100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3163

 

Introduced , by Rep. Natalie A. Manley

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.6
35 ILCS 5/203  from Ch. 120, par. 2-203

    Amends the State Treasurer Act. Provides that contributions to an ABLE account during the taxable year may be deducted from adjusted gross income as provided under a specified Section of the Illinois Income Tax Act. Amends the Illinois Income Tax Act. In a Section concerning base income, provides that the adjusted gross income shall be modified by adding a maximum amount of, for taxable years beginning on or after January 1, 2018, $10,000 contributed in the taxable year to an ABLE account under a specified Section of the State Treasurer Act. Provides for an exemption from a Section concerning the sunset of exemptions, credits, and deductions under the Act. Effective immediately.


LRB100 10240 RJF 20423 b

 

 

A BILL FOR

 

HB3163LRB100 10240 RJF 20423 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The State Treasurer Act is amended by changing
5Section 16.6 as follows:
 
6    (15 ILCS 505/16.6)
7    Sec. 16.6. ABLE account program.
8    (a) As used in this Section:
9    "ABLE account" or "account" means an account established
10for the purpose of financing certain qualified expenses of
11eligible individuals as specifically provided for in this
12Section and authorized by Section 529A of the Internal Revenue
13Code.
14    "ABLE account plan" or "plan" means the savings account
15plan provided for in this Section.
16    "Account administrator" means the person selected by the
17State Treasurer to administer the daily operations of the ABLE
18account plan and provide marketing, recordkeeping, investment
19management, and other services for the plan.
20    "Aggregate account balance" means the amount in an account
21on a particular date or the fair market value of an account on
22a particular date.
23    "Beneficiary" means the ABLE account owner.

 

 

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1    "Board" means the Illinois State Board of Investment.
2    "Contracting state" means a state without a qualified ABLE
3program which has entered into a contract with Illinois to
4provide residents of the contracting state access to a
5qualified ABLE program.
6    "Designated representative" means a person who is
7authorized to act on behalf of an account owner. An account
8owner is authorized to act on his or her own behalf unless the
9account owner is a minor or the account owner has been
10adjudicated to have a disability so that a guardian has been
11appointed. A designated representative acts in a fiduciary
12capacity to the account owner. The State Treasurer shall
13recognize a person as a designated representative without
14appointment by a court in the following order of priority:
15        (1) The account owner's plenary guardian of the estate,
16    or the account owner's limited guardian of financial or
17    contractual matters. Any guardian acting in this capacity
18    shall not be required to seek court approval for any ABLE
19    qualified distributions.
20        (2) The agent named by the account owner in a property
21    power of attorney recognized as a statutory short form
22    power of attorney for property.
23        (3) Such individual or entity that the account owner so
24    designates in writing, in a manner to be established by the
25    State Treasurer.
26        (4) Such other individual or entity designated by the

 

 

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1    State Treasurer pursuant to its rules.
2    "Disability certification" has the meaning given to that
3term under Section 529A of the Internal Revenue Code.
4    "Eligible individual" has the meaning given to that term
5under Section 529A of the Internal Revenue Code.
6    "Participation agreement" means an agreement to
7participate in the ABLE account plan between an account owner
8and the State, through its agencies and the State Treasurer.
9    "Qualified disability expenses" has the meaning given to
10that term under Section 529A of the Internal Revenue Code.
11    "Qualified withdrawal" or "qualified distribution" means a
12withdrawal from an ABLE account to pay the qualified disability
13expenses of the beneficiary of the account.
14    (b) The "Achieving a Better Life Experience" or "ABLE"
15account program is hereby created and shall be administered by
16the State Treasurer. The purpose of the ABLE plan is to
17encourage and assist individuals and families in saving private
18funds for the purpose of supporting individuals with
19disabilities to maintain health, independence, and quality of
20life, and to provide secure funding for disability-related
21expenses on behalf of designated beneficiaries with
22disabilities that will supplement, but not supplant, benefits
23provided through private insurance, federal and State medical
24and disability insurance, the beneficiary's employment, and
25other sources. Under the plan, a person may make contributions
26to an ABLE account to meet the qualified disability expenses of

 

 

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1the designated beneficiary of the account. The plan must be
2operated as an accounts-type plan that permits persons to save
3for qualified disability expenses incurred by or on behalf of
4an eligible individual.
5    The State Treasurer shall promote awareness of the
6availability and advantages of the ABLE account plan as a way
7to assist individuals and families in saving private funds for
8the purpose of supporting individuals with disabilities. The
9cost of these promotional efforts shall not be funded with fees
10imposed on participants by the State Treasurer.
11    The State Treasurer shall not accept contributions for ABLE
12accounts under this Section until the Internal Revenue Service
13has issued its final regulations or interim guidance concerning
14ABLE accounts.
15    A separate account must be maintained for each beneficiary
16for whom contributions are made, and no more than one account
17shall be established per beneficiary. If an ABLE account is
18established for a designated beneficiary, no account
19subsequently established for such beneficiary shall be treated
20as an ABLE account. The preceding sentence shall not apply in
21the case of an ABLE account established for purposes of a
22rollover as permitted under Section 529A of the Internal
23Revenue Code.
24    An ABLE account may be established under this Section for a
25designated beneficiary who is a resident of Illinois, a
26resident of a contracting state, or a resident of any other

 

 

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1state.
2    Prior to the establishment of an ABLE account, an account
3owner must provide documentation to the State Treasurer that
4the account beneficiary is an eligible individual.
5    Annual contributions to an ABLE account on behalf of a
6beneficiary are subject to the requirements of subsection (b)
7of Section 529A of the Internal Revenue Code. No person may
8make a contribution to an ABLE account if such a contribution
9would result in the aggregate account balance of an ABLE
10account exceeding the account balance limit authorized under
11Section 529A of the Internal Revenue Code. The Treasurer shall
12review the contribution limit at least annually.
13    The State Treasurer shall administer the plan, including
14accepting and processing applications, maintaining account
15records, making payments, and undertaking any other necessary
16tasks to administer the plan, including the appointment of an
17account administrator. The State Treasurer may contract with
18one or more third parties to carry out some or all of these
19administrative duties, including, but not limited to,
20providing investment management services, incentives, and
21marketing the plan.
22    In designing and establishing the plan's requirements and
23in negotiating or entering into contracts with third parties
24under this Section, the State Treasurer shall consult with the
25Board. The State Treasurer shall establish fees to be imposed
26on participants to recover the costs of administration,

 

 

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1recordkeeping, and investment management. The State Treasurer
2must use his or her best efforts to keep these fees as low as
3possible, consistent with efficient administration.
4    The Illinois ABLE Accounts Administrative Fund is created
5as a nonappropriated trust fund in the State treasury. The
6State Treasurer shall use moneys in the Administrative Fund to
7pay for administrative expenses he or she incurs in the
8performance of his or her duties under this Section. The State
9Treasurer shall use moneys in the Administrative Fund to cover
10administrative expenses incurred under this Section. The
11Administrative Fund may receive any grants or other moneys
12designated for administrative purposes from the State, or any
13unit of federal, state, or local government, or any other
14person, firm, partnership, or corporation. Any interest
15earnings that are attributable to moneys in the Administrative
16Fund must be deposited into the Administrative Fund. Any fees
17established by the State Treasurer to recover the costs of
18administration, recordkeeping, and investment management shall
19be deposited into the Administrative Fund.
20    Subject to appropriation, the State Treasurer may pay
21administrative costs associated with the creation and
22management of the plan until sufficient assets are available in
23the Administrative Fund for that purpose.
24    Applications for accounts, account owner data, account
25data, and data on beneficiaries of accounts are confidential
26and exempt from disclosure under the Freedom of Information

 

 

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1Act.
2    (c) The State Treasurer may invest the moneys in ABLE
3accounts in the same manner and in the same types of
4investments provided for the investment of moneys by the Board.
5To enhance the safety and liquidity of ABLE accounts, to ensure
6the diversification of the investment portfolio of accounts,
7and in an effort to keep investment dollars in the State, the
8State Treasurer may make a percentage of each account available
9for investment in participating financial institutions doing
10business in the State, except that the accounts may be invested
11without limit in investment options from open-ended investment
12companies registered under Section 80a of the federal
13Investment Company Act of 1940. The State Treasurer may
14contract with one or more third parties for investment
15management, recordkeeping, or other services in connection
16with investing the accounts.
17    The account administrator shall annually prepare and adopt
18a written statement of investment policy that includes a risk
19management and oversight program. The risk management and
20oversight program shall be designed to ensure that an effective
21risk management system is in place to monitor the risk levels
22of the ABLE plan, to ensure that the risks taken are prudent
23and properly managed, to provide an integrated process for
24overall risk management, and to assess investment returns as
25well as risk to determine if the risks taken are adequately
26compensated compared to applicable performance benchmarks and

 

 

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1standards.
2    The State Treasurer may enter into agreements with other
3states to either allow Illinois residents to participate in a
4plan operated by another state or to allow residents of other
5states to participate in the Illinois ABLE plan.
6    (d) The State Treasurer shall ensure that the plan meets
7the requirements for an ABLE account under Section 529A of the
8Internal Revenue Code. The State Treasurer may request a
9private letter ruling or rulings from the Internal Revenue
10Service and must take any necessary steps to ensure that the
11plan qualifies under relevant provisions of federal law.
12Notwithstanding the foregoing, any determination by the
13Secretary of the Treasury of the United States that an account
14was utilized to make non-qualified distributions shall not
15result in an ABLE account being disregarded as a resource.
16    A person may make contributions to an ABLE account on
17behalf of a beneficiary. Contributions to an account made by
18persons other than the account owner become the property of the
19account owner. Contributions to an account shall be considered
20as a transfer of assets for fair market value. A person does
21not acquire an interest in an ABLE account by making
22contributions to an account. A contribution to any account for
23a beneficiary must be rejected if the contribution would cause
24either the aggregate or annual account balance of the account
25to exceed the limits imposed by Section 529A of the Internal
26Revenue Code.

