100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB0009

 

Introduced 1/11/2017, by Sen. Toi W. Hutchinson

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Creates the Sugar-Sweetened Beverage Tax Act. Imposes a tax on distributors of bottled sugar-sweetened beverages, syrups, or powders at the rate of $0.01 per ounce of bottled sugar-sweetened beverages sold or offered for sale to a retailer for sale in the State to a consumer. Requires those distributors to obtain permits. Provides that 2% of the moneys shall be deposited into the Tax Compliance and Administration Fund for the administrative costs of the Department of Revenue, and 98% of the moneys shall be deposited into the General Revenue Fund. Amends the Illinois Income Tax Act. Makes changes concerning the rate of tax. Extends the research and development credit for tax years ending prior to January 1, 2027. Creates an addition modification in an amount equal to the deduction for qualified domestic production activities allowed under Section 199 of the Internal Revenue Code. Makes changes concerning the definition of "unitary business group". Makes changes concerning estimated taxes. Amends the Film Production Services Tax Credit Act of 2008. Provides that no taxpayer may take a credit awarded under the Act for tax years beginning on or after January 1, 2027. Amends the Business Corporation Act of 1983. Makes changes concerning penalties and reports. Amends the Limited Liability Company Act. Makes changes concerning the fee for filing articles of organization. Effective immediately, but this Act does not take effect at all unless Senate Bills 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 12, and 13 of the 100th General Assembly become law.


LRB100 06347 HLH 16385 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB0009LRB100 06347 HLH 16385 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 1. Short title. This Act may be cited as the
5Sugar-Sweetened Beverage Tax Act.
 
6    Section 5. Definitions. For purposes of this Act:
7    "Bottle" means any closed or sealed container regardless of
8size or shape, including, without limitation, those made of
9glass, metal, paper, plastic, or any other material or
10combination of materials.
11    "Bottled sugar-sweetened beverage" means any
12sugar-sweetened beverage contained in a bottle that is ready
13for consumption without further processing such as, without
14limitation, dilution or carbonation.
15    "Caloric sweetener" means any caloric substance suitable
16for human consumption which adds calories to the diet of a
17person who consumes that substance, is used as an ingredient of
18a beverage, syrup, or powder, and includes, without limitation,
19sucrose, fructose, glucose, fruit juice concentrate, or other
20sugars. "Caloric sweetener" excludes non-caloric sweeteners.
21    "Consumer" means a person who purchases a sugar-sweetened
22beverage for consumption and not for sale to another.
23    "Department" means the Department of Revenue.

 

 

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1    "Distributor" means any person, including manufacturers
2and wholesale dealers, who receives, stores, manufactures,
3bottles, or distributes bottled sugar-sweetened beverages,
4syrups, or powders, for sale to retailers doing business in the
5State, whether or not that person also sells such products to
6consumers.
7    "Non-caloric sweetener" means any non-caloric substance
8suitable for human consumption which does not add calories to
9the diet of a person who consumes that substance, is used as an
10ingredient of a beverage, syrup, or powder, and includes,
11without limitation, aspartame, saccharin, stevia, and
12sucralose. "Non-caloric sweetener" excludes caloric
13sweeteners.
14    "Person" means any natural person, partnership,
15cooperative association, limited liability company,
16corporation, personal representative, receiver, trustee,
17assignee, or any other legal entity.
18    "Place of business" means any place where sugar-sweetened
19beverages, syrups, or powders are manufactured or received for
20sale in the State.
21    "Powders" means any solid mixture of ingredients used in
22making, mixing, or compounding sugar-sweetened beverages by
23mixing the powder with any one or more other ingredients,
24including without limitation water, ice, syrup, simple syrup,
25fruits, vegetables, fruit juice, vegetable juice, carbonation
26or other gas. A powder which indicates on the label that it can

 

 

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1be mixed with water is subject to the tax. Notwithstanding any
2other provision, a powder which indicates on the label that it
3cannot be mixed with water and is intended by the manufacturer
4to be mixed only with alcohol or milk is not subject to the
5tax.
6    "Retailer" means any person who sells or otherwise
7dispenses in the State a sugar-sweetened beverage to a consumer
8whether or not that person is also a distributor as defined in
9this Section.
10    "Sale" means the transfer of title or possession for
11valuable consideration regardless of the manner by which the
12transfer is completed.
13    "State" means the State of Illinois.
14    "Sugar-sweetened beverage" means any nonalcoholic
15beverage, carbonated or noncarbonated, which is intended for
16human consumption and contains more than 5 grams of caloric
17sweetener per 12 fluid ounces. As used in this definition,
18"nonalcoholic beverage" means any beverage that contains less
19than one-half of one percent alcohol per volume. The term
20"sugar-sweetened beverage" does not include:
21        (1) beverages sweetened solely with non-caloric
22    sweeteners;
23        (2) beverages sweetened with 5 grams or less of caloric
24    sweeteners per 12 fluid ounces;
25        (3) beverages consisting of 100% natural fruit or
26    vegetable juice with no caloric sweetener; for purposes of

 

 

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1    this paragraph, "natural fruit juice" and "natural
2    vegetable juice" mean the original liquid resulting from
3    the pressing of fruits or vegetables, juice concentrate, or
4    the liquid resulting from the dilution with water of
5    dehydrated natural fruit juice or natural vegetable juice;
6        (4) beverages in which milk, or soy, rice, or similar
7    milk substitute, is the primary ingredient or the first
8    listed ingredient on the label of the beverage; for
9    purposes of this Act, "milk" means natural liquid milk
10    regardless of animal or plant source or butterfat content,
11    natural milk concentrate, whether or not reconstituted,
12    regardless of animal or plant source or butterfat content,
13    or dehydrated natural milk, whether or not reconstituted
14    and regardless of animal or plant source or butterfat
15    content;
16        (5) coffee or tea without caloric sweetener;
17        (6) infant formula;
18        (7) medically necessary foods, as defined in the
19    federal Orphan Drug Act; and
20        (8) water without any caloric sweeteners.
21    "Syrup" means a liquid mixture of ingredients used in
22making, mixing, or compounding sugar-sweetened beverages using
23one or more other ingredients including, without limitation,
24water, ice, a powder, simple syrup, fruits, vegetables, fruit
25juice, vegetable juice, carbonation, or other gas. A syrup
26which indicates on the label that it can be mixed with water is

 

 

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1subject to the tax. Notwithstanding any other provision, a
2syrup which indicates on the label that it cannot be mixed with
3water, and is intended by the manufacturer to be mixed only
4with alcohol or milk is not subject to the tax.
 
5    Section 10. Permit required.
6    (a) Beginning May 1, 2017, every distributor doing business
7in the State who wishes to engage in the business of selling
8sugar-sweetened beverages, syrups, or powders subject to tax
9under this Act shall file with the Department an application
10for a permit to engage in such business. An application shall
11be filed for each place of business owned and operated by the
12distributor. An application for a permit shall be filed on
13forms to be furnished by the Department for that purpose. Each
14such application shall be signed and verified and shall state:
15(1) the name and social security number of the applicant; (2)
16the address of his principal place of business; (3) the address
17of the principal place of business from which he engages in the
18business of distributing sugar-sweetened beverages, syrups, or
19powders to retailers in this State and the addresses of all
20other places of business, if any (enumerating such addresses,
21if any, in a separate list attached to and made a part of the
22application), from which he engages in the business of
23distributing sugar-sweetened beverages, syrups, or powders to
24retailers in this State; (4) the name and address of the person
25or persons who will be responsible for filing returns and

 

 

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1payment of taxes due under this Act; (5) in the case of a
2corporation, the name, title, and social security number of
3each corporate officer; (6) in the case of a limited liability
4company, the name, social security number, and FEIN number of
5each manager and member; and (7) such other information as the
6Department may reasonably require. The application shall
7contain an acceptance of responsibility signed by the person or
8persons who will be responsible for filing returns and payment
9of the taxes due under this Act.
10    (b) The Department may deny a permit to any applicant if a
11person who is named as the owner, a partner, a manager or
12member of a limited liability company, or a corporate officer
13of the applicant on the application for the certificate of
14registration, is or has been named as the owner, a partner, a
15manager or member of a limited liability company, or a
16corporate officer, on the application for the permit or
17certificate of registration of a retailer under the Retailers'
18Occupation Tax Act that is in default for moneys due under this
19Act or any other tax or fee Act administered by the Department.
20For purposes of this paragraph only, in determining whether a
21person is in default for moneys due, the Department shall
22include only amounts established as a final liability within
23the 20 years prior to the date of the Department's notice of
24denial of a certificate of registration. The Department, in its
25discretion, may require that the application for permit be
26submitted electronically.

 

 

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1    (c) Upon receipt of an application and the annual permit
2fee of $250, the Department may issue to the applicant, for the
3place of business designated, a permit, authorizing the sale of
4sugar-sweetened beverages, syrups, and powders in the State. No
5distributor shall sell any sugar-sweetened beverage, syrup, or
6powders without first obtaining a permit to do so under this
7Act. Permits issued pursuant to this Section shall expire one
8year from the date of issuance and may be renewed annually.
9Fees shall be deposited into the Tax Compliance and
10Administration Fund.
11    (d) A permit may not be transferred or assigned from one
12person to another, and a permit shall at all times be
13prominently displayed in a distributor's place of business. The
14Department may refuse to issue a permit to any person
15previously convicted of violations of this Act under such
16procedures as the Department may establish by regulation.
17    (e) The Department may, in its discretion, issue the permit
18electronically.
 
19    Section 15. Tax imposed.
20    (a) Beginning on May 1, 2017, there is imposed a tax on
21every distributor for the privilege of selling the products
22governed by this Act in the State. The tax shall be imposed at
23the rate of $0.01 per ounce of bottled sugar-sweetened
24beverages sold or transferred to a retailer in the State. The
25tax on syrup and powder sold or transferred to a retailer in

 

 

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1the State, either as syrup or powder or as a sugar-sweetened
2beverage derived from that syrup or powder, is equal to $0.01
3per ounce for each ounce of sugar-sweetened beverage produced
4from that syrup or powder. For purposes of calculating the tax,
5the volume of sugar-sweetened beverage produced from syrup or
6powder shall be the larger of (i) the largest volume resulting
7from use of the syrup or powder according to any manufacturer's
8instructions or (ii) the volume actually produced by the
9retailer. The taxes imposed by this Section are in addition to
10any other taxes that may apply to persons or products subject
11to this Act.
12    (b) A retailer that sells bottled sugar-sweetened
13beverages, syrups, or powders in the State to a consumer, on
14which the tax imposed by this Section has not been paid by a
15distributor, is liable for the tax imposed in subsection (a) at
16the time of sale to a consumer.
 
17    Section 20. Pass-through of the tax. A distributor shall
18add the amount of tax levied by this Act to the price of
19sugar-sweetened beverages sold to a retailer, and the retailer
20shall pass the amount of the tax through to the consumer as a
21component of the final retail purchase price. The amount of the
22taxes may be stated separately on all invoices, signs, sales or
23delivery slips, bills, and statements that advertise or
24indicate the price of those beverages.
 

 

 

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1    Section 25. Report of sales and tax remittances.
2    (a) Any distributor or retailer liable for the tax imposed
3by this Act shall, on or before the twentieth day of each
4calendar month, return to the Department a statement containing
5its name and place of business, the quantity of sugar-sweetened
6beverages, syrup, and powders subject to the tax imposed by
7this Act sold or offered for sale in the month preceding the
8month in which the report is due, and any other information
9required by the Department, along with the tax due.
10    (b) If the taxpayer's average monthly tax liability to the
11Department under this Act, was $20,000 or more during the
12preceding 4 complete calendar quarters, he shall file a return
13with the Department each month by the twentieth day of the
14month next following the month during which such tax liability
15is incurred and shall make payment to the Department on or
16before the 7th, 15th, 22nd, and last day of the month during
17which such liability is incurred.
18    (c) The Department, in its discretion, may require that
19returns be submitted and payments be made electronically.
 
20    Section 30. Records of distributors. Every distributor and
21every retailer subject to this Act shall maintain for not less
22than 4 years accurate books and records, showing all
23transactions that gave rise, or may have given rise, to tax
24liability under this Act. Such records are subject to
25inspection by the Department at all reasonable times during

 

 

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1normal business hours.
 
2    Section 35. Exemptions. The following shall be exempt from
3the tax imposed under this Act:
4    (1) Bottled sugar-sweetened beverages, syrups, and powders
5sold by a distributor or a retailer expressly for resale or
6consumption outside of the State.
7    (2) Bottled sugar-sweetened beverages, syrups, and powders
8sold by a distributor to another distributor that holds a
9permit issued under Section 10 if the sales invoice clearly
10indicates that the sale is exempt. If the sale is to a person
11who is both a distributor and a retailer, the sale shall also
12be tax exempt and the tax shall be paid when the purchasing
13distributor-retailer resells the product to a retailer or a
14consumer. This exemption does not apply to any other sale to a
15retailer.
 
16    Section 40. Penalties.
17    (a) Any distributor, retailer, or other person subject to
18the provisions of this Act who fails to pay the entire amount
19of tax imposed by this Act by the date that payment is due,
20fails to submit a report or maintain records required by this
21Act, does business in the State of Illinois without first
22obtaining a permit as required by this Act, or violates any
23other provision of this Act, or rules and regulations adopted
24by the Department for the enforcement of this Act, shall be

 

 

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1guilty of a misdemeanor and shall also be liable for the
2penalties set forth and incorporated by reference into this
3Section.
4    (b) Incorporation by reference. All of the provisions of
5Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, 5j, 6, 6a, 6b,
66c, 8, 9, 10, 11, 11a, and 12 of the Retailers' Occupation Tax
7Act, and all applicable provisions of the Uniform Penalty and
8Interest Act that are not inconsistent with this Act, apply to
9distributors of sugar-sweetened beverages to the same extent as
10if those provisions were included in this Act. References in
11the incorporated Sections of the Retailers' Occupation Tax Act
12to retailers, to sellers, or to persons engaged in the business
13of selling tangible personal property mean distributors and
14retailers when used in this Act. References in the incorporated
15Sections to sales of tangible personal property mean sales of
16sugar-sweetened beverages, syrups, or powders when used in this
17Act.
18    (c) In addition to any other penalty authorized by law, a
19permit issued pursuant to Section 10 shall be suspended or
20revoked if any court of competent jurisdiction determines, or
21the Department finds based on a preponderance of the evidence,
22after the permittee is afforded notice and an opportunity to be
23heard, that the permittee, or any of the permittee's agents or
24employees, has violated any of the requirements, conditions, or
25prohibitions of this Act. For a first violation of this Act
26within any 60-month period, the permit shall be suspended for

 

 

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130 days. For a second violation of this Act within any 60-month
2period, the permit shall be suspended for 90 days. For a third
3violation of this Act within any 60-month period, the permit
4shall be suspended for one year. For a fourth or subsequent
5violation of this Act within any 60-month period, the license
6shall be revoked.
7    (d) A decision of the Department under this Section is a
8final administrative decision and is subject to review by the
9Illinois Independent Tax Tribunal.
 
10    Section 45. Unpaid taxes a debt. The tax herein required to
11be collected by any person distributing sugar-sweetened
12beverages, powders, or syrup for sale to a retailer in the
13State, and any such tax collected by that person shall
14constitute a debt owed by that person to this State.
 
15    Section 50. Revenue distribution. All of the moneys
16collected by the Department pursuant to the taxes imposed by
17Section 15 shall be deposited as follows: 2% shall be deposited
18into the Tax Compliance and Administration Fund for the
19administrative costs of the Department, and 98% shall be
20deposited into the General Revenue Fund. All interest earned on
21moneys in the General Revenue Fund from the tax collected under
22this Act shall remain in the General Revenue Fund.
 
23    Section 97. Severability. The provisions of the

 

 

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1Sugar-Sweetened Beverage Tax Act are severable under Section
21.31 of the Statute on Statutes.
 
3    Section 900. The Illinois Income Tax Act is amended by
4changing Sections 201, 203, 212, 804, 901, and 1501 and by
5adding Section 225 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    Sec. 201. Tax Imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by
17subsection (d-1):
18        (1) In the case of an individual, trust or estate, for
19    taxable years ending prior to July 1, 1989, an amount equal
20    to 2 1/2% of the taxpayer's net income for the taxable
21    year.
22        (2) In the case of an individual, trust or estate, for
23    taxable years beginning prior to July 1, 1989 and ending
24    after June 30, 1989, an amount equal to the sum of (i) 2

 

 

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1    1/2% of the taxpayer's net income for the period prior to
2    July 1, 1989, as calculated under Section 202.3, and (ii)
3    3% of the taxpayer's net income for the period after June
4    30, 1989, as calculated under Section 202.3.
5        (3) In the case of an individual, trust or estate, for
6    taxable years beginning after June 30, 1989, and ending
7    prior to January 1, 2011, an amount equal to 3% of the
8    taxpayer's net income for the taxable year.
9        (4) In the case of an individual, trust, or estate, for
10    taxable years beginning prior to January 1, 2011, and
11    ending after December 31, 2010, an amount equal to the sum
12    of (i) 3% of the taxpayer's net income for the period prior
13    to January 1, 2011, as calculated under Section 202.5, and
14    (ii) 5% of the taxpayer's net income for the period after
15    December 31, 2010, as calculated under Section 202.5.
16        (5) In the case of an individual, trust, or estate, for
17    taxable years beginning on or after January 1, 2011, and
18    ending prior to January 1, 2015, an amount equal to 5% of
19    the taxpayer's net income for the taxable year.
20        (5.1) In the case of an individual, trust, or estate,
21    for taxable years beginning prior to January 1, 2015, and
22    ending after December 31, 2014, an amount equal to the sum
23    of (i) 5% of the taxpayer's net income for the period prior
24    to January 1, 2015, as calculated under Section 202.5, and
25    (ii) 3.75% of the taxpayer's net income for the period
26    after December 31, 2014, as calculated under Section 202.5.

