Sen. Toi W. Hutchinson

Filed: 5/17/2017

 

 


 

 


 
10000SB0009sam004LRB100 06347 HLH 26556 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:

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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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, 204, 212, 222, 804, 901, and 1501
15and by adding Section 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.

 

 

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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

 

 

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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) 4.95% 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 and

 

 

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1    ending prior to January 1, 2024 January 1, 2025, an amount
2    equal to 4.95% 3.25% of the taxpayer's net income for the
3    taxable year.
4        (5.5) In the case of an individual, trust, or estate,
5    for taxable years beginning prior to January 1, 2024 and
6    ending after December 31, 2023, an amount equal to the sum
7    of (i) 4.95% of the taxpayer's net income for the period
8    prior to January 1, 2024, as calculated under Section
9    202.5, and (ii) 3.75% of the taxpayer's net income for the
10    period after December 31, 2023, as calculated under Section
11    202.5.
12        (5.6) In the case of an individual, trust, or estate,
13    for taxable years beginning on or after January 1, 2024,
14    3.75% of the taxpayer's net income for the taxable year.
15        (6) In the case of a corporation, for taxable years
16    ending prior to July 1, 1989, an amount equal to 4% of the
17    taxpayer's net income for the taxable year.
18        (7) In the case of a corporation, for taxable years
19    beginning prior to July 1, 1989 and ending after June 30,
20    1989, an amount equal to the sum of (i) 4% of the
21    taxpayer's net income for the period prior to July 1, 1989,
22    as calculated under Section 202.3, and (ii) 4.8% of the
23    taxpayer's net income for the period after June 30, 1989,
24    as calculated under Section 202.3.
25        (8) In the case of a corporation, for taxable years
26    beginning after June 30, 1989, and ending prior to January

 

 

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

 

 

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1    ending after December 31, 2016 December 31, 2024, an amount
2    equal to the sum of (i) 5.25% of the taxpayer's net income
3    for the period prior to January 1, 2017 January 1, 2025, as
4    calculated under Section 202.5, and (ii) 7% 4.8% of the
5    taxpayer's net income for the period after December 31,
6    2016 December 31, 2024, as calculated under Section 202.5.
7        (14) In the case of a corporation, for taxable years
8    beginning on or after January 1, 2017 and ending prior to
9    January 1, 2024 January 1, 2025, an amount equal to 7% 4.8%
10    of the taxpayer's net income for the taxable year.
11        (15) In the case of a corporation, for taxable years
12    beginning prior to January 1, 2024 and ending after
13    December 31, 2023, an amount equal to the sum of (i) 7% of
14    the taxpayer's net income for the period prior to January
15    1, 2024, as calculated under Section 202.5, and (ii) 5.25%
16    of the taxpayer's net income for the period after December
17    31, 2023, as calculated under Section 202.5.
18        (16) In the case of a corporation, for taxable years
19    beginning on or after January 1, 2024, 5.25% of the
20    taxpayer's net income for the taxable year.
21    The rates under this subsection (b) are subject to the
22provisions of Section 201.5.
23    (c) Personal Property Tax Replacement Income Tax.
24Beginning on July 1, 1979 and thereafter, in addition to such
25income tax, there is also hereby imposed the Personal Property
26Tax Replacement Income Tax measured by net income on every

 

 

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1corporation (including Subchapter S corporations), partnership
2and trust, for each taxable year ending after June 30, 1979.
3Such taxes are imposed on the privilege of earning or receiving
4income in or as a resident of this State. The Personal Property
5Tax Replacement Income Tax shall be in addition to the income
6tax imposed by subsections (a) and (b) of this Section and in
7addition to all other occupation or privilege taxes imposed by
8this State or by any municipal corporation or political
9subdivision thereof.
10    (d) Additional Personal Property Tax Replacement Income
11Tax Rates. The personal property tax replacement income tax
12imposed by this subsection and subsection (c) of this Section
13in the case of a corporation, other than a Subchapter S
14corporation and except as adjusted by subsection (d-1), shall
15be an additional amount equal to 2.85% of such taxpayer's net
16income for the taxable year, except that beginning on January
171, 1981, and thereafter, the rate of 2.85% specified in this
18subsection shall be reduced to 2.5%, and in the case of a
19partnership, trust or a Subchapter S corporation shall be an
20additional amount equal to 1.5% of such taxpayer's net income
21for the taxable year.
22    (d-1) Rate reduction for certain foreign insurers. In the
23case of a foreign insurer, as defined by Section 35A-5 of the
24Illinois Insurance Code, whose state or country of domicile
25imposes on insurers domiciled in Illinois a retaliatory tax
26(excluding any insurer whose premiums from reinsurance assumed

 

 

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1are 50% or more of its total insurance premiums as determined
2under paragraph (2) of subsection (b) of Section 304, except
3that for purposes of this determination premiums from
4reinsurance do not include premiums from inter-affiliate
5reinsurance arrangements), beginning with taxable years ending
6on or after December 31, 1999, the sum of the rates of tax
7imposed by subsections (b) and (d) shall be reduced (but not
8increased) to the rate at which the total amount of tax imposed
9under this Act, net of all credits allowed under this Act,
10shall equal (i) the total amount of tax that would be imposed
11on the foreign insurer's net income allocable to Illinois for
12the taxable year by such foreign insurer's state or country of
13domicile if that net income were subject to all income taxes
14and taxes measured by net income imposed by such foreign
15insurer's state or country of domicile, net of all credits
16allowed or (ii) a rate of zero if no such tax is imposed on such
17income by the foreign insurer's state of domicile. For the
18purposes of this subsection (d-1), an inter-affiliate includes
19a mutual insurer under common management.
20        (1) For the purposes of subsection (d-1), in no event
21    shall the sum of the rates of tax imposed by subsections
22    (b) and (d) be reduced below the rate at which the sum of:
23            (A) the total amount of tax imposed on such foreign
24        insurer under this Act for a taxable year, net of all
25        credits allowed under this Act, plus
26            (B) the privilege tax imposed by Section 409 of the

 

 

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

 

 

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1    service on or after July 1, 1984. There shall be allowed an
2    additional credit equal to .5% of the basis of qualified
3    property placed in service during the taxable year,
4    provided such property is placed in service on or after
5    July 1, 1986, and the taxpayer's base employment within
6    Illinois has increased by 1% or more over the preceding
7    year as determined by the taxpayer's employment records
8    filed with the Illinois Department of Employment Security.
9    Taxpayers who are new to Illinois shall be deemed to have
10    met the 1% growth in base employment for the first year in
11    which they file employment records with the Illinois
12    Department of Employment Security. The provisions added to
13    this Section by Public Act 85-1200 (and restored by Public
14    Act 87-895) shall be construed as declaratory of existing
15    law and not as a new enactment. If, in any year, the
16    increase in base employment within Illinois over the
17    preceding year is less than 1%, the additional credit shall
18    be limited to that percentage times a fraction, the
19    numerator of which is .5% and the denominator of which is
20    1%, but shall not exceed .5%. The investment credit shall
21    not be allowed to the extent that it would reduce a
22    taxpayer's liability in any tax year below zero, nor may
23    any credit for qualified property be allowed for any year
24    other than the year in which the property was placed in
25    service in Illinois. For tax years ending on or after
26    December 31, 1987, and on or before December 31, 1988, the

 

 

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

 

 

10000SB0009sam004- 20 -LRB100 06347 HLH 26556 a

1    liability. If there is credit from more than one tax year
2    that is available to offset a liability, earlier credit
3    shall be applied first.
4        (2) The term "qualified property" means property
5    which:
6            (A) is tangible, whether new or used, including
7        buildings and structural components of buildings and
8        signs that are real property, but not including land or
9        improvements to real property that are not a structural
10        component of a building such as landscaping, sewer
11        lines, local access roads, fencing, parking lots, and
12        other appurtenances;
13            (B) is depreciable pursuant to Section 167 of the
14        Internal Revenue Code, except that "3-year property"
15        as defined in Section 168(c)(2)(A) of that Code is not
16        eligible for the credit provided by this subsection
17        (e);
18            (C) is acquired by purchase as defined in Section
19        179(d) of the Internal Revenue Code;
20            (D) is used in Illinois by a taxpayer who is
21        primarily engaged in manufacturing, or in mining coal
22        or fluorite, or in retailing, or was placed in service
23        on or after July 1, 2006 in a River Edge Redevelopment
24        Zone established pursuant to the River Edge
25        Redevelopment Zone Act; and
26            (E) has not previously been used in Illinois in

 

 

10000SB0009sam004- 21 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 22 -LRB100 06347 HLH 26556 a

1    depreciation purposes is increased after it has been placed
2    in service in Illinois by the taxpayer, the amount of such
3    increase shall be deemed property placed in service on the
4    date of such increase in basis.
5        (6) The term "placed in service" shall have the same
6    meaning as under Section 46 of the Internal Revenue Code.
7        (7) If during any taxable year, any property ceases to
8    be qualified property in the hands of the taxpayer within
9    48 months after being placed in service, or the situs of
10    any qualified property is moved outside Illinois within 48
11    months after being placed in service, the Personal Property
12    Tax Replacement Income Tax for such taxable year shall be
13    increased. Such increase shall be determined by (i)
14    recomputing the investment credit which would have been
15    allowed for the year in which credit for such property was
16    originally allowed by eliminating such property from such
17    computation and, (ii) subtracting such recomputed credit
18    from the amount of credit previously allowed. For the
19    purposes of this paragraph (7), a reduction of the basis of
20    qualified property resulting from a redetermination of the
21    purchase price shall be deemed a disposition of qualified
22    property to the extent of such reduction.
23        (8) Unless the investment credit is extended by law,
24    the basis of qualified property shall not include costs
25    incurred after December 31, 2018, except for costs incurred
26    pursuant to a binding contract entered into on or before

 

 

10000SB0009sam004- 23 -LRB100 06347 HLH 26556 a

1    December 31, 2018.
2        (9) Each taxable year ending before December 31, 2000,
3    a partnership may elect to pass through to its partners the
4    credits to which the partnership is entitled under this
5    subsection (e) for the taxable year. A partner may use the
6    credit allocated to him or her under this paragraph only
7    against the tax imposed in subsections (c) and (d) of this
8    Section. If the partnership makes that election, those
9    credits shall be allocated among the partners in the
10    partnership in accordance with the rules set forth in
11    Section 704(b) of the Internal Revenue Code, and the rules
12    promulgated under that Section, and the allocated amount of
13    the credits shall be allowed to the partners for that
14    taxable year. The partnership shall make this election on
15    its Personal Property Tax Replacement Income Tax return for
16    that taxable year. The election to pass through the credits
17    shall be irrevocable.
18        For taxable years ending on or after December 31, 2000,
19    a partner that qualifies its partnership for a subtraction
20    under subparagraph (I) of paragraph (2) of subsection (d)
21    of Section 203 or a shareholder that qualifies a Subchapter
22    S corporation for a subtraction under subparagraph (S) of
23    paragraph (2) of subsection (b) of Section 203 shall be
24    allowed a credit under this subsection (e) equal to its
25    share of the credit earned under this subsection (e) during
26    the taxable year by the partnership or Subchapter S