 

 

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1    Any change in account owner must be done in a manner
2consistent with Section 529A of the Internal Revenue Code.
3    Notice of any proposed amendments to the rules and
4regulations shall be provided to all owners or their designated
5representatives prior to adoption. Amendments to rules and
6regulations shall apply only to contributions made after the
7adoption of the amendment. Amendments to this Section
8automatically amend the participation agreement. Any
9amendments to the operating procedures and policies of the plan
10shall automatically amend the participation agreement after
11adoption by the State Treasurer.
12    All assets of the plan, including any contributions to
13accounts, are held in trust for the exclusive benefit of the
14account owner and shall be considered spendthrift accounts
15exempt from all of the owner's creditors. The plan shall
16provide separate accounting for each designated beneficiary
17sufficient to satisfy the requirements of paragraph (3) of
18subsection (b) of Section 529A of the Internal Revenue Code.
19Assets must be held in either a state trust fund outside the
20State treasury, to be known as the Illinois ABLE plan trust
21fund, or in accounts with a third-party provider selected
22pursuant to this Section. Amounts contributed to ABLE accounts
23shall not be commingled with State funds and the State shall
24have no claim to or against, or interest in, such funds.
25    Plan assets are not subject to claims by creditors of the
26State and are not subject to appropriation by the State.

 

 

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1Payments from the Illinois ABLE account plan shall be made
2under this Section.
3    The assets of ABLE accounts and their income may not be
4used as security for a loan.
5    The assets of ABLE accounts and their income and operation
6shall be exempt from all taxation by the State of Illinois and
7any of its subdivisions to the extent exempt from federal
8income taxation. The accrued earnings on investments in an ABLE
9account once disbursed on behalf of a designated beneficiary
10shall be similarly exempt from all taxation by the State of
11Illinois and its subdivisions to the extent exempt from federal
12income taxation, so long as they are used for qualified
13expenses. Contributions to an ABLE account during the taxable
14year may be deducted from adjusted gross income as provided in
15Section 203 of the Illinois Income Tax Act. The provisions of
16this paragraph are exempt from Section 250 of the Illinois
17Income Tax Act.
18    Notwithstanding any other provision of law that requires
19consideration of one or more financial circumstances of an
20individual, for the purpose of determining eligibility to
21receive, or the amount of, any assistance or benefit authorized
22by such provision to be provided to or for the benefit of such
23individual, any amount, including earnings thereon, in the ABLE
24account of such individual, any contributions to the ABLE
25account of the individual, and any distribution for qualified
26disability expenses shall be disregarded for such purpose with

 

 

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1respect to any period during which such individual maintains,
2makes contributions to, or receives distributions from such
3ABLE account.
4    (e) The account owner or the designated representative of
5the account owner may request that a qualified distribution be
6made for the benefit of the account owner. Qualified
7distributions shall be made for qualified disability expenses
8allowed pursuant to Section 529A of the Internal Revenue Code.
9Qualified distributions must be withdrawn proportionally from
10contributions and earnings in an account owner's account on the
11date of distribution as provided in Section 529A of the
12Internal Revenue Code. Upon the death of a beneficiary, the
13amount remaining in the beneficiary's account must be
14distributed pursuant to subsection (f) of Section 529A of the
15Internal Revenue Code.
16    (f) The State Treasurer may adopt rules to carry out the
17purposes of this Section. The State Treasurer shall further
18have the power to issue peremptory rules necessary to ensure
19that ABLE accounts meet all of the requirements for a qualified
20state ABLE program under Section 529A of the Internal Revenue
21Code and any regulations issued by the Internal Revenue
22Service.
23(Source: P.A. 99-145, eff. 1-1-16; 99-563, eff. 7-15-16.)
 
24    Section 10. The Illinois Income Tax Act is amended by
25changing Section 203 as follows:
 

 

 

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1    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
2    Sec. 203. Base income defined.
3    (a) Individuals.
4        (1) In general. In the case of an individual, base
5    income means an amount equal to the taxpayer's adjusted
6    gross income for the taxable year as modified by paragraph
7    (2).
8        (2) Modifications. The adjusted gross income referred
9    to in paragraph (1) shall be modified by adding thereto the
10    sum of the following amounts:
11            (A) An amount equal to all amounts paid or accrued
12        to the taxpayer as interest or dividends during the
13        taxable year to the extent excluded from gross income
14        in the computation of adjusted gross income, except
15        stock dividends of qualified public utilities
16        described in Section 305(e) of the Internal Revenue
17        Code;
18            (B) An amount equal to the amount of tax imposed by
19        this Act to the extent deducted from gross income in
20        the computation of adjusted gross income for the
21        taxable year;
22            (C) An amount equal to the amount received during
23        the taxable year as a recovery or refund of real
24        property taxes paid with respect to the taxpayer's
25        principal residence under the Revenue Act of 1939 and

 

 

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1        for which a deduction was previously taken under
2        subparagraph (L) of this paragraph (2) prior to July 1,
3        1991, the retrospective application date of Article 4
4        of Public Act 87-17. In the case of multi-unit or
5        multi-use structures and farm dwellings, the taxes on
6        the taxpayer's principal residence shall be that
7        portion of the total taxes for the entire property
8        which is attributable to such principal residence;
9            (D) An amount equal to the amount of the capital
10        gain deduction allowable under the Internal Revenue
11        Code, to the extent deducted from gross income in the
12        computation of adjusted gross income;
13            (D-5) An amount, to the extent not included in
14        adjusted gross income, equal to the amount of money
15        withdrawn by the taxpayer in the taxable year from a
16        medical care savings account and the interest earned on
17        the account in the taxable year of a withdrawal
18        pursuant to subsection (b) of Section 20 of the Medical
19        Care Savings Account Act or subsection (b) of Section
20        20 of the Medical Care Savings Account Act of 2000;
21            (D-10) For taxable years ending after December 31,
22        1997, an amount equal to any eligible remediation costs
23        that the individual deducted in computing adjusted
24        gross income and for which the individual claims a
25        credit under subsection (l) of Section 201;
26            (D-15) For taxable years 2001 and thereafter, an

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                principal purpose the avoidance of Illinois
2                income tax, and is paid pursuant to a contract
3                or agreement that reflects arm's-length terms;
4                or
5                (iii) any item of intangible expense or cost
6            paid, accrued, or incurred, directly or
7            indirectly, from a transaction with a person if the
8            taxpayer establishes by clear and convincing
9            evidence, that the adjustments are unreasonable;
10            or if the taxpayer and the Director agree in
11            writing to the application or use of an alternative
12            method of apportionment under Section 304(f);
13                Nothing in this subsection shall preclude the
14            Director from making any other adjustment
15            otherwise allowed under Section 404 of this Act for
16            any tax year beginning after the effective date of
17            this amendment provided such adjustment is made
18            pursuant to regulation adopted by the Department
19            and such regulations provide methods and standards
20            by which the Department will utilize its authority
21            under Section 404 of this Act;
22            (D-19) For taxable years ending on or after
23        December 31, 2008, an amount equal to the amount of
24        insurance premium expenses and costs otherwise allowed
25        as a deduction in computing base income, and that were
26        paid, accrued, or incurred, directly or indirectly, to

 

 

HB3163- 21 -LRB100 10240 RJF 20423 b

1        a person who would be a member of the same unitary
2        business group but for the fact that the person is
3        prohibited under Section 1501(a)(27) from being
4        included in the unitary business group because he or
5        she is ordinarily required to apportion business
6        income under different subsections of Section 304. The
7        addition modification required by this subparagraph
8        shall be reduced to the extent that dividends were
9        included in base income of the unitary group for the
10        same taxable year and received by the taxpayer or by a
11        member of the taxpayer's unitary business group
12        (including amounts included in gross income under
13        Sections 951 through 964 of the Internal Revenue Code
14        and amounts included in gross income under Section 78
15        of the Internal Revenue Code) with respect to the stock
16        of the same person to whom the premiums and costs were
17        directly or indirectly paid, incurred, or accrued. The
18        preceding sentence does not apply to the extent that
19        the same dividends caused a reduction to the addition
20        modification required under Section 203(a)(2)(D-17) or
21        Section 203(a)(2)(D-18) of this Act.
22            (D-20) For taxable years beginning on or after
23        January 1, 2002 and ending on or before December 31,
24        2006, in the case of a distribution from a qualified
25        tuition program under Section 529 of the Internal
26        Revenue Code, other than (i) a distribution from a

 

 

HB3163- 22 -LRB100 10240 RJF 20423 b

1        College Savings Pool created under Section 16.5 of the
2        State Treasurer Act or (ii) a distribution from the
3        Illinois Prepaid Tuition Trust Fund, an amount equal to
4        the amount excluded from gross income under Section
5        529(c)(3)(B). For taxable years beginning on or after
6        January 1, 2007, in the case of a distribution from a
7        qualified tuition program under Section 529 of the
8        Internal Revenue Code, other than (i) a distribution
9        from a College Savings Pool created under Section 16.5
10        of the State Treasurer Act, (ii) a distribution from
11        the Illinois Prepaid Tuition Trust Fund, or (iii) a
12        distribution from a qualified tuition program under
13        Section 529 of the Internal Revenue Code that (I)
14        adopts and determines that its offering materials
15        comply with the College Savings Plans Network's
16        disclosure principles and (II) has made reasonable
17        efforts to inform in-state residents of the existence
18        of in-state qualified tuition programs by informing
19        Illinois residents directly and, where applicable, to
20        inform financial intermediaries distributing the
21        program to inform in-state residents of the existence
22        of in-state qualified tuition programs at least
23        annually, an amount equal to the amount excluded from
24        gross income under Section 529(c)(3)(B).
25            For the purposes of this subparagraph (D-20), a
26        qualified tuition program has made reasonable efforts

 

 