 

 

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1        (5.2) In the case of an individual, trust, or estate,
2    for taxable years beginning on or after January 1, 2015,
3    and ending prior to January 1, 2017 January 1, 2025, an
4    amount equal to 3.75% of the taxpayer's net income for the
5    taxable year.
6        (5.3) In the case of an individual, trust, or estate,
7    for taxable years beginning prior to January 1, 2017
8    January 1, 2025, and ending after December 31, 2016
9    December 31, 2024, an amount equal to the sum of (i) 3.75%
10    of the taxpayer's net income for the period prior to
11    January 1, 2017 January 1, 2025, as calculated under
12    Section 202.5, and (ii) 4.95% 3.25% of the taxpayer's net
13    income for the period after December 31, 2016 December 31,
14    2024, as calculated under Section 202.5.
15        (5.4) In the case of an individual, trust, or estate,
16    for taxable years beginning on or after January 1, 2017
17    January 1, 2025, an amount equal to 4.95% 3.25% of the
18    taxpayer's net income for the taxable year.
19        (6) In the case of a corporation, for taxable years
20    ending prior to July 1, 1989, an amount equal to 4% of the
21    taxpayer's net income for the taxable year.
22        (7) In the case of a corporation, for taxable years
23    beginning prior to July 1, 1989 and ending after June 30,
24    1989, an amount equal to the sum of (i) 4% of the
25    taxpayer's net income for the period prior to July 1, 1989,
26    as calculated under Section 202.3, and (ii) 4.8% of the

 

 

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1    taxpayer's net income for the period after June 30, 1989,
2    as calculated under Section 202.3.
3        (8) In the case of a corporation, for taxable years
4    beginning after June 30, 1989, and ending prior to January
5    1, 2011, an amount equal to 4.8% of the taxpayer's net
6    income for the taxable year.
7        (9) In the case of a corporation, for taxable years
8    beginning prior to January 1, 2011, and ending after
9    December 31, 2010, an amount equal to the sum of (i) 4.8%
10    of the taxpayer's net income for the period prior to
11    January 1, 2011, as calculated under Section 202.5, and
12    (ii) 7% of the taxpayer's net income for the period after
13    December 31, 2010, as calculated under Section 202.5.
14        (10) In the case of a corporation, for taxable years
15    beginning on or after January 1, 2011, and ending prior to
16    January 1, 2015, an amount equal to 7% of the taxpayer's
17    net income for the taxable year.
18        (11) In the case of a corporation, for taxable years
19    beginning prior to January 1, 2015, and ending after
20    December 31, 2014, an amount equal to the sum of (i) 7% of
21    the taxpayer's net income for the period prior to January
22    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
23    of the taxpayer's net income for the period after December
24    31, 2014, as calculated under Section 202.5.
25        (12) In the case of a corporation, for taxable years
26    beginning on or after January 1, 2015, and ending prior to

 

 

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1    January 1, 2017 January 1, 2025, an amount equal to 5.25%
2    of the taxpayer's net income for the taxable year.
3        (13) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2017 January 1, 2025, and
5    ending after December 31, 2016 December 31, 2024, an amount
6    equal to the sum of (i) 5.25% of the taxpayer's net income
7    for the period prior to January 1, 2017 January 1, 2025, as
8    calculated under Section 202.5, and (ii) 7% 4.8% of the
9    taxpayer's net income for the period after December 31,
10    2016 December 31, 2024, as calculated under Section 202.5.
11        (14) In the case of a corporation, for taxable years
12    beginning on or after January 1, 2017 January 1, 2025, an
13    amount equal to 7% 4.8% of the taxpayer's net income for
14    the taxable year.
15    The rates under this subsection (b) are subject to the
16provisions of Section 201.5.
17    (c) Personal Property Tax Replacement Income Tax.
18Beginning on July 1, 1979 and thereafter, in addition to such
19income tax, there is also hereby imposed the Personal Property
20Tax Replacement Income Tax measured by net income on every
21corporation (including Subchapter S corporations), partnership
22and trust, for each taxable year ending after June 30, 1979.
23Such taxes are imposed on the privilege of earning or receiving
24income in or as a resident of this State. The Personal Property
25Tax Replacement Income Tax shall be in addition to the income
26tax imposed by subsections (a) and (b) of this Section and in

 

 

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1addition to all other occupation or privilege taxes imposed by
2this State or by any municipal corporation or political
3subdivision thereof.
4    (d) Additional Personal Property Tax Replacement Income
5Tax Rates. The personal property tax replacement income tax
6imposed by this subsection and subsection (c) of this Section
7in the case of a corporation, other than a Subchapter S
8corporation and except as adjusted by subsection (d-1), shall
9be an additional amount equal to 2.85% of such taxpayer's net
10income for the taxable year, except that beginning on January
111, 1981, and thereafter, the rate of 2.85% specified in this
12subsection shall be reduced to 2.5%, and in the case of a
13partnership, trust or a Subchapter S corporation shall be an
14additional amount equal to 1.5% of such taxpayer's net income
15for the taxable year.
16    (d-1) Rate reduction for certain foreign insurers. In the
17case of a foreign insurer, as defined by Section 35A-5 of the
18Illinois Insurance Code, whose state or country of domicile
19imposes on insurers domiciled in Illinois a retaliatory tax
20(excluding any insurer whose premiums from reinsurance assumed
21are 50% or more of its total insurance premiums as determined
22under paragraph (2) of subsection (b) of Section 304, except
23that for purposes of this determination premiums from
24reinsurance do not include premiums from inter-affiliate
25reinsurance arrangements), beginning with taxable years ending
26on or after December 31, 1999, the sum of the rates of tax

 

 

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1imposed by subsections (b) and (d) shall be reduced (but not
2increased) to the rate at which the total amount of tax imposed
3under this Act, net of all credits allowed under this Act,
4shall equal (i) the total amount of tax that would be imposed
5on the foreign insurer's net income allocable to Illinois for
6the taxable year by such foreign insurer's state or country of
7domicile if that net income were subject to all income taxes
8and taxes measured by net income imposed by such foreign
9insurer's state or country of domicile, net of all credits
10allowed or (ii) a rate of zero if no such tax is imposed on such
11income by the foreign insurer's state of domicile. For the
12purposes of this subsection (d-1), an inter-affiliate includes
13a mutual insurer under common management.
14        (1) For the purposes of subsection (d-1), in no event
15    shall the sum of the rates of tax imposed by subsections
16    (b) and (d) be reduced below the rate at which the sum of:
17            (A) the total amount of tax imposed on such foreign
18        insurer under this Act for a taxable year, net of all
19        credits allowed under this Act, plus
20            (B) the privilege tax imposed by Section 409 of the
21        Illinois Insurance Code, the fire insurance company
22        tax imposed by Section 12 of the Fire Investigation
23        Act, and the fire department taxes imposed under
24        Section 11-10-1 of the Illinois Municipal Code,
25    equals 1.25% for taxable years ending prior to December 31,
26    2003, or 1.75% for taxable years ending on or after

 

 

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1    December 31, 2003, of the net taxable premiums written for
2    the taxable year, as described by subsection (1) of Section
3    409 of the Illinois Insurance Code. This paragraph will in
4    no event increase the rates imposed under subsections (b)
5    and (d).
6        (2) Any reduction in the rates of tax imposed by this
7    subsection shall be applied first against the rates imposed
8    by subsection (b) and only after the tax imposed by
9    subsection (a) net of all credits allowed under this
10    Section other than the credit allowed under subsection (i)
11    has been reduced to zero, against the rates imposed by
12    subsection (d).
13    This subsection (d-1) is exempt from the provisions of
14Section 250.
15    (e) Investment credit. A taxpayer shall be allowed a credit
16against the Personal Property Tax Replacement Income Tax for
17investment in qualified property.
18        (1) A taxpayer shall be allowed a credit equal to .5%
19    of the basis of qualified property placed in service during
20    the taxable year, provided such property is placed in
21    service on or after July 1, 1984. There shall be allowed an
22    additional credit equal to .5% of the basis of qualified
23    property placed in service during the taxable year,
24    provided such property is placed in service on or after
25    July 1, 1986, and the taxpayer's base employment within
26    Illinois has increased by 1% or more over the preceding

 

 

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1    year as determined by the taxpayer's employment records
2    filed with the Illinois Department of Employment Security.
3    Taxpayers who are new to Illinois shall be deemed to have
4    met the 1% growth in base employment for the first year in
5    which they file employment records with the Illinois
6    Department of Employment Security. The provisions added to
7    this Section by Public Act 85-1200 (and restored by Public
8    Act 87-895) shall be construed as declaratory of existing
9    law and not as a new enactment. If, in any year, the
10    increase in base employment within Illinois over the
11    preceding year is less than 1%, the additional credit shall
12    be limited to that percentage times a fraction, the
13    numerator of which is .5% and the denominator of which is
14    1%, but shall not exceed .5%. The investment credit shall
15    not be allowed to the extent that it would reduce a
16    taxpayer's liability in any tax year below zero, nor may
17    any credit for qualified property be allowed for any year
18    other than the year in which the property was placed in
19    service in Illinois. For tax years ending on or after
20    December 31, 1987, and on or before December 31, 1988, the
21    credit shall be allowed for the tax year in which the
22    property is placed in service, or, if the amount of the
23    credit exceeds the tax liability for that year, whether it
24    exceeds the original liability or the liability as later
25    amended, such excess may be carried forward and applied to
26    the tax liability of the 5 taxable years following the

 

 

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1    excess credit years if the taxpayer (i) makes investments
2    which cause the creation of a minimum of 2,000 full-time
3    equivalent jobs in Illinois, (ii) is located in an
4    enterprise zone established pursuant to the Illinois
5    Enterprise Zone Act and (iii) is certified by the
6    Department of Commerce and Community Affairs (now
7    Department of Commerce and Economic Opportunity) as
8    complying with the requirements specified in clause (i) and
9    (ii) by July 1, 1986. The Department of Commerce and
10    Community Affairs (now Department of Commerce and Economic
11    Opportunity) shall notify the Department of Revenue of all
12    such certifications immediately. For tax years ending
13    after December 31, 1988, the credit shall be allowed for
14    the tax year in which the property is placed in service,
15    or, if the amount of the credit exceeds the tax liability
16    for that year, whether it exceeds the original liability or
17    the liability as later amended, such excess may be carried
18    forward and applied to the tax liability of the 5 taxable
19    years following the excess credit years. The credit shall
20    be applied to the earliest year for which there is a
21    liability. If there is credit from more than one tax year
22    that is available to offset a liability, earlier credit
23    shall be applied first.
24        (2) The term "qualified property" means property
25    which:
26            (A) is tangible, whether new or used, including

 

 

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1        buildings and structural components of buildings and
2        signs that are real property, but not including land or
3        improvements to real property that are not a structural
4        component of a building such as landscaping, sewer
5        lines, local access roads, fencing, parking lots, and
6        other appurtenances;
7            (B) is depreciable pursuant to Section 167 of the
8        Internal Revenue Code, except that "3-year property"
9        as defined in Section 168(c)(2)(A) of that Code is not
10        eligible for the credit provided by this subsection
11        (e);
12            (C) is acquired by purchase as defined in Section
13        179(d) of the Internal Revenue Code;
14            (D) is used in Illinois by a taxpayer who is
15        primarily engaged in manufacturing, or in mining coal
16        or fluorite, or in retailing, or was placed in service
17        on or after July 1, 2006 in a River Edge Redevelopment
18        Zone established pursuant to the River Edge
19        Redevelopment Zone Act; and
20            (E) has not previously been used in Illinois in
21        such a manner and by such a person as would qualify for
22        the credit provided by this subsection (e) or
23        subsection (f).
24        (3) For purposes of this subsection (e),
25    "manufacturing" means the material staging and production
26    of tangible personal property by procedures commonly

 

 

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1    regarded as manufacturing, processing, fabrication, or
2    assembling which changes some existing material into new
3    shapes, new qualities, or new combinations. For purposes of
4    this subsection (e) the term "mining" shall have the same
5    meaning as the term "mining" in Section 613(c) of the
6    Internal Revenue Code. For purposes of this subsection (e),
7    the term "retailing" means the sale of tangible personal
8    property for use or consumption and not for resale, or
9    services rendered in conjunction with the sale of tangible
10    personal property for use or consumption and not for
11    resale. For purposes of this subsection (e), "tangible
12    personal property" has the same meaning as when that term
13    is used in the Retailers' Occupation Tax Act, and, for
14    taxable years ending after December 31, 2008, does not
15    include the generation, transmission, or distribution of
16    electricity.
17        (4) The basis of qualified property shall be the basis
18    used to compute the depreciation deduction for federal
19    income tax purposes.
20        (5) If the basis of the property for federal income tax
21    depreciation purposes is increased after it has been placed
22    in service in Illinois by the taxpayer, the amount of such
23    increase shall be deemed property placed in service on the
24    date of such increase in basis.
25        (6) The term "placed in service" shall have the same
26    meaning as under Section 46 of the Internal Revenue Code.

 

 

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1        (7) If during any taxable year, any property ceases to
2    be qualified property in the hands of the taxpayer within
3    48 months after being placed in service, or the situs of
4    any qualified property is moved outside Illinois within 48
5    months after being placed in service, the Personal Property
6    Tax Replacement Income Tax for such taxable year shall be
7    increased. Such increase shall be determined by (i)
8    recomputing the investment credit which would have been
9    allowed for the year in which credit for such property was
10    originally allowed by eliminating such property from such
11    computation and, (ii) subtracting such recomputed credit
12    from the amount of credit previously allowed. For the
13    purposes of this paragraph (7), a reduction of the basis of
14    qualified property resulting from a redetermination of the
15    purchase price shall be deemed a disposition of qualified
16    property to the extent of such reduction.
17        (8) Unless the investment credit is extended by law,
18    the basis of qualified property shall not include costs
19    incurred after December 31, 2018, except for costs incurred
20    pursuant to a binding contract entered into on or before
21    December 31, 2018.
22        (9) Each taxable year ending before December 31, 2000,
23    a partnership may elect to pass through to its partners the
24    credits to which the partnership is entitled under this
25    subsection (e) for the taxable year. A partner may use the
26    credit allocated to him or her under this paragraph only

 

 

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1    against the tax imposed in subsections (c) and (d) of this
2    Section. If the partnership makes that election, those
3    credits shall be allocated among the partners in the
4    partnership in accordance with the rules set forth in
5    Section 704(b) of the Internal Revenue Code, and the rules
6    promulgated under that Section, and the allocated amount of
7    the credits shall be allowed to the partners for that
8    taxable year. The partnership shall make this election on
9    its Personal Property Tax Replacement Income Tax return for
10    that taxable year. The election to pass through the credits
11    shall be irrevocable.
12        For taxable years ending on or after December 31, 2000,
13    a partner that qualifies its partnership for a subtraction
14    under subparagraph (I) of paragraph (2) of subsection (d)
15    of Section 203 or a shareholder that qualifies a Subchapter
16    S corporation for a subtraction under subparagraph (S) of
17    paragraph (2) of subsection (b) of Section 203 shall be
18    allowed a credit under this subsection (e) equal to its
19    share of the credit earned under this subsection (e) during
20    the taxable year by the partnership or Subchapter S
21    corporation, determined in accordance with the
22    determination of income and distributive share of income
23    under Sections 702 and 704 and Subchapter S of the Internal
24    Revenue Code. This paragraph is exempt from the provisions
25    of Section 250.
26    (f) Investment credit; Enterprise Zone; River Edge

 

 

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1Redevelopment Zone.
2        (1) A taxpayer shall be allowed a credit against the
3    tax imposed by subsections (a) and (b) of this Section for
4    investment in qualified property which is placed in service
5    in an Enterprise Zone created pursuant to the Illinois
6    Enterprise Zone Act or, for property placed in service on
7    or after July 1, 2006, a River Edge Redevelopment Zone
8    established pursuant to the River Edge Redevelopment Zone
9    Act. For partners, shareholders of Subchapter S
10    corporations, and owners of limited liability companies,
11    if the liability company is treated as a partnership for
12    purposes of federal and State income taxation, there shall
13    be allowed a credit under this subsection (f) to be
14    determined in accordance with the determination of income
15    and distributive share of income under Sections 702 and 704
16    and Subchapter S of the Internal Revenue Code. The credit
17    shall be .5% of the basis for such property. The credit
18    shall be available only in the taxable year in which the
19    property is placed in service in the Enterprise Zone or
20    River Edge Redevelopment Zone and shall not be allowed to
21    the extent that it would reduce a taxpayer's liability for
22    the tax imposed by subsections (a) and (b) of this Section
23    to below zero. For tax years ending on or after December
24    31, 1985, the credit shall be allowed for the tax year in
25    which the property is placed in service, or, if the amount
26    of the credit exceeds the tax liability for that year,

 

 

SB0009- 28 -LRB100 06347 HLH 16385 b

1    whether it exceeds the original liability or the liability
2    as later amended, such excess may be carried forward and
3    applied to the tax liability of the 5 taxable years
4    following the excess credit year. The credit shall be
5    applied to the earliest year for which there is a
6    liability. If there is credit from more than one tax year
7    that is available to offset a liability, the credit
8    accruing first in time shall be applied first.
9        (2) The term qualified property means property which:
10            (A) is tangible, whether new or used, including
11        buildings and structural components of buildings;
12            (B) is depreciable pursuant to Section 167 of the
13        Internal Revenue Code, except that "3-year property"
14        as defined in Section 168(c)(2)(A) of that Code is not
15        eligible for the credit provided by this subsection
16        (f);
17            (C) is acquired by purchase as defined in Section
18        179(d) of the Internal Revenue Code;
19            (D) is used in the Enterprise Zone or River Edge
20        Redevelopment Zone by the taxpayer; and
21            (E) has not been previously used in Illinois in
22        such a manner and by such a person as would qualify for
23        the credit provided by this subsection (f) or
24        subsection (e).
25        (3) The basis of qualified property shall be the basis
26    used to compute the depreciation deduction for federal

 

 

SB0009- 29 -LRB100 06347 HLH 16385 b

1    income tax purposes.
2        (4) If the basis of the property for federal income tax
3    depreciation purposes is increased after it has been placed
4    in service in the Enterprise Zone or River Edge
5    Redevelopment Zone by the taxpayer, the amount of such
6    increase shall be deemed property placed in service on the
7    date of such increase in basis.
8        (5) The term "placed in service" shall have the same
9    meaning as under Section 46 of the Internal Revenue Code.
10        (6) If during any taxable year, any property ceases to
11    be qualified property in the hands of the taxpayer within
12    48 months after being placed in service, or the situs of
13    any qualified property is moved outside the Enterprise Zone
14    or River Edge Redevelopment Zone within 48 months after
15    being placed in service, the tax imposed under subsections
16    (a) and (b) of this Section for such taxable year shall be
17    increased. Such increase shall be determined by (i)
18    recomputing the investment credit which would have been
19    allowed for the year in which credit for such property was
20    originally allowed by eliminating such property from such
21    computation, and (ii) subtracting such recomputed credit
22    from the amount of credit previously allowed. For the
23    purposes of this paragraph (6), a reduction of the basis of
24    qualified property resulting from a redetermination of the
25    purchase price shall be deemed a disposition of qualified
26    property to the extent of such reduction.

