SB3152 EngrossedLRB100 20338 HLH 35625 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        exempt from the provisions of Section 250;
2            (K) An amount equal to those dividends included in
3        such total that were paid by a corporation that
4        conducts business operations in a federally designated
5        Foreign Trade Zone or Sub-Zone and that is designated a
6        High Impact Business located in Illinois; provided
7        that dividends eligible for the deduction provided in
8        subparagraph (J) of paragraph (2) of this subsection
9        shall not be eligible for the deduction provided under
10        this subparagraph (K);
11            (L) For taxable years ending after December 31,
12        1983, an amount equal to all social security benefits
13        and railroad retirement benefits included in such
14        total pursuant to Sections 72(r) and 86 of the Internal
15        Revenue Code;
16            (M) With the exception of any amounts subtracted
17        under subparagraph (N), an amount equal to the sum of
18        all amounts disallowed as deductions by (i) Sections
19        171(a) (2), and 265(2) of the Internal Revenue Code,
20        and all amounts of expenses allocable to interest and
21        disallowed as deductions by Section 265(1) of the
22        Internal Revenue Code; and (ii) for taxable years
23        ending on or after August 13, 1999, Sections 171(a)(2),
24        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
25        Code, plus, for taxable years ending on or after
26        December 31, 2011, Section 45G(e)(3) of the Internal

 

 

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

 

 

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

 

 

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

 

 

SB3152 Engrossed- 20 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 21 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 22 -LRB100 20338 HLH 35625 b

1        Tuition Trust Fund, except that amounts excluded from
2        gross income under Section 529(c)(3)(C)(i) of the
3        Internal Revenue Code shall not be considered moneys
4        contributed under this subparagraph (Y). For purposes
5        of this subparagraph, contributions made by an
6        employer on behalf of an employee, or matching
7        contributions made by an employee, shall be treated as
8        made by the employee. This subparagraph (Y) is exempt
9        from the provisions of Section 250;
10            (Z) For taxable years 2001 and thereafter, for the
11        taxable year in which the bonus depreciation deduction
12        is taken on the taxpayer's federal income tax return
13        under subsection (k) of Section 168 of the Internal
14        Revenue Code and for each applicable taxable year
15        thereafter, an amount equal to "x", where:
16                (1) "y" equals the amount of the depreciation
17            deduction taken for the taxable year on the
18            taxpayer's federal income tax return on property
19            for which the bonus depreciation deduction was
20            taken in any year under subsection (k) of Section
21            168 of the Internal Revenue Code, but not including
22            the bonus depreciation deduction;
23                (2) for taxable years ending on or before
24            December 31, 2005, "x" equals "y" multiplied by 30
25            and then divided by 70 (or "y" multiplied by
26            0.429); and

 

 

SB3152 Engrossed- 23 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 24 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 25 -LRB100 20338 HLH 35625 b

1        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
2        203(d)(2)(D-8), but not to exceed the amount of that
3        addition modification. This subparagraph (CC) is
4        exempt from the provisions of Section 250;
5            (DD) An amount equal to the interest income taken
6        into account for the taxable year (net of the
7        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(a)(2)(D-17) for
22        interest paid, accrued, or incurred, directly or
23        indirectly, to the same person. This subparagraph (DD)
24        is exempt from the provisions of Section 250;
25            (EE) An amount equal to the income from intangible
26        property taken into account for the taxable year (net

 

 

SB3152 Engrossed- 26 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 27 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 28 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 29 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 30 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 31 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 32 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 33 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 34 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 35 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 36 -LRB100 20338 HLH 35625 b

1                    (b) the transaction giving rise to the
2                intangible expense or cost between the
3                taxpayer and the person did not have as a
4                principal purpose the avoidance of Illinois
5                income tax, and is paid pursuant to a contract
6                or agreement that reflects arm's-length terms;
7                or
8                (iii) any item of intangible expense or cost
9            paid, accrued, or incurred, directly or
10            indirectly, from a transaction with a person if the
11            taxpayer establishes by clear and convincing
12            evidence, that the adjustments are unreasonable;
13            or if the taxpayer and the Director agree in
14            writing to the application or use of an alternative
15            method of apportionment under Section 304(f);
16                Nothing in this subsection shall preclude the
17            Director from making any other adjustment
18            otherwise allowed under Section 404 of this Act for
19            any tax year beginning after the effective date of
20            this amendment provided such adjustment is made
21            pursuant to regulation adopted by the Department
22            and such regulations provide methods and standards
23            by which the Department will utilize its authority
24            under Section 404 of this Act;
25            (E-14) For taxable years ending on or after
26        December 31, 2008, an amount equal to the amount of

 

 