 

 

10000SB0009sam004- 24 -LRB100 06347 HLH 26556 a

1    corporation, determined in accordance with the
2    determination of income and distributive share of income
3    under Sections 702 and 704 and Subchapter S of the Internal
4    Revenue Code. This paragraph is exempt from the provisions
5    of Section 250.
6    (f) Investment credit; Enterprise Zone; River Edge
7Redevelopment Zone.
8        (1) A taxpayer shall be allowed a credit against the
9    tax imposed by subsections (a) and (b) of this Section for
10    investment in qualified property which is placed in service
11    in an Enterprise Zone created pursuant to the Illinois
12    Enterprise Zone Act or, for property placed in service on
13    or after July 1, 2006, a River Edge Redevelopment Zone
14    established pursuant to the River Edge Redevelopment Zone
15    Act. For partners, shareholders of Subchapter S
16    corporations, and owners of limited liability companies,
17    if the liability company is treated as a partnership for
18    purposes of federal and State income taxation, there shall
19    be allowed a credit under this subsection (f) to be
20    determined in accordance with the determination of income
21    and distributive share of income under Sections 702 and 704
22    and Subchapter S of the Internal Revenue Code. The credit
23    shall be .5% of the basis for such property. The credit
24    shall be available only in the taxable year in which the
25    property is placed in service in the Enterprise Zone or
26    River Edge Redevelopment Zone and shall not be allowed to

 

 

10000SB0009sam004- 25 -LRB100 06347 HLH 26556 a

1    the extent that it would reduce a taxpayer's liability for
2    the tax imposed by subsections (a) and (b) of this Section
3    to below zero. For tax years ending on or after December
4    31, 1985, the credit shall be allowed for the tax year in
5    which the property is placed in service, or, if the amount
6    of the credit exceeds the tax liability for that year,
7    whether it exceeds the original liability or the liability
8    as later amended, such excess may be carried forward and
9    applied to the tax liability of the 5 taxable years
10    following the excess credit year. The credit shall be
11    applied to the earliest year for which there is a
12    liability. If there is credit from more than one tax year
13    that is available to offset a liability, the credit
14    accruing first in time shall be applied first.
15        (2) The term qualified property means property which:
16            (A) is tangible, whether new or used, including
17        buildings and structural components of buildings;
18            (B) is depreciable pursuant to Section 167 of the
19        Internal Revenue Code, except that "3-year property"
20        as defined in Section 168(c)(2)(A) of that Code is not
21        eligible for the credit provided by this subsection
22        (f);
23            (C) is acquired by purchase as defined in Section
24        179(d) of the Internal Revenue Code;
25            (D) is used in the Enterprise Zone or River Edge
26        Redevelopment Zone by the taxpayer; and

 

 

10000SB0009sam004- 26 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 27 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 28 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 29 -LRB100 06347 HLH 26556 a

1    and (b) of this Section to below zero. For tax years ending
2    on or after December 31, 1987, the credit shall be allowed
3    for the tax year in which the property is placed in
4    service, or, if the amount of the credit exceeds the tax
5    liability for that year, whether it exceeds the original
6    liability or the liability as later amended, such excess
7    may be carried forward and applied to the tax liability of
8    the 5 taxable years following the excess credit year. The
9    credit shall be applied to the earliest year for which
10    there is a liability. If there is credit from more than one
11    tax year that is available to offset a liability, the
12    credit accruing first in time shall be applied first.
13        Changes made in this subdivision (h)(1) by Public Act
14    88-670 restore changes made by Public Act 85-1182 and
15    reflect existing law.
16        (2) The term qualified property means property which:
17            (A) is tangible, whether new or used, including
18        buildings and structural components of buildings;
19            (B) is depreciable pursuant to Section 167 of the
20        Internal Revenue Code, except that "3-year property"
21        as defined in Section 168(c)(2)(A) of that Code is not
22        eligible for the credit provided by this subsection
23        (h);
24            (C) is acquired by purchase as defined in Section
25        179(d) of the Internal Revenue Code; and
26            (D) is not eligible for the Enterprise Zone

 

 

10000SB0009sam004- 30 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 31 -LRB100 06347 HLH 26556 a

1    the purposes of this paragraph (6), a reduction of the
2    basis of qualified property resulting from a
3    redetermination of the purchase price shall be deemed a
4    disposition of qualified property to the extent of such
5    reduction.
6        (7) Beginning with tax years ending after December 31,
7    1996, if a taxpayer qualifies for the credit under this
8    subsection (h) and thereby is granted a tax abatement and
9    the taxpayer relocates its entire facility in violation of
10    the explicit terms and length of the contract under Section
11    18-183 of the Property Tax Code, the tax imposed under
12    subsections (a) and (b) of this Section shall be increased
13    for the taxable year in which the taxpayer relocated its
14    facility by an amount equal to the amount of credit
15    received by the taxpayer under this subsection (h).
16    (i) Credit for Personal Property Tax Replacement Income
17Tax. For tax years ending prior to December 31, 2003, a credit
18shall be allowed against the tax imposed by subsections (a) and
19(b) of this Section for the tax imposed by subsections (c) and
20(d) of this Section. This credit shall be computed by
21multiplying the tax imposed by subsections (c) and (d) of this
22Section by a fraction, the numerator of which is base income
23allocable to Illinois and the denominator of which is Illinois
24base income, and further multiplying the product by the tax
25rate imposed by subsections (a) and (b) of this Section.
26    Any credit earned on or after December 31, 1986 under this

 

 

10000SB0009sam004- 32 -LRB100 06347 HLH 26556 a

1subsection which is unused in the year the credit is computed
2because it exceeds the tax liability imposed by subsections (a)
3and (b) for that year (whether it exceeds the original
4liability or the liability as later amended) may be carried
5forward and applied to the tax liability imposed by subsections
6(a) and (b) of the 5 taxable years following the excess credit
7year, provided that no credit may be carried forward to any
8year ending on or after December 31, 2003. This credit shall be
9applied first to the earliest year for which there is a
10liability. If there is a credit under this subsection from more
11than one tax year that is available to offset a liability the
12earliest credit arising under this subsection shall be applied
13first.
14    If, during any taxable year ending on or after December 31,
151986, the tax imposed by subsections (c) and (d) of this
16Section for which a taxpayer has claimed a credit under this
17subsection (i) is reduced, the amount of credit for such tax
18shall also be reduced. Such reduction shall be determined by
19recomputing the credit to take into account the reduced tax
20imposed by subsections (c) and (d). If any portion of the
21reduced amount of credit has been carried to a different
22taxable year, an amended return shall be filed for such taxable
23year to reduce the amount of credit claimed.
24    (j) Training expense credit. Beginning with tax years
25ending on or after December 31, 1986 and prior to December 31,
262003, a taxpayer shall be allowed a credit against the tax

 

 

10000SB0009sam004- 33 -LRB100 06347 HLH 26556 a

1imposed by subsections (a) and (b) under this Section for all
2amounts paid or accrued, on behalf of all persons employed by
3the taxpayer in Illinois or Illinois residents employed outside
4of Illinois by a taxpayer, for educational or vocational
5training in semi-technical or technical fields or semi-skilled
6or skilled fields, which were deducted from gross income in the
7computation of taxable income. The credit against the tax
8imposed by subsections (a) and (b) shall be 1.6% of such
9training expenses. For partners, shareholders of subchapter S
10corporations, and owners of limited liability companies, if the
11liability company is treated as a partnership for purposes of
12federal and State income taxation, there shall be allowed a
13credit under this subsection (j) to be determined in accordance
14with the determination of income and distributive share of
15income under Sections 702 and 704 and subchapter S of the
16Internal Revenue Code.
17    Any credit allowed under this subsection which is unused in
18the year the credit is earned may be carried forward to each of
19the 5 taxable years following the year for which the credit is
20first computed until it is used. This credit shall be applied
21first to the earliest year for which there is a liability. If
22there is a credit under this subsection from more than one tax
23year that is available to offset a liability the earliest
24credit arising under this subsection shall be applied first. No
25carryforward credit may be claimed in any tax year ending on or
26after December 31, 2003.

 

 

10000SB0009sam004- 34 -LRB100 06347 HLH 26556 a

1    (k) Research and development credit. For tax years ending
2after July 1, 1990 and prior to December 31, 2003, and
3beginning again for tax years ending on or after December 31,
42004, and ending prior to January 1, 2016, a taxpayer shall be
5allowed a credit against the tax imposed by subsections (a) and
6(b) of this Section for increasing research activities in this
7State. The credit allowed against the tax imposed by
8subsections (a) and (b) shall be equal to 6 1/2% of the
9qualifying expenditures for increasing research activities in
10this State. For partners, shareholders of subchapter S
11corporations, and owners of limited liability companies, if the
12liability company is treated as a partnership for purposes of
13federal and State income taxation, there shall be allowed a
14credit under this subsection to be determined in accordance
15with the determination of income and distributive share of
16income under Sections 702 and 704 and subchapter S of the
17Internal Revenue Code.
18    For purposes of this subsection, "qualifying expenditures"
19means the qualifying expenditures as defined for the federal
20credit for increasing research activities which would be
21allowable under Section 41 of the Internal Revenue Code and
22which are conducted in this State, "qualifying expenditures for
23increasing research activities in this State" means the excess
24of qualifying expenditures for the taxable year in which
25incurred over qualifying expenditures for the base period,
26"qualifying expenditures for the base period" means (i) for tax

 

 

10000SB0009sam004- 35 -LRB100 06347 HLH 26556 a

1years ending prior to December 31, 2017, the average of the
2qualifying expenditures for each year in the base period; and
3(2) for tax years ending on or after December 31, 2017, 50% of
4the average of the qualifying expenditures for each year in the
5base period, and "base period" means the 3 taxable years
6immediately preceding the taxable year for which the
7determination is being made.
8    Any credit in excess of the tax liability for the taxable
9year may be carried forward. A taxpayer may elect to have the
10unused credit shown on its final completed return carried over
11as a credit against the tax liability for the following 5
12taxable years or until it has been fully used, whichever occurs
13first; provided that no credit earned in a tax year ending
14prior to December 31, 2003 may be carried forward to any year
15ending on or after December 31, 2003.
16    If an unused credit is carried forward to a given year from
172 or more earlier years, that credit arising in the earliest
18year will be applied first against the tax liability for the
19given year. If a tax liability for the given year still
20remains, the credit from the next earliest year will then be
21applied, and so on, until all credits have been used or no tax
22liability for the given year remains. Any remaining unused
23credit or credits then will be carried forward to the next
24following year in which a tax liability is incurred, except
25that no credit can be carried forward to a year which is more
26than 5 years after the year in which the expense for which the