 

 

SB0009- 30 -LRB100 06347 HLH 16385 b

1        (7) There shall be allowed an additional credit equal
2    to 0.5% of the basis of qualified property placed in
3    service during the taxable year in a River Edge
4    Redevelopment Zone, provided such property is placed in
5    service on or after July 1, 2006, and the taxpayer's base
6    employment within Illinois has increased by 1% or more over
7    the preceding year as determined by the taxpayer's
8    employment records filed with the Illinois Department of
9    Employment Security. Taxpayers who are new to Illinois
10    shall be deemed to have met the 1% growth in base
11    employment for the first year in which they file employment
12    records with the Illinois Department of Employment
13    Security. If, in any year, the increase in base employment
14    within Illinois over the preceding year is less than 1%,
15    the additional credit shall be limited to that percentage
16    times a fraction, the numerator of which is 0.5% and the
17    denominator of which is 1%, but shall not exceed 0.5%.
18    (g) (Blank).
19    (h) Investment credit; High Impact Business.
20        (1) Subject to subsections (b) and (b-5) of Section 5.5
21    of the Illinois Enterprise Zone Act, a taxpayer shall be
22    allowed a credit against the tax imposed by subsections (a)
23    and (b) of this Section for investment in qualified
24    property which is placed in service by a Department of
25    Commerce and Economic Opportunity designated High Impact
26    Business. The credit shall be .5% of the basis for such

 

 

SB0009- 31 -LRB100 06347 HLH 16385 b

1    property. The credit shall not be available (i) until the
2    minimum investments in qualified property set forth in
3    subdivision (a)(3)(A) of Section 5.5 of the Illinois
4    Enterprise Zone Act have been satisfied or (ii) until the
5    time authorized in subsection (b-5) of the Illinois
6    Enterprise Zone Act for entities designated as High Impact
7    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
8    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
9    Act, and shall not be allowed to the extent that it would
10    reduce a taxpayer's liability for the tax imposed by
11    subsections (a) and (b) of this Section to below zero. The
12    credit applicable to such investments shall be taken in the
13    taxable year in which such investments have been completed.
14    The credit for additional investments beyond the minimum
15    investment by a designated high impact business authorized
16    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
17    Enterprise Zone Act shall be available only in the taxable
18    year in which the property is placed in service and shall
19    not be allowed to the extent that it would reduce a
20    taxpayer's liability for the tax imposed by subsections (a)
21    and (b) of this Section to below zero. For tax years ending
22    on or after December 31, 1987, the credit shall be allowed
23    for the tax year in which the property is placed in
24    service, or, if the amount of the credit exceeds the tax
25    liability for that year, whether it exceeds the original
26    liability or the liability as later amended, such excess

 

 

SB0009- 32 -LRB100 06347 HLH 16385 b

1    may be carried forward and applied to the tax liability of
2    the 5 taxable years following the excess credit year. The
3    credit shall be applied to the earliest year for which
4    there is a liability. If there is credit from more than one
5    tax year that is available to offset a liability, the
6    credit accruing first in time shall be applied first.
7        Changes made in this subdivision (h)(1) by Public Act
8    88-670 restore changes made by Public Act 85-1182 and
9    reflect existing law.
10        (2) The term qualified property means property which:
11            (A) is tangible, whether new or used, including
12        buildings and structural components of buildings;
13            (B) is depreciable pursuant to Section 167 of the
14        Internal Revenue Code, except that "3-year property"
15        as defined in Section 168(c)(2)(A) of that Code is not
16        eligible for the credit provided by this subsection
17        (h);
18            (C) is acquired by purchase as defined in Section
19        179(d) of the Internal Revenue Code; and
20            (D) is not eligible for the Enterprise Zone
21        Investment Credit provided by subsection (f) of this
22        Section.
23        (3) The basis of qualified property shall be the basis
24    used to compute the depreciation deduction for federal
25    income tax purposes.
26        (4) If the basis of the property for federal income tax

 

 

SB0009- 33 -LRB100 06347 HLH 16385 b

1    depreciation purposes is increased after it has been placed
2    in service in a federally designated Foreign Trade Zone or
3    Sub-Zone located in Illinois by the taxpayer, the amount of
4    such increase shall be deemed property placed in service on
5    the date of such increase in basis.
6        (5) The term "placed in service" shall have the same
7    meaning as under Section 46 of the Internal Revenue Code.
8        (6) If during any taxable year ending on or before
9    December 31, 1996, any property ceases to be qualified
10    property in the hands of the taxpayer within 48 months
11    after being placed in service, or the situs of any
12    qualified property is moved outside Illinois within 48
13    months after being placed in service, the tax imposed under
14    subsections (a) and (b) of this Section for such taxable
15    year shall be increased. Such increase shall be determined
16    by (i) recomputing the investment credit which would have
17    been allowed for the year in which credit for such property
18    was originally allowed by eliminating such property from
19    such computation, and (ii) subtracting such recomputed
20    credit from the amount of credit previously allowed. For
21    the purposes of this paragraph (6), a reduction of the
22    basis of qualified property resulting from a
23    redetermination of the purchase price shall be deemed a
24    disposition of qualified property to the extent of such
25    reduction.
26        (7) Beginning with tax years ending after December 31,

 

 

SB0009- 34 -LRB100 06347 HLH 16385 b

1    1996, if a taxpayer qualifies for the credit under this
2    subsection (h) and thereby is granted a tax abatement and
3    the taxpayer relocates its entire facility in violation of
4    the explicit terms and length of the contract under Section
5    18-183 of the Property Tax Code, the tax imposed under
6    subsections (a) and (b) of this Section shall be increased
7    for the taxable year in which the taxpayer relocated its
8    facility by an amount equal to the amount of credit
9    received by the taxpayer under this subsection (h).
10    (i) Credit for Personal Property Tax Replacement Income
11Tax. For tax years ending prior to December 31, 2003, a credit
12shall be allowed against the tax imposed by subsections (a) and
13(b) of this Section for the tax imposed by subsections (c) and
14(d) of this Section. This credit shall be computed by
15multiplying the tax imposed by subsections (c) and (d) of this
16Section by a fraction, the numerator of which is base income
17allocable to Illinois and the denominator of which is Illinois
18base income, and further multiplying the product by the tax
19rate imposed by subsections (a) and (b) of this Section.
20    Any credit earned on or after December 31, 1986 under this
21subsection which is unused in the year the credit is computed
22because it exceeds the tax liability imposed by subsections (a)
23and (b) for that year (whether it exceeds the original
24liability or the liability as later amended) may be carried
25forward and applied to the tax liability imposed by subsections
26(a) and (b) of the 5 taxable years following the excess credit

 

 

SB0009- 35 -LRB100 06347 HLH 16385 b

1year, provided that no credit may be carried forward to any
2year ending on or after December 31, 2003. This credit shall be
3applied first to the earliest year for which there is a
4liability. If there is a credit under this subsection from more
5than one tax year that is available to offset a liability the
6earliest credit arising under this subsection shall be applied
7first.
8    If, during any taxable year ending on or after December 31,
91986, the tax imposed by subsections (c) and (d) of this
10Section for which a taxpayer has claimed a credit under this
11subsection (i) is reduced, the amount of credit for such tax
12shall also be reduced. Such reduction shall be determined by
13recomputing the credit to take into account the reduced tax
14imposed by subsections (c) and (d). If any portion of the
15reduced amount of credit has been carried to a different
16taxable year, an amended return shall be filed for such taxable
17year to reduce the amount of credit claimed.
18    (j) Training expense credit. Beginning with tax years
19ending on or after December 31, 1986 and prior to December 31,
202003, a taxpayer shall be allowed a credit against the tax
21imposed by subsections (a) and (b) under this Section for all
22amounts paid or accrued, on behalf of all persons employed by
23the taxpayer in Illinois or Illinois residents employed outside
24of Illinois by a taxpayer, for educational or vocational
25training in semi-technical or technical fields or semi-skilled
26or skilled fields, which were deducted from gross income in the

 

 

SB0009- 36 -LRB100 06347 HLH 16385 b

1computation of taxable income. The credit against the tax
2imposed by subsections (a) and (b) shall be 1.6% of such
3training expenses. For partners, shareholders of subchapter S
4corporations, and owners of limited liability companies, if the
5liability company is treated as a partnership for purposes of
6federal and State income taxation, there shall be allowed a
7credit under this subsection (j) to be determined in accordance
8with the determination of income and distributive share of
9income under Sections 702 and 704 and subchapter S of the
10Internal Revenue Code.
11    Any credit allowed under this subsection which is unused in
12the year the credit is earned may be carried forward to each of
13the 5 taxable years following the year for which the credit is
14first computed until it is used. This credit shall be applied
15first to the earliest year for which there is a liability. If
16there is a credit under this subsection from more than one tax
17year that is available to offset a liability the earliest
18credit arising under this subsection shall be applied first. No
19carryforward credit may be claimed in any tax year ending on or
20after December 31, 2003.
21    (k) Research and development credit. For tax years ending
22after July 1, 1990 and prior to December 31, 2003, and
23beginning again for tax years ending on or after December 31,
242004, and ending prior to January 1, 2027 January 1, 2016, a
25taxpayer shall be allowed a credit against the tax imposed by
26subsections (a) and (b) of this Section for increasing research

 

 

SB0009- 37 -LRB100 06347 HLH 16385 b

1activities in this State. The credit allowed against the tax
2imposed by subsections (a) and (b) shall be equal to 6 1/2% of
3the qualifying expenditures for increasing research activities
4in this State. For partners, shareholders of subchapter S
5corporations, and owners of limited liability companies, if the
6liability company is treated as a partnership for purposes of
7federal and State income taxation, there shall be allowed a
8credit under this subsection to be determined in accordance
9with the determination of income and distributive share of
10income under Sections 702 and 704 and subchapter S of the
11Internal Revenue Code.
12    For purposes of this subsection, "qualifying expenditures"
13means the qualifying expenditures as defined for the federal
14credit for increasing research activities which would be
15allowable under Section 41 of the Internal Revenue Code and
16which are conducted in this State, "qualifying expenditures for
17increasing research activities in this State" means the excess
18of qualifying expenditures for the taxable year in which
19incurred over qualifying expenditures for the base period,
20"qualifying expenditures for the base period" means the average
21of the qualifying expenditures for each year in the base
22period, and "base period" means the 3 taxable years immediately
23preceding the taxable year for which the determination is being
24made.
25    Any credit in excess of the tax liability for the taxable
26year may be carried forward. A taxpayer may elect to have the

 

 

SB0009- 38 -LRB100 06347 HLH 16385 b

1unused credit shown on its final completed return carried over
2as a credit against the tax liability for the following 5
3taxable years or until it has been fully used, whichever occurs
4first; provided that no credit earned in a tax year ending
5prior to December 31, 2003 may be carried forward to any year
6ending on or after December 31, 2003.
7    If an unused credit is carried forward to a given year from
82 or more earlier years, that credit arising in the earliest
9year will be applied first against the tax liability for the
10given year. If a tax liability for the given year still
11remains, the credit from the next earliest year will then be
12applied, and so on, until all credits have been used or no tax
13liability for the given year remains. Any remaining unused
14credit or credits then will be carried forward to the next
15following year in which a tax liability is incurred, except
16that no credit can be carried forward to a year which is more
17than 5 years after the year in which the expense for which the
18credit is given was incurred.
19    No inference shall be drawn from this amendatory Act of the
2091st General Assembly in construing this Section for taxable
21years beginning before January 1, 1999.
22    It is the intent of the General Assembly that the research
23and development credit under this subsection (k) shall apply
24for all tax years ending on or after December 31, 2004 and
25ending prior to January 1, 2027, including, but not limited to,
26the period beginning on January 1, 2016 and ending on the

 

 

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1effective date of this amendatory Act of the 100th General
2Assembly. All actions taken in reliance on the continuation of
3the credit under this subsection (k) by any taxpayer are hereby
4validated.
5    (l) Environmental Remediation Tax Credit.
6        (i) For tax years ending after December 31, 1997 and on
7    or before December 31, 2001, a taxpayer shall be allowed a
8    credit against the tax imposed by subsections (a) and (b)
9    of this Section for certain amounts paid for unreimbursed
10    eligible remediation costs, as specified in this
11    subsection. For purposes of this Section, "unreimbursed
12    eligible remediation costs" means costs approved by the
13    Illinois Environmental Protection Agency ("Agency") under
14    Section 58.14 of the Environmental Protection Act that were
15    paid in performing environmental remediation at a site for
16    which a No Further Remediation Letter was issued by the
17    Agency and recorded under Section 58.10 of the
18    Environmental Protection Act. The credit must be claimed
19    for the taxable year in which Agency approval of the
20    eligible remediation costs is granted. The credit is not
21    available to any taxpayer if the taxpayer or any related
22    party caused or contributed to, in any material respect, a
23    release of regulated substances on, in, or under the site
24    that was identified and addressed by the remedial action
25    pursuant to the Site Remediation Program of the
26    Environmental Protection Act. After the Pollution Control

 

 

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1    Board rules are adopted pursuant to the Illinois
2    Administrative Procedure Act for the administration and
3    enforcement of Section 58.9 of the Environmental
4    Protection Act, determinations as to credit availability
5    for purposes of this Section shall be made consistent with
6    those rules. For purposes of this Section, "taxpayer"
7    includes a person whose tax attributes the taxpayer has
8    succeeded to under Section 381 of the Internal Revenue Code
9    and "related party" includes the persons disallowed a
10    deduction for losses by paragraphs (b), (c), and (f)(1) of
11    Section 267 of the Internal Revenue Code by virtue of being
12    a related taxpayer, as well as any of its partners. The
13    credit allowed against the tax imposed by subsections (a)
14    and (b) shall be equal to 25% of the unreimbursed eligible
15    remediation costs in excess of $100,000 per site, except
16    that the $100,000 threshold shall not apply to any site
17    contained in an enterprise zone as determined by the
18    Department of Commerce and Community Affairs (now
19    Department of Commerce and Economic Opportunity). The
20    total credit allowed shall not exceed $40,000 per year with
21    a maximum total of $150,000 per site. For partners and
22    shareholders of subchapter S corporations, there shall be
23    allowed a credit under this subsection to be determined in
24    accordance with the determination of income and
25    distributive share of income under Sections 702 and 704 and
26    subchapter S of the Internal Revenue Code.

 

 

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1        (ii) A credit allowed under this subsection that is
2    unused in the year the credit is earned may be carried
3    forward to each of the 5 taxable years following the year
4    for which the credit is first earned until it is used. The
5    term "unused credit" does not include any amounts of
6    unreimbursed eligible remediation costs in excess of the
7    maximum credit per site authorized under paragraph (i).
8    This credit shall be applied first to the earliest year for
9    which there is a liability. If there is a credit under this
10    subsection from more than one tax year that is available to
11    offset a liability, the earliest credit arising under this
12    subsection shall be applied first. A credit allowed under
13    this subsection may be sold to a buyer as part of a sale of
14    all or part of the remediation site for which the credit
15    was granted. The purchaser of a remediation site and the
16    tax credit shall succeed to the unused credit and remaining
17    carry-forward period of the seller. To perfect the
18    transfer, the assignor shall record the transfer in the
19    chain of title for the site and provide written notice to
20    the Director of the Illinois Department of Revenue of the
21    assignor's intent to sell the remediation site and the
22    amount of the tax credit to be transferred as a portion of
23    the sale. In no event may a credit be transferred to any
24    taxpayer if the taxpayer or a related party would not be
25    eligible under the provisions of subsection (i).
26        (iii) For purposes of this Section, the term "site"

 

 

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1    shall have the same meaning as under Section 58.2 of the
2    Environmental Protection Act.
3    (m) Education expense credit. Beginning with tax years
4ending after December 31, 1999, a taxpayer who is the custodian
5of one or more qualifying pupils shall be allowed a credit
6against the tax imposed by subsections (a) and (b) of this
7Section for qualified education expenses incurred on behalf of
8the qualifying pupils. The credit shall be equal to 25% of
9qualified education expenses, but in no event may the total
10credit under this subsection claimed by a family that is the
11custodian of qualifying pupils exceed (i) $500 for tax years
12ending prior to December 31, 2017, and (ii) $750 for tax years
13ending on or after December 31, 2017. In no event shall a
14credit under this subsection reduce the taxpayer's liability
15under this Act to less than zero. This subsection is exempt
16from the provisions of Section 250 of this Act.
17    For purposes of this subsection:
18    "Qualifying pupils" means individuals who (i) are
19residents of the State of Illinois, (ii) are under the age of
2021 at the close of the school year for which a credit is
21sought, and (iii) during the school year for which a credit is
22sought were full-time pupils enrolled in a kindergarten through
23twelfth grade education program at any school, as defined in
24this subsection.
25    "Qualified education expense" means the amount incurred on
26behalf of a qualifying pupil in excess of $250 for tuition,

 

 

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1book fees, and lab fees at the school in which the pupil is
2enrolled during the regular school year.
3    "School" means any public or nonpublic elementary or
4secondary school in Illinois that is in compliance with Title
5VI of the Civil Rights Act of 1964 and attendance at which
6satisfies the requirements of Section 26-1 of the School Code,
7except that nothing shall be construed to require a child to
8attend any particular public or nonpublic school to qualify for
9the credit under this Section.
10    "Custodian" means, with respect to qualifying pupils, an
11Illinois resident who is a parent, the parents, a legal
12guardian, or the legal guardians of the qualifying pupils.
13    (n) River Edge Redevelopment Zone site remediation tax
14credit.
15        (i) For tax years ending on or after December 31, 2006,
16    a taxpayer shall be allowed a credit against the tax
17    imposed by subsections (a) and (b) of this Section for
18    certain amounts paid for unreimbursed eligible remediation
19    costs, as specified in this subsection. For purposes of
20    this Section, "unreimbursed eligible remediation costs"
21    means costs approved by the Illinois Environmental
22    Protection Agency ("Agency") under Section 58.14a of the
23    Environmental Protection Act that were paid in performing
24    environmental remediation at a site within a River Edge
25    Redevelopment Zone for which a No Further Remediation
26    Letter was issued by the Agency and recorded under Section

 

 

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1    58.10 of the Environmental Protection Act. The credit must
2    be claimed for the taxable year in which Agency approval of
3    the eligible remediation costs is granted. The credit is
4    not available to any taxpayer if the taxpayer or any
5    related party caused or contributed to, in any material
6    respect, a release of regulated substances on, in, or under
7    the site that was identified and addressed by the remedial
8    action pursuant to the Site Remediation Program of the
9    Environmental Protection Act. Determinations as to credit
10    availability for purposes of this Section shall be made
11    consistent with rules adopted by the Pollution Control
12    Board pursuant to the Illinois Administrative Procedure
13    Act for the administration and enforcement of Section 58.9
14    of the Environmental Protection Act. For purposes of this
15    Section, "taxpayer" includes a person whose tax attributes
16    the taxpayer has succeeded to under Section 381 of the
17    Internal Revenue Code and "related party" includes the
18    persons disallowed a deduction for losses by paragraphs
19    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
20    Code by virtue of being a related taxpayer, as well as any
21    of its partners. The credit allowed against the tax imposed
22    by subsections (a) and (b) shall be equal to 25% of the
23    unreimbursed eligible remediation costs in excess of
24    $100,000 per site.
25        (ii) A credit allowed under this subsection that is
26    unused in the year the credit is earned may be carried

 

 

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1    forward to each of the 5 taxable years following the year
2    for which the credit is first earned until it is used. This
3    credit shall be applied first to the earliest year for
4    which there is a liability. If there is a credit under this
5    subsection from more than one tax year that is available to
6    offset a liability, the earliest credit arising under this
7    subsection shall be applied first. A credit allowed under
8    this subsection may be sold to a buyer as part of a sale of
9    all or part of the remediation site for which the credit
10    was granted. The purchaser of a remediation site and the
11    tax credit shall succeed to the unused credit and remaining
12    carry-forward period of the seller. To perfect the
13    transfer, the assignor shall record the transfer in the
14    chain of title for the site and provide written notice to
15    the Director of the Illinois Department of Revenue of the
16    assignor's intent to sell the remediation site and the
17    amount of the tax credit to be transferred as a portion of
18    the sale. In no event may a credit be transferred to any
19    taxpayer if the taxpayer or a related party would not be
20    eligible under the provisions of subsection (i).
21        (iii) For purposes of this Section, the term "site"
22    shall have the same meaning as under Section 58.2 of the
23    Environmental Protection Act.
24    (o) For each of taxable years during the Compassionate Use
25of Medical Cannabis Pilot Program, a surcharge is imposed on
26all taxpayers on income arising from the sale or exchange of

 

 

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1capital assets, depreciable business property, real property
2used in the trade or business, and Section 197 intangibles of
3an organization registrant under the Compassionate Use of
4Medical Cannabis Pilot Program Act. The amount of the surcharge
5is equal to the amount of federal income tax liability for the
6taxable year attributable to those sales and exchanges. The
7surcharge imposed does not apply if:
8        (1) the medical cannabis cultivation center
9    registration, medical cannabis dispensary registration, or
10    the property of a registration is transferred as a result
11    of any of the following:
12            (A) bankruptcy, a receivership, or a debt
13        adjustment initiated by or against the initial
14        registration or the substantial owners of the initial
15        registration;
16            (B) cancellation, revocation, or termination of
17        any registration by the Illinois Department of Public
18        Health;
19            (C) a determination by the Illinois Department of
20        Public Health that transfer of the registration is in
21        the best interests of Illinois qualifying patients as
22        defined by the Compassionate Use of Medical Cannabis
23        Pilot Program Act;
24            (D) the death of an owner of the equity interest in
25        a registrant;
26            (E) the acquisition of a controlling interest in

 

 

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1        the stock or substantially all of the assets of a
2        publicly traded company;
3            (F) a transfer by a parent company to a wholly
4        owned subsidiary; or
5            (G) the transfer or sale to or by one person to
6        another person where both persons were initial owners
7        of the registration when the registration was issued;
8        or
9        (2) the cannabis cultivation center registration,
10    medical cannabis dispensary registration, or the
11    controlling interest in a registrant's property is
12    transferred in a transaction to lineal descendants in which
13    no gain or loss is recognized or as a result of a
14    transaction in accordance with Section 351 of the Internal
15    Revenue Code in which no gain or loss is recognized.
16(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
17eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
18eff. 7-16-14.)
 
