SB0009 EngrossedLRB100 06347 HLH 16385 b

1    AN ACT concerning revenue.
 
2    WHEREAS, the changes made by this Act are made under
3subsection (a) of Section 3 of Article IX of the Illinois
4Constitution. If there are future changes made to subsection
5(a) of Section 3 of Article IX of the Illinois Constitution,
6then it may result in evaluating the taxes on income imposed by
7this Act; therefore
 
8    Be it enacted by the People of the State of Illinois,
9represented in the General Assembly:
 
10
ARTICLE 5. BUDGET ECONOMIC STABILIZATION FUND ACT

 
11    Section 5-1. Short title. This Act may be cited as the
12Budget Economic Stabilization Fund Act.
 
13    Section 5-5. Legislative intent.
14    The General Assembly finds that, in order to restore
15Illinois' fiscal health, retaining a share of above-trend State
16revenues for future needs and for reducing the need for new
17taxes or increasing any rate of tax or otherwise modifying the
18tax structure, including the elimination or modification of
19deductions, exclusions, or exemptions, is a priority.
 
20    Section 5-10. Definitions. As used in this Act:

 

 

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1    "Above-trend revenues" means general funds revenue
2collections that exceed 2.4% of the prior fiscal year's general
3funds revenue collections.
4    "General funds" means the General Revenue Fund, the Common
5School Fund, the Education Assistance Fund, and the General
6Revenue Common School Special Account Fund.
7    "General funds revenue collections" means, for each fiscal
8year, all gross personal and corporate income taxes, other
9taxes, fees, and other revenues expected to be deposited into
10the State's general funds and recurring transfers into general
11funds from the State Lottery and gaming, but does not include
12other transfers and federal funds.
13    "Unpaid bills" means: pending vouchers approved for
14payment but not paid as of December 31st for each fiscal year
15by the Office of the Comptroller; pending transfers required by
16State statute that have been recorded but have not been paid
17from the General Revenue Fund, Common School Fund, or Education
18Assistance Fund; and all vouchers for invoices that have been
19certified as a proper bill, as defined by the State Prompt
20Payment Act, by the Departments of Healthcare and Family
21Services, Central Management Services, Human Services,
22Revenue, and Aging but not yet approved by the Comptroller as
23of December 31st of each fiscal year from the General Revenue
24Fund, Common School Fund, Education Assistance Fund, Health
25Insurance Fund, Income Tax Refund Fund, and Healthcare Provider
26Relief Fund.
 

 

 

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1    Section 5-15. Certification of the backlog of bills. The
2amount of unpaid bills shall be reported by the Comptroller and
3the Departments of Healthcare and Family Services, Central
4Management Services, Human Services, Revenue, and Aging to the
5Governor's Office of Management and Budget no later than
6January 10th of each year. By January 15th of each year, the
7Governor's Office of Management and Budget shall notify the
8Comptroller, Treasurer, the Speaker and Minority Leader of the
9House, and the President and Minority Leader of the Senate of
10the total amount of unpaid bills as of the preceding December
1131st.
 
12    Section 5-20. Payment of unpaid bills. If unpaid bills
13total more than $1,000,000,000, the Governor shall include in
14his or her budget for the next fiscal year an amount to pay
15unpaid bills equal to the lesser of (i) 50% of above-trend
16revenues that the Governor projects to be received by the State
17in the next fiscal year or (ii) the amount of above-trend
18revenues needed to reduce the unpaid bills to $1,000,000,000.
19This amount to pay off unpaid bills shall be included in the
20Governor's budget as an appropriation to the Bill Backlog
21Payment Fund from the General Revenue Fund. Nothing in this Act
22prohibits the Governor from including in his or her budget, or
23the General Assembly from appropriating, additional moneys for
24the payment of unpaid bills. If for any reason the

 

 

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1appropriations enacted are insufficient to meet the payment of
2unpaid bills required to be included in the Governor's budget
3under this Section, then there is hereby appropriated, on a
4continuing annual basis in each fiscal year, from the General
5Revenue Fund, the amounts necessary for this payment.
 
6    Section 5-25. Transfers into the Budget Economic
7Stabilization Fund.
8    (a) If unpaid bills total less than $1,000,000,000 the
9Governor shall include in his or her budget for the next fiscal
10year at least 50% of any above-trend revenues that the Governor
11projects to be received in the next fiscal year for deposit to
12the Budget Economic Stabilization Fund as an appropriation from
13the General Revenue Fund. Except as provided in subsection (b)
14of this Section, if for any reason the appropriations enacted
15are insufficient to make the deposit required by this Section,
16then this Section shall constitute a continuing appropriation
17from the General Revenue Fund of all amounts necessary for this
18deposit.
19    (b) If the balance of the Budget Economic Stabilization
20Fund at the beginning of the next fiscal year is projected by
21the Governor to exceed 5% of the general funds revenue
22collections estimated for the next fiscal year, transfers into
23the Budget Economic Stabilization Fund are not required for
24that fiscal year.
 

 

 

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1    Section 5-30. Withdrawal from Budget Economic
2Stabilization Fund.
3    (a) Upon the direction of the Governor at any time within a
4fiscal year and within the limitations set forth in this
5Section, the Comptroller and the Treasurer shall transfer the
6amounts designated by the Governor from the Budget Economic
7Stabilization Fund to general funds as specified by the
8Governor. The transfer shall be made as soon as practicable on
9or after the 30th day after the Governor has provided written
10notice of his or her direction to transfer to the Clerk of the
11House of Representatives, the Secretary of the Senate, and the
12Index Department of the Office of the Secretary of State, with
13copies of the notice provided to the Comptroller and Treasurer.
14The notice shall be published on the website of the Governor's
15Office of Management and Budget. The amount directed to be
16transferred may not exceed the limits set forth in subsection
17(c) of this Section. The Governor may direct a transfer from
18the Budget Economic Stabilization Fund to any of the general
19funds only if: he or she estimates that general funds revenue
20collections for the current fiscal year will be less than the
21general funds revenue collections as estimated at the time of
22enactment of appropriations for the current fiscal year; the
23transfer is necessary to provide for the health, safety, and
24welfare of the people of the State of Illinois; and the funds
25transferred are to be spent within previously enacted
26appropriations.

 

 

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1    (b) In addition to transfers directed by the Governor
2within a fiscal year, transfers or appropriations from the
3Budget Economic Stabilization Fund for the current or next
4fiscal year may be made by vote of the General Assembly if:
5        (1) the General Assembly projects that general funds
6    revenue collections for the current or next fiscal year are
7    less than the general funds revenue collections as
8    estimated at the time of enactment of appropriations for
9    the current fiscal year for the preceding year;
10        (2) the General Assembly finds that general funds
11    revenue collections have remained stagnant or dropped
12    during 2 consecutive fiscal quarters within the preceding
13    12 months as compared to the corresponding 2 fiscal
14    quarters of the prior fiscal year; or
15        (3) that the State Coincident Index for the State of
16    Illinois has remained stagnant or dropped over 2
17    consecutive quarters within the preceding 12 months, as
18    published in the Federal Reserve Bank of Philadelphia's
19    publication entitled "State Coincident Indexes" or its
20    successor publication.
21    (c) Transfers or appropriations from the Budget Economic
22Stabilization Fund may not, during any fiscal year, exceed the
23lesser of:
24        (1) 50% of the Budget Economic Stabilization Fund's
25    balance;
26        (2) in the case of appropriation enacted by the General

 

 

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1    Assembly, 50% of the difference between (i) general funds
2    revenue collections, as projected by the Commission on
3    Government Forecasting and Accountability to be received
4    in the next fiscal year, and (ii) a revised general fund
5    revenue collections projection for the current fiscal year
6    presented to the General Assembly by the Commission on
7    Government Forecasting and Accountability; or
8        (3) in the case of transfers to be directed by the
9    Governor within a fiscal year, 50% of the difference
10    between (i) general funds revenue collections, to be
11    received in the next fiscal year as projected by the
12    Governor, and (ii) a revised general fund revenue
13    collections projection for the current fiscal year as
14    projected by the Governor.
 
15    Section 5-35. Fund creation.
16    (a) There is created the Budget Economic Stabilization Fund
17as a special fund in the State Treasury consisting of moneys
18appropriated or transferred to that Fund as provided in Section
195-30 of this Act and as otherwise provided by law. All earnings
20on Budget Economic Stabilization Fund investments shall be
21deposited into that Fund.
22    (b) There is created the Bill Backlog Payment Fund as a
23special fund in the State Treasury consisting of moneys
24appropriated or transferred to that Fund as provided in Section -
2525 of this Act and as otherwise provided by law. All earnings

 

 

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1on Bill Backlog Payment Fund investments shall be deposited
2into that Fund.
 
3
ARTICLE 10. VIDEO SERVICE TAX MODERNIZATION

 
4    Section 10-1. Short title. This Act may be cited as the
5Video Service Tax Modernization Act.
 
6    Section 10-5. Application. This Act applies to the
7provision of direct-to-home satellite service, direct
8broadcast satellite service, and digital audio-visual works on
9or after the effective date of this Act.
10    This Act does not apply to: (1) satellite radio service or
11subscription radio service whereby a digital radio signal is
12broadcast without any corresponding or related video
13programming or services; or (2) a satellite television
14transmission of simulcast horse races broadcast from or
15received at locations operated by an organization licensee, an
16inter-track wagering licensee, or an inter-track wagering
17location licensee licensed under the Illinois Horse Racing Act
18of 1975.
 
19    Section 10-10. Definitions. As used in this Act:
20    "Department" means the Department of Revenue.
21    "Digital audio-visual works" means a series of related
22images that, when shown in succession, impart an impression of

 

 

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1motion, together with accompanying sounds, if any, sold to an
2end user with rights of less than permanent use. "Digital
3audio-visual works" does not include cable service provided by
4a cable operator, as those terms are defined in 47 U.S.C. 522,
5and does not include video service provided by a holder, as
6those terms are defined in Article 21 of the Public Utilities
7Act.
8    "Direct broadcast satellite service" means video services
9transmitted or broadcast by satellite directly to the
10subscriber's premises with the use of or accompanied by ground
11receiving or distribution equipment, including, but not
12limited to, infrastructure to provide Internet access used in
13the transmission or broadcast of such video services, at the
14subscriber's premises, but not in the uplink process to the
15satellite, and includes, but is not limited to, the
16retransmission of local broadcast television, the provision of
17premium channels, other recurring monthly services, service
18and pay-per-view, video-on-demand, and other event-based
19services.
20    "Direct-to-home satellite service" has the meaning given
21to that term in Public Law No. 104-104, Title VI, Section
22602(a), February 8, 1996, 110 Stat. 144 (reprinted at 47 U.S.C.
23152).
24    "End user" means any person other than a person who
25receives by contract a product transferred electronically for
26further commercial broadcast, rebroadcast, transmission,

 

 

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1retransmission, licensing, relicensing, distribution,
2redistribution, or exhibition of the product, in whole or in
3part, to another person or persons.
4    "Gross revenue" means all consideration of any kind or
5nature received by a provider, or an affiliate of the provider,
6in connection with the provision of direct-to-home satellite
7service, direct broadcast satellite service, or digital
8audio-visual works to subscribers. "Gross revenue" does not
9include:
10        (1) charges for the rental of equipment related to the
11    provision of direct-to-home satellite service, direct
12    broadcast satellite service, or digital audiovisual works;
13        (2) activation, installation, repair, or maintenance
14    charges or similar service charges related to the provision
15    of direct-to-home satellite service, direct broadcast
16    satellite service, or digital audio-visual works;
17        (3) service order charges, service termination
18    charges, or any other administrative charges related to the
19    provision of direct-to-home satellite service, direct
20    broadcast satellite service, or digital audiovisual works;
21        (4) revenue not actually received, regardless of
22    whether it is billed, including, but not limited to, bad
23    debts;
24        (5) revenue received by an affiliate or other person in
25    exchange for supplying goods and services used by a
26    provider;

 

 

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1        (6) the amount of any refunds, rebates, or discounts
2    made to subscribers, advertisers, or other persons;
3        (7) revenue from any service that is subject to tax
4    under the Service Occupation Tax Act, Retailers'
5    Occupation Tax Act, Service Use Tax Act, or Use Tax Act;
6        (8) the tax imposed by this Act or any other tax of
7    general applicability imposed on a provider or a purchaser
8    of direct-to-home satellite service, direct broadcast
9    satellite service, or digital audio-visual works by a
10    federal, State, or local governmental entity and required
11    to be collected by a person and remitted to the taxing
12    entity;
13        (9) late payment fees collected from subscribers;
14        (10) charges, other than those charges specifically
15    described in this Act, that are aggregated or bundled with
16    such specifically-described charges on a subscriber's
17    bill, if the provider can reasonably identify the charges
18    in its books and records kept in the regular course of
19    business;
20        (11) revenue from advertising services; or
21        (12) charges that may not be taxed pursuant to the
22    federal Internet Tax Freedom Act.
23    "Permanent" means perpetual or for an indefinite or
24unspecified length of time.
25    "Person" means a natural individual, firm, trust, estate,
26partnership, association, joint stock company, joint venture,

 

 

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1corporation, or limited liability company, or a receiver,
2trustee, guardian, or other representative appointed by order
3of any court, and includes the federal and State governments,
4including State universities created by statute, and
5municipalities, counties, and other political subdivisions of
6this State.
7    "Premises" means a residence or place of business of a
8subscriber in this State.
9    "Provider" means a person who transmits, broadcasts,
10sells, or distributes direct-to-home satellite service, direct
11broadcast satellite service, or digital audio-visual works to
12subscribers in the State.
13    "Subscriber" means a member of the general public who
14receives direct-to-home satellite service, direct broadcast
15satellite service, or digital audio-visual works from a
16provider and does not further distribute the service in the
17ordinary course of business.
 
18    Section 10-15. Imposition of tax.
19    (a) A tax is imposed upon the act or privilege of providing
20direct-to-home satellite service, direct broadcast satellite
21service, or digital audio-visual works to a subscriber in this
22State by any provider at the rate of 5% of the provider's gross
23revenues derived from or attributable to that subscriber.
24    (b) For purposes of the tax imposed by subsection (a), a
25subscriber is in this State if the subscriber's street address

 

 

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1representative of where the subscriber's use or access of the
2direct-to-home satellite service, direct broadcast satellite
3service, or digital audio visual work primarily occurs, which
4must be the street address of the subscriber based on such
5other information kept by the provider in the regular course of
6its business.
7    (c) The tax imposed by subsection (a) may be passed through
8to, and collected from, the provider's subscribers in Illinois.
9To the extent allowed under federal or State law, a provider
10may identify as a separate line item on each regular bill
11issued to a subscriber the amount of the total bill assessed as
12a tax under this Act.
13    (d) To prevent actual multi-state taxation upon the act or
14privilege that is subject to taxation under this Act, any
15taxpayer, upon proof that that taxpayer has paid a tax in
16another state on such event, shall be allowed a credit against
17the tax imposed in this Act to the extent of the amount of such
18tax properly due and paid in such other state. However, such
19tax is not imposed on the act or privilege to the extent such
20act or privilege may not, under the Constitution and statutes
21of the United States, be made the subject of taxation by the
22State.
 
