Sen. James T. Meeks

Filed: 2/18/2010

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 2494

2     AMENDMENT NO. ______. Amend Senate Bill 2494 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 1. Short title. This Act may be cited as the
5 School Choice Act.
 
6     Section 5. Findings and declaration of policy. The General
7 Assembly finds and declares the following:
8         (1) There is a crisis in the elementary and secondary
9     education programs in Chicago and elsewhere in Illinois.
10     Many schools and their pupils are performing significantly
11     below relevant national standards and are unable to access
12     functions of federal and State law designed to improve
13     their performance. Consequently, many pupils are dropping
14     out of school before completing the ordinary course of
15     secondary education or are leaving school without the basic
16     skills and knowledge that will enable them to find and hold

 

 

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1     a job or otherwise become functioning, productive members
2     of our society.
3         (2) Within Chicago and elsewhere in Illinois there are
4     many public and nonpublic schools and independent
5     education services competently and efficiently educating
6     or contributing to the education of children. Most pupils
7     in those schools or receiving those services perform at or
8     above relevant national standards, complete their
9     secondary education, and matriculate to institutions of
10     higher education at an extremely high rate. These services
11     and schools should be accessible to all and should enjoy a
12     cooperative relationship with public school districts,
13     schools, and employees of this State.
14         (3) Custodians of school age children in Chicago and
15     elsewhere in Illinois are frequently unable to enroll their
16     children in schools that will provide them a quality
17     education due to a lack of funds.
18         (4) Adopting a pilot school choice program for students
19     enrolled in the lowest performing schools in Chicago, with
20     the potential to expand elsewhere in Illinois, would enable
21     parents to select schools or services they believe will
22     provide a quality education for their children, empower
23     them to influence the educational policies and procedures
24     in the schools their children attend, and provide them with
25     at least a portion of the funds necessary to pay for a
26     quality education. Such a program would help alleviate the

 

 

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1     crisis in the Chicago school system, assist Chicago
2     children in becoming productive members of society, and
3     test a new approach to education that could be expanded to
4     the rest of the State.
5         (5) The provisions of this Act are in the public
6     interest, for the public benefit, and serve a secular
7     public purpose.
 
8     Section 10. Definitions. As used in this Act:
9     "Base year" means the 2010-2011 school year.
10     "Custodian" means, with respect to a qualifying pupil, a
11 parent or legal guardian who is a resident of the City of
12 Chicago.
13     "Low-performing school" means a school in City of Chicago
14 School District 299 that is ranked within the lowest 10% of
15 schools in that district in terms of the percentage of students
16 meeting or exceeding standards on the Illinois Standards
17 Achievement Test or on the Prairie State Achievement
18 Examination.
19     "Nonpublic school" means any State-recognized, nonpublic
20 elementary or secondary school in the City of Chicago that
21 elects to participate in the school choice program established
22 under this Act and does not discriminate on the basis of race,
23 color, or national origin under Title VI of the Civil Rights
24 Act of 1964 and attendance at which satisfies the requirements
25 of Section 26-1 of the School Code, except that nothing in

 

 

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1 Section 26-1 shall be construed to require a child to attend
2 any particular nonpublic school.
3     "Qualified education expenses" means costs reasonably
4 incurred on behalf of a qualifying pupil for the services of a
5 participating nonpublic school in which the qualifying pupil is
6 enrolled during the regular school year. Qualified education
7 expenses does not include costs incurred for supplies or
8 extra-curricular activities.
9     "Qualifying pupil" means an individual who:
10         (1) is a resident of the City of Chicago;
11         (2) is enrolled in a low-performing school or would be
12     enrolled in a low-performing school if not for enrollment
13     in a nonpublic school; and
14         (3) during the school year for which a voucher is
15     sought, is a full-time pupil enrolled in a kindergarten
16     through 12th grade education program.
17     "School Choice Voucher" means a written instrument issued
18 by the State Board of Education directly to the custodian of a
19 qualifying pupil. The instrument shall be for a sum certain,
20 which must not exceed the foundation level of support amount
21 specified in subsection (B) of Section 18-8.05 of the School
22 Code, to be paid within a designated period of time. The
23 custodian may present the instrument only to a participating
24 nonpublic school as payment for qualified education expenses
25 incurred on behalf of the qualifying pupil.
 

 

 

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1     Section 15. Establishment of program. There is established
2 the School Choice Program. Under the program, after the base
3 year, a custodian of a qualifying pupil shall be entitled to a
4 School Choice Voucher for payment of qualified education
5 expenses incurred on behalf of the qualifying pupil at any
6 participating nonpublic school in which the qualifying pupil is
7 enrolled. A qualifying pupil shall be entitled to enroll at and
8 attend any participating nonpublic school of his or her choice.
 
9     Section 20. Notification of vouchers. The principal of each
10 low-performing school in City of Chicago School District 299
11 shall notify custodians of qualifying pupils that vouchers
12 under this Act are available for the next school year.
13 Notification shall occur in January of each school year
14 beginning with the base year.
 
15     Section 25. Request for voucher. A custodian who applies in
16 accordance with procedures established by the State Board of
17 Education shall receive a voucher under this Act within the
18 dollar limits set out in this Act. The procedure shall require
19 application for the voucher, with documentation as to
20 eligibility, between March 1 and May 1 prior to the school year
21 in which the voucher is to be used.
 
