100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3247

 

Introduced , by Rep. Christine Winger

 

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

    Amends the Illinois Income Tax Act. Creates a deduction for veterinary clinics in an amount equal to the value of any free spaying or neutering services provided by the clinic during the taxable year to a not-for-profit animal rescue or shelter service. Provides that the credit may not exceed $2,500 per taxpayer in any taxable year. Effective immediately.


LRB100 10320 HLH 20509 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3247LRB100 10320 HLH 20509 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 203 as follows:
 
6    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7    Sec. 203. Base income defined.
8    (a) Individuals.
9        (1) In general. In the case of an individual, base
10    income means an amount equal to the taxpayer's adjusted
11    gross income for the taxable year as modified by paragraph
12    (2).
13        (2) Modifications. The adjusted gross income referred
14    to in paragraph (1) shall be modified by adding thereto the
15    sum of the following amounts:
16            (A) An amount equal to all amounts paid or accrued
17        to the taxpayer as interest or dividends during the
18        taxable year to the extent excluded from gross income
19        in the computation of adjusted gross income, except
20        stock dividends of qualified public utilities
21        described in Section 305(e) of the Internal Revenue
22        Code;
23            (B) An amount equal to the amount of tax imposed by

 

 

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1        this Act to the extent deducted from gross income in
2        the computation of adjusted gross income for the
3        taxable year;
4            (C) An amount equal to the amount received during
5        the taxable year as a recovery or refund of real
6        property taxes paid with respect to the taxpayer's
7        principal residence under the Revenue Act of 1939 and
8        for which a deduction was previously taken under
9        subparagraph (L) of this paragraph (2) prior to July 1,
10        1991, the retrospective application date of Article 4
11        of Public Act 87-17. In the case of multi-unit or
12        multi-use structures and farm dwellings, the taxes on
13        the taxpayer's principal residence shall be that
14        portion of the total taxes for the entire property
15        which is attributable to such principal residence;
16            (D) An amount equal to the amount of the capital
17        gain deduction allowable under the Internal Revenue
18        Code, to the extent deducted from gross income in the
19        computation of adjusted gross income;
20            (D-5) An amount, to the extent not included in
21        adjusted gross income, equal to the amount of money
22        withdrawn by the taxpayer in the taxable year from a
23        medical care savings account and the interest earned on
24        the account in the taxable year of a withdrawal
25        pursuant to subsection (b) of Section 20 of the Medical
26        Care Savings Account Act or subsection (b) of Section

 

 

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1        20 of the Medical Care Savings Account Act of 2000;
2            (D-10) For taxable years ending after December 31,
3        1997, an amount equal to any eligible remediation costs
4        that the individual deducted in computing adjusted
5        gross income and for which the individual claims a
6        credit under subsection (l) of Section 201;
7            (D-15) For taxable years 2001 and thereafter, an
8        amount equal to the bonus depreciation deduction taken
9        on the taxpayer's federal income tax return for the
10        taxable year under subsection (k) of Section 168 of the
11        Internal Revenue Code;
12            (D-16) If the taxpayer sells, transfers, abandons,
13        or otherwise disposes of property for which the
14        taxpayer was required in any taxable year to make an
15        addition modification under subparagraph (D-15), then
16        an amount equal to the aggregate amount of the
17        deductions taken in all taxable years under
18        subparagraph (Z) with respect to that property.
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 allowed in any taxable year to make a subtraction
24        modification under subparagraph (Z), then an amount
25        equal to that subtraction modification.
26            The taxpayer is required to make the addition

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            by which the Department will utilize its authority
2            under Section 404 of this Act;
3            (D-19) For taxable years ending on or after
4        December 31, 2008, an amount equal to the amount of
5        insurance premium expenses and costs otherwise allowed
6        as a deduction in computing base income, and that were
7        paid, accrued, or incurred, directly or indirectly, to
8        a person who would be a member of the same unitary
9        business group but for the fact that the person is
10        prohibited under Section 1501(a)(27) from being
11        included in the unitary business group because he or
12        she is ordinarily required to apportion business
13        income under different subsections of Section 304. The
14        addition modification required by this subparagraph
15        shall be reduced to the extent that dividends were
16        included in base income of the unitary group for the
17        same taxable year and received by the taxpayer or by a
18        member of the taxpayer's unitary business group
19        (including amounts included in gross income under
20        Sections 951 through 964 of the Internal Revenue Code
21        and amounts included in gross income under Section 78
22        of the Internal Revenue Code) with respect to the stock
23        of the same person to whom the premiums and costs were
24        directly or indirectly paid, incurred, or accrued. The
25        preceding sentence does not apply to the extent that
26        the same dividends caused a reduction to the addition

 

 

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1        modification required under Section 203(a)(2)(D-17) or
2        Section 203(a)(2)(D-18) of this Act.
3            (D-20) For taxable years beginning on or after
4        January 1, 2002 and ending on or before December 31,
5        2006, in the case of a distribution from a qualified
6        tuition program under Section 529 of the Internal
7        Revenue Code, other than (i) a distribution from a
8        College Savings Pool created under Section 16.5 of the
9        State Treasurer Act or (ii) a distribution from the
10        Illinois Prepaid Tuition Trust Fund, an amount equal to
11        the amount excluded from gross income under Section
12        529(c)(3)(B). For taxable years beginning on or after
13        January 1, 2007, in the case of a distribution from a
14        qualified tuition program under Section 529 of the
15        Internal Revenue Code, other than (i) a distribution
16        from a College Savings Pool created under Section 16.5
17        of the State Treasurer Act, (ii) a distribution from
18        the Illinois Prepaid Tuition Trust Fund, or (iii) a
19        distribution from a qualified tuition program under
20        Section 529 of the Internal Revenue Code that (I)
21        adopts and determines that its offering materials
22        comply with the College Savings Plans Network's
23        disclosure principles and (II) has made reasonable
24        efforts to inform in-state residents of the existence
25        of in-state qualified tuition programs by informing
26        Illinois residents directly and, where applicable, to

 

 

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

 

 

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1        withdrawal or refund of moneys from a qualified tuition
2        program under Section 529 of the Internal Revenue Code
3        administered by the State that is not used for
4        qualified expenses at an eligible education
5        institution, an amount equal to the contribution
6        component of the nonqualified withdrawal or refund
7        that was previously deducted from base income under
8        subsection (a)(2)(y) of this Section, provided that
9        the withdrawal or refund did not result from the
10        beneficiary's death or disability;
11            (D-23) An amount equal to the credit allowable to
12        the taxpayer under Section 218(a) of this Act,
13        determined without regard to Section 218(c) of this
14        Act;
15    and by deducting from the total so obtained the sum of the
16    following amounts:
17            (E) For taxable years ending before December 31,
18        2001, any amount included in such total in respect of
19        any compensation (including but not limited to any
20        compensation paid or accrued to a serviceman while a
21        prisoner of war or missing in action) paid to a
22        resident by reason of being on active duty in the Armed
23        Forces of the United States and in respect of any
24        compensation paid or accrued to a resident who as a
25        governmental employee was a prisoner of war or missing
26        in action, and in respect of any compensation paid to a