19    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
20    Sec. 203. Base income defined.
21    (a) Individuals.
22        (1) In general. In the case of an individual, base
23    income means an amount equal to the taxpayer's adjusted
24    gross income for the taxable year as modified by paragraph
25    (2).

 

 

SB0009- 48 -LRB100 06347 HLH 16385 b

1        (2) Modifications. The adjusted gross income referred
2    to in paragraph (1) shall be modified by adding thereto the
3    sum of the following amounts:
4            (A) An amount equal to all amounts paid or accrued
5        to the taxpayer as interest or dividends during the
6        taxable year to the extent excluded from gross income
7        in the computation of adjusted gross income, except
8        stock dividends of qualified public utilities
9        described in Section 305(e) of the Internal Revenue
10        Code;
11            (B) An amount equal to the amount of tax imposed by
12        this Act to the extent deducted from gross income in
13        the computation of adjusted gross income for the
14        taxable year;
15            (C) An amount equal to the amount received during
16        the taxable year as a recovery or refund of real
17        property taxes paid with respect to the taxpayer's
18        principal residence under the Revenue Act of 1939 and
19        for which a deduction was previously taken under
20        subparagraph (L) of this paragraph (2) prior to July 1,
21        1991, the retrospective application date of Article 4
22        of Public Act 87-17. In the case of multi-unit or
23        multi-use structures and farm dwellings, the taxes on
24        the taxpayer's principal residence shall be that
25        portion of the total taxes for the entire property
26        which is attributable to such principal residence;

 

 

SB0009- 49 -LRB100 06347 HLH 16385 b

1            (D) An amount equal to the amount of the capital
2        gain deduction allowable under the Internal Revenue
3        Code, to the extent deducted from gross income in the
4        computation of adjusted gross income;
5            (D-5) An amount, to the extent not included in
6        adjusted gross income, equal to the amount of money
7        withdrawn by the taxpayer in the taxable year from a
8        medical care savings account and the interest earned on
9        the account in the taxable year of a withdrawal
10        pursuant to subsection (b) of Section 20 of the Medical
11        Care Savings Account Act or subsection (b) of Section
12        20 of the Medical Care Savings Account Act of 2000;
13            (D-10) For taxable years ending after December 31,
14        1997, an amount equal to any eligible remediation costs
15        that the individual deducted in computing adjusted
16        gross income and for which the individual claims a
17        credit under subsection (l) of Section 201;
18            (D-15) For taxable years 2001 and thereafter, an
19        amount equal to the bonus depreciation deduction taken
20        on the taxpayer's federal income tax return for the
21        taxable year under subsection (k) of Section 168 of the
22        Internal Revenue Code;
23            (D-16) If the taxpayer sells, transfers, abandons,
24        or otherwise disposes of property for which the
25        taxpayer was required in any taxable year to make an
26        addition modification under subparagraph (D-15), then

 

 

SB0009- 50 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 51 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 52 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 53 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 54 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 55 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 56 -LRB100 06347 HLH 16385 b

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

 

 

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1        included in base income of the unitary group for the
2        same taxable year and received by the taxpayer or by a
3        member of the taxpayer's unitary business group
4        (including amounts included in gross income under
5        Sections 951 through 964 of the Internal Revenue Code
6        and amounts included in gross income under Section 78
7        of the Internal Revenue Code) with respect to the stock
8        of the same person to whom the premiums and costs were
9        directly or indirectly paid, incurred, or accrued. The
10        preceding sentence does not apply to the extent that
11        the same dividends caused a reduction to the addition
12        modification required under Section 203(a)(2)(D-17) or
13        Section 203(a)(2)(D-18) of this Act.
14            (D-20) For taxable years beginning on or after
15        January 1, 2002 and ending on or before December 31,
16        2006, in the case of a distribution from a qualified
17        tuition program under Section 529 of the Internal
18        Revenue Code, other than (i) a distribution from a
19        College Savings Pool created under Section 16.5 of the
20        State Treasurer Act or (ii) a distribution from the
21        Illinois Prepaid Tuition Trust Fund, an amount equal to
22        the amount excluded from gross income under Section
23        529(c)(3)(B). For taxable years beginning on or after
24        January 1, 2007, in the case of a distribution from a
25        qualified tuition program under Section 529 of the
26        Internal Revenue Code, other than (i) a distribution

 

 

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1        from a College Savings Pool created under Section 16.5
2        of the State Treasurer Act, (ii) a distribution from
3        the Illinois Prepaid Tuition Trust Fund, or (iii) a
4        distribution from a qualified tuition program under
5        Section 529 of the Internal Revenue Code that (I)
6        adopts and determines that its offering materials
7        comply with the College Savings Plans Network's
8        disclosure principles and (II) has made reasonable
9        efforts to inform in-state residents of the existence
10        of in-state qualified tuition programs by informing
11        Illinois residents directly and, where applicable, to
12        inform financial intermediaries distributing the
13        program to inform in-state residents of the existence
14        of in-state qualified tuition programs at least
15        annually, an amount equal to the amount excluded from
16        gross income under Section 529(c)(3)(B).
17            For the purposes of this subparagraph (D-20), a
18        qualified tuition program has made reasonable efforts
19        if it makes disclosures (which may use the term
20        "in-state program" or "in-state plan" and need not
21        specifically refer to Illinois or its qualified
22        programs by name) (i) directly to prospective
23        participants in its offering materials or makes a
24        public disclosure, such as a website posting; and (ii)
25        where applicable, to intermediaries selling the
26        out-of-state program in the same manner that the

 

 

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1        out-of-state program distributes its offering
2        materials;
3            (D-21) For taxable years beginning on or after
4        January 1, 2007, in the case of transfer of moneys from
5        a qualified tuition program under Section 529 of the
6        Internal Revenue Code that is administered by the State
7        to an out-of-state program, an amount equal to the
8        amount of moneys previously deducted from base income
9        under subsection (a)(2)(Y) of this Section;
10            (D-22) For taxable years beginning on or after
11        January 1, 2009, in the case of a nonqualified
12        withdrawal or refund of moneys from a qualified tuition
13        program under Section 529 of the Internal Revenue Code
14        administered by the State that is not used for
15        qualified expenses at an eligible education
16        institution, an amount equal to the contribution
17        component of the nonqualified withdrawal or refund
18        that was previously deducted from base income under
19        subsection (a)(2)(y) of this Section, provided that
20        the withdrawal or refund did not result from the
21        beneficiary's death or disability;
22            (D-23) An amount equal to the credit allowable to
23        the taxpayer under Section 218(a) of this Act,
24        determined without regard to Section 218(c) of this
25        Act;
26            (D-24) For taxable years beginning on or after

 

 

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1        January 1, 2017, an amount equal to the deduction
2        allowed under Section 199 of the Internal Revenue Code
3        for the taxable year;
4    and by deducting from the total so obtained the sum of the
5    following amounts:
6            (E) For taxable years ending before December 31,
7        2001, any amount included in such total in respect of
8        any compensation (including but not limited to any
9        compensation paid or accrued to a serviceman while a
10        prisoner of war or missing in action) paid to a
11        resident by reason of being on active duty in the Armed
12        Forces of the United States and in respect of any
13        compensation paid or accrued to a resident who as a
14        governmental employee was a prisoner of war or missing
15        in action, and in respect of any compensation paid to a
16        resident in 1971 or thereafter for annual training
17        performed pursuant to Sections 502 and 503, Title 32,
18        United States Code as a member of the Illinois National
19        Guard or, beginning with taxable years ending on or
20        after December 31, 2007, the National Guard of any
21        other state. For taxable years ending on or after
22        December 31, 2001, any amount included in such total in
23        respect of any compensation (including but not limited
24        to any compensation paid or accrued to a serviceman
25        while a prisoner of war or missing in action) paid to a
26        resident by reason of being a member of any component

 

 

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1        of the Armed Forces of the United States and in respect
2        of any compensation paid or accrued to a resident who
3        as a governmental employee was a prisoner of war or
4        missing in action, and in respect of any compensation
5        paid to a resident in 2001 or thereafter by reason of
6        being a member of the Illinois National Guard or,
7        beginning with taxable years ending on or after
8        December 31, 2007, the National Guard of any other
9        state. The provisions of this subparagraph (E) are
10        exempt from the provisions of Section 250;
11            (F) An amount equal to all amounts included in such
12        total pursuant to the provisions of Sections 402(a),
13        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
14        Internal Revenue Code, or included in such total as
15        distributions under the provisions of any retirement
16        or disability plan for employees of any governmental
17        agency or unit, or retirement payments to retired
18        partners, which payments are excluded in computing net
19        earnings from self employment by Section 1402 of the
20        Internal Revenue Code and regulations adopted pursuant
21        thereto;
22            (G) The valuation limitation amount;
23            (H) An amount equal to the amount of any tax
24        imposed by this Act which was refunded to the taxpayer
25        and included in such total for the taxable year;
26            (I) An amount equal to all amounts included in such

 

 

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1        total pursuant to the provisions of Section 111 of the
2        Internal Revenue Code as a recovery of items previously
3        deducted from adjusted gross income in the computation
4        of taxable income;
5            (J) An amount equal to those dividends included in
6        such total which were paid by a corporation which
7        conducts business operations in a River Edge
8        Redevelopment Zone or zones created under the River
9        Edge Redevelopment Zone Act, and conducts
10        substantially all of its operations in a River Edge
11        Redevelopment Zone or zones. This subparagraph (J) is
12        exempt from the provisions of Section 250;
13            (K) An amount equal to those dividends included in
14        such total that were paid by a corporation that
15        conducts business operations in a federally designated
16        Foreign Trade Zone or Sub-Zone and that is designated a
17        High Impact Business located in Illinois; provided
18        that dividends eligible for the deduction provided in
19        subparagraph (J) of paragraph (2) of this subsection
20        shall not be eligible for the deduction provided under
21        this subparagraph (K);
22            (L) For taxable years ending after December 31,
23        1983, an amount equal to all social security benefits
24        and railroad retirement benefits included in such
25        total pursuant to Sections 72(r) and 86 of the Internal
26        Revenue Code;

 

 

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

 

 

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1        job training project established pursuant to the Tax
2        Increment Allocation Redevelopment Act;
3            (P) An amount equal to the amount of the deduction
4        used to compute the federal income tax credit for
5        restoration of substantial amounts held under claim of
6        right for the taxable year pursuant to Section 1341 of
7        the Internal Revenue Code or of any itemized deduction
8        taken from adjusted gross income in the computation of
9        taxable income for restoration of substantial amounts
10        held under claim of right for the taxable year;
11            (Q) An amount equal to any amounts included in such
12        total, received by the taxpayer as an acceleration in
13        the payment of life, endowment or annuity benefits in
14        advance of the time they would otherwise be payable as
15        an indemnity for a terminal illness;
16            (R) An amount equal to the amount of any federal or
17        State bonus paid to veterans of the Persian Gulf War;
18            (S) An amount, to the extent included in adjusted
19        gross income, equal to the amount of a contribution
20        made in the taxable year on behalf of the taxpayer to a
21        medical care savings account established under the
22        Medical Care Savings Account Act or the Medical Care
23        Savings Account Act of 2000 to the extent the
24        contribution is accepted by the account administrator
25        as provided in that Act;
26            (T) An amount, to the extent included in adjusted

 

 

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

 

 

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

 

 

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1        federal income tax purposes, attributable to, derived
2        from or in any way related to assets stolen from,
3        hidden from, or otherwise lost to a victim of
4        persecution for racial or religious reasons by Nazi
5        Germany or any other Axis regime immediately prior to,
6        during, and immediately after World War II, including,
7        but not limited to, interest on the proceeds receivable
8        as insurance under policies issued to a victim of
9        persecution for racial or religious reasons by Nazi
10        Germany or any other Axis regime by European insurance
11        companies immediately prior to and during World War II;
12        provided, however, this subtraction from federal
13        adjusted gross income does not apply to assets acquired
14        with such assets or with the proceeds from the sale of
15        such assets; provided, further, this paragraph shall
16        only apply to a taxpayer who was the first recipient of
17        such assets after their recovery and who is a victim of
18        persecution for racial or religious reasons by Nazi
19        Germany or any other Axis regime or as an heir of the
20        victim. The amount of and the eligibility for any
21        public assistance, benefit, or similar entitlement is
22        not affected by the inclusion of items (i) and (ii) of
23        this paragraph in gross income for federal income tax
24        purposes. This paragraph is exempt from the provisions
25        of Section 250;
26            (Y) For taxable years beginning on or after January

 

 

SB0009- 68 -LRB100 06347 HLH 16385 b

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

 

 

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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

 

 

SB0009- 70 -LRB100 06347 HLH 16385 b

1        taxpayer's federal income tax return under subsection
2        (k) of Section 168 of the Internal Revenue Code. This
3        subparagraph (Z) is exempt from the provisions of
4        Section 250;
5            (AA) If the taxpayer sells, transfers, abandons,
6        or otherwise disposes of property for which the
7        taxpayer was required in any taxable year to make an
8        addition modification under subparagraph (D-15), then
9        an amount equal to 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 (D-15), 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 (AA) is exempt from the
21        provisions of Section 250;
22            (BB) Any amount included in adjusted gross income,
23        other than salary, received by a driver in a
24        ridesharing arrangement using a motor vehicle;
25            (CC) The amount of (i) any interest income (net of
26        the deductions allocable thereto) taken into account

 

 

SB0009- 71 -LRB100 06347 HLH 16385 b

1        for the taxable year with respect to a transaction with
2        a taxpayer that is required to make an addition
3        modification with respect to such transaction under
4        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
5        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
6        the amount of that addition modification, and (ii) any
7        income from intangible property (net of the deductions
8        allocable thereto) taken into account for the taxable
9        year with respect to a transaction with a taxpayer that
10        is required to make an addition modification with
11        respect to such transaction under Section
12        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
13        203(d)(2)(D-8), but not to exceed the amount of that
14        addition modification. This subparagraph (CC) is
15        exempt from the provisions of Section 250;
16            (DD) An amount equal to the interest income taken
17        into account for the taxable year (net of the
18        deductions allocable thereto) with respect to
19        transactions with (i) a foreign person who would be a
20        member of the taxpayer's unitary business group but for
21        the fact that the foreign person's business activity
22        outside the United States is 80% or more of that
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, but not to exceed the
5        addition modification required to be made for the same
6        taxable year under Section 203(a)(2)(D-17) for
7        interest paid, accrued, or incurred, directly or
8        indirectly, to the same person. This subparagraph (DD)
9        is exempt from the provisions of Section 250;
10            (EE) An amount equal to the income from intangible
11        property taken into account for the taxable year (net
12        of the 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 that 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(a)(2)(D-18) for

 

 

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1        intangible expenses and costs paid, accrued, or
2        incurred, directly or indirectly, to the same foreign
3        person. This subparagraph (EE) is exempt from the
4        provisions of Section 250;
5            (FF) An amount equal to any amount awarded to the
6        taxpayer during the taxable year by the Court of Claims
7        under subsection (c) of Section 8 of the Court of
8        Claims Act for time unjustly served in a State prison.
9        This subparagraph (FF) is exempt from the provisions of
10        Section 250; and
11            (GG) 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(a)(2)(D-19), 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 (GG),
22        the insurer to which the premiums were paid must add
23        back to income the amount subtracted by the taxpayer
24        pursuant to this subparagraph (GG). This subparagraph
25        (GG) is exempt from the provisions of Section 250.
 

 

 

SB0009- 74 -LRB100 06347 HLH 16385 b

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

 

 

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

 

 

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1            For taxable years in which there is a net operating
2        loss carryback or carryforward from more than one other
3        taxable year ending prior to December 31, 1986, the
4        addition modification provided in this subparagraph
5        (E) shall be the sum of the amounts computed
6        independently under the preceding provisions of this
7        subparagraph (E) for each such taxable year;
8            (E-5) For taxable years ending after December 31,
9        1997, an amount equal to any eligible remediation costs
10        that the corporation deducted in computing adjusted
11        gross income and for which the corporation claims a
12        credit under subsection (l) of Section 201;
13            (E-10) For taxable years 2001 and thereafter, an
14        amount equal to the bonus depreciation deduction taken
15        on the taxpayer's federal income tax return for the
16        taxable year under subsection (k) of Section 168 of the
17        Internal Revenue Code;
18            (E-11) If the taxpayer sells, transfers, abandons,
19        or otherwise disposes of property for which the
20        taxpayer was required in any taxable year to make an
21        addition modification under subparagraph (E-10), then
22        an amount equal to the aggregate amount of the
23        deductions taken in all taxable years under
24        subparagraph (T) with respect to that property.
25            If the taxpayer continues to own property through
26        the last day of the last tax year for which the

 

 

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

 

 

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

 

 

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

 

 

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1            under Section 404 of this Act;
2            (E-13) An amount equal to the amount of intangible
3        expenses and costs otherwise allowed as a deduction in
4        computing base income, and that were paid, accrued, or
5        incurred, directly or indirectly, (i) for taxable
6        years ending on or after December 31, 2004, to a
7        foreign person who would be a member of the same
8        unitary business group but for the fact that the
9        foreign person's business activity outside the United
10        States is 80% or more of that person's total business
11        activity and (ii) for taxable years ending on or after
12        December 31, 2008, to a person who would be a member of
13        the same unitary business group but for the fact that
14        the person is prohibited under Section 1501(a)(27)
15        from being included in the unitary business group
16        because he or she is ordinarily required to apportion
17        business income under different subsections of Section
18        304. The addition modification required by this
19        subparagraph shall be reduced to the extent that
20        dividends were included in base income of the unitary
21        group for the same taxable year and received by the
22        taxpayer or by a member of the taxpayer's unitary
23        business group (including amounts included in gross
24        income pursuant to Sections 951 through 964 of the
25        Internal Revenue Code and amounts included in gross
26        income under Section 78 of the Internal Revenue Code)

 

 

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

 

 

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1            to a tax on or measured by net income with respect
2            to such item; or
3                (ii) any item of intangible expense or cost
4            paid, accrued, or incurred, directly or
5            indirectly, if the taxpayer can establish, based
6            on a preponderance of the evidence, both of the
7            following:
8                    (a) the person during the same taxable
9                year paid, accrued, or incurred, the
10                intangible expense or cost to a person that is
11                not a related member, and
12                    (b) the transaction giving rise to the
13                intangible expense or cost between the
14                taxpayer and the person did not have as a
15                principal purpose the avoidance of Illinois
16                income tax, and is paid pursuant to a contract
17                or agreement that reflects arm's-length terms;
18                or
19                (iii) any item of intangible expense or cost
20            paid, accrued, or incurred, directly or
21            indirectly, from a transaction with a person if the
22            taxpayer establishes by clear and convincing
23            evidence, that the adjustments are unreasonable;
24            or if the taxpayer and the Director agree in
25            writing to the application or use of an alternative
26            method of apportionment under Section 304(f);

 

 

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

 

 