SB3152 Engrossed- 37 -LRB100 20338 HLH 35625 b

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

 

 

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1        real estate investment trust that is allowed to a real
2        estate investment trust under Section 857(b)(2)(B) of
3        the Internal Revenue Code for dividends paid;
4            (E-16) An amount equal to the credit allowable to
5        the taxpayer under Section 218(a) of this Act,
6        determined without regard to Section 218(c) of this
7        Act;
8            (E-17) For taxable years ending on or after
9        December 31, 2017, an amount equal to the deduction
10        allowed under Section 199 of the Internal Revenue Code
11        for the taxable year;
12            (E-18) For taxable years beginning after December
13        31, 2017, an amount equal to the deduction allowed
14        under Section 250(a)(1)(A) of the Internal Revenue
15        Code for the taxable year.
16    and by deducting from the total so obtained the sum of the
17    following amounts:
18            (F) An amount equal to the amount of any tax
19        imposed by this Act which was refunded to the taxpayer
20        and included in such total for the taxable year;
21            (G) An amount equal to any amount included in such
22        total under Section 78 of the Internal Revenue Code;
23            (H) In the case of a regulated investment company,
24        an amount equal to the amount of exempt interest
25        dividends as defined in subsection (b) (5) of Section
26        852 of the Internal Revenue Code, paid to shareholders

 

 

SB3152 Engrossed- 39 -LRB100 20338 HLH 35625 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB3152 Engrossed- 47 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 48 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 49 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 50 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 51 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 52 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 53 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 54 -LRB100 20338 HLH 35625 b

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

 

 

SB3152 Engrossed- 55 -LRB100 20338 HLH 35625 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        preceding sentence does not apply to the extent that
2        the same dividends caused a reduction to the addition
3        modification required under Section 203(c)(2)(G-12) or
4        Section 203(c)(2)(G-13) of this Act;
5            (G-15) An amount equal to the credit allowable to
6        the taxpayer under Section 218(a) of this Act,
7        determined without regard to Section 218(c) of this
8        Act;
9            (G-16) For taxable years ending on or after
10        December 31, 2017, an amount equal to the deduction
11        allowed under Section 199 of the Internal Revenue Code
12        for the taxable year;
13    and by deducting from the total so obtained the sum of the
14    following amounts:
15            (H) An amount equal to all amounts included in such
16        total pursuant to the provisions of Sections 402(a),
17        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
18        Internal Revenue Code or included in such total as
19        distributions under the provisions of any retirement
20        or disability plan for employees of any governmental
21        agency or unit, or retirement payments to retired
22        partners, which payments are excluded in computing net
23        earnings from self employment by Section 1402 of the
24        Internal Revenue Code and regulations adopted pursuant
25        thereto;
26            (I) The valuation limitation amount;

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        member of the taxpayer's unitary business group but for
2        the fact that the foreign person's business activity
3        outside the United States is 80% or more of that
4        person's total business activity and (ii) for taxable
5        years ending on or after December 31, 2008, to a person
6        who would be a member of the same unitary business
7        group but for the fact that the person is prohibited
8        under Section 1501(a)(27) from being included in the
9        unitary business group because he or she is ordinarily
10        required to apportion business income under different
11        subsections of Section 304, but not to exceed the
12        addition modification required to be made for the same
13        taxable year under Section 203(c)(2)(G-13) for
14        intangible expenses and costs paid, accrued, or
15        incurred, directly or indirectly, to the same foreign
16        person. This subparagraph (V) is exempt from the
17        provisions of Section 250;
18            (W) in the case of an estate, an amount equal to
19        all amounts included in such total pursuant to the
20        provisions of Section 111 of the Internal Revenue Code
21        as a recovery of items previously deducted by the
22        decedent from adjusted gross income in the computation
23        of taxable income. This subparagraph (W) is exempt from
24        Section 250;
25            (X) an amount equal to the refund included in such
26        total of any tax deducted for federal income tax

 

 

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1        purposes, to the extent that deduction was added back
2        under subparagraph (F). This subparagraph (X) is
3        exempt from the provisions of Section 250; and
4            (Y) For taxable years ending on or after December
5        31, 2011, in the case of a taxpayer who was required to
6        add back any insurance premiums under Section
7        203(c)(2)(G-14), such taxpayer may elect to subtract
8        that part of a reimbursement received from the
9        insurance company equal to the amount of the expense or
10        loss (including expenses incurred by the insurance
11        company) that would have been taken into account as a
12        deduction for federal income tax purposes if the
13        expense or loss had been uninsured. If a taxpayer makes
14        the election provided for by this subparagraph (Y), the
15        insurer to which the premiums were paid must add back
16        to income the amount subtracted by the taxpayer
17        pursuant to this subparagraph (Y). This subparagraph
18        (Y) is exempt from the provisions of Section 250.
19            (Z) For taxable years beginning after December 31,
20        2017 and before January 1, 2026, the amount of excess
21        business loss of the taxpayer disallowed as a deduction
22        by Section 461(l)(1)(B) of the Internal Revenue Code.
23        (3) Limitation. The amount of any modification
24    otherwise required under this subsection shall, under
25    regulations prescribed by the Department, be adjusted by
26    any amounts included therein which were properly paid,