 

 

10000SB0009sam004- 36 -LRB100 06347 HLH 26556 a

1credit is given was incurred.
2    No inference shall be drawn from this amendatory Act of the
391st General Assembly in construing this Section for taxable
4years beginning before January 1, 1999.
5    This subsection (k) is exempt from the provisions of
6Section 250.
7    It is the intent of the General Assembly that the research
8and development credit under this subsection (k) shall apply
9continuously for all tax years ending on or after December 31,
102004, including, but not limited to, the period beginning on
11January 1, 2016 and ending on the effective date of this
12amendatory Act of the 100th General Assembly. All actions taken
13in reliance on the continuation of the credit under this
14subsection (k) by any taxpayer are hereby validated.
15    (l) Environmental Remediation Tax Credit.
16        (i) For tax years ending after December 31, 1997 and on
17    or before December 31, 2001, a taxpayer shall be allowed a
18    credit against the tax imposed by subsections (a) and (b)
19    of this Section for certain amounts paid for unreimbursed
20    eligible remediation costs, as specified in this
21    subsection. For purposes of this Section, "unreimbursed
22    eligible remediation costs" means costs approved by the
23    Illinois Environmental Protection Agency ("Agency") under
24    Section 58.14 of the Environmental Protection Act that were
25    paid in performing environmental remediation at a site for
26    which a No Further Remediation Letter was issued by the

 

 

10000SB0009sam004- 37 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 38 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 39 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 40 -LRB100 06347 HLH 26556 a

1January 1, 2018, no taxpayer may claim a credit under this
2subsection (m) if the taxpayer's adjusted gross income for the
3taxable year exceeds (i) $500,000, in the case of spouses
4filing a joint federal tax return or (ii) $250,000, in the case
5of all other taxpayers. This subsection is exempt from the
6provisions of Section 250 of this Act.
7    For purposes of this subsection:
8    "Qualifying pupils" means individuals who (i) are
9residents of the State of Illinois, (ii) are under the age of
1021 at the close of the school year for which a credit is
11sought, and (iii) during the school year for which a credit is
12sought were full-time pupils enrolled in a kindergarten through
13twelfth grade education program at any school, as defined in
14this subsection.
15    "Qualified education expense" means the amount incurred on
16behalf of a qualifying pupil in excess of $250 for tuition,
17book fees, and lab fees at the school in which the pupil is
18enrolled during the regular school year.
19    "School" means any public or nonpublic elementary or
20secondary school in Illinois that is in compliance with Title
21VI of the Civil Rights Act of 1964 and attendance at which
22satisfies the requirements of Section 26-1 of the School Code,
23except that nothing shall be construed to require a child to
24attend any particular public or nonpublic school to qualify for
25the credit under this Section.
26    "Custodian" means, with respect to qualifying pupils, an

 

 

10000SB0009sam004- 41 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 42 -LRB100 06347 HLH 26556 a

1    consistent with rules adopted by the Pollution Control
2    Board pursuant to the Illinois Administrative Procedure
3    Act for the administration and enforcement of Section 58.9
4    of the Environmental Protection Act. For purposes of this
5    Section, "taxpayer" includes a person whose tax attributes
6    the taxpayer has succeeded to under Section 381 of the
7    Internal Revenue Code and "related party" includes the
8    persons disallowed a deduction for losses by paragraphs
9    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
10    Code by virtue of being a related taxpayer, as well as any
11    of its partners. The credit allowed against the tax imposed
12    by subsections (a) and (b) shall be equal to 25% of the
13    unreimbursed eligible remediation costs in excess of
14    $100,000 per site.
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. This
19    credit shall be applied first to the earliest year for
20    which there is a liability. If there is a credit under this
21    subsection from more than one tax year that is available to
22    offset a liability, the earliest credit arising under this
23    subsection shall be applied first. A credit allowed under
24    this subsection may be sold to a buyer as part of a sale of
25    all or part of the remediation site for which the credit
26    was granted. The purchaser of a remediation site and the

 

 

10000SB0009sam004- 43 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 44 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 45 -LRB100 06347 HLH 26556 a

1    controlling interest in a registrant's property is
2    transferred in a transaction to lineal descendants in which
3    no gain or loss is recognized or as a result of a
4    transaction in accordance with Section 351 of the Internal
5    Revenue Code in which no gain or loss is recognized.
6(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
7eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
8eff. 7-16-14.)
 
9    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
10    Sec. 203. Base income defined.
11    (a) Individuals.
12        (1) In general. In the case of an individual, base
13    income means an amount equal to the taxpayer's adjusted
14    gross income for the taxable year as modified by paragraph
15    (2).
16        (2) Modifications. The adjusted gross income referred
17    to in paragraph (1) shall be modified by adding thereto the
18    sum of the following amounts:
19            (A) An amount equal to all amounts paid or accrued
20        to the taxpayer as interest or dividends during the
21        taxable year to the extent excluded from gross income
22        in the computation of adjusted gross income, except
23        stock dividends of qualified public utilities
24        described in Section 305(e) of the Internal Revenue
25        Code;

 

 

10000SB0009sam004- 46 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 47 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 48 -LRB100 06347 HLH 26556 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            (D-17) 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 foreign person's business activity outside
11        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 under Sections 951 through 964
26        of the Internal Revenue Code and amounts included in

 

 

10000SB0009sam004- 49 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 50 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 51 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 52 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 53 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 54 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 55 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 56 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 57 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 58 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 59 -LRB100 06347 HLH 26556 a

1            (F) An amount equal to all amounts included in such
2        total pursuant to the provisions of Sections 402(a),
3        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
4        Internal Revenue Code, or included in such total as
5        distributions under the provisions of any retirement
6        or disability plan for employees of any governmental
7        agency or unit, or retirement payments to retired
8        partners, which payments are excluded in computing net
9        earnings from self employment by Section 1402 of the
10        Internal Revenue Code and regulations adopted pursuant
11        thereto;
12            (G) The valuation limitation amount;
13            (H) An amount equal to the amount of any tax
14        imposed by this Act which was refunded to the taxpayer
15        and included in such total for the taxable year;
16            (I) An amount equal to all amounts included in such
17        total pursuant to the provisions of Section 111 of the
18        Internal Revenue Code as a recovery of items previously
19        deducted from adjusted gross income in the computation
20        of taxable income;
21            (J) An amount equal to those dividends included in
22        such total which were paid by a corporation which
23        conducts business operations in a River Edge
24        Redevelopment Zone or zones created under the River
25        Edge Redevelopment Zone Act, and conducts
26        substantially all of its operations in a River Edge

 

 

10000SB0009sam004- 60 -LRB100 06347 HLH 26556 a

1        Redevelopment Zone or zones. This subparagraph (J) is
2        exempt from the provisions of Section 250;
3            (K) An amount equal to those dividends included in
4        such total that were paid by a corporation that
5        conducts business operations in a federally designated
6        Foreign Trade Zone or Sub-Zone and that is designated a
7        High Impact Business located in Illinois; provided
8        that dividends eligible for the deduction provided in
9        subparagraph (J) of paragraph (2) of this subsection
10        shall not be eligible for the deduction provided under
11        this subparagraph (K);
12            (L) For taxable years ending after December 31,
13        1983, an amount equal to all social security benefits
14        and railroad retirement benefits included in such
15        total pursuant to Sections 72(r) and 86 of the Internal
16        Revenue Code;
17            (M) With the exception of any amounts subtracted
18        under subparagraph (N), an amount equal to the sum of
19        all amounts disallowed as deductions by (i) Sections
20        171(a) (2), and 265(2) of the Internal Revenue Code,
21        and all amounts of expenses allocable to interest and
22        disallowed as deductions by Section 265(1) of the
23        Internal Revenue Code; and (ii) for taxable years
24        ending on or after August 13, 1999, Sections 171(a)(2),
25        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
26        Code, plus, for taxable years ending on or after

 

 

10000SB0009sam004- 61 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 62 -LRB100 06347 HLH 26556 a

1            (Q) An amount equal to any amounts included in such
2        total, received by the taxpayer as an acceleration in
3        the payment of life, endowment or annuity benefits in
4        advance of the time they would otherwise be payable as
5        an indemnity for a terminal illness;
6            (R) An amount equal to the amount of any federal or
7        State bonus paid to veterans of the Persian Gulf War;
8            (S) An amount, to the extent included in adjusted
9        gross income, equal to the amount of a contribution
10        made in the taxable year on behalf of the taxpayer to a
11        medical care savings account established under the
12        Medical Care Savings Account Act or the Medical Care
13        Savings Account Act of 2000 to the extent the
14        contribution is accepted by the account administrator
15        as provided in that Act;
16            (T) An amount, to the extent included in adjusted
17        gross income, equal to the amount of interest earned in
18        the taxable year on a medical care savings account
19        established under the Medical Care Savings Account Act
20        or the Medical Care Savings Account Act of 2000 on
21        behalf of the taxpayer, other than interest added
22        pursuant to item (D-5) of this paragraph (2);
23            (U) For one taxable year beginning on or after
24        January 1, 1994, an amount equal to the total amount of
25        tax imposed and paid under subsections (a) and (b) of
26        Section 201 of this Act on grant amounts received by

 

 

10000SB0009sam004- 63 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 64 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 65 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 66 -LRB100 06347 HLH 26556 a

1        State Treasurer Act or (ii) the Illinois Prepaid
2        Tuition Trust Fund, except that amounts excluded from
3        gross income under Section 529(c)(3)(C)(i) of the
4        Internal Revenue Code shall not be considered moneys
5        contributed under this subparagraph (Y). For purposes
6        of this subparagraph, contributions made by an
7        employer on behalf of an employee, or matching
8        contributions made by an employee, shall be treated as
9        made by the employee. This subparagraph (Y) is exempt
10        from the provisions of Section 250;
11            (Z) 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

 

 

10000SB0009sam004- 67 -LRB100 06347 HLH 26556 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 (Z) is exempt from the provisions of
20        Section 250;
21            (AA) If the taxpayer sells, transfers, abandons,
22        or otherwise disposes of property for which the
23        taxpayer was required in any taxable year to make an
24        addition modification under subparagraph (D-15), then
25        an amount equal to that addition modification.
26            If the taxpayer continues to own property through