 

 

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1        resident in 1971 or thereafter for annual training
2        performed pursuant to Sections 502 and 503, Title 32,
3        United States Code as a member of the Illinois National
4        Guard or, beginning with taxable years ending on or
5        after December 31, 2007, the National Guard of any
6        other state. For taxable years ending on or after
7        December 31, 2001, any amount included in such total in
8        respect of any compensation (including but not limited
9        to any compensation paid or accrued to a serviceman
10        while a prisoner of war or missing in action) paid to a
11        resident by reason of being a member of any component
12        of the Armed Forces of the United States and in respect
13        of any compensation paid or accrued to a resident who
14        as a governmental employee was a prisoner of war or
15        missing in action, and in respect of any compensation
16        paid to a resident in 2001 or thereafter by reason of
17        being a member of the Illinois National Guard or,
18        beginning with taxable years ending on or after
19        December 31, 2007, the National Guard of any other
20        state. The provisions of this subparagraph (E) are
21        exempt from the provisions of Section 250;
22            (F) An amount equal to all amounts included in such
23        total pursuant to the provisions of Sections 402(a),
24        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
25        Internal Revenue Code, or included in such total as
26        distributions under the provisions of any retirement

 

 

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1        or disability plan for employees of any governmental
2        agency or unit, or retirement payments to retired
3        partners, which payments are excluded in computing net
4        earnings from self employment by Section 1402 of the
5        Internal Revenue Code and regulations adopted pursuant
6        thereto;
7            (G) The valuation limitation amount;
8            (H) 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            (I) An amount equal to all amounts included in such
12        total pursuant to the provisions of Section 111 of the
13        Internal Revenue Code as a recovery of items previously
14        deducted from adjusted gross income in the computation
15        of taxable income;
16            (J) An amount equal to those dividends included in
17        such total which were paid by a corporation which
18        conducts business operations in a River Edge
19        Redevelopment Zone or zones created under the River
20        Edge Redevelopment Zone Act, and conducts
21        substantially all of its operations in a River Edge
22        Redevelopment Zone or zones. This subparagraph (J) is
23        exempt from the provisions of Section 250;
24            (K) 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

 

 

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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 (J) of paragraph (2) of this subsection
5        shall not be eligible for the deduction provided under
6        this subparagraph (K);
7            (L) For taxable years ending after December 31,
8        1983, an amount equal to all social security benefits
9        and railroad retirement benefits included in such
10        total pursuant to Sections 72(r) and 86 of the Internal
11        Revenue Code;
12            (M) With the exception of any amounts subtracted
13        under subparagraph (N), an amount equal to the sum of
14        all amounts disallowed as deductions by (i) Sections
15        171(a) (2), and 265(2) of the Internal Revenue Code,
16        and all amounts of expenses allocable to interest and
17        disallowed as deductions by Section 265(1) of the
18        Internal Revenue Code; and (ii) for taxable years
19        ending on or after August 13, 1999, Sections 171(a)(2),
20        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
21        Code, plus, for taxable years ending on or after
22        December 31, 2011, Section 45G(e)(3) of the Internal
23        Revenue Code and, for taxable years ending on or after
24        December 31, 2008, any amount included in gross income
25        under Section 87 of the Internal Revenue Code; the
26        provisions of this subparagraph are exempt from the

 

 

HB3247- 17 -LRB100 10320 HLH 20509 b

1        provisions of Section 250;
2            (N) An amount equal to all amounts included in such
3        total which are exempt from taxation by this State
4        either by reason of its statutes or Constitution or by
5        reason of the Constitution, treaties or statutes of the
6        United States; provided that, in the case of any
7        statute of this State that exempts income derived from
8        bonds or other obligations from the tax imposed under
9        this Act, the amount exempted shall be the interest net
10        of bond premium amortization;
11            (O) An amount equal to any contribution made to a
12        job training project established pursuant to the Tax
13        Increment Allocation Redevelopment Act;
14            (P) An amount equal to the amount of the deduction
15        used to compute the federal income tax credit for
16        restoration of substantial amounts held under claim of
17        right for the taxable year pursuant to Section 1341 of
18        the Internal Revenue Code or of any itemized deduction
19        taken from adjusted gross income in the computation of
20        taxable income for restoration of substantial amounts
21        held under claim of right for the taxable year;
22            (Q) An amount equal to any amounts included in such
23        total, received by the taxpayer as an acceleration in
24        the payment of life, endowment or annuity benefits in
25        advance of the time they would otherwise be payable as
26        an indemnity for a terminal illness;

 

 

HB3247- 18 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 19 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 20 -LRB100 10320 HLH 20509 b

1        gross income in the taxable year from amounts converted
2        from a regular IRA to a Roth IRA. This paragraph is
3        exempt from the provisions of Section 250;
4            (X) For taxable year 1999 and thereafter, an amount
5        equal to the amount of any (i) distributions, to the
6        extent includible in gross income for federal income
7        tax purposes, made to the taxpayer because of his or
8        her status as a victim of persecution for racial or
9        religious reasons by Nazi Germany or any other Axis
10        regime or as an heir of the victim and (ii) items of
11        income, to the extent includible in gross income for
12        federal income tax purposes, attributable to, derived
13        from or in any way related to assets stolen from,
14        hidden from, or otherwise lost to a victim of
15        persecution for racial or religious reasons by Nazi
16        Germany or any other Axis regime immediately prior to,
17        during, and immediately after World War II, including,
18        but not limited to, interest on the proceeds receivable
19        as insurance under policies issued to a victim of
20        persecution for racial or religious reasons by Nazi
21        Germany or any other Axis regime by European insurance
22        companies immediately prior to and during World War II;
23        provided, however, this subtraction from federal
24        adjusted gross income does not apply to assets acquired
25        with such assets or with the proceeds from the sale of
26        such assets; provided, further, this paragraph shall

 

 