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1        if it makes disclosures (which may use the term
2        "in-state program" or "in-state plan" and need not
3        specifically refer to Illinois or its qualified
4        programs by name) (i) directly to prospective
5        participants in its offering materials or makes a
6        public disclosure, such as a website posting; and (ii)
7        where applicable, to intermediaries selling the
8        out-of-state program in the same manner that the
9        out-of-state program distributes its offering
10        materials;
11            (D-21) For taxable years beginning on or after
12        January 1, 2007, in the case of transfer of moneys from
13        a qualified tuition program under Section 529 of the
14        Internal Revenue Code that is administered by the State
15        to an out-of-state program, an amount equal to the
16        amount of moneys previously deducted from base income
17        under subsection (a)(2)(Y) of this Section;
18            (D-22) For taxable years beginning on or after
19        January 1, 2009, in the case of a nonqualified
20        withdrawal or refund of moneys from a qualified tuition
21        program under Section 529 of the Internal Revenue Code
22        administered by the State that is not used for
23        qualified expenses at an eligible education
24        institution, an amount equal to the contribution
25        component of the nonqualified withdrawal or refund
26        that was previously deducted from base income under

 

 

HB3163- 24 -LRB100 10240 RJF 20423 b

1        subsection (a)(2)(y) of this Section, provided that
2        the withdrawal or refund did not result from the
3        beneficiary's death or disability;
4            (D-23) An amount equal to the credit allowable to
5        the taxpayer under Section 218(a) of this Act,
6        determined without regard to Section 218(c) of this
7        Act;
8    and by deducting from the total so obtained the sum of the
9    following amounts:
10            (E) For taxable years ending before December 31,
11        2001, any amount included in such total in respect of
12        any compensation (including but not limited to any
13        compensation paid or accrued to a serviceman while a
14        prisoner of war or missing in action) paid to a
15        resident by reason of being on active duty in the Armed
16        Forces of the United States and in respect of any
17        compensation paid or accrued to a resident who as a
18        governmental employee was a prisoner of war or missing
19        in action, and in respect of any compensation paid to a
20        resident in 1971 or thereafter for annual training
21        performed pursuant to Sections 502 and 503, Title 32,
22        United States Code as a member of the Illinois National
23        Guard or, beginning with taxable years ending on or
24        after December 31, 2007, the National Guard of any
25        other state. For taxable years ending on or after
26        December 31, 2001, any amount included in such total in

 

 

HB3163- 25 -LRB100 10240 RJF 20423 b

1        respect of any compensation (including but not limited
2        to any compensation paid or accrued to a serviceman
3        while a prisoner of war or missing in action) paid to a
4        resident by reason of being a member of any component
5        of the Armed Forces of the United States and in respect
6        of any compensation paid or accrued to a resident who
7        as a governmental employee was a prisoner of war or
8        missing in action, and in respect of any compensation
9        paid to a resident in 2001 or thereafter by reason of
10        being a member of the Illinois National Guard or,
11        beginning with taxable years ending on or after
12        December 31, 2007, the National Guard of any other
13        state. The provisions of this subparagraph (E) are
14        exempt from the provisions of Section 250;
15            (F) An amount equal to all amounts included in such
16        total pursuant to the provisions of Sections 402(a),
17        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
18        Internal Revenue Code, or included in such total as
19        distributions under the provisions of any retirement
20        or disability plan for employees of any governmental
21        agency or unit, or retirement payments to retired
22        partners, which payments are excluded in computing net
23        earnings from self employment by Section 1402 of the
24        Internal Revenue Code and regulations adopted pursuant
25        thereto;
26            (G) The valuation limitation amount;

 

 

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1            (H) An amount equal to the amount of any tax
2        imposed by this Act which was refunded to the taxpayer
3        and included in such total for the taxable year;
4            (I) An amount equal to all amounts included in such
5        total pursuant to the provisions of Section 111 of the
6        Internal Revenue Code as a recovery of items previously
7        deducted from adjusted gross income in the computation
8        of taxable income;
9            (J) An amount equal to those dividends included in
10        such total which were paid by a corporation which
11        conducts business operations in a River Edge
12        Redevelopment Zone or zones created under the River
13        Edge Redevelopment Zone Act, and conducts
14        substantially all of its operations in a River Edge
15        Redevelopment Zone or zones. This subparagraph (J) is
16        exempt from the provisions of Section 250;
17            (K) An amount equal to those dividends included in
18        such total that were paid by a corporation that
19        conducts business operations in a federally designated
20        Foreign Trade Zone or Sub-Zone and that is designated a
21        High Impact Business located in Illinois; provided
22        that dividends eligible for the deduction provided in
23        subparagraph (J) of paragraph (2) of this subsection
24        shall not be eligible for the deduction provided under
25        this subparagraph (K);
26            (L) For taxable years ending after December 31,

 

 

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1        1983, an amount equal to all social security benefits
2        and railroad retirement benefits included in such
3        total pursuant to Sections 72(r) and 86 of the Internal
4        Revenue Code;
5            (M) With the exception of any amounts subtracted
6        under subparagraph (N), an amount equal to the sum of
7        all amounts disallowed as deductions by (i) Sections
8        171(a) (2), and 265(2) of the Internal Revenue Code,
9        and all amounts of expenses allocable to interest and
10        disallowed as deductions by Section 265(1) of the
11        Internal Revenue Code; and (ii) for taxable years
12        ending on or after August 13, 1999, Sections 171(a)(2),
13        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
14        Code, plus, for taxable years ending on or after
15        December 31, 2011, Section 45G(e)(3) of the Internal
16        Revenue Code and, for taxable years ending on or after
17        December 31, 2008, any amount included in gross income
18        under Section 87 of the Internal Revenue Code; the
19        provisions of this subparagraph are exempt from the
20        provisions of Section 250;
21            (N) An amount equal to all amounts included in such
22        total which are exempt from taxation by this State
23        either by reason of its statutes or Constitution or by
24        reason of the Constitution, treaties or statutes of the
25        United States; provided that, in the case of any
26        statute of this State that exempts income derived from

 

 

HB3163- 28 -LRB100 10240 RJF 20423 b

1        bonds or other obligations from the tax imposed under
2        this Act, the amount exempted shall be the interest net
3        of bond premium amortization;
4            (O) An amount equal to any contribution made to a
5        job training project established pursuant to the Tax
6        Increment Allocation Redevelopment Act;
7            (P) An amount equal to the amount of the deduction
8        used to compute the federal income tax credit for
9        restoration of substantial amounts held under claim of
10        right for the taxable year pursuant to Section 1341 of
11        the Internal Revenue Code or of any itemized deduction
12        taken from adjusted gross income in the computation of
13        taxable income for restoration of substantial amounts
14        held under claim of right for the taxable year;
15            (Q) An amount equal to any amounts included in such
16        total, received by the taxpayer as an acceleration in
17        the payment of life, endowment or annuity benefits in
18        advance of the time they would otherwise be payable as
19        an indemnity for a terminal illness;
20            (R) An amount equal to the amount of any federal or
21        State bonus paid to veterans of the Persian Gulf War;
22            (S) An amount, to the extent included in adjusted
23        gross income, equal to the amount of a contribution
24        made in the taxable year on behalf of the taxpayer to a
25        medical care savings account established under the
26        Medical Care Savings Account Act or the Medical Care

 

 

HB3163- 29 -LRB100 10240 RJF 20423 b

1        Savings Account Act of 2000 to the extent the
2        contribution is accepted by the account administrator
3        as provided in that Act;
4            (T) An amount, to the extent included in adjusted
5        gross income, equal to the amount of interest earned in
6        the taxable year on a medical care savings account
7        established under the Medical Care Savings Account Act
8        or the Medical Care Savings Account Act of 2000 on
9        behalf of the taxpayer, other than interest added
10        pursuant to item (D-5) of this paragraph (2);
11            (U) For one taxable year beginning on or after
12        January 1, 1994, an amount equal to the total amount of
13        tax imposed and paid under subsections (a) and (b) of
14        Section 201 of this Act on grant amounts received by
15        the taxpayer under the Nursing Home Grant Assistance
16        Act during the taxpayer's taxable years 1992 and 1993;
17            (V) Beginning with tax years ending on or after
18        December 31, 1995 and ending with tax years ending on
19        or before December 31, 2004, an amount equal to the
20        amount paid by a taxpayer who is a self-employed
21        taxpayer, a partner of a partnership, or a shareholder
22        in a Subchapter S corporation for health insurance or
23        long-term care insurance for that taxpayer or that
24        taxpayer's spouse or dependents, to the extent that the
25        amount paid for that health insurance or long-term care
26        insurance may be deducted under Section 213 of the

 

 

HB3163- 30 -LRB100 10240 RJF 20423 b

1        Internal Revenue Code, has not been deducted on the
2        federal income tax return of the taxpayer, and does not
3        exceed the taxable income attributable to that
4        taxpayer's income, self-employment income, or
5        Subchapter S corporation income; except that no
6        deduction shall be allowed under this item (V) if the
7        taxpayer is eligible to participate in any health
8        insurance or long-term care insurance plan of an
9        employer of the taxpayer or the taxpayer's spouse. The
10        amount of the health insurance and long-term care
11        insurance subtracted under this item (V) shall be
12        determined by multiplying total health insurance and
13        long-term care insurance premiums paid by the taxpayer
14        times a number that represents the fractional
15        percentage of eligible medical expenses under Section
16        213 of the Internal Revenue Code of 1986 not actually
17        deducted on the taxpayer's federal income tax return;
18            (W) For taxable years beginning on or after January
19        1, 1998, all amounts included in the taxpayer's federal
20        gross income in the taxable year from amounts converted
21        from a regular IRA to a Roth IRA. This paragraph is
22        exempt from the provisions of Section 250;
23            (X) For taxable year 1999 and thereafter, an amount
24        equal to the amount of any (i) distributions, to the
25        extent includible in gross income for federal income
26        tax purposes, made to the taxpayer because of his or

 

 

