Sen. Toi W. Hutchinson

Filed: 3/2/2017

 

 


 

 


 
10000SB0009sam003LRB100 06347 HLH 22889 a

1
AMENDMENT TO SENATE BILL 9

2    AMENDMENT NO. ______. Amend Senate Bill 9 by replacing
3everything after the enacting clause with the following:
 
4
"ARTICLE 5. BUDGET ECONOMIC STABILIZATION FUND ACT

 
5    Section 5-1. Short title. This Act may be cited as the
6Budget Economic Stabilization Fund Act.
 
7    Section 5-5. Legislative intent.
8    The General Assembly finds that, in order to restore
9Illinois' fiscal health, retaining a share of above-trend State
10revenues for future needs and for reducing the need for new
11taxes or increasing any rate of tax or otherwise modifying the
12tax structure, including the elimination or modification of
13deductions, exclusions, or exemptions, is a priority.
 
14    Section 5-10. Definitions. As used in this Act:

 

 

10000SB0009sam003- 2 -LRB100 06347 HLH 22889 a

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.
 

 

 

10000SB0009sam003- 3 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 4 -LRB100 06347 HLH 22889 a

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.
 

 

 

10000SB0009sam003- 5 -LRB100 06347 HLH 22889 a

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.

 

 

10000SB0009sam003- 6 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 7 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 8 -LRB100 06347 HLH 22889 a

1on Bill Backlog Payment Fund investments shall be deposited
2into that Fund.
 
3
ARTICLE 30. AMENDATORY PROVISIONS

 
4    Section 30-5. The State Finance Act is amended by changing
5Section 6z-51 and by adding Sections 5.878 and 5.879 as
6follows:
 
7    (30 ILCS 105/5.878 new)
8    Sec. 5.878. The Budget Economic Stabilization Fund.
 
9    (30 ILCS 105/5.879 new)
10    Sec. 5.879. The Bill Backlog Payment Fund.
 
11    (30 ILCS 105/6z-51)
12    Sec. 6z-51. Budget Stabilization Fund.
13    (a) The Budget Stabilization Fund, a special fund in the
14State Treasury, shall consist of moneys appropriated or
15transferred to that Fund, as provided in Section 6z-43 and as
16otherwise provided by law. All earnings on Budget Stabilization
17Fund investments shall be deposited into that Fund.
18    (b) Until an initial transfer has been made to the Budget
19Economic Stabilization Fund under Section 5-30 of the Budget
20Economic Stabilization Fund Act, the The State Comptroller may
21direct the State Treasurer to transfer moneys from the Budget

 

 

10000SB0009sam003- 9 -LRB100 06347 HLH 22889 a

1Stabilization Fund to the General Revenue Fund in order to meet
2cash flow deficits resulting from timing variations between
3disbursements and the receipt of funds within a fiscal year.
4Any moneys so borrowed in any fiscal year other than Fiscal
5Year 2011 shall be repaid by June 30 of the fiscal year in
6which they were borrowed. Any moneys so borrowed in Fiscal Year
72011 shall be repaid no later than July 15, 2011.
8    (c) During Fiscal Year 2017 only, amounts may be expended
9from the Budget Stabilization Fund only pursuant to specific
10authorization by appropriation. Any moneys expended pursuant
11to appropriation shall not be subject to repayment.
12(Source: P.A. 99-523, eff. 6-30-16.)
 
13    Section 30-10. The Illinois Income Tax Act is amended by
14changing Sections 201, 203, 212, 222, 804, 901, and 1501 and by
15adding Sections 201.7 and 225 as follows:
 
16    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
17    Sec. 201. Tax Imposed.
18    (a) In general. A tax measured by net income is hereby
19imposed on every individual, corporation, trust and estate for
20each taxable year ending after July 31, 1969 on the privilege
21of earning or receiving income in or as a resident of this
22State. Such tax shall be in addition to all other occupation or
23privilege taxes imposed by this State or by any municipal
24corporation or political subdivision thereof.

 

 

10000SB0009sam003- 10 -LRB100 06347 HLH 22889 a

1    (b) Rates. The tax imposed by subsection (a) of this
2Section shall be determined as follows, except as adjusted by
3subsection (d-1):
4        (1) In the case of an individual, trust or estate, for
5    taxable years ending prior to July 1, 1989, an amount equal
6    to 2 1/2% of the taxpayer's net income for the taxable
7    year.
8        (2) In the case of an individual, trust or estate, for
9    taxable years beginning prior to July 1, 1989 and ending
10    after June 30, 1989, an amount equal to the sum of (i) 2
11    1/2% of the taxpayer's net income for the period prior to
12    July 1, 1989, as calculated under Section 202.3, and (ii)
13    3% of the taxpayer's net income for the period after June
14    30, 1989, as calculated under Section 202.3.
15        (3) In the case of an individual, trust or estate, for
16    taxable years beginning after June 30, 1989, and ending
17    prior to January 1, 2011, an amount equal to 3% of the
18    taxpayer's net income for the taxable year.
19        (4) In the case of an individual, trust, or estate, for
20    taxable years beginning prior to January 1, 2011, and
21    ending after December 31, 2010, an amount equal to the sum
22    of (i) 3% of the taxpayer's net income for the period prior
23    to January 1, 2011, as calculated under Section 202.5, and
24    (ii) 5% of the taxpayer's net income for the period after
25    December 31, 2010, as calculated under Section 202.5.
26        (5) In the case of an individual, trust, or estate, for

 

 

10000SB0009sam003- 11 -LRB100 06347 HLH 22889 a

1    taxable years beginning on or after January 1, 2011, and
2    ending prior to January 1, 2015, an amount equal to 5% of
3    the taxpayer's net income for the taxable year.
4        (5.1) In the case of an individual, trust, or estate,
5    for taxable years beginning prior to January 1, 2015, and
6    ending after December 31, 2014, an amount equal to the sum
7    of (i) 5% of the taxpayer's net income for the period prior
8    to January 1, 2015, as calculated under Section 202.5, and
9    (ii) 3.75% of the taxpayer's net income for the period
10    after December 31, 2014, as calculated under Section 202.5.
11        (5.2) In the case of an individual, trust, or estate,
12    for taxable years beginning on or after January 1, 2015,
13    and ending prior to January 1, 2017 January 1, 2025, an
14    amount equal to 3.75% of the taxpayer's net income for the
15    taxable year.
16        (5.3) In the case of an individual, trust, or estate,
17    for taxable years beginning prior to January 1, 2017
18    January 1, 2025, and ending after December 31, 2016
19    December 31, 2024, an amount equal to the sum of (i) 3.75%
20    of the taxpayer's net income for the period prior to
21    January 1, 2017 January 1, 2025, as calculated under
22    Section 202.5, and (ii) 4.99% 3.25% of the taxpayer's net
23    income for the period after December 31, 2016 December 31,
24    2024, as calculated under Section 202.5.
25        (5.4) In the case of an individual, trust, or estate,
26    for taxable years beginning on or after January 1, 2017

 

 

10000SB0009sam003- 12 -LRB100 06347 HLH 22889 a

1    January 1, 2025, an amount equal to 4.99% 3.25% of the
2    taxpayer's net income for the taxable year.
3        (6) In the case of a corporation, for taxable years
4    ending prior to July 1, 1989, an amount equal to 4% of the
5    taxpayer's net income for the taxable year.
6        (7) In the case of a corporation, for taxable years
7    beginning prior to July 1, 1989 and ending after June 30,
8    1989, an amount equal to the sum of (i) 4% of the
9    taxpayer's net income for the period prior to July 1, 1989,
10    as calculated under Section 202.3, and (ii) 4.8% of the
11    taxpayer's net income for the period after June 30, 1989,
12    as calculated under Section 202.3.
13        (8) In the case of a corporation, for taxable years
14    beginning after June 30, 1989, and ending prior to January
15    1, 2011, an amount equal to 4.8% of the taxpayer's net
16    income for the taxable year.
17        (9) In the case of a corporation, for taxable years
18    beginning prior to January 1, 2011, and ending after
19    December 31, 2010, an amount equal to the sum of (i) 4.8%
20    of the taxpayer's net income for the period prior to
21    January 1, 2011, as calculated under Section 202.5, and
22    (ii) 7% of the taxpayer's net income for the period after
23    December 31, 2010, as calculated under Section 202.5.
24        (10) In the case of a corporation, for taxable years
25    beginning on or after January 1, 2011, and ending prior to
26    January 1, 2015, an amount equal to 7% of the taxpayer's

 

 

10000SB0009sam003- 13 -LRB100 06347 HLH 22889 a

1    net income for the taxable year.
2        (11) In the case of a corporation, for taxable years
3    beginning prior to January 1, 2015, and ending after
4    December 31, 2014, an amount equal to the sum of (i) 7% of
5    the taxpayer's net income for the period prior to January
6    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
7    of the taxpayer's net income for the period after December
8    31, 2014, as calculated under Section 202.5.
9        (12) In the case of a corporation, for taxable years
10    beginning on or after January 1, 2015, and ending prior to
11    January 1, 2017 January 1, 2025, an amount equal to 5.25%
12    of the taxpayer's net income for the taxable year.
13        (13) In the case of a corporation, for taxable years
14    beginning prior to January 1, 2017 January 1, 2025, and
15    ending after December 31, 2016 December 31, 2024, an amount
16    equal to the sum of (i) 5.25% of the taxpayer's net income
17    for the period prior to January 1, 2017 January 1, 2025, as
18    calculated under Section 202.5, and (ii) 7% 4.8% of the
19    taxpayer's net income for the period after December 31,
20    2016 December 31, 2024, as calculated under Section 202.5.
21        (14) In the case of a corporation, for taxable years
22    beginning on or after January 1, 2017 January 1, 2025, an
23    amount equal to 7% 4.8% of the taxpayer's net income for
24    the taxable year.
25    The rates under this subsection (b) are subject to the
26provisions of Section 201.5.

 

 

10000SB0009sam003- 14 -LRB100 06347 HLH 22889 a

1    (c) Personal Property Tax Replacement Income Tax.
2Beginning on July 1, 1979 and thereafter, in addition to such
3income tax, there is also hereby imposed the Personal Property
4Tax Replacement Income Tax measured by net income on every
5corporation (including Subchapter S corporations), partnership
6and trust, for each taxable year ending after June 30, 1979.
7Such taxes are imposed on the privilege of earning or receiving
8income in or as a resident of this State. The Personal Property
9Tax Replacement Income Tax shall be in addition to the income
10tax imposed by subsections (a) and (b) of this Section and in
11addition to all other occupation or privilege taxes imposed by
12this State or by any municipal corporation or political
13subdivision thereof.
14    (d) Additional Personal Property Tax Replacement Income
15Tax Rates. The personal property tax replacement income tax
16imposed by this subsection and subsection (c) of this Section
17in the case of a corporation, other than a Subchapter S
18corporation and except as adjusted by subsection (d-1), shall
19be an additional amount equal to 2.85% of such taxpayer's net
20income for the taxable year, except that beginning on January
211, 1981, and thereafter, the rate of 2.85% specified in this
22subsection shall be reduced to 2.5%, and in the case of a
23partnership, trust or a Subchapter S corporation shall be an
24additional amount equal to 1.5% of such taxpayer's net income
25for the taxable year.
26    (d-1) Rate reduction for certain foreign insurers. In the

 

 

10000SB0009sam003- 15 -LRB100 06347 HLH 22889 a

1case of a foreign insurer, as defined by Section 35A-5 of the
2Illinois Insurance Code, whose state or country of domicile
3imposes on insurers domiciled in Illinois a retaliatory tax
4(excluding any insurer whose premiums from reinsurance assumed
5are 50% or more of its total insurance premiums as determined
6under paragraph (2) of subsection (b) of Section 304, except
7that for purposes of this determination premiums from
8reinsurance do not include premiums from inter-affiliate
9reinsurance arrangements), beginning with taxable years ending
10on or after December 31, 1999, the sum of the rates of tax
11imposed by subsections (b) and (d) shall be reduced (but not
12increased) to the rate at which the total amount of tax imposed
13under this Act, net of all credits allowed under this Act,
14shall equal (i) the total amount of tax that would be imposed
15on the foreign insurer's net income allocable to Illinois for
16the taxable year by such foreign insurer's state or country of
17domicile if that net income were subject to all income taxes
18and taxes measured by net income imposed by such foreign
19insurer's state or country of domicile, net of all credits
20allowed or (ii) a rate of zero if no such tax is imposed on such
21income by the foreign insurer's state of domicile. For the
22purposes of this subsection (d-1), an inter-affiliate includes
23a mutual insurer under common management.
24        (1) For the purposes of subsection (d-1), in no event
25    shall the sum of the rates of tax imposed by subsections
26    (b) and (d) be reduced below the rate at which the sum of:

 

 

10000SB0009sam003- 16 -LRB100 06347 HLH 22889 a

1            (A) the total amount of tax imposed on such foreign
2        insurer under this Act for a taxable year, net of all
3        credits allowed under this Act, plus
4            (B) the privilege tax imposed by Section 409 of the
5        Illinois Insurance Code, the fire insurance company
6        tax imposed by Section 12 of the Fire Investigation
7        Act, and the fire department taxes imposed under
8        Section 11-10-1 of the Illinois Municipal Code,
9    equals 1.25% for taxable years ending prior to December 31,
10    2003, or 1.75% for taxable years ending on or after
11    December 31, 2003, of the net taxable premiums written for
12    the taxable year, as described by subsection (1) of Section
13    409 of the Illinois Insurance Code. This paragraph will in
14    no event increase the rates imposed under subsections (b)
15    and (d).
16        (2) Any reduction in the rates of tax imposed by this
17    subsection shall be applied first against the rates imposed
18    by subsection (b) and only after the tax imposed by
19    subsection (a) net of all credits allowed under this
20    Section other than the credit allowed under subsection (i)
21    has been reduced to zero, against the rates imposed by
22    subsection (d).
23    This subsection (d-1) is exempt from the provisions of
24Section 250.
25    (e) Investment credit. A taxpayer shall be allowed a credit
26against the Personal Property Tax Replacement Income Tax for

 

 

10000SB0009sam003- 17 -LRB100 06347 HLH 22889 a

1investment in qualified property.
2        (1) A taxpayer shall be allowed a credit equal to .5%
3    of the basis of qualified property placed in service during
4    the taxable year, provided such property is placed in
5    service on or after July 1, 1984. There shall be allowed an
6    additional credit equal to .5% of the basis of qualified
7    property placed in service during the taxable year,
8    provided such property is placed in service on or after
9    July 1, 1986, and the taxpayer's base employment within
10    Illinois has increased by 1% or more over the preceding
11    year as determined by the taxpayer's employment records
12    filed with the Illinois Department of Employment Security.
13    Taxpayers who are new to Illinois shall be deemed to have
14    met the 1% growth in base employment for the first year in
15    which they file employment records with the Illinois
16    Department of Employment Security. The provisions added to
17    this Section by Public Act 85-1200 (and restored by Public
18    Act 87-895) shall be construed as declaratory of existing
19    law and not as a new enactment. If, in any year, the
20    increase in base employment within Illinois over the
21    preceding year is less than 1%, the additional credit shall
22    be limited to that percentage times a fraction, the
23    numerator of which is .5% and the denominator of which is
24    1%, but shall not exceed .5%. The investment credit shall
25    not be allowed to the extent that it would reduce a
26    taxpayer's liability in any tax year below zero, nor may

 

 

10000SB0009sam003- 18 -LRB100 06347 HLH 22889 a

1    any credit for qualified property be allowed for any year
2    other than the year in which the property was placed in
3    service in Illinois. For tax years ending on or after
4    December 31, 1987, and on or before December 31, 1988, the
5    credit shall be allowed for the tax year in which the
6    property is placed in service, or, if the amount of the
7    credit exceeds the tax liability for that year, whether it
8    exceeds the original liability or the liability as later
9    amended, such excess may be carried forward and applied to
10    the tax liability of the 5 taxable years following the
11    excess credit years if the taxpayer (i) makes investments
12    which cause the creation of a minimum of 2,000 full-time
13    equivalent jobs in Illinois, (ii) is located in an
14    enterprise zone established pursuant to the Illinois
15    Enterprise Zone Act and (iii) is certified by the
16    Department of Commerce and Community Affairs (now
17    Department of Commerce and Economic Opportunity) as
18    complying with the requirements specified in clause (i) and
19    (ii) by July 1, 1986. The Department of Commerce and
20    Community Affairs (now Department of Commerce and Economic
21    Opportunity) shall notify the Department of Revenue of all
22    such certifications immediately. For tax years ending
23    after December 31, 1988, the credit shall be allowed for
24    the tax year in which the property is placed in service,
25    or, if the amount of the credit exceeds the tax liability
26    for that year, whether it exceeds the original liability or