 

 

10000SB0009sam004- 68 -LRB100 06347 HLH 26556 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 (D-15), 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 (AA) is exempt from the
11        provisions of Section 250;
12            (BB) Any amount included in adjusted gross income,
13        other than salary, received by a driver in a
14        ridesharing arrangement using a motor vehicle;
15            (CC) The amount of (i) any interest income (net of
16        the deductions allocable thereto) taken into account
17        for the taxable year with respect to a transaction with
18        a taxpayer that is required to make an addition
19        modification with respect to such transaction under
20        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
21        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
22        the amount of that addition modification, and (ii) any
23        income from intangible property (net of the deductions
24        allocable thereto) taken into account for the taxable
25        year with respect to a transaction with a taxpayer that
26        is required to make an addition modification with

 

 

10000SB0009sam004- 69 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 70 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 71 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 72 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 73 -LRB100 06347 HLH 26556 a

1        subtraction modifications in such earlier taxable
2        year, with the following limitations applied in the
3        order that they are listed:
4                (i) the addition modification relating to the
5            net operating loss carried back or forward to the
6            taxable year from any taxable year ending prior to
7            December 31, 1986 shall be reduced by the amount of
8            addition modification under this subparagraph (E)
9            which related to that net operating loss and which
10            was taken into account in calculating the base
11            income of an earlier taxable year, and
12                (ii) the addition modification relating to the
13            net operating loss carried back or forward to the
14            taxable year from any taxable year ending prior to
15            December 31, 1986 shall not exceed the amount of
16            such carryback or carryforward;
17            For taxable years in which there is a net operating
18        loss carryback or carryforward from more than one other
19        taxable year ending prior to December 31, 1986, the
20        addition modification provided in this subparagraph
21        (E) shall be the sum of the amounts computed
22        independently under the preceding provisions of this
23        subparagraph (E) for each such taxable year;
24            (E-5) For taxable years ending after December 31,
25        1997, an amount equal to any eligible remediation costs
26        that the corporation deducted in computing adjusted

 

 

10000SB0009sam004- 74 -LRB100 06347 HLH 26556 a

1        gross income and for which the corporation claims a
2        credit under subsection (l) of Section 201;
3            (E-10) For taxable years 2001 and thereafter, an
4        amount equal to the bonus depreciation deduction taken
5        on the taxpayer's federal income tax return for the
6        taxable year under subsection (k) of Section 168 of the
7        Internal Revenue Code;
8            (E-11) If the taxpayer sells, transfers, abandons,
9        or otherwise disposes of property for which the
10        taxpayer was required in any taxable year to make an
11        addition modification under subparagraph (E-10), then
12        an amount equal to the aggregate amount of the
13        deductions taken in all taxable years under
14        subparagraph (T) with respect to that property.
15            If the taxpayer continues to own property through
16        the last day of the last tax year for which the
17        taxpayer may claim a depreciation deduction for
18        federal income tax purposes and for which the taxpayer
19        was allowed in any taxable year to make a subtraction
20        modification under subparagraph (T), then an amount
21        equal to that subtraction modification.
22            The taxpayer is required to make the addition
23        modification under this subparagraph only once with
24        respect to any one piece of property;
25            (E-12) An amount equal to the amount otherwise
26        allowed as a deduction in computing base income for

 

 

10000SB0009sam004- 75 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 76 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 77 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 78 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 79 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 80 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 81 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 82 -LRB100 06347 HLH 26556 a

1        31, 2008, any deduction for dividends paid by a captive
2        real estate investment trust that is allowed to a real
3        estate investment trust under Section 857(b)(2)(B) of
4        the Internal Revenue Code for dividends paid;
5            (E-16) 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            (E-17) 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            (F) An amount equal to the amount of any tax
16        imposed by this Act which was refunded to the taxpayer
17        and included in such total for the taxable year;
18            (G) An amount equal to any amount included in such
19        total under Section 78 of the Internal Revenue Code;
20            (H) In the case of a regulated investment company,
21        an amount equal to the amount of exempt interest
22        dividends as defined in subsection (b) (5) of Section
23        852 of the Internal Revenue Code, paid to shareholders
24        for the taxable year;
25            (I) With the exception of any amounts subtracted
26        under subparagraph (J), an amount equal to the sum of

 

 

10000SB0009sam004- 83 -LRB100 06347 HLH 26556 a

1        all amounts disallowed as deductions by (i) Sections
2        171(a) (2), and 265(a)(2) and amounts disallowed as
3        interest expense by Section 291(a)(3) of the Internal
4        Revenue Code, and all amounts of expenses allocable to
5        interest and disallowed as deductions by Section
6        265(a)(1) of the Internal Revenue Code; and (ii) for
7        taxable years ending on or after August 13, 1999,
8        Sections 171(a)(2), 265, 280C, 291(a)(3), and
9        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
10        for tax years ending on or after December 31, 2011,
11        amounts disallowed as deductions by Section 45G(e)(3)
12        of the Internal Revenue Code and, for taxable years
13        ending on or after December 31, 2008, any amount
14        included in gross income under Section 87 of the
15        Internal Revenue Code and the policyholders' share of
16        tax-exempt interest of a life insurance company under
17        Section 807(a)(2)(B) of the Internal Revenue Code (in
18        the case of a life insurance company with gross income
19        from a decrease in reserves for the tax year) or
20        Section 807(b)(1)(B) of the Internal Revenue Code (in
21        the case of a life insurance company allowed a
22        deduction for an increase in reserves for the tax
23        year); the provisions of this subparagraph are exempt
24        from the provisions of Section 250;
25            (J) An amount equal to all amounts included in such
26        total which are exempt from taxation by this State

 

 

10000SB0009sam004- 84 -LRB100 06347 HLH 26556 a

1        either by reason of its statutes or Constitution or by
2        reason of the Constitution, treaties or statutes of the
3        United States; provided that, in the case of any
4        statute of this State that exempts income derived from
5        bonds or other obligations from the tax imposed under
6        this Act, the amount exempted shall be the interest net
7        of bond premium amortization;
8            (K) An amount equal to those dividends included in
9        such total which were paid by a corporation which
10        conducts business operations in a River Edge
11        Redevelopment Zone or zones created under the River
12        Edge Redevelopment Zone Act and conducts substantially
13        all of its operations in a River Edge Redevelopment
14        Zone or zones. This subparagraph (K) is exempt from the
15        provisions of Section 250;
16            (L) 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 (K) of paragraph 2 of this subsection
23        shall not be eligible for the deduction provided under
24        this subparagraph (L);
25            (M) For any taxpayer that is a financial
26        organization within the meaning of Section 304(c) of

 

 

10000SB0009sam004- 85 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 86 -LRB100 06347 HLH 26556 a

1        Investment Credit. To determine the portion of a loan
2        or loans that is secured by property eligible for a
3        Section 201(h) investment credit to the borrower, the
4        entire principal amount of the loan or loans between
5        the taxpayer and the borrower should be divided into
6        the basis of the Section 201(h) investment credit
7        property which secures the loan or loans, using for
8        this purpose the original basis of such property on the
9        date that it was placed in service in a federally
10        designated Foreign Trade Zone or Sub-Zone located in
11        Illinois. No taxpayer that is eligible for the
12        deduction provided in subparagraph (M) of paragraph
13        (2) of this subsection shall be eligible for the
14        deduction provided under this subparagraph (M-1). The
15        subtraction modification available to taxpayers in any
16        year under this subsection shall be that portion of the
17        total interest paid by the borrower with respect to
18        such loan attributable to the eligible property as
19        calculated under the previous sentence;
20            (N) Two times any contribution made during the
21        taxable year to a designated zone organization to the
22        extent that the contribution (i) qualifies as a
23        charitable contribution under subsection (c) of
24        Section 170 of the Internal Revenue Code and (ii) must,
25        by its terms, be used for a project approved by the
26        Department of Commerce and Economic Opportunity under

 

 

10000SB0009sam004- 87 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 88 -LRB100 06347 HLH 26556 a

1        through 964 of the Internal Revenue Code and including,
2        for taxable years ending on or after December 31, 2008,
3        dividends received from a captive real estate
4        investment trust, from any such corporation specified
5        in clause (i) that would but for the provisions of
6        Section 1504 (b) (3) of the Internal Revenue Code be
7        treated as a member of the affiliated group which
8        includes the dividend recipient, exceed the amount of
9        the modification provided under subparagraph (G) of
10        paragraph (2) of this subsection (b) which is related
11        to such dividends. This subparagraph (O) is exempt from
12        the provisions of Section 250 of this Act;
13            (P) An amount equal to any contribution made to a
14        job training project established pursuant to the Tax
15        Increment Allocation Redevelopment Act;
16            (Q) An amount equal to the amount of the deduction
17        used to compute the federal income tax credit for
18        restoration of substantial amounts held under claim of
19        right for the taxable year pursuant to Section 1341 of
20        the Internal Revenue Code;
21            (R) On and after July 20, 1999, in the case of an
22        attorney-in-fact with respect to whom an interinsurer
23        or a reciprocal insurer has made the election under
24        Section 835 of the Internal Revenue Code, 26 U.S.C.
25        835, an amount equal to the excess, if any, of the
26        amounts paid or incurred by that interinsurer or

 

 

10000SB0009sam004- 89 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 90 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 91 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 92 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 93 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 94 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 95 -LRB100 06347 HLH 26556 a

1        without regard to any net operating loss deduction.
2        This subparagraph (Z) is exempt from the provisions of
3        Section 250.
4        (3) Special rule. For purposes of paragraph (2) (A),
5    "gross income" in the case of a life insurance company, for
6    tax years ending on and after December 31, 1994, and prior
7    to December 31, 2011, shall mean the gross investment
8    income for the taxable year and, for tax years ending on or
9    after December 31, 2011, shall mean all amounts included in
10    life insurance gross income under Section 803(a)(3) of the
11    Internal Revenue Code.
 