 

 

SB3152 Engrossed- 72 -LRB100 20338 HLH 35625 b

1    credited, or required to be distributed, or permanently set
2    aside for charitable purposes pursuant to Internal Revenue
3    Code Section 642(c) during the taxable year.
 
4    (d) Partnerships.
5        (1) In general. In the case of a partnership, base
6    income means an amount equal to the taxpayer's taxable
7    income for the taxable year as modified by paragraph (2).
8        (2) Modifications. The taxable income referred to in
9    paragraph (1) shall be modified by adding thereto the sum
10    of the following amounts:
11            (A) An amount equal to all amounts paid or accrued
12        to the taxpayer as interest or dividends during the
13        taxable year to the extent excluded from gross income
14        in the computation of taxable income;
15            (B) An amount equal to the amount of tax imposed by
16        this Act to the extent deducted from gross income for
17        the taxable year;
18            (C) The amount of deductions allowed to the
19        partnership pursuant to Section 707 (c) of the Internal
20        Revenue Code in calculating its taxable income;
21            (D) An amount equal to the amount of the capital
22        gain deduction allowable under the Internal Revenue
23        Code, to the extent deducted from gross income in the
24        computation of taxable income;
25            (D-5) For taxable years 2001 and thereafter, an

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1                taxpayer and the person did not have as a
2                principal purpose the avoidance of Illinois
3                income tax, and is paid pursuant to a contract
4                or agreement that reflects arm's-length terms;
5                or
6                (iii) any item of intangible expense or cost
7            paid, accrued, or incurred, directly or
8            indirectly, from a transaction with a person if the
9            taxpayer establishes by clear and convincing
10            evidence, that the adjustments are unreasonable;
11            or if the taxpayer and the Director agree in
12            writing to the application or use of an alternative
13            method of apportionment under Section 304(f);
14                Nothing in this subsection shall preclude the
15            Director from making any other adjustment
16            otherwise allowed under Section 404 of this Act for
17            any tax year beginning after the effective date of
18            this amendment provided such adjustment is made
19            pursuant to regulation adopted by the Department
20            and such regulations provide methods and standards
21            by which the Department will utilize its authority
22            under Section 404 of this Act;
23            (D-9) For taxable years ending on or after December
24        31, 2008, an amount equal to the amount of insurance
25        premium expenses and costs otherwise allowed as a
26        deduction in computing base income, and that were paid,

 

 

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

 

 

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1            (D-11) For taxable years ending on or after
2        December 31, 2017, an amount equal to the deduction
3        allowed under Section 199 of the Internal Revenue Code
4        for the taxable year;
5    and by deducting from the total so obtained the following
6    amounts:
7            (E) The valuation limitation amount;
8            (F) An amount equal to the amount of any tax
9        imposed by this Act which was refunded to the taxpayer
10        and included in such total for the taxable year;
11            (G) An amount equal to all amounts included in
12        taxable income as modified by subparagraphs (A), (B),
13        (C) and (D) which are exempt from taxation by this
14        State either by reason of its statutes or Constitution
15        or by reason of the Constitution, treaties or statutes
16        of the United States; provided that, in the case of any
17        statute of this State that exempts income derived from
18        bonds or other obligations from the tax imposed under
19        this Act, the amount exempted shall be the interest net
20        of bond premium amortization;
21            (H) Any income of the partnership which
22        constitutes personal service income as defined in
23        Section 1348 (b) (1) of the Internal Revenue Code (as
24        in effect December 31, 1981) or a reasonable allowance
25        for compensation paid or accrued for services rendered
26        by partners to the partnership, whichever is greater;

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            (Q) The amount of (i) any interest income (net of
2        the deductions allocable thereto) taken into account
3        for the taxable year with respect to a transaction with
4        a taxpayer that is required to make an addition
5        modification with respect to such transaction under
6        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
7        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
8        the amount of such addition modification and (ii) any
9        income from intangible property (net of the deductions
10        allocable thereto) taken into account for the taxable
11        year with respect to a transaction with a taxpayer that
12        is required to make an addition modification with
13        respect to such transaction under Section
14        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
15        203(d)(2)(D-8), but not to exceed the amount of such
16        addition modification. This subparagraph (Q) is exempt
17        from Section 250;
18            (R) 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

