of an 
    alteration is required by Section 506(b), a claim
for 
    refund may be filed within 2 years after the date on which 
    such
notification was due (regardless of whether such 
    notice was given), but
the amount recoverable pursuant to a 
    claim filed under this Section
shall be limited to the 
    amount of any overpayment resulting under this
Act from 
    recomputation of the taxpayer's net income, net loss, or 
    Article 2
credits for the taxable
year after giving effect 
    to the item or items reflected in the
alteration required 
    to be reported.


        (2) Tentative carryback adjustments paid before 
    January 1, 1974.
If, as the result of the payment before 
    January 1, 1974 of a federal
tentative carryback 
    adjustment, a notification of an alteration is
required 
    under Section 506(b), a claim for refund may be filed at 
    any
time before January 1, 1976, but the amount recoverable 
    pursuant to a
claim filed under this Section shall be 
    limited to the amount of any
overpayment resulting under 
    this Act from recomputation of the
taxpayer's base income 
    for the taxable year after giving effect to the
federal 
    alteration resulting from the tentative carryback 
    adjustment
irrespective of any limitation imposed in 
    paragraph (l) of this
subsection.

    (c) Extension by agreement.  Where, before the expiration of 
the
time prescribed in this section for the filing of a claim 
for refund,
both the Department and the claimant shall have 
consented in writing to
its filing after such time, such claim 
may be filed at any time prior to
the expiration of the period 
agreed upon.  The period so agreed upon may
be extended by 
subsequent agreements in writing made before the
expiration of 
the period previously agreed upon.
In the case of a taxpayer 
who is a partnership, Subchapter S corporation, or
trust and 
who enters into an agreement with the Department pursuant to 
this
subsection on or after January 1, 2003, a claim for refund 
may be filed by issued to the
partners, shareholders, or 
beneficiaries of the taxpayer at any time prior to
the 
expiration of the period agreed upon. Any refund
allowed 
pursuant to the claim, however, shall be limited to the amount 
of any
overpayment
of tax due under this Act that results from 
recomputation of items of income,
deduction, credits, or other 
amounts of the taxpayer that are taken into
account by the 
partner, shareholder, or beneficiary in computing its 
liability
under this Act.

    (d) Limit on amount of credit or refund.


        (1) Limit where claim filed within 3-year period.  If 
    the claim was
filed by the claimant during the 3-year 
    period prescribed in subsection
(a), the amount of the 
    credit or refund shall not exceed the portion of
the tax 
    paid within the period, immediately preceding the filing of 
    the
claim, equal to 3 years plus the period of any 
    extension of time for
filing the return.


        (2) Limit where claim not filed within 3-year period.  
    If the claim
was not filed within such 3-year period, the 
    amount of the credit or
refund shall not exceed the portion 
    of the tax paid during the one year
immediately preceding 
    the filing of the claim.

    (e) Time return deemed filed.  For purposes of this section 
a tax
return filed before the last day prescribed by law for 
the filing of
such return (including any extensions thereof) 
shall be deemed to have
been filed on such last day.

    (f) No claim for refund or credit based on the taxpayer's 
taking a credit for
estimated tax payments as provided by 
Section 601(b)(2) or for any amount
paid by a taxpayer pursuant 
to Section 602(a) or for any amount of credit for
tax withheld 
pursuant to Article 7 may be filed unless a return was filed 
for the tax year not more than 3
years after the due date, as 
provided by Section 505, of the return which
was required to be 
filed relative to the taxable year for which the
payments were 
made or for which the tax was withheld. The changes in
this 
subsection (f) made by this
amendatory Act of 1987 shall apply 
to all taxable years ending on or after
December 31, 1969.

    (g) Special Period of Limitation with Respect to Net Loss 
Carrybacks.
If the claim for refund relates to an overpayment 
attributable to a net
loss carryback as provided by Section 
207, in lieu of the 3 year period of
limitation prescribed in 
subsection (a), the period shall be that period
which ends 3 
years after the time prescribed by law for filing the return

(including extensions thereof) for the taxable year of the net 
loss which
results in such carryback (or, on and after August 
13, 1999, with respect to a change in the
carryover of
an 
Article 2 credit to a taxable year resulting from the carryback 
of a Section
207 loss incurred in a taxable year beginning on 
or after January 1, 2000, the
period shall be that period
that 
ends 3 years after the time prescribed by law for filing the 
return
(including extensions of that time) for that subsequent 
taxable year),
or the period prescribed in subsection (c) in

respect of such taxable year, whichever expires later.  In the 
case of such
a claim, the amount of the refund may exceed the 
portion of the tax paid
within the period provided in 
subsection (d) to the extent of the amount of
the overpayment 
attributable to such carryback.
On and after August 13, 1999, 
if the claim for refund relates to an overpayment attributable 
to
the
carryover
of an Article 2 credit, or of a Section 207 
loss, earned, incurred (in a
taxable year beginning on or after 
January 1, 2000), or used in
a
year for which a notification of 
a change affecting federal taxable income must
be filed under 
subsection (b) of Section 506, the claim may be filed within 
the
period
prescribed in paragraph (1) of subsection (b) in 
respect of the year for which
the
notification is required.  In 
the case of such a claim, the amount of the
refund may exceed 
the portion of the tax paid within the period provided in

subsection (d) to the extent of the amount of the overpayment 
attributable to
the recomputation of the taxpayer's Article 2 
credits, or Section 207 loss,
earned, incurred, or used in the 
taxable year for which the notification is
given.