HB3163- 31 -LRB100 10240 RJF 20423 b

1        her status as a victim of persecution for racial or
2        religious reasons by Nazi Germany or any other Axis
3        regime or as an heir of the victim and (ii) items of
4        income, to the extent includible in gross income for
5        federal income tax purposes, attributable to, derived
6        from or in any way related to assets stolen from,
7        hidden from, or otherwise lost to a victim of
8        persecution for racial or religious reasons by Nazi
9        Germany or any other Axis regime immediately prior to,
10        during, and immediately after World War II, including,
11        but not limited to, interest on the proceeds receivable
12        as insurance under policies issued to a victim of
13        persecution for racial or religious reasons by Nazi
14        Germany or any other Axis regime by European insurance
15        companies immediately prior to and during World War II;
16        provided, however, this subtraction from federal
17        adjusted gross income does not apply to assets acquired
18        with such assets or with the proceeds from the sale of
19        such assets; provided, further, this paragraph shall
20        only apply to a taxpayer who was the first recipient of
21        such assets after their recovery and who is a victim of
22        persecution for racial or religious reasons by Nazi
23        Germany or any other Axis regime or as an heir of the
24        victim. The amount of and the eligibility for any
25        public assistance, benefit, or similar entitlement is
26        not affected by the inclusion of items (i) and (ii) of

 

 

HB3163- 32 -LRB100 10240 RJF 20423 b

1        this paragraph in gross income for federal income tax
2        purposes. This paragraph is exempt from the provisions
3        of Section 250;
4            (Y) For taxable years beginning on or after January
5        1, 2002 and ending on or before December 31, 2004,
6        moneys contributed in the taxable year to a College
7        Savings Pool account under Section 16.5 of the State
8        Treasurer Act, except that amounts excluded from gross
9        income under Section 529(c)(3)(C)(i) of the Internal
10        Revenue Code shall not be considered moneys
11        contributed under this subparagraph (Y). For taxable
12        years beginning on or after January 1, 2005, a maximum
13        of $10,000 contributed in the taxable year to (i) a
14        College Savings Pool account under Section 16.5 of the
15        State Treasurer Act or (ii) the Illinois Prepaid
16        Tuition Trust Fund, except that amounts excluded from
17        gross income under Section 529(c)(3)(C)(i) of the
18        Internal Revenue Code shall not be considered moneys
19        contributed under this subparagraph (Y). For purposes
20        of this subparagraph, contributions made by an
21        employer on behalf of an employee, or matching
22        contributions made by an employee, shall be treated as
23        made by the employee. This subparagraph (Y) is exempt
24        from the provisions of Section 250;
25            (Y-5) For taxable years beginning on or after
26        January 1, 2018, a maximum of $10,000 contributed in

 

 

HB3163- 33 -LRB100 10240 RJF 20423 b

1        the taxable year to an ABLE account under Section 16.6
2        of the State Treasurer Act. This subparagraph (Y-5) is
3        exempt from the provisions of Section 250 of this Act;
4            (Z) For taxable years 2001 and thereafter, for the
5        taxable year in which the bonus depreciation deduction
6        is taken on the taxpayer's federal income tax return
7        under subsection (k) of Section 168 of the Internal
8        Revenue Code and for each applicable taxable year
9        thereafter, an amount equal to "x", where:
10                (1) "y" equals the amount of the depreciation
11            deduction taken for the taxable year on the
12            taxpayer's federal income tax return on property
13            for which the bonus depreciation deduction was
14            taken in any year under subsection (k) of Section
15            168 of the Internal Revenue Code, but not including
16            the bonus depreciation deduction;
17                (2) for taxable years ending on or before
18            December 31, 2005, "x" equals "y" multiplied by 30
19            and then divided by 70 (or "y" multiplied by
20            0.429); and
21                (3) for taxable years ending after December
22            31, 2005:
23                    (i) for property on which a bonus
24                depreciation deduction of 30% of the adjusted
25                basis was taken, "x" equals "y" multiplied by
26                30 and then divided by 70 (or "y" multiplied by

 

 

HB3163- 34 -LRB100 10240 RJF 20423 b

1                0.429); and
2                    (ii) for property on which a bonus
3                depreciation deduction of 50% of the adjusted
4                basis was taken, "x" equals "y" multiplied by
5                1.0.
6            The aggregate amount deducted under this
7        subparagraph in all taxable years for any one piece of
8        property may not exceed the amount of the bonus
9        depreciation deduction taken on that property on the
10        taxpayer's federal income tax return under subsection
11        (k) of Section 168 of the Internal Revenue Code. This
12        subparagraph (Z) is exempt from the provisions of
13        Section 250;
14            (AA) If the taxpayer sells, transfers, abandons,
15        or otherwise disposes of property for which the
16        taxpayer was required in any taxable year to make an
17        addition modification under subparagraph (D-15), then
18        an amount equal to that addition modification.
19            If the taxpayer continues to own property through
20        the last day of the last tax year for which the
21        taxpayer may claim a depreciation deduction for
22        federal income tax purposes and for which the taxpayer
23        was required in any taxable year to make an addition
24        modification under subparagraph (D-15), then an amount
25        equal to that addition modification.
26            The taxpayer is allowed to take the deduction under

 

 

HB3163- 35 -LRB100 10240 RJF 20423 b

1        this subparagraph only once with respect to any one
2        piece of property.
3            This subparagraph (AA) is exempt from the
4        provisions of Section 250;
5            (BB) Any amount included in adjusted gross income,
6        other than salary, received by a driver in a
7        ridesharing arrangement using a motor vehicle;
8            (CC) The amount of (i) any interest income (net of
9        the deductions allocable thereto) taken into account
10        for the taxable year with respect to a transaction with
11        a taxpayer that is required to make an addition
12        modification with respect to such transaction under
13        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
14        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
15        the amount of that addition modification, and (ii) any
16        income from intangible property (net of the deductions
17        allocable thereto) taken into account for the taxable
18        year with respect to a transaction with a taxpayer that
19        is required to make an addition modification with
20        respect to such transaction under Section
21        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
22        203(d)(2)(D-8), but not to exceed the amount of that
23        addition modification. This subparagraph (CC) is
24        exempt from the provisions of Section 250;
25            (DD) An amount equal to the interest income taken
26        into account for the taxable year (net of the

 

 

HB3163- 36 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 37 -LRB100 10240 RJF 20423 b

1        years ending on or after December 31, 2008, to a person
2        who would be a member of the same unitary business
3        group but for the fact that the person is prohibited
4        under Section 1501(a)(27) from being included in the
5        unitary business group because he or she is ordinarily
6        required to apportion business income under different
7        subsections of Section 304, but not to exceed the
8        addition modification required to be made for the same
9        taxable year under Section 203(a)(2)(D-18) for
10        intangible expenses and costs paid, accrued, or
11        incurred, directly or indirectly, to the same foreign
12        person. This subparagraph (EE) is exempt from the
13        provisions of Section 250;
14            (FF) An amount equal to any amount awarded to the
15        taxpayer during the taxable year by the Court of Claims
16        under subsection (c) of Section 8 of the Court of
17        Claims Act for time unjustly served in a State prison.
18        This subparagraph (FF) is exempt from the provisions of
19        Section 250; and
20            (GG) For taxable years ending on or after December
21        31, 2011, in the case of a taxpayer who was required to
22        add back any insurance premiums under Section
23        203(a)(2)(D-19), such taxpayer may elect to subtract
24        that part of a reimbursement received from the
25        insurance company equal to the amount of the expense or
26        loss (including expenses incurred by the insurance

 

 

HB3163- 38 -LRB100 10240 RJF 20423 b

1        company) that would have been taken into account as a
2        deduction for federal income tax purposes if the
3        expense or loss had been uninsured. If a taxpayer makes
4        the election provided for by this subparagraph (GG),
5        the insurer to which the premiums were paid must add
6        back to income the amount subtracted by the taxpayer
7        pursuant to this subparagraph (GG). This subparagraph
8        (GG) is exempt from the provisions of Section 250.
 
9    (b) Corporations.
10        (1) In general. In the case of a corporation, base
11    income means an amount equal to the taxpayer's taxable
12    income for the taxable year as modified by paragraph (2).
13        (2) Modifications. The taxable income referred to in
14    paragraph (1) shall be modified by adding thereto the sum
15    of the following amounts:
16            (A) An amount equal to all amounts paid or accrued
17        to the taxpayer as interest and all distributions
18        received from regulated investment companies during
19        the taxable year to the extent excluded from gross
20        income in the computation of taxable income;
21            (B) An amount equal to the amount of tax imposed by
22        this Act to the extent deducted from gross income in
23        the computation of taxable income for the taxable year;
24            (C) In the case of a regulated investment company,
25        an amount equal to the excess of (i) the net long-term

 

 

HB3163- 39 -LRB100 10240 RJF 20423 b

1        capital gain for the taxable year, over (ii) the amount
2        of the capital gain dividends designated as such in
3        accordance with Section 852(b)(3)(C) of the Internal
4        Revenue Code and any amount designated under Section
5        852(b)(3)(D) of the Internal Revenue Code,
6        attributable to the taxable year (this amendatory Act
7        of 1995 (Public Act 89-89) is declarative of existing
8        law and is not a new enactment);
9            (D) The amount of any net operating loss deduction
10        taken in arriving at taxable income, other than a net
11        operating loss carried forward from a taxable year
12        ending prior to December 31, 1986;
13            (E) For taxable years in which a net operating loss
14        carryback or carryforward from a taxable year ending
15        prior to December 31, 1986 is an element of taxable
16        income under paragraph (1) of subsection (e) or
17        subparagraph (E) of paragraph (2) of subsection (e),
18        the amount by which addition modifications other than
19        those provided by this subparagraph (E) exceeded
20        subtraction modifications in such earlier taxable
21        year, with the following limitations applied in the
22        order that they are listed:
23                (i) the addition modification relating to the
24            net operating loss carried back or forward to the
25            taxable year from any taxable year ending prior to
26            December 31, 1986 shall be reduced by the amount of

 

 