22     Section 30. Issuance and payment of voucher. A voucher may
23 only be issued to a custodian who has made proper application

 

 

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1 pursuant to Section 25 of this Act. The custodian shall present
2 the voucher to a participating nonpublic school of his or her
3 choice as payment for qualified education expenses. Upon
4 presentment, the State Board of Education shall honor the
5 voucher and, as issuer of the instrument, pay the participating
6 nonpublic school in accordance with procedures established by
7 the State Board of Education. The procedures shall require all
8 of the following:
9         (1) that the applying custodian be notified of the
10     voucher award by August 1 of the school year in which the
11     voucher is to be used;
12         (2) that the voucher instrument be issued to the
13     custodian no later than September 15 of the school year in
14     which the voucher is to be used;
15         (3) that the custodian present the voucher instrument
16     to the participating school no later than October 1 of the
17     school year in which the voucher is to be used;
18         (4) that the participating school present the voucher
19     instrument, with proof of service to the custodian of the
20     qualifying pupil, to the State Board of Education no later
21     than October 31 of the school year in which the voucher is
22     to be used;
23         (5) that the State Board of Education shall honor the
24     voucher instrument and as issuer pay the participating
25     school no later than December 31 of the school year in
26     which the voucher is to be used; and

 

 

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1         (6) that participating schools must not be required to
2     accept vouchers as full payment for services but neither
3     shall they charge voucher pupils tuition or any other
4     educational expenses at a higher rate than other pupils.
 
5     Section 35. Amount of voucher. A School Choice Voucher for
6 qualified education expenses incurred through participating
7 schools during any school year after the base year shall be for
8 the lesser of (i) the foundation level of support amount
9 specified in subsection (B) of Section 18-8.05 of the School
10 Code or (ii) the actual qualified education expenses related to
11 the qualifying pupil's enrollment.
 
12     Section 40. Renewal of voucher. School Choice Vouchers
13 shall be renewable every year through grade 12 so long as the
14 qualifying pupil and custodian continue to remain eligible
15 pursuant to Section 10 of this Act.
 
16     Section 45. Assessment. All pupils receiving services
17 obtained through School Choice Vouchers shall be assessed
18 annually in the same manner as Illinois' public school
19 students. Participating schools shall be responsible for
20 administering the assessments and reporting the results to the
21 State Board of Education.
 
22     Section 50. Funding. If the amount needed to fund vouchers

 

 

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1 for all qualifying pupils seeking to participate under this Act
2 exceeds the appropriation for the program in any year, the
3 State Board of Education shall determine an equitable way to
4 allocate the appropriated funding among the qualifying pupils
5 consistent with the stated purpose and policy of this Act,
6 which may include the consideration of household income of the
7 pupils.
 
8     Section 55. Not base income. The amount of any voucher
9 redeemed under this Act shall not be considered base income
10 under subsection (a) of Section 203 of the Illinois Income Tax
11 Act and shall not be taxable for Illinois income tax purposes.
 
12     Section 60. Report and expansion. On or before December 31,
13 2014, the State Board of Education shall submit a report to the
14 General Assembly reviewing the current status of the program
15 operating under this Act. This report shall include, but not be
16 limited to, the numbers of qualifying pupils receiving each
17 School Choice Voucher, the names of the schools from which and
18 to which pupils transferred, the financial ramifications of the
19 program, and the results of pupil assessments. In its report,
20 the State Board of Education shall assess whether the program
21 has been financially and academically beneficial and shall make
22 a recommendation on whether the program should be expanded to
23 other schools in the City of Chicago or to other areas of this
24 State.
 

 

 

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1     Section 65. Penalties. It shall be a Class 3 felony to use
2 or attempt to use a voucher under this Act for any purpose
3 other than those permitted by this Act. It shall also be a
4 Class 3 felony for any person, with intent to defraud, to
5 knowingly forge, alter, or misrepresent information on a
6 voucher application or on any documents submitted in
7 application for a voucher, to deliver any such document knowing
8 it to have been thus forged, altered, or based on
9 misrepresentation, or to possess, with intent to issue or
10 deliver, any such document knowing it to have been thus forged,
11 altered, or based on misrepresentation.
 
12     Section 70. Rules. The State Board of Education shall adopt
13 rules to implement this Act. The creation of the School Choice
14 Program does not expand the regulatory authority of the State,
15 its officers, or any school district to impose any additional
16 regulation of nonpublic schools beyond those reasonably
17 necessary to enforce the requirements of the program.
 
18     Section 900. The Illinois Income Tax Act is amended by
19 changing Section 203 as follows:
 
20     (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
21     Sec. 203. Base income defined.
22     (a) Individuals.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1         she is ordinarily required to apportion business
2         income under different subsections of Section 304. The
3         addition modification required by this subparagraph
4         shall be reduced to the extent that dividends were
5         included in base income of the unitary group for the
6         same taxable year and received by the taxpayer or by a
7         member of the taxpayer's unitary business group
8         (including amounts included in gross income under
9         Sections 951 through 964 of the Internal Revenue Code
10         and amounts included in gross income under Section 78
11         of the Internal Revenue Code) with respect to the stock
12         of the same person to whom the premiums and costs were
13         directly or indirectly paid, incurred, or accrued. The
14         preceding sentence does not apply to the extent that
15         the same dividends caused a reduction to the addition
16         modification required under Section 203(a)(2)(D-17) or
17         Section 203(a)(2)(D-18) of this Act.
18             (D-20) For taxable years beginning on or after
19         January 1, 2002 and ending on or before December 31,
20         2006, in the case of a distribution from a qualified
21         tuition program under Section 529 of the Internal
22         Revenue Code, other than (i) a distribution from a
23         College Savings Pool created under Section 16.5 of the
24         State Treasurer Act or (ii) a distribution from the
25         Illinois Prepaid Tuition Trust Fund, an amount equal to
26         the amount excluded from gross income under Section

 

 