12    (c) Trusts and estates.
13        (1) In general. In the case of a trust or estate, base
14    income means an amount equal to the taxpayer's taxable
15    income for the taxable year as modified by paragraph (2).
16        (2) Modifications. Subject to the provisions of
17    paragraph (3), the taxable income referred to in paragraph
18    (1) shall be modified by adding thereto the sum of the
19    following amounts:
20            (A) An amount equal to all amounts paid or accrued
21        to the taxpayer as interest or dividends during the
22        taxable year to the extent excluded from gross income
23        in the computation of taxable income;
24            (B) In the case of (i) an estate, $600; (ii) a
25        trust which, under its governing instrument, is

 

 

10000SB0009sam004- 96 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 97 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 98 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 99 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 100 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 101 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 102 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 103 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 104 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 105 -LRB100 06347 HLH 26556 a

1            under Section 404 of this Act;
2            (G-14) For taxable years ending on or after
3        December 31, 2008, an amount equal to the amount of
4        insurance premium expenses and costs otherwise allowed
5        as a deduction in computing base income, and that were
6        paid, accrued, or incurred, directly or indirectly, to
7        a person who would be a member of the same unitary
8        business group but for the fact that the person is
9        prohibited under Section 1501(a)(27) from being
10        included in the unitary business group because he or
11        she is ordinarily required to apportion business
12        income under different subsections of Section 304. The
13        addition modification required by this subparagraph
14        shall be reduced to the extent that dividends were
15        included in base income of the unitary group for the
16        same taxable year and received by the taxpayer or by a
17        member of the taxpayer's unitary business group
18        (including amounts included in gross income under
19        Sections 951 through 964 of the Internal Revenue Code
20        and amounts included in gross income under Section 78
21        of the Internal Revenue Code) with respect to the stock
22        of the same person to whom the premiums and costs were
23        directly or indirectly paid, incurred, or accrued. The
24        preceding sentence does not apply to the extent that
25        the same dividends caused a reduction to the addition
26        modification required under Section 203(c)(2)(G-12) or

 

 

10000SB0009sam004- 106 -LRB100 06347 HLH 26556 a

1        Section 203(c)(2)(G-13) of this Act;
2            (G-15) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6            (G-16) For taxable years beginning on or after
7        January 1, 2017, an amount equal to the deduction
8        allowed under Section 199 of the Internal Revenue Code
9        for the taxable year;
10    and by deducting from the total so obtained the sum of the
11    following amounts:
12            (H) An amount equal to all amounts included in such
13        total pursuant to the provisions of Sections 402(a),
14        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
15        Internal Revenue Code or included in such total as
16        distributions under the provisions of any retirement
17        or disability plan for employees of any governmental
18        agency or unit, or retirement payments to retired
19        partners, which payments are excluded in computing net
20        earnings from self employment by Section 1402 of the
21        Internal Revenue Code and regulations adopted pursuant
22        thereto;
23            (I) The valuation limitation amount;
24            (J) An amount equal to the amount of any tax
25        imposed by this Act which was refunded to the taxpayer
26        and included in such total for the taxable year;

 

 

10000SB0009sam004- 107 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 108 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 109 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 110 -LRB100 06347 HLH 26556 a

1        Germany or any other Axis regime or as an heir of the
2        victim. The amount of and the eligibility for any
3        public assistance, benefit, or similar entitlement is
4        not affected by the inclusion of items (i) and (ii) of
5        this paragraph in gross income for federal income tax
6        purposes. This paragraph is exempt from the provisions
7        of Section 250;
8            (R) For taxable years 2001 and thereafter, for the
9        taxable year in which the bonus depreciation deduction
10        is taken on the taxpayer's federal income tax return
11        under subsection (k) of Section 168 of the Internal
12        Revenue Code and for each applicable taxable year
13        thereafter, an amount equal to "x", where:
14                (1) "y" equals the amount of the depreciation
15            deduction taken for the taxable year on the
16            taxpayer's federal income tax return on property
17            for which the bonus depreciation deduction was
18            taken in any year under subsection (k) of Section
19            168 of the Internal Revenue Code, but not including
20            the bonus depreciation deduction;
21                (2) for taxable years ending on or before
22            December 31, 2005, "x" equals "y" multiplied by 30
23            and then divided by 70 (or "y" multiplied by
24            0.429); and
25                (3) for taxable years ending after December
26            31, 2005:

 

 

10000SB0009sam004- 111 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 112 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 113 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 114 -LRB100 06347 HLH 26556 a

1        person's total business activity and (ii) for taxable
2        years ending on or after December 31, 2008, to a person
3        who would be a member of the same unitary business
4        group but for the fact that the person is prohibited
5        under Section 1501(a)(27) from being included in the
6        unitary business group because he or she is ordinarily
7        required to apportion business income under different
8        subsections of Section 304, but not to exceed the
9        addition modification required to be made for the same
10        taxable year under Section 203(c)(2)(G-13) for
11        intangible expenses and costs paid, accrued, or
12        incurred, directly or indirectly, to the same foreign
13        person. This subparagraph (V) is exempt from the
14        provisions of Section 250;
15            (W) in the case of an estate, an amount equal to
16        all amounts included in such total pursuant to the
17        provisions of Section 111 of the Internal Revenue Code
18        as a recovery of items previously deducted by the
19        decedent from adjusted gross income in the computation
20        of taxable income. This subparagraph (W) is exempt from
21        Section 250;
22            (X) an amount equal to the refund included in such
23        total of any tax deducted for federal income tax
24        purposes, to the extent that deduction was added back
25        under subparagraph (F). This subparagraph (X) is
26        exempt from the provisions of Section 250; and

 

 

10000SB0009sam004- 115 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 116 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 117 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 118 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 119 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 120 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 121 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 122 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 123 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 124 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 125 -LRB100 06347 HLH 26556 a

1            (F) 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            (G) An amount equal to all amounts included in
5        taxable income as modified by subparagraphs (A), (B),
6        (C) and (D) which are exempt from taxation by this
7        State either by reason of its statutes or Constitution
8        or by reason of the Constitution, treaties or statutes
9        of the United States; provided that, in the case of any
10        statute of this State that exempts income derived from
11        bonds or other obligations from the tax imposed under
12        this Act, the amount exempted shall be the interest net
13        of bond premium amortization;
14            (H) Any income of the partnership which
15        constitutes personal service income as defined in
16        Section 1348 (b) (1) of the Internal Revenue Code (as
17        in effect December 31, 1981) or a reasonable allowance
18        for compensation paid or accrued for services rendered
19        by partners to the partnership, whichever is greater;
20        this subparagraph (H) is exempt from the provisions of
21        Section 250;
22            (I) An amount equal to all amounts of income
23        distributable to an entity subject to the Personal
24        Property Tax Replacement Income Tax imposed by
25        subsections (c) and (d) of Section 201 of this Act
26        including amounts distributable to organizations

 

 

10000SB0009sam004- 126 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 127 -LRB100 06347 HLH 26556 a

1        provisions of Section 250;
2            (L) An amount equal to any contribution made to a
3        job training project established pursuant to the Real
4        Property Tax Increment Allocation Redevelopment Act;
5            (M) An amount equal to those dividends included in
6        such total that were paid by a corporation that
7        conducts business operations in a federally designated
8        Foreign Trade Zone or Sub-Zone and that is designated a
9        High Impact Business located in Illinois; provided
10        that dividends eligible for the deduction provided in
11        subparagraph (K) of paragraph (2) of this subsection
12        shall not be eligible for the deduction provided under
13        this subparagraph (M);
14            (N) An amount equal to the amount of the deduction
15        used to compute the federal income tax credit for
16        restoration of substantial amounts held under claim of
17        right for the taxable year pursuant to Section 1341 of
18        the Internal Revenue Code;
19            (O) For taxable years 2001 and thereafter, for the
20        taxable year in which the bonus depreciation deduction
21        is taken on the taxpayer's federal income tax return
22        under subsection (k) of Section 168 of the Internal
23        Revenue Code and for each applicable taxable year
24        thereafter, an amount equal to "x", where:
25                (1) "y" equals the amount of the depreciation
26            deduction taken for the taxable year on the

 

 

10000SB0009sam004- 128 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 129 -LRB100 06347 HLH 26556 a

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

 

 

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

 

 

10000SB0009sam004- 131 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 132 -LRB100 06347 HLH 26556 a

1        add back any insurance premiums under Section
2        203(d)(2)(D-9), such taxpayer may elect to subtract
3        that part of a reimbursement received from the
4        insurance company equal to the amount of the expense or
5        loss (including expenses incurred by the insurance
6        company) that would have been taken into account as a
7        deduction for federal income tax purposes if the
8        expense or loss had been uninsured. If a taxpayer makes
9        the election provided for by this subparagraph (T), the
10        insurer to which the premiums were paid must add back
11        to income the amount subtracted by the taxpayer
12        pursuant to this subparagraph (T). This subparagraph
13        (T) is exempt from the provisions of Section 250.
 
14    (e) Gross income; adjusted gross income; taxable income.
15        (1) In general. Subject to the provisions of paragraph
16    (2) and subsection (b) (3), for purposes of this Section
17    and Section 803(e), a taxpayer's gross income, adjusted
18    gross income, or taxable income for the taxable year shall
19    mean the amount of gross income, adjusted gross income or
20    taxable income properly reportable for federal income tax
21    purposes for the taxable year under the provisions of the
22    Internal Revenue Code. Taxable income may be less than
23    zero. However, for taxable years ending on or after
24    December 31, 1986, net operating loss carryforwards from
25    taxable years ending prior to December 31, 1986, may not

 

 

10000SB0009sam004- 133 -LRB100 06347 HLH 26556 a

1    exceed the sum of federal taxable income for the taxable
2    year before net operating loss deduction, plus the excess
3    of addition modifications over subtraction modifications
4    for the taxable year. For taxable years ending prior to
5    December 31, 1986, taxable income may never be an amount in
6    excess of the net operating loss for the taxable year as
7    defined in subsections (c) and (d) of Section 172 of the
8    Internal Revenue Code, provided that when taxable income of
9    a corporation (other than a Subchapter S corporation),
10    trust, or estate is less than zero and addition
11    modifications, other than those provided by subparagraph
12    (E) of paragraph (2) of subsection (b) for corporations or
13    subparagraph (E) of paragraph (2) of subsection (c) for
14    trusts and estates, exceed subtraction modifications, an
15    addition modification must be made under those
16    subparagraphs for any other taxable year to which the
17    taxable income less than zero (net operating loss) is
18    applied under Section 172 of the Internal Revenue Code or
19    under subparagraph (E) of paragraph (2) of this subsection
20    (e) applied in conjunction with Section 172 of the Internal
21    Revenue Code.
22        (2) Special rule. For purposes of paragraph (1) of this
23    subsection, the taxable income properly reportable for
24    federal income tax purposes shall mean:
25            (A) Certain life insurance companies. In the case
26        of a life insurance company subject to the tax imposed

 

 

10000SB0009sam004- 134 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 135 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 136 -LRB100 06347 HLH 26556 a

1        the election may only be revoked upon approval of the
2        Director. The Department shall adopt rules setting
3        forth requirements for documenting the elections and
4        any resulting Illinois net loss and the standards to be
5        used by the Director in evaluating requests to revoke
6        elections. Public Act 96-932 is declaratory of
7        existing law;
8            (G) Subchapter S corporations. In the case of: (i)
9        a Subchapter S corporation for which there is in effect
10        an election for the taxable year under Section 1362 of
11        the Internal Revenue Code, the taxable income of such
12        corporation determined in accordance with Section
13        1363(b) of the Internal Revenue Code, except that
14        taxable income shall take into account those items
15        which are required by Section 1363(b)(1) of the
16        Internal Revenue Code to be separately stated; and (ii)
17        a Subchapter S corporation for which there is in effect
18        a federal election to opt out of the provisions of the
19        Subchapter S Revision Act of 1982 and have applied
20        instead the prior federal Subchapter S rules as in
21        effect on July 1, 1982, the taxable income of such
22        corporation determined in accordance with the federal
23        Subchapter S rules as in effect on July 1, 1982; and
24            (H) Partnerships. In the case of a partnership,
25        taxable income determined in accordance with Section
26        703 of the Internal Revenue Code, except that taxable

 

 

10000SB0009sam004- 137 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 138 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 139 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 140 -LRB100 06347 HLH 26556 a

1August 1, 1969 or otherwise.
2(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
3eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
496-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
56-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
6eff. 8-23-11; 97-905, eff. 8-7-12.)
 