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1            addition modification under this subparagraph (E)
2            which related to that net operating loss and which
3            was taken into account in calculating the base
4            income of an earlier taxable year, and
5                (ii) the addition modification relating to the
6            net operating loss carried back or forward to the
7            taxable year from any taxable year ending prior to
8            December 31, 1986 shall not exceed the amount of
9            such carryback or carryforward;
10            For taxable years in which there is a net operating
11        loss carryback or carryforward from more than one other
12        taxable year ending prior to December 31, 1986, the
13        addition modification provided in this subparagraph
14        (E) shall be the sum of the amounts computed
15        independently under the preceding provisions of this
16        subparagraph (E) for each such taxable year;
17            (E-5) For taxable years ending after December 31,
18        1997, an amount equal to any eligible remediation costs
19        that the corporation deducted in computing adjusted
20        gross income and for which the corporation claims a
21        credit under subsection (l) of Section 201;
22            (E-10) For taxable years 2001 and thereafter, an
23        amount equal to the bonus depreciation deduction taken
24        on the taxpayer's federal income tax return for the
25        taxable year under subsection (k) of Section 168 of the
26        Internal Revenue Code;

 

 

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1            (E-11) If the taxpayer sells, transfers, abandons,
2        or otherwise disposes of property for which the
3        taxpayer was required in any taxable year to make an
4        addition modification under subparagraph (E-10), then
5        an amount equal to the aggregate amount of the
6        deductions taken in all taxable years under
7        subparagraph (T) with respect to that property.
8            If the taxpayer continues to own property through
9        the last day of the last tax year for which the
10        taxpayer may claim a depreciation deduction for
11        federal income tax purposes and for which the taxpayer
12        was allowed in any taxable year to make a subtraction
13        modification under subparagraph (T), then an amount
14        equal to that subtraction modification.
15            The taxpayer is required to make the addition
16        modification under this subparagraph only once with
17        respect to any one piece of property;
18            (E-12) An amount equal to the amount otherwise
19        allowed as a deduction in computing base income for
20        interest paid, accrued, or incurred, directly or
21        indirectly, (i) for taxable years ending on or after
22        December 31, 2004, to a foreign person who would be a
23        member of the same unitary business group but for the
24        fact the foreign person's business activity outside
25        the United States is 80% or more of the foreign
26        person's total business activity and (ii) for taxable

 

 

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

 

 

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

 

 

HB3163- 44 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 45 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 46 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 47 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 48 -LRB100 10240 RJF 20423 b

1        included in the unitary business group because he or
2        she is ordinarily required to apportion business
3        income under different subsections of Section 304. The
4        addition modification required by this subparagraph
5        shall be reduced to the extent that dividends were
6        included in base income of the unitary group for the
7        same taxable year and received by the taxpayer or by a
8        member of the taxpayer's unitary business group
9        (including amounts included in gross income under
10        Sections 951 through 964 of the Internal Revenue Code
11        and amounts included in gross income under Section 78
12        of the Internal Revenue Code) with respect to the stock
13        of the same person to whom the premiums and costs were
14        directly or indirectly paid, incurred, or accrued. The
15        preceding sentence does not apply to the extent that
16        the same dividends caused a reduction to the addition
17        modification required under Section 203(b)(2)(E-12) or
18        Section 203(b)(2)(E-13) of this Act;
19            (E-15) For taxable years beginning after December
20        31, 2008, any deduction for dividends paid by a captive
21        real estate investment trust that is allowed to a real
22        estate investment trust under Section 857(b)(2)(B) of
23        the Internal Revenue Code for dividends paid;
24            (E-16) An amount equal to the credit allowable to
25        the taxpayer under Section 218(a) of this Act,
26        determined without regard to Section 218(c) of this

 

 

HB3163- 49 -LRB100 10240 RJF 20423 b

1        Act;
2    and by deducting from the total so obtained the sum of the
3    following amounts:
4            (F) An amount equal to the amount of any tax
5        imposed by this Act which was refunded to the taxpayer
6        and included in such total for the taxable year;
7            (G) An amount equal to any amount included in such
8        total under Section 78 of the Internal Revenue Code;
9            (H) In the case of a regulated investment company,
10        an amount equal to the amount of exempt interest
11        dividends as defined in subsection (b) (5) of Section
12        852 of the Internal Revenue Code, paid to shareholders
13        for the taxable year;
14            (I) With the exception of any amounts subtracted
15        under subparagraph (J), an amount equal to the sum of
16        all amounts disallowed as deductions by (i) Sections
17        171(a) (2), and 265(a)(2) and amounts disallowed as
18        interest expense by Section 291(a)(3) of the Internal
19        Revenue Code, and all amounts of expenses allocable to
20        interest and disallowed as deductions by Section
21        265(a)(1) of the Internal Revenue Code; and (ii) for
22        taxable years ending on or after August 13, 1999,
23        Sections 171(a)(2), 265, 280C, 291(a)(3), and
24        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
25        for tax years ending on or after December 31, 2011,
26        amounts disallowed as deductions by Section 45G(e)(3)

 

 

HB3163- 50 -LRB100 10240 RJF 20423 b

1        of the Internal Revenue Code and, for taxable years
2        ending on or after December 31, 2008, any amount
3        included in gross income under Section 87 of the
4        Internal Revenue Code and the policyholders' share of
5        tax-exempt interest of a life insurance company under
6        Section 807(a)(2)(B) of the Internal Revenue Code (in
7        the case of a life insurance company with gross income
8        from a decrease in reserves for the tax year) or
9        Section 807(b)(1)(B) of the Internal Revenue Code (in
10        the case of a life insurance company allowed a
11        deduction for an increase in reserves for the tax
12        year); the provisions of this subparagraph are exempt
13        from the provisions of Section 250;
14            (J) An amount equal to all amounts included in such
15        total which are exempt from taxation by this State
16        either by reason of its statutes or Constitution or by
17        reason of the Constitution, treaties or statutes of the
18        United States; provided that, in the case of any
19        statute of this State that exempts income derived from
20        bonds or other obligations from the tax imposed under
21        this Act, the amount exempted shall be the interest net
22        of bond premium amortization;
23            (K) An amount equal to those dividends included in
24        such total which were paid by a corporation which
25        conducts business operations in a River Edge
26        Redevelopment Zone or zones created under the River

 

 

HB3163- 51 -LRB100 10240 RJF 20423 b

1        Edge Redevelopment Zone Act and conducts substantially
2        all of its operations in a River Edge Redevelopment
3        Zone or zones. This subparagraph (K) is exempt from the
4        provisions of Section 250;
5            (L) An amount equal to those dividends included in
6        such total that were paid by a corporation that
7        conducts business operations in a federally designated
8        Foreign Trade Zone or Sub-Zone and that is designated a
9        High Impact Business located in Illinois; provided
10        that dividends eligible for the deduction provided in
11        subparagraph (K) of paragraph 2 of this subsection
12        shall not be eligible for the deduction provided under
13        this subparagraph (L);
14            (M) For any taxpayer that is a financial
15        organization within the meaning of Section 304(c) of
16        this Act, an amount included in such total as interest
17        income from a loan or loans made by such taxpayer to a
18        borrower, to the extent that such a loan is secured by
19        property which is eligible for the River Edge
20        Redevelopment Zone Investment Credit. To determine the
21        portion of a loan or loans that is secured by property
22        eligible for a Section 201(f) investment credit to the
23        borrower, the entire principal amount of the loan or
24        loans between the taxpayer and the borrower should be
25        divided into the basis of the Section 201(f) investment
26        credit property which secures the loan or loans, using

 

 

HB3163- 52 -LRB100 10240 RJF 20423 b

1        for this purpose the original basis of such property on
2        the date that it was placed in service in the River
3        Edge Redevelopment Zone. The subtraction modification
4        available to taxpayer in any year under this subsection
5        shall be that portion of the total interest paid by the
6        borrower with respect to such loan attributable to the
7        eligible property as calculated under the previous
8        sentence. This subparagraph (M) is exempt from the
9        provisions of Section 250;
10            (M-1) For any taxpayer that is a financial
11        organization within the meaning of Section 304(c) of
12        this Act, an amount included in such total as interest
13        income from a loan or loans made by such taxpayer to a
14        borrower, to the extent that such a loan is secured by
15        property which is eligible for the High Impact Business
16        Investment Credit. To determine the portion of a loan
17        or loans that is secured by property eligible for a
18        Section 201(h) investment credit to the borrower, the
19        entire principal amount of the loan or loans between
20        the taxpayer and the borrower should be divided into
21        the basis of the Section 201(h) investment credit
22        property which secures the loan or loans, using for
23        this purpose the original basis of such property on the
24        date that it was placed in service in a federally
25        designated Foreign Trade Zone or Sub-Zone located in
26        Illinois. No taxpayer that is eligible for the

 

 

HB3163- 53 -LRB100 10240 RJF 20423 b

1        deduction provided in subparagraph (M) of paragraph
2        (2) of this subsection shall be eligible for the
3        deduction provided under this subparagraph (M-1). The
4        subtraction modification available to taxpayers in any
5        year under this subsection shall be that portion of the
6        total interest paid by the borrower with respect to
7        such loan attributable to the eligible property as
8        calculated under the previous sentence;
9            (N) Two times any contribution made during the
10        taxable year to a designated zone organization to the
11        extent that the contribution (i) qualifies as a
12        charitable contribution under subsection (c) of
13        Section 170 of the Internal Revenue Code and (ii) must,
14        by its terms, be used for a project approved by the
15        Department of Commerce and Economic Opportunity under
16        Section 11 of the Illinois Enterprise Zone Act or under
17        Section 10-10 of the River Edge Redevelopment Zone Act.
18        This subparagraph (N) is exempt from the provisions of
19        Section 250;
20            (O) An amount equal to: (i) 85% for taxable years
21        ending on or before December 31, 1992, or, a percentage
22        equal to the percentage allowable under Section
23        243(a)(1) of the Internal Revenue Code of 1986 for
24        taxable years ending after December 31, 1992, of the
25        amount by which dividends included in taxable income
26        and received from a corporation that is not created or

 

 