    (h) Claim for refund based on net loss.  On and after August 
23, 2002, no claim for refund shall
be allowed to the extent 
the refund is the result of an amount of net loss
incurred in 
any taxable year ending prior to December 31, 2002
under 
Section 207 of this Act that was not reported to the Department

within 3 years of the due date (including extensions) of the 
return for the
loss year on either the original return filed by 
the taxpayer or on amended
return or to the extent that the 
refund is the result of an amount of net loss incurred in any 
taxable year under Section 207 for which no return was filed 
within 3 years of the due date (including extensions) of the 
return for the loss year.

(Source: P.A. 94-836, eff. 6-6-06; 95-233, eff. 8-16-07.)


 



    (35 ILCS 5/1002)  (from Ch. 120, par. 10-1002)


    Sec. 1002. Failure to Pay Tax. 

    (a) Negligence.  If any part of a deficiency is due to 
negligence or
intentional disregard of rules and regulations 
(but without intent to
defraud) there shall be added to the tax 
as a penalty the amount prescribed
by Section 3-5 of the 
Uniform Penalty and Interest Act.

    (b) Fraud.  If any part of a deficiency is due to fraud, 
there
shall be added to the tax as a penalty the amount 
prescribed
by Section 3-6 of the Uniform Penalty and Interest 
Act.

    (c) Nonwillful failure to pay withholding tax. If any 
employer, without
intent to evade or defeat any tax imposed by 
this Act or the payment
thereof, shall fail to make a return 
and pay a tax withheld by him at the
time required by or under 
the provisions of this Act, such employer shall
be liable for 
such taxes and shall pay the same together with the interest

and the penalty provided by Sections 3-2 and 3-3, respectively, 
of the
Uniform Penalty and Interest Act and such interest and 
penalty shall not be
charged to or collected from the employee 
by the employer.

    (d) Willful failure to collect and pay over tax.  Any person

required to collect, truthfully account for, and pay over the 
tax
imposed by this Act who willfully fails to collect such tax 
or
truthfully account for and pay over such tax or willfully 
attempts in
any manner to evade or defeat the tax or the 
payment thereof, shall, in
addition to other penalties provided 
by law, be liable for the penalty
imposed by Section 3-7 of the 
Uniform Penalty and Interest Act.

    (e) Penalties assessable.


        (1) In general. Except as otherwise provided in this 
    Act or the Uniform Penalty and Interest Act,  the
penalties 
    provided by this Act or by the Uniform Penalty and Interest 
    Act shall be paid upon notice and demand and
shall be 
    assessed, collected, and paid in the same manner as taxes 
    and any
reference in this Act to the tax imposed by this 
    Act shall be deemed also
to refer to penalties provided by 
    this Act or by the Uniform Penalty and Interest Act.


        (2) Procedure for assessing certain penalties.  For the 
    purposes of
Article 9 any penalty under Section 804(a) or 
    Section 1001 shall be deemed
assessed upon the filing of 
    the return for the taxable year.


        (3) Procedure for assessing the penalty for failure to 
    file withholding
returns or annual transmittal forms for 
    wage and tax statements.  The penalty
imposed by Section 
    1004 will be asserted by the Department's issuance of
a 
    notice of deficiency.  If taxpayer files a timely protest, 
    the procedures
of Section 908 will be followed.  If taxpayer 
    does not file a timely protest,
the notice of deficiency 
    will constitute an assessment pursuant to subsection
(c) of 
    Section 904. 

        (4) Assessment of penalty under Section 1005(a) 1005 
    (b).   The penalty imposed under Section 1005(a) 1005(b) 
    shall be deemed assessed upon the assessment of the tax to 
    which such penalty relates and shall be collected and paid 
    on notice and demand in the same manner as the tax.

    (f) Determination of deficiency.   For purposes of 
subsections (a)
and (b), the amount shown as the tax by the 
taxpayer upon his return
shall be taken into account in 
determining the amount of the deficiency
only if such return 
was filed on or before the last day prescribed by
law for the 
filing of such return, including any extensions of the time
for 
such filing.

(Source: P.A. 93-840, eff. 7-30-04.)

 



    (35 ILCS 5/1101)  (from Ch. 120, par. 11-1101)


    Sec. 1101. Lien for Tax. 
    (a) If any person liable to pay any tax
neglects or refuses 
to pay the same after demand, the amount (including any

interest, additional amount,
addition to tax, or assessable 
penalty, together with any costs that may
accrue in addition 
thereto) shall be a lien in favor of the State of
Illinois upon 
all property and rights to property, whether real or
personal, 
belonging to such person.

    (b) Unless another date is specifically fixed by law, the 
lien imposed
by subsection (a) of this Section shall arise at 
the time the assessment is
made and shall continue until the 
liability for the amount so assessed (or
a judgment against the 
taxpayer arising out of such liability) is satisfied
or becomes 
unenforceable by reason of lapse of time.

    (c) Deficiency procedure. If the lien arises from an 
assessment
pursuant to a notice of deficiency, such lien shall 
not attach and the
notice referred to in this section shall not 
be filed until all proceedings
in court for review of such 
assessment have terminated or the time for the
taking thereof 
has expired without such proceedings being instituted.

    (d) Notice of lien.  The lien created by assessment shall

terminate unless a notice of lien is filed, as provided in 
section 1103 hereof,
within 3 years from the date all 
proceedings in court for the review of
such assessment have 
terminated or the time for the taking thereof has
expired 
without such proceedings being instituted. Where the lien 
results
from the filing of a return without payment of the tax 
or penalty shown
therein to be due, the lien shall terminate 
unless a notice of lien is
filed within 3 years from the date 
such return was filed with the
Department.
For the purposes of 
this subsection (d) (c), a tax return filed before the last
day 
prescribed by law, including any extension thereof, shall be 
deemed to
have been filed on such last day. The time limitation 
period on the Department's right to file a notice of lien shall 
not run during any period of time in which the order of any 
court has the effect of enjoining or restraining the Department 
from filing such notice of lien. 