 

 

10000SB0009sam003- 19 -LRB100 06347 HLH 22889 a

1    the liability as later amended, such excess may be carried
2    forward and applied to the tax liability of the 5 taxable
3    years following the excess credit years. The credit shall
4    be applied to the earliest year for which there is a
5    liability. If there is credit from more than one tax year
6    that is available to offset a liability, earlier credit
7    shall be applied first.
8        (2) The term "qualified property" means property
9    which:
10            (A) is tangible, whether new or used, including
11        buildings and structural components of buildings and
12        signs that are real property, but not including land or
13        improvements to real property that are not a structural
14        component of a building such as landscaping, sewer
15        lines, local access roads, fencing, parking lots, and
16        other appurtenances;
17            (B) is depreciable pursuant to Section 167 of the
18        Internal Revenue Code, except that "3-year property"
19        as defined in Section 168(c)(2)(A) of that Code is not
20        eligible for the credit provided by this subsection
21        (e);
22            (C) is acquired by purchase as defined in Section
23        179(d) of the Internal Revenue Code;
24            (D) is used in Illinois by a taxpayer who is
25        primarily engaged in manufacturing, or in mining coal
26        or fluorite, or in retailing, or was placed in service

 

 

10000SB0009sam003- 20 -LRB100 06347 HLH 22889 a

1        on or after July 1, 2006 in a River Edge Redevelopment
2        Zone established pursuant to the River Edge
3        Redevelopment Zone Act; and
4            (E) has not previously been used in Illinois in
5        such a manner and by such a person as would qualify for
6        the credit provided by this subsection (e) or
7        subsection (f).
8        (3) For purposes of this subsection (e),
9    "manufacturing" means the material staging and production
10    of tangible personal property by procedures commonly
11    regarded as manufacturing, processing, fabrication, or
12    assembling which changes some existing material into new
13    shapes, new qualities, or new combinations. For purposes of
14    this subsection (e) the term "mining" shall have the same
15    meaning as the term "mining" in Section 613(c) of the
16    Internal Revenue Code. For purposes of this subsection (e),
17    the term "retailing" means the sale of tangible personal
18    property for use or consumption and not for resale, or
19    services rendered in conjunction with the sale of tangible
20    personal property for use or consumption and not for
21    resale. For purposes of this subsection (e), "tangible
22    personal property" has the same meaning as when that term
23    is used in the Retailers' Occupation Tax Act, and, for
24    taxable years ending after December 31, 2008, does not
25    include the generation, transmission, or distribution of
26    electricity.

 

 

10000SB0009sam003- 21 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 22 -LRB100 06347 HLH 22889 a

1        (8) Unless the investment credit is extended by law,
2    the basis of qualified property shall not include costs
3    incurred after December 31, 2018, except for costs incurred
4    pursuant to a binding contract entered into on or before
5    December 31, 2018.
6        (9) Each taxable year ending before December 31, 2000,
7    a partnership may elect to pass through to its partners the
8    credits to which the partnership is entitled under this
9    subsection (e) for the taxable year. A partner may use the
10    credit allocated to him or her under this paragraph only
11    against the tax imposed in subsections (c) and (d) of this
12    Section. If the partnership makes that election, those
13    credits shall be allocated among the partners in the
14    partnership in accordance with the rules set forth in
15    Section 704(b) of the Internal Revenue Code, and the rules
16    promulgated under that Section, and the allocated amount of
17    the credits shall be allowed to the partners for that
18    taxable year. The partnership shall make this election on
19    its Personal Property Tax Replacement Income Tax return for
20    that taxable year. The election to pass through the credits
21    shall be irrevocable.
22        For taxable years ending on or after December 31, 2000,
23    a partner that qualifies its partnership for a subtraction
24    under subparagraph (I) of paragraph (2) of subsection (d)
25    of Section 203 or a shareholder that qualifies a Subchapter
26    S corporation for a subtraction under subparagraph (S) of

 

 

10000SB0009sam003- 23 -LRB100 06347 HLH 22889 a

1    paragraph (2) of subsection (b) of Section 203 shall be
2    allowed a credit under this subsection (e) equal to its
3    share of the credit earned under this subsection (e) during
4    the taxable year by the partnership or Subchapter S
5    corporation, determined in accordance with the
6    determination of income and distributive share of income
7    under Sections 702 and 704 and Subchapter S of the Internal
8    Revenue Code. This paragraph is exempt from the provisions
9    of Section 250.
10    (f) Investment credit; Enterprise Zone; River Edge
11Redevelopment Zone.
12        (1) A taxpayer shall be allowed a credit against the
13    tax imposed by subsections (a) and (b) of this Section for
14    investment in qualified property which is placed in service
15    in an Enterprise Zone created pursuant to the Illinois
16    Enterprise Zone Act or, for property placed in service on
17    or after July 1, 2006, a River Edge Redevelopment Zone
18    established pursuant to the River Edge Redevelopment Zone
19    Act. For partners, shareholders of Subchapter S
20    corporations, and owners of limited liability companies,
21    if the liability company is treated as a partnership for
22    purposes of federal and State income taxation, there shall
23    be allowed a credit under this subsection (f) to be
24    determined in accordance with the determination of income
25    and distributive share of income under Sections 702 and 704
26    and Subchapter S of the Internal Revenue Code. The credit

 

 

10000SB0009sam003- 24 -LRB100 06347 HLH 22889 a

1    shall be .5% of the basis for such property. The credit
2    shall be available only in the taxable year in which the
3    property is placed in service in the Enterprise Zone or
4    River Edge Redevelopment Zone and shall not be allowed to
5    the extent that it would reduce a taxpayer's liability for
6    the tax imposed by subsections (a) and (b) of this Section
7    to below zero. For tax years ending on or after December
8    31, 1985, the credit shall be allowed for the tax year in
9    which the property is placed in service, or, if the amount
10    of the credit exceeds the tax liability for that year,
11    whether it exceeds the original liability or the liability
12    as later amended, such excess may be carried forward and
13    applied to the tax liability of the 5 taxable years
14    following the excess credit year. The credit shall be
15    applied to the earliest year for which there is a
16    liability. If there is credit from more than one tax year
17    that is available to offset a liability, the credit
18    accruing first in time shall be applied first.
19        (2) The term qualified property means property which:
20            (A) is tangible, whether new or used, including
21        buildings and structural components of buildings;
22            (B) is depreciable pursuant to Section 167 of the
23        Internal Revenue Code, except that "3-year property"
24        as defined in Section 168(c)(2)(A) of that Code is not
25        eligible for the credit provided by this subsection
26        (f);

 

 

10000SB0009sam003- 25 -LRB100 06347 HLH 22889 a

1            (C) is acquired by purchase as defined in Section
2        179(d) of the Internal Revenue Code;
3            (D) is used in the Enterprise Zone or River Edge
4        Redevelopment Zone by the taxpayer; and
5            (E) has not been previously used in Illinois in
6        such a manner and by such a person as would qualify for
7        the credit provided by this subsection (f) or
8        subsection (e).
9        (3) The basis of qualified property shall be the basis
10    used to compute the depreciation deduction for federal
11    income tax purposes.
12        (4) If the basis of the property for federal income tax
13    depreciation purposes is increased after it has been placed
14    in service in the Enterprise Zone or River Edge
15    Redevelopment Zone by the taxpayer, the amount of such
16    increase shall be deemed property placed in service on the
17    date of such increase in basis.
18        (5) The term "placed in service" shall have the same
19    meaning as under Section 46 of the Internal Revenue Code.
20        (6) If during any taxable year, any property ceases to
21    be qualified property in the hands of the taxpayer within
22    48 months after being placed in service, or the situs of
23    any qualified property is moved outside the Enterprise Zone
24    or River Edge Redevelopment Zone within 48 months after
25    being placed in service, the tax imposed under subsections
26    (a) and (b) of this Section for such taxable year shall be

 

 

10000SB0009sam003- 26 -LRB100 06347 HLH 22889 a

1    increased. Such increase shall be determined by (i)
2    recomputing the investment credit which would have been
3    allowed for the year in which credit for such property was
4    originally allowed by eliminating such property from such
5    computation, and (ii) subtracting such recomputed credit
6    from the amount of credit previously allowed. For the
7    purposes of this paragraph (6), a reduction of the basis of
8    qualified property resulting from a redetermination of the
9    purchase price shall be deemed a disposition of qualified
10    property to the extent of such reduction.
11        (7) There shall be allowed an additional credit equal
12    to 0.5% of the basis of qualified property placed in
13    service during the taxable year in a River Edge
14    Redevelopment Zone, provided such property is placed in
15    service on or after July 1, 2006, and the taxpayer's base
16    employment within Illinois has increased by 1% or more over
17    the preceding year as determined by the taxpayer's
18    employment records filed with the Illinois Department of
19    Employment Security. Taxpayers who are new to Illinois
20    shall be deemed to have met the 1% growth in base
21    employment for the first year in which they file employment
22    records with the Illinois Department of Employment
23    Security. If, in any year, the increase in base employment
24    within Illinois over the preceding year is less than 1%,
25    the additional credit shall be limited to that percentage
26    times a fraction, the numerator of which is 0.5% and the

 

 

10000SB0009sam003- 27 -LRB100 06347 HLH 22889 a

1    denominator of which is 1%, but shall not exceed 0.5%.
2    (g) (Blank).
3    (h) Investment credit; High Impact Business.
4        (1) Subject to subsections (b) and (b-5) of Section 5.5
5    of the Illinois Enterprise Zone Act, a taxpayer shall be
6    allowed a credit against the tax imposed by subsections (a)
7    and (b) of this Section for investment in qualified
8    property which is placed in service by a Department of
9    Commerce and Economic Opportunity designated High Impact
10    Business. The credit shall be .5% of the basis for such
11    property. The credit shall not be available (i) until the
12    minimum investments in qualified property set forth in
13    subdivision (a)(3)(A) of Section 5.5 of the Illinois
14    Enterprise Zone Act have been satisfied or (ii) until the
15    time authorized in subsection (b-5) of the Illinois
16    Enterprise Zone Act for entities designated as High Impact
17    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
18    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
19    Act, and shall not be allowed to the extent that it would
20    reduce a taxpayer's liability for the tax imposed by
21    subsections (a) and (b) of this Section to below zero. The
22    credit applicable to such investments shall be taken in the
23    taxable year in which such investments have been completed.
24    The credit for additional investments beyond the minimum
25    investment by a designated high impact business authorized
26    under subdivision (a)(3)(A) of Section 5.5 of the Illinois

 

 

10000SB0009sam003- 28 -LRB100 06347 HLH 22889 a

1    Enterprise Zone Act shall be available only in the taxable
2    year in which the property is placed in service and shall
3    not be allowed to the extent that it would reduce a
4    taxpayer's liability for the tax imposed by subsections (a)
5    and (b) of this Section to below zero. For tax years ending
6    on or after December 31, 1987, the credit shall be allowed
7    for the tax year in which the property is placed in
8    service, or, if the amount of the credit exceeds the tax
9    liability for that year, whether it exceeds the original
10    liability or the liability as later amended, such excess
11    may be carried forward and applied to the tax liability of
12    the 5 taxable years following the excess credit year. The
13    credit shall be applied to the earliest year for which
14    there is a liability. If there is credit from more than one
15    tax year that is available to offset a liability, the
16    credit accruing first in time shall be applied first.
17        Changes made in this subdivision (h)(1) by Public Act
18    88-670 restore changes made by Public Act 85-1182 and
19    reflect existing law.
20        (2) The term qualified property means property which:
21            (A) is tangible, whether new or used, including
22        buildings and structural components of buildings;
23            (B) is depreciable pursuant to Section 167 of the
24        Internal Revenue Code, except that "3-year property"
25        as defined in Section 168(c)(2)(A) of that Code is not
26        eligible for the credit provided by this subsection

 

 

10000SB0009sam003- 29 -LRB100 06347 HLH 22889 a

1        (h);
2            (C) is acquired by purchase as defined in Section
3        179(d) of the Internal Revenue Code; and
4            (D) is not eligible for the Enterprise Zone
5        Investment Credit provided by subsection (f) of this
6        Section.
7        (3) The basis of qualified property shall be the basis
8    used to compute the depreciation deduction for federal
9    income tax purposes.
10        (4) If the basis of the property for federal income tax
11    depreciation purposes is increased after it has been placed
12    in service in a federally designated Foreign Trade Zone or
13    Sub-Zone located in Illinois by the taxpayer, the amount of
14    such increase shall be deemed property placed in service on
15    the date of such increase in basis.
16        (5) The term "placed in service" shall have the same
17    meaning as under Section 46 of the Internal Revenue Code.
18        (6) If during any taxable year ending on or before
19    December 31, 1996, any property ceases to be qualified
20    property in the hands of the taxpayer within 48 months
21    after being placed in service, or the situs of any
22    qualified property is moved outside Illinois within 48
23    months after being placed in service, the tax imposed under
24    subsections (a) and (b) of this Section for such taxable
25    year shall be increased. Such increase shall be determined
26    by (i) recomputing the investment credit which would have

 

 

10000SB0009sam003- 30 -LRB100 06347 HLH 22889 a

1    been allowed for the year in which credit for such property
2    was originally allowed by eliminating such property from
3    such computation, and (ii) subtracting such recomputed
4    credit from the amount of credit previously allowed. For
5    the purposes of this paragraph (6), a reduction of the
6    basis of qualified property resulting from a
7    redetermination of the purchase price shall be deemed a
8    disposition of qualified property to the extent of such
9    reduction.
10        (7) Beginning with tax years ending after December 31,
11    1996, if a taxpayer qualifies for the credit under this
12    subsection (h) and thereby is granted a tax abatement and
13    the taxpayer relocates its entire facility in violation of
14    the explicit terms and length of the contract under Section
15    18-183 of the Property Tax Code, the tax imposed under
16    subsections (a) and (b) of this Section shall be increased
17    for the taxable year in which the taxpayer relocated its
18    facility by an amount equal to the amount of credit
19    received by the taxpayer under this subsection (h).
20    (i) Credit for Personal Property Tax Replacement Income
21Tax. For tax years ending prior to December 31, 2003, a credit
22shall be allowed against the tax imposed by subsections (a) and
23(b) of this Section for the tax imposed by subsections (c) and
24(d) of this Section. This credit shall be computed by
25multiplying the tax imposed by subsections (c) and (d) of this
26Section by a fraction, the numerator of which is base income

 

 

10000SB0009sam003- 31 -LRB100 06347 HLH 22889 a

1allocable to Illinois and the denominator of which is Illinois
2base income, and further multiplying the product by the tax
3rate imposed by subsections (a) and (b) of this Section.
4    Any credit earned on or after December 31, 1986 under this
5subsection which is unused in the year the credit is computed
6because it exceeds the tax liability imposed by subsections (a)
7and (b) for that year (whether it exceeds the original
8liability or the liability as later amended) may be carried
9forward and applied to the tax liability imposed by subsections
10(a) and (b) of the 5 taxable years following the excess credit
11year, provided that no credit may be carried forward to any
12year ending on or after December 31, 2003. This credit shall be
13applied first to the earliest year for which there is a
14liability. If there is a credit under this subsection from more
15than one tax year that is available to offset a liability the
16earliest credit arising under this subsection shall be applied
17first.
18    If, during any taxable year ending on or after December 31,
191986, the tax imposed by subsections (c) and (d) of this
20Section for which a taxpayer has claimed a credit under this
21subsection (i) is reduced, the amount of credit for such tax
22shall also be reduced. Such reduction shall be determined by
23recomputing the credit to take into account the reduced tax
24imposed by subsections (c) and (d). If any portion of the
25reduced amount of credit has been carried to a different
26taxable year, an amended return shall be filed for such taxable

 

 