 

 

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1        who would be a member of the same unitary business
2        group but for the fact that the person is prohibited
3        under Section 1501(a)(27) from being included in the
4        unitary business group because he or she is ordinarily
5        required to apportion business income under different
6        subsections of Section 304, but not to exceed the
7        addition modification required to be made for the same
8        taxable year under Section 203(d)(2)(D-7) for interest
9        paid, accrued, or incurred, directly or indirectly, to
10        the same person. This subparagraph (R) is exempt from
11        Section 250;
12            (S) 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

 

 

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

 

 

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

 

 

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1    (e) applied in conjunction with Section 172 of the Internal
2    Revenue Code.
3        (2) Special rule. For purposes of paragraph (1) of this
4    subsection, the taxable income properly reportable for
5    federal income tax purposes shall mean:
6            (A) Certain life insurance companies. In the case
7        of a life insurance company subject to the tax imposed
8        by Section 801 of the Internal Revenue Code, life
9        insurance company taxable income, plus the amount of
10        distribution from pre-1984 policyholder surplus
11        accounts as calculated under Section 815a of the
12        Internal Revenue Code;
13            (B) Certain other insurance companies. In the case
14        of mutual insurance companies subject to the tax
15        imposed by Section 831 of the Internal Revenue Code,
16        insurance company taxable income;
17            (C) Regulated investment companies. In the case of
18        a regulated investment company subject to the tax
19        imposed by Section 852 of the Internal Revenue Code,
20        investment company taxable income;
21            (D) Real estate investment trusts. In the case of a
22        real estate investment trust subject to the tax imposed
23        by Section 857 of the Internal Revenue Code, real
24        estate investment trust taxable income;
25            (E) Consolidated corporations. In the case of a
26        corporation which is a member of an affiliated group of

 

 

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

 

 

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

 

 

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1        instead the prior federal Subchapter S rules as in
2        effect on July 1, 1982, the taxable income of such
3        corporation determined in accordance with the federal
4        Subchapter S rules as in effect on July 1, 1982; and
5            (H) Partnerships. In the case of a partnership,
6        taxable income determined in accordance with Section
7        703 of the Internal Revenue Code, except that taxable
8        income shall take into account those items which are
9        required by Section 703(a)(1) to be separately stated
10        but which would be taken into account by an individual
11        in calculating his taxable income.
12        (3) Recapture of business expenses on disposition of
13    asset or business. Notwithstanding any other law to the
14    contrary, if in prior years income from an asset or
15    business has been classified as business income and in a
16    later year is demonstrated to be non-business income, then
17    all expenses, without limitation, deducted in such later
18    year and in the 2 immediately preceding taxable years
19    related to that asset or business that generated the
20    non-business income shall be added back and recaptured as
21    business income in the year of the disposition of the asset
22    or business. Such amount shall be apportioned to Illinois
23    using the greater of the apportionment fraction computed
24    for the business under Section 304 of this Act for the
25    taxable year or the average of the apportionment fractions
26    computed for the business under Section 304 of this Act for

 

 

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

 

 

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1        determining gain) for such property on that date
2        (determined under the Internal Revenue Code as in
3        effect on that date), or (ii) the total gain realized
4        and reportable for federal income tax purposes in
5        respect of the sale, exchange or other disposition of
6        such property.
7            (B) If the fair market value of property referred
8        to in paragraph (1) was not readily ascertainable on
9        August 1, 1969, the pre-August 1, 1969 appreciation
10        amount for such property is that amount which bears the
11        same ratio to the total gain reported in respect of the
12        property for federal income tax purposes for the
13        taxable year, as the number of full calendar months in
14        that part of the taxpayer's holding period for the
15        property ending July 31, 1969 bears to the number of
16        full calendar months in the taxpayer's entire holding
17        period for the property.
18            (C) The Department shall prescribe such
19        regulations as may be necessary to carry out the
20        purposes of this paragraph.
 
21    (g) Double deductions. Unless specifically provided
22otherwise, nothing in this Section shall permit the same item
23to be deducted more than once.
 
24    (h) Legislative intention. Except as expressly provided by

 

 

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1this Section there shall be no modifications or limitations on
2the amounts of income, gain, loss or deduction taken into
3account in determining gross income, adjusted gross income or
4taxable income for federal income tax purposes for the taxable
5year, or in the amount of such items entering into the
6computation of base income and net income under this Act for
7such taxable year, whether in respect of property values as of
8August 1, 1969 or otherwise.
9(Source: P.A. 100-22, eff. 7-6-17.)