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1         529(c)(3)(B). For taxable years beginning on or after
2         January 1, 2007, in the case of a distribution from a
3         qualified tuition program under Section 529 of the
4         Internal Revenue Code, other than (i) a distribution
5         from a College Savings Pool created under Section 16.5
6         of the State Treasurer Act, (ii) a distribution from
7         the Illinois Prepaid Tuition Trust Fund, or (iii) a
8         distribution from a qualified tuition program under
9         Section 529 of the Internal Revenue Code that (I)
10         adopts and determines that its offering materials
11         comply with the College Savings Plans Network's
12         disclosure principles and (II) has made reasonable
13         efforts to inform in-state residents of the existence
14         of in-state qualified tuition programs by informing
15         Illinois residents directly and, where applicable, to
16         inform financial intermediaries distributing the
17         program to inform in-state residents of the existence
18         of in-state qualified tuition programs at least
19         annually, an amount equal to the amount excluded from
20         gross income under Section 529(c)(3)(B).
21             For the purposes of this subparagraph (D-20), a
22         qualified tuition program has made reasonable efforts
23         if it makes disclosures (which may use the term
24         "in-state program" or "in-state plan" and need not
25         specifically refer to Illinois or its qualified
26         programs by name) (i) directly to prospective

 

 

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1         participants in its offering materials or makes a
2         public disclosure, such as a website posting; and (ii)
3         where applicable, to intermediaries selling the
4         out-of-state program in the same manner that the
5         out-of-state program distributes its offering
6         materials;
7             (D-21) For taxable years beginning on or after
8         January 1, 2007, in the case of transfer of moneys from
9         a qualified tuition program under Section 529 of the
10         Internal Revenue Code that is administered by the State
11         to an out-of-state program, an amount equal to the
12         amount of moneys previously deducted from base income
13         under subsection (a)(2)(Y) of this Section;
14             (D-22) For taxable years beginning on or after
15         January 1, 2009, in the case of a nonqualified
16         withdrawal or refund of moneys from a qualified tuition
17         program under Section 529 of the Internal Revenue Code
18         administered by the State that is not used for
19         qualified expenses at an eligible education
20         institution, an amount equal to the contribution
21         component of the nonqualified withdrawal or refund
22         that was previously deducted from base income under
23         subsection (a)(2)(y) of this Section, provided that
24         the withdrawal or refund did not result from the
25         beneficiary's death or disability;
26             (D-23) An amount equal to the credit allowable to

 

 

09600SB2494sam001 - 22 - LRB096 15388 NHT 36734 a

1         the taxpayer under Section 218(a) of this Act,
2         determined without regard to Section 218(c) of this
3         Act;
4     and by deducting from the total so obtained the sum of the
5     following amounts:
6             (E) For taxable years ending before December 31,
7         2001, any amount included in such total in respect of
8         any compensation (including but not limited to any
9         compensation paid or accrued to a serviceman while a
10         prisoner of war or missing in action) paid to a
11         resident by reason of being on active duty in the Armed
12         Forces of the United States and in respect of any
13         compensation paid or accrued to a resident who as a
14         governmental employee was a prisoner of war or missing
15         in action, and in respect of any compensation paid to a
16         resident in 1971 or thereafter for annual training
17         performed pursuant to Sections 502 and 503, Title 32,
18         United States Code as a member of the Illinois National
19         Guard or, beginning with taxable years ending on or
20         after December 31, 2007, the National Guard of any
21         other state. For taxable years ending on or after
22         December 31, 2001, any amount included in such total in
23         respect of any compensation (including but not limited
24         to any compensation paid or accrued to a serviceman
25         while a prisoner of war or missing in action) paid to a
26         resident by reason of being a member of any component

 

 

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1         of the Armed Forces of the United States and in respect
2         of any compensation paid or accrued to a resident who
3         as a governmental employee was a prisoner of war or
4         missing in action, and in respect of any compensation
5         paid to a resident in 2001 or thereafter by reason of
6         being a member of the Illinois National Guard or,
7         beginning with taxable years ending on or after
8         December 31, 2007, the National Guard of any other
9         state. The provisions of this amendatory Act of the
10         92nd General Assembly are exempt from the provisions of
11         Section 250;
12             (F) An amount equal to all amounts included in such
13         total pursuant to the provisions of Sections 402(a),
14         402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
15         Internal Revenue Code, or included in such total as
16         distributions under the provisions of any retirement
17         or disability plan for employees of any governmental
18         agency or unit, or retirement payments to retired
19         partners, which payments are excluded in computing net
20         earnings from self employment by Section 1402 of the
21         Internal Revenue Code and regulations adopted pursuant
22         thereto;
23             (G) The valuation limitation amount;
24             (H) An amount equal to the amount of any tax
25         imposed by this Act which was refunded to the taxpayer
26         and included in such total for the taxable year;

 

 

09600SB2494sam001 - 24 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 25 - LRB096 15388 NHT 36734 a

1         and railroad retirement benefits included in such
2         total pursuant to Sections 72(r) and 86 of the Internal
3         Revenue Code;
4             (M) With the exception of any amounts subtracted
5         under subparagraph (N), an amount equal to the sum of
6         all amounts disallowed as deductions by (i) Sections
7         171(a) (2), and 265(2) of the Internal Revenue Code of
8         1954, as now or hereafter amended, and all amounts of
9         expenses allocable to interest and disallowed as
10         deductions by Section 265(1) of the Internal Revenue
11         Code of 1954, as now or hereafter amended; and (ii) for
12         taxable years ending on or after August 13, 1999,
13         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
14         the Internal Revenue Code; the provisions of this
15         subparagraph are exempt from the provisions of Section
16         250;
17             (N) An amount equal to all amounts included in such
18         total which are exempt from taxation by this State
19         either by reason of its statutes or Constitution or by
20         reason of the Constitution, treaties or statutes of the
21         United States; provided that, in the case of any
22         statute of this State that exempts income derived from
23         bonds or other obligations from the tax imposed under
24         this Act, the amount exempted shall be the interest net
25         of bond premium amortization;
26             (O) An amount equal to any contribution made to a