(Source: P.A. 86-905.)

 



    (35 ILCS 5/1402)  (from Ch. 120, par. 14-1402)



    Sec. 1402. Notice. 

    Whenever notice is required by this Act, such notice may 
shall, if not
otherwise provided, be given or issued by mailing 
it by first-class registered or
certified mail addressed to the 
person concerned at his last known address.
Notice to a person 
who is under a legal disability or deceased, shall be
mailed to 
his last known address or, if the Department has received 
notice
of the existence of a fiduciary for such person or his 
estate, to such
fiduciary.

(Source: P.A. 76-261.)

 



    (35 ILCS 5/1405.4)


    Sec. 1405.4. Tax refund inquiries; response. The 
Department of Revenue
shall establish procedures to inform 
taxpayers of the status of their refunds and shall provide a 
response to respond in writing to each inquiry concerning 
refunds under this Act
within 10 days after receiving the 
inquiry.  The response shall include the
date the inquiry was 
received, the file number assigned to the inquiry, and the
name 
and telephone number of a person within the Department of 
Revenue whom the
taxpayer may contact with further inquiries.

(Source: P.A. 89-89, eff. 6-30-95.)

 



    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)


    Sec. 1501. Definitions. 

    (a) In general. When used in this Act, where not
otherwise 
distinctly expressed or manifestly incompatible with the 
intent
thereof:


        (1) Business income. The term "business income" means 
    all income that may be treated as apportionable business 
    income under the Constitution of the United States.    
    Business income is net of the deductions allocable thereto. 
    Such term does not include compensation
or the deductions 
    allocable thereto.
For each taxable year beginning on or 
    after January 1, 2003, a taxpayer may
elect to treat all 
    income other than compensation as business income.  This

    election shall be made in accordance with rules adopted by 
    the Department and,
once made, shall be irrevocable.

        (1.5) Captive real estate investment trust:

            (A) The term "captive real estate investment 
        trust" means a corporation, trust, or association:

                (i) that is considered a real estate 
            investment trust for the taxable year under 
            Section 856 of the Internal Revenue Code;

                (ii) the certificates of beneficial interest 
            or shares of which are not regularly traded on an 
            established securities market; and
                (iii) of which more than 50% of the voting 
            power or value of the beneficial interest or 
            shares, at any time during the last half of the 
            taxable year, is owned or controlled, directly, 
            indirectly, or constructively, by a single 
            corporation.
            (B) The term "captive real estate investment 
        trust" does not include:
                (i) a real estate investment trust of which 
            more than 50% of the voting power or value of the 
            beneficial interest or shares is owned or 
            controlled, directly, indirectly, or 
            constructively, by:
                    (a) a real estate investment trust, other 
                than a captive real estate investment trust;
                    (b) a person who is exempt from taxation 
                under Section 501 of the Internal Revenue Code, 
                and who is not required to treat income 
                received from the real estate investment trust 
                as unrelated business taxable income under 
                Section 512 of the Internal Revenue Code;
                    (c) a listed Australian property trust, if 
                no more than 50% of the voting power or value 
                of the beneficial interest or shares of that 
                trust, at any time during the last half of the 
                taxable year, is owned or controlled, directly 
                or indirectly, by a single person;
                    (d) an entity organized as a trust, 
                provided a listed Australian property trust 
                described in subparagraph (c) owns or 
                controls, directly or indirectly, or 
                constructively, 75% or more of the voting power 
                or value of the beneficial interests or shares 
                of such entity; or
                    (e) an entity that is organized outside of 
                the laws of the United States and that 
                satisfies all of the following criteria:
                        (1) at least 75% of the entity's total 
                    asset value at the close of its taxable 
                    year is represented by real estate assets 
                    (as defined in Section 856(c)(5)(B) of the 
                    Internal Revenue Code, thereby including 
                    shares or certificates of beneficial 
                    interest in any real estate investment 
                    trust), cash and cash equivalents, and 
                    U.S. Government securities;
                        (2) the entity is not subject to tax on 
                    amounts that are distributed to its 
                    beneficial owners or is exempt from 
                    entity-level taxation;
                        (3) the entity distributes at least 
                    85% of its taxable income (as computed in 
                    the jurisdiction in which it is organized) 
                    to the holders of its shares or 
                    certificates of beneficial interest on an 
                    annual basis;
                        (4) either (i) the shares or 
                    beneficial interests of the entity are 
                    regularly traded on an established 
                    securities market or (ii) not more than 10% 
                    of the voting power or value in the entity 
                    is held, directly, indirectly, or 
                    constructively, by a single entity or 
                    individual; and
                        (5) the entity is organized in a 
                    country that has entered into a tax treaty 
                    with the United States; or 
                (ii) during its first taxable year for which it 
            elects to be treated as a real estate investment 
            trust under Section 856(c)(1) of the Internal 
            Revenue Code, a real estate investment trust the 
            certificates of beneficial interest or shares of 
            which are not regularly traded on an established 
            securities market, but only if the certificates of 
            beneficial interest or shares of the real estate 
            investment trust are regularly traded on an 
            established securities market prior to the earlier 
            of the due date (including extensions) for filing 
            its return under this Act for that first taxable 
            year or the date it actually files that return.
            (C) For the purposes of this subsection (1.5), the 
        constructive ownership rules prescribed under Section 
        318(a) of the Internal Revenue Code, as modified by 
        Section 856(d)(5) of the Internal Revenue Code, apply 
        in determining the ownership of stock, assets, or net 
        profits of any person.