SB0009- 84 -LRB100 06347 HLH 16385 b

1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the stock
4        of the same person to whom the premiums and costs were
5        directly or indirectly paid, incurred, or accrued. The
6        preceding sentence does not apply to the extent that
7        the same dividends caused a reduction to the addition
8        modification required under Section 203(b)(2)(E-12) or
9        Section 203(b)(2)(E-13) of this Act;
10            (E-15) For taxable years beginning after December
11        31, 2008, any deduction for dividends paid by a captive
12        real estate investment trust that is allowed to a real
13        estate investment trust under Section 857(b)(2)(B) of
14        the Internal Revenue Code for dividends paid;
15            (E-16) An amount equal to the credit allowable to
16        the taxpayer under Section 218(a) of this Act,
17        determined without regard to Section 218(c) of this
18        Act;
19            (E-17) For taxable years beginning on or after
20        January 1, 2017, an amount equal to the deduction
21        allowed under Section 199 of the Internal Revenue Code
22        for the taxable year;
23            (E-18) For taxable years beginning on or after
24        January 1, 2017, any deduction allowed to the taxpayer
25        under Sections 243 through 246A of the Internal Revenue
26        Code;

 

 

SB0009- 85 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 86 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 87 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 88 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 89 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 90 -LRB100 06347 HLH 16385 b

1        state or political subdivision thereof, including, for
2        taxable years ending on or after December 31, 1988,
3        dividends received or deemed received or paid or deemed
4        paid under Sections 951 through 965 of the Internal
5        Revenue Code, exceed the amount of the modification
6        provided under subparagraph (G) of paragraph (2) of
7        this subsection (b) which is related to such dividends,
8        and including, for taxable years ending on or after
9        December 31, 2008, dividends received from a captive
10        real estate investment trust; plus (ii) 100% of the
11        amount by which dividends, included in taxable income
12        and received, including, for taxable years ending on or
13        after December 31, 1988, dividends received or deemed
14        received or paid or deemed paid under Sections 951
15        through 964 of the Internal Revenue Code and including,
16        for taxable years ending on or after December 31, 2008,
17        dividends received from a captive real estate
18        investment trust, from any such corporation specified
19        in clause (i) that would but for the provisions of
20        Section 1504 (b) (3) of the Internal Revenue Code be
21        treated as a member of the affiliated group which
22        includes the dividend recipient, exceed the amount of
23        the modification provided under subparagraph (G) of
24        paragraph (2) of this subsection (b) which is related
25        to such dividends. This subparagraph (O) shall not
26        apply to taxable years beginning on or after January 1,

 

 

SB0009- 91 -LRB100 06347 HLH 16385 b

1        2017 is exempt from the provisions of Section 250 of
2        this Act;
3            (P) An amount equal to any contribution made to a
4        job training project established pursuant to the Tax
5        Increment Allocation Redevelopment Act;
6            (Q) 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            (R) On and after July 20, 1999, in the case of an
12        attorney-in-fact with respect to whom an interinsurer
13        or a reciprocal insurer has made the election under
14        Section 835 of the Internal Revenue Code, 26 U.S.C.
15        835, an amount equal to the excess, if any, of the
16        amounts paid or incurred by that interinsurer or
17        reciprocal insurer in the taxable year to the
18        attorney-in-fact over the deduction allowed to that
19        interinsurer or reciprocal insurer with respect to the
20        attorney-in-fact under Section 835(b) of the Internal
21        Revenue Code for the taxable year; the provisions of
22        this subparagraph are exempt from the provisions of
23        Section 250;
24            (S) For taxable years ending on or after December
25        31, 1997, in the case of a Subchapter S corporation, an
26        amount equal to all amounts of income allocable to a

 

 

SB0009- 92 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 93 -LRB100 06347 HLH 16385 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        taxable year ending prior to December 31, 1986, the
2        addition modification provided in this subparagraph
3        (E) shall be the sum of the amounts computed
4        independently under the preceding provisions of this
5        subparagraph (E) for each such taxable year;
6            (F) For taxable years ending on or after January 1,
7        1989, an amount equal to the tax deducted pursuant to
8        Section 164 of the Internal Revenue Code if the trust
9        or estate is claiming the same tax for purposes of the
10        Illinois foreign tax credit under Section 601 of this
11        Act;
12            (G) An amount equal to the amount of the capital
13        gain deduction allowable under the Internal Revenue
14        Code, to the extent deducted from gross income in the
15        computation of taxable income;
16            (G-5) For taxable years ending after December 31,
17        1997, an amount equal to any eligible remediation costs
18        that the trust or estate deducted in computing adjusted
19        gross income and for which the trust or estate claims a
20        credit under subsection (l) of Section 201;
21            (G-10) For taxable years 2001 and thereafter, an
22        amount equal to the bonus depreciation deduction taken
23        on the taxpayer's federal income tax return for the
24        taxable year under subsection (k) of Section 168 of the
25        Internal Revenue Code; and
26            (G-11) If the taxpayer sells, transfers, abandons,

 

 

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

 

 

SB0009- 102 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 103 -LRB100 06347 HLH 16385 b

1            the taxpayer can establish, based on a
2            preponderance of the evidence, both of the
3            following:
4                    (a) the person, during the same taxable
5                year, paid, accrued, or incurred, the interest
6                to a person that is not a related member, and
7                    (b) the transaction giving rise to the
8                interest expense between the taxpayer and the
9                person did not have as a principal purpose the
10                avoidance of Illinois income tax, and is paid
11                pursuant to a contract or agreement that
12                reflects an arm's-length interest rate and
13                terms; or
14                (iii) the taxpayer can establish, based on
15            clear and convincing evidence, that the interest
16            paid, accrued, or incurred relates to a contract or
17            agreement entered into at arm's-length rates and
18            terms and the principal purpose for the payment is
19            not federal or Illinois tax avoidance; or
20                (iv) an item of interest paid, accrued, or
21            incurred, directly or indirectly, to a person if
22            the taxpayer establishes by clear and convincing
23            evidence that the adjustments are unreasonable; or
24            if the taxpayer and the Director agree in writing
25            to the application or use of an alternative method
26            of apportionment under Section 304(f).

 

 

SB0009- 104 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 105 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 106 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 107 -LRB100 06347 HLH 16385 b

1                (iii) any item of intangible expense or cost
2            paid, accrued, or incurred, directly or
3            indirectly, from a transaction with a person if the
4            taxpayer establishes by clear and convincing
5            evidence, that the adjustments are unreasonable;
6            or if the taxpayer and the Director agree in
7            writing to the application or use of an alternative
8            method 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;
18            (G-14) For taxable years ending on or after
19        December 31, 2008, an amount equal to the amount of
20        insurance premium expenses and costs otherwise allowed
21        as a deduction in computing base income, and that were
22        paid, accrued, or incurred, directly or indirectly, to
23        a person who would be a member of the same unitary
24        business group but for the fact that the person is
25        prohibited under Section 1501(a)(27) from being
26        included in the unitary business group because he or

 

 

SB0009- 108 -LRB100 06347 HLH 16385 b

1        she is ordinarily required to apportion business
2        income under different subsections of Section 304. The
3        addition modification required by this subparagraph
4        shall be reduced to the extent that dividends were
5        included in base income of the unitary group for the
6        same taxable year and received by the taxpayer or by a
7        member of the taxpayer's unitary business group
8        (including amounts included in gross income under
9        Sections 951 through 964 of the Internal Revenue Code
10        and amounts included in gross income under Section 78
11        of the Internal Revenue Code) with respect to the stock
12        of the same person to whom the premiums and costs were
13        directly or indirectly paid, incurred, or accrued. The
14        preceding sentence does not apply to the extent that
15        the same dividends caused a reduction to the addition
16        modification required under Section 203(c)(2)(G-12) or
17        Section 203(c)(2)(G-13) of this Act;
18            (G-15) An amount equal to the credit allowable to
19        the taxpayer under Section 218(a) of this Act,
20        determined without regard to Section 218(c) of this
21        Act;
22            (G-16) For taxable years beginning on or after
23        January 1, 2017, an amount equal to the deduction
24        allowed under Section 199 of the Internal Revenue Code
25        for the taxable year;
26    and by deducting from the total so obtained the sum of the

 

 

SB0009- 109 -LRB100 06347 HLH 16385 b

1    following amounts:
2            (H) An amount equal to all amounts included in such
3        total pursuant to the provisions of Sections 402(a),
4        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
5        Internal Revenue Code or included in such total as
6        distributions under the provisions of any retirement
7        or disability plan for employees of any governmental
8        agency or unit, or retirement payments to retired
9        partners, which payments are excluded in computing net
10        earnings from self employment by Section 1402 of the
11        Internal Revenue Code and regulations adopted pursuant
12        thereto;
13            (I) The valuation limitation amount;
14            (J) An amount equal to the amount of any tax
15        imposed by this Act which was refunded to the taxpayer
16        and included in such total for the taxable year;
17            (K) An amount equal to all amounts included in
18        taxable income as modified by subparagraphs (A), (B),
19        (C), (D), (E), (F) and (G) which are exempt from
20        taxation by this State either by reason of its statutes
21        or Constitution or by reason of the Constitution,
22        treaties or statutes of the United States; provided
23        that, in the case of any statute of this State that
24        exempts income derived from bonds or other obligations
25        from the tax imposed under this Act, the amount
26        exempted shall be the interest net of bond premium

 

 

SB0009- 110 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 111 -LRB100 06347 HLH 16385 b

1        job training project established pursuant to the Tax
2        Increment Allocation Redevelopment Act;
3            (O) An amount equal to those dividends included in
4        such total that were paid by a corporation that
5        conducts business operations in a federally designated
6        Foreign Trade Zone or Sub-Zone and that is designated a
7        High Impact Business located in Illinois; provided
8        that dividends eligible for the deduction provided in
9        subparagraph (M) of paragraph (2) of this subsection
10        shall not be eligible for the deduction provided under
11        this subparagraph (O);
12            (P) An amount equal to the amount of the deduction
13        used to compute the federal income tax credit for
14        restoration of substantial amounts held under claim of
15        right for the taxable year pursuant to Section 1341 of
16        the Internal Revenue Code;
17            (Q) For taxable year 1999 and thereafter, an amount
18        equal to the amount of any (i) distributions, to the
19        extent includible in gross income for federal income
20        tax purposes, made to the taxpayer because of his or
21        her status as a victim of persecution for racial or
22        religious reasons by Nazi Germany or any other Axis
23        regime or as an heir of the victim and (ii) items of
24        income, to the extent includible in gross income for
25        federal income tax purposes, attributable to, derived
26        from or in any way related to assets stolen from,

 

 

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

 

 

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

 

 

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

 

 

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1        for the taxable year with respect to a transaction with
2        a taxpayer that is required to make an addition
3        modification with respect to such transaction under
4        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
5        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
6        the amount of such addition modification and (ii) any
7        income from intangible property (net of the deductions
8        allocable thereto) taken into account for the taxable
9        year with respect to a transaction with a taxpayer that
10        is required to make an addition modification with
11        respect to such transaction under Section
12        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
13        203(d)(2)(D-8), but not to exceed the amount of such
14        addition modification. This subparagraph (T) is exempt
15        from the provisions of Section 250;
16            (U) An amount equal to the interest income taken
17        into account for the taxable year (net of the
18        deductions allocable thereto) with respect to
19        transactions with (i) a foreign person who would be a
20        member of the taxpayer's unitary business group but for
21        the fact the foreign person's business activity
22        outside the United States is 80% or more of that
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, but not to exceed the
5        addition modification required to be made for the same
6        taxable year under Section 203(c)(2)(G-12) for
7        interest paid, accrued, or incurred, directly or
8        indirectly, to the same person. This subparagraph (U)
9        is exempt from the provisions of Section 250;
10            (V) An amount equal to the income from intangible
11        property taken into account for the taxable year (net
12        of the 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 that 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-13) for

 

 

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

 

 

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1        the election provided for by this subparagraph (Y), the
2        insurer to which the premiums were paid must add back
3        to income the amount subtracted by the taxpayer
4        pursuant to this subparagraph (Y). This subparagraph
5        (Y) is exempt from the provisions of Section 250.
6        (3) Limitation. The amount of any modification
7    otherwise required under this subsection shall, under
8    regulations prescribed by the Department, be adjusted by
9    any amounts included therein which were properly paid,
10    credited, or required to be distributed, or permanently set
11    aside for charitable purposes pursuant to Internal Revenue
12    Code Section 642(c) during the taxable year.
 
13    (d) Partnerships.
14        (1) In general. In the case of a partnership, base
15    income means an amount equal to the taxpayer's taxable
16    income for the taxable year as modified by paragraph (2).
17        (2) Modifications. The taxable income referred to in
18    paragraph (1) shall be modified by adding thereto the sum
19    of the following amounts:
20            (A) An amount equal to all amounts paid or accrued
21        to the taxpayer as interest or dividends during the
22        taxable year to the extent excluded from gross income
23        in the computation of taxable income;
24            (B) An amount equal to the amount of tax imposed by
25        this Act to the extent deducted from gross income for

 

 

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1        the taxable year;
2            (C) The amount of deductions allowed to the
3        partnership pursuant to Section 707 (c) of the Internal
4        Revenue Code in calculating its taxable income;
5            (D) An amount equal to the amount of the capital
6        gain deduction allowable under the Internal Revenue
7        Code, to the extent deducted from gross income in the
8        computation of taxable income;
9            (D-5) For taxable years 2001 and thereafter, an
10        amount equal to the bonus depreciation deduction taken
11        on the taxpayer's federal income tax return for the
12        taxable year under subsection (k) of Section 168 of the
13        Internal Revenue Code;
14            (D-6) If the taxpayer sells, transfers, abandons,
15        or otherwise disposes of property for which the
16        taxpayer was required in any taxable year to make an
17        addition modification under subparagraph (D-5), then
18        an amount equal to the aggregate amount of the
19        deductions taken in all taxable years under
20        subparagraph (O) with respect to that property.
21            If the taxpayer continues to own property through
22        the last day of the last tax year for which the
23        taxpayer may claim a depreciation deduction for
24        federal income tax purposes and for which the taxpayer
25        was allowed in any taxable year to make a subtraction
26        modification under subparagraph (O), then an amount

 

 

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

 

 

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

 

 

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

 

 

SB0009- 123 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 124 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 125 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 126 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 127 -LRB100 06347 HLH 16385 b

1        directly or indirectly paid, incurred, or accrued. The
2        preceding sentence does not apply to the extent that
3        the same dividends caused a reduction to the addition
4        modification required under Section 203(d)(2)(D-7) or
5        Section 203(d)(2)(D-8) of this Act;
6            (D-10) An amount equal to the credit allowable to
7        the taxpayer under Section 218(a) of this Act,
8        determined without regard to Section 218(c) of this
9        Act;
10            (D-11) For taxable years beginning on or after
11        January 1, 2017, an amount equal to the deduction
12        allowed under Section 199 of the Internal Revenue Code
13        for the taxable year;
14    and by deducting from the total so obtained the following
15    amounts:
16            (E) The valuation limitation amount;
17            (F) An amount equal to the amount of any tax
18        imposed by this Act which was refunded to the taxpayer
19        and included in such total for the taxable year;
20            (G) An amount equal to all amounts included in
21        taxable income as modified by subparagraphs (A), (B),
22        (C) and (D) which are exempt from taxation by this
23        State either by reason of its statutes or Constitution
24        or by reason of the Constitution, treaties or statutes
25        of the United States; provided that, in the case of any
26        statute of this State that exempts income derived from

 

 

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1        bonds or other obligations from the tax imposed under
2        this Act, the amount exempted shall be the interest net
3        of bond premium amortization;
4            (H) Any income of the partnership which
5        constitutes personal service income as defined in
6        Section 1348 (b) (1) of the Internal Revenue Code (as
7        in effect December 31, 1981) or a reasonable allowance
8        for compensation paid or accrued for services rendered
9        by partners to the partnership, whichever is greater;
10        this subparagraph (H) is exempt from the provisions of
11        Section 250;
12            (I) An amount equal to all amounts of income
13        distributable to an entity subject to the Personal
14        Property Tax Replacement Income Tax imposed by
15        subsections (c) and (d) of Section 201 of this Act
16        including amounts distributable to organizations
17        exempt from federal income tax by reason of Section
18        501(a) of the Internal Revenue Code; this subparagraph
19        (I) is exempt from the provisions of Section 250;
20            (J) With the exception of any amounts subtracted
21        under subparagraph (G), an amount equal to the sum of
22        all amounts disallowed as deductions by (i) Sections
23        171(a) (2), and 265(2) of the Internal Revenue Code,
24        and all amounts of expenses allocable to interest and
25        disallowed as deductions by Section 265(1) of the
26        Internal Revenue Code; and (ii) for taxable years

 

 

SB0009- 129 -LRB100 06347 HLH 16385 b

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

 

 

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1        subparagraph (K) of paragraph (2) of this subsection
2        shall not be eligible for the deduction provided under
3        this subparagraph (M);
4            (N) An amount equal to the amount of the deduction
5        used to compute the federal income tax credit for
6        restoration of substantial amounts held under claim of
7        right for the taxable year pursuant to Section 1341 of
8        the Internal Revenue Code;
9            (O) For taxable years 2001 and thereafter, for the
10        taxable year in which the bonus depreciation deduction
11        is taken on the taxpayer's federal income tax return
12        under subsection (k) of Section 168 of the Internal
13        Revenue Code and for each applicable taxable year
14        thereafter, an amount equal to "x", where:
15                (1) "y" equals the amount of the depreciation
16            deduction taken for the taxable year on the
17            taxpayer's federal income tax return on property
18            for which the bonus depreciation deduction was
19            taken in any year under subsection (k) of Section
20            168 of the Internal Revenue Code, but not including
21            the bonus depreciation deduction;
22                (2) for taxable years ending on or before
23            December 31, 2005, "x" equals "y" multiplied by 30
24            and then divided by 70 (or "y" multiplied by
25            0.429); and
26                (3) for taxable years ending after December

 

 

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1            31, 2005:
2                    (i) for property on which a bonus
3                depreciation deduction of 30% of the adjusted
4                basis was taken, "x" equals "y" multiplied by
5                30 and then divided by 70 (or "y" multiplied by
6                0.429); and
7                    (ii) for property on which a bonus
8                depreciation deduction of 50% of the adjusted
9                basis was taken, "x" equals "y" multiplied by
10                1.0.
11            The aggregate amount deducted under this
12        subparagraph in all taxable years for any one piece of
13        property may not exceed the amount of the bonus
14        depreciation deduction taken on that property on the
15        taxpayer's federal income tax return under subsection
16        (k) of Section 168 of the Internal Revenue Code. This
17        subparagraph (O) is exempt from the provisions of
18        Section 250;
19            (P) If the taxpayer sells, transfers, abandons, or
20        otherwise disposes of property for which the taxpayer
21        was required in any taxable year to make an addition
22        modification under subparagraph (D-5), then an amount
23        equal to that addition modification.
24            If the taxpayer continues to own property through
25        the last day of the last tax year for which the
26        taxpayer may claim a depreciation deduction for

 

 

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1        federal income tax purposes and for which the taxpayer
2        was required in any taxable year to make an addition
3        modification under subparagraph (D-5), then an amount
4        equal to that addition modification.
5            The taxpayer is allowed to take the deduction under
6        this subparagraph only once with respect to any one
7        piece of property.
8            This subparagraph (P) is exempt from the
9        provisions of Section 250;
10            (Q) 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 such 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 such
25        addition modification. This subparagraph (Q) is exempt
26        from Section 250;

 

 

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1            (R) 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(d)(2)(D-7) for interest
18        paid, accrued, or incurred, directly or indirectly, to
19        the same person. This subparagraph (R) is exempt from
20        Section 250;
21            (S) 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

 

 