10000SB0009sam003- 32 -LRB100 06347 HLH 22889 a

1year to reduce the amount of credit claimed.
2    (j) Training expense credit. Beginning with tax years
3ending on or after December 31, 1986 and prior to December 31,
42003, a taxpayer shall be allowed a credit against the tax
5imposed by subsections (a) and (b) under this Section for all
6amounts paid or accrued, on behalf of all persons employed by
7the taxpayer in Illinois or Illinois residents employed outside
8of Illinois by a taxpayer, for educational or vocational
9training in semi-technical or technical fields or semi-skilled
10or skilled fields, which were deducted from gross income in the
11computation of taxable income. The credit against the tax
12imposed by subsections (a) and (b) shall be 1.6% of such
13training expenses. For partners, shareholders of subchapter S
14corporations, and owners of limited liability companies, if the
15liability company is treated as a partnership for purposes of
16federal and State income taxation, there shall be allowed a
17credit under this subsection (j) to be determined in accordance
18with the determination of income and distributive share of
19income under Sections 702 and 704 and subchapter S of the
20Internal Revenue Code.
21    Any credit allowed under this subsection which is unused in
22the year the credit is earned may be carried forward to each of
23the 5 taxable years following the year for which the credit is
24first computed until it is used. This credit shall be applied
25first to the earliest year for which there is a liability. If
26there is a credit under this subsection from more than one tax

 

 

10000SB0009sam003- 33 -LRB100 06347 HLH 22889 a

1year that is available to offset a liability the earliest
2credit arising under this subsection shall be applied first. No
3carryforward credit may be claimed in any tax year ending on or
4after December 31, 2003.
5    (k) Research and development credit. For tax years ending
6after July 1, 1990 and prior to December 31, 2003, and
7beginning again for tax years ending on or after December 31,
82004, and ending prior to January 1, 2016, a taxpayer shall be
9allowed a credit against the tax imposed by subsections (a) and
10(b) of this Section for increasing research activities in this
11State. The credit allowed against the tax imposed by
12subsections (a) and (b) shall be equal to 6 1/2% of the
13qualifying expenditures for increasing research activities in
14this State. For partners, shareholders of subchapter S
15corporations, and owners of limited liability companies, if the
16liability company is treated as a partnership for purposes of
17federal and State income taxation, there shall be allowed a
18credit under this subsection to be determined in accordance
19with the determination of income and distributive share of
20income under Sections 702 and 704 and subchapter S of the
21Internal Revenue Code.
22    For purposes of this subsection, "qualifying expenditures"
23means the qualifying expenditures as defined for the federal
24credit for increasing research activities which would be
25allowable under Section 41 of the Internal Revenue Code and
26which are conducted in this State, "qualifying expenditures for

 

 

10000SB0009sam003- 34 -LRB100 06347 HLH 22889 a

1increasing research activities in this State" means the excess
2of qualifying expenditures for the taxable year in which
3incurred over qualifying expenditures for the base period,
4"qualifying expenditures for the base period" means (i) for tax
5years ending prior to December 31, 2017, the average of the
6qualifying expenditures for each year in the base period; and
7(2) for tax years ending on or after December 31, 2017, 50% of
8the average of the qualifying expenditures for each year in the
9base period, and "base period" means the 3 taxable years
10immediately preceding the taxable year for which the
11determination is being made.
12    Any credit in excess of the tax liability for the taxable
13year may be carried forward. A taxpayer may elect to have the
14unused credit shown on its final completed return carried over
15as a credit against the tax liability for the following 5
16taxable years or until it has been fully used, whichever occurs
17first; provided that no credit earned in a tax year ending
18prior to December 31, 2003 may be carried forward to any year
19ending on or after December 31, 2003.
20    If an unused credit is carried forward to a given year from
212 or more earlier years, that credit arising in the earliest
22year will be applied first against the tax liability for the
23given year. If a tax liability for the given year still
24remains, the credit from the next earliest year will then be
25applied, and so on, until all credits have been used or no tax
26liability for the given year remains. Any remaining unused

 

 

10000SB0009sam003- 35 -LRB100 06347 HLH 22889 a

1credit or credits then will be carried forward to the next
2following year in which a tax liability is incurred, except
3that no credit can be carried forward to a year which is more
4than 5 years after the year in which the expense for which the
5credit is given was incurred.
6    No inference shall be drawn from this amendatory Act of the
791st General Assembly in construing this Section for taxable
8years beginning before January 1, 1999.
9    This subsection (k) is exempt from the provisions of
10Section 250.
11    It is the intent of the General Assembly that the research
12and development credit under this subsection (k) shall apply
13continuously for all tax years ending on or after December 31,
142004, including, but not limited to, the period beginning on
15January 1, 2016 and ending on the effective date of this
16amendatory Act of the 100th General Assembly. All actions taken
17in reliance on the continuation of the credit under this
18subsection (k) by any taxpayer are hereby validated.
19    (l) Environmental Remediation Tax Credit.
20        (i) For tax years ending after December 31, 1997 and on
21    or before December 31, 2001, a taxpayer shall be allowed a
22    credit against the tax imposed by subsections (a) and (b)
23    of this Section for certain amounts paid for unreimbursed
24    eligible remediation costs, as specified in this
25    subsection. For purposes of this Section, "unreimbursed
26    eligible remediation costs" means costs approved by the

 

 

10000SB0009sam003- 36 -LRB100 06347 HLH 22889 a

1    Illinois Environmental Protection Agency ("Agency") under
2    Section 58.14 of the Environmental Protection Act that were
3    paid in performing environmental remediation at a site for
4    which a No Further Remediation Letter was issued by the
5    Agency and recorded under Section 58.10 of the
6    Environmental Protection Act. The credit must be claimed
7    for the taxable year in which Agency approval of the
8    eligible remediation costs is granted. The credit is not
9    available to any taxpayer if the taxpayer or any related
10    party caused or contributed to, in any material respect, a
11    release of regulated substances on, in, or under the site
12    that was identified and addressed by the remedial action
13    pursuant to the Site Remediation Program of the
14    Environmental Protection Act. After the Pollution Control
15    Board rules are adopted pursuant to the Illinois
16    Administrative Procedure Act for the administration and
17    enforcement of Section 58.9 of the Environmental
18    Protection Act, determinations as to credit availability
19    for purposes of this Section shall be made consistent with
20    those rules. For purposes of this Section, "taxpayer"
21    includes a person whose tax attributes the taxpayer has
22    succeeded to under Section 381 of the Internal Revenue Code
23    and "related party" includes the persons disallowed a
24    deduction for losses by paragraphs (b), (c), and (f)(1) of
25    Section 267 of the Internal Revenue Code by virtue of being
26    a related taxpayer, as well as any of its partners. The

 

 

10000SB0009sam003- 37 -LRB100 06347 HLH 22889 a

1    credit allowed against the tax imposed by subsections (a)
2    and (b) shall be equal to 25% of the unreimbursed eligible
3    remediation costs in excess of $100,000 per site, except
4    that the $100,000 threshold shall not apply to any site
5    contained in an enterprise zone as determined by the
6    Department of Commerce and Community Affairs (now
7    Department of Commerce and Economic Opportunity). The
8    total credit allowed shall not exceed $40,000 per year with
9    a maximum total of $150,000 per site. For partners and
10    shareholders of subchapter S corporations, there shall be
11    allowed a credit under this subsection to be determined in
12    accordance with the determination of income and
13    distributive share of income under Sections 702 and 704 and
14    subchapter S of the Internal Revenue Code.
15        (ii) A credit allowed under this subsection that is
16    unused in the year the credit is earned may be carried
17    forward to each of the 5 taxable years following the year
18    for which the credit is first earned until it is used. The
19    term "unused credit" does not include any amounts of
20    unreimbursed eligible remediation costs in excess of the
21    maximum credit per site authorized under paragraph (i).
22    This credit shall be applied first to the earliest year for
23    which there is a liability. If there is a credit under this
24    subsection from more than one tax year that is available to
25    offset a liability, the earliest credit arising under this
26    subsection shall be applied first. A credit allowed under

 

 

10000SB0009sam003- 38 -LRB100 06347 HLH 22889 a

1    this subsection may be sold to a buyer as part of a sale of
2    all or part of the remediation site for which the credit
3    was granted. The purchaser of a remediation site and the
4    tax credit shall succeed to the unused credit and remaining
5    carry-forward period of the seller. To perfect the
6    transfer, the assignor shall record the transfer in the
7    chain of title for the site and provide written notice to
8    the Director of the Illinois Department of Revenue of the
9    assignor's intent to sell the remediation site and the
10    amount of the tax credit to be transferred as a portion of
11    the sale. In no event may a credit be transferred to any
12    taxpayer if the taxpayer or a related party would not be
13    eligible under the provisions of subsection (i).
14        (iii) For purposes of this Section, the term "site"
15    shall have the same meaning as under Section 58.2 of the
16    Environmental Protection Act.
17    (m) Education expense credit. Beginning with tax years
18ending after December 31, 1999, a taxpayer who is the custodian
19of one or more qualifying pupils shall be allowed a credit
20against the tax imposed by subsections (a) and (b) of this
21Section for qualified education expenses incurred on behalf of
22the qualifying pupils. The credit shall be equal to 25% of
23qualified education expenses, but in no event may the total
24credit under this subsection claimed by a family that is the
25custodian of qualifying pupils exceed (i) $500 for tax years
26ending prior to December 31, 2017, and (ii) $750 for tax years

 

 

10000SB0009sam003- 39 -LRB100 06347 HLH 22889 a

1ending on or after December 31, 2017. In no event shall a
2credit under this subsection reduce the taxpayer's liability
3under this Act to less than zero. This subsection is exempt
4from the provisions of Section 250 of this Act.
5    For purposes of this subsection:
6    "Qualifying pupils" means individuals who (i) are
7residents of the State of Illinois, (ii) are under the age of
821 at the close of the school year for which a credit is
9sought, and (iii) during the school year for which a credit is
10sought were full-time pupils enrolled in a kindergarten through
11twelfth grade education program at any school, as defined in
12this subsection.
13    "Qualified education expense" means the amount incurred on
14behalf of a qualifying pupil in excess of $250 for tuition,
15book fees, and lab fees at the school in which the pupil is
16enrolled during the regular school year.
17    "School" means any public or nonpublic elementary or
18secondary school in Illinois that is in compliance with Title
19VI of the Civil Rights Act of 1964 and attendance at which
20satisfies the requirements of Section 26-1 of the School Code,
21except that nothing shall be construed to require a child to
22attend any particular public or nonpublic school to qualify for
23the credit under this Section.
24    "Custodian" means, with respect to qualifying pupils, an
25Illinois resident who is a parent, the parents, a legal
26guardian, or the legal guardians of the qualifying pupils.

 

 

10000SB0009sam003- 40 -LRB100 06347 HLH 22889 a

1    (n) River Edge Redevelopment Zone site remediation tax
2credit.
3        (i) For tax years ending on or after December 31, 2006,
4    a taxpayer shall be allowed a credit against the tax
5    imposed by subsections (a) and (b) of this Section for
6    certain amounts paid for unreimbursed eligible remediation
7    costs, as specified in this subsection. For purposes of
8    this Section, "unreimbursed eligible remediation costs"
9    means costs approved by the Illinois Environmental
10    Protection Agency ("Agency") under Section 58.14a of the
11    Environmental Protection Act that were paid in performing
12    environmental remediation at a site within a River Edge
13    Redevelopment Zone for which a No Further Remediation
14    Letter was issued by the Agency and recorded under Section
15    58.10 of the Environmental Protection Act. The credit must
16    be claimed for the taxable year in which Agency approval of
17    the eligible remediation costs is granted. The credit is
18    not available to any taxpayer if the taxpayer or any
19    related party caused or contributed to, in any material
20    respect, a release of regulated substances on, in, or under
21    the site that was identified and addressed by the remedial
22    action pursuant to the Site Remediation Program of the
23    Environmental Protection Act. Determinations as to credit
24    availability for purposes of this Section shall be made
25    consistent with rules adopted by the Pollution Control
26    Board pursuant to the Illinois Administrative Procedure

 

 

10000SB0009sam003- 41 -LRB100 06347 HLH 22889 a

1    Act for the administration and enforcement of Section 58.9
2    of the Environmental Protection Act. For purposes of this
3    Section, "taxpayer" includes a person whose tax attributes
4    the taxpayer has succeeded to under Section 381 of the
5    Internal Revenue Code and "related party" includes the
6    persons disallowed a deduction for losses by paragraphs
7    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
8    Code by virtue of being a related taxpayer, as well as any
9    of its partners. The credit allowed against the tax imposed
10    by subsections (a) and (b) shall be equal to 25% of the
11    unreimbursed eligible remediation costs in excess of
12    $100,000 per site.
13        (ii) A credit allowed under this subsection that is
14    unused in the year the credit is earned may be carried
15    forward to each of the 5 taxable years following the year
16    for which the credit is first earned until it is used. This
17    credit shall be applied first to the earliest year for
18    which there is a liability. If there is a credit under this
19    subsection from more than one tax year that is available to
20    offset a liability, the earliest credit arising under this
21    subsection shall be applied first. A credit allowed under
22    this subsection may be sold to a buyer as part of a sale of
23    all or part of the remediation site for which the credit
24    was granted. The purchaser of a remediation site and the
25    tax credit shall succeed to the unused credit and remaining
26    carry-forward period of the seller. To perfect the

 

 

10000SB0009sam003- 42 -LRB100 06347 HLH 22889 a

1    transfer, the assignor shall record the transfer in the
2    chain of title for the site and provide written notice to
3    the Director of the Illinois Department of Revenue of the
4    assignor's intent to sell the remediation site and the
5    amount of the tax credit to be transferred as a portion of
6    the sale. In no event may a credit be transferred to any
7    taxpayer if the taxpayer or a related party would not be
8    eligible under the provisions of subsection (i).
9        (iii) For purposes of this Section, the term "site"
10    shall have the same meaning as under Section 58.2 of the
11    Environmental Protection Act.
12    (o) For each of taxable years during the Compassionate Use
13of Medical Cannabis Pilot Program, a surcharge is imposed on
14all taxpayers on income arising from the sale or exchange of
15capital assets, depreciable business property, real property
16used in the trade or business, and Section 197 intangibles of
17an organization registrant under the Compassionate Use of
18Medical Cannabis Pilot Program Act. The amount of the surcharge
19is equal to the amount of federal income tax liability for the
20taxable year attributable to those sales and exchanges. The
21surcharge imposed does not apply if:
22        (1) the medical cannabis cultivation center
23    registration, medical cannabis dispensary registration, or
24    the property of a registration is transferred as a result
25    of any of the following:
26            (A) bankruptcy, a receivership, or a debt

 

 

10000SB0009sam003- 43 -LRB100 06347 HLH 22889 a

1        adjustment initiated by or against the initial
2        registration or the substantial owners of the initial
3        registration;
4            (B) cancellation, revocation, or termination of
5        any registration by the Illinois Department of Public
6        Health;
7            (C) a determination by the Illinois Department of
8        Public Health that transfer of the registration is in
9        the best interests of Illinois qualifying patients as
10        defined by the Compassionate Use of Medical Cannabis
11        Pilot Program Act;
12            (D) the death of an owner of the equity interest in
13        a registrant;
14            (E) the acquisition of a controlling interest in
15        the stock or substantially all of the assets of a
16        publicly traded company;
17            (F) a transfer by a parent company to a wholly
18        owned subsidiary; or
19            (G) the transfer or sale to or by one person to
20        another person where both persons were initial owners
21        of the registration when the registration was issued;
22        or
23        (2) the cannabis cultivation center registration,
24    medical cannabis dispensary registration, or the
25    controlling interest in a registrant's property is
26    transferred in a transaction to lineal descendants in which

 

 

10000SB0009sam003- 44 -LRB100 06347 HLH 22889 a

1    no gain or loss is recognized or as a result of a
2    transaction in accordance with Section 351 of the Internal
3    Revenue Code in which no gain or loss is recognized.
4(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
5eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
6eff. 7-16-14.)
 