HB3247- 21 -LRB100 10320 HLH 20509 b

1        only apply to a taxpayer who was the first recipient of
2        such assets after their recovery and who is a victim of
3        persecution for racial or religious reasons by Nazi
4        Germany or any other Axis regime or as an heir of the
5        victim. The amount of and the eligibility for any
6        public assistance, benefit, or similar entitlement is
7        not affected by the inclusion of items (i) and (ii) of
8        this paragraph in gross income for federal income tax
9        purposes. This paragraph is exempt from the provisions
10        of Section 250;
11            (Y) For taxable years beginning on or after January
12        1, 2002 and ending on or before December 31, 2004,
13        moneys contributed in the taxable year to a College
14        Savings Pool account under Section 16.5 of the State
15        Treasurer Act, except that amounts excluded from gross
16        income under Section 529(c)(3)(C)(i) of the Internal
17        Revenue Code shall not be considered moneys
18        contributed under this subparagraph (Y). For taxable
19        years beginning on or after January 1, 2005, a maximum
20        of $10,000 contributed in the taxable year to (i) a
21        College Savings Pool account under Section 16.5 of the
22        State Treasurer Act or (ii) the Illinois Prepaid
23        Tuition Trust Fund, except that amounts excluded from
24        gross income under Section 529(c)(3)(C)(i) of the
25        Internal Revenue Code shall not be considered moneys
26        contributed under this subparagraph (Y). For purposes

 

 

HB3247- 22 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 23 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 24 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 25 -LRB100 10320 HLH 20509 b

1            (DD) An amount equal to the interest income taken
2        into account for the taxable year (net of the
3        deductions allocable thereto) with respect to
4        transactions with (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(a)(2)(D-17) for
18        interest paid, accrued, or incurred, directly or
19        indirectly, to the same person. This subparagraph (DD)
20        is exempt from the provisions of Section 250;
21            (EE) An amount equal to the income from intangible
22        property taken into account for the taxable year (net
23        of the deductions allocable thereto) with respect to
24        transactions with (i) a foreign person who would be a
25        member of the taxpayer's unitary business group but for
26        the fact that the foreign person's business activity

 

 

HB3247- 26 -LRB100 10320 HLH 20509 b

1        outside the United States is 80% or more of that
2        person's total business activity and (ii) for taxable
3        years ending on or after December 31, 2008, to a person
4        who would be a member of the same unitary business
5        group but for the fact that the person is prohibited
6        under Section 1501(a)(27) from being included in the
7        unitary business group because he or she is ordinarily
8        required to apportion business income under different
9        subsections of Section 304, but not to exceed the
10        addition modification required to be made for the same
11        taxable year under Section 203(a)(2)(D-18) for
12        intangible expenses and costs paid, accrued, or
13        incurred, directly or indirectly, to the same foreign
14        person. This subparagraph (EE) is exempt from the
15        provisions of Section 250;
16            (FF) An amount equal to any amount awarded to the
17        taxpayer during the taxable year by the Court of Claims
18        under subsection (c) of Section 8 of the Court of
19        Claims Act for time unjustly served in a State prison.
20        This subparagraph (FF) is exempt from the provisions of
21        Section 250; and
22            (GG) 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(a)(2)(D-19), such taxpayer may elect to subtract
26        that part of a reimbursement received from the

 

 

HB3247- 27 -LRB100 10320 HLH 20509 b

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 (GG),
7        the insurer to which the premiums were paid must add
8        back to income the amount subtracted by the taxpayer
9        pursuant to this subparagraph (GG). This subparagraph
10        (GG) is exempt from the provisions of Section 250; and
11        .
12            (HH) For taxable years ending on or after December
13        31, 2017, for any taxpayer that operates a veterinary
14        clinic in the State, an amount equal to the value of
15        any free spaying or neutering services provided by the
16        clinic during the taxable year to a not-for-profit
17        animal rescue or shelter service, but not to exceed
18        $2,500 per taxpayer in any taxable year; for the
19        purposes of this subparagraph, the value of the spaying
20        or neutering services shall be equal to the clinic's
21        normal charges for those services; this subparagraph
22        (HH) is exempt from the provisions of Section 250.
 
23    (b) Corporations.
24        (1) In general. In the case of a corporation, base
25    income means an amount equal to the taxpayer's taxable

 

 

HB3247- 28 -LRB100 10320 HLH 20509 b

1    income for the taxable year as modified by paragraph (2).
2        (2) Modifications. The taxable income referred to in
3    paragraph (1) shall be modified by adding thereto the sum
4    of the following amounts:
5            (A) An amount equal to all amounts paid or accrued
6        to the taxpayer as interest and all distributions
7        received from regulated investment companies during
8        the taxable year to the extent excluded from gross
9        income in the computation of taxable income;
10            (B) An amount equal to the amount of tax imposed by
11        this Act to the extent deducted from gross income in
12        the computation of taxable income for the taxable year;
13            (C) In the case of a regulated investment company,
14        an amount equal to the excess of (i) the net long-term
15        capital gain for the taxable year, over (ii) the amount
16        of the capital gain dividends designated as such in
17        accordance with Section 852(b)(3)(C) of the Internal
18        Revenue Code and any amount designated under Section
19        852(b)(3)(D) of the Internal Revenue Code,
20        attributable to the taxable year (this amendatory Act
21        of 1995 (Public Act 89-89) is declarative of existing
22        law and is not a new enactment);
23            (D) The amount of any net operating loss deduction
24        taken in arriving at taxable income, other than a net
25        operating loss carried forward from a taxable year
26        ending prior to December 31, 1986;

 

 

HB3247- 29 -LRB100 10320 HLH 20509 b

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 earlier taxable
9        year, with the following limitations applied in the
10        order that 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

 

 

HB3247- 30 -LRB100 10320 HLH 20509 b

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            (E-5) For taxable years ending after December 31,
6        1997, an amount equal to any eligible remediation costs
7        that the corporation deducted in computing adjusted
8        gross income and for which the corporation claims a
9        credit under subsection (l) of Section 201;
10            (E-10) For taxable years 2001 and thereafter, an
11        amount equal to the bonus depreciation deduction taken
12        on the taxpayer's federal income tax return for the
13        taxable year under subsection (k) of Section 168 of the
14        Internal Revenue Code;
15            (E-11) If the taxpayer sells, transfers, abandons,
16        or otherwise disposes of property for which the
17        taxpayer was required in any taxable year to make an
18        addition modification under subparagraph (E-10), then
19        an amount equal to the aggregate amount of the
20        deductions taken in all taxable years under
21        subparagraph (T) with respect to that property.
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 allowed in any taxable year to make a subtraction

 

 

HB3247- 31 -LRB100 10320 HLH 20509 b

1        modification under subparagraph (T), then an amount
2        equal to that subtraction modification.
3            The taxpayer is required to make the addition
4        modification under this subparagraph only once with
5        respect to any one piece of property;
6            (E-12) An amount equal to the amount otherwise
7        allowed as a deduction in computing base income for
8        interest paid, accrued, or incurred, directly or
9        indirectly, (i) for taxable years ending on or after
10        December 31, 2004, to a foreign person who would be a
11        member of the same unitary business group but for the
12        fact the foreign person's business activity outside
13        the United States is 80% or more of the foreign
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. The addition modification
22        required by this subparagraph shall be reduced to the
23        extent that dividends were included in base income of
24        the unitary group for the same taxable year and
25        received by the taxpayer or by a member of the
26        taxpayer's unitary business group (including amounts