 

 

09600SB2494sam001 - 26 - LRB096 15388 NHT 36734 a

1         job training project established pursuant to the Tax
2         Increment Allocation Redevelopment Act;
3             (P) An amount equal to the amount of the deduction
4         used to compute the federal income tax credit for
5         restoration of substantial amounts held under claim of
6         right for the taxable year pursuant to Section 1341 of
7         the Internal Revenue Code of 1986;
8             (Q) An amount equal to any amounts included in such
9         total, received by the taxpayer as an acceleration in
10         the payment of life, endowment or annuity benefits in
11         advance of the time they would otherwise be payable as
12         an indemnity for a terminal illness;
13             (R) An amount equal to the amount of any federal or
14         State bonus paid to veterans of the Persian Gulf War;
15             (S) An amount, to the extent included in adjusted
16         gross income, equal to the amount of a contribution
17         made in the taxable year on behalf of the taxpayer to a
18         medical care savings account established under the
19         Medical Care Savings Account Act or the Medical Care
20         Savings Account Act of 2000 to the extent the
21         contribution is accepted by the account administrator
22         as provided in that Act;
23             (T) An amount, to the extent included in adjusted
24         gross income, equal to the amount of interest earned in
25         the taxable year on a medical care savings account
26         established under the Medical Care Savings Account Act

 

 

09600SB2494sam001 - 27 - LRB096 15388 NHT 36734 a

1         or the Medical Care Savings Account Act of 2000 on
2         behalf of the taxpayer, other than interest added
3         pursuant to item (D-5) of this paragraph (2);
4             (U) For one taxable year beginning on or after
5         January 1, 1994, an amount equal to the total amount of
6         tax imposed and paid under subsections (a) and (b) of
7         Section 201 of this Act on grant amounts received by
8         the taxpayer under the Nursing Home Grant Assistance
9         Act during the taxpayer's taxable years 1992 and 1993;
10             (V) Beginning with tax years ending on or after
11         December 31, 1995 and ending with tax years ending on
12         or before December 31, 2004, an amount equal to the
13         amount paid by a taxpayer who is a self-employed
14         taxpayer, a partner of a partnership, or a shareholder
15         in a Subchapter S corporation for health insurance or
16         long-term care insurance for that taxpayer or that
17         taxpayer's spouse or dependents, to the extent that the
18         amount paid for that health insurance or long-term care
19         insurance may be deducted under Section 213 of the
20         Internal Revenue Code of 1986, has not been deducted on
21         the federal income tax return of the taxpayer, and does
22         not exceed the taxable income attributable to that
23         taxpayer's income, self-employment income, or
24         Subchapter S corporation income; except that no
25         deduction shall be allowed under this item (V) if the
26         taxpayer is eligible to participate in any health

 

 

09600SB2494sam001 - 28 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 29 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 30 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 31 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 32 - LRB096 15388 NHT 36734 a

1         Section 250;
2             (AA) If the taxpayer sells, transfers, abandons,
3         or otherwise disposes of property for which the
4         taxpayer was required in any taxable year to make an
5         addition modification under subparagraph (D-15), then
6         an amount equal to that addition modification.
7             If the taxpayer continues to own property through
8         the last day of the last tax year for which the
9         taxpayer may claim a depreciation deduction for
10         federal income tax purposes and for which the taxpayer
11         was required in any taxable year to make an addition
12         modification under subparagraph (D-15), then an amount
13         equal to that addition modification.
14             The taxpayer is allowed to take the deduction under
15         this subparagraph only once with respect to any one
16         piece of property.
17             This subparagraph (AA) is exempt from the
18         provisions of Section 250;
19             (BB) Any amount included in adjusted gross income,
20         other than salary, received by a driver in a
21         ridesharing arrangement using a motor vehicle;
22             (CC) 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

 

 

09600SB2494sam001 - 33 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 34 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 35 - LRB096 15388 NHT 36734 a

1         provisions of Section 250.
2             (FF) For taxable years ending on or after December
3         31, 2010, an amount, to the extent that it is included
4         in adjusted gross income, equal to any voucher redeemed
5         under the School Choice Act. This subparagraph is
6         exempt from the provisions of Section 250.
 
7     (b) Corporations.
8         (1) In general. In the case of a corporation, base
9     income means an amount equal to the taxpayer's taxable
10     income for the taxable year as modified by paragraph (2).
11         (2) Modifications. The taxable income referred to in
12     paragraph (1) shall be modified by adding thereto the sum
13     of the following amounts:
14             (A) An amount equal to all amounts paid or accrued
15         to the taxpayer as interest and all distributions
16         received from regulated investment companies during
17         the taxable year to the extent excluded from gross
18         income in the computation of taxable income;
19             (B) An amount equal to the amount of tax imposed by
20         this Act to the extent deducted from gross income in
21         the computation of taxable income for the taxable year;
22             (C) In the case of a regulated investment company,
23         an amount equal to the excess of (i) the net long-term
24         capital gain for the taxable year, over (ii) the amount
25         of the capital gain dividends designated as such in

 

 

09600SB2494sam001 - 36 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 37 - LRB096 15388 NHT 36734 a

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

 

 