HB3163- 54 -LRB100 10240 RJF 20423 b

1        organized under the laws of the United States or any
2        state or political subdivision thereof, including, for
3        taxable years ending on or after December 31, 1988,
4        dividends received or deemed received or paid or deemed
5        paid under Sections 951 through 965 of the Internal
6        Revenue Code, exceed the amount of the modification
7        provided under subparagraph (G) of paragraph (2) of
8        this subsection (b) which is related to such dividends,
9        and including, for taxable years ending on or after
10        December 31, 2008, dividends received from a captive
11        real estate investment trust; plus (ii) 100% of the
12        amount by which dividends, included in taxable income
13        and received, including, for taxable years ending on or
14        after December 31, 1988, dividends received or deemed
15        received or paid or deemed paid under Sections 951
16        through 964 of the Internal Revenue Code and including,
17        for taxable years ending on or after December 31, 2008,
18        dividends received from a captive real estate
19        investment trust, from any such corporation specified
20        in clause (i) that would but for the provisions of
21        Section 1504 (b) (3) of the Internal Revenue Code be
22        treated as a member of the affiliated group which
23        includes the dividend recipient, exceed the amount of
24        the modification provided under subparagraph (G) of
25        paragraph (2) of this subsection (b) which is related
26        to such dividends. This subparagraph (O) is exempt from

 

 

HB3163- 55 -LRB100 10240 RJF 20423 b

1        the provisions of Section 250 of this Act;
2            (P) An amount equal to any contribution made to a
3        job training project established pursuant to the Tax
4        Increment Allocation Redevelopment Act;
5            (Q) An amount equal to the amount of the deduction
6        used to compute the federal income tax credit for
7        restoration of substantial amounts held under claim of
8        right for the taxable year pursuant to Section 1341 of
9        the Internal Revenue Code;
10            (R) On and after July 20, 1999, in the case of an
11        attorney-in-fact with respect to whom an interinsurer
12        or a reciprocal insurer has made the election under
13        Section 835 of the Internal Revenue Code, 26 U.S.C.
14        835, an amount equal to the excess, if any, of the
15        amounts paid or incurred by that interinsurer or
16        reciprocal insurer in the taxable year to the
17        attorney-in-fact over the deduction allowed to that
18        interinsurer or reciprocal insurer with respect to the
19        attorney-in-fact under Section 835(b) of the Internal
20        Revenue Code for the taxable year; the provisions of
21        this subparagraph are exempt from the provisions of
22        Section 250;
23            (S) For taxable years ending on or after December
24        31, 1997, in the case of a Subchapter S corporation, an
25        amount equal to all amounts of income allocable to a
26        shareholder subject to the Personal Property Tax

 

 

HB3163- 56 -LRB100 10240 RJF 20423 b

1        Replacement Income Tax imposed by subsections (c) and
2        (d) of Section 201 of this Act, including amounts
3        allocable to organizations exempt from federal income
4        tax by reason of Section 501(a) of the Internal Revenue
5        Code. This subparagraph (S) is exempt from the
6        provisions of Section 250;
7            (T) For taxable years 2001 and thereafter, for the
8        taxable year in which the bonus depreciation deduction
9        is taken on the taxpayer's federal income tax return
10        under subsection (k) of Section 168 of the Internal
11        Revenue Code and for each applicable taxable year
12        thereafter, an amount equal to "x", where:
13                (1) "y" equals the amount of the depreciation
14            deduction taken for the taxable year on the
15            taxpayer's federal income tax return on property
16            for which the bonus depreciation deduction was
17            taken in any year under subsection (k) of Section
18            168 of the Internal Revenue Code, but not including
19            the bonus depreciation deduction;
20                (2) for taxable years ending on or before
21            December 31, 2005, "x" equals "y" multiplied by 30
22            and then divided by 70 (or "y" multiplied by
23            0.429); and
24                (3) for taxable years ending after December
25            31, 2005:
26                    (i) for property on which a bonus

 

 

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

 

 

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

 

 

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

 

 

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1            (X) An amount equal to the income from intangible
2        property taken into account for the taxable year (net
3        of the deductions allocable thereto) with respect to
4        transactions with (i) a foreign person who would be a
5        member of the taxpayer's unitary business group but for
6        the fact that the foreign person's business activity
7        outside the United States is 80% or more of that
8        person's total business activity and (ii) for taxable
9        years ending on or after December 31, 2008, to a person
10        who would be a member of the same unitary business
11        group but for the fact that the person is prohibited
12        under Section 1501(a)(27) from being included in the
13        unitary business group because he or she is ordinarily
14        required to apportion business income under different
15        subsections of Section 304, but not to exceed the
16        addition modification required to be made for the same
17        taxable year under Section 203(b)(2)(E-13) for
18        intangible expenses and costs paid, accrued, or
19        incurred, directly or indirectly, to the same foreign
20        person. This subparagraph (X) is exempt from the
21        provisions of Section 250;
22            (Y) For taxable years ending on or after December
23        31, 2011, in the case of a taxpayer who was required to
24        add back any insurance premiums under Section
25        203(b)(2)(E-14), such taxpayer may elect to subtract
26        that part of a reimbursement received from the

 

 

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1        insurance company equal to the amount of the expense or
2        loss (including expenses incurred by the insurance
3        company) that would have been taken into account as a
4        deduction for federal income tax purposes if the
5        expense or loss had been uninsured. If a taxpayer makes
6        the election provided for by this subparagraph (Y), the
7        insurer to which the premiums were paid must add back
8        to income the amount subtracted by the taxpayer
9        pursuant to this subparagraph (Y). This subparagraph
10        (Y) is exempt from the provisions of Section 250; and
11            (Z) The difference between the nondeductible
12        controlled foreign corporation dividends under Section
13        965(e)(3) of the Internal Revenue Code over the taxable
14        income of the taxpayer, computed without regard to
15        Section 965(e)(2)(A) of the Internal Revenue Code, and
16        without regard to any net operating loss deduction.
17        This subparagraph (Z) is exempt from the provisions of
18        Section 250.
19        (3) Special rule. For purposes of paragraph (2) (A),
20    "gross income" in the case of a life insurance company, for
21    tax years ending on and after December 31, 1994, and prior
22    to December 31, 2011, shall mean the gross investment
23    income for the taxable year and, for tax years ending on or
24    after December 31, 2011, shall mean all amounts included in
25    life insurance gross income under Section 803(a)(3) of the
26    Internal Revenue Code.
 

 

 

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1    (c) Trusts and estates.
2        (1) In general. In the case of a trust or estate, base
3    income means an amount equal to the taxpayer's taxable
4    income for the taxable year as modified by paragraph (2).
5        (2) Modifications. Subject to the provisions of
6    paragraph (3), the taxable income referred to in paragraph
7    (1) shall be modified by adding thereto the sum of the
8    following amounts:
9            (A) An amount equal to all amounts paid or accrued
10        to the taxpayer as interest or dividends during the
11        taxable year to the extent excluded from gross income
12        in the computation of taxable income;
13            (B) In the case of (i) an estate, $600; (ii) a
14        trust which, under its governing instrument, is
15        required to distribute all of its income currently,
16        $300; and (iii) any other trust, $100, but in each such
17        case, only to the extent such amount was deducted in
18        the computation of taxable income;
19            (C) An amount equal to the amount of tax imposed by
20        this Act to the extent deducted from gross income in
21        the computation of taxable income for the taxable year;
22            (D) The amount of any net operating loss deduction
23        taken in arriving at taxable income, other than a net
24        operating loss carried forward from a taxable year
25        ending prior to December 31, 1986;

 

 

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

 

 

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1        addition modification provided in this subparagraph
2        (E) shall be the sum of the amounts computed
3        independently under the preceding provisions of this
4        subparagraph (E) for each such taxable year;
5            (F) For taxable years ending on or after January 1,
6        1989, an amount equal to the tax deducted pursuant to
7        Section 164 of the Internal Revenue Code if the trust
8        or estate is claiming the same tax for purposes of the
9        Illinois foreign tax credit under Section 601 of this
10        Act;
11            (G) An amount equal to the amount of the capital
12        gain deduction allowable under the Internal Revenue
13        Code, to the extent deducted from gross income in the
14        computation of taxable income;
15            (G-5) For taxable years ending after December 31,
16        1997, an amount equal to any eligible remediation costs
17        that the trust or estate deducted in computing adjusted
18        gross income and for which the trust or estate claims a
19        credit under subsection (l) of Section 201;
20            (G-10) For taxable years 2001 and thereafter, an
21        amount equal to the bonus depreciation deduction taken
22        on the taxpayer's federal income tax return for the
23        taxable year under subsection (k) of Section 168 of the
24        Internal Revenue Code; and
25            (G-11) If the taxpayer sells, transfers, abandons,
26        or otherwise disposes of property for which the

 

 

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

 

 

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

 

 

HB3163- 67 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 68 -LRB100 10240 RJF 20423 b

1            Director from making any other adjustment
2            otherwise allowed under Section 404 of this Act for
3            any tax year beginning after the effective date of
4            this amendment provided such adjustment is made
5            pursuant to regulation adopted by the Department
6            and such regulations provide methods and standards
7            by which the Department will utilize its authority
8            under Section 404 of this Act;
9            (G-13) An amount equal to the amount of intangible
10        expenses and costs otherwise allowed as a deduction in
11        computing base income, and that were paid, accrued, or
12        incurred, directly or indirectly, (i) for taxable
13        years ending on or after December 31, 2004, to a
14        foreign person who would be a member of the same
15        unitary business group but for the fact that the
16        foreign person's business activity outside the United
17        States is 80% or more of that person's total business
18        activity and (ii) for taxable years ending on or after
19        December 31, 2008, to a person who would be a member of
20        the same unitary business group but for the fact that
21        the person is prohibited under Section 1501(a)(27)
22        from being included in the unitary business group
23        because he or she is ordinarily required to apportion
24        business income under different subsections of Section
25        304. The addition modification required by this
26        subparagraph shall be reduced to the extent that

 

 