 

 

HB3247- 32 -LRB100 10320 HLH 20509 b

1        included in gross income pursuant to Sections 951
2        through 964 of the Internal Revenue Code and amounts
3        included in gross income under Section 78 of the
4        Internal Revenue Code) with respect to the stock of the
5        same person to whom the interest was paid, accrued, or
6        incurred.
7            This paragraph shall not apply to the following:
8                (i) an item of interest paid, accrued, or
9            incurred, directly or indirectly, to a person who
10            is subject in a foreign country or state, other
11            than a state which requires mandatory unitary
12            reporting, to a tax on or measured by net income
13            with respect to such interest; or
14                (ii) an item of interest paid, accrued, or
15            incurred, directly or indirectly, to a person if
16            the taxpayer can establish, based on a
17            preponderance of the evidence, both of the
18            following:
19                    (a) the person, during the same taxable
20                year, paid, accrued, or incurred, the interest
21                to a person that is not a related member, and
22                    (b) the transaction giving rise to the
23                interest expense between the taxpayer and the
24                person did not have as a principal purpose the
25                avoidance of Illinois income tax, and is paid
26                pursuant to a contract or agreement that

 

 

HB3247- 33 -LRB100 10320 HLH 20509 b

1                reflects an arm's-length interest rate and
2                terms; or
3                (iii) the taxpayer can establish, based on
4            clear and convincing evidence, that the interest
5            paid, accrued, or incurred relates to a contract or
6            agreement entered into at arm's-length rates and
7            terms and the principal purpose for the payment is
8            not federal or Illinois tax avoidance; or
9                (iv) an item of interest paid, accrued, or
10            incurred, directly or indirectly, to a person if
11            the taxpayer establishes by clear and convincing
12            evidence that the adjustments are unreasonable; or
13            if the taxpayer and the Director agree in writing
14            to the application or use of an alternative method
15            of apportionment under Section 304(f).
16                Nothing in this subsection shall preclude the
17            Director from making any other adjustment
18            otherwise allowed under Section 404 of this Act for
19            any tax year beginning after the effective date of
20            this amendment provided such adjustment is made
21            pursuant to regulation adopted by the Department
22            and such regulations provide methods and standards
23            by which the Department will utilize its authority
24            under Section 404 of this Act;
25            (E-13) An amount equal to the amount of intangible
26        expenses and costs otherwise allowed as a deduction in

 

 

HB3247- 34 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 35 -LRB100 10320 HLH 20509 b

1        sentence shall not apply to the extent that the same
2        dividends caused a reduction to the addition
3        modification required under Section 203(b)(2)(E-12) of
4        this Act. As used in this subparagraph, the term
5        "intangible expenses and costs" includes (1) expenses,
6        losses, and costs for, or related to, the direct or
7        indirect acquisition, use, maintenance or management,
8        ownership, sale, exchange, or any other disposition of
9        intangible property; (2) losses incurred, directly or
10        indirectly, from factoring transactions or discounting
11        transactions; (3) royalty, patent, technical, and
12        copyright fees; (4) licensing fees; and (5) other
13        similar expenses and costs. For purposes of this
14        subparagraph, "intangible property" includes patents,
15        patent applications, trade names, trademarks, service
16        marks, copyrights, mask works, trade secrets, and
17        similar types of intangible assets.
18            This paragraph shall not apply to the following:
19                (i) any item of intangible expenses or costs
20            paid, accrued, or incurred, directly or
21            indirectly, from a transaction with a person who is
22            subject in a foreign country or state, other than a
23            state which requires mandatory unitary reporting,
24            to a tax on or measured by net income with respect
25            to such item; or
26                (ii) any item of intangible expense or cost

 

 

HB3247- 36 -LRB100 10320 HLH 20509 b

1            paid, accrued, or incurred, directly or
2            indirectly, if the taxpayer can establish, based
3            on a preponderance of the evidence, both of the
4            following:
5                    (a) the person during the same taxable
6                year paid, accrued, or incurred, the
7                intangible expense or cost to a person that is
8                not a related member, and
9                    (b) the transaction giving rise to the
10                intangible expense or cost between the
11                taxpayer and the person did not have as a
12                principal purpose the avoidance of Illinois
13                income tax, and is paid pursuant to a contract
14                or agreement that reflects arm's-length terms;
15                or
16                (iii) any item of intangible expense or cost
17            paid, accrued, or incurred, directly or
18            indirectly, from a transaction with a person if the
19            taxpayer establishes by clear and convincing
20            evidence, that the adjustments are unreasonable;
21            or if the taxpayer and the Director agree in
22            writing to the application or use of an alternative
23            method of apportionment under Section 304(f);
24                Nothing in this subsection shall preclude the
25            Director from making any other adjustment
26            otherwise allowed under Section 404 of this Act for

 

 

HB3247- 37 -LRB100 10320 HLH 20509 b

1            any tax year beginning after the effective date of
2            this amendment provided such adjustment is made
3            pursuant to regulation adopted by the Department
4            and such regulations provide methods and standards
5            by which the Department will utilize its authority
6            under Section 404 of this Act;
7            (E-14) For taxable years ending on or after
8        December 31, 2008, an amount equal to the amount of
9        insurance premium expenses and costs otherwise allowed
10        as a deduction in computing base income, and that were
11        paid, accrued, or incurred, directly or indirectly, to
12        a person who would be a member of the same unitary
13        business group but for the fact that the person is
14        prohibited under Section 1501(a)(27) from being
15        included in the unitary business group because he or
16        she is ordinarily required to apportion business
17        income under different subsections of Section 304. The
18        addition modification required by this subparagraph
19        shall be reduced to the extent that dividends were
20        included in base income of the unitary group for the
21        same taxable year and received by the taxpayer or by a
22        member of the taxpayer's unitary business group
23        (including amounts included in gross income under
24        Sections 951 through 964 of the Internal Revenue Code
25        and amounts included in gross income under Section 78
26        of the Internal Revenue Code) with respect to the stock

 

 

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1        of the same person to whom the premiums and costs were
2        directly or indirectly paid, incurred, or accrued. The
3        preceding sentence does not apply to the extent that
4        the same dividends caused a reduction to the addition
5        modification required under Section 203(b)(2)(E-12) or
6        Section 203(b)(2)(E-13) of this Act;
7            (E-15) For taxable years beginning after December
8        31, 2008, any deduction for dividends paid by a captive
9        real estate investment trust that is allowed to a real
10        estate investment trust under Section 857(b)(2)(B) of
11        the Internal Revenue Code for dividends paid;
12            (E-16) An amount equal to the credit allowable to
13        the taxpayer under Section 218(a) of this Act,
14        determined without regard to Section 218(c) of this
15        Act;
16    and by deducting from the total so obtained the sum of the
17    following amounts:
18            (F) An amount equal to the amount of any tax
19        imposed by this Act which was refunded to the taxpayer
20        and included in such total for the taxable year;
21            (G) An amount equal to any amount included in such
22        total under Section 78 of the Internal Revenue Code;
23            (H) In the case of a regulated investment company,
24        an amount equal to the amount of exempt interest
25        dividends as defined in subsection (b) (5) of Section
26        852 of the Internal Revenue Code, paid to shareholders