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1         taxpayer was required in any taxable year to make an
2         addition modification under subparagraph (E-10), then
3         an amount equal to the aggregate amount of the
4         deductions taken in all taxable years under
5         subparagraph (T) with respect to that property.
6             If the taxpayer continues to own property through
7         the last day of the last tax year for which the
8         taxpayer may claim a depreciation deduction for
9         federal income tax purposes and for which the taxpayer
10         was allowed in any taxable year to make a subtraction
11         modification under subparagraph (T), then an amount
12         equal to that subtraction modification.
13             The taxpayer is required to make the addition
14         modification under this subparagraph only once with
15         respect to any one piece of property;
16             (E-12) An amount equal to the amount otherwise
17         allowed as a deduction in computing base income for
18         interest paid, accrued, or incurred, directly or
19         indirectly, (i) for taxable years ending on or after
20         December 31, 2004, to a foreign person who would be a
21         member of the same unitary business group but for the
22         fact the foreign person's business activity outside
23         the United States is 80% or more of the foreign
24         person's total business activity and (ii) for taxable
25         years ending on or after December 31, 2008, to a person
26         who would be a member of the same unitary business

 

 

09600SB2494sam001 - 39 - LRB096 15388 NHT 36734 a

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

 

 

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

 

 

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

 

 

09600SB2494sam001 - 42 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 43 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 44 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 45 - LRB096 15388 NHT 36734 a

1         income under different subsections of Section 304. The
2         addition modification required by this subparagraph
3         shall be reduced to the extent that dividends were
4         included in base income of the unitary group for the
5         same taxable year and received by the taxpayer or by a
6         member of the taxpayer's unitary business group
7         (including amounts included in gross income under
8         Sections 951 through 964 of the Internal Revenue Code
9         and amounts included in gross income under Section 78
10         of the Internal Revenue Code) with respect to the stock
11         of the same person to whom the premiums and costs were
12         directly or indirectly paid, incurred, or accrued. The
13         preceding sentence does not apply to the extent that
14         the same dividends caused a reduction to the addition
15         modification required under Section 203(b)(2)(E-12) or
16         Section 203(b)(2)(E-13) of this Act;
17             (E-15) For taxable years beginning after December
18         31, 2008, any deduction for dividends paid by a captive
19         real estate investment trust that is allowed to a real
20         estate investment trust under Section 857(b)(2)(B) of
21         the Internal Revenue Code for dividends paid;
22             (E-16) An amount equal to the credit allowable to
23         the taxpayer under Section 218(a) of this Act,
24         determined without regard to Section 218(c) of this
25         Act;
26     and by deducting from the total so obtained the sum of the

 

 

09600SB2494sam001 - 46 - LRB096 15388 NHT 36734 a

1     following amounts:
2             (F) An amount equal to the amount of any tax
3         imposed by this Act which was refunded to the taxpayer
4         and included in such total for the taxable year;
5             (G) An amount equal to any amount included in such
6         total under Section 78 of the Internal Revenue Code;
7             (H) In the case of a regulated investment company,
8         an amount equal to the amount of exempt interest
9         dividends as defined in subsection (b) (5) of Section
10         852 of the Internal Revenue Code, paid to shareholders
11         for the taxable year;
12             (I) With the exception of any amounts subtracted
13         under subparagraph (J), an amount equal to the sum of
14         all amounts disallowed as deductions by (i) Sections
15         171(a) (2), and 265(a)(2) and amounts disallowed as
16         interest expense by Section 291(a)(3) of the Internal
17         Revenue Code, as now or hereafter amended, and all
18         amounts of expenses allocable to interest and
19         disallowed as deductions by Section 265(a)(1) of the
20         Internal Revenue Code, as now or hereafter amended; and
21         (ii) for taxable years ending on or after August 13,
22         1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
23         832(b)(5)(B)(i) of the Internal Revenue Code; the
24         provisions of this subparagraph are exempt from the
25         provisions of Section 250;
26             (J) An amount equal to all amounts included in such

 

 

09600SB2494sam001 - 47 - LRB096 15388 NHT 36734 a

1         total which are exempt from taxation by this State
2         either by reason of its statutes or Constitution or by
3         reason of the Constitution, treaties or statutes of the
4         United States; provided that, in the case of any
5         statute of this State that exempts income derived from
6         bonds or other obligations from the tax imposed under
7         this Act, the amount exempted shall be the interest net
8         of bond premium amortization;
9             (K) An amount equal to those dividends included in
10         such total which were paid by a corporation which
11         conducts business operations in an Enterprise Zone or
12         zones created under the Illinois Enterprise Zone Act or
13         a River Edge Redevelopment Zone or zones created under
14         the River Edge Redevelopment Zone Act and conducts
15         substantially all of its operations in an Enterprise
16         Zone or zones or a River Edge Redevelopment Zone or
17         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

 

 

09600SB2494sam001 - 48 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 49 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 50 - LRB096 15388 NHT 36734 a

1         extent that the contribution (i) qualifies as a
2         charitable contribution under subsection (c) of
3         Section 170 of the Internal Revenue Code and (ii) must,
4         by its terms, be used for a project approved by the
5         Department of Commerce and Economic Opportunity under
6         Section 11 of the Illinois Enterprise Zone Act or under
7         Section 10-10 of the River Edge Redevelopment Zone Act.
8         This subparagraph (N) is exempt from the provisions of
9         Section 250;
10             (O) An amount equal to: (i) 85% for taxable years
11         ending on or before December 31, 1992, or, a percentage
12         equal to the percentage allowable under Section
13         243(a)(1) of the Internal Revenue Code of 1986 for
14         taxable years ending after December 31, 1992, of the
15         amount by which dividends included in taxable income
16         and received from a corporation that is not created or
17         organized under the laws of the United States or any
18         state or political subdivision thereof, including, for
19         taxable years ending on or after December 31, 1988,
20         dividends received or deemed received or paid or deemed
21         paid under Sections 951 through 964 of the Internal
22         Revenue Code, exceed the amount of the modification
23         provided under subparagraph (G) of paragraph (2) of
24         this subsection (b) which is related to such dividends,
25         and including, for taxable years ending on or after
26         December 31, 2008, dividends received from a captive