7    (35 ILCS 5/201.7 new)
8    Sec. 201.7. Fiscal Year 2018 spending limitation and tax
9reduction.
10    (a) If, in State fiscal year 2018, State spending exceeds
11the State spending limitation set forth in subsection (b) of
12this Section, then the tax rates set forth in subsection (b) of
13Section 201 of this Act shall be reduced, according to the
14procedures set forth in this Section, to 3.75% of the
15taxpayer's net income for individuals, trusts, and estates and
16to 5.25% of the taxpayer's net income for corporations. For all
17taxable years following the taxable year in which the rate has
18been reduced pursuant to this Section, the tax rate set forth
19in subsection (b) of Section 201 of this Act shall be 3.75% of
20the taxpayer's net income for individuals, trusts, and estates
21and 5.25% of the taxpayer's net income for corporations.
22    (b) The State spending limitation for fiscal year 2018
23shall be $37,875,000,000.
24    (c) Notwithstanding any other provision of law to the
25contrary, the Auditor General shall examine each Public Act

 

 

10000SB0009sam003- 45 -LRB100 06347 HLH 22889 a

1authorizing State spending from State general funds and prepare
2a report no later than 30 days after receiving notification of
3the Public Act from the Secretary of State or 60 days after the
4effective date of the Public Act, whichever is earlier. The
5Auditor General shall file the report with the Secretary of
6State and copies with the Governor, the State Treasurer, the
7State Comptroller, the Senate, and the House of
8Representatives. The report shall indicate: (i) the amount of
9State spending set forth in the applicable Public Act; (ii) the
10total amount of State spending authorized by law for the
11applicable fiscal year as of the date of the report; and (iii)
12whether State spending exceeds the State spending limitation
13set forth in subsection (b). The Auditor General may examine
14multiple Public Acts in one consolidated report, provided that
15each Public Act is examined within the time period mandated by
16this subsection (c). The Auditor General shall issue reports in
17accordance with this Section through June 30, 2018, or the
18effective date of a reduction in the rate of tax imposed by
19subsections (a) and (b) of Section 201 of this Act pursuant to
20this Section, whichever is earlier.
21    At the request of the Auditor General, each State agency
22shall, without delay, make available to the Auditor General or
23his or her designated representative any record or information
24requested and shall provide for examination or copying all
25records, accounts, papers, reports, vouchers, correspondence,
26books and other documentation in the custody of that agency,

 

 

10000SB0009sam003- 46 -LRB100 06347 HLH 22889 a

1including information stored in electronic data processing
2systems, which is related to or within the scope of a report
3prepared under this Section. The Auditor General shall report
4to the Governor each instance in which a State agency fails to
5cooperate promptly and fully with his or her office as required
6by this Section.
7    The Auditor General's report shall not be in the nature of
8a post-audit or examination and shall not lead to the issuance
9of an opinion as that term is defined in generally accepted
10government auditing standards.
11    (d) If the Auditor General reports that State spending has
12exceeded the State spending limitation set forth in subsection
13(b) and if the Governor has not been presented with a bill or
14bills passed by the General Assembly to reduce State spending
15to a level that does not exceed the State spending limitation
16within 45 calendar days of receipt of the Auditor General's
17report, then the Governor may, for the purpose of reducing
18State spending to a level that does not exceed the State
19spending limitation set forth in subsection (b), designate
20amounts to be set aside as a reserve from the amounts
21appropriated from the State general funds for all boards,
22commissions, agencies, institutions, authorities, colleges,
23universities, and bodies politic and corporate of the State,
24but not other constitutional officers, the legislative or
25judicial branch, the office of the Executive Inspector General,
26or the Executive Ethics Commission. Such a designation must be

 

 

10000SB0009sam003- 47 -LRB100 06347 HLH 22889 a

1made within 15 calendar days after the end of that 45-day
2period. If the Governor designates amounts to be set aside as a
3reserve, the Governor shall give notice of the designation to
4the Auditor General, the State Treasurer, the State
5Comptroller, the Senate, and the House of Representatives. The
6amounts placed in reserves shall not be transferred, obligated,
7encumbered, expended, or otherwise committed unless so
8authorized by law. Any amount placed in reserves is not State
9spending and shall not be considered when calculating the total
10amount of State spending. Any Public Act authorizing the use of
11amounts placed in reserve by the Governor is considered State
12spending, unless such Public Act authorizes the use of amounts
13placed in reserves in response to a fiscal emergency under
14subsection (g).
15    (e) If the Auditor General reports under subsection (c)
16that State spending has exceeded the State spending limitation
17set forth in subsection (b), then the Auditor General shall
18issue a supplemental report no sooner than the 61st day and no
19later than the 65th day after issuing the report pursuant to
20subsection (c). The supplemental report shall: (i) summarize
21details of actions taken by the General Assembly and the
22Governor after the issuance of the initial report to reduce
23State spending, if any, (ii) indicate whether the level of
24State spending has changed since the initial report, and (iii)
25indicate whether State spending exceeds the State spending
26limitation. The Auditor General shall file the report with the

 

 

10000SB0009sam003- 48 -LRB100 06347 HLH 22889 a

1Secretary of State and copies with the Governor, the State
2Treasurer, the State Comptroller, the Senate, and the House of
3Representatives. If the supplemental report of the Auditor
4General provides that State spending exceeds the State spending
5limitation, then the rate of tax imposed by subsections (a) and
6(b) of Section 201 is reduced as provided in this Section
7beginning on the first day of the first month to occur not less
8than 30 days after issuance of the supplemental report.
9    (f) Should the rates of tax be reduced under this Section,
10the tax imposed by subsections (a) and (b) of Section 201 shall
11be determined as follows:
12        (1) In the case of an individual, trust, or estate, the
13    tax shall be imposed in an amount equal to the sum of (i)
14    the rate applicable to the taxpayer under subsection (b) of
15    Section 201 (without regard to the provisions of this
16    Section) times the taxpayer's net income for any portion of
17    the taxable year prior to the effective date of the
18    reduction and (ii) 3.75% of the taxpayer's net income for
19    any portion of the taxable year on or after the effective
20    date of the reduction.
21        (2) In the case of a corporation, the tax shall be
22    imposed in an amount equal to the sum of (i) the rate
23    applicable to the taxpayer under subsection (b) of Section
24    201 (without regard to the provisions of this Section)
25    times the taxpayer's net income for any portion of the
26    taxable year prior to the effective date of the reduction

 

 

10000SB0009sam003- 49 -LRB100 06347 HLH 22889 a

1    and (ii) 5.25% of the taxpayer's net income for any portion
2    of the taxable year on or after the effective date of the
3    reduction.
4        (3) For any taxpayer for whom the rate has been reduced
5    under this Section for a portion of a taxable year, the
6    taxpayer shall determine the net income for each portion of
7    the taxable year following the rules set forth in Section
8    202.5 of this Act, using the effective date of the rate
9    reduction rather than the January 1 dates found in that
10    Section, and the day before the effective date of the rate
11    reduction rather than the December 31 dates found in that
12    Section.
13        (4) If the rate applicable to the taxpayer under
14    subsection (b) of Section 201 (without regard to the
15    provisions of this Section) changes during a portion of the
16    taxable year to which that rate is applied under paragraphs
17    (1) or (2) of this subsection (f), the tax for that portion
18    of the taxable year for purposes of paragraph (1) or (2) of
19    this subsection (f) shall be determined as if that portion
20    of the taxable year were a separate taxable year, following
21    the rules set forth in Section 202.5 of this Act. If the
22    taxpayer elects to follow the rules set forth in subsection
23    (b) of Section 202.5, the taxpayer shall follow the rules
24    set forth in subsection (b) of Section 202.5 for all
25    purposes of this Section for that taxable year.
26    (g) Notwithstanding the State spending limitation set

 

 

10000SB0009sam003- 50 -LRB100 06347 HLH 22889 a

1forth in subsection (b) of this Section, the Governor may
2declare a fiscal emergency by filing a declaration with the
3Secretary of State and copies with the State Treasurer, the
4State Comptroller, the Senate, and the House of
5Representatives. The declaration must be limited to only one
6State fiscal year, set forth compelling reasons for declaring a
7fiscal emergency, and request a specific dollar amount. Unless,
8within 10 calendar days of receipt of the Governor's
9declaration, the State Comptroller or State Treasurer notifies
10the Senate and the House of Representatives that he or she does
11not concur in the Governor's declaration, State spending
12authorized by law to address the fiscal emergency in an amount
13no greater than the dollar amount specified in the declaration
14shall not be considered "State spending" for purposes of the
15State spending limitation.
16    (h) As used in this Section:
17    "State general funds" means the General Revenue Fund, the
18Common School Fund, the General Revenue Common School Special
19Account Fund, the Education Assistance Fund, and the Budget
20Stabilization Fund.
21    "State spending" means (i) the total amount authorized for
22spending by appropriation or statutory transfer from the State
23general funds in the applicable fiscal year, and (ii) any
24amounts the Governor places in reserves in accordance with
25subsection (d) that are subsequently released from reserves
26following authorization by a Public Act. For the purpose of

 

 

10000SB0009sam003- 51 -LRB100 06347 HLH 22889 a

1this definition, "appropriation" means authority to spend
2money from a State general fund for a specific amount, purpose,
3and time period, including any supplemental appropriation or
4continuing appropriation, but does not include
5reappropriations from a previous fiscal year. For the purpose
6of this definition, "statutory transfer" means authority to
7transfer funds from one State general fund to any other fund in
8the State treasury, but does not include transfers made from
9one State general fund to another State general fund.
10    "State spending limitation" means the amount described in
11subsection (b) of this Section for the applicable fiscal year.
 
12    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
13    Sec. 203. Base income defined.
14    (a) Individuals.
15        (1) In general. In the case of an individual, base
16    income means an amount equal to the taxpayer's adjusted
17    gross income for the taxable year as modified by paragraph
18    (2).
19        (2) Modifications. The adjusted gross income referred
20    to in paragraph (1) shall be modified by adding thereto the
21    sum 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 adjusted gross income, except

 

 

10000SB0009sam003- 52 -LRB100 06347 HLH 22889 a

1        stock dividends of qualified public utilities
2        described in Section 305(e) of the Internal Revenue
3        Code;
4            (B) An amount equal to the amount of tax imposed by
5        this Act to the extent deducted from gross income in
6        the computation of adjusted gross income for the
7        taxable year;
8            (C) An amount equal to the amount received during
9        the taxable year as a recovery or refund of real
10        property taxes paid with respect to the taxpayer's
11        principal residence under the Revenue Act of 1939 and
12        for which a deduction was previously taken under
13        subparagraph (L) of this paragraph (2) prior to July 1,
14        1991, the retrospective application date of Article 4
15        of Public Act 87-17. In the case of multi-unit or
16        multi-use structures and farm dwellings, the taxes on
17        the taxpayer's principal residence shall be that
18        portion of the total taxes for the entire property
19        which is attributable to such principal residence;
20            (D) An amount equal to the amount of the capital
21        gain deduction allowable under the Internal Revenue
22        Code, to the extent deducted from gross income in the
23        computation of adjusted gross income;
24            (D-5) An amount, to the extent not included in
25        adjusted gross income, equal to the amount of money
26        withdrawn by the taxpayer in the taxable year from a

 

 

10000SB0009sam003- 53 -LRB100 06347 HLH 22889 a

1        medical care savings account and the interest earned on
2        the account in the taxable year of a withdrawal
3        pursuant to subsection (b) of Section 20 of the Medical
4        Care Savings Account Act or subsection (b) of Section
5        20 of the Medical Care Savings Account Act of 2000;
6            (D-10) For taxable years ending after December 31,
7        1997, an amount equal to any eligible remediation costs
8        that the individual deducted in computing adjusted
9        gross income and for which the individual claims a
10        credit under subsection (l) of Section 201;
11            (D-15) 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-16) If the taxpayer sells, transfers, abandons,
17        or otherwise disposes of property for which the
18        taxpayer was required in any taxable year to make an
19        addition modification under subparagraph (D-15), then
20        an amount equal to the aggregate amount of the
21        deductions taken in all taxable years under
22        subparagraph (Z) 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

 

 

10000SB0009sam003- 54 -LRB100 06347 HLH 22889 a

1        was allowed in any taxable year to make a subtraction
2        modification under subparagraph (Z), 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-17) 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 that 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

 

 

10000SB0009sam003- 55 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 56 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 57 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 58 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 59 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 60 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 61 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 62 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 63 -LRB100 06347 HLH 22889 a

1        amount of moneys previously deducted from base income
2        under subsection (a)(2)(Y) of this Section;
3            (D-22) For taxable years beginning on or after
4        January 1, 2009, in the case of a nonqualified
5        withdrawal or refund of moneys from a qualified tuition
6        program under Section 529 of the Internal Revenue Code
7        administered by the State that is not used for
8        qualified expenses at an eligible education
9        institution, an amount equal to the contribution
10        component of the nonqualified withdrawal or refund
11        that was previously deducted from base income under
12        subsection (a)(2)(y) of this Section, provided that
13        the withdrawal or refund did not result from the
14        beneficiary's death or disability;
15            (D-23) An amount equal to the credit allowable to
16        the taxpayer under Section 218(a) of this Act,
17        determined without regard to Section 218(c) of this
18        Act;
19            (D-24) For taxable years beginning on or after
20        January 1, 2017, an amount equal to the deduction
21        allowed under Section 199 of the Internal Revenue Code
22        for the taxable year;
23    and by deducting from the total so obtained the sum of the
24    following amounts:
25            (E) For taxable years ending before December 31,
26        2001, any amount included in such total in respect of

 

 

10000SB0009sam003- 64 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 65 -LRB100 06347 HLH 22889 a

1        December 31, 2007, the National Guard of any other
2        state. The provisions of this subparagraph (E) are
3        exempt from the provisions of Section 250;
4            (F) 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            (G) The valuation limitation amount;
16            (H) 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            (I) An amount equal to all amounts included in such
20        total pursuant to the provisions of Section 111 of the
21        Internal Revenue Code as a recovery of items previously
22        deducted from adjusted gross income in the computation
23        of taxable income;
24            (J) An amount equal to those dividends included in
25        such total which were paid by a corporation which
26        conducts business operations in a River Edge

 

 

10000SB0009sam003- 66 -LRB100 06347 HLH 22889 a

1        Redevelopment Zone or zones created under the River
2        Edge Redevelopment Zone Act, and conducts
3        substantially all of its operations in a River Edge
4        Redevelopment Zone or zones. This subparagraph (J) is
5        exempt from the provisions of Section 250;
6            (K) An amount equal to those dividends included in
7        such total that were paid by a corporation that
8        conducts business operations in a federally designated
9        Foreign Trade Zone or Sub-Zone and that is designated a
10        High Impact Business located in Illinois; provided
11        that dividends eligible for the deduction provided in
12        subparagraph (J) of paragraph (2) of this subsection
13        shall not be eligible for the deduction provided under
14        this subparagraph (K);
15            (L) For taxable years ending after December 31,
16        1983, an amount equal to all social security benefits
17        and railroad retirement benefits included in such
18        total pursuant to Sections 72(r) and 86 of the Internal
19        Revenue Code;
20            (M) With the exception of any amounts subtracted
21        under subparagraph (N), an amount equal to the sum of
22        all amounts disallowed as deductions by (i) Sections
23        171(a) (2), and 265(2) of the Internal Revenue Code,
24        and all amounts of expenses allocable to interest and
25        disallowed as deductions by Section 265(1) of the
26        Internal Revenue Code; and (ii) for taxable years

 

 

10000SB0009sam003- 67 -LRB100 06347 HLH 22889 a

1        ending on or after August 13, 1999, Sections 171(a)(2),
2        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
3        Code, plus, for taxable years ending on or after
4        December 31, 2011, Section 45G(e)(3) of the Internal
5        Revenue Code and, for taxable years ending on or after
6        December 31, 2008, any amount included in gross income
7        under Section 87 of the Internal Revenue Code; the
8        provisions of this subparagraph are exempt from the
9        provisions of Section 250;
10            (N) An amount equal to all amounts included in such
11        total which are exempt from taxation by this State
12        either by reason of its statutes or Constitution or by
13        reason of the Constitution, treaties or statutes of the
14        United States; provided that, in the case of any
15        statute of this State that exempts income derived from
16        bonds or other obligations from the tax imposed under
17        this Act, the amount exempted shall be the interest net
18        of bond premium amortization;
19            (O) An amount equal to any contribution made to a
20        job training project established pursuant to the Tax
21        Increment Allocation Redevelopment Act;
22            (P) An amount equal to the amount of the deduction
23        used to compute the federal income tax credit for
24        restoration of substantial amounts held under claim of
25        right for the taxable year pursuant to Section 1341 of
26        the Internal Revenue Code or of any itemized deduction

 

 