 

 

HB3247- 39 -LRB100 10320 HLH 20509 b

1        for the taxable year;
2            (I) With the exception of any amounts subtracted
3        under subparagraph (J), an amount equal to the sum of
4        all amounts disallowed as deductions by (i) Sections
5        171(a) (2), and 265(a)(2) and amounts disallowed as
6        interest expense by Section 291(a)(3) of the Internal
7        Revenue Code, and all amounts of expenses allocable to
8        interest and disallowed as deductions by Section
9        265(a)(1) of the Internal Revenue Code; and (ii) for
10        taxable years ending on or after August 13, 1999,
11        Sections 171(a)(2), 265, 280C, 291(a)(3), and
12        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
13        for tax years ending on or after December 31, 2011,
14        amounts disallowed as deductions by Section 45G(e)(3)
15        of the Internal Revenue Code and, for taxable years
16        ending on or after December 31, 2008, any amount
17        included in gross income under Section 87 of the
18        Internal Revenue Code and the policyholders' share of
19        tax-exempt interest of a life insurance company under
20        Section 807(a)(2)(B) of the Internal Revenue Code (in
21        the case of a life insurance company with gross income
22        from a decrease in reserves for the tax year) or
23        Section 807(b)(1)(B) of the Internal Revenue Code (in
24        the case of a life insurance company allowed a
25        deduction for an increase in reserves for the tax
26        year); the provisions of this subparagraph are exempt

 

 

HB3247- 40 -LRB100 10320 HLH 20509 b

1        from the provisions of Section 250;
2            (J) An amount equal to all amounts included in such
3        total which are exempt from taxation by this State
4        either by reason of its statutes or Constitution or by
5        reason of the Constitution, treaties or statutes of the
6        United States; provided that, in the case of any
7        statute of this State that exempts income derived from
8        bonds or other obligations from the tax imposed under
9        this Act, the amount exempted shall be the interest net
10        of bond premium amortization;
11            (K) An amount equal to those dividends included in
12        such total which were paid by a corporation which
13        conducts business operations in a River Edge
14        Redevelopment Zone or zones created under the River
15        Edge Redevelopment Zone Act and conducts substantially
16        all of its operations in a River Edge Redevelopment
17        Zone or zones. This subparagraph (K) is exempt from the
18        provisions of Section 250;
19            (L) An amount equal to those dividends included in
20        such total that were paid by a corporation that
21        conducts business operations in a federally designated
22        Foreign Trade Zone or Sub-Zone and that is designated a
23        High Impact Business located in Illinois; provided
24        that dividends eligible for the deduction provided in
25        subparagraph (K) of paragraph 2 of this subsection
26        shall not be eligible for the deduction provided under

 

 

HB3247- 41 -LRB100 10320 HLH 20509 b

1        this subparagraph (L);
2            (M) For any taxpayer that is a financial
3        organization within the meaning of Section 304(c) of
4        this Act, an amount included in such total as interest
5        income from a loan or loans made by such taxpayer to a
6        borrower, to the extent that such a loan is secured by
7        property which is eligible for the River Edge
8        Redevelopment Zone Investment Credit. To determine the
9        portion of a loan or loans that is secured by property
10        eligible for a Section 201(f) investment credit to the
11        borrower, the entire principal amount of the loan or
12        loans between the taxpayer and the borrower should be
13        divided into the basis of the Section 201(f) investment
14        credit property which secures the loan or loans, using
15        for this purpose the original basis of such property on
16        the date that it was placed in service in the River
17        Edge Redevelopment Zone. The subtraction modification
18        available to taxpayer in any year under this subsection
19        shall be that portion of the total interest paid by the
20        borrower with respect to such loan attributable to the
21        eligible property as calculated under the previous
22        sentence. This subparagraph (M) is exempt from the
23        provisions of Section 250;
24            (M-1) For any taxpayer that is a financial
25        organization within the meaning of Section 304(c) of
26        this Act, an amount included in such total as interest

 

 

HB3247- 42 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 43 -LRB100 10320 HLH 20509 b

1        Section 170 of the Internal Revenue Code and (ii) must,
2        by its terms, be used for a project approved by the
3        Department of Commerce and Economic Opportunity under
4        Section 11 of the Illinois Enterprise Zone Act or under
5        Section 10-10 of the River Edge Redevelopment Zone Act.
6        This subparagraph (N) is exempt from the provisions of
7        Section 250;
8            (O) An amount equal to: (i) 85% for taxable years
9        ending on or before December 31, 1992, or, a percentage
10        equal to the percentage allowable under Section
11        243(a)(1) of the Internal Revenue Code of 1986 for
12        taxable years ending after December 31, 1992, of the
13        amount by which dividends included in taxable income
14        and received from a corporation that is not created or
15        organized under the laws of the United States or any
16        state or political subdivision thereof, including, for
17        taxable years ending on or after December 31, 1988,
18        dividends received or deemed received or paid or deemed
19        paid under Sections 951 through 965 of the Internal
20        Revenue Code, exceed the amount of the modification
21        provided under subparagraph (G) of paragraph (2) of
22        this subsection (b) which is related to such dividends,
23        and including, for taxable years ending on or after
24        December 31, 2008, dividends received from a captive
25        real estate investment trust; plus (ii) 100% of the
26        amount by which dividends, included in taxable income

 

 

HB3247- 44 -LRB100 10320 HLH 20509 b

1        and received, including, for taxable years ending on or
2        after December 31, 1988, dividends received or deemed
3        received or paid or deemed paid under Sections 951
4        through 964 of the Internal Revenue Code and including,
5        for taxable years ending on or after December 31, 2008,
6        dividends received from a captive real estate
7        investment trust, from any such corporation specified
8        in clause (i) that would but for the provisions of
9        Section 1504 (b) (3) of the Internal Revenue Code be
10        treated as a member of the affiliated group which
11        includes the dividend recipient, exceed the amount of
12        the modification provided under subparagraph (G) of
13        paragraph (2) of this subsection (b) which is related
14        to such dividends. This subparagraph (O) is exempt from
15        the provisions of Section 250 of this Act;
16            (P) An amount equal to any contribution made to a
17        job training project established pursuant to the Tax
18        Increment Allocation Redevelopment Act;
19            (Q) An amount equal to the amount of the deduction
20        used to compute the federal income tax credit for
21        restoration of substantial amounts held under claim of
22        right for the taxable year pursuant to Section 1341 of
23        the Internal Revenue Code;
24            (R) On and after July 20, 1999, in the case of an
25        attorney-in-fact with respect to whom an interinsurer
26        or a reciprocal insurer has made the election under