23    Section 10-20. Remittances.
24    (a) On or before the twentieth day of each calendar month,
25every provider of direct-to-home satellite service, direct

 

 

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1broadcast satellite service, or digital audio-visual works
2that provides such service or services to a subscriber in this
3State during the preceding calendar month shall file a return
4with the Department, in a form prescribed by the Department,
5stating:
6        (1) the name of the provider;
7        (2) the address of the provider's principal place of
8    business;
9        (3) the total amount of gross revenues received by the
10    provider during the preceding calendar month, quarter, or
11    year, as the case may be, from the provision of
12    direct-to-home satellite service, direct broadcast
13    satellite service, or digital audio-visual works during
14    that preceding calendar month, quarter, or year and upon
15    the basis of which the tax is imposed;
16        (4) the amount of tax due;
17        (5) the signature of the taxpayer; and
18        (6) such other reasonable information as the
19    Department may require.
20    (b) If a taxpayer fails to sign a return within 30 days
21after the proper notice and demand for signature by the
22Department is received by the taxpayer, then the return shall
23be considered valid and any amount shown to be due on the
24return shall be deemed assessed.
25    (c) If the provider is otherwise required to file a monthly
26return, and if the provider's average monthly tax liability to

 

 

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1the Department under this Act does not exceed $200, the
2Department may authorize the provider's returns to be filed on
3a quarter annual basis, with the return for January, February,
4and March of a given year being due by April 20 of that year;
5with the return for April, May, and June of a given year being
6due by July 20 of that year; with the return for July, August,
7and September of a given year being due by October 20 of that
8year, and with the return for October, November, and December
9of a given year being due by January 20 of the following year.
10    (d) If the provider is otherwise required to file a monthly
11or quarterly return, and if the provider's average monthly tax
12liability with the Department under this Act does not exceed
13$50, the Department may authorize the provider's returns to be
14filed on an annual basis, with the return for a given year
15being due by January 20 of the following year.
16    (e) Those quarterly and annual returns shall be subject to
17the same requirements as to form and substance as monthly
18returns.
19    (f) A taxpayer who has an annual tax liability in the
20amount set forth in subsection (b) of Section 2505-210 of the
21Department of Revenue Law shall make all payments required by
22rules of the Department by electronic funds transfer.
23    Any taxpayer not required to make payments by electronic
24funds transfer may make payments by electronic funds transfer
25with the permission of the Department.
26    All taxpayers required to make payment by electronic funds

 

 

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1transfer and any taxpayers authorized to voluntarily make
2payments by electronic funds transfer shall make those payments
3in the manner authorized by the Department.
 
4    Section 10-25. Records.
5    (a) A provider on whom the tax is imposed by this Act shall
6maintain the necessary records, and any other information
7required by the Department, to determine the amount of the tax
8that the provider is required to remit and any credit that the
9provider is entitled to claim under this Act.
10    (b) The records shall be open at all times to inspection by
11the Department.
 
12    Section 10-30. Rules. The Department is authorized to adopt
13and enforce any reasonable rules and to prescribe such forms
14relating to the administration and enforcement of this Act as
15it may deem appropriate.
 
16    Section 10-35. Incorporation of Retailers' Occupation Tax
17Act and Uniform Penalty and Interest Act. All of the provisions
18of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, and 5j of the
19Retailers' Occupation Tax Act, which are not inconsistent with
20this Act, and the Uniform Penalty and Interest Act, shall
21apply, as far as practicable, to the subject matter of this Act
22to the same extent as if such provisions were included herein.
23References in those incorporated Sections to taxpayers and to

 

 

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1persons engaged in the business of selling tangible personal
2property at retail mean providers of direct-to-home satellite
3service, direct broadcast satellite service, or digital
4audio-visual works when used in this Act.
 
5
ARTICLE 15. ENTERTAINMENT TAX FAIRNESS ACT

 
6    Section 15-1. Short title. This Act may be cited as the
7Entertainment Tax Fairness Act.
 
8    Section 15-5. Application. This Act applies to all
9subscribers of entertainment in this State for the privilege to
10witness, view, or otherwise enjoy the entertainment.
11    This Act does not apply to: (1) satellite radio service or
12subscription radio service whereby a digital radio signal is
13broadcast without any corresponding or related video
14programming or services; or (2) a satellite television
15transmission of simulcast horse races broadcast from or
16received at locations operated by an organization licensee, an
17inter-track wagering licensee, or an inter-track wagering
18location licensee licensed under the Illinois Horse Racing Act
19of 1975.
 
20    Section 15-10. Definitions. As used in this Act:
21    "Cable service" has the meaning given to that term in item
22(6) of 47 U.S.C. 522.

 

 

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1    "Department" means the Department of Revenue.
2    "Digital audio-visual works service" means the
3transmission of a series of related images that, when shown in
4succession, impart an impression of motion, together with
5accompanying sounds, if any, sold to an end user with rights of
6less than permanent use. "Digital audio-visual works service"
7does not include cable service or video service.
8    "Direct broadcast satellite service" means video services
9transmitted or broadcast by satellite directly to the
10subscriber's premises with the use of or accompanied by ground
11receiving or distribution equipment, including, but not
12limited to, infrastructure to provide Internet access used in
13the transmission or broadcast of such video services, at the
14subscriber's premises, but not in the uplink process to the
15satellite, and includes, but is not limited to, the
16retransmission of local broadcast television, the provision of
17premium channels, other recurring monthly services, service
18and pay-per-view, video-on-demand, and other event-based
19services.
20    "Direct-to-home satellite service" has the meaning given
21to that term in Public Law No. 104-104, Title VI, Section
22602(a), February 8, 1996, 110 Stat. 144 (reprinted at 47 U.S.C.
23152).
24    "End user" means any person other than a person who
25receives by contract a product transferred electronically for
26further commercial broadcast, rebroadcast, transmission,

 

 

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1retransmission, licensing, relicensing, distribution,
2redistribution, or exhibition of the product, in whole or in
3part, to another person or persons.
4    "Entertainment" means any paid video programming whether
5transmitted by cable service, direct-to-home satellite
6service, direct broadcast satellite service, digital
7audio-visual works service, or video service to a subscriber in
8this State.
9    "Permanent" means perpetual or for an indefinite or
10unspecified length of time.
11    "Provider" means a person who transmits, broadcasts,
12sells, or distributes cable service, direct-to-home satellite
13service, direct broadcast satellite service, digital
14audio-visual works service, or video service to subscribers in
15the State.
16    "Subscriber" means a member of the general public who
17receives cable service, direct-to-home satellite service,
18direct broadcast satellite service, or digital audio-visual
19works service, or video service from a provider and does not
20further distribute the service in the ordinary course of
21business.
22    "Video service" has the meaning given to that term in the
23Cable and Video Competition Law of 2007 of the Public Utilities
24Act.
 
25    Section 15-15. Imposition of tax.

 

 

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1    (a) A tax is imposed upon the subscribers of entertainment
2in this State at the rate of 1% of the charges paid for the
3privilege to witness, view, or otherwise enjoy the
4entertainment.
5    (b) For purposes of the tax imposed by subsection (a), a
6subscriber is in this State if the subscriber's street address
7is representative of where the subscriber's use or access of
8the entertainment primarily occurs, which must be the street
9address of the subscriber based on such other information kept
10by the provider in the regular course of its business.
11    (c) The provider of the entertainment shall collect and
12secure from each subscriber the tax imposed by this Act and
13remit the tax to the Department as set forth in Section 15-20
14of this Act.
 
15    Section 15-20. Remittances.
16    (a) On or before the twentieth day of each calendar month,
17every provider shall file a return with the Department, in a
18form prescribed by the Department, stating:
19        (1) the name of the provider;
20        (2) the address of the provider's principal place of
21    business;
22        (3) the total amount of tax revenues collected by the
23    provider under this Act during the preceding calendar
24    month, quarter, or year, as the case may be, during that
25    preceding calendar month, quarter, or year and upon the

 

 

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1    basis of which the tax is imposed;
2        (4) the amount of tax due;
3        (5) the signature of the provider; and
4        (6) such other reasonable information as the
5    Department may require.
6    (b) If a provider fails to sign a return within 30 days
7after the proper notice and demand for signature by the
8Department is received by the provider, then the return shall
9be considered valid and any amount shown to be due on the
10return shall be deemed assessed.
11    (c) If the provider is otherwise required to file a monthly
12return, and if the amount collected by the provider under this
13Act does not exceed $200, the Department may authorize the
14provider's returns to be filed on a quarter annual basis, with
15the return for January, February, and March of a given year
16being due by April 20 of that year; with the return for April,
17May, and June of a given year being due by July 20 of that year;
18with the return for July, August, and September of a given year
19being due by October 20 of that year, and with the return for
20October, November, and December of a given year being due by
21January 20 of the following year.
22    (d) If the provider is otherwise required to file a monthly
23or quarterly return, and if the amount collected by the
24provider under this Act does not exceed $50, the Department may
25authorize the provider's returns to be filed on an annual
26basis, with the return for a given year being due by January 20

 

 

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1of the following year.
2    (e) Those quarterly and annual returns shall be subject to
3the same requirements as to form and substance as monthly
4returns.
5    (f) A provider responsible for collecting and remitting the
6amount set forth in subsection (b) of Section 2505-210 of the
7Department of Revenue Law shall make all payments required by
8rules of the Department by electronic funds transfer.
9    Any provider not required to make payments by electronic
10funds transfer may make payments by electronic funds transfer
11with the permission of the Department.
12    All providers required to make payment by electronic funds
13transfer and any taxpayers authorized to voluntarily make
14payments by electronic funds transfer shall make those payments
15in the manner authorized by the Department.
 
16    Section 15-25. Records.
17    (a) A provider subject to this Act shall maintain the
18necessary records, and any other information required by the
19Department, to determine the amount of the tax that the
20provider is required to collect and remit and any credit that
21the provider is entitled to claim under this Act.
22    (b) The records shall be open at all times to inspection by
23the Department.
 
24    Section 15-30. Rules. The Department is authorized to adopt

 

 

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1and enforce any reasonable rules and to prescribe such forms
2relating to the administration and enforcement of this Act as
3it may deem appropriate.
 
4    Section 15-35. Incorporation of Retailers' Occupation Tax
5Act and Uniform Penalty and Interest Act. All of the provisions
6of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, and 5j of the
7Retailers' Occupation Tax Act, which are not inconsistent with
8this Act, and the Uniform Penalty and Interest Act, shall
9apply, as far as practicable, to the subject matter of this Act
10to the same extent as if such provisions were included herein.
11References in those incorporated Sections to taxpayers and to
12persons engaged in the business of selling tangible personal
13property at retail mean providers of direct-to-home satellite
14service, direct broadcast satellite service, or digital
15audio-visual works service when used in this Act.
 
16
ARTICLE 30. AMENDATORY PROVISIONS

 
17    Section 30-5. The State Finance Act is amended by changing
18Section 6z-51 and by adding Sections 5.878 and 5.879 as
19follows:
 
20    (30 ILCS 105/5.878 new)
21    Sec. 5.878. The Budget Economic Stabilization Fund.
 

 

 

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1    (30 ILCS 105/5.879 new)
2    Sec. 5.879. The Bill Backlog Payment Fund.
 
3    (30 ILCS 105/6z-51)
4    Sec. 6z-51. Budget Stabilization Fund.
5    (a) The Budget Stabilization Fund, a special fund in the
6State Treasury, shall consist of moneys appropriated or
7transferred to that Fund, as provided in Section 6z-43 and as
8otherwise provided by law. All earnings on Budget Stabilization
9Fund investments shall be deposited into that Fund.
10    (b) Until an initial transfer has been made to the Budget
11Economic Stabilization Fund under Section 5-30 of the Budget
12Economic Stabilization Fund Act, the The State Comptroller may
13direct the State Treasurer to transfer moneys from the Budget
14Stabilization Fund to the General Revenue Fund in order to meet
15cash flow deficits resulting from timing variations between
16disbursements and the receipt of funds within a fiscal year.
17Any moneys so borrowed in any fiscal year other than Fiscal
18Year 2011 shall be repaid by June 30 of the fiscal year in
19which they were borrowed. Any moneys so borrowed in Fiscal Year
202011 shall be repaid no later than July 15, 2011.
21    (c) During Fiscal Year 2017 only, amounts may be expended
22from the Budget Stabilization Fund only pursuant to specific
23authorization by appropriation. Any moneys expended pursuant
24to appropriation shall not be subject to repayment.
25(Source: P.A. 99-523, eff. 6-30-16.)
 

 

 

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1    Section 30-10. The Illinois Income Tax Act is amended by
2changing Sections 201, 203, 204, 208, 212, 222, 804, 901, and
31501 and by adding Section 225 as follows:
 
4    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
5    Sec. 201. Tax Imposed.
6    (a) In general. A tax measured by net income is hereby
7imposed on every individual, corporation, trust and estate for
8each taxable year ending after July 31, 1969 on the privilege
9of earning or receiving income in or as a resident of this
10State. Such tax shall be in addition to all other occupation or
11privilege taxes imposed by this State or by any municipal
12corporation or political subdivision thereof.
13    (b) Rates. The tax imposed by subsection (a) of this
14Section shall be determined as follows, except as adjusted by
15subsection (d-1):
16        (1) In the case of an individual, trust or estate, for
17    taxable years ending prior to July 1, 1989, an amount equal
18    to 2 1/2% of the taxpayer's net income for the taxable
19    year.
20        (2) In the case of an individual, trust or estate, for
21    taxable years beginning prior to July 1, 1989 and ending
22    after June 30, 1989, an amount equal to the sum of (i) 2
23    1/2% of the taxpayer's net income for the period prior to
24    July 1, 1989, as calculated under Section 202.3, and (ii)

 

 

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1    3% of the taxpayer's net income for the period after June
2    30, 1989, as calculated under Section 202.3.
3        (3) In the case of an individual, trust or estate, for
4    taxable years beginning after June 30, 1989, and ending
5    prior to January 1, 2011, an amount equal to 3% of the
6    taxpayer's net income for the taxable year.
7        (4) In the case of an individual, trust, or estate, for
8    taxable years beginning prior to January 1, 2011, and
9    ending after December 31, 2010, an amount equal to the sum
10    of (i) 3% of the taxpayer's net income for the period prior
11    to January 1, 2011, as calculated under Section 202.5, and
12    (ii) 5% of the taxpayer's net income for the period after
13    December 31, 2010, as calculated under Section 202.5.
14        (5) In the case of an individual, trust, or estate, for
15    taxable years beginning on or after January 1, 2011, and
16    ending prior to January 1, 2015, an amount equal to 5% of
17    the taxpayer's net income for the taxable year.
18        (5.1) In the case of an individual, trust, or estate,
19    for taxable years beginning prior to January 1, 2015, and
20    ending after December 31, 2014, an amount equal to the sum
21    of (i) 5% of the taxpayer's net income for the period prior
22    to January 1, 2015, as calculated under Section 202.5, and
23    (ii) 3.75% of the taxpayer's net income for the period
24    after December 31, 2014, as calculated under Section 202.5.
25        (5.2) In the case of an individual, trust, or estate,
26    for taxable years beginning on or after January 1, 2015,

 

 

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

 

 

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1        (8) In the case of a corporation, for taxable years
2    beginning after June 30, 1989, and ending prior to January
3    1, 2011, an amount equal to 4.8% of the taxpayer's net
4    income for the taxable year.
5        (9) In the case of a corporation, for taxable years
6    beginning prior to January 1, 2011, and ending after
7    December 31, 2010, an amount equal to the sum of (i) 4.8%
8    of the taxpayer's net income for the period prior to
9    January 1, 2011, as calculated under Section 202.5, and
10    (ii) 7% of the taxpayer's net income for the period after
11    December 31, 2010, as calculated under Section 202.5.
12        (10) In the case of a corporation, for taxable years
13    beginning on or after January 1, 2011, and ending prior to
14    January 1, 2015, an amount equal to 7% of the taxpayer's
15    net income for the taxable year.
16        (11) In the case of a corporation, for taxable years
17    beginning prior to January 1, 2015, and ending after
18    December 31, 2014, an amount equal to the sum of (i) 7% of
19    the taxpayer's net income for the period prior to January
20    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
21    of the taxpayer's net income for the period after December
22    31, 2014, as calculated under Section 202.5.
23        (12) In the case of a corporation, for taxable years
24    beginning on or after January 1, 2015, and ending prior to
25    January 1, 2017 January 1, 2025, an amount equal to 5.25%
26    of the taxpayer's net income for the taxable year.