7    (35 ILCS 5/204)  (from Ch. 120, par. 2-204)
8    Sec. 204. Standard Exemption.
9    (a) Allowance of exemption. In computing net income under
10this Act, there shall be allowed as an exemption the sum of the
11amounts determined under subsections (b), (c) and (d),
12multiplied by a fraction the numerator of which is the amount
13of the taxpayer's base income allocable to this State for the
14taxable year and the denominator of which is the taxpayer's
15total base income for the taxable year.
16    (b) Basic amount. For the purpose of subsection (a) of this
17Section, except as provided by subsection (a) of Section 205
18and in this subsection, each taxpayer shall be allowed a basic
19amount of $1000, except that for corporations the basic amount
20shall be zero for tax years ending on or after December 31,
212003, and for individuals the basic amount shall be:
22        (1) for taxable years ending on or after December 31,
23    1998 and prior to December 31, 1999, $1,300;
24        (2) for taxable years ending on or after December 31,
25    1999 and prior to December 31, 2000, $1,650;

 

 

10000SB0009sam004- 141 -LRB100 06347 HLH 26556 a

1        (3) for taxable years ending on or after December 31,
2    2000 and prior to December 31, 2012, $2,000;
3        (4) for taxable years ending on or after December 31,
4    2012 and prior to December 31, 2013, $2,050;
5        (5) for taxable years ending on or after December 31,
6    2013, $2,050 plus the cost-of-living adjustment under
7    subsection (d-5).
8For taxable years ending on or after December 31, 1992, a
9taxpayer whose Illinois base income exceeds the basic amount
10and who is claimed as a dependent on another person's tax
11return under the Internal Revenue Code shall not be allowed any
12basic amount under this subsection.
13    (c) Additional amount for individuals. In the case of an
14individual taxpayer, there shall be allowed for the purpose of
15subsection (a), in addition to the basic amount provided by
16subsection (b), an additional exemption equal to the basic
17amount for each exemption in excess of one allowable to such
18individual taxpayer for the taxable year under Section 151 of
19the Internal Revenue Code.
20    (d) Additional exemptions for an individual taxpayer and
21his or her spouse. In the case of an individual taxpayer and
22his or her spouse, he or she shall each be allowed additional
23exemptions as follows:
24        (1) Additional exemption for taxpayer or spouse 65
25    years of age or older.
26            (A) For taxpayer. An additional exemption of

 

 

10000SB0009sam004- 142 -LRB100 06347 HLH 26556 a

1        $1,000 for the taxpayer if he or she has attained the
2        age of 65 before the end of the taxable year.
3            (B) For spouse when a joint return is not filed. An
4        additional exemption of $1,000 for the spouse of the
5        taxpayer if a joint return is not made by the taxpayer
6        and his spouse, and if the spouse has attained the age
7        of 65 before the end of such taxable year, and, for the
8        calendar year in which the taxable year of the taxpayer
9        begins, has no gross income and is not the dependent of
10        another taxpayer.
11        (2) Additional exemption for blindness of taxpayer or
12    spouse.
13            (A) For taxpayer. An additional exemption of
14        $1,000 for the taxpayer if he or she is blind at the
15        end of the taxable year.
16            (B) For spouse when a joint return is not filed. An
17        additional exemption of $1,000 for the spouse of the
18        taxpayer if a separate return is made by the taxpayer,
19        and if the spouse is blind and, for the calendar year
20        in which the taxable year of the taxpayer begins, has
21        no gross income and is not the dependent of another
22        taxpayer. For purposes of this paragraph, the
23        determination of whether the spouse is blind shall be
24        made as of the end of the taxable year of the taxpayer;
25        except that if the spouse dies during such taxable year
26        such determination shall be made as of the time of such

 

 

10000SB0009sam004- 143 -LRB100 06347 HLH 26556 a

1        death.
2            (C) Blindness defined. For purposes of this
3        subsection, an individual is blind only if his or her
4        central visual acuity does not exceed 20/200 in the
5        better eye with correcting lenses, or if his or her
6        visual acuity is greater than 20/200 but is accompanied
7        by a limitation in the fields of vision such that the
8        widest diameter of the visual fields subtends an angle
9        no greater than 20 degrees.
10    (d-5) Cost-of-living adjustment. For purposes of item (5)
11of subsection (b), the cost-of-living adjustment for any
12calendar year and for taxable years ending prior to the end of
13the subsequent calendar year is equal to $2,050 times the
14percentage (if any) by which:
15        (1) the Consumer Price Index for the preceding calendar
16    year, exceeds
17        (2) the Consumer Price Index for the calendar year
18    2011.
19    The Consumer Price Index for any calendar year is the
20average of the Consumer Price Index as of the close of the
2112-month period ending on August 31 of that calendar year.
22    The term "Consumer Price Index" means the last Consumer
23Price Index for All Urban Consumers published by the United
24States Department of Labor or any successor agency.
25    If any cost-of-living adjustment is not a multiple of $25,
26that adjustment shall be rounded to the next lowest multiple of

 

 

10000SB0009sam004- 144 -LRB100 06347 HLH 26556 a

1$25.
2    (e) Cross reference. See Article 3 for the manner of
3determining base income allocable to this State.
4    (f) Application of Section 250. Section 250 does not apply
5to the amendments to this Section made by Public Act 90-613.
6    (g) Notwithstanding any other provision of law, for taxable
7years beginning on or after January 1, 2018, no taxpayer may
8claim an exemption under this Section if the taxpayer's
9adjusted gross income for the taxable year exceeds (i)
10$500,000, in the case of spouses filing a joint federal tax
11return or (ii) $250,000, in the case of all other taxpayers.
12(Source: P.A. 97-507, eff. 8-23-11; 97-652, eff. 6-1-12.)
 
13    (35 ILCS 5/212)
14    Sec. 212. Earned income tax credit.
15    (a) With respect to the federal earned income tax credit
16allowed for the taxable year under Section 32 of the federal
17Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer
18is entitled to a credit against the tax imposed by subsections
19(a) and (b) of Section 201 in an amount equal to (i) 5% of the
20federal tax credit for each taxable year beginning on or after
21January 1, 2000 and ending prior to December 31, 2012, (ii)
227.5% of the federal tax credit for each taxable year beginning
23on or after January 1, 2012 and ending prior to December 31,
242013, and (iii) 10% of the federal tax credit for each taxable
25year beginning on or after January 1, 2013 and beginning prior

 

 

10000SB0009sam004- 145 -LRB100 06347 HLH 26556 a

1to January 1, 2017, (iv) 11% of the federal tax credit for each
2taxable year beginning on or after January 1, 2017 and
3beginning prior to January 1, 2018, (v) 12% of the federal tax
4credit for each taxable year beginning on or after January 1,
52018 and beginning prior to January 1, 2019, (vi) 13% of the
6federal tax credit for each taxable year beginning on or after
7January 1, 2019 and beginning prior to January 1, 2020, (vii)
814% of the federal tax credit for each taxable year beginning
9on or after January 1, 2020 and beginning prior to January 1,
102021, and (viii) 15% of the federal tax credit for each taxable
11year beginning on or after January 1, 2021.
12    For a non-resident or part-year resident, the amount of the
13credit under this Section shall be in proportion to the amount
14of income attributable to this State.
15    (b) For taxable years beginning before January 1, 2003, in
16no event shall a credit under this Section reduce the
17taxpayer's liability to less than zero. For each taxable year
18beginning on or after January 1, 2003, if the amount of the
19credit exceeds the income tax liability for the applicable tax
20year, then the excess credit shall be refunded to the taxpayer.
21The amount of a refund shall not be included in the taxpayer's
22income or resources for the purposes of determining eligibility
23or benefit level in any means-tested benefit program
24administered by a governmental entity unless required by
25federal law.
26    (c) This Section is exempt from the provisions of Section

 

 

10000SB0009sam004- 146 -LRB100 06347 HLH 26556 a

1250.
2(Source: P.A. 97-652, eff. 6-1-12.)
 
3    (35 ILCS 5/222)
4    Sec. 222. Live theater production credit.
5    (a) For tax years beginning on or after January 1, 2012 and
6beginning prior to January 1, 2027, a taxpayer who has received
7a tax credit award under the Live Theater Production Tax Credit
8Act is entitled to a credit against the taxes imposed under
9subsections (a) and (b) of Section 201 of this Act in an amount
10determined under that Act by the Department of Commerce and
11Economic Opportunity.
12    (b) If the taxpayer is a partnership, limited liability
13partnership, limited liability company, or Subchapter S
14corporation, the tax credit award is allowed to the partners,
15unit holders, or shareholders in accordance with the
16determination of income and distributive share of income under
17Sections 702 and 704 and Subchapter S of the Internal Revenue
18Code.
19    (c) A sale, assignment, or transfer of the tax credit award
20may be made by the taxpayer earning the credit within one year
21after the credit is awarded in accordance with rules adopted by
22the Department of Commerce and Economic Opportunity.
23    (d) The Department of Revenue, in cooperation with the
24Department of Commerce and Economic Opportunity, shall adopt
25rules to enforce and administer the provisions of this Section.