 

 

09600SB2494sam001 - 51 - LRB096 15388 NHT 36734 a

1         real estate investment trust; plus (ii) 100% of the
2         amount by which dividends, included in taxable income
3         and received, including, for taxable years ending on or
4         after December 31, 1988, dividends received or deemed
5         received or paid or deemed paid under Sections 951
6         through 964 of the Internal Revenue Code and including,
7         for taxable years ending on or after December 31, 2008,
8         dividends received from a captive real estate
9         investment trust, from any such corporation specified
10         in clause (i) that would but for the provisions of
11         Section 1504 (b) (3) of the Internal Revenue Code be
12         treated as a member of the affiliated group which
13         includes the dividend recipient, exceed the amount of
14         the modification provided under subparagraph (G) of
15         paragraph (2) of this subsection (b) which is related
16         to such dividends. This subparagraph (O) is exempt from
17         the provisions of Section 250 of this Act;
18             (P) An amount equal to any contribution made to a
19         job training project established pursuant to the Tax
20         Increment Allocation Redevelopment Act;
21             (Q) 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 of 1986;
26             (R) On and after July 20, 1999, in the case of an

 

 

09600SB2494sam001 - 52 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 53 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 54 - LRB096 15388 NHT 36734 a

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

 

 

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

 

 

09600SB2494sam001 - 57 - LRB096 15388 NHT 36734 a

1         group but for the fact that the person is prohibited
2         under Section 1501(a)(27) from being included in the
3         unitary business group because he or she is ordinarily
4         required to apportion business income under different
5         subsections of Section 304, but not to exceed the
6         addition modification required to be made for the same
7         taxable year under Section 203(b)(2)(E-13) for
8         intangible expenses and costs paid, accrued, or
9         incurred, directly or indirectly, to the same foreign
10         person. This subparagraph (X) is exempt from the
11         provisions of Section 250.
12         (3) Special rule. For purposes of paragraph (2) (A),
13     "gross income" in the case of a life insurance company, for
14     tax years ending on and after December 31, 1994, shall mean
15     the gross investment income for the taxable year.
 
16     (c) Trusts and estates.
17         (1) In general. In the case of a trust or estate, base
18     income means an amount equal to the taxpayer's taxable
19     income for the taxable year as modified by paragraph (2).
20         (2) Modifications. Subject to the provisions of
21     paragraph (3), the taxable income referred to in paragraph
22     (1) shall be modified by adding thereto the sum of the
23     following amounts:
24             (A) An amount equal to all amounts paid or accrued
25         to the taxpayer as interest or dividends during the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

09600SB2494sam001 - 62 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 63 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 64 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 65 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 66 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 67 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 68 - LRB096 15388 NHT 36734 a

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

 

 

09600SB2494sam001 - 69 - LRB096 15388 NHT 36734 a

1             (K) An amount equal to all amounts included in
2         taxable income as modified by subparagraphs (A), (B),
3         (C), (D), (E), (F) and (G) which are exempt from
4         taxation by this State either by reason of its statutes
5         or Constitution or by reason of the Constitution,
6         treaties or statutes of the United States; provided
7         that, in the case of any statute of this State that
8         exempts income derived from bonds or other obligations
9         from the tax imposed under this Act, the amount
10         exempted shall be the interest net of bond premium
11         amortization;
12             (L) With the exception of any amounts subtracted
13         under subparagraph (K), an amount equal to the sum of
14         all amounts disallowed as deductions by (i) Sections
15         171(a) (2) and 265(a)(2) of the Internal Revenue Code,
16         as now or hereafter amended, and all amounts of
17         expenses allocable to interest and disallowed as
18         deductions by Section 265(1) of the Internal Revenue
19         Code of 1954, as now or hereafter amended; and (ii) for
20         taxable years ending on or after August 13, 1999,
21         Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
22         the Internal Revenue Code; the provisions of this
23         subparagraph are exempt from the provisions of Section
24         250;
25             (M) An amount equal to those dividends included in
26         such total which were paid by a corporation which

 

 

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1         conducts business operations in an Enterprise Zone or
2         zones created under the Illinois Enterprise Zone Act or
3         a River Edge Redevelopment Zone or zones created under
4         the River Edge Redevelopment Zone Act and conducts
5         substantially all of its operations in an Enterprise
6         Zone or Zones or a River Edge Redevelopment Zone or
7         zones. This subparagraph (M) is exempt from the
8         provisions of Section 250;
9             (N) An amount equal to any contribution made to a
10         job training project established pursuant to the Tax
11         Increment Allocation Redevelopment Act;
12             (O) 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 (M) of paragraph (2) of this subsection
19         shall not be eligible for the deduction provided under
20         this subparagraph (O);
21             (P) 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 of 1986;
26             (Q) For taxable year 1999 and thereafter, an amount

 

 

09600SB2494sam001 - 71 - LRB096 15388 NHT 36734 a

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

 

 

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

 

 

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

 

 

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

 

 

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1         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 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(c)(2)(G-12) for
16         interest paid, accrued, or incurred, directly or
17         indirectly, to the same person. This subparagraph (U)
18         is exempt from the provisions of Section 250; and
19             (V) An amount equal to the income from intangible
20         property taken into account for the taxable year (net
21         of the deductions allocable thereto) with respect to
22         transactions with (i) a foreign person who would be a
23         member of the taxpayer's unitary business group but for
24         the fact that the foreign person's business activity
25         outside the United States is 80% or more of that
26         person's total business activity and (ii) for taxable

 

 

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1         years ending on or after December 31, 2008, to a person
2         who would be a member of the same unitary business
3         group but for the fact that the person is prohibited
4         under Section 1501(a)(27) from being included in the
5         unitary business group because he or she is ordinarily
6         required to apportion business income under different
7         subsections of Section 304, but not to exceed the
8         addition modification required to be made for the same
9         taxable year under Section 203(c)(2)(G-13) for
10         intangible expenses and costs paid, accrued, or
11         incurred, directly or indirectly, to the same foreign
12         person. This subparagraph (V) is exempt from the
13         provisions of Section 250.
14         (3) Limitation. The amount of any modification
15     otherwise required under this subsection shall, under
16     regulations prescribed by the Department, be adjusted by
17     any amounts included therein which were properly paid,
18     credited, or required to be distributed, or permanently set
19     aside for charitable purposes pursuant to Internal Revenue
20     Code Section 642(c) during the taxable year.
 
21     (d) Partnerships.
22         (1) In general. In the case of a partnership, base
23     income means an amount equal to the taxpayer's taxable
24     income for the taxable year as modified by paragraph (2).
25         (2) Modifications. The taxable income referred to in

 

 

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

 

 

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1         deductions taken in all taxable years under
2         subparagraph (O) with respect to that property.
3             If the taxpayer continues to own property through
4         the last day of the last tax year for which the
5         taxpayer may claim a depreciation deduction for
6         federal income tax purposes and for which the taxpayer
7         was allowed in any taxable year to make a subtraction
8         modification under subparagraph (O), then an amount
9         equal to that subtraction modification.
10             The taxpayer is required to make the addition
11         modification under this subparagraph only once with
12         respect to any one piece of property;
13             (D-7) An amount equal to the amount otherwise
14         allowed as a deduction in computing base income for
15         interest paid, accrued, or incurred, directly or
16         indirectly, (i) for taxable years ending on or after
17         December 31, 2004, to a foreign person who would be a
18         member of the same unitary business group but for the
19         fact the foreign person's business activity outside
20         the United States is 80% or more of the foreign
21         person's total business activity and (ii) for taxable
22         years ending on or after December 31, 2008, to a person
23         who would be a member of the same unitary business
24         group but for the fact that the person is prohibited
25         under Section 1501(a)(27) from being included in the
26         unitary business group because he or she is ordinarily

 

 

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

 

 

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

 

 

09600SB2494sam001 - 81 - LRB096 15388 NHT 36734 a

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

 

 

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

 

 

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

 

 

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

 

 

09600SB2494sam001 - 85 - LRB096 15388 NHT 36734 a

1         included in base income of the unitary group for the
2         same taxable year and received by the taxpayer or by a
3         member of the taxpayer's unitary business group
4         (including amounts included in gross income under
5         Sections 951 through 964 of the Internal Revenue Code
6         and amounts included in gross income under Section 78
7         of the Internal Revenue Code) with respect to the stock
8         of the same person to whom the premiums and costs were
9         directly or indirectly paid, incurred, or accrued. The
10         preceding sentence does not apply to the extent that
11         the same dividends caused a reduction to the addition
12         modification required under Section 203(d)(2)(D-7) or
13         Section 203(d)(2)(D-8) of this Act;
14             (D-10) An amount equal to the credit allowable to
15         the taxpayer under Section 218(a) of this Act,
16         determined without regard to Section 218(c) of this
17         Act;
18     and by deducting from the total so obtained the following
19     amounts:
20             (E) The valuation limitation amount;
21             (F) An amount equal to the amount of any tax
22         imposed by this Act which was refunded to the taxpayer
23         and included in such total for the taxable year;
24             (G) An amount equal to all amounts included in
25         taxable income as modified by subparagraphs (A), (B),
26         (C) and (D) which are exempt from taxation by this

 

 

09600SB2494sam001 - 86 - LRB096 15388 NHT 36734 a

1         State either by reason of its statutes or Constitution
2         or by reason of the Constitution, treaties or statutes
3         of the United States; provided that, in the case of any
4         statute of this State that exempts income derived from
5         bonds or other obligations from the tax imposed under
6         this Act, the amount exempted shall be the interest net
7         of bond premium amortization;
8             (H) Any income of the partnership which
9         constitutes personal service income as defined in
10         Section 1348 (b) (1) of the Internal Revenue Code (as
11         in effect December 31, 1981) or a reasonable allowance
12         for compensation paid or accrued for services rendered
13         by partners to the partnership, whichever is greater;
14             (I) An amount equal to all amounts of income
15         distributable to an entity subject to the Personal
16         Property Tax Replacement Income Tax imposed by
17         subsections (c) and (d) of Section 201 of this Act
18         including amounts distributable to organizations
19         exempt from federal income tax by reason of Section
20         501(a) of the Internal Revenue Code, provided that the
21         deduction under this subparagraph (I) shall not be
22         allowed to a publicly traded partnership under Section
23         7704 of the Internal Revenue Code for any taxable year
24         ending on or after December 31, 2009;
25             (J) With the exception of any amounts subtracted
26         under subparagraph (G), an amount equal to the sum of

 

 

09600SB2494sam001 - 87 - LRB096 15388 NHT 36734 a

1         all amounts disallowed as deductions by (i) Sections
2         171(a) (2), and 265(2) of the Internal Revenue Code of
3         1954, as now or hereafter amended, and all amounts of
4         expenses allocable to interest and disallowed as
5         deductions by Section 265(1) of the Internal Revenue
6         Code, as now or hereafter amended; and (ii) for taxable
7         years ending on or after August 13, 1999, Sections
8         171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
9         Internal Revenue Code; the provisions of this
10         subparagraph are exempt from the provisions of Section
11         250;
12             (K) An amount equal to those dividends included in
13         such total which were paid by a corporation which
14         conducts business operations in an Enterprise Zone or
15         zones created under the Illinois Enterprise Zone Act,
16         enacted by the 82nd General Assembly, or a River Edge
17         Redevelopment Zone or zones created under the River
18         Edge Redevelopment Zone Act and conducts substantially
19         all of its operations in an Enterprise Zone or Zones or
20         from a River Edge Redevelopment Zone or zones. This
21         subparagraph (K) is exempt from the provisions of
22         Section 250;
23             (L) An amount equal to any contribution made to a
24         job training project established pursuant to the Real
25         Property Tax Increment Allocation Redevelopment Act;
26             (M) An amount equal to those dividends included in

 

 

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1         such total that were paid by a corporation that
2         conducts business operations in a federally designated
3         Foreign Trade Zone or Sub-Zone and that is designated a
4         High Impact Business located in Illinois; provided
5         that dividends eligible for the deduction provided in
6         subparagraph (K) of paragraph (2) of this subsection
7         shall not be eligible for the deduction provided under
8         this subparagraph (M);
9             (N) An amount equal to the amount of the deduction
10         used to compute the federal income tax credit for
11         restoration of substantial amounts held under claim of
12         right for the taxable year pursuant to Section 1341 of
13         the Internal Revenue Code of 1986;
14             (O) For taxable years 2001 and thereafter, for the
15         taxable year in which the bonus depreciation deduction
16         is taken on the taxpayer's federal income tax return
17         under subsection (k) of Section 168 of the Internal
18         Revenue Code and for each applicable taxable year
19         thereafter, an amount equal to "x", where:
20                 (1) "y" equals the amount of the depreciation
21             deduction taken for the taxable year on the
22             taxpayer's federal income tax return on property
23             for which the bonus depreciation deduction was
24             taken in any year under subsection (k) of Section
25             168 of the Internal Revenue Code, but not including
26             the bonus depreciation deduction;

 

 

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

 

 

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

 

 

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

 

 

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1         property taken into account for the taxable year (net
2         of the deductions allocable thereto) with respect to
3         transactions with (i) a foreign person who would be a
4         member of the taxpayer's unitary business group but for
5         the fact that the foreign person's business activity
6         outside the United States is 80% or more of that
7         person's total business activity and (ii) for taxable
8         years ending on or after December 31, 2008, to a person
9         who would be a member of the same unitary business
10         group but for the fact that the person is prohibited
11         under Section 1501(a)(27) from being included in the
12         unitary business group because he or she is ordinarily
13         required to apportion business income under different
14         subsections of Section 304, but not to exceed the
15         addition modification required to be made for the same
16         taxable year under Section 203(d)(2)(D-8) for
17         intangible expenses and costs paid, accrued, or
18         incurred, directly or indirectly, to the same person.
19         This subparagraph (S) is exempt from Section 250.
 
20     (e) Gross income; adjusted gross income; taxable income.
21         (1) In general. Subject to the provisions of paragraph
22     (2) and subsection (b) (3), for purposes of this Section
23     and Section 803(e), a taxpayer's gross income, adjusted
24     gross income, or taxable income for the taxable year shall
25     mean the amount of gross income, adjusted gross income or

 

 

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

 

 

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

 

 

09600SB2494sam001 - 95 - LRB096 15388 NHT 36734 a

1         for the taxable year for federal income tax purposes,
2         taxable income determined as if such corporation had
3         filed a separate return for federal income tax purposes
4         for the taxable year and each preceding taxable year
5         for which it was a member of an affiliated group. For
6         purposes of this subparagraph, the taxpayer's separate
7         taxable income shall be determined as if the election
8         provided by Section 243(b) (2) of the Internal Revenue
9         Code had been in effect for all such years;
10             (F) Cooperatives. In the case of a cooperative
11         corporation or association, the taxable income of such
12         organization determined in accordance with the
13         provisions of Section 1381 through 1388 of the Internal
14         Revenue Code;
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

 

 

09600SB2494sam001 - 96 - LRB096 15388 NHT 36734 a

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
22 otherwise, nothing in this Section shall permit the same item
23 to be deducted more than once.
 
24     (h) Legislative intention. Except as expressly provided by

 

 

09600SB2494sam001 - 99 - LRB096 15388 NHT 36734 a

1 this Section there shall be no modifications or limitations on
2 the amounts of income, gain, loss or deduction taken into
3 account in determining gross income, adjusted gross income or
4 taxable income for federal income tax purposes for the taxable
5 year, or in the amount of such items entering into the
6 computation of base income and net income under this Act for
7 such taxable year, whether in respect of property values as of
8 August 1, 1969 or otherwise.
9 (Source: P.A. 95-23, eff. 8-3-07; 95-233, eff. 8-16-07; 95-286,
10 eff. 8-20-07; 95-331, eff. 8-21-07; 95-707, eff. 1-11-08;
11 95-876, eff. 8-21-08; 96-45, eff. 7-15-09; 96-120, eff. 8-4-09;
12 96-198, eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff.
13 8-14-09; 96-835, eff. 12-16-09.)".