 

 

SB0009 Engrossed- 29 -LRB100 06347 HLH 16385 b

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

 

 

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1subdivision thereof.
2    (d) Additional Personal Property Tax Replacement Income
3Tax Rates. The personal property tax replacement income tax
4imposed by this subsection and subsection (c) of this Section
5in the case of a corporation, other than a Subchapter S
6corporation and except as adjusted by subsection (d-1), shall
7be an additional amount equal to 2.85% of such taxpayer's net
8income for the taxable year, except that beginning on January
91, 1981, and thereafter, the rate of 2.85% specified in this
10subsection shall be reduced to 2.5%, and in the case of a
11partnership, trust or a Subchapter S corporation shall be an
12additional amount equal to 1.5% of such taxpayer's net income
13for the taxable year.
14    (d-1) Rate reduction for certain foreign insurers. In the
15case of a foreign insurer, as defined by Section 35A-5 of the
16Illinois Insurance Code, whose state or country of domicile
17imposes on insurers domiciled in Illinois a retaliatory tax
18(excluding any insurer whose premiums from reinsurance assumed
19are 50% or more of its total insurance premiums as determined
20under paragraph (2) of subsection (b) of Section 304, except
21that for purposes of this determination premiums from
22reinsurance do not include premiums from inter-affiliate
23reinsurance arrangements), beginning with taxable years ending
24on or after December 31, 1999, the sum of the rates of tax
25imposed by subsections (b) and (d) shall be reduced (but not
26increased) to the rate at which the total amount of tax imposed

 

 

SB0009 Engrossed- 31 -LRB100 06347 HLH 16385 b

1under this Act, net of all credits allowed under this Act,
2shall equal (i) the total amount of tax that would be imposed
3on the foreign insurer's net income allocable to Illinois for
4the taxable year by such foreign insurer's state or country of
5domicile if that net income were subject to all income taxes
6and taxes measured by net income imposed by such foreign
7insurer's state or country of domicile, net of all credits
8allowed or (ii) a rate of zero if no such tax is imposed on such
9income by the foreign insurer's state of domicile. For the
10purposes of this subsection (d-1), an inter-affiliate includes
11a mutual insurer under common management.
12        (1) For the purposes of subsection (d-1), in no event
13    shall the sum of the rates of tax imposed by subsections
14    (b) and (d) be reduced below the rate at which the sum of:
15            (A) the total amount of tax imposed on such foreign
16        insurer under this Act for a taxable year, net of all
17        credits allowed under this Act, plus
18            (B) the privilege tax imposed by Section 409 of the
19        Illinois Insurance Code, the fire insurance company
20        tax imposed by Section 12 of the Fire Investigation
21        Act, and the fire department taxes imposed under
22        Section 11-10-1 of the Illinois Municipal Code,
23    equals 1.25% for taxable years ending prior to December 31,
24    2003, or 1.75% for taxable years ending on or after
25    December 31, 2003, of the net taxable premiums written for
26    the taxable year, as described by subsection (1) of Section

 

 

SB0009 Engrossed- 32 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 33 -LRB100 06347 HLH 16385 b

1    Taxpayers who are new to Illinois shall be deemed to have
2    met the 1% growth in base employment for the first year in
3    which they file employment records with the Illinois
4    Department of Employment Security. The provisions added to
5    this Section by Public Act 85-1200 (and restored by Public
6    Act 87-895) shall be construed as declaratory of existing
7    law and not as a new enactment. If, in any year, the
8    increase in base employment within Illinois over the
9    preceding year is less than 1%, the additional credit shall
10    be limited to that percentage times a fraction, the
11    numerator of which is .5% and the denominator of which is
12    1%, but shall not exceed .5%. The investment credit shall
13    not be allowed to the extent that it would reduce a
14    taxpayer's liability in any tax year below zero, nor may
15    any credit for qualified property be allowed for any year
16    other than the year in which the property was placed in
17    service in Illinois. For tax years ending on or after
18    December 31, 1987, and on or before December 31, 1988, the
19    credit shall be allowed for the tax year in which the
20    property is placed in service, or, if the amount of the
21    credit exceeds the tax liability for that year, whether it
22    exceeds the original liability or the liability as later
23    amended, such excess may be carried forward and applied to
24    the tax liability of the 5 taxable years following the
25    excess credit years if the taxpayer (i) makes investments
26    which cause the creation of a minimum of 2,000 full-time

 

 

SB0009 Engrossed- 34 -LRB100 06347 HLH 16385 b

1    equivalent jobs in Illinois, (ii) is located in an
2    enterprise zone established pursuant to the Illinois
3    Enterprise Zone Act and (iii) is certified by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity) as
6    complying with the requirements specified in clause (i) and
7    (ii) by July 1, 1986. The Department of Commerce and
8    Community Affairs (now Department of Commerce and Economic
9    Opportunity) shall notify the Department of Revenue of all
10    such certifications immediately. For tax years ending
11    after December 31, 1988, the credit shall be allowed for
12    the tax year in which the property is placed in service,
13    or, if the amount of the credit exceeds the tax liability
14    for that year, whether it exceeds the original liability or
15    the liability as later amended, such excess may be carried
16    forward and applied to the tax liability of the 5 taxable
17    years following the excess credit years. The credit shall
18    be applied to the earliest year for which there is a
19    liability. If there is credit from more than one tax year
20    that is available to offset a liability, earlier credit
21    shall be applied first.
22        (2) The term "qualified property" means property
23    which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings and
26        signs that are real property, but not including land or

 

 

SB0009 Engrossed- 35 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 36 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 37 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 38 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 39 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 40 -LRB100 06347 HLH 16385 b

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

 

 

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1    depreciation purposes is increased after it has been placed
2    in service in the Enterprise Zone or River Edge
3    Redevelopment Zone by the taxpayer, the amount of such
4    increase shall be deemed property placed in service on the
5    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, any property ceases to
9    be qualified property in the hands of the taxpayer within
10    48 months after being placed in service, or the situs of
11    any qualified property is moved outside the Enterprise Zone
12    or River Edge Redevelopment Zone within 48 months after
13    being placed in service, the tax imposed under subsections
14    (a) and (b) of this Section for such taxable year shall be
15    increased. Such increase shall be determined by (i)
16    recomputing the investment credit which would have been
17    allowed for the year in which credit for such property was
18    originally allowed by eliminating such property from such
19    computation, and (ii) subtracting such recomputed credit
20    from the amount of credit previously allowed. For the
21    purposes of this paragraph (6), a reduction of the basis of
22    qualified property resulting from a redetermination of the
23    purchase price shall be deemed a disposition of qualified
24    property to the extent of such reduction.
25        (7) There shall be allowed an additional credit equal
26    to 0.5% of the basis of qualified property placed in

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    the taxpayer relocates its entire facility in violation of
2    the explicit terms and length of the contract under Section
3    18-183 of the Property Tax Code, the tax imposed under
4    subsections (a) and (b) of this Section shall be increased
5    for the taxable year in which the taxpayer relocated its
6    facility by an amount equal to the amount of credit
7    received by the taxpayer under this subsection (h).
8    (i) Credit for Personal Property Tax Replacement Income
9Tax. For tax years ending prior to December 31, 2003, a credit
10shall be allowed against the tax imposed by subsections (a) and
11(b) of this Section for the tax imposed by subsections (c) and
12(d) of this Section. This credit shall be computed by
13multiplying the tax imposed by subsections (c) and (d) of this
14Section by a fraction, the numerator of which is base income
15allocable to Illinois and the denominator of which is Illinois
16base income, and further multiplying the product by the tax
17rate imposed by subsections (a) and (b) of this Section.
18    Any credit earned on or after December 31, 1986 under this
19subsection which is unused in the year the credit is computed
20because it exceeds the tax liability imposed by subsections (a)
21and (b) for that year (whether it exceeds the original
22liability or the liability as later amended) may be carried
23forward and applied to the tax liability imposed by subsections
24(a) and (b) of the 5 taxable years following the excess credit
25year, provided that no credit may be carried forward to any
26year ending on or after December 31, 2003. This credit shall be

 

 

SB0009 Engrossed- 47 -LRB100 06347 HLH 16385 b

1applied first to the earliest year for which there is a
2liability. If there is a credit under this subsection from more
3than one tax year that is available to offset a liability the
4earliest credit arising under this subsection shall be applied
5first.
6    If, during any taxable year ending on or after December 31,
71986, the tax imposed by subsections (c) and (d) of this
8Section for which a taxpayer has claimed a credit under this
9subsection (i) is reduced, the amount of credit for such tax
10shall also be reduced. Such reduction shall be determined by
11recomputing the credit to take into account the reduced tax
12imposed by subsections (c) and (d). If any portion of the
13reduced amount of credit has been carried to a different
14taxable year, an amended return shall be filed for such taxable
15year to reduce the amount of credit claimed.
16    (j) Training expense credit. Beginning with tax years
17ending on or after December 31, 1986 and prior to December 31,
182003, a taxpayer shall be allowed a credit against the tax
19imposed by subsections (a) and (b) under this Section for all
20amounts paid or accrued, on behalf of all persons employed by
21the taxpayer in Illinois or Illinois residents employed outside
22of Illinois by a taxpayer, for educational or vocational
23training in semi-technical or technical fields or semi-skilled
24or skilled fields, which were deducted from gross income in the
25computation of taxable income. The credit against the tax
26imposed by subsections (a) and (b) shall be 1.6% of such

 

 

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1training expenses. For partners, shareholders of subchapter S
2corporations, and owners of limited liability companies, if the
3liability company is treated as a partnership for purposes of
4federal and State income taxation, there shall be allowed a
5credit under this subsection (j) to be determined in accordance
6with the determination of income and distributive share of
7income under Sections 702 and 704 and subchapter S of the
8Internal Revenue Code.
9    Any credit allowed under this subsection which is unused in
10the year the credit is earned may be carried forward to each of
11the 5 taxable years following the year for which the credit is
12first computed until it is used. This credit shall be applied
13first to the earliest year for which there is a liability. If
14there is a credit under this subsection from more than one tax
15year that is available to offset a liability the earliest
16credit arising under this subsection shall be applied first. No
17carryforward credit may be claimed in any tax year ending on or
18after December 31, 2003.
19    (k) Research and development credit. For tax years ending
20after July 1, 1990 and prior to December 31, 2003, and
21beginning again for tax years ending on or after December 31,
222004, and ending prior to January 1, 2016, a taxpayer shall be
23allowed a credit against the tax imposed by subsections (a) and
24(b) of this Section for increasing research activities in this
25State. The credit allowed against the tax imposed by
26subsections (a) and (b) shall be equal to 6 1/2% of the

 

 

SB0009 Engrossed- 49 -LRB100 06347 HLH 16385 b

1qualifying expenditures for increasing research activities in
2this State. For partners, shareholders of subchapter S
3corporations, and owners of limited liability companies, if the
4liability company is treated as a partnership for purposes of
5federal and State income taxation, there shall be allowed a
6credit under this subsection to be determined in accordance
7with the determination of income and distributive share of
8income under Sections 702 and 704 and subchapter S of the
9Internal Revenue Code.
10    For purposes of this subsection, "qualifying expenditures"
11means the qualifying expenditures as defined for the federal
12credit for increasing research activities which would be
13allowable under Section 41 of the Internal Revenue Code and
14which are conducted in this State, "qualifying expenditures for
15increasing research activities in this State" means the excess
16of qualifying expenditures for the taxable year in which
17incurred over qualifying expenditures for the base period,
18"qualifying expenditures for the base period" means (i) for tax
19years ending prior to December 31, 2017, the average of the
20qualifying expenditures for each year in the base period; and
21(2) for tax years ending on or after December 31, 2017, 50% of
22the average of the qualifying expenditures for each year in the
23base period, and "base period" means the 3 taxable years
24immediately preceding the taxable year for which the
25determination is being made.
26    Any credit in excess of the tax liability for the taxable

 

 

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1year may be carried forward. A taxpayer may elect to have the
2unused credit shown on its final completed return carried over
3as a credit against the tax liability for the following 5
4taxable years or until it has been fully used, whichever occurs
5first; provided that no credit earned in a tax year ending
6prior to December 31, 2003 may be carried forward to any year
7ending on or after December 31, 2003.
8    If an unused credit is carried forward to a given year from
92 or more earlier years, that credit arising in the earliest
10year will be applied first against the tax liability for the
11given year. If a tax liability for the given year still
12remains, the credit from the next earliest year will then be
13applied, and so on, until all credits have been used or no tax
14liability for the given year remains. Any remaining unused
15credit or credits then will be carried forward to the next
16following year in which a tax liability is incurred, except
17that no credit can be carried forward to a year which is more
18than 5 years after the year in which the expense for which the
19credit is given was incurred.
20    No inference shall be drawn from this amendatory Act of the
2191st General Assembly in construing this Section for taxable
22years beginning before January 1, 1999.
23    This subsection (k) is exempt from the provisions of
24Section 250.
25    It is the intent of the General Assembly that the research
26and development credit under this subsection (k) shall apply

 

 