10000SB0009sam003- 68 -LRB100 06347 HLH 22889 a

1        taken from adjusted gross income in the computation of
2        taxable income for restoration of substantial amounts
3        held under claim of right for the taxable year;
4            (Q) An amount equal to any amounts included in such
5        total, received by the taxpayer as an acceleration in
6        the payment of life, endowment or annuity benefits in
7        advance of the time they would otherwise be payable as
8        an indemnity for a terminal illness;
9            (R) An amount equal to the amount of any federal or
10        State bonus paid to veterans of the Persian Gulf War;
11            (S) An amount, to the extent included in adjusted
12        gross income, equal to the amount of a contribution
13        made in the taxable year on behalf of the taxpayer to a
14        medical care savings account established under the
15        Medical Care Savings Account Act or the Medical Care
16        Savings Account Act of 2000 to the extent the
17        contribution is accepted by the account administrator
18        as provided in that Act;
19            (T) An amount, to the extent included in adjusted
20        gross income, equal to the amount of interest earned in
21        the taxable year on a medical care savings account
22        established under the Medical Care Savings Account Act
23        or the Medical Care Savings Account Act of 2000 on
24        behalf of the taxpayer, other than interest added
25        pursuant to item (D-5) of this paragraph (2);
26            (U) For one taxable year beginning on or after

 

 

10000SB0009sam003- 69 -LRB100 06347 HLH 22889 a

1        January 1, 1994, an amount equal to the total amount of
2        tax imposed and paid under subsections (a) and (b) of
3        Section 201 of this Act on grant amounts received by
4        the taxpayer under the Nursing Home Grant Assistance
5        Act during the taxpayer's taxable years 1992 and 1993;
6            (V) Beginning with tax years ending on or after
7        December 31, 1995 and ending with tax years ending on
8        or before December 31, 2004, an amount equal to the
9        amount paid by a taxpayer who is a self-employed
10        taxpayer, a partner of a partnership, or a shareholder
11        in a Subchapter S corporation for health insurance or
12        long-term care insurance for that taxpayer or that
13        taxpayer's spouse or dependents, to the extent that the
14        amount paid for that health insurance or long-term care
15        insurance may be deducted under Section 213 of the
16        Internal Revenue Code, has not been deducted on the
17        federal income tax return of the taxpayer, and does not
18        exceed the taxable income attributable to that
19        taxpayer's income, self-employment income, or
20        Subchapter S corporation income; except that no
21        deduction shall be allowed under this item (V) if the
22        taxpayer is eligible to participate in any health
23        insurance or long-term care insurance plan of an
24        employer of the taxpayer or the taxpayer's spouse. The
25        amount of the health insurance and long-term care
26        insurance subtracted under this item (V) shall be

 

 

10000SB0009sam003- 70 -LRB100 06347 HLH 22889 a

1        determined by multiplying total health insurance and
2        long-term care insurance premiums paid by the taxpayer
3        times a number that represents the fractional
4        percentage of eligible medical expenses under Section
5        213 of the Internal Revenue Code of 1986 not actually
6        deducted on the taxpayer's federal income tax return;
7            (W) For taxable years beginning on or after January
8        1, 1998, all amounts included in the taxpayer's federal
9        gross income in the taxable year from amounts converted
10        from a regular IRA to a Roth IRA. This paragraph is
11        exempt from the provisions of Section 250;
12            (X) For taxable year 1999 and thereafter, an amount
13        equal to the amount of any (i) distributions, to the
14        extent includible in gross income for federal income
15        tax purposes, made to the taxpayer because of his or
16        her status as a victim of persecution for racial or
17        religious reasons by Nazi Germany or any other Axis
18        regime or as an heir of the victim and (ii) items of
19        income, to the extent includible in gross income for
20        federal income tax purposes, attributable to, derived
21        from or in any way related to assets stolen from,
22        hidden from, or otherwise lost to a victim of
23        persecution for racial or religious reasons by Nazi
24        Germany or any other Axis regime immediately prior to,
25        during, and immediately after World War II, including,
26        but not limited to, interest on the proceeds receivable

 

 

10000SB0009sam003- 71 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 72 -LRB100 06347 HLH 22889 a

1        years beginning on or after January 1, 2005, a maximum
2        of $10,000 contributed in the taxable year to (i) a
3        College Savings Pool account under Section 16.5 of the
4        State Treasurer Act or (ii) the Illinois Prepaid
5        Tuition Trust Fund, except that amounts excluded from
6        gross income under Section 529(c)(3)(C)(i) of the
7        Internal Revenue Code shall not be considered moneys
8        contributed under this subparagraph (Y). For purposes
9        of this subparagraph, contributions made by an
10        employer on behalf of an employee, or matching
11        contributions made by an employee, shall be treated as
12        made by the employee. This subparagraph (Y) is exempt
13        from the provisions of Section 250;
14            (Z) For taxable years 2001 and thereafter, for the
15        taxable year in which the bonus depreciation deduction
16        is taken on the taxpayer's federal income tax return
17        under subsection (k) of Section 168 of the Internal
18        Revenue Code and for each applicable taxable year
19        thereafter, an amount equal to "x", where:
20                (1) "y" equals the amount of the depreciation
21            deduction taken for the taxable year on the
22            taxpayer's federal income tax return on property
23            for which the bonus depreciation deduction was
24            taken in any year under subsection (k) of Section
25            168 of the Internal Revenue Code, but not including
26            the bonus depreciation deduction;

 

 

10000SB0009sam003- 73 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 74 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 75 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 76 -LRB100 06347 HLH 22889 a

1        indirectly, to the same person. This subparagraph (DD)
2        is exempt from the provisions of Section 250;
3            (EE) An amount equal to the income from intangible
4        property taken into account for the taxable year (net
5        of the 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(a)(2)(D-18) for
20        intangible expenses and costs paid, accrued, or
21        incurred, directly or indirectly, to the same foreign
22        person. This subparagraph (EE) is exempt from the
23        provisions of Section 250;
24            (FF) An amount equal to any amount awarded to the
25        taxpayer during the taxable year by the Court of Claims
26        under subsection (c) of Section 8 of the Court of

 

 

10000SB0009sam003- 77 -LRB100 06347 HLH 22889 a

1        Claims Act for time unjustly served in a State prison.
2        This subparagraph (FF) is exempt from the provisions of
3        Section 250; and
4            (GG) For taxable years ending on or after December
5        31, 2011, in the case of a taxpayer who was required to
6        add back any insurance premiums under Section
7        203(a)(2)(D-19), such taxpayer may elect to subtract
8        that part of a reimbursement received from the
9        insurance company equal to the amount of the expense or
10        loss (including expenses incurred by the insurance
11        company) that would have been taken into account as a
12        deduction for federal income tax purposes if the
13        expense or loss had been uninsured. If a taxpayer makes
14        the election provided for by this subparagraph (GG),
15        the insurer to which the premiums were paid must add
16        back to income the amount subtracted by the taxpayer
17        pursuant to this subparagraph (GG). This subparagraph
18        (GG) is exempt from the provisions of Section 250.
 
19    (b) Corporations.
20        (1) In general. In the case of a corporation, base
21    income means an amount equal to the taxpayer's taxable
22    income for the taxable year as modified by paragraph (2).
23        (2) Modifications. The taxable income referred to in
24    paragraph (1) shall be modified by adding thereto the sum
25    of the following amounts:

 

 

10000SB0009sam003- 78 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 79 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 80 -LRB100 06347 HLH 22889 a

1            (E-5) For taxable years ending after December 31,
2        1997, an amount equal to any eligible remediation costs
3        that the corporation deducted in computing adjusted
4        gross income and for which the corporation claims a
5        credit under subsection (l) of Section 201;
6            (E-10) For taxable years 2001 and thereafter, an
7        amount equal to the bonus depreciation deduction taken
8        on the taxpayer's federal income tax return for the
9        taxable year under subsection (k) of Section 168 of the
10        Internal Revenue Code;
11            (E-11) If the taxpayer sells, transfers, abandons,
12        or otherwise disposes of property for which the
13        taxpayer was required in any taxable year to make an
14        addition modification under subparagraph (E-10), then
15        an amount equal to the aggregate amount of the
16        deductions taken in all taxable years under
17        subparagraph (T) with respect to that property.
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 allowed in any taxable year to make a subtraction
23        modification under subparagraph (T), then an amount
24        equal to that subtraction modification.
25            The taxpayer is required to make the addition
26        modification under this subparagraph only once with

 

 

10000SB0009sam003- 81 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 82 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 83 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 84 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 85 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 86 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 87 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 88 -LRB100 06347 HLH 22889 a

1        modification required under Section 203(b)(2)(E-12) or
2        Section 203(b)(2)(E-13) of this Act;
3            (E-15) For taxable years beginning after December
4        31, 2008, any deduction for dividends paid by a captive
5        real estate investment trust that is allowed to a real
6        estate investment trust under Section 857(b)(2)(B) of
7        the Internal Revenue Code for dividends paid;
8            (E-16) 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            (E-17) 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 sum of the
17    following amounts:
18            (F) An amount equal to the amount of any tax
19        imposed by this Act which was refunded to the taxpayer
20        and included in such total for the taxable year;
21            (G) An amount equal to any amount included in such
22        total under Section 78 of the Internal Revenue Code;
23            (H) In the case of a regulated investment company,
24        an amount equal to the amount of exempt interest
25        dividends as defined in subsection (b) (5) of Section
26        852 of the Internal Revenue Code, paid to shareholders

 

 

10000SB0009sam003- 89 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 90 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 91 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 92 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 93 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 94 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 95 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 96 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 97 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 98 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 99 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 100 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 101 -LRB100 06347 HLH 22889 a

1        965(e)(3) of the Internal Revenue Code over the taxable
2        income of the taxpayer, computed without regard to
3        Section 965(e)(2)(A) of the Internal Revenue Code, and
4        without regard to any net operating loss deduction.
5        This subparagraph (Z) is exempt from the provisions of
6        Section 250.
7        (3) Special rule. For purposes of paragraph (2) (A),
8    "gross income" in the case of a life insurance company, for
9    tax years ending on and after December 31, 1994, and prior
10    to December 31, 2011, shall mean the gross investment
11    income for the taxable year and, for tax years ending on or
12    after December 31, 2011, shall mean all amounts included in
13    life insurance gross income under Section 803(a)(3) of the
14    Internal Revenue Code.
 
15    (c) Trusts and estates.
16        (1) In general. In the case of a trust or estate, 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. Subject to the provisions of
20    paragraph (3), the taxable income referred to in paragraph
21    (1) shall be modified by adding thereto the sum of the
22    following amounts:
23            (A) An amount equal to all amounts paid or accrued
24        to the taxpayer as interest or dividends during the
25        taxable year to the extent excluded from gross income

 

 

10000SB0009sam003- 102 -LRB100 06347 HLH 22889 a

1        in the computation of taxable income;
2            (B) In the case of (i) an estate, $600; (ii) a
3        trust which, under its governing instrument, is
4        required to distribute all of its income currently,
5        $300; and (iii) any other trust, $100, but in each such
6        case, only to the extent such amount was deducted in
7        the computation of taxable income;
8            (C) An amount equal to the amount of tax imposed by
9        this Act to the extent deducted from gross income in
10        the computation of taxable income for the taxable year;
11            (D) The amount of any net operating loss deduction
12        taken in arriving at taxable income, other than a net
13        operating loss carried forward from a taxable year
14        ending prior to December 31, 1986;
15            (E) For taxable years in which a net operating loss
16        carryback or carryforward from a taxable year ending
17        prior to December 31, 1986 is an element of taxable
18        income under paragraph (1) of subsection (e) or
19        subparagraph (E) of paragraph (2) of subsection (e),
20        the amount by which addition modifications other than
21        those provided by this subparagraph (E) exceeded
22        subtraction modifications in such taxable year, with
23        the following limitations applied in the order that
24        they are listed:
25                (i) the addition modification relating to the
26            net operating loss carried back or forward to the

 

 

10000SB0009sam003- 103 -LRB100 06347 HLH 22889 a

1            taxable year from any taxable year ending prior to
2            December 31, 1986 shall be reduced by the amount of
3            addition modification under this subparagraph (E)
4            which related to that net operating loss and which
5            was taken into account in calculating the base
6            income of an earlier taxable year, and
7                (ii) the addition modification relating to the
8            net operating loss carried back or forward to the
9            taxable year from any taxable year ending prior to
10            December 31, 1986 shall not exceed the amount of
11            such carryback or carryforward;
12            For taxable years in which there is a net operating
13        loss carryback or carryforward from more than one other
14        taxable year ending prior to December 31, 1986, the
15        addition modification provided in this subparagraph
16        (E) shall be the sum of the amounts computed
17        independently under the preceding provisions of this
18        subparagraph (E) for each such taxable year;
19            (F) For taxable years ending on or after January 1,
20        1989, an amount equal to the tax deducted pursuant to
21        Section 164 of the Internal Revenue Code if the trust
22        or estate is claiming the same tax for purposes of the
23        Illinois foreign tax credit under Section 601 of this
24        Act;
25            (G) An amount equal to the amount of the capital
26        gain deduction allowable under the Internal Revenue

 

 

10000SB0009sam003- 104 -LRB100 06347 HLH 22889 a

1        Code, to the extent deducted from gross income in the
2        computation of taxable income;
3            (G-5) For taxable years ending after December 31,
4        1997, an amount equal to any eligible remediation costs
5        that the trust or estate deducted in computing adjusted
6        gross income and for which the trust or estate claims a
7        credit under subsection (l) of Section 201;
8            (G-10) For taxable years 2001 and thereafter, an
9        amount equal to the bonus depreciation deduction taken
10        on the taxpayer's federal income tax return for the
11        taxable year under subsection (k) of Section 168 of the
12        Internal Revenue Code; and
13            (G-11) 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 (G-10), then
17        an amount equal to the aggregate amount of the
18        deductions taken in all taxable years under
19        subparagraph (R) with respect to that property.
20            If the taxpayer continues to own property through
21        the last day of the last tax year for which the
22        taxpayer may claim a depreciation deduction for
23        federal income tax purposes and for which the taxpayer
24        was allowed in any taxable year to make a subtraction
25        modification under subparagraph (R), then an amount
26        equal to that subtraction modification.