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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(d)(2)(D-8) for
12        intangible expenses and costs paid, accrued, or
13        incurred, directly or indirectly, to the same person.
14        This subparagraph (S) is exempt from Section 250; and
15            (T) For taxable years ending on or after December
16        31, 2011, in the case of a taxpayer who was required to
17        add back any insurance premiums under Section
18        203(d)(2)(D-9), such taxpayer may elect to subtract
19        that part of a reimbursement received from the
20        insurance company equal to the amount of the expense or
21        loss (including expenses incurred by the insurance
22        company) that would have been taken into account as a
23        deduction for federal income tax purposes if the
24        expense or loss had been uninsured. If a taxpayer makes
25        the election provided for by this subparagraph (T), the
26        insurer to which the premiums were paid must add back

 

 

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

 

 

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

 

 

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

 

 

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1        that a cooperative corporation or association may make
2        an election to follow its federal income tax treatment
3        of patronage losses and nonpatronage losses. In the
4        event such election is made, such losses shall be
5        computed and carried over in a manner consistent with
6        subsection (a) of Section 207 of this Act and
7        apportioned by the apportionment factor reported by
8        the cooperative on its Illinois income tax return filed
9        for the taxable year in which the losses are incurred.
10        The election shall be effective for all taxable years
11        with original returns due on or after the date of the
12        election. In addition, the cooperative may file an
13        amended return or returns, as allowed under this Act,
14        to provide that the election shall be effective for
15        losses incurred or carried forward for taxable years
16        occurring prior to the date of the election. Once made,
17        the election may only be revoked upon approval of the
18        Director. The Department shall adopt rules setting
19        forth requirements for documenting the elections and
20        any resulting Illinois net loss and the standards to be
21        used by the Director in evaluating requests to revoke
22        elections. Public Act 96-932 is declaratory of
23        existing law;
24            (G) Subchapter S corporations. In the case of: (i)
25        a Subchapter S corporation for which there is in effect
26        an election for the taxable year under Section 1362 of

 

 

SB0009- 139 -LRB100 06347 HLH 16385 b

1        the Internal Revenue Code, the taxable income of such
2        corporation determined in accordance with Section
3        1363(b) of the Internal Revenue Code, except that
4        taxable income shall take into account those items
5        which are required by Section 1363(b)(1) of the
6        Internal Revenue Code to be separately stated; and (ii)
7        a Subchapter S corporation for which there is in effect
8        a federal election to opt out of the provisions of the
9        Subchapter S Revision Act of 1982 and have applied
10        instead the prior federal Subchapter S rules as in
11        effect on July 1, 1982, the taxable income of such
12        corporation determined in accordance with the federal
13        Subchapter S rules as in effect on July 1, 1982; and
14            (H) Partnerships. In the case of a partnership,
15        taxable income determined in accordance with Section
16        703 of the Internal Revenue Code, except that taxable
17        income shall take into account those items which are
18        required by Section 703(a)(1) to be separately stated
19        but which would be taken into account by an individual
20        in calculating his taxable income.
21        (3) Recapture of business expenses on disposition of
22    asset or business. Notwithstanding any other law to the
23    contrary, if in prior years income from an asset or
24    business has been classified as business income and in a
25    later year is demonstrated to be non-business income, then
26    all expenses, without limitation, deducted in such later

 

 

SB0009- 140 -LRB100 06347 HLH 16385 b

1    year and in the 2 immediately preceding taxable years
2    related to that asset or business that generated the
3    non-business income shall be added back and recaptured as
4    business income in the year of the disposition of the asset
5    or business. Such amount shall be apportioned to Illinois
6    using the greater of the apportionment fraction computed
7    for the business under Section 304 of this Act for the
8    taxable year or the average of the apportionment fractions
9    computed for the business under Section 304 of this Act for
10    the taxable year and for the 2 immediately preceding
11    taxable years.
 
12    (f) Valuation limitation amount.
13        (1) In general. The valuation limitation amount
14    referred to in subsections (a) (2) (G), (c) (2) (I) and
15    (d)(2) (E) is an amount equal to:
16            (A) The sum of the pre-August 1, 1969 appreciation
17        amounts (to the extent consisting of gain reportable
18        under the provisions of Section 1245 or 1250 of the
19        Internal Revenue Code) for all property in respect of
20        which such gain was reported for the taxable year; plus
21            (B) The lesser of (i) the sum of the pre-August 1,
22        1969 appreciation amounts (to the extent consisting of
23        capital gain) for all property in respect of which such
24        gain was reported for federal income tax purposes for
25        the taxable year, or (ii) the net capital gain for the

 

 

SB0009- 141 -LRB100 06347 HLH 16385 b

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

 

 

SB0009- 142 -LRB100 06347 HLH 16385 b

1            (C) The Department shall prescribe such
2        regulations as may be necessary to carry out the
3        purposes of this paragraph.
 
4    (g) Double deductions. Unless specifically provided
5otherwise, nothing in this Section shall permit the same item
6to be deducted more than once.
 
7    (h) Legislative intention. Except as expressly provided by
8this Section there shall be no modifications or limitations on
9the amounts of income, gain, loss or deduction taken into
10account in determining gross income, adjusted gross income or
11taxable income for federal income tax purposes for the taxable
12year, or in the amount of such items entering into the
13computation of base income and net income under this Act for
14such taxable year, whether in respect of property values as of
15August 1, 1969 or otherwise.
16(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
17eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1896-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
196-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
20eff. 8-23-11; 97-905, eff. 8-7-12.)
 
21    (35 ILCS 5/212)
22    Sec. 212. Earned income tax credit.
23    (a) With respect to the federal earned income tax credit

 

 

SB0009- 143 -LRB100 06347 HLH 16385 b

1allowed for the taxable year under Section 32 of the federal
2Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer
3is entitled to a credit against the tax imposed by subsections
4(a) and (b) of Section 201 in an amount equal to (i) 5% of the
5federal tax credit for each taxable year beginning on or after
6January 1, 2000 and ending prior to December 31, 2012, (ii)
77.5% of the federal tax credit for each taxable year beginning
8on or after January 1, 2012 and ending prior to December 31,
92013, and (iii) 10% of the federal tax credit for each taxable
10year beginning on or after January 1, 2013 and beginning prior
11to January 1, 2017, and (iv) 15% of the federal tax credit for
12each taxable year beginning on or after January 1, 2017.
13    For a non-resident or part-year resident, the amount of the
14credit under this Section shall be in proportion to the amount
15of income attributable to this State.
16    (b) For taxable years beginning before January 1, 2003, in
17no event shall a credit under this Section reduce the
18taxpayer's liability to less than zero. For each taxable year
19beginning on or after January 1, 2003, if the amount of the
20credit exceeds the income tax liability for the applicable tax
21year, then the excess credit shall be refunded to the taxpayer.
22The amount of a refund shall not be included in the taxpayer's
23income or resources for the purposes of determining eligibility
24or benefit level in any means-tested benefit program
25administered by a governmental entity unless required by
26federal law.

 

 

SB0009- 144 -LRB100 06347 HLH 16385 b

1    (c) This Section is exempt from the provisions of Section
2250.
3(Source: P.A. 97-652, eff. 6-1-12.)
 
4    (35 ILCS 5/225 new)
5    Sec. 225. Credit for instructional materials and supplies.
6For taxable years beginning on and after January 1, 2017, a
7taxpayer shall be allowed a credit in the amount paid by the
8taxpayer during the taxable year for instructional materials
9and supplies with respect to classroom based instruction in a
10qualified school, or $250, whichever is less, provided that the
11taxpayer is a teacher, instructor, counselor, principal, or
12aide in a qualified school for at least 900 hours during a
13school year.
14    The credit may not be carried back and may not reduce the
15taxpayer's liability to less than zero. If the amount of the
16credit exceeds the tax liability for the year, the excess may
17be carried forward and applied to the tax liability of the 5
18taxable years following the excess credit year. The tax credit
19shall be applied to the earliest year for which there is a tax
20liability. If there are credits for more than one year that are
21available to offset a liability, the earlier credit shall be
22applied first.
23    For purposes of this Section, the term "materials and
24supplies" means amounts paid for instructional materials or
25supplies that are designated for classroom use in any qualified

 

 

SB0009- 145 -LRB100 06347 HLH 16385 b

1school. For purposes of this Section, the term "qualified
2school" has the meaning given to that term in the Invest in
3Kids Act.
4    This Section is exempt from the provisions of Section 250.
 
5    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
6    Sec. 804. Failure to Pay Estimated Tax.
7    (a) In general. In case of any underpayment of estimated
8tax by a taxpayer, except as provided in subsection (d) or (e),
9the taxpayer shall be liable to a penalty in an amount
10determined at the rate prescribed by Section 3-3 of the Uniform
11Penalty and Interest Act upon the amount of the underpayment
12(determined under subsection (b)) for each required
13installment.
14    (b) Amount of underpayment. For purposes of subsection (a),
15the amount of the underpayment shall be the excess of:
16        (1) the amount of the installment which would be
17    required to be paid under subsection (c), over
18        (2) the amount, if any, of the installment paid on or
19    before the last date prescribed for payment.
20    (c) Amount of Required Installments.
21        (1) Amount.
22            (A) In General. Except as provided in paragraphs
23        (2) and (3), the amount of any required installment
24        shall be 25% of the required annual payment.
25            (B) Required Annual Payment. For purposes of

 

 

SB0009- 146 -LRB100 06347 HLH 16385 b

1        subparagraph (A), the term "required annual payment"
2        means the lesser of:
3                (i) 90% of the tax shown on the return for the
4            taxable year, or if no return is filed, 90% of the
5            tax for such year;
6                (ii) for installments due prior to February 1,
7            2011, and after January 31, 2012, 100% of the tax
8            shown on the return of the taxpayer for the
9            preceding taxable year if a return showing a
10            liability for tax was filed by the taxpayer for the
11            preceding taxable year and such preceding year was
12            a taxable year of 12 months; or
13                (iii) for installments due after January 31,
14            2011, and prior to February 1, 2012, 150% of the
15            tax shown on the return of the taxpayer for the
16            preceding taxable year if a return showing a
17            liability for tax was filed by the taxpayer for the
18            preceding taxable year and such preceding year was
19            a taxable year of 12 months.
20        (2) Lower Required Installment where Annualized Income
21    Installment is Less Than Amount Determined Under Paragraph
22    (1).
23            (A) In General. In the case of any required
24        installment if a taxpayer establishes that the
25        annualized income installment is less than the amount
26        determined under paragraph (1),

 

 

SB0009- 147 -LRB100 06347 HLH 16385 b

1                (i) the amount of such required installment
2            shall be the annualized income installment, and
3                (ii) any reduction in a required installment
4            resulting from the application of this
5            subparagraph shall be recaptured by increasing the
6            amount of the next required installment determined
7            under paragraph (1) by the amount of such
8            reduction, and by increasing subsequent required
9            installments to the extent that the reduction has
10            not previously been recaptured under this clause.
11            (B) Determination of Annualized Income
12        Installment. In the case of any required installment,
13        the annualized income installment is the excess, if
14        any, of:
15                (i) an amount equal to the applicable
16            percentage of the tax for the taxable year computed
17            by placing on an annualized basis the net income
18            for months in the taxable year ending before the
19            due date for the installment, over
20                (ii) the aggregate amount of any prior
21            required installments for the taxable year.
22            (C) Applicable Percentage.
23        In the case of the followingThe applicable
24        required installments:percentage is:
25        1st ...............................22.5%
26        2nd ...............................45%

 

 

SB0009- 148 -LRB100 06347 HLH 16385 b

1        3rd ...............................67.5%
2        4th ...............................90%
3            (D) Annualized Net Income; Individuals. For
4        individuals, net income shall be placed on an
5        annualized basis by:
6                (i) multiplying by 12, or in the case of a
7            taxable year of less than 12 months, by the number
8            of months in the taxable year, the net income
9            computed without regard to the standard exemption
10            for the months in the taxable year ending before
11            the month in which the installment is required to
12            be paid;
13                (ii) dividing the resulting amount by the
14            number of months in the taxable year ending before
15            the month in which such installment date falls; and
16                (iii) deducting from such amount the standard
17            exemption allowable for the taxable year, such
18            standard exemption being determined as of the last
19            date prescribed for payment of the installment.
20            (E) Annualized Net Income; Corporations. For
21        corporations, net income shall be placed on an
22        annualized basis by multiplying by 12 the taxable
23        income
24                (i) for the first 3 months of the taxable year,
25            in the case of the installment required to be paid
26            in the 4th month,

 

 

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1                (ii) for the first 3 months or for the first 5
2            months of the taxable year, in the case of the
3            installment required to be paid in the 6th month,
4                (iii) for the first 6 months or for the first 8
5            months of the taxable year, in the case of the
6            installment required to be paid in the 9th month,
7            and
8                (iv) for the first 9 months or for the first 11
9            months of the taxable year, in the case of the
10            installment required to be paid in the 12th month
11            of the taxable year,
12        then dividing the resulting amount by the number of
13        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
14        case may be).
15        (3) Notwithstanding any other provision of this
16    subsection (c), in the case of a federally regulated
17    exchange that elects to apportion its income under Section
18    304(c-1) of this Act, the amount of each required
19    installment due prior to June 30 of the first taxable year
20    to which the election applies shall be 25% of the tax that
21    would have been shown on the return for that taxable year
22    if the taxpayer had not made such election.
23    (d) Exceptions. Notwithstanding the provisions of the
24preceding subsections, the penalty imposed by subsection (a)
25shall not be imposed if the taxpayer was not required to file
26an Illinois income tax return for the preceding taxable year,

 

 

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1or, for individuals, if the taxpayer had no tax liability for
2the preceding taxable year and such year was a taxable year of
312 months. The penalty imposed by subsection (a) shall also not
4be imposed on any underpayments of estimated tax due before the
5effective date of this amendatory Act of 1998 which
6underpayments are solely attributable to the change in
7apportionment from subsection (a) to subsection (h) of Section
8304. The provisions of this amendatory Act of 1998 apply to tax
9years ending on or after December 31, 1998.
10    (e) The penalty imposed for underpayment of estimated tax
11by subsection (a) of this Section shall not be imposed to the
12extent that the Director or his or her designate determines,
13pursuant to Section 3-8 of the Uniform Penalty and Interest Act
14that the penalty should not be imposed.
15    (f) Definition of tax. For purposes of subsections (b) and
16(c), the term "tax" means the excess of the tax imposed under
17Article 2 of this Act, over the amounts credited against such
18tax under Sections 601(b) (3) and (4).
19    (g) Application of Section in case of tax withheld under
20Article 7. For purposes of applying this Section:
21        (1) tax withheld from compensation for the taxable year
22    shall be deemed a payment of estimated tax, and an equal
23    part of such amount shall be deemed paid on each
24    installment date for such taxable year, unless the taxpayer
25    establishes the dates on which all amounts were actually
26    withheld, in which case the amounts so withheld shall be

 

 

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1    deemed payments of estimated tax on the dates on which such
2    amounts were actually withheld;
3        (2) amounts timely paid by a partnership, Subchapter S
4    corporation, or trust on behalf of a partner, shareholder,
5    or beneficiary pursuant to subsection (f) of Section 502 or
6    Section 709.5 and claimed as a payment of estimated tax
7    shall be deemed a payment of estimated tax made on the last
8    day of the taxable year of the partnership, Subchapter S
9    corporation, or trust for which the income from the
10    withholding is made was computed; and
11        (3) all other amounts pursuant to Article 7 shall be
12    deemed a payment of estimated tax on the date the payment
13    is made to the taxpayer of the amount from which the tax is
14    withheld.
15    (g-5) Amounts withheld under the State Salary and Annuity
16Withholding Act. An individual who has amounts withheld under
17paragraph (10) of Section 4 of the State Salary and Annuity
18Withholding Act may elect to have those amounts treated as
19payments of estimated tax made on the dates on which those
20amounts are actually withheld.
21    (g-10) Notwithstanding any other provision of law, no
22penalty shall apply with respect to an underpayment of
23estimated tax for the first, second, or third quarter of any
24taxable year beginning on or after January 1, 2017 and
25beginning prior to January 1, 2018 if (i) the underpayment was
26due to the changes made by this amendatory Act of the 100th

 

 

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1General Assembly, (ii) the payment was otherwise timely made,
2and (iii) the balance due is included with the taxpayer's
3estimated tax payment for the fourth quarter.
4    (i) Short taxable year. The application of this Section to
5taxable years of less than 12 months shall be in accordance
6with regulations prescribed by the Department.
7    The changes in this Section made by Public Act 84-127 shall
8apply to taxable years ending on or after January 1, 1986.
9(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
1097-636, eff. 6-1-12.)
 
11    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
12    Sec. 901. Collection authority.
13    (a) In general.
14    The Department shall collect the taxes imposed by this Act.
15The Department shall collect certified past due child support
16amounts under Section 2505-650 of the Department of Revenue Law
17(20 ILCS 2505/2505-650). Except as provided in subsections (c),
18(e), (f), (g), and (h) of this Section, money collected
19pursuant to subsections (a) and (b) of Section 201 of this Act
20shall be paid into the General Revenue Fund in the State
21treasury; money collected pursuant to subsections (c) and (d)
22of Section 201 of this Act shall be paid into the Personal
23Property Tax Replacement Fund, a special fund in the State
24Treasury; and money collected under Section 2505-650 of the
25Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid

 

 

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1into the Child Support Enforcement Trust Fund, a special fund
2outside the State Treasury, or to the State Disbursement Unit
3established under Section 10-26 of the Illinois Public Aid
4Code, as directed by the Department of Healthcare and Family
5Services.
6    (b) Local Government Distributive Fund.
7    Beginning August 1, 1969, and continuing through June 30,
81994, the Treasurer shall transfer each month from the General
9Revenue Fund to a special fund in the State treasury, to be
10known as the "Local Government Distributive Fund", an amount
11equal to 1/12 of the net revenue realized from the tax imposed
12by subsections (a) and (b) of Section 201 of this Act during
13the preceding month. Beginning July 1, 1994, and continuing
14through June 30, 1995, the Treasurer shall transfer each month
15from the General Revenue Fund to the Local Government
16Distributive Fund an amount equal to 1/11 of the net revenue
17realized from the tax imposed by subsections (a) and (b) of
18Section 201 of this Act during the preceding month. Beginning
19July 1, 1995 and continuing through January 31, 2011, the
20Treasurer shall transfer each month from the General Revenue
21Fund to the Local Government Distributive Fund an amount equal
22to the net of (i) 1/10 of the net revenue realized from the tax
23imposed by subsections (a) and (b) of Section 201 of the
24Illinois Income Tax Act during the preceding month (ii) minus,
25beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
26and beginning July 1, 2004, zero. Beginning February 1, 2011,

 

 

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1and continuing through January 31, 2015, the Treasurer shall
2transfer each month from the General Revenue Fund to the Local
3Government Distributive Fund an amount equal to the sum of (i)
46% (10% of the ratio of the 3% individual income tax rate prior
5to 2011 to the 5% individual income tax rate after 2010) of the
6net revenue realized from the tax imposed by subsections (a)
7and (b) of Section 201 of this Act upon individuals, trusts,
8and estates during the preceding month and (ii) 6.86% (10% of
9the ratio of the 4.8% corporate income tax rate prior to 2011
10to the 7% corporate income tax rate after 2010) of the net
11revenue realized from the tax imposed by subsections (a) and
12(b) of Section 201 of this Act upon corporations during the
13preceding month. Beginning February 1, 2015 and continuing
14through January 31, 2017 January 31, 2025, the Treasurer shall
15transfer each month from the General Revenue Fund to the Local
16Government Distributive Fund an amount equal to the sum of (i)
178% (10% of the ratio of the 3% individual income tax rate prior
18to 2011 to the 3.75% individual income tax rate after 2014) of
19the net revenue realized from the tax imposed by subsections
20(a) and (b) of Section 201 of this Act upon individuals,
21trusts, and estates during the preceding month and (ii) 9.14%
22(10% of the ratio of the 4.8% corporate income tax rate prior
23to 2011 to the 5.25% corporate income tax rate after 2014) of
24the net revenue realized from the tax imposed by subsections
25(a) and (b) of Section 201 of this Act upon corporations during
26the preceding month. Beginning February 1, 2017 February 1,