 

 

HB3247- 45 -LRB100 10320 HLH 20509 b

1        Section 835 of the Internal Revenue Code, 26 U.S.C.
2        835, an amount equal to the excess, if any, of the
3        amounts paid or incurred by that interinsurer or
4        reciprocal insurer in the taxable year to the
5        attorney-in-fact over the deduction allowed to that
6        interinsurer or reciprocal insurer with respect to the
7        attorney-in-fact under Section 835(b) of the Internal
8        Revenue Code for the taxable year; the provisions of
9        this subparagraph are exempt from the provisions of
10        Section 250;
11            (S) For taxable years ending on or after December
12        31, 1997, in the case of a Subchapter S corporation, an
13        amount equal to all amounts of income allocable to a
14        shareholder subject to the Personal Property Tax
15        Replacement Income Tax imposed by subsections (c) and
16        (d) of Section 201 of this Act, including amounts
17        allocable to organizations exempt from federal income
18        tax by reason of Section 501(a) of the Internal Revenue
19        Code. This subparagraph (S) is exempt from the
20        provisions of Section 250;
21            (T) For taxable years 2001 and thereafter, for the
22        taxable year in which the bonus depreciation deduction
23        is taken on the taxpayer's federal income tax return
24        under subsection (k) of Section 168 of the Internal
25        Revenue Code and for each applicable taxable year
26        thereafter, an amount equal to "x", where:

 

 

HB3247- 46 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 47 -LRB100 10320 HLH 20509 b

1        taxpayer's federal income tax return under subsection
2        (k) of Section 168 of the Internal Revenue Code. This
3        subparagraph (T) is exempt from the provisions of
4        Section 250;
5            (U) If the taxpayer sells, transfers, abandons, or
6        otherwise disposes of property for which the taxpayer
7        was required in any taxable year to make an addition
8        modification under subparagraph (E-10), then an amount
9        equal to that addition modification.
10            If the taxpayer continues to own property through
11        the last day of the last tax year for which the
12        taxpayer may claim a depreciation deduction for
13        federal income tax purposes and for which the taxpayer
14        was required in any taxable year to make an addition
15        modification under subparagraph (E-10), then an amount
16        equal to that addition modification.
17            The taxpayer is allowed to take the deduction under
18        this subparagraph only once with respect to any one
19        piece of property.
20            This subparagraph (U) is exempt from the
21        provisions of Section 250;
22            (V) The amount of: (i) any interest income (net of
23        the deductions allocable thereto) taken into account
24        for the taxable year with respect to a transaction with
25        a taxpayer that is required to make an addition
26        modification with respect to such transaction under

 

 

HB3247- 48 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 49 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 50 -LRB100 10320 HLH 20509 b

1        unitary business group because he or she is ordinarily
2        required to apportion business income under different
3        subsections of Section 304, but not to exceed the
4        addition modification required to be made for the same
5        taxable year under Section 203(b)(2)(E-13) for
6        intangible expenses and costs paid, accrued, or
7        incurred, directly or indirectly, to the same foreign
8        person. This subparagraph (X) is exempt from the
9        provisions of Section 250;
10            (Y) For taxable years ending on or after December
11        31, 2011, in the case of a taxpayer who was required to
12        add back any insurance premiums under Section
13        203(b)(2)(E-14), such taxpayer may elect to subtract
14        that part of a reimbursement received from the
15        insurance company equal to the amount of the expense or
16        loss (including expenses incurred by the insurance
17        company) that would have been taken into account as a
18        deduction for federal income tax purposes if the
19        expense or loss had been uninsured. If a taxpayer makes
20        the election provided for by this subparagraph (Y), the
21        insurer to which the premiums were paid must add back
22        to income the amount subtracted by the taxpayer
23        pursuant to this subparagraph (Y). This subparagraph
24        (Y) is exempt from the provisions of Section 250; and
25            (Z) The difference between the nondeductible
26        controlled foreign corporation dividends under Section

 

 

HB3247- 51 -LRB100 10320 HLH 20509 b

1        965(e)(3) of the Internal Revenue Code over the taxable
2        income of the taxpayer, computed without regard to
3        Section 965(e)(2)(A) of the Internal Revenue Code, and
4        without regard to any net operating loss deduction.
5        This subparagraph (Z) is exempt from the provisions of
6        Section 250; and .
7            (AA) For taxable years ending on or after December
8        31, 2017, for any taxpayer that operates a veterinary
9        clinic in the State, an amount equal to the value of
10        any free spaying or neutering services provided by the
11        clinic during the taxable year to a not-for-profit
12        animal rescue or shelter service, but not to exceed
13        $2,500 per taxpayer in any taxable year; for the
14        purposes of this subparagraph, the value of the spaying
15        or neutering services shall be equal to the clinic's
16        normal charges for those services; this subparagraph
17        (AA) is exempt from the provisions of Section 250.
18        (3) Special rule. For purposes of paragraph (2) (A),
19    "gross income" in the case of a life insurance company, for
20    tax years ending on and after December 31, 1994, and prior
21    to December 31, 2011, shall mean the gross investment
22    income for the taxable year and, for tax years ending on or
23    after December 31, 2011, shall mean all amounts included in
24    life insurance gross income under Section 803(a)(3) of the
25    Internal Revenue Code.
 

 

 

HB3247- 52 -LRB100 10320 HLH 20509 b

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;
26            (E) For taxable years in which a net operating loss

 

 

HB3247- 53 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 54 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 55 -LRB100 10320 HLH 20509 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB3247- 69 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 70 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 71 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 72 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 73 -LRB100 10320 HLH 20509 b

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

 

 

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1        interest paid, accrued, or incurred, directly or
2        indirectly, (i) for taxable years ending on or after
3        December 31, 2004, to a foreign person who would be a
4        member of the same unitary business group but for the
5        fact the foreign person's business activity outside
6        the United States is 80% or more of the foreign
7        person's total business activity and (ii) for taxable
8        years ending on or after December 31, 2008, to a person
9        who would be a member of the same unitary business
10        group but for the fact that the person is prohibited
11        under Section 1501(a)(27) from being included in the
12        unitary business group because he or she is ordinarily
13        required to apportion business income under different
14        subsections of Section 304. The addition modification
15        required by this subparagraph shall be reduced to the
16        extent that dividends were included in base income of
17        the unitary group for the same taxable year and
18        received by the taxpayer or by a member of the
19        taxpayer's unitary business group (including amounts
20        included in gross income pursuant to Sections 951
21        through 964 of the Internal Revenue Code and amounts
22        included in gross income under Section 78 of the
23        Internal Revenue Code) with respect to the stock of the
24        same person to whom the interest was paid, accrued, or
25        incurred.
26            This paragraph shall not apply to the following:

 

 

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

 

 

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1            not federal or Illinois tax avoidance; or
2                (iv) an item of interest paid, accrued, or
3            incurred, directly or indirectly, to a person if
4            the taxpayer establishes by clear and convincing
5            evidence that the adjustments are unreasonable; or
6            if the taxpayer and the Director agree in writing
7            to the application or use of an alternative method
8            of apportionment under Section 304(f).
9                Nothing in this subsection shall preclude the
10            Director from making any other adjustment
11            otherwise allowed under Section 404 of this Act for
12            any tax year beginning after the effective date of
13            this amendment provided such adjustment is made
14            pursuant to regulation adopted by the Department
15            and such regulations provide methods and standards
16            by which the Department will utilize its authority
17            under Section 404 of this Act; and
18            (D-8) An amount equal to the amount of intangible
19        expenses and costs otherwise allowed as a deduction in
20        computing base income, and that were paid, accrued, or
21        incurred, directly or indirectly, (i) for taxable
22        years ending on or after December 31, 2004, to a
23        foreign person who would be a member of the same
24        unitary business group but for the fact that the
25        foreign person's business activity outside the United
26        States is 80% or more of that person's total business

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB3247- 85 -LRB100 10320 HLH 20509 b

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

 

 

HB3247- 86 -LRB100 10320 HLH 20509 b

1        the deductions allocable thereto) taken into account
2        for the taxable year with respect to a transaction with
3        a taxpayer that is required to make an addition
4        modification with respect to such transaction under
5        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
6        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
7        the amount of such addition modification and (ii) any
8        income from intangible property (net of the deductions
9        allocable thereto) taken into account for the taxable
10        year with respect to a transaction with a taxpayer that
11        is required to make an addition modification with
12        respect to such transaction under Section
13        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
14        203(d)(2)(D-8), but not to exceed the amount of such
15        addition modification. This subparagraph (Q) is exempt
16        from Section 250;
17            (R) An amount equal to the interest income taken
18        into account for the taxable year (net of the
19        deductions allocable thereto) with respect to
20        transactions with (i) a foreign person who would be a
21        member of the taxpayer's unitary business group but for
22        the fact that the foreign person's business activity
23        outside the United States is 80% or more of that
24        person's total business activity 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, but not to exceed the
6        addition modification required to be made for the same
7        taxable year under Section 203(d)(2)(D-7) for interest
8        paid, accrued, or incurred, directly or indirectly, to
9        the same person. This subparagraph (R) is exempt from
10        Section 250;
11            (S) An amount equal to the income from intangible
12        property taken into account for the taxable year (net
13        of the 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 that 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(d)(2)(D-8) for
2        intangible expenses and costs paid, accrued, or
3        incurred, directly or indirectly, to the same person.
4        This subparagraph (S) is exempt from Section 250; and
5            (T) For taxable years ending on or after December
6        31, 2011, in the case of a taxpayer who was required to
7        add back any insurance premiums under Section
8        203(d)(2)(D-9), such taxpayer may elect to subtract
9        that part of a reimbursement received from the
10        insurance company equal to the amount of the expense or
11        loss (including expenses incurred by the insurance
12        company) that would have been taken into account as a
13        deduction for federal income tax purposes if the
14        expense or loss had been uninsured. If a taxpayer makes
15        the election provided for by this subparagraph (T), the
16        insurer to which the premiums were paid must add back
17        to income the amount subtracted by the taxpayer
18        pursuant to this subparagraph (T). This subparagraph
19        (T) is exempt from the provisions of Section 250; and .
20            (U) For taxable years ending on or after December
21        31, 2017, for any taxpayer that operates a veterinary
22        clinic in the State, an amount equal to the value of
23        any free spaying or neutering services provided by the
24        clinic during the taxable year to a not-for-profit
25        animal rescue or shelter service, but not to exceed
26        $2,500 per taxpayer in any taxable year; for the

 

 

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1        purposes of this subparagraph, the value of the spaying
2        or neutering services shall be equal to the clinic's
3        normal charges for those services; this subparagraph
4        (U) is exempt from the provisions of Section 250.
 
5    (e) Gross income; adjusted gross income; taxable income.
6        (1) In general. Subject to the provisions of paragraph
7    (2) and subsection (b) (3), for purposes of this Section
8    and Section 803(e), a taxpayer's gross income, adjusted
9    gross income, or taxable income for the taxable year shall
10    mean the amount of gross income, adjusted gross income or
11    taxable income properly reportable for federal income tax
12    purposes for the taxable year under the provisions of the
13    Internal Revenue Code. Taxable income may be less than
14    zero. However, for taxable years ending on or after
15    December 31, 1986, net operating loss carryforwards from
16    taxable years ending prior to December 31, 1986, may not
17    exceed the sum of federal taxable income for the taxable
18    year before net operating loss deduction, plus the excess
19    of addition modifications over subtraction modifications
20    for the taxable year. For taxable years ending prior to
21    December 31, 1986, taxable income may never be an amount in
22    excess of the net operating loss for the taxable year as
23    defined in subsections (c) and (d) of Section 172 of the
24    Internal Revenue Code, provided that when taxable income of
25    a corporation (other than a Subchapter S corporation),

 

 

HB3247- 90 -LRB100 10320 HLH 20509 b

1    trust, or estate is less than zero and addition
2    modifications, other than those provided by subparagraph
3    (E) of paragraph (2) of subsection (b) for corporations or
4    subparagraph (E) of paragraph (2) of subsection (c) for
5    trusts and estates, exceed subtraction modifications, an
6    addition modification must be made under those
7    subparagraphs for any other taxable year to which the
8    taxable income less than zero (net operating loss) is
9    applied under Section 172 of the Internal Revenue Code or
10    under subparagraph (E) of paragraph (2) of this subsection
11    (e) applied in conjunction with Section 172 of the Internal
12    Revenue Code.
13        (2) Special rule. For purposes of paragraph (1) of this
14    subsection, the taxable income properly reportable for
15    federal income tax purposes shall mean:
16            (A) Certain life insurance companies. In the case
17        of a life insurance company subject to the tax imposed
18        by Section 801 of the Internal Revenue Code, life
19        insurance company taxable income, plus the amount of
20        distribution from pre-1984 policyholder surplus
21        accounts as calculated under Section 815a of the
22        Internal Revenue Code;
23            (B) Certain other insurance companies. In the case
24        of mutual insurance companies subject to the tax
25        imposed by Section 831 of the Internal Revenue Code,
26        insurance company taxable income;

 

 