 

 

10000SB0009sam003- 105 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 106 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 107 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 108 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 109 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 110 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 111 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 112 -LRB100 06347 HLH 22889 a

1        preceding sentence does not apply to the extent that
2        the same dividends caused a reduction to the addition
3        modification required under Section 203(c)(2)(G-12) or
4        Section 203(c)(2)(G-13) of this Act;
5            (G-15) An amount equal to the credit allowable to
6        the taxpayer under Section 218(a) of this Act,
7        determined without regard to Section 218(c) of this
8        Act;
9            (G-16) For taxable years beginning on or after
10        January 1, 2017, an amount equal to the deduction
11        allowed under Section 199 of the Internal Revenue Code
12        for the taxable year;
13    and by deducting from the total so obtained the sum of the
14    following amounts:
15            (H) An amount equal to all amounts included in such
16        total pursuant to the provisions of Sections 402(a),
17        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
18        Internal Revenue Code or included in such total as
19        distributions under the provisions of any retirement
20        or disability plan for employees of any governmental
21        agency or unit, or retirement payments to retired
22        partners, which payments are excluded in computing net
23        earnings from self employment by Section 1402 of the
24        Internal Revenue Code and regulations adopted pursuant
25        thereto;
26            (I) The valuation limitation amount;

 

 

10000SB0009sam003- 113 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 114 -LRB100 06347 HLH 22889 a

1        December 31, 2008, any amount included in gross income
2        under Section 87 of the Internal Revenue Code; the
3        provisions of this subparagraph are exempt from the
4        provisions of Section 250;
5            (M) An amount equal to those dividends included in
6        such total which were paid by a corporation which
7        conducts business operations in a River Edge
8        Redevelopment Zone or zones created under the River
9        Edge Redevelopment Zone Act and conducts substantially
10        all of its operations in a River Edge Redevelopment
11        Zone or zones. This subparagraph (M) is exempt from the
12        provisions of Section 250;
13            (N) An amount equal to any contribution made to a
14        job training project established pursuant to the Tax
15        Increment Allocation Redevelopment Act;
16            (O) An amount equal to those dividends included in
17        such total that were paid by a corporation that
18        conducts business operations in a federally designated
19        Foreign Trade Zone or Sub-Zone and that is designated a
20        High Impact Business located in Illinois; provided
21        that dividends eligible for the deduction provided in
22        subparagraph (M) of paragraph (2) of this subsection
23        shall not be eligible for the deduction provided under
24        this subparagraph (O);
25            (P) An amount equal to the amount of the deduction
26        used to compute the federal income tax credit for

 

 

10000SB0009sam003- 115 -LRB100 06347 HLH 22889 a

1        restoration of substantial amounts held under claim of
2        right for the taxable year pursuant to Section 1341 of
3        the Internal Revenue Code;
4            (Q) For taxable year 1999 and thereafter, an amount
5        equal to the amount of any (i) distributions, to the
6        extent includible in gross income for federal income
7        tax purposes, made to the taxpayer because of his or
8        her status as a victim of persecution for racial or
9        religious reasons by Nazi Germany or any other Axis
10        regime or as an heir of the victim and (ii) items of
11        income, to the extent includible in gross income for
12        federal income tax purposes, attributable to, derived
13        from or in any way related to assets stolen from,
14        hidden from, or otherwise lost to a victim of
15        persecution for racial or religious reasons by Nazi
16        Germany or any other Axis regime immediately prior to,
17        during, and immediately after World War II, including,
18        but not limited to, interest on the proceeds receivable
19        as insurance under policies issued to a victim of
20        persecution for racial or religious reasons by Nazi
21        Germany or any other Axis regime by European insurance
22        companies immediately prior to and during World War II;
23        provided, however, this subtraction from federal
24        adjusted gross income does not apply to assets acquired
25        with such assets or with the proceeds from the sale of
26        such assets; provided, further, this paragraph shall

 

 

10000SB0009sam003- 116 -LRB100 06347 HLH 22889 a

1        only apply to a taxpayer who was the first recipient of
2        such assets after their recovery and who is a victim of
3        persecution for racial or religious reasons by Nazi
4        Germany or any other Axis regime or as an heir of the
5        victim. The amount of and the eligibility for any
6        public assistance, benefit, or similar entitlement is
7        not affected by the inclusion of items (i) and (ii) of
8        this paragraph in gross income for federal income tax
9        purposes. This paragraph is exempt from the provisions
10        of Section 250;
11            (R) 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

 

 

10000SB0009sam003- 117 -LRB100 06347 HLH 22889 a

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 (R) is exempt from the provisions of
20        Section 250;
21            (S) 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 (G-10), then an amount
25        equal to that addition modification.
26            If the taxpayer continues to own property through

 

 

10000SB0009sam003- 118 -LRB100 06347 HLH 22889 a

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 (G-10), 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 (S) is exempt from the
11        provisions of Section 250;
12            (T) 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

 

 

10000SB0009sam003- 119 -LRB100 06347 HLH 22889 a

1        addition modification. This subparagraph (T) is exempt
2        from the provisions of Section 250;
3            (U) 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 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(c)(2)(G-12) for
20        interest paid, accrued, or incurred, directly or
21        indirectly, to the same person. This subparagraph (U)
22        is exempt from the provisions of Section 250;
23            (V) 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

 

 

10000SB0009sam003- 120 -LRB100 06347 HLH 22889 a

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(c)(2)(G-13) for
14        intangible expenses and costs paid, accrued, or
15        incurred, directly or indirectly, to the same foreign
16        person. This subparagraph (V) is exempt from the
17        provisions of Section 250;
18            (W) in the case of an estate, an amount equal to
19        all amounts included in such total pursuant to the
20        provisions of Section 111 of the Internal Revenue Code
21        as a recovery of items previously deducted by the
22        decedent from adjusted gross income in the computation
23        of taxable income. This subparagraph (W) is exempt from
24        Section 250;
25            (X) an amount equal to the refund included in such
26        total of any tax deducted for federal income tax

 

 

10000SB0009sam003- 121 -LRB100 06347 HLH 22889 a

1        purposes, to the extent that deduction was added back
2        under subparagraph (F). This subparagraph (X) is
3        exempt from the provisions of Section 250; and
4            (Y) For taxable years ending on or after December
5        31, 2011, in the case of a taxpayer who was required to
6        add back any insurance premiums under Section
7        203(c)(2)(G-14), such taxpayer may elect to subtract
8        that part of a reimbursement received from the
9        insurance company equal to the amount of the expense or
10        loss (including expenses incurred by the insurance
11        company) that would have been taken into account as a
12        deduction for federal income tax purposes if the
13        expense or loss had been uninsured. If a taxpayer makes
14        the election provided for by this subparagraph (Y), the
15        insurer to which the premiums were paid must add back
16        to income the amount subtracted by the taxpayer
17        pursuant to this subparagraph (Y). This subparagraph
18        (Y) is exempt from the provisions of Section 250.
19        (3) Limitation. The amount of any modification
20    otherwise required under this subsection shall, under
21    regulations prescribed by the Department, be adjusted by
22    any amounts included therein which were properly paid,
23    credited, or required to be distributed, or permanently set
24    aside for charitable purposes pursuant to Internal Revenue
25    Code Section 642(c) during the taxable year.
 

 

 

10000SB0009sam003- 122 -LRB100 06347 HLH 22889 a

1    (d) Partnerships.
2        (1) In general. In the case of a partnership, base
3    income means an amount equal to the taxpayer's taxable
4    income for the taxable year as modified by paragraph (2).
5        (2) Modifications. The taxable income referred to in
6    paragraph (1) shall be modified by adding thereto the sum
7    of the following amounts:
8            (A) An amount equal to all amounts paid or accrued
9        to the taxpayer as interest or dividends during the
10        taxable year to the extent excluded from gross income
11        in the computation of taxable income;
12            (B) An amount equal to the amount of tax imposed by
13        this Act to the extent deducted from gross income for
14        the taxable year;
15            (C) The amount of deductions allowed to the
16        partnership pursuant to Section 707 (c) of the Internal
17        Revenue Code in calculating its taxable income;
18            (D) An amount equal to the amount of the capital
19        gain deduction allowable under the Internal Revenue
20        Code, to the extent deducted from gross income in the
21        computation of taxable income;
22            (D-5) For taxable years 2001 and thereafter, an
23        amount equal to the bonus depreciation deduction taken
24        on the taxpayer's federal income tax return for the
25        taxable year under subsection (k) of Section 168 of the
26        Internal Revenue Code;

 

 

10000SB0009sam003- 123 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 124 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 125 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 126 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 127 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 128 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 129 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 130 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 131 -LRB100 06347 HLH 22889 a

1    and by deducting from the total so obtained the following
2    amounts:
3            (E) The valuation limitation amount;
4            (F) An amount equal to the amount of any tax
5        imposed by this Act which was refunded to the taxpayer
6        and included in such total for the taxable year;
7            (G) An amount equal to all amounts included in
8        taxable income as modified by subparagraphs (A), (B),
9        (C) and (D) which are exempt from taxation by this
10        State either by reason of its statutes or Constitution
11        or by reason of the Constitution, treaties or statutes
12        of the United States; provided that, in the case of any
13        statute of this State that exempts income derived from
14        bonds or other obligations from the tax imposed under
15        this Act, the amount exempted shall be the interest net
16        of bond premium amortization;
17            (H) Any income of the partnership which
18        constitutes personal service income as defined in
19        Section 1348 (b) (1) of the Internal Revenue Code (as
20        in effect December 31, 1981) or a reasonable allowance
21        for compensation paid or accrued for services rendered
22        by partners to the partnership, whichever is greater;
23        this subparagraph (H) is exempt from the provisions of
24        Section 250;
25            (I) An amount equal to all amounts of income
26        distributable to an entity subject to the Personal

 

 

10000SB0009sam003- 132 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 133 -LRB100 06347 HLH 22889 a

1        Edge Redevelopment Zone Act and conducts substantially
2        all of its operations from a River Edge Redevelopment
3        Zone or zones. This subparagraph (K) is exempt from the
4        provisions of Section 250;
5            (L) An amount equal to any contribution made to a
6        job training project established pursuant to the Real
7        Property Tax Increment Allocation Redevelopment Act;
8            (M) 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 (M);
17            (N) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code;
22            (O) For taxable years 2001 and thereafter, for the
23        taxable year in which the bonus depreciation deduction
24        is taken on the taxpayer's federal income tax return
25        under subsection (k) of Section 168 of the Internal
26        Revenue Code and for each applicable taxable year

 

 

10000SB0009sam003- 134 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 135 -LRB100 06347 HLH 22889 a

1        depreciation deduction taken on that property on the
2        taxpayer's federal income tax return under subsection
3        (k) of Section 168 of the Internal Revenue Code. This
4        subparagraph (O) is exempt from the provisions of
5        Section 250;
6            (P) If the taxpayer sells, transfers, abandons, or
7        otherwise disposes of property for which the taxpayer
8        was required in any taxable year to make an addition
9        modification under subparagraph (D-5), then an amount
10        equal to that addition modification.
11            If the taxpayer continues to own property through
12        the last day of the last tax year for which the
13        taxpayer may claim a depreciation deduction for
14        federal income tax purposes and for which the taxpayer
15        was required in any taxable year to make an addition
16        modification under subparagraph (D-5), then an amount
17        equal to that addition modification.
18            The taxpayer is allowed to take the deduction under
19        this subparagraph only once with respect to any one
20        piece of property.
21            This subparagraph (P) is exempt from the
22        provisions of Section 250;
23            (Q) The amount of (i) any interest income (net of
24        the deductions allocable thereto) taken into account
25        for the taxable year with respect to a transaction with
26        a taxpayer that is required to make an addition

 

 

10000SB0009sam003- 136 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 137 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 138 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 139 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 140 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 141 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 142 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 143 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 144 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 145 -LRB100 06347 HLH 22889 a

1        respect of the sale, exchange or other disposition of
2        such property.
3            (B) If the fair market value of property referred
4        to in paragraph (1) was not readily ascertainable on
5        August 1, 1969, the pre-August 1, 1969 appreciation
6        amount for such property is that amount which bears the
7        same ratio to the total gain reported in respect of the
8        property for federal income tax purposes for the
9        taxable year, as the number of full calendar months in
10        that part of the taxpayer's holding period for the
11        property ending July 31, 1969 bears to the number of
12        full calendar months in the taxpayer's entire holding
13        period for the property.
14            (C) The Department shall prescribe such
15        regulations as may be necessary to carry out the
16        purposes of this paragraph.
 
17    (g) Double deductions. Unless specifically provided
18otherwise, nothing in this Section shall permit the same item
19to be deducted more than once.
 
20    (h) Legislative intention. Except as expressly provided by
21this Section there shall be no modifications or limitations on
22the amounts of income, gain, loss or deduction taken into
23account in determining gross income, adjusted gross income or
24taxable income for federal income tax purposes for the taxable

 

 

10000SB0009sam003- 146 -LRB100 06347 HLH 22889 a

1year, or in the amount of such items entering into the
2computation of base income and net income under this Act for
3such taxable year, whether in respect of property values as of
4August 1, 1969 or otherwise.
5(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
6eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
796-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
86-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
9eff. 8-23-11; 97-905, eff. 8-7-12.)
 
10    (35 ILCS 5/212)
11    Sec. 212. Earned income tax credit.
12    (a) With respect to the federal earned income tax credit
13allowed for the taxable year under Section 32 of the federal
14Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer
15is entitled to a credit against the tax imposed by subsections
16(a) and (b) of Section 201 in an amount equal to (i) 5% of the
17federal tax credit for each taxable year beginning on or after
18January 1, 2000 and ending prior to December 31, 2012, (ii)
197.5% of the federal tax credit for each taxable year beginning
20on or after January 1, 2012 and ending prior to December 31,
212013, and (iii) 10% of the federal tax credit for each taxable
22year beginning on or after January 1, 2013 and beginning prior
23to January 1, 2017, and (iv) 15% of the federal tax credit for
24each taxable year beginning on or after January 1, 2017.
25    For a non-resident or part-year resident, the amount of the

 

 

10000SB0009sam003- 147 -LRB100 06347 HLH 22889 a

1credit under this Section shall be in proportion to the amount
2of income attributable to this State.
3    (b) For taxable years beginning before January 1, 2003, in
4no event shall a credit under this Section reduce the
5taxpayer's liability to less than zero. For each taxable year
6beginning on or after January 1, 2003, if the amount of the
7credit exceeds the income tax liability for the applicable tax
8year, then the excess credit shall be refunded to the taxpayer.
9The amount of a refund shall not be included in the taxpayer's
10income or resources for the purposes of determining eligibility
11or benefit level in any means-tested benefit program
12administered by a governmental entity unless required by
13federal law.
14    (c) This Section is exempt from the provisions of Section
15250.
16(Source: P.A. 97-652, eff. 6-1-12.)
 
17    (35 ILCS 5/222)
18    Sec. 222. Live theater production credit.
19    (a) For tax years beginning on or after January 1, 2012 and
20beginning prior to January 1, 2027, a taxpayer who has received
21a tax credit award under the Live Theater Production Tax Credit
22Act is entitled to a credit against the taxes imposed under
23subsections (a) and (b) of Section 201 of this Act in an amount
24determined under that Act by the Department of Commerce and
25Economic Opportunity.

 

 

10000SB0009sam003- 148 -LRB100 06347 HLH 22889 a

1    (b) If the taxpayer is a partnership, limited liability
2partnership, limited liability company, or Subchapter S
3corporation, the tax credit award is allowed to the partners,
4unit holders, or shareholders in accordance with the
5determination of income and distributive share of income under
6Sections 702 and 704 and Subchapter S of the Internal Revenue
7Code.
8    (c) A sale, assignment, or transfer of the tax credit award
9may be made by the taxpayer earning the credit within one year
10after the credit is awarded in accordance with rules adopted by
11the Department of Commerce and Economic Opportunity.
12    (d) The Department of Revenue, in cooperation with the
13Department of Commerce and Economic Opportunity, shall adopt
14rules to enforce and administer the provisions of this Section.
15    (e) The tax credit award may not be carried back. If the
16amount of the credit exceeds the tax liability for the year,
17the excess may be carried forward and applied to the tax
18liability of the 5 tax years following the excess credit year.
19The tax credit award shall be applied to the earliest year for
20which there is a tax liability. If there are credits from more
21than one tax year that are available to offset liability, the
22earlier credit shall be applied first. In no event may a credit
23under this Section reduce the taxpayer's liability to less than
24zero.
25(Source: P.A. 97-636, eff. 6-1-12.)
 