 

 

10000SB0009sam004- 147 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 148 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 149 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 150 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 151 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 152 -LRB100 06347 HLH 26556 a

1            date prescribed for payment of the installment.
2            (E) Annualized Net Income; Corporations. For
3        corporations, net income shall be placed on an
4        annualized basis by multiplying by 12 the taxable
5        income
6                (i) for the first 3 months of the taxable year,
7            in the case of the installment required to be paid
8            in the 4th month,
9                (ii) for the first 3 months or for the first 5
10            months of the taxable year, in the case of the
11            installment required to be paid in the 6th month,
12                (iii) for the first 6 months or for the first 8
13            months of the taxable year, in the case of the
14            installment required to be paid in the 9th month,
15            and
16                (iv) for the first 9 months or for the first 11
17            months of the taxable year, in the case of the
18            installment required to be paid in the 12th month
19            of the taxable year,
20        then dividing the resulting amount by the number of
21        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
22        case may be).
23        (3) Notwithstanding any other provision of this
24    subsection (c), in the case of a federally regulated
25    exchange that elects to apportion its income under Section
26    304(c-1) of this Act, the amount of each required

 

 

10000SB0009sam004- 153 -LRB100 06347 HLH 26556 a

1    installment due prior to June 30 of the first taxable year
2    to which the election applies shall be 25% of the tax that
3    would have been shown on the return for that taxable year
4    if the taxpayer had not made such election.
5    (d) Exceptions. Notwithstanding the provisions of the
6preceding subsections, the penalty imposed by subsection (a)
7shall not be imposed if the taxpayer was not required to file
8an Illinois income tax return for the preceding taxable year,
9or, for individuals, if the taxpayer had no tax liability for
10the preceding taxable year and such year was a taxable year of
1112 months. The penalty imposed by subsection (a) shall also not
12be imposed on any underpayments of estimated tax due before the
13effective date of this amendatory Act of 1998 which
14underpayments are solely attributable to the change in
15apportionment from subsection (a) to subsection (h) of Section
16304. The provisions of this amendatory Act of 1998 apply to tax
17years ending on or after December 31, 1998.
18    (e) The penalty imposed for underpayment of estimated tax
19by subsection (a) of this Section shall not be imposed to the
20extent that the Director or his or her designate determines,
21pursuant to Section 3-8 of the Uniform Penalty and Interest Act
22that the penalty should not be imposed.
23    (f) Definition of tax. For purposes of subsections (b) and
24(c), the term "tax" means the excess of the tax imposed under
25Article 2 of this Act, over the amounts credited against such
26tax under Sections 601(b) (3) and (4).

 

 

10000SB0009sam004- 154 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 155 -LRB100 06347 HLH 26556 a

1payments of estimated tax made on the dates on which those
2amounts are actually withheld.
3    (g-10) Notwithstanding any other provision of law, no
4penalty shall apply with respect to an underpayment of
5estimated tax for the first, second, or third quarter of any
6taxable year beginning on or after January 1, 2017 and
7beginning prior to January 1, 2018 if (i) the underpayment was
8due to the changes made by this amendatory Act of the 100th
9General Assembly, (ii) the payment was otherwise timely made,
10and (iii) the balance due is included with the taxpayer's
11estimated tax payment for the fourth quarter.
12    (i) Short taxable year. The application of this Section to
13taxable years of less than 12 months shall be in accordance
14with regulations prescribed by the Department.
15    The changes in this Section made by Public Act 84-127 shall
16apply to taxable years ending on or after January 1, 1986.
17(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
1897-636, eff. 6-1-12.)
 
19    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
20    Sec. 901. Collection authority.
21    (a) In general.
22    The Department shall collect the taxes imposed by this Act.
23The Department shall collect certified past due child support
24amounts under Section 2505-650 of the Department of Revenue Law
25(20 ILCS 2505/2505-650). Except as provided in subsections (c),

 

 

10000SB0009sam004- 156 -LRB100 06347 HLH 26556 a

1(e), (f), (g), and (h) of this Section, money collected
2pursuant to subsections (a) and (b) of Section 201 of this Act
3shall be paid into the General Revenue Fund in the State
4treasury; money collected pursuant to subsections (c) and (d)
5of Section 201 of this Act shall be paid into the Personal
6Property Tax Replacement Fund, a special fund in the State
7Treasury; and money collected under Section 2505-650 of the
8Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
9into the Child Support Enforcement Trust Fund, a special fund
10outside the State Treasury, or to the State Disbursement Unit
11established under Section 10-26 of the Illinois Public Aid
12Code, as directed by the Department of Healthcare and Family
13Services.
14    (b) Local Government Distributive Fund.
15    Beginning August 1, 1969, and continuing through June 30,
161994, the Treasurer shall transfer each month from the General
17Revenue Fund to a special fund in the State treasury, to be
18known as the "Local Government Distributive Fund", an amount
19equal to 1/12 of the net revenue realized from the tax imposed
20by subsections (a) and (b) of Section 201 of this Act during
21the preceding month. Beginning July 1, 1994, and continuing
22through June 30, 1995, the Treasurer shall transfer each month
23from the General Revenue Fund to the Local Government
24Distributive Fund an amount equal to 1/11 of the net revenue
25realized from the tax imposed by subsections (a) and (b) of
26Section 201 of this Act during the preceding month. Beginning

 

 

10000SB0009sam004- 157 -LRB100 06347 HLH 26556 a

1July 1, 1995 and continuing through January 31, 2011, the
2Treasurer shall transfer each month from the General Revenue
3Fund to the Local Government Distributive Fund an amount equal
4to the net of (i) 1/10 of the net revenue realized from the tax
5imposed by subsections (a) and (b) of Section 201 of the
6Illinois Income Tax Act during the preceding month (ii) minus,
7beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
8and beginning July 1, 2004, zero. Beginning February 1, 2011,
9and continuing through January 31, 2015, the Treasurer shall
10transfer each month from the General Revenue Fund to the Local
11Government Distributive Fund an amount equal to the sum of (i)
126% (10% of the ratio of the 3% individual income tax rate prior
13to 2011 to the 5% individual income tax rate after 2010) of the
14net revenue realized from the tax imposed by subsections (a)
15and (b) of Section 201 of this Act upon individuals, trusts,
16and estates during the preceding month and (ii) 6.86% (10% of
17the ratio of the 4.8% corporate income tax rate prior to 2011
18to the 7% corporate income tax rate after 2010) of the net
19revenue realized from the tax imposed by subsections (a) and
20(b) of Section 201 of this Act upon corporations during the
21preceding month. Beginning February 1, 2015 and continuing
22through January 31, 2017 January 31, 2025, the Treasurer shall
23transfer each month from the General Revenue Fund to the Local
24Government Distributive Fund an amount equal to the sum of (i)
258% (10% of the ratio of the 3% individual income tax rate prior
26to 2011 to the 3.75% individual income tax rate after 2014) of

 

 

10000SB0009sam004- 158 -LRB100 06347 HLH 26556 a

1the net revenue realized from the tax imposed by subsections
2(a) and (b) of Section 201 of this Act upon individuals,
3trusts, and estates during the preceding month and (ii) 9.14%
4(10% of the ratio of the 4.8% corporate income tax rate prior
5to 2011 to the 5.25% corporate income tax rate after 2014) of
6the net revenue realized from the tax imposed by subsections
7(a) and (b) of Section 201 of this Act upon corporations during
8the preceding month. Beginning February 1, 2017 and continuing
9through January 31, 2024 February 1, 2025, the Treasurer shall
10transfer each month from the General Revenue Fund to the Local
11Government Distributive Fund an amount equal to the sum of (i)
126.06% 9.23% (10% of the ratio of the 3% individual income tax
13rate prior to 2011 to the 4.95% 3.25% individual income tax
14rate beginning in 2017 after 2024) of the net revenue realized
15from the tax imposed by subsections (a) and (b) of Section 201
16of this Act upon individuals, trusts, and estates during the
17preceding month and (ii) 6.86% (10% of the ratio of the 4.8%
18corporate income tax rate prior to 2011 to the 7% corporate
19income tax rate beginning in 2017) 10% of the net revenue
20realized from the tax imposed by subsections (a) and (b) of
21Section 201 of this Act upon corporations during the preceding
22month. Beginning February 1, 2024, the Treasurer shall transfer
23each month from the General Revenue Fund to the Local
24Government Distributive Fund an amount equal to the sum of (i)
258% (10% of the ratio of the 3% individual income tax rate prior
26to 2011 to the 3.75% individual income tax rate after 2024) of

 

 

10000SB0009sam004- 159 -LRB100 06347 HLH 26556 a

1the net revenue realized from the tax imposed by subsections
2(a) and (b) of Section 201 of this Act upon individuals,
3trusts, and estates during the preceding month and (ii) 9.14%
4(10% of the ratio of the 4.8% corporate income tax rate prior
5to 2011 to the 5.25% corporate income tax rate beginning in
62024) of the net revenue realized from the tax imposed by
7subsections (a) and (b) of Section 201 of this Act upon
8corporations during the preceding month. Net revenue realized
9for a month shall be defined as the revenue from the tax
10imposed by subsections (a) and (b) of Section 201 of this Act
11which is deposited in the General Revenue Fund, the Education
12Assistance Fund, the Income Tax Surcharge Local Government
13Distributive Fund, the Fund for the Advancement of Education,
14and the Commitment to Human Services Fund during the month
15minus the amount paid out of the General Revenue Fund in State
16warrants during that same month as refunds to taxpayers for
17overpayment of liability under the tax imposed by subsections
18(a) and (b) of Section 201 of this Act.
19    Beginning on August 26, 2014 (the effective date of Public
20Act 98-1052), the Comptroller shall perform the transfers
21required by this subsection (b) no later than 60 days after he
22or she receives the certification from the Treasurer as
23provided in Section 1 of the State Revenue Sharing Act.
24    (c) Deposits Into Income Tax Refund Fund.
25        (1) Beginning on January 1, 1989 and thereafter, the
26    Department shall deposit a percentage of the amounts

 

 

10000SB0009sam004- 160 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 161 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 162 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 163 -LRB100 06347 HLH 26556 a

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

 

 

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

 

 