        (2) Commercial domicile. The term "commercial 
    domicile" means the
principal
place from which the trade or 
    business of the taxpayer is directed or managed.


        (3) Compensation. The term "compensation" means wages, 
    salaries,
commissions
and any other form of remuneration 
    paid to employees for personal services.


        (4) Corporation. The term "corporation" includes 
    associations, joint-stock
companies, insurance companies 
    and cooperatives. Any entity, including a
limited 
    liability company formed under the Illinois Limited 
    Liability Company
Act, shall be treated as a corporation if 
    it is so classified for federal
income tax purposes.



        (5) Department. The term "Department" means the 
    Department of Revenue of
this State.


        (6) Director. The term "Director" means the Director of 
    Revenue of this
State.


        (7) Fiduciary. The term "fiduciary" means a guardian, 
    trustee, executor,
administrator, receiver, or any person 
    acting in any fiduciary capacity for any
person.


        (8) Financial organization.


            (A) The term "financial organization" means
any

        bank, bank holding company, trust company, savings 
        bank, industrial bank,
land bank, safe deposit 
        company, private banker, savings and loan association,

        building and loan association, credit union, currency 
        exchange, cooperative
bank, small loan company, sales 
        finance company, investment company, or any
person 
        which is owned by a bank or bank holding company.  For 
        the purpose of
this Section a "person" will include 
        only those persons which a bank holding
company may 
        acquire and hold an interest in, directly or 
        indirectly, under the
provisions of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1841, et seq.),
except 
        where interests in any person must be disposed of 
        within certain
required time limits under the Bank 
        Holding Company Act of 1956.


            (B) For purposes of subparagraph (A) of this 
        paragraph, the term
"bank" includes (i) any entity that 
        is regulated by the Comptroller of the
Currency under 
        the National Bank Act, or by the Federal Reserve Board, 
        or by
the
Federal Deposit Insurance Corporation and 
        (ii) any federally or State chartered
bank
operating as 
        a credit card bank.


            (C) For purposes of subparagraph (A) of this 
        paragraph, the term
"sales finance company" has the 
        meaning provided in the following item (i) or
(ii):


                (i) A person primarily engaged in one or more 
            of the following
businesses:  the business of 
            purchasing customer receivables, the business
of 
            making loans upon the security of customer 
            receivables, the
business of making loans for the 
            express purpose of funding purchases of
tangible 
            personal property or services by the borrower, or 
            the business of
finance leasing.  For purposes of 
            this item (i), "customer receivable"
means:


                    (a) a retail installment contract or 
                retail charge agreement within
the
meaning
of 
                the Sales Finance Agency Act, the Retail 
                Installment Sales Act, or the
Motor Vehicle 
                Retail Installment Sales Act;


                    (b) an installment, charge, credit, or 
                similar contract or agreement
arising from
the 
                sale of tangible personal property or services 
                in a transaction involving
a deferred payment 
                price payable in one or more installments 
                subsequent
to the sale; or


                    (c) the outstanding balance of a contract 
                or agreement described in
provisions
(a) or (b) 
                of this item (i).


                A customer receivable need not provide for 
            payment of interest on
deferred
payments.  A sales 
            finance company may purchase a customer receivable 
            from, or
make a loan secured by a customer 
            receivable to, the seller in the original

            transaction or to a person who purchased the 
            customer receivable directly or
indirectly from 
            that seller.


                (ii) A corporation meeting each of the 
            following criteria:


                    (a) the corporation must be a member of an 
                "affiliated group" within
the
meaning of 
                Section 1504(a) of the Internal Revenue Code, 
                determined
without regard to Section 1504(b) 
                of the Internal Revenue Code;


                    (b) more than 50% of the gross income of 
                the corporation for the
taxable
year
must be 
                interest income derived from qualifying loans.  
                A "qualifying
loan" is a loan made to a member 
                of the corporation's affiliated group that

                originates customer receivables (within the 
                meaning of item (i)) or to whom
customer 
                receivables originated by a member of the 
                affiliated group have been
transferred, to
the 
                extent the average outstanding balance of 
                loans from that corporation
to members of its 
                affiliated group during the taxable year do not 
                exceed
the limitation amount for that 
                corporation.  The "limitation amount" for a

                corporation is the average outstanding 
                balances during the taxable year of
customer 
                receivables (within the meaning of item (i)) 
                originated by
all members of the affiliated 
                group.
 If the average outstanding balances of 
                the
loans made by a corporation to members of 
                its affiliated group exceed the
limitation 
                amount, the interest income of that 
                corporation from qualifying
loans shall be 
                equal to its interest income from loans to 
                members of its
affiliated groups times a 
                fraction equal to the limitation amount 
                divided by
the average outstanding balances of 
                the loans made by that corporation to
members 
                of its affiliated group;


                    (c) the total of all shareholder's equity 
                (including, without
limitation,
paid-in

                capital on common and preferred stock and 
                retained earnings) of the
corporation plus the 
                total of all of its loans, advances, and other

                obligations payable or owed to members of its 
                affiliated group may not
exceed 20% of the 
                total assets of the corporation at any time 
                during the tax
year; and


                    (d) more than 50% of all interest-bearing 
                obligations of the
affiliated group payable to 
                persons outside the group determined in 
                accordance
with generally accepted accounting 
                principles must be obligations of the

                corporation.