HB3163- 69 -LRB100 10240 RJF 20423 b

1        dividends were included in base income of the unitary
2        group for the same taxable year and received by the
3        taxpayer or by a member of the taxpayer's unitary
4        business group (including amounts included in gross
5        income pursuant to Sections 951 through 964 of the
6        Internal Revenue Code and amounts included in gross
7        income under Section 78 of the Internal Revenue Code)
8        with respect to the stock of the same person to whom
9        the intangible expenses and costs were directly or
10        indirectly paid, incurred, or accrued. The preceding
11        sentence shall not apply to the extent that the same
12        dividends caused a reduction to the addition
13        modification required under Section 203(c)(2)(G-12) of
14        this Act. As used in this subparagraph, the term
15        "intangible expenses and costs" includes: (1)
16        expenses, losses, and costs for or related to the
17        direct or indirect acquisition, use, maintenance or
18        management, ownership, sale, exchange, or any other
19        disposition of intangible property; (2) losses
20        incurred, directly or indirectly, from factoring
21        transactions or discounting transactions; (3) royalty,
22        patent, technical, and copyright fees; (4) licensing
23        fees; and (5) other similar expenses and costs. For
24        purposes of this subparagraph, "intangible property"
25        includes patents, patent applications, trade names,
26        trademarks, service marks, copyrights, mask works,

 

 

HB3163- 70 -LRB100 10240 RJF 20423 b

1        trade secrets, and similar types of intangible assets.
2            This paragraph shall not apply to the following:
3                (i) any item of intangible expenses or costs
4            paid, accrued, or incurred, directly or
5            indirectly, from a transaction with a person who is
6            subject in a foreign country or state, other than a
7            state which requires mandatory unitary reporting,
8            to a tax on or measured by net income with respect
9            to such item; or
10                (ii) any item of intangible expense or cost
11            paid, accrued, or incurred, directly or
12            indirectly, if the taxpayer can establish, based
13            on a preponderance of the evidence, both of the
14            following:
15                    (a) the person during the same taxable
16                year paid, accrued, or incurred, the
17                intangible expense or cost to a person that is
18                not a related member, and
19                    (b) the transaction giving rise to the
20                intangible expense or cost between the
21                taxpayer and the person did not have as a
22                principal purpose the avoidance of Illinois
23                income tax, and is paid pursuant to a contract
24                or agreement that reflects arm's-length terms;
25                or
26                (iii) any item of intangible expense or cost

 

 

HB3163- 71 -LRB100 10240 RJF 20423 b

1            paid, accrued, or incurred, directly or
2            indirectly, from a transaction with a person if the
3            taxpayer establishes by clear and convincing
4            evidence, that the adjustments are unreasonable;
5            or if the taxpayer and the Director agree in
6            writing to the application or use of an alternative
7            method of apportionment under Section 304(f);
8                Nothing in this subsection shall preclude the
9            Director from making any other adjustment
10            otherwise allowed under Section 404 of this Act for
11            any tax year beginning after the effective date of
12            this amendment provided such adjustment is made
13            pursuant to regulation adopted by the Department
14            and such regulations provide methods and standards
15            by which the Department will utilize its authority
16            under Section 404 of this Act;
17            (G-14) For taxable years ending on or after
18        December 31, 2008, an amount equal to the amount of
19        insurance premium expenses and costs otherwise allowed
20        as a deduction in computing base income, and that were
21        paid, accrued, or incurred, directly or indirectly, to
22        a person who would be a member of the same unitary
23        business group but for the fact that the person is
24        prohibited under Section 1501(a)(27) from being
25        included in the unitary business group because he or
26        she is ordinarily required to apportion business

 

 

HB3163- 72 -LRB100 10240 RJF 20423 b

1        income under different subsections of Section 304. The
2        addition modification required by this subparagraph
3        shall be reduced to the extent that dividends were
4        included in base income of the unitary group for the
5        same taxable year and received by the taxpayer or by a
6        member of the taxpayer's unitary business group
7        (including amounts included in gross income under
8        Sections 951 through 964 of the Internal Revenue Code
9        and amounts included in gross income under Section 78
10        of the Internal Revenue Code) with respect to the stock
11        of the same person to whom the premiums and costs were
12        directly or indirectly paid, incurred, or accrued. The
13        preceding sentence does not apply to the extent that
14        the same dividends caused a reduction to the addition
15        modification required under Section 203(c)(2)(G-12) or
16        Section 203(c)(2)(G-13) of this Act;
17            (G-15) An amount equal to the credit allowable to
18        the taxpayer under Section 218(a) of this Act,
19        determined without regard to Section 218(c) of this
20        Act;
21    and by deducting from the total so obtained the sum of the
22    following amounts:
23            (H) An amount equal to all amounts included in such
24        total pursuant to the provisions of Sections 402(a),
25        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
26        Internal Revenue Code or included in such total as

 

 

HB3163- 73 -LRB100 10240 RJF 20423 b

1        distributions under the provisions of any retirement
2        or disability plan for employees of any governmental
3        agency or unit, or retirement payments to retired
4        partners, which payments are excluded in computing net
5        earnings from self employment by Section 1402 of the
6        Internal Revenue Code and regulations adopted pursuant
7        thereto;
8            (I) The valuation limitation amount;
9            (J) An amount equal to the amount of any tax
10        imposed by this Act which was refunded to the taxpayer
11        and included in such total for the taxable year;
12            (K) An amount equal to all amounts included in
13        taxable income as modified by subparagraphs (A), (B),
14        (C), (D), (E), (F) and (G) which are exempt from
15        taxation by this State either by reason of its statutes
16        or Constitution or by reason of the Constitution,
17        treaties or statutes of the United States; provided
18        that, in the case of any statute of this State that
19        exempts income derived from bonds or other obligations
20        from the tax imposed under this Act, the amount
21        exempted shall be the interest net of bond premium
22        amortization;
23            (L) With the exception of any amounts subtracted
24        under subparagraph (K), an amount equal to the sum of
25        all amounts disallowed as deductions by (i) Sections
26        171(a) (2) and 265(a)(2) of the Internal Revenue Code,

 

 

HB3163- 74 -LRB100 10240 RJF 20423 b

1        and all amounts of expenses allocable to interest and
2        disallowed as deductions by Section 265(1) of the
3        Internal Revenue Code; and (ii) for taxable years
4        ending on or after August 13, 1999, Sections 171(a)(2),
5        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
6        Code, plus, (iii) for taxable years ending on or after
7        December 31, 2011, Section 45G(e)(3) of the Internal
8        Revenue Code and, for taxable years ending on or after
9        December 31, 2008, any amount included in gross income
10        under Section 87 of the Internal Revenue Code; the
11        provisions of this subparagraph are exempt from the
12        provisions of Section 250;
13            (M) An amount equal to those dividends included in
14        such total which were paid by a corporation which
15        conducts business operations in a River Edge
16        Redevelopment Zone or zones created under the River
17        Edge Redevelopment Zone Act and conducts substantially
18        all of its operations in a River Edge Redevelopment
19        Zone or zones. This subparagraph (M) is exempt from the
20        provisions of Section 250;
21            (N) An amount equal to any contribution made to a
22        job training project established pursuant to the Tax
23        Increment Allocation Redevelopment Act;
24            (O) An amount equal to those dividends included in
25        such total that were paid by a corporation that
26        conducts business operations in a federally designated

 

 

HB3163- 75 -LRB100 10240 RJF 20423 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        all amounts included in such total pursuant to the
2        provisions of Section 111 of the Internal Revenue Code
3        as a recovery of items previously deducted by the
4        decedent from adjusted gross income in the computation
5        of taxable income. This subparagraph (W) is exempt from
6        Section 250;
7            (X) an amount equal to the refund included in such
8        total of any tax deducted for federal income tax
9        purposes, to the extent that deduction was added back
10        under subparagraph (F). This subparagraph (X) is
11        exempt from the provisions of Section 250; and
12            (Y) For taxable years ending on or after December
13        31, 2011, in the case of a taxpayer who was required to
14        add back any insurance premiums under Section
15        203(c)(2)(G-14), such taxpayer may elect to subtract
16        that part of a reimbursement received from the
17        insurance company equal to the amount of the expense or
18        loss (including expenses incurred by the insurance
19        company) that would have been taken into account as a
20        deduction for federal income tax purposes if the
21        expense or loss had been uninsured. If a taxpayer makes
22        the election provided for by this subparagraph (Y), the
23        insurer to which the premiums were paid must add back
24        to income the amount subtracted by the taxpayer
25        pursuant to this subparagraph (Y). This subparagraph
26        (Y) is exempt from the provisions of Section 250.

 

 

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1        (3) Limitation. The amount of any modification
2    otherwise required under this subsection shall, under
3    regulations prescribed by the Department, be adjusted by
4    any amounts included therein which were properly paid,
5    credited, or required to be distributed, or permanently set
6    aside for charitable purposes pursuant to Internal Revenue
7    Code Section 642(c) during the taxable year.
 
8    (d) Partnerships.
9        (1) In general. In the case of a partnership, base
10    income means an amount equal to the taxpayer's taxable
11    income for the taxable year as modified by paragraph (2).
12        (2) Modifications. The taxable income referred to in
13    paragraph (1) shall be modified by adding thereto the sum
14    of the following amounts:
15            (A) An amount equal to all amounts paid or accrued
16        to the taxpayer as interest or dividends during the
17        taxable year to the extent excluded from gross income
18        in the computation of taxable income;
19            (B) An amount equal to the amount of tax imposed by
20        this Act to the extent deducted from gross income for
21        the taxable year;
22            (C) The amount of deductions allowed to the
23        partnership pursuant to Section 707 (c) of the Internal
24        Revenue Code in calculating its taxable income;
25            (D) An amount equal to the amount of the capital

 

 

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1        gain deduction allowable under the Internal Revenue
2        Code, to the extent deducted from gross income in the
3        computation of taxable income;
4            (D-5) For taxable years 2001 and thereafter, an
5        amount equal to the bonus depreciation deduction taken
6        on the taxpayer's federal income tax return for the
7        taxable year under subsection (k) of Section 168 of the
8        Internal Revenue Code;
9            (D-6) If the taxpayer sells, transfers, abandons,
10        or otherwise disposes of property for which the
11        taxpayer was required in any taxable year to make an
12        addition modification under subparagraph (D-5), then
13        an amount equal to the aggregate amount of the
14        deductions taken in all taxable years under
15        subparagraph (O) with respect to that property.
16            If the taxpayer continues to own property through
17        the last day of the last tax year for which the
18        taxpayer may claim a depreciation deduction for
19        federal income tax purposes and for which the taxpayer
20        was allowed in any taxable year to make a subtraction
21        modification under subparagraph (O), then an amount
22        equal to that subtraction modification.
23            The taxpayer is required to make the addition
24        modification under this subparagraph only once with
25        respect to any one piece of property;
26            (D-7) An amount equal to the amount otherwise

 

 

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

 

 

HB3163- 85 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 86 -LRB100 10240 RJF 20423 b

1            terms and the principal purpose for the payment is
2            not federal or Illinois tax avoidance; or
3                (iv) an item of interest paid, accrued, or
4            incurred, directly or indirectly, to a person if
5            the taxpayer establishes by clear and convincing
6            evidence that the adjustments are unreasonable; or
7            if the taxpayer and the Director agree in writing
8            to the application or use of an alternative method
9            of apportionment under Section 304(f).
10                Nothing in this subsection shall preclude the
11            Director from making any other adjustment
12            otherwise allowed under Section 404 of this Act for
13            any tax year beginning after the effective date of
14            this amendment provided such adjustment is made
15            pursuant to regulation adopted by the Department
16            and such regulations provide methods and standards
17            by which the Department will utilize its authority
18            under Section 404 of this Act; and
19            (D-8) An amount equal to the amount of intangible
20        expenses and costs otherwise allowed as a deduction in
21        computing base income, and that were paid, accrued, or
22        incurred, directly or indirectly, (i) for taxable
23        years ending on or after December 31, 2004, to a
24        foreign person who would be a member of the same
25        unitary business group but for the fact that the
26        foreign person's business activity outside the United

 

 

HB3163- 87 -LRB100 10240 RJF 20423 b

1        States is 80% or more of that person's total business
2        activity and (ii) for taxable years ending on or after
3        December 31, 2008, to a person who would be a member of
4        the same unitary business group but for the fact that
5        the person is prohibited under Section 1501(a)(27)
6        from being included in the unitary business group
7        because he or she is ordinarily required to apportion
8        business income under different subsections of Section
9        304. The addition modification required by this
10        subparagraph shall be reduced to the extent that
11        dividends were included in base income of the unitary
12        group for the same taxable year and received by the
13        taxpayer or by a member of the taxpayer's unitary
14        business group (including amounts included in gross
15        income pursuant to Sections 951 through 964 of the
16        Internal Revenue Code and amounts included in gross
17        income under Section 78 of the Internal Revenue Code)
18        with respect to the stock of the same person to whom
19        the intangible expenses and costs were directly or
20        indirectly paid, incurred or accrued. The preceding
21        sentence shall not apply to the extent that the same
22        dividends caused a reduction to the addition
23        modification required under Section 203(d)(2)(D-7) of
24        this Act. As used in this subparagraph, the term
25        "intangible expenses and costs" includes (1) expenses,
26        losses, and costs for, or related to, the direct or

 

 

HB3163- 88 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 89 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 90 -LRB100 10240 RJF 20423 b

1            (D-9) For taxable years ending on or after December
2        31, 2008, an amount equal to the amount of insurance
3        premium expenses and costs otherwise allowed as a
4        deduction in computing base income, and that were paid,
5        accrued, or incurred, directly or indirectly, to a
6        person who would be a member of the same unitary
7        business group but for the fact that the person is
8        prohibited under Section 1501(a)(27) from being
9        included in the unitary business group because he or
10        she is ordinarily required to apportion business
11        income under different subsections of Section 304. The
12        addition modification required by this subparagraph
13        shall be reduced to the extent that dividends were
14        included in base income of the unitary group for the
15        same taxable year and received by the taxpayer or by a
16        member of the taxpayer's unitary business group
17        (including amounts included in gross income under
18        Sections 951 through 964 of the Internal Revenue Code
19        and amounts included in gross income under Section 78
20        of the Internal Revenue Code) with respect to the stock
21        of the same person to whom the premiums and costs were
22        directly or indirectly paid, incurred, or accrued. The
23        preceding sentence does not apply to the extent that
24        the same dividends caused a reduction to the addition
25        modification required under Section 203(d)(2)(D-7) or
26        Section 203(d)(2)(D-8) of this Act;

 

 

HB3163- 91 -LRB100 10240 RJF 20423 b

1            (D-10) An amount equal to the credit allowable to
2        the taxpayer under Section 218(a) of this Act,
3        determined without regard to Section 218(c) of this
4        Act;
5    and by deducting from the total so obtained the following
6    amounts:
7            (E) The valuation limitation amount;
8            (F) An amount equal to the amount of any tax
9        imposed by this Act which was refunded to the taxpayer
10        and included in such total for the taxable year;
11            (G) An amount equal to all amounts included in
12        taxable income as modified by subparagraphs (A), (B),
13        (C) and (D) which are exempt from taxation by this
14        State either by reason of its statutes or Constitution
15        or by reason of the Constitution, treaties or statutes
16        of the United States; provided that, in the case of any
17        statute of this State that exempts income derived from
18        bonds or other obligations from the tax imposed under
19        this Act, the amount exempted shall be the interest net
20        of bond premium amortization;
21            (H) Any income of the partnership which
22        constitutes personal service income as defined in
23        Section 1348 (b) (1) of the Internal Revenue Code (as
24        in effect December 31, 1981) or a reasonable allowance
25        for compensation paid or accrued for services rendered
26        by partners to the partnership, whichever is greater;

 

 

HB3163- 92 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 93 -LRB100 10240 RJF 20423 b

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

 

 

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

 

 

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1                1.0.
2            The aggregate amount deducted under this
3        subparagraph in all taxable years for any one piece of
4        property may not exceed the amount of the bonus
5        depreciation deduction taken on that property on the
6        taxpayer's federal income tax return under subsection
7        (k) of Section 168 of the Internal Revenue Code. This
8        subparagraph (O) is exempt from the provisions of
9        Section 250;
10            (P) If the taxpayer sells, transfers, abandons, or
11        otherwise disposes of property for which the taxpayer
12        was required in any taxable year to make an addition
13        modification under subparagraph (D-5), then an amount
14        equal to that addition modification.
15            If the taxpayer continues to own property through
16        the last day of the last tax year for which the
17        taxpayer may claim a depreciation deduction for
18        federal income tax purposes and for which the taxpayer
19        was required in any taxable year to make an addition
20        modification under subparagraph (D-5), then an amount
21        equal to that addition modification.
22            The taxpayer is allowed to take the deduction under
23        this subparagraph only once with respect to any one
24        piece of property.
25            This subparagraph (P) is exempt from the
26        provisions of Section 250;

 

 

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

 

 

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

 

 

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

 

 

HB3163- 99 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 100 -LRB100 10240 RJF 20423 b

1    (e) applied in conjunction with Section 172 of the Internal
2    Revenue Code.
3        (2) Special rule. For purposes of paragraph (1) of this
4    subsection, the taxable income properly reportable for
5    federal income tax purposes shall mean:
6            (A) Certain life insurance companies. In the case
7        of a life insurance company subject to the tax imposed
8        by Section 801 of the Internal Revenue Code, life
9        insurance company taxable income, plus the amount of
10        distribution from pre-1984 policyholder surplus
11        accounts as calculated under Section 815a of the
12        Internal Revenue Code;
13            (B) Certain other insurance companies. In the case
14        of mutual insurance companies subject to the tax
15        imposed by Section 831 of the Internal Revenue Code,
16        insurance company taxable income;
17            (C) Regulated investment companies. In the case of
18        a regulated investment company subject to the tax
19        imposed by Section 852 of the Internal Revenue Code,
20        investment company taxable income;
21            (D) Real estate investment trusts. In the case of a
22        real estate investment trust subject to the tax imposed
23        by Section 857 of the Internal Revenue Code, real
24        estate investment trust taxable income;
25            (E) Consolidated corporations. In the case of a
26        corporation which is a member of an affiliated group of

 

 

HB3163- 101 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 102 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 103 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 104 -LRB100 10240 RJF 20423 b

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

 

 

HB3163- 105 -LRB100 10240 RJF 20423 b

1        determining gain) for such property on that date
2        (determined under the Internal Revenue Code as in
3        effect on that date), or (ii) the total gain realized
4        and reportable for federal income tax purposes in
5        respect of the sale, exchange or other disposition of
6        such property.
7            (B) If the fair market value of property referred
8        to in paragraph (1) was not readily ascertainable on
9        August 1, 1969, the pre-August 1, 1969 appreciation
10        amount for such property is that amount which bears the
11        same ratio to the total gain reported in respect of the
12        property for federal income tax purposes for the
13        taxable year, as the number of full calendar months in
14        that part of the taxpayer's holding period for the
15        property ending July 31, 1969 bears to the number of
16        full calendar months in the taxpayer's entire holding
17        period for the property.
18            (C) The Department shall prescribe such
19        regulations as may be necessary to carry out the
20        purposes of this paragraph.
 
21    (g) Double deductions. Unless specifically provided
22otherwise, nothing in this Section shall permit the same item
23to be deducted more than once.
 
24    (h) Legislative intention. Except as expressly provided by

 

 

HB3163- 106 -LRB100 10240 RJF 20423 b

1this Section there shall be no modifications or limitations on
2the amounts of income, gain, loss or deduction taken into
3account in determining gross income, adjusted gross income or
4taxable income for federal income tax purposes for the taxable
5year, or in the amount of such items entering into the
6computation of base income and net income under this Act for
7such taxable year, whether in respect of property values as of
8August 1, 1969 or otherwise.
9(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
10eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1196-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
126-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
13eff. 8-23-11; 97-905, eff. 8-7-12.)
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.