10000SB0009sam004- 165 -LRB100 06347 HLH 26556 a

1        (4.5) As soon as possible after the end of fiscal year
2    1999 and of each fiscal year thereafter, the Director shall
3    order transferred and the State Treasurer and State
4    Comptroller shall transfer from the Income Tax Refund Fund
5    to the General Revenue Fund any surplus remaining in the
6    Income Tax Refund Fund as of the end of such fiscal year;
7    excluding for fiscal years 2000, 2001, and 2002 amounts
8    attributable to transfers under item (3) of subsection (c)
9    less refunds resulting from the earned income tax credit.
10        (5) This Act shall constitute an irrevocable and
11    continuing appropriation from the Income Tax Refund Fund
12    for the purpose of paying refunds upon the order of the
13    Director in accordance with the provisions of this Section.
14    (e) Deposits into the Education Assistance Fund and the
15Income Tax Surcharge Local Government Distributive Fund.
16    On July 1, 1991, and thereafter, of the amounts collected
17pursuant to subsections (a) and (b) of Section 201 of this Act,
18minus deposits into the Income Tax Refund Fund, the Department
19shall deposit 7.3% into the Education Assistance Fund in the
20State Treasury. Beginning July 1, 1991, and continuing through
21January 31, 1993, of the amounts collected pursuant to
22subsections (a) and (b) of Section 201 of the Illinois Income
23Tax Act, minus deposits into the Income Tax Refund Fund, the
24Department shall deposit 3.0% into the Income Tax Surcharge
25Local Government Distributive Fund in the State Treasury.
26Beginning February 1, 1993 and continuing through June 30,

 

 

10000SB0009sam004- 166 -LRB100 06347 HLH 26556 a

11993, of the amounts collected pursuant to subsections (a) and
2(b) of Section 201 of the Illinois Income Tax Act, minus
3deposits into the Income Tax Refund Fund, the Department shall
4deposit 4.4% into the Income Tax Surcharge Local Government
5Distributive Fund in the State Treasury. Beginning July 1,
61993, and continuing through June 30, 1994, of the amounts
7collected under subsections (a) and (b) of Section 201 of this
8Act, minus deposits into the Income Tax Refund Fund, the
9Department shall deposit 1.475% into the Income Tax Surcharge
10Local Government Distributive Fund in the State Treasury.
11    (f) Deposits into the Fund for the Advancement of
12Education. Beginning February 1, 2015, the Department shall
13deposit the following portions of the revenue realized from the
14tax imposed upon individuals, trusts, and estates by
15subsections (a) and (b) of Section 201 of this Act during the
16preceding month, minus deposits into the Income Tax Refund
17Fund, into the Fund for the Advancement of Education:
18        (1) beginning February 1, 2015, and prior to February
19    1, 2025, 1/30; and
20        (2) beginning February 1, 2025, 1/26.
21    If the rate of tax imposed by subsection (a) and (b) of
22Section 201 is reduced pursuant to Section 201.5 of this Act,
23the Department shall not make the deposits required by this
24subsection (f) on or after the effective date of the reduction.
25    (g) Deposits into the Commitment to Human Services Fund.
26Beginning February 1, 2015, the Department shall deposit the

 

 

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1following portions of the revenue realized from the tax imposed
2upon individuals, trusts, and estates by subsections (a) and
3(b) of Section 201 of this Act during the preceding month,
4minus deposits into the Income Tax Refund Fund, into the
5Commitment to Human Services Fund:
6        (1) beginning February 1, 2015, and prior to February
7    1, 2025, 1/30; and
8        (2) beginning February 1, 2025, 1/26.
9    If the rate of tax imposed by subsection (a) and (b) of
10Section 201 is reduced pursuant to Section 201.5 of this Act,
11the Department shall not make the deposits required by this
12subsection (g) on or after the effective date of the reduction.
13    (h) Deposits into the Tax Compliance and Administration
14Fund. Beginning on the first day of the first calendar month to
15occur on or after August 26, 2014 (the effective date of Public
16Act 98-1098), each month the Department shall pay into the Tax
17Compliance and Administration Fund, to be used, subject to
18appropriation, to fund additional auditors and compliance
19personnel at the Department, an amount equal to 1/12 of 5% of
20the cash receipts collected during the preceding fiscal year by
21the Audit Bureau of the Department from the tax imposed by
22subsections (a), (b), (c), and (d) of Section 201 of this Act,
23net of deposits into the Income Tax Refund Fund made from those
24cash receipts.
25(Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;
2698-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.

 

 

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17-20-15.)
 
2    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
3    Sec. 1501. Definitions.
4    (a) In general. When used in this Act, where not otherwise
5distinctly expressed or manifestly incompatible with the
6intent thereof:
7        (1) Business income. The term "business income" means
8    all income that may be treated as apportionable business
9    income under the Constitution of the United States.
10    Business income is net of the deductions allocable thereto.
11    Such term does not include compensation or the deductions
12    allocable thereto. For each taxable year beginning on or
13    after January 1, 2003, a taxpayer may elect to treat all
14    income other than compensation as business income. This
15    election shall be made in accordance with rules adopted by
16    the Department and, once made, shall be irrevocable.
17        (1.5) Captive real estate investment trust:
18            (A) The term "captive real estate investment
19        trust" means a corporation, trust, or association:
20                (i) that is considered a real estate
21            investment trust for the taxable year under
22            Section 856 of the Internal Revenue Code;
23                (ii) the certificates of beneficial interest
24            or shares of which are not regularly traded on an
25            established securities market; and

 

 

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

 

 

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1                or indirectly, by a single person;
2                    (d) an entity organized as a trust,
3                provided a listed Australian property trust
4                described in subparagraph (c) owns or
5                controls, directly or indirectly, or
6                constructively, 75% or more of the voting power
7                or value of the beneficial interests or shares
8                of such entity; or
9                    (e) an entity that is organized outside of
10                the laws of the United States and that
11                satisfies all of the following criteria:
12                        (1) at least 75% of the entity's total
13                    asset value at the close of its taxable
14                    year is represented by real estate assets
15                    (as defined in Section 856(c)(5)(B) of the
16                    Internal Revenue Code, thereby including
17                    shares or certificates of beneficial
18                    interest in any real estate investment
19                    trust), cash and cash equivalents, and
20                    U.S. Government securities;
21                        (2) the entity is not subject to tax on
22                    amounts that are distributed to its
23                    beneficial owners or is exempt from
24                    entity-level taxation;
25                        (3) the entity distributes at least
26                    85% of its taxable income (as computed in

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                the Sales Finance Agency Act, the Retail
2                Installment Sales Act, or the Motor Vehicle
3                Retail Installment Sales Act;
4                    (b) an installment, charge, credit, or
5                similar contract or agreement arising from the
6                sale of tangible personal property or services
7                in a transaction involving a deferred payment
8                price payable in one or more installments
9                subsequent to the sale; or
10                    (c) the outstanding balance of a contract
11                or agreement described in provisions (a) or (b)
12                of this item (i).
13                A customer receivable need not provide for
14            payment of interest on deferred payments. A sales
15            finance company may purchase a customer receivable
16            from, or make a loan secured by a customer
17            receivable to, the seller in the original
18            transaction or to a person who purchased the
19            customer receivable directly or indirectly from
20            that seller.
21                (ii) A corporation meeting each of the
22            following criteria:
23                    (a) the corporation must be a member of an
24                "affiliated group" within the meaning of
25                Section 1504(a) of the Internal Revenue Code,
26                determined without regard to Section 1504(b)

 

 

10000SB0009sam004- 176 -LRB100 06347 HLH 26556 a

1                of the Internal Revenue Code;
2                    (b) more than 50% of the gross income of
3                the corporation for the taxable year must be
4                interest income derived from qualifying loans.
5                A "qualifying loan" is a loan made to a member
6                of the corporation's affiliated group that
7                originates customer receivables (within the
8                meaning of item (i)) or to whom customer
9                receivables originated by a member of the
10                affiliated group have been transferred, to the
11                extent the average outstanding balance of
12                loans from that corporation to members of its
13                affiliated group during the taxable year do not
14                exceed the limitation amount for that
15                corporation. The "limitation amount" for a
16                corporation is the average outstanding
17                balances during the taxable year of customer
18                receivables (within the meaning of item (i))
19                originated by all members of the affiliated
20                group. If the average outstanding balances of
21                the loans made by a corporation to members of
22                its affiliated group exceed the limitation
23                amount, the interest income of that
24                corporation from qualifying loans shall be
25                equal to its interest income from loans to
26                members of its affiliated groups times a

 

 

10000SB0009sam004- 177 -LRB100 06347 HLH 26556 a

1                fraction equal to the limitation amount
2                divided by the average outstanding balances of
3                the loans made by that corporation to members
4                of its affiliated group;
5                    (c) the total of all shareholder's equity
6                (including, without limitation, paid-in
7                capital on common and preferred stock and
8                retained earnings) of the corporation plus the
9                total of all of its loans, advances, and other
10                obligations payable or owed to members of its
11                affiliated group may not exceed 20% of the
12                total assets of the corporation at any time
13                during the tax year; and
14                    (d) more than 50% of all interest-bearing
15                obligations of the affiliated group payable to
16                persons outside the group determined in
17                accordance with generally accepted accounting
18                principles must be obligations of the
19                corporation.
20            This amendatory Act of the 91st General Assembly is
21        declaratory of existing law.
22            (D) Subparagraphs (B) and (C) of this paragraph are
23        declaratory of existing law and apply retroactively,
24        for all tax years beginning on or before December 31,
25        1996, to all original returns, to all amended returns
26        filed no later than 30 days after the effective date of

 

 

10000SB0009sam004- 178 -LRB100 06347 HLH 26556 a

1        this amendatory Act of 1996, and to all notices issued
2        on or before the effective date of this amendatory Act
3        of 1996 under subsection (a) of Section 903, subsection
4        (a) of Section 904, subsection (e) of Section 909, or
5        Section 912. A taxpayer that is a "financial
6        organization" that engages in any transaction with an
7        affiliate shall be a "financial organization" for all
8        purposes of this Act.
9            (E) For all tax years beginning on or before
10        December 31, 1996, a taxpayer that falls within the
11        definition of a "financial organization" under
12        subparagraphs (B) or (C) of this paragraph, but who
13        does not fall within the definition of a "financial
14        organization" under the Proposed Regulations issued by
15        the Department of Revenue on July 19, 1996, may
16        irrevocably elect to apply the Proposed Regulations
17        for all of those years as though the Proposed
18        Regulations had been lawfully promulgated, adopted,
19        and in effect for all of those years. For purposes of
20        applying subparagraphs (B) or (C) of this paragraph to
21        all of those years, the election allowed by this
22        subparagraph applies only to the taxpayer making the
23        election and to those members of the taxpayer's unitary
24        business group who are ordinarily required to
25        apportion business income under the same subsection of
26        Section 304 of this Act as the taxpayer making the

 

 

10000SB0009sam004- 179 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 180 -LRB100 06347 HLH 26556 a

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

 

 

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

 

 

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

 

 

10000SB0009sam004- 183 -LRB100 06347 HLH 26556 a

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

 

 

10000SB0009sam004- 184 -LRB100 06347 HLH 26556 a

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        wholesaling, retailing of tangible personal property,
2        insurance, transportation or finance); or (2) are
3        steps in a vertically structured enterprise or process
4