            This amendatory Act of the 91st General Assembly is 
        declaratory of
existing
law.


            (D) Subparagraphs
(B) and (C) of this paragraph are 
        declaratory of
existing law and apply retroactively, 
        for all tax years beginning on or before
December 31, 
        1996,
 to all original returns, to all amended returns 
        filed no later than 30
days after the effective date of 
        this amendatory Act of 1996, and to all
notices issued 
        on or before the effective date of this amendatory Act 
        of 1996
under subsection (a) of Section 903, subsection 
        (a) of Section 904,
subsection (e) of Section 909, or 
        Section 912.
A taxpayer that is a "financial 
        organization" that engages in any transaction
with an 
        affiliate shall be a "financial organization" for all 
        purposes of this
Act.


            (E) For all tax years beginning on or
before 
        December 31, 1996, a taxpayer that falls within the 
        definition
of a
"financial organization" under 
        subparagraphs (B) or (C) of this paragraph, but
who 
        does
not fall within the definition of a "financial 
        organization" under the Proposed
Regulations issued by 
        the Department of Revenue on July 19, 1996, may

        irrevocably elect to apply the Proposed Regulations 
        for all of those years as
though the Proposed 
        Regulations had been lawfully promulgated, adopted, 
        and in
effect for all of those years.  For purposes of 
        applying subparagraphs (B) or
(C) of
this
paragraph to 
        all of those years, the election allowed by this 
        subparagraph
applies only to the taxpayer making the 
        election and to those members of the
taxpayer's unitary 
        business group who are ordinarily required to 
        apportion
business income under the same subsection of 
        Section 304 of this Act as the
taxpayer making the 
        election.  No election allowed by this subparagraph 
        shall
be made under a claim
filed under subsection (d) 
        of Section 909 more than 30 days after the
effective 
        date of this amendatory Act of 1996.


            (F) Finance Leases.  For purposes of this 
        subsection, a finance lease
shall be treated as a loan 
        or other extension of credit, rather than as a
lease,

        regardless of how the transaction is characterized for 
        any other purpose,
including the purposes of any 
        regulatory agency to which the lessor is subject.
 A 
        finance lease is any transaction in the form of a lease 
        in which the lessee
is treated as the owner of the 
        leased asset entitled to any deduction for

        depreciation allowed under Section 167 of the Internal 
        Revenue Code.


        (9) Fiscal year. The term "fiscal year" means an 
    accounting period of
12 months ending on the last day of 
    any month other than December.

        (9.5) Fixed place of business. The term "fixed place of 
    business" has the same meaning as that term is given in 
    Section 864 of the Internal Revenue Code and the related 
    Treasury regulations. 

        (10) Includes and including. The terms "includes" and 
    "including" when
used in a definition contained in this Act 
    shall not be deemed to exclude
other things otherwise 
    within the meaning of the term defined.


        (11) Internal Revenue Code. The term "Internal Revenue 
    Code" means the
United States Internal Revenue Code of 1954 
    or any successor law or laws
relating to federal income 
    taxes in effect for the taxable year.

        (11.5) Investment partnership.
            (A) The term "investment partnership" means any 
        entity that is treated as a partnership for federal 
        income tax purposes that meets the following 
        requirements:
                (i) no less than 90% of the partnership's cost 
            of its total assets consists of qualifying 
            investment securities, deposits at banks or other 
            financial institutions, and office space and 
            equipment reasonably necessary to carry on its 
            activities as an investment partnership;
                (ii)        no less than 90% of its gross income 
            consists of interest, dividends, and gains from 
            the sale or exchange of qualifying investment 
            securities; and

                (iii) the partnership is not a dealer in 
            qualifying investment securities.
            (B)       For purposes of this paragraph (11.5), the term 
        "qualifying investment securities" includes all of the 
        following:

                (i) common stock, including preferred or debt 
            securities convertible into common stock, and 
            preferred stock;
                (ii) bonds, debentures, and other debt 
            securities;
                (iii) foreign and domestic currency deposits 
            secured by federal, state, or local governmental 
            agencies;
                (iv) mortgage or asset-backed securities 
            secured by federal, state, or local governmental 
            agencies;
                (v) repurchase agreements and loan 
            participations;
                (vi) foreign currency exchange contracts and 
            forward and futures contracts on foreign 
            currencies;
                (vii) stock and bond index securities and 
            futures contracts and other similar financial 
            securities and futures contracts on those 
            securities;

                (viii) options for the purchase or sale of any 
            of the securities, currencies, contracts, or 
            financial instruments described in items (i) to 
            (vii), inclusive;

                (ix)       regulated futures contracts;

                (x) commodities (not described in Section 
            1221(a)(1) of the Internal Revenue Code) or 
            futures, forwards, and options with respect to 
            such commodities, provided, however, that any item 
            of a physical commodity to which title is actually 
            acquired in the partnership's capacity as a dealer 
            in such commodity shall not be a qualifying 
            investment security;


                (xi) derivatives; and

                (xii) a partnership interest in another 
            partnership that is an investment partnership.


        (12) Mathematical error. The term "mathematical error" 
    includes the
following types of errors, omissions, or 
    defects in a return filed by a
taxpayer which prevents 
    acceptance of the return as filed for processing:


            (A) arithmetic errors or incorrect computations on 
        the return or
supporting schedules;


            (B) entries on the wrong lines;


            (C) omission of required supporting forms or 
        schedules or the omission
of the information in whole 
        or in part called for thereon; and


            (D) an attempt to claim, exclude, deduct, or 
        improperly report, in a
manner
directly contrary to the 
        provisions of the Act and regulations thereunder
any 
        item of income, exemption, deduction, or credit.