HB3247- 91 -LRB100 10320 HLH 20509 b

1            (C) Regulated investment companies. In the case of
2        a regulated investment company subject to the tax
3        imposed by Section 852 of the Internal Revenue Code,
4        investment company taxable income;
5            (D) Real estate investment trusts. In the case of a
6        real estate investment trust subject to the tax imposed
7        by Section 857 of the Internal Revenue Code, real
8        estate investment trust taxable income;
9            (E) Consolidated corporations. In the case of a
10        corporation which is a member of an affiliated group of
11        corporations filing a consolidated income tax return
12        for the taxable year for federal income tax purposes,
13        taxable income determined as if such corporation had
14        filed a separate return for federal income tax purposes
15        for the taxable year and each preceding taxable year
16        for which it was a member of an affiliated group. For
17        purposes of this subparagraph, the taxpayer's separate
18        taxable income shall be determined as if the election
19        provided by Section 243(b) (2) of the Internal Revenue
20        Code had been in effect for all such years;
21            (F) Cooperatives. In the case of a cooperative
22        corporation or association, the taxable income of such
23        organization determined in accordance with the
24        provisions of Section 1381 through 1388 of the Internal
25        Revenue Code, but without regard to the prohibition
26        against offsetting losses from patronage activities

 

 

HB3247- 92 -LRB100 10320 HLH 20509 b

1        against income from nonpatronage activities; except
2        that a cooperative corporation or association may make
3        an election to follow its federal income tax treatment
4        of patronage losses and nonpatronage losses. In the
5        event such election is made, such losses shall be
6        computed and carried over in a manner consistent with
7        subsection (a) of Section 207 of this Act and
8        apportioned by the apportionment factor reported by
9        the cooperative on its Illinois income tax return filed
10        for the taxable year in which the losses are incurred.
11        The election shall be effective for all taxable years
12        with original returns due on or after the date of the
13        election. In addition, the cooperative may file an
14        amended return or returns, as allowed under this Act,
15        to provide that the election shall be effective for
16        losses incurred or carried forward for taxable years
17        occurring prior to the date of the election. Once made,
18        the election may only be revoked upon approval of the
19        Director. The Department shall adopt rules setting
20        forth requirements for documenting the elections and
21        any resulting Illinois net loss and the standards to be
22        used by the Director in evaluating requests to revoke
23        elections. Public Act 96-932 is declaratory of
24        existing law;
25            (G) Subchapter S corporations. In the case of: (i)
26        a Subchapter S corporation for which there is in effect

 

 

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1        an election for the taxable year under Section 1362 of
2        the Internal Revenue Code, the taxable income of such
3        corporation determined in accordance with Section
4        1363(b) of the Internal Revenue Code, except that
5        taxable income shall take into account those items
6        which are required by Section 1363(b)(1) of the
7        Internal Revenue Code to be separately stated; and (ii)
8        a Subchapter S corporation for which there is in effect
9        a federal election to opt out of the provisions of the
10        Subchapter S Revision Act of 1982 and have applied
11        instead the prior federal Subchapter S rules as in
12        effect on July 1, 1982, the taxable income of such
13        corporation determined in accordance with the federal
14        Subchapter S rules as in effect on July 1, 1982; and
15            (H) Partnerships. In the case of a partnership,
16        taxable income determined in accordance with Section
17        703 of the Internal Revenue Code, except that taxable
18        income shall take into account those items which are
19        required by Section 703(a)(1) to be separately stated
20        but which would be taken into account by an individual
21        in calculating his taxable income.
22        (3) Recapture of business expenses on disposition of
23    asset or business. Notwithstanding any other law to the
24    contrary, if in prior years income from an asset or
25    business has been classified as business income and in a
26    later year is demonstrated to be non-business income, then

 

 

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1    all expenses, without limitation, deducted in such later
2    year and in the 2 immediately preceding taxable years
3    related to that asset or business that generated the
4    non-business income shall be added back and recaptured as
5    business income in the year of the disposition of the asset
6    or business. Such amount shall be apportioned to Illinois
7    using the greater of the apportionment fraction computed
8    for the business under Section 304 of this Act for the
9    taxable year or the average of the apportionment fractions
10    computed for the business under Section 304 of this Act for
11    the taxable year and for the 2 immediately preceding
12    taxable years.
 
13    (f) Valuation limitation amount.
14        (1) In general. The valuation limitation amount
15    referred to in subsections (a) (2) (G), (c) (2) (I) and
16    (d)(2) (E) is an amount equal to:
17            (A) The sum of the pre-August 1, 1969 appreciation
18        amounts (to the extent consisting of gain reportable
19        under the provisions of Section 1245 or 1250 of the
20        Internal Revenue Code) for all property in respect of
21        which such gain was reported for the taxable year; plus
22            (B) The lesser of (i) the sum of the pre-August 1,
23        1969 appreciation amounts (to the extent consisting of
24        capital gain) for all property in respect of which such
25        gain was reported for federal income tax purposes for

 

 

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1        the taxable year, or (ii) the net capital gain for the
2        taxable year, reduced in either case by any amount of
3        such gain included in the amount determined under
4        subsection (a) (2) (F) or (c) (2) (H).
5        (2) Pre-August 1, 1969 appreciation amount.
6            (A) If the fair market value of property referred
7        to in paragraph (1) was readily ascertainable on August
8        1, 1969, the pre-August 1, 1969 appreciation amount for
9        such property is the lesser of (i) the excess of such
10        fair market value over the taxpayer's basis (for
11        determining gain) for such property on that date
12        (determined under the Internal Revenue Code as in
13        effect on that date), or (ii) the total gain realized
14        and reportable for federal income tax purposes in
15        respect of the sale, exchange or other disposition of
16        such property.
17            (B) If the fair market value of property referred
18        to in paragraph (1) was not readily ascertainable on
19        August 1, 1969, the pre-August 1, 1969 appreciation
20        amount for such property is that amount which bears the
21        same ratio to the total gain reported in respect of the
22        property for federal income tax purposes for the
23        taxable year, as the number of full calendar months in
24        that part of the taxpayer's holding period for the
25        property ending July 31, 1969 bears to the number of
26        full calendar months in the taxpayer's entire holding

 

 

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1        period for the property.
2            (C) The Department shall prescribe such
3        regulations as may be necessary to carry out the
4        purposes of this paragraph.
 
5    (g) Double deductions. Unless specifically provided
6otherwise, nothing in this Section shall permit the same item
7to be deducted more than once.
 
8    (h) Legislative intention. Except as expressly provided by
9this Section there shall be no modifications or limitations on
10the amounts of income, gain, loss or deduction taken into
11account in determining gross income, adjusted gross income or
12taxable income for federal income tax purposes for the taxable
13year, or in the amount of such items entering into the
14computation of base income and net income under this Act for
15such taxable year, whether in respect of property values as of
16August 1, 1969 or otherwise.
17(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
18eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1996-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
206-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
21eff. 8-23-11; 97-905, eff. 8-7-12.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.