 

 

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12025, the Treasurer shall transfer each month from the General
2Revenue Fund to the Local Government Distributive Fund an
3amount equal to the sum of (i) 6.06% 9.23% (10% of the ratio of
4the 3% individual income tax rate prior to 2011 to the 4.95%
53.25% individual income tax rate beginning in 2017 after 2024)
6of the net revenue realized from the tax imposed by subsections
7(a) and (b) of Section 201 of this Act upon individuals,
8trusts, and estates during the preceding month and (ii) 6.86%
9(10% of the ratio of the 4.8% corporate income tax rate prior
10to 2011 to the 7% corporate income tax rate beginning in 2017)
1110% of the net revenue realized from the tax imposed by
12subsections (a) and (b) of Section 201 of this Act upon
13corporations during the preceding month. Net revenue realized
14for a month shall be defined as the revenue from the tax
15imposed by subsections (a) and (b) of Section 201 of this Act
16which is deposited in the General Revenue Fund, the Education
17Assistance Fund, the Income Tax Surcharge Local Government
18Distributive Fund, the Fund for the Advancement of Education,
19and the Commitment to Human Services Fund during the month
20minus the amount paid out of the General Revenue Fund in State
21warrants during that same month as refunds to taxpayers for
22overpayment of liability under the tax imposed by subsections
23(a) and (b) of Section 201 of this Act.
24    Beginning on August 26, 2014 (the effective date of Public
25Act 98-1052), the Comptroller shall perform the transfers
26required by this subsection (b) no later than 60 days after he

 

 

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1or she receives the certification from the Treasurer as
2provided in Section 1 of the State Revenue Sharing Act.
3    (c) Deposits Into Income Tax Refund Fund.
4        (1) Beginning on January 1, 1989 and thereafter, the
5    Department shall deposit a percentage of the amounts
6    collected pursuant to subsections (a) and (b)(1), (2), and
7    (3), of Section 201 of this Act into a fund in the State
8    treasury known as the Income Tax Refund Fund. The
9    Department shall deposit 6% of such amounts during the
10    period beginning January 1, 1989 and ending on June 30,
11    1989. Beginning with State fiscal year 1990 and for each
12    fiscal year thereafter, the percentage deposited into the
13    Income Tax Refund Fund during a fiscal year shall be the
14    Annual Percentage. For fiscal years 1999 through 2001, the
15    Annual Percentage shall be 7.1%. For fiscal year 2003, the
16    Annual Percentage shall be 8%. For fiscal year 2004, the
17    Annual Percentage shall be 11.7%. Upon the effective date
18    of this amendatory Act of the 93rd General Assembly, the
19    Annual Percentage shall be 10% for fiscal year 2005. For
20    fiscal year 2006, the Annual Percentage shall be 9.75%. For
21    fiscal year 2007, the Annual Percentage shall be 9.75%. For
22    fiscal year 2008, the Annual Percentage shall be 7.75%. For
23    fiscal year 2009, the Annual Percentage shall be 9.75%. For
24    fiscal year 2010, the Annual Percentage shall be 9.75%. For
25    fiscal year 2011, the Annual Percentage shall be 8.75%. For
26    fiscal year 2012, the Annual Percentage shall be 8.75%. For

 

 

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1    fiscal year 2013, the Annual Percentage shall be 9.75%. For
2    fiscal year 2014, the Annual Percentage shall be 9.5%. For
3    fiscal year 2015, the Annual Percentage shall be 10%. For
4    all other fiscal years, the Annual Percentage shall be
5    calculated as a fraction, the numerator of which shall be
6    the amount of refunds approved for payment by the
7    Department during the preceding fiscal year as a result of
8    overpayment of tax liability under subsections (a) and
9    (b)(1), (2), and (3) of Section 201 of this Act plus the
10    amount of such refunds remaining approved but unpaid at the
11    end of the preceding fiscal year, minus the amounts
12    transferred into the Income Tax Refund Fund from the
13    Tobacco Settlement Recovery Fund, and the denominator of
14    which shall be the amounts which will be collected pursuant
15    to subsections (a) and (b)(1), (2), and (3) of Section 201
16    of this Act during the preceding fiscal year; except that
17    in State fiscal year 2002, the Annual Percentage shall in
18    no event exceed 7.6%. The Director of Revenue shall certify
19    the Annual Percentage to the Comptroller on the last
20    business day of the fiscal year immediately preceding the
21    fiscal year for which it is to be effective.
22        (2) Beginning on January 1, 1989 and thereafter, the
23    Department shall deposit a percentage of the amounts
24    collected pursuant to subsections (a) and (b)(6), (7), and
25    (8), (c) and (d) of Section 201 of this Act into a fund in
26    the State treasury known as the Income Tax Refund Fund. The

 

 

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1    Department shall deposit 18% of such amounts during the
2    period beginning January 1, 1989 and ending on June 30,
3    1989. Beginning with State fiscal year 1990 and for each
4    fiscal year thereafter, the percentage deposited into the
5    Income Tax Refund Fund during a fiscal year shall be the
6    Annual Percentage. For fiscal years 1999, 2000, and 2001,
7    the Annual Percentage shall be 19%. For fiscal year 2003,
8    the Annual Percentage shall be 27%. For fiscal year 2004,
9    the Annual Percentage shall be 32%. Upon the effective date
10    of this amendatory Act of the 93rd General Assembly, the
11    Annual Percentage shall be 24% for fiscal year 2005. For
12    fiscal year 2006, the Annual Percentage shall be 20%. For
13    fiscal year 2007, the Annual Percentage shall be 17.5%. For
14    fiscal year 2008, the Annual Percentage shall be 15.5%. For
15    fiscal year 2009, the Annual Percentage shall be 17.5%. For
16    fiscal year 2010, the Annual Percentage shall be 17.5%. For
17    fiscal year 2011, the Annual Percentage shall be 17.5%. For
18    fiscal year 2012, the Annual Percentage shall be 17.5%. For
19    fiscal year 2013, the Annual Percentage shall be 14%. For
20    fiscal year 2014, the Annual Percentage shall be 13.4%. For
21    fiscal year 2015, the Annual Percentage shall be 14%. For
22    all other fiscal years, the Annual Percentage shall be
23    calculated as a fraction, the numerator of which shall be
24    the amount of refunds approved for payment by the
25    Department during the preceding fiscal year as a result of
26    overpayment of tax liability under subsections (a) and

 

 

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1    (b)(6), (7), and (8), (c) and (d) of Section 201 of this
2    Act plus the amount of such refunds remaining approved but
3    unpaid at the end of the preceding fiscal year, and the
4    denominator of which shall be the amounts which will be
5    collected pursuant to subsections (a) and (b)(6), (7), and
6    (8), (c) and (d) of Section 201 of this Act during the
7    preceding fiscal year; except that in State fiscal year
8    2002, the Annual Percentage shall in no event exceed 23%.
9    The Director of Revenue shall certify the Annual Percentage
10    to the Comptroller on the last business day of the fiscal
11    year immediately preceding the fiscal year for which it is
12    to be effective.
13        (3) The Comptroller shall order transferred and the
14    Treasurer shall transfer from the Tobacco Settlement
15    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
16    in January, 2001, (ii) $35,000,000 in January, 2002, and
17    (iii) $35,000,000 in January, 2003.
18    (d) Expenditures from Income Tax Refund Fund.
19        (1) Beginning January 1, 1989, money in the Income Tax
20    Refund Fund shall be expended exclusively for the purpose
21    of paying refunds resulting from overpayment of tax
22    liability under Section 201 of this Act, for paying rebates
23    under Section 208.1 in the event that the amounts in the
24    Homeowners' Tax Relief Fund are insufficient for that
25    purpose, and for making transfers pursuant to this
26    subsection (d).

 

 

SB0009- 160 -LRB100 06347 HLH 16385 b

1        (2) The Director shall order payment of refunds
2    resulting from overpayment of tax liability under Section
3    201 of this Act from the Income Tax Refund Fund only to the
4    extent that amounts collected pursuant to Section 201 of
5    this Act and transfers pursuant to this subsection (d) and
6    item (3) of subsection (c) have been deposited and retained
7    in the Fund.
8        (3) As soon as possible after the end of each fiscal
9    year, the Director shall order transferred and the State
10    Treasurer and State Comptroller shall transfer from the
11    Income Tax Refund Fund to the Personal Property Tax
12    Replacement Fund an amount, certified by the Director to
13    the Comptroller, equal to the excess of the amount
14    collected pursuant to subsections (c) and (d) of Section
15    201 of this Act deposited into the Income Tax Refund Fund
16    during the fiscal year over the amount of refunds resulting
17    from overpayment of tax liability under subsections (c) and
18    (d) of Section 201 of this Act paid from the Income Tax
19    Refund Fund during the fiscal year.
20        (4) As soon as possible after the end of each fiscal
21    year, the Director shall order transferred and the State
22    Treasurer and State Comptroller shall transfer from the
23    Personal Property Tax Replacement Fund to the Income Tax
24    Refund Fund an amount, certified by the Director to the
25    Comptroller, equal to the excess of the amount of refunds
26    resulting from overpayment of tax liability under

 

 

SB0009- 161 -LRB100 06347 HLH 16385 b

1    subsections (c) and (d) of Section 201 of this Act paid
2    from the Income Tax Refund Fund during the fiscal year over
3    the amount collected pursuant to subsections (c) and (d) of
4    Section 201 of this Act deposited into the Income Tax
5    Refund Fund during the fiscal year.
6        (4.5) As soon as possible after the end of fiscal year
7    1999 and of each fiscal year thereafter, the Director shall
8    order transferred and the State Treasurer and State
9    Comptroller shall transfer from the Income Tax Refund Fund
10    to the General Revenue Fund any surplus remaining in the
11    Income Tax Refund Fund as of the end of such fiscal year;
12    excluding for fiscal years 2000, 2001, and 2002 amounts
13    attributable to transfers under item (3) of subsection (c)
14    less refunds resulting from the earned income tax credit.
15        (5) This Act shall constitute an irrevocable and
16    continuing appropriation from the Income Tax Refund Fund
17    for the purpose of paying refunds upon the order of the
18    Director in accordance with the provisions of this Section.
19    (e) Deposits into the Education Assistance Fund and the
20Income Tax Surcharge Local Government Distributive Fund.
21    On July 1, 1991, and thereafter, of the amounts collected
22pursuant to subsections (a) and (b) of Section 201 of this Act,
23minus deposits into the Income Tax Refund Fund, the Department
24shall deposit 7.3% into the Education Assistance Fund in the
25State Treasury. Beginning July 1, 1991, and continuing through
26January 31, 1993, of the amounts collected pursuant to

 

 

SB0009- 162 -LRB100 06347 HLH 16385 b

1subsections (a) and (b) of Section 201 of the Illinois Income
2Tax Act, minus deposits into the Income Tax Refund Fund, the
3Department shall deposit 3.0% into the Income Tax Surcharge
4Local Government Distributive Fund in the State Treasury.
5Beginning February 1, 1993 and continuing through June 30,
61993, of the amounts collected pursuant to subsections (a) and
7(b) of Section 201 of the Illinois Income Tax Act, minus
8deposits into the Income Tax Refund Fund, the Department shall
9deposit 4.4% into the Income Tax Surcharge Local Government
10Distributive Fund in the State Treasury. Beginning July 1,
111993, and continuing through June 30, 1994, of the amounts
12collected under subsections (a) and (b) of Section 201 of this
13Act, minus deposits into the Income Tax Refund Fund, the
14Department shall deposit 1.475% into the Income Tax Surcharge
15Local Government Distributive Fund in the State Treasury.
16    (f) Deposits into the Fund for the Advancement of
17Education. Beginning February 1, 2015, the Department shall
18deposit the following portions of the revenue realized from the
19tax imposed upon individuals, trusts, and estates by
20subsections (a) and (b) of Section 201 of this Act during the
21preceding month, minus deposits into the Income Tax Refund
22Fund, into the Fund for the Advancement of Education:
23        (1) beginning February 1, 2015, and prior to February
24    1, 2025, 1/30; and
25        (2) beginning February 1, 2025, 1/26.
26    If the rate of tax imposed by subsection (a) and (b) of

 

 

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1Section 201 is reduced pursuant to Section 201.5 of this Act,
2the Department shall not make the deposits required by this
3subsection (f) on or after the effective date of the reduction.
4    (g) Deposits into the Commitment to Human Services Fund.
5Beginning February 1, 2015, the Department shall deposit the
6following portions of the revenue realized from the tax imposed
7upon individuals, trusts, and estates by subsections (a) and
8(b) of Section 201 of this Act during the preceding month,
9minus deposits into the Income Tax Refund Fund, into the
10Commitment to Human Services Fund:
11        (1) beginning February 1, 2015, and prior to February
12    1, 2025, 1/30; and
13        (2) beginning February 1, 2025, 1/26.
14    If the rate of tax imposed by subsection (a) and (b) of
15Section 201 is reduced pursuant to Section 201.5 of this Act,
16the Department shall not make the deposits required by this
17subsection (g) on or after the effective date of the reduction.
18    (h) Deposits into the Tax Compliance and Administration
19Fund. Beginning on the first day of the first calendar month to
20occur on or after August 26, 2014 (the effective date of Public
21Act 98-1098), each month the Department shall pay into the Tax
22Compliance and Administration Fund, to be used, subject to
23appropriation, to fund additional auditors and compliance
24personnel at the Department, an amount equal to 1/12 of 5% of
25the cash receipts collected during the preceding fiscal year by
26the Audit Bureau of the Department from the tax imposed by

 

 

SB0009- 164 -LRB100 06347 HLH 16385 b

1subsections (a), (b), (c), and (d) of Section 201 of this Act,
2net of deposits into the Income Tax Refund Fund made from those
3cash receipts.
4(Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;
598-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.
67-20-15.)
 
7    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
8    Sec. 1501. Definitions.
9    (a) In general. When used in this Act, where not otherwise
10distinctly expressed or manifestly incompatible with the
11intent thereof:
12        (1) Business income. The term "business income" means
13    all income that may be treated as apportionable business
14    income under the Constitution of the United States.
15    Business income is net of the deductions allocable thereto.
16    Such term does not include compensation or the deductions
17    allocable thereto. For each taxable year beginning on or
18    after January 1, 2003, a taxpayer may elect to treat all
19    income other than compensation as business income. This
20    election shall be made in accordance with rules adopted by
21    the Department and, once made, shall be irrevocable.
22        (1.5) Captive real estate investment trust:
23            (A) The term "captive real estate investment
24        trust" means a corporation, trust, or association:
25                (i) that is considered a real estate

 

 

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1            investment trust for the taxable year under
2            Section 856 of the Internal Revenue Code;
3                (ii) the certificates of beneficial interest
4            or shares of which are not regularly traded on an
5            established securities market; and
6                (iii) of which more than 50% of the voting
7            power or value of the beneficial interest or
8            shares, at any time during the last half of the
9            taxable year, is owned or controlled, directly,
10            indirectly, or constructively, by a single
11            corporation.
12            (B) The term "captive real estate investment
13        trust" does not include:
14                (i) a real estate investment trust of which
15            more than 50% of the voting power or value of the
16            beneficial interest or shares is owned or
17            controlled, directly, indirectly, or
18            constructively, by:
19                    (a) a real estate investment trust, other
20                than a captive real estate investment trust;
21                    (b) a person who is exempt from taxation
22                under Section 501 of the Internal Revenue Code,
23                and who is not required to treat income
24                received from the real estate investment trust
25                as unrelated business taxable income under
26                Section 512 of the Internal Revenue Code;

 

 

SB0009- 166 -LRB100 06347 HLH 16385 b

1                    (c) a listed Australian property trust, if
2                no more than 50% of the voting power or value
3                of the beneficial interest or shares of that
4                trust, at any time during the last half of the
5                taxable year, is owned or controlled, directly
6                or indirectly, by a single person;
7                    (d) an entity organized as a trust,
8                provided a listed Australian property trust
9                described in subparagraph (c) owns or
10                controls, directly or indirectly, or
11                constructively, 75% or more of the voting power
12                or value of the beneficial interests or shares
13                of such entity; or
14                    (e) an entity that is organized outside of
15                the laws of the United States and that
16                satisfies all of the following criteria:
17                        (1) at least 75% of the entity's total
18                    asset value at the close of its taxable
19                    year is represented by real estate assets
20                    (as defined in Section 856(c)(5)(B) of the
21                    Internal Revenue Code, thereby including
22                    shares or certificates of beneficial
23                    interest in any real estate investment
24                    trust), cash and cash equivalents, and
25                    U.S. Government securities;
26                        (2) the entity is not subject to tax on

 

 

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1                    amounts that are distributed to its
2                    beneficial owners or is exempt from
3                    entity-level taxation;
4                        (3) the entity distributes at least
5                    85% of its taxable income (as computed in
6                    the jurisdiction in which it is organized)
7                    to the holders of its shares or
8                    certificates of beneficial interest on an
9                    annual basis;
10                        (4) either (i) the shares or
11                    beneficial interests of the entity are
12                    regularly traded on an established
13                    securities market or (ii) not more than 10%
14                    of the voting power or value in the entity
15                    is held, directly, indirectly, or
16                    constructively, by a single entity or
17                    individual; and
18                        (5) the entity is organized in a
19                    country that has entered into a tax treaty
20                    with the United States; or
21                (ii) during its first taxable year for which it
22            elects to be treated as a real estate investment
23            trust under Section 856(c)(1) of the Internal
24            Revenue Code, a real estate investment trust the
25            certificates of beneficial interest or shares of
26            which are not regularly traded on an established

 

 

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1            securities market, but only if the certificates of
2            beneficial interest or shares of the real estate
3            investment trust are regularly traded on an
4            established securities market prior to the earlier
5            of the due date (including extensions) for filing
6            its return under this Act for that first taxable
7            year or the date it actually files that return.
8            (C) For the purposes of this subsection (1.5), the
9        constructive ownership rules prescribed under Section
10        318(a) of the Internal Revenue Code, as modified by
11        Section 856(d)(5) of the Internal Revenue Code, apply
12        in determining the ownership of stock, assets, or net
13        profits of any person.
14            (D) For the purposes of this item (1.5), for
15        taxable years ending on or after August 16, 2007, the
16        voting power or value of the beneficial interest or
17        shares of a real estate investment trust does not
18        include any voting power or value of beneficial
19        interest or shares in a real estate investment trust
20        held directly or indirectly in a segregated asset
21        account by a life insurance company (as described in
22        Section 817 of the Internal Revenue Code) to the extent
23        such voting power or value is for the benefit of
24        entities or persons who are either immune from taxation
25        or exempt from taxation under subtitle A of the
26        Internal Revenue Code.