        (13) Nonbusiness income. The term "nonbusiness income" 
    means all income
other than business income or 
    compensation.


        (14) Nonresident. The term "nonresident" means a 
    person who is not a
resident.


        (15) Paid, incurred and accrued. The terms "paid", 
    "incurred" and
"accrued"
shall be construed according to 
    the method of accounting upon the basis
of which the 
    person's base income is computed under this Act.


        (16) Partnership and partner. The term "partnership" 
    includes a syndicate,
group, pool, joint venture or other 
    unincorporated organization, through
or by means of which 
    any business, financial operation, or venture is carried

    on, and which is not, within the meaning of this Act, a 
    trust or estate
or a corporation; and the term "partner" 
    includes a member in such syndicate,
group, pool, joint 
    venture or organization.


        The term "partnership" includes any entity, including 
    a limited
liability company formed under the Illinois

    Limited Liability Company Act, classified as a partnership 
    for federal income tax purposes.


        The term "partnership" does not include a syndicate, 
    group, pool,
joint venture, or other unincorporated 
    organization established for the
sole purpose of playing 
    the Illinois State Lottery.


        (17) Part-year resident. The term "part-year resident" 
    means an individual
who became a resident during the 
    taxable year or ceased to be a resident
during the taxable 
    year. Under Section 1501(a)(20)(A)(i) residence
commences 
    with presence in this State for other than a temporary or 
    transitory
purpose and ceases with absence from this State 
    for other than a temporary or
transitory purpose. Under 
    Section 1501(a)(20)(A)(ii) residence commences
with the 
    establishment of domicile in this State and ceases with the

    establishment of domicile in another State.


        (18) Person. The term "person" shall be construed to 
    mean and include
an individual, a trust, estate, 
    partnership, association, firm, company,
corporation, 
    limited liability company, or fiduciary. For purposes of 
    Section
1301 and 1302 of this Act, a "person" means (i) an 
    individual, (ii) a
corporation, (iii) an officer, agent, or 
    employee of a
corporation, (iv) a member, agent or employee 
    of a partnership, or (v)
a member,
manager, employee, 
    officer, director, or agent of a limited liability company

    who in such capacity commits an offense specified in 
    Section 1301 and 1302.


        (18A) Records.  The term "records" includes all data 
    maintained by the
taxpayer, whether on paper, microfilm, 
    microfiche, or any type of
machine-sensible data 
    compilation.


        (19) Regulations. The term "regulations" includes 
    rules promulgated and
forms prescribed by the Department.


        (20) Resident. The term "resident" means:


            (A) an individual (i) who is
in this State for 
        other than a temporary or transitory purpose during the

        taxable year; or (ii) who is domiciled in this State 
        but is absent from
the State for a temporary or 
        transitory purpose during the taxable year;


            (B) The estate of a decedent who at his or her 
        death was domiciled in
this
State;


            (C) A trust created by a will of a decedent who at 
        his death was
domiciled
in this State; and


            (D) An irrevocable trust, the grantor of which was 
        domiciled in this
State
at the time such trust became 
        irrevocable. For purpose of this subparagraph,
a trust 
        shall be considered irrevocable to the extent that the 
        grantor is
not treated as the owner thereof under 
        Sections 671 through 678 of the Internal
Revenue Code.


        (21) Sales. The term "sales" means all gross receipts 
    of the taxpayer
not allocated under Sections 301, 302 and 
    303.


        (22) State. The term "state" when applied to a 
    jurisdiction other than
this State means any state of the 
    United States, the District of Columbia,
the Commonwealth 
    of Puerto Rico, any Territory or Possession of the United

    States, and any foreign country, or any political 
    subdivision of any of the
foregoing.  For purposes of the 
    foreign tax credit under Section 601, the
term "state" 
    means any state of the United States, the District of 
    Columbia,
the Commonwealth of Puerto Rico, and any 
    territory or possession of the
United States, or any 
    political subdivision of any of the foregoing,
effective 
    for tax years ending on or after December 31, 1989.


        (23) Taxable year. The term "taxable year" means the 
    calendar year, or
the fiscal year ending during such 
    calendar year, upon the basis of which
the base income is 
    computed under this Act. "Taxable year" means, in the
case 
    of a return made for a fractional part of a year under the 
    provisions
of this Act, the period for which such return is 
    made.


        (24) Taxpayer. The term "taxpayer" means any person 
    subject to the tax
imposed by this Act.


        (25) International banking facility.  The term 
    international banking
facility shall have the same meaning 
    as is set forth in the Illinois Banking
Act or as is set 
    forth in the laws of the United States or regulations of

    the Board of Governors of the Federal Reserve System.


        (26) Income Tax Return Preparer.


            (A) The term "income tax return preparer"
means any 
        person who prepares for compensation, or who employs 
        one or more
persons to prepare for compensation, any 
        return of tax imposed by this Act
or any claim for 
        refund of tax imposed by this Act.  The preparation of a

        substantial portion of a return or claim for refund 
        shall be treated as
the preparation of that return or 
        claim for refund.