 

 

10000SB0009sam003- 149 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 150 -LRB100 06347 HLH 22889 a

1    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
2    Sec. 804. Failure to Pay Estimated Tax.
3    (a) In general. In case of any underpayment of estimated
4tax by a taxpayer, except as provided in subsection (d) or (e),
5the taxpayer shall be liable to a penalty in an amount
6determined at the rate prescribed by Section 3-3 of the Uniform
7Penalty and Interest Act upon the amount of the underpayment
8(determined under subsection (b)) for each required
9installment.
10    (b) Amount of underpayment. For purposes of subsection (a),
11the amount of the underpayment shall be the excess of:
12        (1) the amount of the installment which would be
13    required to be paid under subsection (c), over
14        (2) the amount, if any, of the installment paid on or
15    before the last date prescribed for payment.
16    (c) Amount of Required Installments.
17        (1) Amount.
18            (A) In General. Except as provided in paragraphs
19        (2) and (3), the amount of any required installment
20        shall be 25% of the required annual payment.
21            (B) Required Annual Payment. For purposes of
22        subparagraph (A), the term "required annual payment"
23        means the lesser of:
24                (i) 90% of the tax shown on the return for the
25            taxable year, or if no return is filed, 90% of the

 

 

10000SB0009sam003- 151 -LRB100 06347 HLH 22889 a

1            tax for such year;
2                (ii) for installments due prior to February 1,
3            2011, and after January 31, 2012, 100% of the tax
4            shown on the return of the taxpayer for the
5            preceding taxable year if a return showing a
6            liability for tax was filed by the taxpayer for the
7            preceding taxable year and such preceding year was
8            a taxable year of 12 months; or
9                (iii) for installments due after January 31,
10            2011, and prior to February 1, 2012, 150% of the
11            tax shown on the return of the taxpayer for the
12            preceding taxable year if a return showing a
13            liability for tax was filed by the taxpayer for the
14            preceding taxable year and such preceding year was
15            a taxable year of 12 months.
16        (2) Lower Required Installment where Annualized Income
17    Installment is Less Than Amount Determined Under Paragraph
18    (1).
19            (A) In General. In the case of any required
20        installment if a taxpayer establishes that the
21        annualized income installment is less than the amount
22        determined under paragraph (1),
23                (i) the amount of such required installment
24            shall be the annualized income installment, and
25                (ii) any reduction in a required installment
26            resulting from the application of this

 

 

10000SB0009sam003- 152 -LRB100 06347 HLH 22889 a

1            subparagraph shall be recaptured by increasing the
2            amount of the next required installment determined
3            under paragraph (1) by the amount of such
4            reduction, and by increasing subsequent required
5            installments to the extent that the reduction has
6            not previously been recaptured under this clause.
7            (B) Determination of Annualized Income
8        Installment. In the case of any required installment,
9        the annualized income installment is the excess, if
10        any, of:
11                (i) an amount equal to the applicable
12            percentage of the tax for the taxable year computed
13            by placing on an annualized basis the net income
14            for months in the taxable year ending before the
15            due date for the installment, over
16                (ii) the aggregate amount of any prior
17            required installments for the taxable year.
18            (C) Applicable Percentage.
19        In the case of the followingThe applicable
20        required installments:percentage is:
21        1st ...............................22.5%
22        2nd ...............................45%
23        3rd ...............................67.5%
24        4th ...............................90%
25            (D) Annualized Net Income; Individuals. For
26        individuals, net income shall be placed on an

 

 

10000SB0009sam003- 153 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 154 -LRB100 06347 HLH 22889 a

1            months of the taxable year, in the case of the
2            installment required to be paid in the 9th month,
3            and
4                (iv) for the first 9 months or for the first 11
5            months of the taxable year, in the case of the
6            installment required to be paid in the 12th month
7            of the taxable year,
8        then dividing the resulting amount by the number of
9        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
10        case may be).
11        (3) Notwithstanding any other provision of this
12    subsection (c), in the case of a federally regulated
13    exchange that elects to apportion its income under Section
14    304(c-1) of this Act, the amount of each required
15    installment due prior to June 30 of the first taxable year
16    to which the election applies shall be 25% of the tax that
17    would have been shown on the return for that taxable year
18    if the taxpayer had not made such election.
19    (d) Exceptions. Notwithstanding the provisions of the
20preceding subsections, the penalty imposed by subsection (a)
21shall not be imposed if the taxpayer was not required to file
22an Illinois income tax return for the preceding taxable year,
23or, for individuals, if the taxpayer had no tax liability for
24the preceding taxable year and such year was a taxable year of
2512 months. The penalty imposed by subsection (a) shall also not
26be imposed on any underpayments of estimated tax due before the

 

 

10000SB0009sam003- 155 -LRB100 06347 HLH 22889 a

1effective date of this amendatory Act of 1998 which
2underpayments are solely attributable to the change in
3apportionment from subsection (a) to subsection (h) of Section
4304. The provisions of this amendatory Act of 1998 apply to tax
5years ending on or after December 31, 1998.
6    (e) The penalty imposed for underpayment of estimated tax
7by subsection (a) of this Section shall not be imposed to the
8extent that the Director or his or her designate determines,
9pursuant to Section 3-8 of the Uniform Penalty and Interest Act
10that the penalty should not be imposed.
11    (f) Definition of tax. For purposes of subsections (b) and
12(c), the term "tax" means the excess of the tax imposed under
13Article 2 of this Act, over the amounts credited against such
14tax under Sections 601(b) (3) and (4).
15    (g) Application of Section in case of tax withheld under
16Article 7. For purposes of applying this Section:
17        (1) tax withheld from compensation for the taxable year
18    shall be deemed a payment of estimated tax, and an equal
19    part of such amount shall be deemed paid on each
20    installment date for such taxable year, unless the taxpayer
21    establishes the dates on which all amounts were actually
22    withheld, in which case the amounts so withheld shall be
23    deemed payments of estimated tax on the dates on which such
24    amounts were actually withheld;
25        (2) amounts timely paid by a partnership, Subchapter S
26    corporation, or trust on behalf of a partner, shareholder,

 

 

10000SB0009sam003- 156 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 157 -LRB100 06347 HLH 22889 a

1taxable years of less than 12 months shall be in accordance
2with regulations prescribed by the Department.
3    The changes in this Section made by Public Act 84-127 shall
4apply to taxable years ending on or after January 1, 1986.
5(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
697-636, eff. 6-1-12.)
 
7    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
8    Sec. 901. Collection authority.
9    (a) In general.
10    The Department shall collect the taxes imposed by this Act.
11The Department shall collect certified past due child support
12amounts under Section 2505-650 of the Department of Revenue Law
13(20 ILCS 2505/2505-650). Except as provided in subsections (c),
14(e), (f), (g), and (h) of this Section, money collected
15pursuant to subsections (a) and (b) of Section 201 of this Act
16shall be paid into the General Revenue Fund in the State
17treasury; money collected pursuant to subsections (c) and (d)
18of Section 201 of this Act shall be paid into the Personal
19Property Tax Replacement Fund, a special fund in the State
20Treasury; and money collected under Section 2505-650 of the
21Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
22into the Child Support Enforcement Trust Fund, a special fund
23outside the State Treasury, or to the State Disbursement Unit
24established under Section 10-26 of the Illinois Public Aid
25Code, as directed by the Department of Healthcare and Family

 

 

10000SB0009sam003- 158 -LRB100 06347 HLH 22889 a

1Services.
2    (b) Local Government Distributive Fund.
3    Beginning August 1, 1969, and continuing through June 30,
41994, the Treasurer shall transfer each month from the General
5Revenue Fund to a special fund in the State treasury, to be
6known as the "Local Government Distributive Fund", an amount
7equal to 1/12 of the net revenue realized from the tax imposed
8by subsections (a) and (b) of Section 201 of this Act during
9the preceding month. Beginning July 1, 1994, and continuing
10through June 30, 1995, the Treasurer shall transfer each month
11from the General Revenue Fund to the Local Government
12Distributive Fund an amount equal to 1/11 of the net revenue
13realized from the tax imposed by subsections (a) and (b) of
14Section 201 of this Act during the preceding month. Beginning
15July 1, 1995 and continuing through January 31, 2011, the
16Treasurer shall transfer each month from the General Revenue
17Fund to the Local Government Distributive Fund an amount equal
18to the net of (i) 1/10 of the net revenue realized from the tax
19imposed by subsections (a) and (b) of Section 201 of the
20Illinois Income Tax Act during the preceding month (ii) minus,
21beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
22and beginning July 1, 2004, zero. Beginning February 1, 2011,
23and continuing through January 31, 2015, 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)
266% (10% of the ratio of the 3% individual income tax rate prior

 

 

10000SB0009sam003- 159 -LRB100 06347 HLH 22889 a

1to 2011 to the 5% individual income tax rate after 2010) of the
2net revenue realized from the tax imposed by subsections (a)
3and (b) of Section 201 of this Act upon individuals, trusts,
4and estates during the preceding month and (ii) 6.86% (10% of
5the ratio of the 4.8% corporate income tax rate prior to 2011
6to the 7% corporate income tax rate after 2010) of the net
7revenue realized from the tax imposed by subsections (a) and
8(b) of Section 201 of this Act upon corporations during the
9preceding month. Beginning February 1, 2015 and continuing
10through January 31, 2017 January 31, 2025, 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)
138% (10% of the ratio of the 3% individual income tax rate prior
14to 2011 to the 3.75% individual income tax rate after 2014) of
15the 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) 9.14%
18(10% of the ratio of the 4.8% corporate income tax rate prior
19to 2011 to the 5.25% corporate income tax rate after 2014) of
20the net revenue realized from the tax imposed by subsections
21(a) and (b) of Section 201 of this Act upon corporations during
22the preceding month. Beginning February 1, 2017 February 1,
232025, the Treasurer shall transfer each month from the General
24Revenue Fund to the Local Government Distributive Fund an
25amount equal to the sum of (i) 6.02% 9.23% (10% of the ratio of
26the 3% individual income tax rate prior to 2011 to the 4.99%

 

 

10000SB0009sam003- 160 -LRB100 06347 HLH 22889 a

13.25% individual income tax rate beginning in 2017 after 2024)
2of the 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) 6.86%
5(10% of the ratio of the 4.8% corporate income tax rate prior
6to 2011 to the 7% corporate income tax rate beginning in 2017)
710% of the net revenue realized from the tax imposed by
8subsections (a) and (b) of Section 201 of this Act upon
9corporations during the preceding month. Net revenue realized
10for a month shall be defined as the revenue from the tax
11imposed by subsections (a) and (b) of Section 201 of this Act
12which is deposited in the General Revenue Fund, the Education
13Assistance Fund, the Income Tax Surcharge Local Government
14Distributive Fund, the Fund for the Advancement of Education,
15and the Commitment to Human Services Fund during the month
16minus the amount paid out of the General Revenue Fund in State
17warrants during that same month as refunds to taxpayers for
18overpayment of liability under the tax imposed by subsections
19(a) and (b) of Section 201 of this Act.
20    Beginning on August 26, 2014 (the effective date of Public
21Act 98-1052), the Comptroller shall perform the transfers
22required by this subsection (b) no later than 60 days after he
23or she receives the certification from the Treasurer as
24provided in Section 1 of the State Revenue Sharing Act.
25    (c) Deposits Into Income Tax Refund Fund.
26        (1) Beginning on January 1, 1989 and thereafter, the

 

 

10000SB0009sam003- 161 -LRB100 06347 HLH 22889 a

1    Department shall deposit a percentage of the amounts
2    collected pursuant to subsections (a) and (b)(1), (2), and
3    (3), of Section 201 of this Act into a fund in the State
4    treasury known as the Income Tax Refund Fund. The
5    Department shall deposit 6% of such amounts during the
6    period beginning January 1, 1989 and ending on June 30,
7    1989. Beginning with State fiscal year 1990 and for each
8    fiscal year thereafter, the percentage deposited into the
9    Income Tax Refund Fund during a fiscal year shall be the
10    Annual Percentage. For fiscal years 1999 through 2001, the
11    Annual Percentage shall be 7.1%. For fiscal year 2003, the
12    Annual Percentage shall be 8%. For fiscal year 2004, the
13    Annual Percentage shall be 11.7%. Upon the effective date
14    of this amendatory Act of the 93rd General Assembly, the
15    Annual Percentage shall be 10% for fiscal year 2005. For
16    fiscal year 2006, the Annual Percentage shall be 9.75%. For
17    fiscal year 2007, the Annual Percentage shall be 9.75%. For
18    fiscal year 2008, the Annual Percentage shall be 7.75%. For
19    fiscal year 2009, the Annual Percentage shall be 9.75%. For
20    fiscal year 2010, the Annual Percentage shall be 9.75%. For
21    fiscal year 2011, the Annual Percentage shall be 8.75%. For
22    fiscal year 2012, the Annual Percentage shall be 8.75%. For
23    fiscal year 2013, the Annual Percentage shall be 9.75%. For
24    fiscal year 2014, the Annual Percentage shall be 9.5%. For
25    fiscal year 2015, the Annual Percentage shall be 10%. For
26    all other fiscal years, the Annual Percentage shall be

 

 

10000SB0009sam003- 162 -LRB100 06347 HLH 22889 a

1    calculated as a fraction, the numerator of which shall be
2    the amount of refunds approved for payment by the
3    Department during the preceding fiscal year as a result of
4    overpayment of tax liability under subsections (a) and
5    (b)(1), (2), and (3) of Section 201 of this Act plus the
6    amount of such refunds remaining approved but unpaid at the
7    end of the preceding fiscal year, minus the amounts
8    transferred into the Income Tax Refund Fund from the
9    Tobacco Settlement Recovery Fund, and the denominator of
10    which shall be the amounts which will be collected pursuant
11    to subsections (a) and (b)(1), (2), and (3) of Section 201
12    of this Act during the preceding fiscal year; except that
13    in State fiscal year 2002, the Annual Percentage shall in
14    no event exceed 7.6%. The Director of Revenue shall certify
15    the Annual Percentage to the Comptroller on the last
16    business day of the fiscal year immediately preceding the
17    fiscal year for which it is to be effective.
18        (2) Beginning on January 1, 1989 and thereafter, the
19    Department shall deposit a percentage of the amounts
20    collected pursuant to subsections (a) and (b)(6), (7), and
21    (8), (c) and (d) of Section 201 of this Act into a fund in
22    the State treasury known as the Income Tax Refund Fund. The
23    Department shall deposit 18% of such amounts during the
24    period beginning January 1, 1989 and ending on June 30,
25    1989. Beginning with State fiscal year 1990 and for each
26    fiscal year thereafter, the percentage deposited into the

 

 

10000SB0009sam003- 163 -LRB100 06347 HLH 22889 a

1    Income Tax Refund Fund during a fiscal year shall be the
2    Annual Percentage. For fiscal years 1999, 2000, and 2001,
3    the Annual Percentage shall be 19%. For fiscal year 2003,
4    the Annual Percentage shall be 27%. For fiscal year 2004,
5    the Annual Percentage shall be 32%. Upon the effective date
6    of this amendatory Act of the 93rd General Assembly, the
7    Annual Percentage shall be 24% for fiscal year 2005. For
8    fiscal year 2006, the Annual Percentage shall be 20%. For
9    fiscal year 2007, the Annual Percentage shall be 17.5%. For
10    fiscal year 2008, the Annual Percentage shall be 15.5%. For
11    fiscal year 2009, the Annual Percentage shall be 17.5%. For
12    fiscal year 2010, the Annual Percentage shall be 17.5%. For
13    fiscal year 2011, the Annual Percentage shall be 17.5%. For
14    fiscal year 2012, the Annual Percentage shall be 17.5%. For
15    fiscal year 2013, the Annual Percentage shall be 14%. For
16    fiscal year 2014, the Annual Percentage shall be 13.4%. For
17    fiscal year 2015, the Annual Percentage shall be 14%. For
18    all other fiscal years, the Annual Percentage shall be
19    calculated as a fraction, the numerator of which shall be
20    the amount of refunds approved for payment by the
21    Department during the preceding fiscal year as a result of
22    overpayment of tax liability under subsections (a) and
23    (b)(6), (7), and (8), (c) and (d) of Section 201 of this
24    Act plus the amount of such refunds remaining approved but
25    unpaid at the end of the preceding fiscal year, and the
26    denominator of which shall be the amounts which will be

 

 

10000SB0009sam003- 164 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 165 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 166 -LRB100 06347 HLH 22889 a

1    Refund Fund during the fiscal year.
2        (4.5) As soon as possible after the end of fiscal year
3    1999 and of each fiscal year thereafter, the Director shall
4    order transferred and the State Treasurer and State
5    Comptroller shall transfer from the Income Tax Refund Fund
6    to the General Revenue Fund any surplus remaining in the
7    Income Tax Refund Fund as of the end of such fiscal year;
8    excluding for fiscal years 2000, 2001, and 2002 amounts
9    attributable to transfers under item (3) of subsection (c)
10    less refunds resulting from the earned income tax credit.
11        (5) This Act shall constitute an irrevocable and
12    continuing appropriation from the Income Tax Refund Fund
13    for the purpose of paying refunds upon the order of the
14    Director in accordance with the provisions of this Section.
15    (e) Deposits into the Education Assistance Fund and the
16Income Tax Surcharge Local Government Distributive Fund.
17    On July 1, 1991, and thereafter, of the amounts collected
18pursuant to subsections (a) and (b) of Section 201 of this Act,
19minus deposits into the Income Tax Refund Fund, the Department
20shall deposit 7.3% into the Education Assistance Fund in the
21State Treasury. Beginning July 1, 1991, and continuing through
22January 31, 1993, of the amounts collected pursuant to
23subsections (a) and (b) of Section 201 of the Illinois Income
24Tax Act, minus deposits into the Income Tax Refund Fund, the
25Department shall deposit 3.0% into the Income Tax Surcharge
26Local Government Distributive Fund in the State Treasury.