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1continuously for all tax years ending on or after December 31,
22004, including, but not limited to, the period beginning on
3January 1, 2016 and ending on the effective date of this
4amendatory Act of the 100th General Assembly. All actions taken
5in reliance on the continuation of the credit under this
6subsection (k) by any taxpayer are hereby validated.
7    (l) Environmental Remediation Tax Credit.
8        (i) For tax years ending after December 31, 1997 and on
9    or before December 31, 2001, a taxpayer shall be allowed a
10    credit against the tax imposed by subsections (a) and (b)
11    of this Section for certain amounts paid for unreimbursed
12    eligible remediation costs, as specified in this
13    subsection. For purposes of this Section, "unreimbursed
14    eligible remediation costs" means costs approved by the
15    Illinois Environmental Protection Agency ("Agency") under
16    Section 58.14 of the Environmental Protection Act that were
17    paid in performing environmental remediation at a site for
18    which a No Further Remediation Letter was issued by the
19    Agency and recorded under Section 58.10 of the
20    Environmental Protection Act. The credit must be claimed
21    for the taxable year in which Agency approval of the
22    eligible remediation costs is granted. The credit is not
23    available to any taxpayer if the taxpayer or any related
24    party caused or contributed to, in any material respect, a
25    release of regulated substances on, in, or under the site
26    that was identified and addressed by the remedial action

 

 

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

 

 

SB0009 Engrossed- 53 -LRB100 06347 HLH 16385 b

1    distributive share of income under Sections 702 and 704 and
2    subchapter S of the Internal Revenue Code.
3        (ii) A credit allowed under this subsection that is
4    unused in the year the credit is earned may be carried
5    forward to each of the 5 taxable years following the year
6    for which the credit is first earned until it is used. The
7    term "unused credit" does not include any amounts of
8    unreimbursed eligible remediation costs in excess of the
9    maximum credit per site authorized under paragraph (i).
10    This credit shall be applied first to the earliest year for
11    which there is a liability. If there is a credit under this
12    subsection from more than one tax year that is available to
13    offset a liability, the earliest credit arising under this
14    subsection shall be applied first. A credit allowed under
15    this subsection may be sold to a buyer as part of a sale of
16    all or part of the remediation site for which the credit
17    was granted. The purchaser of a remediation site and the
18    tax credit shall succeed to the unused credit and remaining
19    carry-forward period of the seller. To perfect the
20    transfer, the assignor shall record the transfer in the
21    chain of title for the site and provide written notice to
22    the Director of the Illinois Department of Revenue of the
23    assignor's intent to sell the remediation site and the
24    amount of the tax credit to be transferred as a portion of
25    the sale. In no event may a credit be transferred to any
26    taxpayer if the taxpayer or a related party would not be

 

 

SB0009 Engrossed- 54 -LRB100 06347 HLH 16385 b

1    eligible under the provisions of subsection (i).
2        (iii) For purposes of this Section, the term "site"
3    shall have the same meaning as under Section 58.2 of the
4    Environmental Protection Act.
5    (m) Education expense credit. Beginning with tax years
6ending after December 31, 1999, a taxpayer who is the custodian
7of one or more qualifying pupils shall be allowed a credit
8against the tax imposed by subsections (a) and (b) of this
9Section for qualified education expenses incurred on behalf of
10the qualifying pupils. The credit shall be equal to 25% of
11qualified education expenses, but in no event may the total
12credit under this subsection claimed by a family that is the
13custodian of qualifying pupils exceed (i) $500 for tax years
14ending prior to December 31, 2017, and (ii) $750 for tax years
15ending on or after December 31, 2017. In no event shall a
16credit under this subsection reduce the taxpayer's liability
17under this Act to less than zero. Notwithstanding any other
18provision of law, for taxable years beginning on or after
19January 1, 2018, no taxpayer may claim a credit under this
20subsection (m) if the taxpayer's adjusted gross income for the
21taxable year exceeds (i) $500,000, in the case of spouses
22filing a joint federal tax return or (ii) $250,000, in the case
23of all other taxpayers. This subsection is exempt from the
24provisions of Section 250 of this Act.
25    For purposes of this subsection:
26    "Qualifying pupils" means individuals who (i) are

 

 

SB0009 Engrossed- 55 -LRB100 06347 HLH 16385 b

1residents of the State of Illinois, (ii) are under the age of
221 at the close of the school year for which a credit is
3sought, and (iii) during the school year for which a credit is
4sought were full-time pupils enrolled in a kindergarten through
5twelfth grade education program at any school, as defined in
6this subsection.
7    "Qualified education expense" means the amount incurred on
8behalf of a qualifying pupil in excess of $250 for tuition,
9book fees, and lab fees at the school in which the pupil is
10enrolled during the regular school year.
11    "School" means any public or nonpublic elementary or
12secondary school in Illinois that is in compliance with Title
13VI of the Civil Rights Act of 1964 and attendance at which
14satisfies the requirements of Section 26-1 of the School Code,
15except that nothing shall be construed to require a child to
16attend any particular public or nonpublic school to qualify for
17the credit under this Section.
18    "Custodian" means, with respect to qualifying pupils, an
19Illinois resident who is a parent, the parents, a legal
20guardian, or the legal guardians of the qualifying pupils.
21    (n) River Edge Redevelopment Zone site remediation tax
22credit.
23        (i) For tax years ending on or after December 31, 2006,
24    a taxpayer shall be allowed a credit against the tax
25    imposed by subsections (a) and (b) of this Section for
26    certain amounts paid for unreimbursed eligible remediation

 

 

SB0009 Engrossed- 56 -LRB100 06347 HLH 16385 b

1    costs, as specified in this subsection. For purposes of
2    this Section, "unreimbursed eligible remediation costs"
3    means costs approved by the Illinois Environmental
4    Protection Agency ("Agency") under Section 58.14a of the
5    Environmental Protection Act that were paid in performing
6    environmental remediation at a site within a River Edge
7    Redevelopment Zone for which a No Further Remediation
8    Letter was issued by the Agency and recorded under Section
9    58.10 of the Environmental Protection Act. The credit must
10    be claimed for the taxable year in which Agency approval of
11    the eligible remediation costs is granted. The credit is
12    not available to any taxpayer if the taxpayer or any
13    related party caused or contributed to, in any material
14    respect, a release of regulated substances on, in, or under
15    the site that was identified and addressed by the remedial
16    action pursuant to the Site Remediation Program of the
17    Environmental Protection Act. Determinations as to credit
18    availability for purposes of this Section shall be made
19    consistent with rules adopted by the Pollution Control
20    Board pursuant to the Illinois Administrative Procedure
21    Act for the administration and enforcement of Section 58.9
22    of the Environmental Protection Act. For purposes of this
23    Section, "taxpayer" includes a person whose tax attributes
24    the taxpayer has succeeded to under Section 381 of the
25    Internal Revenue Code and "related party" includes the
26    persons disallowed a deduction for losses by paragraphs

 

 

SB0009 Engrossed- 57 -LRB100 06347 HLH 16385 b

1    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
2    Code by virtue of being a related taxpayer, as well as any
3    of its partners. The credit allowed against the tax imposed
4    by subsections (a) and (b) shall be equal to 25% of the
5    unreimbursed eligible remediation costs in excess of
6    $100,000 per site.
7        (ii) A credit allowed under this subsection that is
8    unused in the year the credit is earned may be carried
9    forward to each of the 5 taxable years following the year
10    for which the credit is first earned until it is used. This
11    credit shall be applied first to the earliest year for
12    which there is a liability. If there is a credit under this
13    subsection from more than one tax year that is available to
14    offset a liability, the earliest credit arising under this
15    subsection shall be applied first. A credit allowed under
16    this subsection may be sold to a buyer as part of a sale of
17    all or part of the remediation site for which the credit
18    was granted. The purchaser of a remediation site and the
19    tax credit shall succeed to the unused credit and remaining
20    carry-forward period of the seller. To perfect the
21    transfer, the assignor shall record the transfer in the
22    chain of title for the site and provide written notice to
23    the Director of the Illinois Department of Revenue of the
24    assignor's intent to sell the remediation site and the
25    amount of the tax credit to be transferred as a portion of
26    the sale. In no event may a credit be transferred to any

 

 

SB0009 Engrossed- 58 -LRB100 06347 HLH 16385 b

1    taxpayer if the taxpayer or a related party would not be
2    eligible under the provisions of subsection (i).
3        (iii) For purposes of this Section, the term "site"
4    shall have the same meaning as under Section 58.2 of the
5    Environmental Protection Act.
6    (o) For each of taxable years during the Compassionate Use
7of Medical Cannabis Pilot Program, a surcharge is imposed on
8all taxpayers on income arising from the sale or exchange of
9capital assets, depreciable business property, real property
10used in the trade or business, and Section 197 intangibles of
11an organization registrant under the Compassionate Use of
12Medical Cannabis Pilot Program Act. The amount of the surcharge
13is equal to the amount of federal income tax liability for the
14taxable year attributable to those sales and exchanges. The
15surcharge imposed does not apply if:
16        (1) the medical cannabis cultivation center
17    registration, medical cannabis dispensary registration, or
18    the property of a registration is transferred as a result
19    of any of the following:
20            (A) bankruptcy, a receivership, or a debt
21        adjustment initiated by or against the initial
22        registration or the substantial owners of the initial
23        registration;
24            (B) cancellation, revocation, or termination of
25        any registration by the Illinois Department of Public
26        Health;

 

 

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1            (C) a determination by the Illinois Department of
2        Public Health that transfer of the registration is in
3        the best interests of Illinois qualifying patients as
4        defined by the Compassionate Use of Medical Cannabis
5        Pilot Program Act;
6            (D) the death of an owner of the equity interest in
7        a registrant;
8            (E) the acquisition of a controlling interest in
9        the stock or substantially all of the assets of a
10        publicly traded company;
11            (F) a transfer by a parent company to a wholly
12        owned subsidiary; or
13            (G) the transfer or sale to or by one person to
14        another person where both persons were initial owners
15        of the registration when the registration was issued;
16        or
17        (2) the cannabis cultivation center registration,
18    medical cannabis dispensary registration, or the
19    controlling interest in a registrant's property is
20    transferred in a transaction to lineal descendants in which
21    no gain or loss is recognized or as a result of a
22    transaction in accordance with Section 351 of the Internal
23    Revenue Code in which no gain or loss is recognized.
24(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
25eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
26eff. 7-16-14.)
 

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB0009 Engrossed- 72 -LRB100 06347 HLH 16385 b

1        subsection (a)(2)(y) of this Section, provided that
2        the withdrawal or refund did not result from the
3        beneficiary's death or disability;
4            (D-23) An amount equal to the credit allowable to
5        the taxpayer under Section 218(a) of this Act,
6        determined without regard to Section 218(c) of this
7        Act;
8            (D-24) For taxable years beginning on or after
9        January 1, 2017, an amount equal to the deduction
10        allowed under Section 199 of the Internal Revenue Code
11        for the taxable year;
12    and by deducting from the total so obtained the sum of the
13    following amounts:
14            (E) For taxable years ending before December 31,
15        2001, any amount included in such total in respect of
16        any compensation (including but not limited to any
17        compensation paid or accrued to a serviceman while a
18        prisoner of war or missing in action) paid to a
19        resident by reason of being on active duty in the Armed
20        Forces of the United States and in respect of any
21        compensation paid or accrued to a resident who as a
22        governmental employee was a prisoner of war or missing
23        in action, and in respect of any compensation paid to a
24        resident in 1971 or thereafter for annual training
25        performed pursuant to Sections 502 and 503, Title 32,
26        United States Code as a member of the Illinois National

 

 

SB0009 Engrossed- 73 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 74 -LRB100 06347 HLH 16385 b

1        earnings from self employment by Section 1402 of the
2        Internal Revenue Code and regulations adopted pursuant
3        thereto;
4            (G) The valuation limitation amount;
5            (H) An amount equal to the amount of any tax
6        imposed by this Act which was refunded to the taxpayer
7        and included in such total for the taxable year;
8            (I) An amount equal to all amounts included in such
9        total pursuant to the provisions of Section 111 of the
10        Internal Revenue Code as a recovery of items previously
11        deducted from adjusted gross income in the computation
12        of taxable income;
13            (J) An amount equal to those dividends included in
14        such total which were paid by a corporation which
15        conducts business operations in a River Edge
16        Redevelopment Zone or zones created under the River
17        Edge Redevelopment Zone Act, and conducts
18        substantially all of its operations in a River Edge
19        Redevelopment Zone or zones. This subparagraph (J) is
20        exempt from the provisions of Section 250;
21            (K) 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

 

 

SB0009 Engrossed- 75 -LRB100 06347 HLH 16385 b

1        subparagraph (J) of paragraph (2) of this subsection
2        shall not be eligible for the deduction provided under
3        this subparagraph (K);
4            (L) For taxable years ending after December 31,
5        1983, an amount equal to all social security benefits
6        and railroad retirement benefits included in such
7        total pursuant to Sections 72(r) and 86 of the Internal
8        Revenue Code;
9            (M) With the exception of any amounts subtracted
10        under subparagraph (N), an amount equal to the sum of
11        all amounts disallowed as deductions by (i) Sections
12        171(a) (2), and 265(2) of the Internal Revenue Code,
13        and all amounts of expenses allocable to interest and
14        disallowed as deductions by Section 265(1) of the
15        Internal Revenue Code; and (ii) for taxable years
16        ending on or after August 13, 1999, Sections 171(a)(2),
17        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
18        Code, plus, for taxable years ending on or after
19        December 31, 2011, Section 45G(e)(3) of the Internal
20        Revenue Code and, for taxable years ending on or after
21        December 31, 2008, any amount included in gross income
22        under Section 87 of the Internal Revenue Code; the
23        provisions of this subparagraph are exempt from the
24        provisions of Section 250;
25            (N) An amount equal to all amounts included in such
26        total which are exempt from taxation by this State

 

 

SB0009 Engrossed- 76 -LRB100 06347 HLH 16385 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB0009 Engrossed- 88 -LRB100 06347 HLH 16385 b

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

 

 

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1        who would be a member of the same unitary business
2        group but for the fact that the person is prohibited
3        under Section 1501(a)(27) from being included in the
4        unitary business group because he or she is ordinarily
5        required to apportion business income under different
6        subsections of Section 304. 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 Engrossed- 91 -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 Engrossed- 92 -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            (E-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 Engrossed- 93 -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(b)(2)(E-12) of
15        this Act. As used in this subparagraph, the term
16        "intangible expenses and costs" includes (1) expenses,
17        losses, and costs for, or related to, the direct or
18        indirect acquisition, use, maintenance or management,
19        ownership, sale, exchange, or any other disposition of
20        intangible property; (2) losses incurred, directly or
21        indirectly, from factoring transactions or discounting
22        transactions; (3) royalty, patent, technical, and
23        copyright fees; (4) licensing fees; and (5) other
24        similar expenses and costs. For purposes of this
25        subparagraph, "intangible property" includes patents,
26        patent applications, trade names, trademarks, service

 

 

SB0009 Engrossed- 94 -LRB100 06347 HLH 16385 b

1        marks, copyrights, mask works, trade secrets, and
2        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 Engrossed- 95 -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            (E-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

 

 

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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(b)(2)(E-12) or
17        Section 203(b)(2)(E-13) of this Act;
18            (E-15) For taxable years beginning after December
19        31, 2008, any deduction for dividends paid by a captive
20        real estate investment trust that is allowed to a real
21        estate investment trust under Section 857(b)(2)(B) of
22        the Internal Revenue Code for dividends paid;
23            (E-16) An amount equal to the credit allowable to
24        the taxpayer under Section 218(a) of this Act,
25        determined without regard to Section 218(c) of this
26        Act;

 

 