            (B) A person is not an income tax return preparer 
        if all he or she does
is


                (i) furnish typing, reproducing, or other 
            mechanical assistance;


                (ii) prepare returns or claims for refunds for 
            the employer by whom he
or she is regularly and 
            continuously employed;


                (iii) prepare as a fiduciary returns or claims 
            for refunds for any
person; or


                (iv) prepare claims for refunds for a taxpayer 
            in response to any
notice
of deficiency issued to 
            that taxpayer or in response to any waiver of

            restriction after the commencement of an audit of 
            that taxpayer or of another
taxpayer if a 
            determination in the audit of the other taxpayer 
            directly or
indirectly affects the tax liability 
            of the taxpayer whose claims he or she is

            preparing.


        (27) Unitary business group.  
            (A) The term "unitary business group" means
a group 
        of persons related through common ownership whose 
        business activities
are integrated with, dependent 
        upon and contribute to each other.  The group
will not 
        include those members whose business activity outside 
        the United
States is 80% or more of any such member's 
        total business activity; for
purposes of this 
        paragraph and clause (a)(3)(B)(ii) of Section 304,

        business
activity within the United States shall be 
        measured by means of the factors
ordinarily applicable 
        under subsections (a), (b), (c), (d), or (h)
of Section

        304 except that, in the case of members ordinarily 
        required to apportion
business income by means of the 3 
        factor formula of property, payroll and sales

        specified in subsection (a) of Section 304, including 
        the
formula as weighted in subsection (h) of Section 
        304, such members shall
not use the sales factor in the 
        computation and the results of the property
and payroll 
        factor computations of subsection (a) of Section 304 
        shall be
divided by 2 (by one if either
the property or 
        payroll factor has a denominator of zero). The 
        computation
required by the preceding sentence shall, 
        in each case, involve the division of
the member's 
        property, payroll, or revenue miles in the United 
        States,
insurance premiums on property or risk in the 
        United States, or financial
organization business 
        income from sources within the United States, as the

        case may be, by the respective worldwide figures for 
        such items.  Common
ownership in the case of 
        corporations is the direct or indirect control or

        ownership of more than 50% of the outstanding voting 
        stock of the persons
carrying on unitary business 
        activity.  Unitary business activity can
ordinarily be 
        illustrated where the activities of the members are:  
        (1) in the
same general line (such as manufacturing, 
        wholesaling, retailing of tangible
personal property, 
        insurance, transportation or finance); or (2) are 
        steps in a
vertically structured enterprise or process 
        (such as the steps involved in the
production of 
        natural resources, which might include exploration, 
        mining,
refining, and marketing); and, in either 
        instance, the members are functionally
integrated 
        through the exercise of strong centralized management 
        (where, for
example, authority over such matters as 
        purchasing, financing, tax compliance,
product line, 
        personnel, marketing and capital investment is not 
        left to each
member).

            (B) In no event, shall however, will any
unitary 
        business group include members
which are ordinarily 
        required to apportion business income under different

        subsections of Section 304 except that for tax years 
        ending on or after
December 31, 1987 this prohibition 
        shall not apply to a holding company that would 
        otherwise be a member of a unitary business group with 
        taxpayers that apportion business income under any of 
        subsections (b), (c), or (d) of Section 304 unitary 
        business group
composed of one or more taxpayers all of 
        which apportion business income
pursuant to subsection 
        (b) of Section 304, or all of which apportion business

        income pursuant to subsection (d) of Section 304, and a 
        holding company of such
single-factor taxpayers (see 
        definition of "financial organization" for rule

        regarding holding companies of financial 
        organizations).  If a unitary business
group would, but 
        for the preceding sentence, include members that are

        ordinarily required to apportion business income under 
        different subsections of
Section 304, then for each 
        subsection of Section 304 for which there are two or

        more members, there shall be a separate unitary 
        business group composed of such
members.  For purposes 
        of the preceding two sentences, a member is "ordinarily

        required to apportion business income" under a 
        particular subsection of Section
304 if it would be 
        required to use the apportionment method prescribed by 
        such
subsection except for the fact that it derives 
        business income solely from
Illinois.  As used in this 
        paragraph, the phrase "United States" means only the 50 
        states and the District of Columbia, but does not 
        include any territory or possession of the United 
        States or any area over which the United States has 
        asserted jurisdiction or claimed exclusive rights with 
        respect to the exploration for or exploitation of 
        natural resources.

            (C) Holding companies.
                (i) For purposes of this subparagraph, a 
            "holding company" is a corporation (other than a 
            corporation that is a financial organization under 
            paragraph (8) of this subsection (a) of Section 
            1501 because it is a bank holding company under the 
            provisions of the Bank Holding Company Act of 1956 
            (12 U.S.C. 1841, et seq.) or because it is owned by 
            a bank or a bank holding company) that owns a 
            controlling interest in one or more other 
            taxpayers ("controlled taxpayers"); that, during 
            the period that includes the taxable year and the 2 
            immediately preceding taxable years or, if the 
            corporation was formed during the current or 
            immediately preceding taxable year, the taxable 
            years in which the corporation has been in 
            existence, derived substantially all its gross 
            income from dividends, interest, rents, royalties, 
            fees or other charges received from controlled 
            taxpayers for the provision of services, and gains 
            on the sale or other disposition of interests in 
            controlled taxpayers or in property leased or 
            licensed to controlled taxpayers or used by the 
            taxpayer in providing services to controlled 
            taxpayers; and that incurs no substantial expenses 
            other than expenses (including interest and other 
            costs of borrowing) incurred in connection with 
            the acquisition and holding of interests in 
            controlled taxpayers and in the provision of 
            services to controlled taxpayers or in the leasing 
            or licensing of property to controlled taxpayers.
                (ii) The income of a holding company which is a 
            member of more than one unitary business group 
            shall be included in each unitary business group of 
            which it is a member on a pro rata basis, by 
            including in each unitary business group that 
            portion of the base income of the holding company 
            that bears the same proportion to the total base 
            income of the holding company as the gross receipts 
            of the unitary business group bears to the combined 
            gross receipts of all unitary business groups (in 
            both cases without regard to the holding company) 
            or on any other reasonable basis, consistently 
            applied.
                (iii) A holding company shall apportion its 
            business income under the subsection of Section 
            304 used by the other members of its unitary 
            business group.  The apportionment factors of a 
            holding company which would be a member of more 
            than one unitary business group shall be included 
            with the apportionment factors of each unitary 
            business group of which it is a member on a pro 
            rata basis using the same method used in clause 
            (ii).
                (iv) The provisions of this subparagraph (C) 
            are intended to clarify existing law.
            (D) If including the base income and factors of a 
        holding company in more than one unitary business group 
        under subparagraph (C) does not fairly reflect the 
        degree of integration between the holding company and 
        one or more of the unitary business groups, the 
        dependence of the holding company and one or more of 
        the unitary business groups upon each other, or the 
        contributions between the holding company and one or 
        more of the unitary business groups, the holding 
        company may petition the Director, under the 
        procedures provided under Section 304(f), for 
        permission to include all base income and factors of 
        the holding company only with members of a unitary 
        business group apportioning their business income 
        under one subsection of subsections (a), (b), (c), or 
        (d) of Section 304.  If the petition is granted, the 
        holding company shall be included in a unitary business 
        group only with persons apportioning their business 
        income under the selected subsection of Section 304 
        until the Director grants a petition of the holding 
        company either to be included in more than one unitary 
        business group under subparagraph (C) or to include its 
        base income and factors only with members of a unitary 
        business group apportioning their business income 
        under a different subsection of Section 304. 
            (E) If the unitary business group members' 
        accounting periods differ,
the common parent's 
        accounting period or, if there is no common parent, the

        accounting period of the member that is expected to 
        have, on a recurring basis,
the greatest Illinois 
        income tax liability must be used to determine whether 
        to
use the apportionment method provided in subsection 
        (a) or subsection (h) of
Section 304.  The
prohibition 
        against membership in a unitary business group for 
        taxpayers
ordinarily required to apportion income 
        under different subsections of Section
304 does not 
        apply to taxpayers required to apportion income under 
        subsection
(a) and subsection (h) of Section
304.  The 
        provisions of this amendatory Act of 1998 apply to tax

        years ending on or after December 31, 1998.


        (28) Subchapter S corporation.  The term "Subchapter S 
    corporation"
means a corporation for which there is in 
    effect an election under Section
1362 of the Internal 
    Revenue Code, or for which there is a federal election
to 
    opt out of the provisions of the Subchapter S Revision Act 
    of 1982 and
have applied instead the prior federal 
    Subchapter S rules as in effect on July
1, 1982.

        (30) Foreign person. The term "foreign person" means 
    any person who is a nonresident alien individual and any 
    nonindividual entity, regardless of where created or 
    organized, whose business activity outside the United 
    States is 80% or more of the entity's total business 
    activity.

 

    (b) Other definitions.


        (1) Words denoting number, gender, and so forth,
when 
    used in this Act, where not otherwise distinctly expressed 
    or manifestly
incompatible with the intent thereof:


            (A) Words importing the singular include and apply 
        to several persons,
parties or things;


            (B) Words importing the plural include the 
        singular; and


            (C) Words importing the masculine gender include 
        the feminine as well.


        (2) "Company" or "association" as including successors 
    and assigns. The
word "company" or "association", when used 
    in reference to a corporation,
shall be deemed to embrace 
    the words "successors and assigns of such company
or 
    association", and in like manner as if these last-named 
    words, or words
of similar import, were expressed.


        (3) Other terms. Any term used in any Section of this 
    Act with respect
to the application of, or in connection 
    with, the provisions of any other
Section of this Act shall 
    have the same meaning as in such other Section.

(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08; 
96-641, eff. 8-24-09.)



 

    Section 99. Effective date. This Act takes effect upon 
becoming law.


                                  



									INDEX
								

									Statutes amended in order of appearance
								
    35 ILCS 5/203from Ch. 120, par. 2-203
    35 ILCS 5/204from Ch. 120, par. 2-204
    35 ILCS 5/205from Ch. 120, par. 2-205
    35 ILCS 5/207from Ch. 120, par. 2-207
    35 ILCS 5/214
    35 ILCS 5/220
    35 ILCS 5/304from Ch. 120, par. 3-304
    35 ILCS 5/502from Ch. 120, par. 5-502
    35 ILCS 5/506from Ch. 120, par. 5-506
    35 ILCS 5/601from Ch. 120, par. 6-601
    35 ILCS 5/701from Ch. 120, par. 7-701
    35 ILCS 5/702from Ch. 120, par. 7-702
    35 ILCS 5/703from Ch. 120, par. 7-703
    35 ILCS 5/704A
    35 ILCS 5/709.5
    35 ILCS 5/804from Ch. 120, par. 8-804
    35 ILCS 5/909from Ch. 120, par. 9-909
    35 ILCS 5/911from Ch. 120, par. 9-911
    35 ILCS 5/1002from Ch. 120, par. 10-1002
    35 ILCS 5/1101from Ch. 120, par. 11-1101
    35 ILCS 5/1402from Ch. 120, par. 14-1402
    35 ILCS 5/1405.4
    35 ILCS 5/1501from Ch. 120, par. 15-1501