 

 

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1        (2) Commercial domicile. The term "commercial
2    domicile" means the principal place from which the trade or
3    business of the taxpayer is directed or managed.
4        (3) Compensation. The term "compensation" means wages,
5    salaries, commissions and any other form of remuneration
6    paid to employees for personal services.
7        (4) Corporation. The term "corporation" includes
8    associations, joint-stock companies, insurance companies
9    and cooperatives. Any entity, including a limited
10    liability company formed under the Illinois Limited
11    Liability Company Act, shall be treated as a corporation if
12    it is so classified for federal income tax purposes.
13        (5) Department. The term "Department" means the
14    Department of Revenue of this State.
15        (6) Director. The term "Director" means the Director of
16    Revenue of this State.
17        (7) Fiduciary. The term "fiduciary" means a guardian,
18    trustee, executor, administrator, receiver, or any person
19    acting in any fiduciary capacity for any person.
20        (8) Financial organization.
21            (A) The term "financial organization" means any
22        bank, bank holding company, trust company, savings
23        bank, industrial bank, land bank, safe deposit
24        company, private banker, savings and loan association,
25        building and loan association, credit union, currency
26        exchange, cooperative bank, small loan company, sales

 

 

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1        finance company, investment company, or any person
2        which is owned by a bank or bank holding company. For
3        the purpose of this Section a "person" will include
4        only those persons which a bank holding company may
5        acquire and hold an interest in, directly or
6        indirectly, under the provisions of the Bank Holding
7        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
8        where interests in any person must be disposed of
9        within certain required time limits under the Bank
10        Holding Company Act of 1956.
11            (B) For purposes of subparagraph (A) of this
12        paragraph, the term "bank" includes (i) any entity that
13        is regulated by the Comptroller of the Currency under
14        the National Bank Act, or by the Federal Reserve Board,
15        or by the Federal Deposit Insurance Corporation and
16        (ii) any federally or State chartered bank operating as
17        a credit card bank.
18            (C) For purposes of subparagraph (A) of this
19        paragraph, the term "sales finance company" has the
20        meaning provided in the following item (i) or (ii):
21                (i) A person primarily engaged in one or more
22            of the following businesses: the business of
23            purchasing customer receivables, the business of
24            making loans upon the security of customer
25            receivables, the business of making loans for the
26            express purpose of funding purchases of tangible

 

 

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1            personal property or services by the borrower, or
2            the business of finance leasing. For purposes of
3            this item (i), "customer receivable" means:
4                    (a) a retail installment contract or
5                retail charge agreement within the meaning of
6                the Sales Finance Agency Act, the Retail
7                Installment Sales Act, or the Motor Vehicle
8                Retail Installment Sales Act;
9                    (b) an installment, charge, credit, or
10                similar contract or agreement arising from the
11                sale of tangible personal property or services
12                in a transaction involving a deferred payment
13                price payable in one or more installments
14                subsequent to the sale; or
15                    (c) the outstanding balance of a contract
16                or agreement described in provisions (a) or (b)
17                of this item (i).
18                A customer receivable need not provide for
19            payment of interest on deferred payments. A sales
20            finance company may purchase a customer receivable
21            from, or make a loan secured by a customer
22            receivable to, the seller in the original
23            transaction or to a person who purchased the
24            customer receivable directly or indirectly from
25            that seller.
26                (ii) A corporation meeting each of the

 

 

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1            following criteria:
2                    (a) the corporation must be a member of an
3                "affiliated group" within the meaning of
4                Section 1504(a) of the Internal Revenue Code,
5                determined without regard to Section 1504(b)
6                of the Internal Revenue Code;
7                    (b) more than 50% of the gross income of
8                the corporation for the taxable year must be
9                interest income derived from qualifying loans.
10                A "qualifying loan" is a loan made to a member
11                of the corporation's affiliated group that
12                originates customer receivables (within the
13                meaning of item (i)) or to whom customer
14                receivables originated by a member of the
15                affiliated group have been transferred, to the
16                extent the average outstanding balance of
17                loans from that corporation to members of its
18                affiliated group during the taxable year do not
19                exceed the limitation amount for that
20                corporation. The "limitation amount" for a
21                corporation is the average outstanding
22                balances during the taxable year of customer
23                receivables (within the meaning of item (i))
24                originated by all members of the affiliated
25                group. If the average outstanding balances of
26                the loans made by a corporation to members of

 

 

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1                its affiliated group exceed the limitation
2                amount, the interest income of that
3                corporation from qualifying loans shall be
4                equal to its interest income from loans to
5                members of its affiliated groups times a
6                fraction equal to the limitation amount
7                divided by the average outstanding balances of
8                the loans made by that corporation to members
9                of its affiliated group;
10                    (c) the total of all shareholder's equity
11                (including, without limitation, paid-in
12                capital on common and preferred stock and
13                retained earnings) of the corporation plus the
14                total of all of its loans, advances, and other
15                obligations payable or owed to members of its
16                affiliated group may not exceed 20% of the
17                total assets of the corporation at any time
18                during the tax year; and
19                    (d) more than 50% of all interest-bearing
20                obligations of the affiliated group payable to
21                persons outside the group determined in
22                accordance with generally accepted accounting
23                principles must be obligations of the
24                corporation.
25            This amendatory Act of the 91st General Assembly is
26        declaratory of existing law.

 

 

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1            (D) Subparagraphs (B) and (C) of this paragraph are
2        declaratory of existing law and apply retroactively,
3        for all tax years beginning on or before December 31,
4        1996, to all original returns, to all amended returns
5        filed no later than 30 days after the effective date of
6        this amendatory Act of 1996, and to all notices issued
7        on or before the effective date of this amendatory Act
8        of 1996 under subsection (a) of Section 903, subsection
9        (a) of Section 904, subsection (e) of Section 909, or
10        Section 912. A taxpayer that is a "financial
11        organization" that engages in any transaction with an
12        affiliate shall be a "financial organization" for all
13        purposes of this Act.
14            (E) For all tax years beginning on or before
15        December 31, 1996, a taxpayer that falls within the
16        definition of a "financial organization" under
17        subparagraphs (B) or (C) of this paragraph, but who
18        does not fall within the definition of a "financial
19        organization" under the Proposed Regulations issued by
20        the Department of Revenue on July 19, 1996, may
21        irrevocably elect to apply the Proposed Regulations
22        for all of those years as though the Proposed
23        Regulations had been lawfully promulgated, adopted,
24        and in effect for all of those years. For purposes of
25        applying subparagraphs (B) or (C) of this paragraph to
26        all of those years, the election allowed by this

 

 

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1        subparagraph applies only to the taxpayer making the
2        election and to those members of the taxpayer's unitary
3        business group who are ordinarily required to
4        apportion business income under the same subsection of
5        Section 304 of this Act as the taxpayer making the
6        election. No election allowed by this subparagraph
7        shall be made under a claim filed under subsection (d)
8        of Section 909 more than 30 days after the effective
9        date of this amendatory Act of 1996.
10            (F) Finance Leases. For purposes of this
11        subsection, a finance lease shall be treated as a loan
12        or other extension of credit, rather than as a lease,
13        regardless of how the transaction is characterized for
14        any other purpose, including the purposes of any
15        regulatory agency to which the lessor is subject. A
16        finance lease is any transaction in the form of a lease
17        in which the lessee is treated as the owner of the
18        leased asset entitled to any deduction for
19        depreciation allowed under Section 167 of the Internal
20        Revenue Code.
21        (9) Fiscal year. The term "fiscal year" means an
22    accounting period of 12 months ending on the last day of
23    any month other than December.
24        (9.5) Fixed place of business. The term "fixed place of
25    business" has the same meaning as that term is given in
26    Section 864 of the Internal Revenue Code and the related

 

 

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1    Treasury regulations.
2        (10) Includes and including. The terms "includes" and
3    "including" when used in a definition contained in this Act
4    shall not be deemed to exclude other things otherwise
5    within the meaning of the term defined.
6        (11) Internal Revenue Code. The term "Internal Revenue
7    Code" means the United States Internal Revenue Code of 1954
8    or any successor law or laws relating to federal income
9    taxes in effect for the taxable year.
10        (11.5) Investment partnership.
11            (A) The term "investment partnership" means any
12        entity that is treated as a partnership for federal
13        income tax purposes that meets the following
14        requirements:
15                (i) no less than 90% of the partnership's cost
16            of its total assets consists of qualifying
17            investment securities, deposits at banks or other
18            financial institutions, and office space and
19            equipment reasonably necessary to carry on its
20            activities as an investment partnership;
21                (ii) no less than 90% of its gross income
22            consists of interest, dividends, and gains from
23            the sale or exchange of qualifying investment
24            securities; and
25                (iii) the partnership is not a dealer in
26            qualifying investment securities.

 

 

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1            (B) For purposes of this paragraph (11.5), the term
2        "qualifying investment securities" includes all of the
3        following:
4                (i) common stock, including preferred or debt
5            securities convertible into common stock, and
6            preferred stock;
7                (ii) bonds, debentures, and other debt
8            securities;
9                (iii) foreign and domestic currency deposits
10            secured by federal, state, or local governmental
11            agencies;
12                (iv) mortgage or asset-backed securities
13            secured by federal, state, or local governmental
14            agencies;
15                (v) repurchase agreements and loan
16            participations;
17                (vi) foreign currency exchange contracts and
18            forward and futures contracts on foreign
19            currencies;
20                (vii) stock and bond index securities and
21            futures contracts and other similar financial
22            securities and futures contracts on those
23            securities;
24                (viii) options for the purchase or sale of any
25            of the securities, currencies, contracts, or
26            financial instruments described in items (i) to

 

 

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1            (vii), inclusive;
2                (ix) regulated futures contracts;
3                (x) commodities (not described in Section
4            1221(a)(1) of the Internal Revenue Code) or
5            futures, forwards, and options with respect to
6            such commodities, provided, however, that any item
7            of a physical commodity to which title is actually
8            acquired in the partnership's capacity as a dealer
9            in such commodity shall not be a qualifying
10            investment security;
11                (xi) derivatives; and
12                (xii) a partnership interest in another
13            partnership that is an investment partnership.
14        (12) Mathematical error. The term "mathematical error"
15    includes the following types of errors, omissions, or
16    defects in a return filed by a taxpayer which prevents
17    acceptance of the return as filed for processing:
18            (A) arithmetic errors or incorrect computations on
19        the return or supporting schedules;
20            (B) entries on the wrong lines;
21            (C) omission of required supporting forms or
22        schedules or the omission of the information in whole
23        or in part called for thereon; and
24            (D) an attempt to claim, exclude, deduct, or
25        improperly report, in a manner directly contrary to the
26        provisions of the Act and regulations thereunder any

 

 

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1        item of income, exemption, deduction, or credit.
2        (13) Nonbusiness income. The term "nonbusiness income"
3    means all income other than business income or
4    compensation.
5        (14) Nonresident. The term "nonresident" means a
6    person who is not a resident.
7        (15) Paid, incurred and accrued. The terms "paid",
8    "incurred" and "accrued" shall be construed according to
9    the method of accounting upon the basis of which the
10    person's base income is computed under this Act.
11        (16) Partnership and partner. The term "partnership"
12    includes a syndicate, group, pool, joint venture or other
13    unincorporated organization, through or by means of which
14    any business, financial operation, or venture is carried
15    on, and which is not, within the meaning of this Act, a
16    trust or estate or a corporation; and the term "partner"
17    includes a member in such syndicate, group, pool, joint
18    venture or organization.
19        The term "partnership" includes any entity, including
20    a limited liability company formed under the Illinois
21    Limited Liability Company Act, classified as a partnership
22    for federal income tax purposes.
23        The term "partnership" does not include a syndicate,
24    group, pool, joint venture, or other unincorporated
25    organization established for the sole purpose of playing
26    the Illinois State Lottery.

 

 

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1        (17) Part-year resident. The term "part-year resident"
2    means an individual who became a resident during the
3    taxable year or ceased to be a resident during the taxable
4    year. Under Section 1501(a)(20)(A)(i) residence commences
5    with presence in this State for other than a temporary or
6    transitory purpose and ceases with absence from this State
7    for other than a temporary or transitory purpose. Under
8    Section 1501(a)(20)(A)(ii) residence commences with the
9    establishment of domicile in this State and ceases with the
10    establishment of domicile in another State.
11        (18) Person. The term "person" shall be construed to
12    mean and include an individual, a trust, estate,
13    partnership, association, firm, company, corporation,
14    limited liability company, or fiduciary. For purposes of
15    Section 1301 and 1302 of this Act, a "person" means (i) an
16    individual, (ii) a corporation, (iii) an officer, agent, or
17    employee of a corporation, (iv) a member, agent or employee
18    of a partnership, or (v) a member, manager, employee,
19    officer, director, or agent of a limited liability company
20    who in such capacity commits an offense specified in
21    Section 1301 and 1302.
22        (18A) Records. The term "records" includes all data
23    maintained by the taxpayer, whether on paper, microfilm,
24    microfiche, or any type of machine-sensible data
25    compilation.
26        (19) Regulations. The term "regulations" includes

 

 

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1    rules promulgated and forms prescribed by the Department.
2        (20) Resident. The term "resident" means:
3            (A) an individual (i) who is in this State for
4        other than a temporary or transitory purpose during the
5        taxable year; or (ii) who is domiciled in this State
6        but is absent from the State for a temporary or
7        transitory purpose during the taxable year;
8            (B) The estate of a decedent who at his or her
9        death was domiciled in this State;
10            (C) A trust created by a will of a decedent who at
11        his death was domiciled in this State; and
12            (D) An irrevocable trust, the grantor of which was
13        domiciled in this State at the time such trust became
14        irrevocable. For purpose of this subparagraph, a trust
15        shall be considered irrevocable to the extent that the
16        grantor is not treated as the owner thereof under
17        Sections 671 through 678 of the Internal Revenue Code.
18        (21) Sales. The term "sales" means all gross receipts
19    of the taxpayer not allocated under Sections 301, 302 and
20    303.
21        (22) State. The term "state" when applied to a
22    jurisdiction other than this State means any state of the
23    United States, the District of Columbia, the Commonwealth
24    of Puerto Rico, any Territory or Possession of the United
25    States, and any foreign country, or any political
26    subdivision of any of the foregoing. For purposes of the

 

 

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1    foreign tax credit under Section 601, the term "state"
2    means any state of the United States, the District of
3    Columbia, the Commonwealth of Puerto Rico, and any
4    territory or possession of the United States, or any
5    political subdivision of any of the foregoing, effective
6    for tax years ending on or after December 31, 1989.
7        (23) Taxable year. The term "taxable year" means the
8    calendar year, or the fiscal year ending during such
9    calendar year, upon the basis of which the base income is
10    computed under this Act. "Taxable year" means, in the case
11    of a return made for a fractional part of a year under the
12    provisions of this Act, the period for which such return is
13    made.
14        (24) Taxpayer. The term "taxpayer" means any person
15    subject to the tax imposed by this Act.
16        (25) International banking facility. The term
17    international banking facility shall have the same meaning
18    as is set forth in the Illinois Banking Act or as is set
19    forth in the laws of the United States or regulations of
20    the Board of Governors of the Federal Reserve System.
21        (26) Income Tax Return Preparer.
22            (A) The term "income tax return preparer" means any
23        person who prepares for compensation, or who employs
24        one or more persons to prepare for compensation, any
25        return of tax imposed by this Act or any claim for
26        refund of tax imposed by this Act. The preparation of a

 

 

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1        substantial portion of a return or claim for refund
2        shall be treated as the preparation of that return or
3        claim for refund.
4            (B) A person is not an income tax return preparer
5        if all he or she does is
6                (i) furnish typing, reproducing, or other
7            mechanical assistance;
8                (ii) prepare returns or claims for refunds for
9            the employer by whom he or she is regularly and
10            continuously employed;
11                (iii) prepare as a fiduciary returns or claims
12            for refunds for any person; or
13                (iv) prepare claims for refunds for a taxpayer
14            in response to any notice of deficiency issued to
15            that taxpayer or in response to any waiver of
16            restriction after the commencement of an audit of
17            that taxpayer or of another taxpayer if a
18            determination in the audit of the other taxpayer
19            directly or indirectly affects the tax liability
20            of the taxpayer whose claims he or she is
21            preparing.
22        (27) Unitary business group.
23            (A) The term "unitary business group" means a group
24        of persons related through common ownership whose
25        business activities are integrated with, dependent
26        upon and contribute to each other. The group will not

 

 

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1        include those members whose business activity outside
2        the United States is 80% or more of any such member's
3        total business activity; for purposes of this
4        paragraph and clause (a)(3)(B)(ii) of Section 304,
5        business activity within the United States shall be
6        measured by means of the factors ordinarily applicable
7        under subsections (a), (b), (c), (d), or (h) of Section
8        304 except that, in the case of members ordinarily
9        required to apportion business income by means of the 3
10        factor formula of property, payroll and sales
11        specified in subsection (a) of Section 304, including
12        the formula as weighted in subsection (h) of Section
13        304, such members shall not use the sales factor in the
14        computation and the results of the property and payroll
15        factor computations of subsection (a) of Section 304
16        shall be divided by 2 (by one if either the property or
17        payroll factor has a denominator of zero). The
18        computation required by the preceding sentence shall,
19        in each case, involve the division of the member's
20        property, payroll, or revenue miles in the United
21        States, insurance premiums on property or risk in the
22        United States, or financial organization business
23        income from sources within the United States, as the
24        case may be, by the respective worldwide figures for
25        such items. Common ownership in the case of
26        corporations is the direct or indirect control or

 

 

SB0009- 185 -LRB100 06347 HLH 16385 b

1        ownership of more than 50% of the outstanding voting
2        stock of the persons carrying on unitary business
3        activity. Unitary business activity can ordinarily be
4        illustrated where the activities of the members are:
5        (1) in the same general line (such as manufacturing,
6        wholesaling, retailing of tangible personal property,
7        insurance, transportation or finance); or (2) are
8        steps in a vertically structured enterprise or process
9        (such as the steps involved in the production of
10        natural resources, which might include exploration,
11        mining, refining, and marketing); and, in either
12        instance, the members are functionally integrated
13        through the exercise of strong centralized management
14        (where, for example, authority over such matters as
15        purchasing, financing, tax compliance, product line,
16        personnel, marketing and capital investment is not
17        left to each member).
18            (B) In no event, for taxable years beginning prior
19        to January 1, 2017, shall any unitary business group
20        include members which are ordinarily required to
21        apportion business income under different subsections
22        of Section 304 except that for tax years ending on or
23        after December 31, 1987 this prohibition shall not
24        apply to a holding company that would otherwise be a
25        member of a unitary business group with taxpayers that
26        apportion business income under any of subsections

 

 

SB0009- 186 -LRB100 06347 HLH 16385 b

1        (b), (c), (c-1), or (d) of Section 304. If a unitary
2        business group would, but for the preceding sentence,
3        include members that are ordinarily required to
4        apportion business income under different subsections
5        of Section 304, then for each subsection of Section 304
6        for which there are two or more members, there shall be
7        a separate unitary business group composed of such
8        members. For purposes of the preceding two sentences, a
9        member is "ordinarily required to apportion business
10        income" under a particular subsection of Section 304 if
11        it would be required to use the apportionment method
12        prescribed by such subsection except for the fact that
13        it derives business income solely from Illinois. As
14        used in this paragraph, the phrase "United States"
15        means only the 50 states and the District of Columbia,
16        but does not include any territory or possession of the
17        United States or any area over which the United States
18        has asserted jurisdiction or claimed exclusive rights
19        with respect to the exploration for or exploitation of
20        natural resources.
21            (C) Holding companies.
22                (i) For purposes of this subparagraph, a
23            "holding company" is a corporation (other than a
24            corporation that is a financial organization under
25            paragraph (8) of this subsection (a) of Section
26            1501 because it is a bank holding company under the

 

 

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1            provisions of the Bank Holding Company Act of 1956
2            (12 U.S.C. 1841, et seq.) or because it is owned by
3            a bank or a bank holding company) that owns a
4            controlling interest in one or more other
5            taxpayers ("controlled taxpayers"); that, during
6            the period that includes the taxable year and the 2
7            immediately preceding taxable years or, if the
8            corporation was formed during the current or
9            immediately preceding taxable year, the taxable
10            years in which the corporation has been in
11            existence, derived substantially all its gross
12            income from dividends, interest, rents, royalties,
13            <