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1            (E-17) For taxable years beginning on or after
2        January 1, 2017, an amount equal to the deduction
3        allowed under Section 199 of the Internal Revenue Code
4        for the taxable year;
5    and by deducting from the total so obtained the sum of the
6    following amounts:
7            (F) An amount equal to the amount of any tax
8        imposed by this Act which was refunded to the taxpayer
9        and included in such total for the taxable year;
10            (G) An amount equal to any amount included in such
11        total under Section 78 of the Internal Revenue Code;
12            (H) In the case of a regulated investment company,
13        an amount equal to the amount of exempt interest
14        dividends as defined in subsection (b) (5) of Section
15        852 of the Internal Revenue Code, paid to shareholders
16        for the taxable year;
17            (I) With the exception of any amounts subtracted
18        under subparagraph (J), an amount equal to the sum of
19        all amounts disallowed as deductions by (i) Sections
20        171(a) (2), and 265(a)(2) and amounts disallowed as
21        interest expense by Section 291(a)(3) of the Internal
22        Revenue Code, and all amounts of expenses allocable to
23        interest and disallowed as deductions by Section
24        265(a)(1) of the Internal Revenue Code; and (ii) for
25        taxable years ending on or after August 13, 1999,
26        Sections 171(a)(2), 265, 280C, 291(a)(3), and

 

 

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1        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
2        for tax years ending on or after December 31, 2011,
3        amounts disallowed as deductions by Section 45G(e)(3)
4        of the Internal Revenue Code and, for taxable years
5        ending on or after December 31, 2008, any amount
6        included in gross income under Section 87 of the
7        Internal Revenue Code and the policyholders' share of
8        tax-exempt interest of a life insurance company under
9        Section 807(a)(2)(B) of the Internal Revenue Code (in
10        the case of a life insurance company with gross income
11        from a decrease in reserves for the tax year) or
12        Section 807(b)(1)(B) of the Internal Revenue Code (in
13        the case of a life insurance company allowed a
14        deduction for an increase in reserves for the tax
15        year); the provisions of this subparagraph are exempt
16        from the provisions of Section 250;
17            (J) 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            (K) An amount equal to those dividends included in

 

 

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

 

 

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

 

 

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1        date that it was placed in service in a federally
2        designated Foreign Trade Zone or Sub-Zone located in
3        Illinois. No taxpayer that is eligible for the
4        deduction provided in subparagraph (M) of paragraph
5        (2) of this subsection shall be eligible for the
6        deduction provided under this subparagraph (M-1). The
7        subtraction modification available to taxpayers in any
8        year under this subsection shall be that portion of the
9        total interest paid by the borrower with respect to
10        such loan attributable to the eligible property as
11        calculated under the previous sentence;
12            (N) Two times any contribution made during the
13        taxable year to a designated zone organization to the
14        extent that the contribution (i) qualifies as a
15        charitable contribution under subsection (c) of
16        Section 170 of the Internal Revenue Code and (ii) must,
17        by its terms, be used for a project approved by the
18        Department of Commerce and Economic Opportunity under
19        Section 11 of the Illinois Enterprise Zone Act or under
20        Section 10-10 of the River Edge Redevelopment Zone Act.
21        This subparagraph (N) is exempt from the provisions of
22        Section 250;
23            (O) An amount equal to: (i) 85% for taxable years
24        ending on or before December 31, 1992, or, a percentage
25        equal to the percentage allowable under Section
26        243(a)(1) of the Internal Revenue Code of 1986 for

 

 

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1        taxable years ending after December 31, 1992, of the
2        amount by which dividends included in taxable income
3        and received from a corporation that is not created or
4        organized under the laws of the United States or any
5        state or political subdivision thereof, including, for
6        taxable years ending on or after December 31, 1988,
7        dividends received or deemed received or paid or deemed
8        paid under Sections 951 through 965 of the Internal
9        Revenue Code, exceed the amount of the modification
10        provided under subparagraph (G) of paragraph (2) of
11        this subsection (b) which is related to such dividends,
12        and including, for taxable years ending on or after
13        December 31, 2008, dividends received from a captive
14        real estate investment trust; plus (ii) 100% of the
15        amount by which dividends, included in taxable income
16        and received, including, for taxable years ending on or
17        after December 31, 1988, dividends received or deemed
18        received or paid or deemed paid under Sections 951
19        through 964 of the Internal Revenue Code and including,
20        for taxable years ending on or after December 31, 2008,
21        dividends received from a captive real estate
22        investment trust, from any such corporation specified
23        in clause (i) that would but for the provisions of
24        Section 1504 (b) (3) of the Internal Revenue Code be
25        treated as a member of the affiliated group which
26        includes the dividend recipient, exceed the amount of

 

 

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

 

 

SB0009 Engrossed- 104 -LRB100 06347 HLH 16385 b

1        31, 1997, in the case of a Subchapter S corporation, an
2        amount equal to all amounts of income allocable to a
3        shareholder subject to the Personal Property Tax
4        Replacement Income Tax imposed by subsections (c) and
5        (d) of Section 201 of this Act, including amounts
6        allocable to organizations exempt from federal income
7        tax by reason of Section 501(a) of the Internal Revenue
8        Code. This subparagraph (S) is exempt from the
9        provisions of Section 250;
10            (T) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not including
22            the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

SB0009 Engrossed- 105 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 106 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 107 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 108 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 109 -LRB100 06347 HLH 16385 b

1        add back any insurance premiums under Section
2        203(b)(2)(E-14), such taxpayer may elect to subtract
3        that part of a reimbursement received from the
4        insurance company equal to the amount of the expense or
5        loss (including expenses incurred by the insurance
6        company) that would have been taken into account as a
7        deduction for federal income tax purposes if the
8        expense or loss had been uninsured. If a taxpayer makes
9        the election provided for by this subparagraph (Y), the
10        insurer to which the premiums were paid must add back
11        to income the amount subtracted by the taxpayer
12        pursuant to this subparagraph (Y). This subparagraph
13        (Y) is exempt from the provisions of Section 250; and
14            (Z) The difference between the nondeductible
15        controlled foreign corporation dividends under Section
16        965(e)(3) of the Internal Revenue Code over the taxable
17        income of the taxpayer, computed without regard to
18        Section 965(e)(2)(A) of the Internal Revenue Code, and
19        without regard to any net operating loss deduction.
20        This subparagraph (Z) is exempt from the provisions of
21        Section 250.
22        (3) Special rule. For purposes of paragraph (2) (A),
23    "gross income" in the case of a life insurance company, for
24    tax years ending on and after December 31, 1994, and prior
25    to December 31, 2011, shall mean the gross investment
26    income for the taxable year and, for tax years ending on or

 

 

SB0009 Engrossed- 110 -LRB100 06347 HLH 16385 b

1    after December 31, 2011, shall mean all amounts included in
2    life insurance gross income under Section 803(a)(3) of the
3    Internal Revenue Code.
 
4    (c) Trusts and estates.
5        (1) In general. In the case of a trust or estate, base
6    income means an amount equal to the taxpayer's taxable
7    income for the taxable year as modified by paragraph (2).
8        (2) Modifications. Subject to the provisions of
9    paragraph (3), the taxable income referred to in paragraph
10    (1) shall be modified by adding thereto the sum of the
11    following amounts:
12            (A) An amount equal to all amounts paid or accrued
13        to the taxpayer as interest or dividends during the
14        taxable year to the extent excluded from gross income
15        in the computation of taxable income;
16            (B) In the case of (i) an estate, $600; (ii) a
17        trust which, under its governing instrument, is
18        required to distribute all of its income currently,
19        $300; and (iii) any other trust, $100, but in each such
20        case, only to the extent such amount was deducted in
21        the computation of taxable income;
22            (C) An amount equal to the amount of tax imposed by
23        this Act to the extent deducted from gross income in
24        the computation of taxable income for the taxable year;
25            (D) The amount of any net operating loss deduction

 

 

SB0009 Engrossed- 111 -LRB100 06347 HLH 16385 b

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 taxable year, with
12        the following limitations applied in the order that
13        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;

 

 

SB0009 Engrossed- 112 -LRB100 06347 HLH 16385 b

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            (F) For taxable years ending on or after January 1,
9        1989, an amount equal to the tax deducted pursuant to
10        Section 164 of the Internal Revenue Code if the trust
11        or estate is claiming the same tax for purposes of the
12        Illinois foreign tax credit under Section 601 of this
13        Act;
14            (G) An amount equal to the amount of the capital
15        gain deduction allowable under the Internal Revenue
16        Code, to the extent deducted from gross income in the
17        computation of taxable income;
18            (G-5) For taxable years ending after December 31,
19        1997, an amount equal to any eligible remediation costs
20        that the trust or estate deducted in computing adjusted
21        gross income and for which the trust or estate claims a
22        credit under subsection (l) of Section 201;
23            (G-10) For taxable years 2001 and thereafter, an
24        amount equal to the bonus depreciation deduction taken
25        on the taxpayer's federal income tax return for the
26        taxable year under subsection (k) of Section 168 of the

 

 

SB0009 Engrossed- 113 -LRB100 06347 HLH 16385 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        prohibited under Section 1501(a)(27) from being
2        included in the unitary business group because he or
3        she is ordinarily required to apportion business
4        income under different subsections of Section 304. The
5        addition modification required by this subparagraph
6        shall be reduced to the extent that dividends were
7        included in base income of the unitary group for the
8        same taxable year and received by the taxpayer or by a
9        member of the taxpayer's unitary business group
10        (including amounts included in gross income under
11        Sections 951 through 964 of the Internal Revenue Code
12        and amounts included in gross income under Section 78
13        of the Internal Revenue Code) with respect to the stock
14        of the same person to whom the premiums and costs were
15        directly or indirectly paid, incurred, or accrued. The
16        preceding sentence does not apply to the extent that
17        the same dividends caused a reduction to the addition
18        modification required under Section 203(c)(2)(G-12) or
19        Section 203(c)(2)(G-13) of this Act;
20            (G-15) An amount equal to the credit allowable to
21        the taxpayer under Section 218(a) of this Act,
22        determined without regard to Section 218(c) of this
23        Act;
24            (G-16) For taxable years beginning on or after
25        January 1, 2017, an amount equal to the deduction
26        allowed under Section 199 of the Internal Revenue Code

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB0009 Engrossed- 126 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 127 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 128 -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, but not to exceed the
7        addition modification required to be made for the same
8        taxable year under Section 203(c)(2)(G-12) for
9        interest paid, accrued, or incurred, directly or
10        indirectly, to the same person. This subparagraph (U)
11        is exempt from the provisions of Section 250;
12            (V) An amount equal to the income from intangible
13        property taken into account for the taxable year (net
14        of the deductions allocable thereto) with respect to
15        transactions with (i) a foreign person who would be a
16        member of the taxpayer's unitary business group but for
17        the fact that the foreign person's business activity
18        outside the United States is 80% or more of that
19        person's total business activity and (ii) for taxable
20        years ending on or after December 31, 2008, to a person
21        who would be a member of the same unitary business
22        group but for the fact that the person is prohibited
23        under Section 1501(a)(27) from being included in the
24        unitary business group because he or she is ordinarily
25        required to apportion business income under different
26        subsections of Section 304, but not to exceed the

 

 

SB0009 Engrossed- 129 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 130 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 131 -LRB100 06347 HLH 16385 b

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

 

 

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1        was allowed in any taxable year to make a subtraction
2        modification under subparagraph (O), then an amount
3        equal to that subtraction modification.
4            The taxpayer is required to make the addition
5        modification under this subparagraph only once with
6        respect to any one piece of property;
7            (D-7) An amount equal to the amount otherwise
8        allowed as a deduction in computing base income for
9        interest paid, accrued, or incurred, directly or
10        indirectly, (i) for taxable years ending on or after
11        December 31, 2004, to a foreign person who would be a
12        member of the same unitary business group but for the
13        fact the foreign person's business activity outside
14        the United States is 80% or more of the foreign
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. The addition modification
23        required by this subparagraph shall be reduced to the
24        extent that dividends were included in base income of
25        the unitary group for the same taxable year and
26        received by the taxpayer or by a member of the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        High Impact Business located in Illinois; provided
2        that dividends eligible for the deduction provided in
3        subparagraph (K) of paragraph (2) of this subsection
4        shall not be eligible for the deduction provided under
5        this subparagraph (M);
6            (N) 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            (O) For taxable years 2001 and thereafter, for the
12        taxable year in which the bonus depreciation deduction
13        is taken on the taxpayer's federal income tax return
14        under subsection (k) of Section 168 of the Internal
15        Revenue Code and for each applicable taxable year
16        thereafter, an amount equal to "x", where:
17                (1) "y" equals the amount of the depreciation
18            deduction taken for the taxable year on the
19            taxpayer's federal income tax return on property
20            for which the bonus depreciation deduction was
21            taken in any year under subsection (k) of Section
22            168 of the Internal Revenue Code, but not including
23            the bonus depreciation deduction;
24                (2) for taxable years ending on or before
25            December 31, 2005, "x" equals "y" multiplied by 30
26            and then divided by 70 (or "y" multiplied by

 

 

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

 

 

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

 

 

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

 

 

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1        member of the taxpayer's unitary business group but for
2        the fact that the foreign person's business activity
3        outside the United States is 80% or more of that
4        person's total business activity and (ii) for taxable
5        years ending on or after December 31, 2008, to a person
6        who would be a member of the same unitary business
7        group but for the fact that the person is prohibited
8        under Section 1501(a)(27) from being included in the
9        unitary business group because he or she is ordinarily
10        required to apportion business income under different
11        subsections of Section 304, but not to exceed the
12        addition modification required to be made for the same
13        taxable year under Section 203(d)(2)(D-8) for
14        intangible expenses and costs paid, accrued, or
15        incurred, directly or indirectly, to the same person.
16        This subparagraph (S) is exempt from Section 250; and
17            (T) 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(d)(2)(D-9), 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 (T), 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 (T). This subparagraph
5        (T) is exempt from the provisions of Section 250.
 
6    (e) Gross income; adjusted gross income; taxable income.
7        (1) In general. Subject to the provisions of paragraph
8    (2) and subsection (b) (3), for purposes of this Section
9    and Section 803(e), a taxpayer's gross income, adjusted
10    gross income, or taxable income for the taxable year shall
11    mean the amount of gross income, adjusted gross income or
12    taxable income properly reportable for federal income tax
13    purposes for the taxable year under the provisions of the
14    Internal Revenue Code. Taxable income may be less than
15    zero. However, for taxable years ending on or after
16    December 31, 1986, net operating loss carryforwards from
17    taxable years ending prior to December 31, 1986, may not
18    exceed the sum of federal taxable income for the taxable
19    year before net operating loss deduction, plus the excess
20    of addition modifications over subtraction modifications
21    for the taxable year. For taxable years ending prior to
22    December 31, 1986, taxable income may never be an amount in
23    excess of the net operating loss for the taxable year as
24    defined in subsections (c) and (d) of Section 172 of the
25    Internal Revenue Code, provided that when taxable income of

 

 

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

 

 

SB0009 Engrossed- 149 -LRB100 06347 HLH 16385 b

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

 

 

SB0009 Engrossed- 150 -LRB100 06347 HLH 16385 b

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

 

 

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

 

 

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

 

 

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

 

 

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1        full calendar months in the taxpayer's entire holding
2        period for the property.
3            (C) The Department shall prescribe such
4        regulations as may be necessary to carry out the
5        purposes of this paragraph.
 
6    (g) Double deductions. Unless specifically provided
7otherwise, nothing in this Section shall permit the same item
8to be deducted more than once.
 
9    (h) Legislative intention. Except as expressly provided by
10this Section there shall be no modifications or limitations on
11the amounts of income, gain, loss or deduction taken into
12account in determining gross income, adjusted gross income or
13taxable income for federal income tax purposes for the taxable
14year, or in the amount of such items entering into the
15computation of base income and net income under this Act for
16such taxable year, whether in respect of property values as of
17August 1, 1969 or otherwise.
18(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
19eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
2096-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
216-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
22eff. 8-23-11; 97-905, eff. 8-7-12.)
 
23    (35 ILCS 5/204)  (from Ch. 120, par. 2-204)

 

 

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1    Sec. 204. Standard Exemption.
2    (a) Allowance of exemption. In computing net income under
3this Act, there shall be allowed as an exemption the sum of the
4amounts determined under subsections (b), (c) and (d),
5multiplied by a fraction the numerator of which is the amount
6of the taxpayer's base income allocable to this State for the
7taxable year and the denominator of which is the taxpayer's
8total base income for the taxable year.
9    (b) Basic amount. For the purpose of subsection (a) of this
10Section, except as provided by subsection (a) of Section 205
11and in this subsection, each taxpayer shall be allowed a basic
12amount of $1000, except that for corporations the basic amount
13shall be zero for tax years ending on or after December 31,
142003, and for individuals the basic amount shall be:
15        (1) for taxable years ending on or after December 31,
16    1998 and prior to December 31, 1999, $1,300;
17        (2) for taxable years ending on or after December 31,
18    1999 and prior to December 31, 2000, $1,650;
19        (3) for taxable years ending on or after December 31,
20    2000 and prior to December 31, 2012, $2,000;
21        (4) for taxable years ending on or after December 31,
22    2012 and prior to December 31, 2013, $2,050;
23        (5) for taxable years ending on or after December 31,
24    2013, $2,050 plus the cost-of-living adjustment under
25    subsection (d-5).
26For taxable years ending on or after December 31, 1992, a

 

 

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1taxpayer whose Illinois base income exceeds the basic amount
2and who is claimed as a dependent on another person's tax
3return under the Internal Revenue Code shall not be allowed any
4basic amount under this subsection.
5    (c) Additional amount for individuals. In the case of an
6individual taxpayer, there shall be allowed for the purpose of
7subsection (a), in addition to the basic amount provided by
8subsection (b), an additional exemption equal to the basic
9amount for each exemption in excess of one allowable to such
10individual taxpayer for the taxable year under Section 151 of
11the Internal Revenue Code.
12    (d) Additional exemptions for an individual taxpayer and
13his or her spouse. In the case of an individual taxpayer and
14his or her spouse, he or she shall each be allowed additional
15exemptions as follows:
16        (1) Additional exemption for taxpayer or spouse 65
17    years of age or older.
18            (A) For taxpayer. An additional exemption of
19        $1,000 for the taxpayer if he or she has attained the
20        age of 65 before the end of the taxable year.
21            (B) For spouse when a joint return is not filed. An
22        additional exemption of $1,000 for the spouse of the
23        taxpayer if a joint return is not made by the taxpayer
24        and his spouse, and if the spouse has attained the age
25        of 65 before the end of such taxable year, and, for the
26        calendar year in which the taxable year of the taxpayer

 

 

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1        begins, has no gross income and is not the dependent of
2        another taxpayer.
3        (2) Additional exemption for blindness of taxpayer or
4    spouse.
5            (A) For taxpayer. An additional exemption of
6        $1,000 for the taxpayer if he or she is blind at the
7        end of the taxable year.
8            (B) For spouse when a joint return is not filed. An
9        additional exemption of $1,000 for the spouse of the
10        taxpayer if a separate return is made by the taxpayer,
11        and if the spouse is blind and, for the calendar year
12        in which the taxable year of the taxpayer begins, has
13        no gross income and is not the dependent of another
14        taxpayer. For purposes of this paragraph, the
15        determination of whether the spouse is blind shall be
16        made as of the end of the taxable year of the taxpayer;
17        except that if the spouse dies during such taxable year
18        such determination shall be made as of the time of such
19        death.
20            (C) Blindness defined. For purposes of this
21        subsection, an individual is blind only if his or her
22        central visual acuity does not exceed 20/200 in the
23        better eye with correcting lenses, or if his or her
24        visual acuity is greater than 20/200 but is accompanied
25        by a limitation in the fields of vision such that the
26        widest diameter of the visual fields subtends an angle

 

 

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1        no greater than 20 degrees.
2    (d-5) Cost-of-living adjustment. For purposes of item (5)
3of subsection (b), the cost-of-living adjustment for any
4calendar year and for taxable years ending prior to the end of
5the subsequent calendar year is equal to $2,050 times the
6percentage (if any) by which:
7        (1) the Consumer Price Index for the preceding calendar
8    year, exceeds
9        (2) the Consumer Price Index for the calendar year
10    2011.
11    The Consumer Price Index for any calendar year is the
12average of the Consumer Price Index as of the close of the
1312-month period ending on August 31 of that calendar year.
14    The term "Consumer Price Index" means the last Consumer
15Price Index for All Urban Consumers published by the United
16States Department of Labor or any successor agency.
17    If any cost-of-living adjustment is not a multiple of $25,
18that adjustment shall be rounded to the next lowest multiple of
19$25.
20    (e) Cross reference. See Article 3 for the manner of
21determining base income allocable to this State.
22    (f) Application of Section 250. Section 250 does not apply
23to the amendments to this Section made by Public Act 90-613.
24    (g) Notwithstanding any other provision of law, for taxable
25years beginning on or after January 1, 2018, no taxpayer may
26claim an exemption under this Section if the taxpayer's

 

 

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1adjusted gross income for the taxable year exceeds (i)
2$500,000, in the case of spouses filing a joint federal tax
3return or (ii) $250,000, in the case of all other taxpayers.
4(Source: P.A. 97-507, eff. 8-23-11; 97-652, eff. 6-1-12.)
 
5    (35 ILCS 5/208)  (from Ch. 120, par. 2-208)
6    Sec. 208. Tax credit for residential real property taxes.
7Beginning with tax years ending on or after December 31, 1991,
8every individual taxpayer shall be entitled to a tax credit
9equal to 5% of real property taxes paid by such taxpayer during
10the taxable year on the principal residence of the taxpayer. In
11the case of multi-unit or multi-use structures and farm
12dwellings, the taxes on the taxpayer's principal residence
13shall be that portion of the total taxes which is attributable
14to such principal residence. Notwithstanding any other
15provision of law, for taxable years beginning on or after
16January 1, 2018, no taxpayer may claim a credit under this
17Section if the taxpayer's adjusted gross income for the taxable
18year exceeds (i) $500,000, in the case of spouses filing a
19joint federal tax return, or (ii) $250,000, in the case of all
20other taxpayers.
21(Source: P.A. 87-17.)
 
22    (35 ILCS 5/212)
23    Sec. 212. Earned income tax credit.
24    (a) With respect to the federal earned income tax credit

 

 

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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.

 

 

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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 5/222)
5    Sec. 222. Live theater production credit.
6    (a) For tax years beginning on or after January 1, 2012 and
7beginning prior to January 1, 2027, a taxpayer who has received
8a tax credit award under the Live Theater Production Tax Credit
9Act is entitled to a credit against the taxes imposed under
10subsections (a) and (b) of Section 201 of this Act in an amount
11determined under that Act by the Department of Commerce and
12Economic Opportunity.
13    (b) If the taxpayer is a partnership, limited liability
14partnership, limited liability company, or Subchapter S
15corporation, the tax credit award is allowed to the partners,
16unit holders, or shareholders in accordance with the
17determination of income and distributive share of income under
18Sections 702 and 704 and Subchapter S of the Internal Revenue
19Code.
20    (c) A sale, assignment, or transfer of the tax credit award
21may be made by the taxpayer earning the credit within one year
22after the credit is awarded in accordance with rules adopted by
23the Department of Commerce and Economic Opportunity.
24    (d) The Department of Revenue, in cooperation with the
25Department of Commerce and Economic Opportunity, shall adopt

 

 

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1rules to enforce and administer the provisions of this Section.
2    (e) The tax credit award may not be carried back. If the
3amount of the credit exceeds the tax liability for the year,
4the excess may be carried forward and applied to the tax
5liability of the 5 tax years following the excess credit year.
6The tax credit award shall be applied to the earliest year for
7which there is a tax liability. If there are credits from more
8than one tax year that are available to offset liability, the
9earlier credit shall be applied first. In no event may a credit
10under this Section reduce the taxpayer's liability to less than
11zero.
12(Source: P.A. 97-636, eff. 6-1-12.)
 
13    (35 ILCS 5/225 new)
14    Sec. 225. Credit for instructional materials and supplies.
15For taxable years beginning on and after January 1, 2017, a
16taxpayer shall be allowed a credit in the amount paid by the
17taxpayer during the taxable year for instructional materials
18and supplies with respect to classroom based instruction in a
19qualified school, or $250, whichever is less, provided that the
20taxpayer is a teacher, instructor, counselor, principal, or
21aide in a qualified school for at least 900 hours during a
22school year.
23    The credit may not be carried back and may not reduce the
24taxpayer's liability to less than zero. If the amount of the
25credit exceeds the tax liability for the year, the excess may

 

 

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1be carried forward and applied to the tax liability of the 5
2taxable years following the excess credit year. The tax credit
3shall be applied to the earliest year for which there is a tax
4liability. If there are credits for more than one year that are
5available to offset a liability, the earlier credit shall be
6applied first.
7    For purposes of this Section, the term "materials and
8supplies" means amounts paid for instructional materials or
9supplies that are designated for classroom use in any qualified
10school. For purposes of this Section, the term "qualified
11school" means a public school or non-public school located in
12Illinois.
13    This Section is exempt from the provisions of Section 250.
 
14    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
15    Sec. 804. Failure to Pay Estimated Tax.
16    (a) In general. In case of any underpayment of estimated
17tax by a taxpayer, except as provided in subsection (d) or (e),
18the taxpayer shall be liable to a penalty in an amount
19determined at the rate prescribed by Section 3-3 of the Uniform
20Penalty and Interest Act upon the amount of the underpayment
21(determined under subsection (b)) for each required
22installment.
23    (b) Amount of underpayment. For purposes of subsection (a),
24the amount of the underpayment shall be the excess of:
25        (1) the amount of the installment which would be

 

 

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1    required to be paid under subsection (c), over
2        (2) the amount, if any, of the installment paid on or
3    before the last date prescribed for payment.
4    (c) Amount of Required Installments.
5        (1) Amount.
6            (A) In General. Except as provided in paragraphs
7        (2) and (3), the amount of any required installment
8        shall be 25% of the required annual payment.
9            (B) Required Annual Payment. For purposes of
10        subparagraph (A), the term "required annual payment"
11        means the lesser of:
12                (i) 90% of the tax shown on the return for the
13            taxable year, or if no return is filed, 90% of the
14            tax for such year;
15                (ii) for installments due prior to February 1,
16            2011, and after January 31, 2012, 100% of the tax
17            shown on the return of the taxpayer for the
18            preceding taxable year if a return showing a
19            liability for tax was filed by the taxpayer for the
20            preceding taxable year and such preceding year was
21            a taxable year of 12 months; or
22                (iii) for installments due after January 31,
23            2011, and prior to February 1, 2012, 150% of the
24            tax shown on the return of the taxpayer for the
25            preceding taxable year if a return showing a
26            liability for tax was filed by the taxpayer for the

 

 

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1            preceding taxable year and such preceding year was
2            a taxable year of 12 months.
3        (2) Lower Required Installment where Annualized Income
4    Installment is Less Than Amount Determined Under Paragraph
5    (1).
6            (A) In General. In the case of any required
7        installment if a taxpayer establishes that the
8        annualized income installment is less than the amount
9        determined under paragraph (1),
10                (i) the amount of such required installment
11            shall be the annualized income installment, and
12                (ii) any reduction in a required installment
13            resulting from the application of this
14            subparagraph shall be recaptured by increasing the
15            amount of the next required installment determined
16            under paragraph (1) by the amount of such
17            reduction, and by increasing subsequent required
18            installments to the extent that the reduction has
19            not previously been recaptured under this clause.
20            (B) Determination of Annualized Income
21        Installment. In the case of any required installment,
22        the annualized income installment is the excess, if
23        any, of:
24                (i) an amount equal to the applicable
25            percentage of the tax for the taxable year computed
26            by placing on an annualized basis the net income

 

 

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1            for months in the taxable year ending before the
2            due date for the installment, over
3                (ii) the aggregate amount of any prior
4            required installments for the taxable year.
5            (C) Applicable Percentage.
6        In the case of the followingThe applicable
7        required installments:percentage is:
8        1st ...............................22.5%
9        2nd ...............................45%
10        3rd ...............................67.5%
11        4th ...............................90%
12            (D) Annualized Net Income; Individuals. For
13        individuals, net income shall be placed on an
14        annualized basis by:
15                (i) multiplying by 12, or in the case of a
16            taxable year of less than 12 months, by the number
17            of months in the taxable year, the net income
18            computed without regard to the standard exemption
19            for the months in the taxable year ending before
20            the month in which the installment is required to
21            be paid;
22                (ii) dividing the resulting amount by the
23            number of months in the taxable year ending before
24            the month in which such installment date falls; and
25                (iii) deducting from such amount the standard
26            exemption allowable for the taxable year, such

 

 

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1            standard exemption being determined as of the last
2            date prescribed for payment of the installment.
3            (E) Annualized Net Income; Corporations. For
4        corporations, net income shall be placed on an
5        annualized basis by multiplying by 12 the taxable
6        income
7                (i) for the first 3 months of the taxable year,
8            in the case of the installment required to be paid
9            in the 4th month,
10                (ii) for the first 3 months or for the first 5
11            months of the taxable year, in the case of the
12            installment required to be paid in the 6th month,
13                (iii) for the first 6 months or for the first 8
14            months of the taxable year, in the case of the
15            installment required to be paid in the 9th month,
16            and
17                (iv) for the first 9 months or for the first 11
18            months of the taxable year, in the case of the
19            installment required to be paid in the 12th month
20            of the taxable year,
21        then dividing the resulting amount by the number of
22        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
23        case may be).
24        (3) Notwithstanding any other provision of this
25    subsection (c), in the case of a federally regulated
26    exchange that elects to apportion its income under Section

 

 

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1    304(c-1) of this Act, the amount of each required
2    installment due prior to June 30 of the first taxable year
3    to which the election applies shall be 25% of the tax that
4    would have been shown on the return for that taxable year
5    if the taxpayer had not made such election.
6    (d) Exceptions. Notwithstanding the provisions of the
7preceding subsections, the penalty imposed by subsection (a)
8shall not be imposed if the taxpayer was not required to file
9an Illinois income tax return for the preceding taxable year,
10or, for individuals, if the taxpayer had no tax liability for
11the preceding taxable year and such year was a taxable year of
1212 months. The penalty imposed by subsection (a) shall also not
13be imposed on any underpayments of estimated tax due before the
14effective date of this amendatory Act of 1998 which
15underpayments are solely attributable to the change in
16apportionment from subsection (a) to subsection (h) of Section
17304. The provisions of this amendatory Act of 1998 apply to tax
18years ending on or after December 31, 1998.
19    (e) The penalty imposed for underpayment of estimated tax
20by subsection (a) of this Section shall not be imposed to the
21extent that the Director or his or her designate determines,
22pursuant to Section 3-8 of the Uniform Penalty and Interest Act
23that the penalty should not be imposed.
24    (f) Definition of tax. For purposes of subsections (b) and
25(c), the term "tax" means the excess of the tax imposed under
26Article 2 of this Act, over the amounts credited against such

 

 

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1tax under Sections 601(b) (3) and (4).
2    (g) Application of Section in case of tax withheld under
3Article 7. For purposes of applying this Section:
4        (1) tax withheld from compensation for the taxable year
5    shall be deemed a payment of estimated tax, and an equal
6    part of such amount shall be deemed paid on each
7    installment date for such taxable year, unless the taxpayer
8    establishes the dates on which all amounts were actually
9    withheld, in which case the amounts so withheld shall be
10    deemed payments of estimated tax on the dates on which such
11    amounts were actually withheld;
12        (2) amounts timely paid by a partnership, Subchapter S
13    corporation, or trust on behalf of a partner, shareholder,
14    or beneficiary pursuant to subsection (f) of Section 502 or
15    Section 709.5 and claimed as a payment of estimated tax
16    shall be deemed a payment of estimated tax made on the last
17    day of the taxable year of the partnership, Subchapter S
18    corporation, or trust for which the income from the
19    withholding is made was computed; and
20        (3) all other amounts pursuant to Article 7 shall be
21    deemed a payment of estimated tax on the date the payment
22    is made to the taxpayer of the amount from which the tax is
23    withheld.
24    (g-5) Amounts withheld under the State Salary and Annuity
25Withholding Act. An individual who has amounts withheld under
26paragraph (10) of Section 4 of the State Salary and Annuity

 

 

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1Withholding Act may elect to have those amounts treated as
2payments of estimated tax made on the dates on which those
3amounts are actually withheld.
4    (g-10) Notwithstanding any other provision of law, no
5penalty shall apply with respect to an underpayment of
6estimated tax for the first, second, or third quarter of any
7taxable year beginning on or after January 1, 2017 and
8beginning prior to January 1, 2018 if (i) the underpayment was
9due to the changes made by this amendatory Act of the 100th
10General Assembly, (ii) the payment was otherwise timely made,
11and (iii) the balance due is included with the taxpayer's
12estimated tax payment for the fourth quarter.
13    (i) Short taxable year. The application of this Section to
14taxable years of less than 12 months shall be in accordance
15with regulations prescribed by the Department.
16    The changes in this Section made by Public Act 84-127 shall
17apply to taxable years ending on or after January 1, 1986.
18(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
1997-636, eff. 6-1-12.)
 
20    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
21    Sec. 901. Collection authority.
22    (a) In general.
23    The Department shall collect the taxes imposed by this Act.
24The Department shall collect certified past due child support
25amounts under Section 2505-650 of the Department of Revenue Law

 

 

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1(20 ILCS 2505/2505-650). Except as provided in subsections (c),
2(e), (f), (g), and (h) of this Section, money collected
3pursuant to subsections (a) and (b) of Section 201 of this Act
4shall be paid into the General Revenue Fund in the State
5treasury; money collected pursuant to subsections (c) and (d)
6of Section 201 of this Act shall be paid into the Personal
7Property Tax Replacement Fund, a special fund in the State
8Treasury; and money collected under Section 2505-650 of the
9Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
10into the Child Support Enforcement Trust Fund, a special fund
11outside the State Treasury, or to the State Disbursement Unit
12established under Section 10-26 of the Illinois Public Aid
13Code, as directed by the Department of Healthcare and Family
14Services.
15    (b) Local Government Distributive Fund.
16    Beginning August 1, 1969, and continuing through June 30,
171994, the Treasurer shall transfer each month from the General
18Revenue Fund to a special fund in the State treasury, to be
19known as the "Local Government Distributive Fund", an amount
20equal to 1/12 of the net revenue realized from the tax imposed
21by subsections (a) and (b) of Section 201 of this Act during
22the preceding month. Beginning July 1, 1994, and continuing
23through June 30, 1995, the Treasurer shall transfer each month
24from the General Revenue Fund to the Local Government
25Distributive Fund an amount equal to 1/11 of the net revenue
26realized from the tax imposed by subsections (a) and (b) of

 

 

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1Section 201 of this Act during the preceding month. Beginning
2July 1, 1995 and continuing through January 31, 2011, the
3Treasurer shall transfer each month from the General Revenue
4Fund to the Local Government Distributive Fund an amount equal
5to the net of (i) 1/10 of the net revenue realized from the tax
6imposed by subsections (a) and (b) of Section 201 of the
7Illinois Income Tax Act during the preceding month (ii) minus,
8beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
9and beginning July 1, 2004, zero. Beginning February 1, 2011,
10and continuing through January 31, 2015, the Treasurer shall
11transfer each month from the General Revenue Fund to the Local
12Government Distributive Fund an amount equal to the sum of (i)
136% (10% of the ratio of the 3% individual income tax rate prior
14to 2011 to the 5% individual income tax rate after 2010) of the
15net revenue realized from the tax imposed by subsections (a)
16and (b) of Section 201 of this Act upon individuals, trusts,
17and estates during the preceding month and (ii) 6.86% (10% of
18the ratio of the 4.8% corporate income tax rate prior to 2011
19to the 7% corporate income tax rate after 2010) of the net
20revenue realized from the tax imposed by subsections (a) and
21(b) of Section 201 of this Act upon corporations during the
22preceding month. Beginning February 1, 2015 and continuing
23through January 31, 2017 January 31, 2025, the Treasurer shall
24transfer each month from the General Revenue Fund to the Local
25Government Distributive Fund an amount equal to the sum of (i)
268% (10% of the ratio of the 3% individual income tax rate prior

 

 

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1to 2011 to the 3.75% individual income tax rate after 2014) of
2the net revenue realized from the tax imposed by subsections
3(a) and (b) of Section 201 of this Act upon individuals,
4trusts, and estates during the preceding month and (ii) 9.14%
5(10% of the ratio of the 4.8% corporate income tax rate prior
6to 2011 to the 5.25% corporate income tax rate after 2014) of
7the net revenue realized from the tax imposed by subsections
8(a) and (b) of Section 201 of this Act upon corporations during
9the preceding month. Beginning February 1, 2017 February 1,
102025, the Treasurer shall transfer each month from the General
11Revenue Fund to the Local Government Distributive Fund an
12amount equal to the sum of (i) 6.06% 9.23% (10% of the ratio of
13the 3% individual income tax rate prior to 2011 to the 4.95%
143.25% individual income tax rate beginning in 2017 after 2024)
15of the net revenue realized from the tax imposed by subsections
16(a) and (b) of Section 201 of this Act upon individuals,
17trusts, and estates during the preceding month and (ii) 6.86%
18(10% of the ratio of the 4.8% corporate income tax rate prior
19to 2011 to the 7% corporate income tax rate beginning in 2017)
2010% of the net revenue realized from the tax imposed by
21subsections (a) and (b) of Section 201 of this Act upon
22corporations during the preceding month. Net revenue realized
23for a month shall be defined as the revenue from the tax
24imposed by subsections (a) and (b) of Section 201 of this Act
25which is deposited in the General Revenue Fund, the Education
26Assistance Fund, the Income Tax Surcharge Local Government

 

 

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1Distributive Fund, the Fund for the Advancement of Education,
2and the Commitment to Human Services Fund during the month
3minus the amount paid out of the General Revenue Fund in State
4warrants during that same month as refunds to taxpayers for
5overpayment of liability under the tax imposed by subsections
6(a) and (b) of Section 201 of this Act.
7    Beginning on August 26, 2014 (the effective date of Public
8Act 98-1052), the Comptroller shall perform the transfers
9required by this subsection (b) no later than 60 days after he
10or she receives the certification from the Treasurer as
11provided in Section 1 of the State Revenue Sharing Act.
12    (c) Deposits Into Income Tax Refund Fund.
13        (1) Beginning on January 1, 1989 and thereafter, the
14    Department shall deposit a percentage of the amounts
15    collected pursuant to subsections (a) and (b)(1), (2), and
16    (3), of Section 201 of this Act into a fund in the State
17    treasury known as the Income Tax Refund Fund. The
18    Department shall deposit 6% of such amounts during the
19    period beginning January 1, 1989 and ending on June 30,
20    1989. Beginning with State fiscal year 1990 and for each
21    fiscal year thereafter, the percentage deposited into the
22    Income Tax Refund Fund during a fiscal year shall be the
23    Annual Percentage. For fiscal years 1999 through 2001, the
24    Annual Percentage shall be 7.1%. For fiscal year 2003, the
25    Annual Percentage shall be 8%. For fiscal year 2004, the
26    Annual Percentage shall be 11.7%. Upon the effective date

 

 

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1    of this amendatory Act of the 93rd General Assembly, the
2    Annual Percentage shall be 10% for fiscal year 2005. For
3    fiscal year 2006, the Annual Percentage shall be 9.75%. For
4    fiscal year 2007, the Annual Percentage shall be 9.75%. For
5    fiscal year 2008, the Annual Percentage shall be 7.75%. For
6    fiscal year 2009, the Annual Percentage shall be 9.75%. For
7    fiscal year 2010, the Annual Percentage shall be 9.75%. For
8    fiscal year 2011, the Annual Percentage shall be 8.75%. For
9    fiscal year 2012, the Annual Percentage shall be 8.75%. For
10    fiscal year 2013, the Annual Percentage shall be 9.75%. For
11    fiscal year 2014, the Annual Percentage shall be 9.5%. For
12    fiscal year 2015, the Annual Percentage shall be 10%. For
13    all other fiscal years, the Annual Percentage shall be
14    calculated as a fraction, the numerator of which shall be
15    the amount of refunds approved for payment by the
16    Department during the preceding fiscal year as a result of
17    overpayment of tax liability under subsections (a) and
18    (b)(1), (2), and (3) of Section 201 of this Act plus the
19    amount of such refunds remaining approved but unpaid at the
20    end of the preceding fiscal year, minus the amounts
21    transferred into the Income Tax Refund Fund from the
22    Tobacco Settlement Recovery Fund, and the denominator of
23    which shall be the amounts which will be collected pursuant
24    to subsections (a) and (b)(1), (2), and (3) of Section 201
25    of this Act during the preceding fiscal year; except that
26    in State fiscal year 2002, the Annual Percentage shall in

 

 

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1    no event exceed 7.6%. The Director of Revenue shall certify
2    the Annual Percentage to the Comptroller on the last
3    business day of the fiscal year immediately preceding the
4    fiscal year for which it is to be effective.
5        (2) Beginning on January 1, 1989 and thereafter, the
6    Department shall deposit a percentage of the amounts
7    collected pursuant to subsections (a) and (b)(6), (7), and
8    (8), (c) and (d) of Section 201 of this Act into a fund in
9    the State treasury known as the Income Tax Refund Fund. The
10    Department shall deposit 18% of such amounts during the
11    period beginning January 1, 1989 and ending on June 30,
12    1989. Beginning with State fiscal year 1990 and for each
13    fiscal year thereafter, the percentage deposited into the
14    Income Tax Refund Fund during a fiscal year shall be the
15    Annual Percentage. For fiscal years 1999, 2000, and 2001,
16    the Annual Percentage shall be 19%. For fiscal year 2003,
17    the Annual Percentage shall be 27%. For fiscal year 2004,
18    the Annual Percentage shall be 32%. Upon the effective date
19    of this amendatory Act of the 93rd General Assembly, the
20    Annual Percentage shall be 24% for fiscal year 2005. For
21    fiscal year 2006, the Annual Percentage shall be 20%. For
22    fiscal year 2007, the Annual Percentage shall be 17.5%. For
23    fiscal year 2008, the Annual Percentage shall be 15.5%. For
24    fiscal year 2009, the Annual Percentage shall be 17.5%. For
25    fiscal year 2010, the Annual Percentage shall be 17.5%. For
26    fiscal year 2011, the Annual Percentage shall be 17.5%. For

 

 

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1    fiscal year 2012, the Annual Percentage shall be 17.5%. For
2    fiscal year 2013, the Annual Percentage shall be 14%. For
3    fiscal year 2014, the Annual Percentage shall be 13.4%. For
4    fiscal year 2015, the Annual Percentage shall be 14%. For
5    all other fiscal years, the Annual Percentage shall be
6    calculated as a fraction, the numerator of which shall be
7    the amount of refunds approved for payment by the
8    Department during the preceding fiscal year as a result of
9    overpayment of tax liability under subsections (a) and
10    (b)(6), (7), and (8), (c) and (d) of Section 201 of this
11    Act plus the amount of such refunds remaining approved but
12    unpaid at the end of the preceding fiscal year, and the
13    denominator of which shall be the amounts which will be
14    collected pursuant to subsections (a) and (b)(6), (7), and
15    (8), (c) and (d) of Section 201 of this Act during the
16    preceding fiscal year; except that in State fiscal year
17    2002, the Annual Percentage shall in no event exceed 23%.
18    The Director of Revenue shall certify the Annual Percentage
19    to the Comptroller on the last business day of the fiscal
20    year immediately preceding the fiscal year for which it is
21    to be effective.
22        (3) The Comptroller shall order transferred and the
23    Treasurer shall transfer from the Tobacco Settlement
24    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
25    in January, 2001, (ii) $35,000,000 in January, 2002, and
26    (iii) $35,000,000 in January, 2003.

 

 

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1    (d) Expenditures from Income Tax Refund Fund.
2        (1) Beginning January 1, 1989, money in the Income Tax
3    Refund Fund shall be expended exclusively for the purpose
4    of paying refunds resulting from overpayment of tax
5    liability under Section 201 of this Act, for paying rebates
6    under Section 208.1 in the event that the amounts in the
7    Homeowners' Tax Relief Fund are insufficient for that
8    purpose, and for making transfers pursuant to this
9    subsection (d).
10        (2) The Director shall order payment of refunds
11    resulting from overpayment of tax liability under Section
12    201 of this Act from the Income Tax Refund Fund only to the
13    extent that amounts collected pursuant to Section 201 of
14    this Act and transfers pursuant to this subsection (d) and
15    item (3) of subsection (c) have been deposited and retained
16    in the Fund.
17        (3) As soon as possible after the end of each fiscal
18    year, the Director shall order transferred and the State
19    Treasurer and State Comptroller shall transfer from the
20    Income Tax Refund Fund to the Personal Property Tax
21    Replacement Fund an amount, certified by the Director to
22    the Comptroller, equal to the excess of the amount
23    collected pursuant to subsections (c) and (d) of Section
24    201 of this Act deposited into the Income Tax Refund Fund
25    during the fiscal year over the amount of refunds resulting
26    from overpayment of tax liability under subsections (c) and

 

 

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1    (d) of Section 201 of this Act paid from the Income Tax
2    Refund Fund during the fiscal year.
3        (4) As soon as possible after the end of each fiscal
4    year, the Director shall order transferred and the State
5    Treasurer and State Comptroller shall transfer from the
6    Personal Property Tax Replacement Fund to the Income Tax
7    Refund Fund an amount, certified by the Director to the
8    Comptroller, equal to the excess of the amount of refunds
9    resulting from overpayment of tax liability under
10    subsections (c) and (d) of Section 201 of this Act paid
11    from the Income Tax Refund Fund during the fiscal year over
12    the amount collected pursuant to subsections (c) and (d) of
13    Section 201 of this Act deposited into the Income Tax
14    Refund Fund during the fiscal year.
15        (4.5) As soon as possible after the end of fiscal year
16    1999 and of each fiscal year thereafter, the Director shall
17    order transferred and the State Treasurer and State
18    Comptroller shall transfer from the Income Tax Refund Fund
19    to the General Revenue Fund any surplus remaining in the
20    Income Tax Refund Fund as of the end of such fiscal year;
21    excluding for fiscal years 2000, 2001, and 2002 amounts
22    attributable to transfers under item (3) of subsection (c)
23    less refunds resulting from the earned income tax credit.
24        (5) This Act shall constitute an irrevocable and
25    continuing appropriation from the Income Tax Refund Fund
26    for the purpose of paying refunds upon the order of the

 

 

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1    Director in accordance with the provisions of this Section.
2    (e) Deposits into the Education Assistance Fund and the
3Income Tax Surcharge Local Government Distributive Fund.
4    On July 1, 1991, and thereafter, of the amounts collected
5pursuant to subsections (a) and (b) of Section 201 of this Act,
6minus deposits into the Income Tax Refund Fund, the Department
7shall deposit 7.3% into the Education Assistance Fund in the
8State Treasury. Beginning July 1, 1991, and continuing through
9January 31, 1993, of the amounts collected pursuant to
10subsections (a) and (b) of Section 201 of the Illinois Income
11Tax Act, minus deposits into the Income Tax Refund Fund, the
12Department shall deposit 3.0% into the Income Tax Surcharge
13Local Government Distributive Fund in the State Treasury.
14Beginning February 1, 1993 and continuing through June 30,
151993, of the amounts collected pursuant to subsections (a) and
16(b) of Section 201 of the Illinois Income Tax Act, minus
17deposits into the Income Tax Refund Fund, the Department shall
18deposit 4.4% into the Income Tax Surcharge Local Government
19Distributive Fund in the State Treasury. Beginning July 1,
201993, and continuing through June 30, 1994, of the amounts
21collected under subsections (a) and (b) of Section 201 of this
22Act, minus deposits into the Income Tax Refund Fund, the
23Department shall deposit 1.475% into the Income Tax Surcharge
24Local Government Distributive Fund in the State Treasury.
25    (f) Deposits into the Fund for the Advancement of
26Education. Beginning February 1, 2015, the Department shall

 

 

SB0009 Engrossed- 181 -LRB100 06347 HLH 16385 b

1deposit the following portions of the revenue realized from the
2tax imposed upon individuals, trusts, and estates by
3subsections (a) and (b) of Section 201 of this Act during the
4preceding month, minus deposits into the Income Tax Refund
5Fund, into the Fund for the Advancement of Education:
6        (1) beginning February 1, 2015, and prior to February
7    1, 2025, 1/30; and
8        (2) beginning February 1, 2025, 1/26.
9    If the rate of tax imposed by subsection (a) and (b) of
10Section 201 is reduced pursuant to Section 201.5 of this Act,
11the Department shall not make the deposits required by this
12subsection (f) on or after the effective date of the reduction.
13    (g) Deposits into the Commitment to Human Services Fund.
14Beginning February 1, 2015, the Department shall deposit the
15following portions of the revenue realized from the tax imposed
16upon individuals, trusts, and estates by subsections (a) and
17(b) of Section 201 of this Act during the preceding month,
18minus deposits into the Income Tax Refund Fund, into the
19Commitment to Human Services Fund:
20        (1) beginning February 1, 2015, and prior to February
21    1, 2025, 1/30; and
22        (2) beginning February 1, 2025, 1/26.
23    If the rate of tax imposed by subsection (a) and (b) of
24Section 201 is reduced pursuant to Section 201.5 of this Act,
25the Department shall not make the deposits required by this
26subsection (g) on or after the effective date of the reduction.

 

 

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1    (h) Deposits into the Tax Compliance and Administration
2Fund. Beginning on the first day of the first calendar month to
3occur on or after August 26, 2014 (the effective date of Public
4Act 98-1098), each month the Department shall pay into the Tax
5Compliance and Administration Fund, to be used, subject to
6appropriation, to fund additional auditors and compliance
7personnel at the Department, an amount equal to 1/12 of 5% of
8the cash receipts collected during the preceding fiscal year by
9the Audit Bureau of the Department from the tax imposed by
10subsections (a), (b), (c), and (d) of Section 201 of this Act,
11net of deposits into the Income Tax Refund Fund made from those
12cash receipts.
13(Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;
1498-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.
157-20-15.)
 
16    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
17    Sec. 1501. Definitions.
18    (a) In general. When used in this Act, where not otherwise
19distinctly expressed or manifestly incompatible with the
20intent thereof:
21        (1) Business income. The term "business income" means
22    all income that may be treated as apportionable business
23    income under the Constitution of the United States.
24    Business income is net of the deductions allocable thereto.
25    Such term does not include compensation or the deductions

 

 

SB0009 Engrossed- 183 -LRB100 06347 HLH 16385 b

1    allocable thereto. For each taxable year beginning on or
2    after January 1, 2003, a taxpayer may elect to treat all
3    income other than compensation as business income. This
4    election shall be made in accordance with rules adopted by
5    the Department and, once made, shall be irrevocable.
6        (1.5) Captive real estate investment trust:
7            (A) The term "captive real estate investment
8        trust" means a corporation, trust, or association:
9                (i) that is considered a real estate
10            investment trust for the taxable year under
11            Section 856 of the Internal Revenue Code;
12                (ii) the certificates of beneficial interest
13            or shares of which are not regularly traded on an
14            established securities market; and
15                (iii) of which more than 50% of the voting
16            power or value of the beneficial interest or
17            shares, at any time during the last half of the
18            taxable year, is owned or controlled, directly,
19            indirectly, or constructively, by a single
20            corporation.
21            (B) The term "captive real estate investment
22        trust" does not include:
23                (i) a real estate investment trust of which
24            more than 50% of the voting power or value of the
25            beneficial interest or shares is owned or
26            controlled, directly, indirectly, or

 

 

SB0009 Engrossed- 184 -LRB100 06347 HLH 16385 b

1            constructively, by:
2                    (a) a real estate investment trust, other
3                than a captive real estate investment trust;
4                    (b) a person who is exempt from taxation
5                under Section 501 of the Internal Revenue Code,
6                and who is not required to treat income
7                received from the real estate investment trust
8                as unrelated business taxable income under
9                Section 512 of the Internal Revenue Code;
10                    (c) a listed Australian property trust, if
11                no more than 50% of the voting power or value
12                of the beneficial interest or shares of that
13                trust, at any time during the last half of the
14                taxable year, is owned or controlled, directly
15                or indirectly, by a single person;
16                    (d) an entity organized as a trust,
17                provided a listed Australian property trust
18                described in subparagraph (c) owns or
19                controls, directly or indirectly, or
20                constructively, 75% or more of the voting power
21                or value of the beneficial interests or shares
22                of such entity; or
23                    (e) an entity that is organized outside of
24                the laws of the United States and that
25                satisfies all of the following criteria:
26                        (1) at least 75% of the entity's total

 

 

SB0009 Engrossed- 185 -LRB100 06347 HLH 16385 b

1                    asset value at the close of its taxable
2                    year is represented by real estate assets
3                    (as defined in Section 856(c)(5)(B) of the
4                    Internal Revenue Code, thereby including
5                    shares or certificates of beneficial
6                    interest in any real estate investment
7                    trust), cash and cash equivalents, and
8                    U.S. Government securities;
9                        (2) the entity is not subject to tax on
10                    amounts that are distributed to its
11                    beneficial owners or is exempt from
12                    entity-level taxation;
13                        (3) the entity distributes at least
14                    85% of its taxable income (as computed in
15                    the jurisdiction in which it is organized)
16                    to the holders of its shares or
17                    certificates of beneficial interest on an
18                    annual basis;
19                        (4) either (i) the shares or
20                    beneficial interests of the entity are
21                    regularly traded on an established
22                    securities market or (ii) not more than 10%
23                    of the voting power or value in the entity
24                    is held, directly, indirectly, or
25                    constructively, by a single entity or
26                    individual; and

 

 

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1                        (5) the entity is organized in a
2                    country that has entered into a tax treaty
3                    with the United States; or
4                (ii) during its first taxable year for which it
5            elects to be treated as a real estate investment
6            trust under Section 856(c)(1) of the Internal
7            Revenue Code, a real estate investment trust the
8            certificates of beneficial interest or shares of
9            which are not regularly traded on an established
10            securities market, but only if the certificates of
11            beneficial interest or shares of the real estate
12            investment trust are regularly traded on an
13            established securities market prior to the earlier
14            of the due date (including extensions) for filing
15            its return under this Act for that first taxable
16            year or the date it actually files that return.
17            (C) For the purposes of this subsection (1.5), the
18        constructive ownership rules prescribed under Section
19        318(a) of the Internal Revenue Code, as modified by
20        Section 856(d)(5) of the Internal Revenue Code, apply
21        in determining the ownership of stock, assets, or net
22        profits of any person.
23            (D) For the purposes of this item (1.5), for
24        taxable years ending on or after August 16, 2007, the
25        voting power or value of the beneficial interest or
26        shares of a real estate investment trust does not

 

 

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1        include any voting power or value of beneficial
2        interest or shares in a real estate investment trust
3        held directly or indirectly in a segregated asset
4        account by a life insurance company (as described in
5        Section 817 of the Internal Revenue Code) to the extent
6        such voting power or value is for the benefit of
7        entities or persons who are either immune from taxation
8        or exempt from taxation under subtitle A of the
9        Internal Revenue Code.
10        (2) Commercial domicile. The term "commercial
11    domicile" means the principal place from which the trade or
12    business of the taxpayer is directed or managed.
13        (3) Compensation. The term "compensation" means wages,
14    salaries, commissions and any other form of remuneration
15    paid to employees for personal services.
16        (4) Corporation. The term "corporation" includes
17    associations, joint-stock companies, insurance companies
18    and cooperatives. Any entity, including a limited
19    liability company formed under the Illinois Limited
20    Liability Company Act, shall be treated as a corporation if
21    it is so classified for federal income tax purposes.
22        (5) Department. The term "Department" means the
23    Department of Revenue of this State.
24        (6) Director. The term "Director" means the Director of
25    Revenue of this State.
26        (7) Fiduciary. The term "fiduciary" means a guardian,

 

 

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1    trustee, executor, administrator, receiver, or any person
2    acting in any fiduciary capacity for any person.
3        (8) Financial organization.
4            (A) The term "financial organization" means any
5        bank, bank holding company, trust company, savings
6        bank, industrial bank, land bank, safe deposit
7        company, private banker, savings and loan association,
8        building and loan association, credit union, currency
9        exchange, cooperative bank, small loan company, sales
10        finance company, investment company, or any person
11        which is owned by a bank or bank holding company. For
12        the purpose of this Section a "person" will include
13        only those persons which a bank holding company may
14        acquire and hold an interest in, directly or
15        indirectly, under the provisions of the Bank Holding
16        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
17        where interests in any person must be disposed of
18        within certain required time limits under the Bank
19        Holding Company Act of 1956.
20            (B) For purposes of subparagraph (A) of this
21        paragraph, the term "bank" includes (i) any entity that
22        is regulated by the Comptroller of the Currency under
23        the National Bank Act, or by the Federal Reserve Board,
24        or by the Federal Deposit Insurance Corporation and
25        (ii) any federally or State chartered bank operating as
26        a credit card bank.

 

 

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1            (C) For purposes of subparagraph (A) of this
2        paragraph, the term "sales finance company" has the
3        meaning provided in the following item (i) or (ii):
4                (i) A person primarily engaged in one or more
5            of the following businesses: the business of
6            purchasing customer receivables, the business of
7            making loans upon the security of customer
8            receivables, the business of making loans for the
9            express purpose of funding purchases of tangible
10            personal property or services by the borrower, or
11            the business of finance leasing. For purposes of
12            this item (i), "customer receivable" means:
13                    (a) a retail installment contract or
14                retail charge agreement within the meaning of
15                the Sales Finance Agency Act, the Retail
16                Installment Sales Act, or the Motor Vehicle
17                Retail Installment Sales Act;
18                    (b) an installment, charge, credit, or
19                similar contract or agreement arising from the
20                sale of tangible personal property or services
21                in a transaction involving a deferred payment
22                price payable in one or more installments
23                subsequent to the sale; or
24                    (c) the outstanding balance of a contract
25                or agreement described in provisions (a) or (b)
26                of this item (i).

 

 

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1                A customer receivable need not provide for
2            payment of interest on deferred payments. A sales
3            finance company may purchase a customer receivable
4            from, or make a loan secured by a customer
5            receivable to, the seller in the original
6            transaction or to a person who purchased the
7            customer receivable directly or indirectly from
8            that seller.
9                (ii) A corporation meeting each of the
10            following criteria:
11                    (a) the corporation must be a member of an
12                "affiliated group" within the meaning of
13                Section 1504(a) of the Internal Revenue Code,
14                determined without regard to Section 1504(b)
15                of the Internal Revenue Code;
16                    (b) more than 50% of the gross income of
17                the corporation for the taxable year must be
18                interest income derived from qualifying loans.
19                A "qualifying loan" is a loan made to a member
20                of the corporation's affiliated group that
21                originates customer receivables (within the
22                meaning of item (i)) or to whom customer
23                receivables originated by a member of the
24                affiliated group have been transferred, to the
25                extent the average outstanding balance of
26                loans from that corporation to members of its

 

 

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1                affiliated group during the taxable year do not
2                exceed the limitation amount for that
3                corporation. The "limitation amount" for a
4                corporation is the average outstanding
5                balances during the taxable year of customer
6                receivables (within the meaning of item (i))
7                originated by all members of the affiliated
8                group. If the average outstanding balances of
9                the loans made by a corporation to members of
10                its affiliated group exceed the limitation
11                amount, the interest income of that
12                corporation from qualifying loans shall be
13                equal to its interest income from loans to
14                members of its affiliated groups times a
15                fraction equal to the limitation amount
16                divided by the average outstanding balances of
17                the loans made by that corporation to members
18                of its affiliated group;
19                    (c) th