 

 

10000SB0009sam003- 167 -LRB100 06347 HLH 22889 a

1Beginning February 1, 1993 and continuing through June 30,
21993, of the amounts collected pursuant to subsections (a) and
3(b) of Section 201 of the Illinois Income Tax Act, minus
4deposits into the Income Tax Refund Fund, the Department shall
5deposit 4.4% into the Income Tax Surcharge Local Government
6Distributive Fund in the State Treasury. Beginning July 1,
71993, and continuing through June 30, 1994, of the amounts
8collected under subsections (a) and (b) of Section 201 of this
9Act, minus deposits into the Income Tax Refund Fund, the
10Department shall deposit 1.475% into the Income Tax Surcharge
11Local Government Distributive Fund in the State Treasury.
12    (f) Deposits into the Fund for the Advancement of
13Education. Beginning February 1, 2015, the Department shall
14deposit the following portions of the revenue realized from the
15tax imposed upon individuals, trusts, and estates by
16subsections (a) and (b) of Section 201 of this Act during the
17preceding month, minus deposits into the Income Tax Refund
18Fund, into the Fund for the Advancement of Education:
19        (1) beginning February 1, 2015, and prior to February
20    1, 2025, 1/30; and
21        (2) beginning February 1, 2025, 1/26.
22    If the rate of tax imposed by subsection (a) and (b) of
23Section 201 is reduced pursuant to Section 201.5 of this Act,
24the Department shall not make the deposits required by this
25subsection (f) on or after the effective date of the reduction.
26    (g) Deposits into the Commitment to Human Services Fund.

 

 

10000SB0009sam003- 168 -LRB100 06347 HLH 22889 a

1Beginning February 1, 2015, the Department shall deposit the
2following portions of the revenue realized from the tax imposed
3upon individuals, trusts, and estates by subsections (a) and
4(b) of Section 201 of this Act during the preceding month,
5minus deposits into the Income Tax Refund Fund, into the
6Commitment to Human Services Fund:
7        (1) beginning February 1, 2015, and prior to February
8    1, 2025, 1/30; and
9        (2) beginning February 1, 2025, 1/26.
10    If the rate of tax imposed by subsection (a) and (b) of
11Section 201 is reduced pursuant to Section 201.5 of this Act,
12the Department shall not make the deposits required by this
13subsection (g) on or after the effective date of the reduction.
14    (h) Deposits into the Tax Compliance and Administration
15Fund. Beginning on the first day of the first calendar month to
16occur on or after August 26, 2014 (the effective date of Public
17Act 98-1098), each month the Department shall pay into the Tax
18Compliance and Administration Fund, to be used, subject to
19appropriation, to fund additional auditors and compliance
20personnel at the Department, an amount equal to 1/12 of 5% of
21the cash receipts collected during the preceding fiscal year by
22the Audit Bureau of the Department from the tax imposed by
23subsections (a), (b), (c), and (d) of Section 201 of this Act,
24net of deposits into the Income Tax Refund Fund made from those
25cash receipts.
26(Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;

 

 

10000SB0009sam003- 169 -LRB100 06347 HLH 22889 a

198-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.
27-20-15.)
 
3    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
4    Sec. 1501. Definitions.
5    (a) In general. When used in this Act, where not otherwise
6distinctly expressed or manifestly incompatible with the
7intent thereof:
8        (1) Business income. The term "business income" means
9    all income that may be treated as apportionable business
10    income under the Constitution of the United States.
11    Business income is net of the deductions allocable thereto.
12    Such term does not include compensation or the deductions
13    allocable thereto. For each taxable year beginning on or
14    after January 1, 2003, a taxpayer may elect to treat all
15    income other than compensation as business income. This
16    election shall be made in accordance with rules adopted by
17    the Department and, once made, shall be irrevocable.
18        (1.5) Captive real estate investment trust:
19            (A) The term "captive real estate investment
20        trust" means a corporation, trust, or association:
21                (i) that is considered a real estate
22            investment trust for the taxable year under
23            Section 856 of the Internal Revenue Code;
24                (ii) the certificates of beneficial interest
25            or shares of which are not regularly traded on an

 

 

10000SB0009sam003- 170 -LRB100 06347 HLH 22889 a

1            established securities market; and
2                (iii) of which more than 50% of the voting
3            power or value of the beneficial interest or
4            shares, at any time during the last half of the
5            taxable year, is owned or controlled, directly,
6            indirectly, or constructively, by a single
7            corporation.
8            (B) The term "captive real estate investment
9        trust" does not include:
10                (i) a real estate investment trust of which
11            more than 50% of the voting power or value of the
12            beneficial interest or shares is owned or
13            controlled, directly, indirectly, or
14            constructively, by:
15                    (a) a real estate investment trust, other
16                than a captive real estate investment trust;
17                    (b) a person who is exempt from taxation
18                under Section 501 of the Internal Revenue Code,
19                and who is not required to treat income
20                received from the real estate investment trust
21                as unrelated business taxable income under
22                Section 512 of the Internal Revenue Code;
23                    (c) a listed Australian property trust, if
24                no more than 50% of the voting power or value
25                of the beneficial interest or shares of that
26                trust, at any time during the last half of the

 

 

10000SB0009sam003- 171 -LRB100 06347 HLH 22889 a

1                taxable year, is owned or controlled, directly
2                or indirectly, by a single person;
3                    (d) an entity organized as a trust,
4                provided a listed Australian property trust
5                described in subparagraph (c) owns or
6                controls, directly or indirectly, or
7                constructively, 75% or more of the voting power
8                or value of the beneficial interests or shares
9                of such entity; or
10                    (e) an entity that is organized outside of
11                the laws of the United States and that
12                satisfies all of the following criteria:
13                        (1) at least 75% of the entity's total
14                    asset value at the close of its taxable
15                    year is represented by real estate assets
16                    (as defined in Section 856(c)(5)(B) of the
17                    Internal Revenue Code, thereby including
18                    shares or certificates of beneficial
19                    interest in any real estate investment
20                    trust), cash and cash equivalents, and
21                    U.S. Government securities;
22                        (2) the entity is not subject to tax on
23                    amounts that are distributed to its
24                    beneficial owners or is exempt from
25                    entity-level taxation;
26                        (3) the entity distributes at least

 

 

10000SB0009sam003- 172 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 173 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 174 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 175 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 176 -LRB100 06347 HLH 22889 a

1                retail charge agreement within the meaning of
2                the Sales Finance Agency Act, the Retail
3                Installment Sales Act, or the Motor Vehicle
4                Retail Installment Sales Act;
5                    (b) an installment, charge, credit, or
6                similar contract or agreement arising from the
7                sale of tangible personal property or services
8                in a transaction involving a deferred payment
9                price payable in one or more installments
10                subsequent to the sale; or
11                    (c) the outstanding balance of a contract
12                or agreement described in provisions (a) or (b)
13                of this item (i).
14                A customer receivable need not provide for
15            payment of interest on deferred payments. A sales
16            finance company may purchase a customer receivable
17            from, or make a loan secured by a customer
18            receivable to, the seller in the original
19            transaction or to a person who purchased the
20            customer receivable directly or indirectly from
21            that seller.
22                (ii) A corporation meeting each of the
23            following criteria:
24                    (a) the corporation must be a member of an
25                "affiliated group" within the meaning of
26                Section 1504(a) of the Internal Revenue Code,

 

 

10000SB0009sam003- 177 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 178 -LRB100 06347 HLH 22889 a

1                members of its affiliated groups times a
2                fraction equal to the limitation amount
3                divided by the average outstanding balances of
4                the loans made by that corporation to members
5                of its affiliated group;
6                    (c) the total of all shareholder's equity
7                (including, without limitation, paid-in
8                capital on common and preferred stock and
9                retained earnings) of the corporation plus the
10                total of all of its loans, advances, and other
11                obligations payable or owed to members of its
12                affiliated group may not exceed 20% of the
13                total assets of the corporation at any time
14                during the tax year; and
15                    (d) more than 50% of all interest-bearing
16                obligations of the affiliated group payable to
17                persons outside the group determined in
18                accordance with generally accepted accounting
19                principles must be obligations of the
20                corporation.
21            This amendatory Act of the 91st General Assembly is
22        declaratory of existing law.
23            (D) Subparagraphs (B) and (C) of this paragraph are
24        declaratory of existing law and apply retroactively,
25        for all tax years beginning on or before December 31,
26        1996, to all original returns, to all amended returns

 

 

10000SB0009sam003- 179 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 180 -LRB100 06347 HLH 22889 a

1        Section 304 of this Act as the taxpayer making the
2        election. No election allowed by this subparagraph
3        shall be made under a claim filed under subsection (d)
4        of Section 909 more than 30 days after the effective
5        date of this amendatory Act of 1996.
6            (F) Finance Leases. For purposes of this
7        subsection, a finance lease shall be treated as a loan
8        or other extension of credit, rather than as a lease,
9        regardless of how the transaction is characterized for
10        any other purpose, including the purposes of any
11        regulatory agency to which the lessor is subject. A
12        finance lease is any transaction in the form of a lease
13        in which the lessee is treated as the owner of the
14        leased asset entitled to any deduction for
15        depreciation allowed under Section 167 of the Internal
16        Revenue Code.
17        (9) Fiscal year. The term "fiscal year" means an
18    accounting period of 12 months ending on the last day of
19    any month other than December.
20        (9.5) Fixed place of business. The term "fixed place of
21    business" has the same meaning as that term is given in
22    Section 864 of the Internal Revenue Code and the related
23    Treasury regulations.
24        (10) Includes and including. The terms "includes" and
25    "including" when used in a definition contained in this Act
26    shall not be deemed to exclude other things otherwise

 

 

10000SB0009sam003- 181 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 182 -LRB100 06347 HLH 22889 a

1            securities convertible into common stock, and
2            preferred stock;
3                (ii) bonds, debentures, and other debt
4            securities;
5                (iii) foreign and domestic currency deposits
6            secured by federal, state, or local governmental
7            agencies;
8                (iv) mortgage or asset-backed securities
9            secured by federal, state, or local governmental
10            agencies;
11                (v) repurchase agreements and loan
12            participations;
13                (vi) foreign currency exchange contracts and
14            forward and futures contracts on foreign
15            currencies;
16                (vii) stock and bond index securities and
17            futures contracts and other similar financial
18            securities and futures contracts on those
19            securities;
20                (viii) options for the purchase or sale of any
21            of the securities, currencies, contracts, or
22            financial instruments described in items (i) to
23            (vii), inclusive;
24                (ix) regulated futures contracts;
25                (x) commodities (not described in Section
26            1221(a)(1) of the Internal Revenue Code) or

 

 

10000SB0009sam003- 183 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 184 -LRB100 06347 HLH 22889 a

1        (14) Nonresident. The term "nonresident" means a
2    person who is not a resident.
3        (15) Paid, incurred and accrued. The terms "paid",
4    "incurred" and "accrued" shall be construed according to
5    the method of accounting upon the basis of which the
6    person's base income is computed under this Act.
7        (16) Partnership and partner. The term "partnership"
8    includes a syndicate, group, pool, joint venture or other
9    unincorporated organization, through or by means of which
10    any business, financial operation, or venture is carried
11    on, and which is not, within the meaning of this Act, a
12    trust or estate or a corporation; and the term "partner"
13    includes a member in such syndicate, group, pool, joint
14    venture or organization.
15        The term "partnership" includes any entity, including
16    a limited liability company formed under the Illinois
17    Limited Liability Company Act, classified as a partnership
18    for federal income tax purposes.
19        The term "partnership" does not include a syndicate,
20    group, pool, joint venture, or other unincorporated
21    organization established for the sole purpose of playing
22    the Illinois State Lottery.
23        (17) Part-year resident. The term "part-year resident"
24    means an individual who became a resident during the
25    taxable year or ceased to be a resident during the taxable
26    year. Under Section 1501(a)(20)(A)(i) residence commences

 

 

10000SB0009sam003- 185 -LRB100 06347 HLH 22889 a

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

 

 

10000SB0009sam003- 186 -LRB100 06347 HLH 22889 a

1        taxable year; or (ii) who is domiciled in this State
2        but is absent from the State for a temporary or
3        transitory purpose during the taxable year;
4            (B) The estate of a decedent who at his or her
5        death was domiciled in this State;
6            (C) A trust created by a will of a decedent who at
7        his death was domiciled in this State; and
8            (D) An irrevocable trust, the grantor of which was
9        domiciled in this State at the time such trust became
10        irrevocable. For purpose of this subparagraph, a trust
11        shall be considered irrevocable to the extent that the
12        grantor is not treated as the owner thereof under
13        Sections 671 through 678 of the Internal Revenue Code.
14        (21) Sales. The term "sales" means all gross receipts
15    of the taxpayer not allocated under Sections 301, 302 and
16    303.
17        (22) State. The term "state" when applied to a
18    jurisdiction other than this State means any state of the
19    United States, the District of Columbia, the Commonwealth
20    of Puerto Rico, any Territory or Possession of the United
21    States, and any foreign country, or any political
22    subdivision of any of the foregoing. For purposes of the
23    foreign tax credit under Section 601, the term "state"
24    means any state of the United States, the District of
25    Columbia, the Commonwealth of Puerto Rico, and any
26    territory or possession of the United States, or any

 

 

10000SB0009sam003- 187 -LRB100 06347 HLH 22889 a

1    political subdivision of any of the foregoing, effective
2    for tax years ending on or after December 31, 1989.
3        (23) Taxable year. The term "taxable year" means the
4    calendar year, or the fiscal year ending during such
5    calendar year, upon the basis of which the base income is
6    computed under this Act. "Taxable year" means, in the case
7    of a return made for a fractional part of a year under the
8    provisions of this Act, the period for which such return is
9    made.
10        (24) Taxpayer. The term "taxpayer" means any person
11    subject to the tax imposed by this Act.
12        (25) International banking facility. The term
13    international banking facility shall have the same meaning
14    as is set forth in the Illinois Banking Act or as is set
15    forth in the laws of the United States or regulations of
16    the Board of Governors of the Federal Reserve System.
17        (26) Income Tax Return Preparer.
18            (A) The term "income tax return preparer" means any
19        person who prepares for compensation, or who employs
20        one or more persons to prepare for compensation, any
21        return of tax imposed by this Act or any claim for
22        refund of tax imposed by this Act. The preparation of a
23        substantial portion of a return or claim for refund
24        shall be treated as the preparation of that return or
25        claim for refund.
26            (B) A person is not an income tax return preparer

 

 

10000SB0009sam003- 188 -LRB100 06347 HLH 22889 a

1        if all he or she does is
2                (i) furnish typing, reproducing, or other
3            mechanical assistance;
4                (ii) prepare returns or claims for refunds for
5            the employer by whom he or she is regularly and
6            continuously employed;
7                (iii) prepare as a fiduciary returns or claims
8            for refunds for any person; or
9                (iv) prepare claims for refunds for a taxpayer
10            in response to any notice of deficiency issued to
11            that taxpayer or in response to any waiver of
12            restriction after the commencement of an audit of
13            that taxpayer or of another taxpayer if a
14            determination in the audit of the other taxpayer
15            directly or indirectly affects the tax liability
16            of the taxpayer whose claims he or she is
17            preparing.
18        (27) Unitary business group.
19            (A) The term "unitary business group" means a group
20        of persons related through common ownership whose
21        business activities are integrated with, dependent
22        upon and contribute to each other. The group will not
23        include those members whose business activity outside
24        the United States is 80% or more of any such member's
25        total business activity; for purposes of this
26        paragraph and clause (a)(3)(B)(ii) of Section 304,

 

 

10000SB0009sam003- 189 -LRB100 06347 HLH 22889 a

1        business activity within the United States shall be
2        measured by means of the factors ordinarily applicable
3        under subsections (a), (b), (c), (d), or (h) of Section
4        304 except that, in the case of members ordinarily
5        required to apportion business income by means of the 3
6        factor formula of property, payroll and sales
7        specified in subsection (a) of Section 304, including
8        the formula as weighted in subsection (h) of Section
9        304, such members shall not use the sales factor in the
10        computation and the results of the property and payroll
11        factor computations of subsection (a) of Section 304
12        shall be divided by 2 (by one if either the property or
13        payroll factor has a denominator of zero). The
14        computation required by the preceding sentence shall,
15        in each case, involve the division of the member's
16        property, payroll, or revenue miles in the United
17        States, insurance premiums on property or risk in the
18        United States, or financial organization business
19        income from sources within the United States, as the
20        case may be, by the respective worldwide figures for
21        such items. Common ownership in the case of
22        corporations is the direct or indirect control or
23        ownership of more than 50% of the outstanding voting
24        stock of the persons carrying on unitary business
25        activity. Unitary business activity can ordinarily be
26        illustrated where the activities of the members are: