97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB6208

 

Introduced , by Rep. Tom Cross

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/203  from Ch. 120, par. 2-203

    Amends the Illinois Income Tax Act. Creates a deduction in amount equal to any amount received by the taxpayer during the taxable year as an honorarium associated with competing in the Olympic or Paralympic Games. Effective immediately.


LRB097 22302 HLH 71055 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        resident in 1971 or thereafter for annual training
2        performed pursuant to Sections 502 and 503, Title 32,
3        United States Code as a member of the Illinois National
4        Guard or, beginning with taxable years ending on or
5        after December 31, 2007, the National Guard of any
6        other state. For taxable years ending on or after
7        December 31, 2001, any amount included in such total in
8        respect of any compensation (including but not limited
9        to any compensation paid or accrued to a serviceman
10        while a prisoner of war or missing in action) paid to a
11        resident by reason of being a member of any component
12        of the Armed Forces of the United States and in respect
13        of any compensation paid or accrued to a resident who
14        as a governmental employee was a prisoner of war or
15        missing in action, and in respect of any compensation
16        paid to a resident in 2001 or thereafter by reason of
17        being a member of the Illinois National Guard or,
18        beginning with taxable years ending on or after
19        December 31, 2007, the National Guard of any other
20        state. The provisions of this subparagraph (E) are
21        exempt from the provisions of Section 250;
22            (F) An amount equal to all amounts included in such
23        total pursuant to the provisions of Sections 402(a),
24        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
25        Internal Revenue Code, or included in such total as
26        distributions under the provisions of any retirement

 

 

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1        or disability plan for employees of any governmental
2        agency or unit, or retirement payments to retired
3        partners, which payments are excluded in computing net
4        earnings from self employment by Section 1402 of the
5        Internal Revenue Code and regulations adopted pursuant
6        thereto;
7            (G) The valuation limitation amount;
8            (H) An amount equal to the amount of any tax
9        imposed by this Act which was refunded to the taxpayer
10        and included in such total for the taxable year;
11            (I) An amount equal to all amounts included in such
12        total pursuant to the provisions of Section 111 of the
13        Internal Revenue Code as a recovery of items previously
14        deducted from adjusted gross income in the computation
15        of taxable income;
16            (J) An amount equal to those dividends included in
17        such total which were paid by a corporation which
18        conducts business operations in an Enterprise Zone or
19        zones created under the Illinois Enterprise Zone Act or
20        a River Edge Redevelopment Zone or zones created under
21        the River Edge Redevelopment Zone Act, and conducts
22        substantially all of its operations in an Enterprise
23        Zone or zones or a River Edge Redevelopment Zone or
24        zones. This subparagraph (J) is exempt from the
25        provisions of Section 250;
26            (K) 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 (J) of paragraph (2) of this subsection
7        shall not be eligible for the deduction provided under
8        this subparagraph (K);
9            (L) For taxable years ending after December 31,
10        1983, an amount equal to all social security benefits
11        and railroad retirement benefits included in such
12        total pursuant to Sections 72(r) and 86 of the Internal
13        Revenue Code;
14            (M) With the exception of any amounts subtracted
15        under subparagraph (N), an amount equal to the sum of
16        all amounts disallowed as deductions by (i) Sections
17        171(a) (2), and 265(2) of the Internal Revenue Code,
18        and all amounts of expenses allocable to interest and
19        disallowed as deductions by Section 265(1) of the
20        Internal Revenue Code; and (ii) for taxable years
21        ending on or after August 13, 1999, Sections 171(a)(2),
22        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
23        Code, plus, for taxable years ending on or after
24        December 31, 2011, Section 45G(e)(3) of the Internal
25        Revenue Code and, for taxable years ending on or after
26        December 31, 2008, any amount included in gross income

 

 

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

 

 

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1        advance of the time they would otherwise be payable as
2        an indemnity for a terminal illness;
3            (R) An amount equal to the amount of any federal or
4        State bonus paid to veterans of the Persian Gulf War;
5            (S) An amount, to the extent included in adjusted
6        gross income, equal to the amount of a contribution
7        made in the taxable year on behalf of the taxpayer to a
8        medical care savings account established under the
9        Medical Care Savings Account Act or the Medical Care
10        Savings Account Act of 2000 to the extent the
11        contribution is accepted by the account administrator
12        as provided in that Act;
13            (T) An amount, to the extent included in adjusted
14        gross income, equal to the amount of interest earned in
15        the taxable year on a medical care savings account
16        established under the Medical Care Savings Account Act
17        or the Medical Care Savings Account Act of 2000 on
18        behalf of the taxpayer, other than interest added
19        pursuant to item (D-5) of this paragraph (2);
20            (U) For one taxable year beginning on or after
21        January 1, 1994, an amount equal to the total amount of
22        tax imposed and paid under subsections (a) and (b) of
23        Section 201 of this Act on grant amounts received by
24        the taxpayer under the Nursing Home Grant Assistance
25        Act during the taxpayer's taxable years 1992 and 1993;
26            (V) Beginning with tax years ending on or after

 

 

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1        December 31, 1995 and ending with tax years ending on
2        or before December 31, 2004, an amount equal to the
3        amount paid by a taxpayer who is a self-employed
4        taxpayer, a partner of a partnership, or a shareholder
5        in a Subchapter S corporation for health insurance or
6        long-term care insurance for that taxpayer or that
7        taxpayer's spouse or dependents, to the extent that the
8        amount paid for that health insurance or long-term care
9        insurance may be deducted under Section 213 of the
10        Internal Revenue Code, has not been deducted on the
11        federal income tax return of the taxpayer, and does not
12        exceed the taxable income attributable to that
13        taxpayer's income, self-employment income, or
14        Subchapter S corporation income; except that no
15        deduction shall be allowed under this item (V) if the
16        taxpayer is eligible to participate in any health
17        insurance or long-term care insurance plan of an
18        employer of the taxpayer or the taxpayer's spouse. The
19        amount of the health insurance and long-term care
20        insurance subtracted under this item (V) shall be
21        determined by multiplying total health insurance and
22        long-term care insurance premiums paid by the taxpayer
23        times a number that represents the fractional
24        percentage of eligible medical expenses under Section
25        213 of the Internal Revenue Code of 1986 not actually
26        deducted on the taxpayer's federal income tax return;

 

 

HB6208- 20 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 21 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 22 -LRB097 22302 HLH 71055 b

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

 

 

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

 

 

HB6208- 24 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 25 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 26 -LRB097 22302 HLH 71055 b

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(a)(2)(D-18) for
14        intangible expenses and costs paid, accrued, or
15        incurred, directly or indirectly, to the same foreign
16        person. This subparagraph (EE) is exempt from the
17        provisions of Section 250;
18            (FF) An amount equal to any amount awarded to the
19        taxpayer during the taxable year by the Court of Claims
20        under subsection (c) of Section 8 of the Court of
21        Claims Act for time unjustly served in a State prison.
22        This subparagraph (FF) is exempt from the provisions of
23        Section 250; and
24            (GG) For taxable years ending on or after December
25        31, 2011, in the case of a taxpayer who was required to
26        add back any insurance premiums under Section

 

 

HB6208- 27 -LRB097 22302 HLH 71055 b

1        203(a)(2)(D-19), such taxpayer may elect to subtract
2        that part of a reimbursement received from the
3        insurance company equal to the amount of the expense or
4        loss (including expenses incurred by the insurance
5        company) that would have been taken into account as a
6        deduction for federal income tax purposes if the
7        expense or loss had been uninsured. If a taxpayer makes
8        the election provided for by this subparagraph (GG),
9        the insurer to which the premiums were paid must add
10        back to income the amount subtracted by the taxpayer
11        pursuant to this subparagraph (GG). This subparagraph
12        (GG) is exempt from the provisions of Section 250; and
13        .
14            (HH) For taxable years ending on or after December
15        31, 2012, an amount equal to any amount received by the
16        taxpayer during the taxable year as an honorarium
17        associated with competing in the Olympic or Paralympic
18        Games.
 
19    (b) Corporations.
20        (1) In general. In the case of a corporation, base
21    income means an amount equal to the taxpayer's taxable
22    income for the taxable year as modified by paragraph (2).
23        (2) Modifications. The taxable income referred to in
24    paragraph (1) shall be modified by adding thereto the sum
25    of the following amounts:

 

 

HB6208- 28 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 29 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 30 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 31 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 32 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 33 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 34 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 35 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 36 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 37 -LRB097 22302 HLH 71055 b

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

 

 

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1        modification required under Section 203(b)(2)(E-12) or
2        Section 203(b)(2)(E-13) of this Act;
3            (E-15) For taxable years beginning after December
4        31, 2008, any deduction for dividends paid by a captive
5        real estate investment trust that is allowed to a real
6        estate investment trust under Section 857(b)(2)(B) of
7        the Internal Revenue Code for dividends paid;
8            (E-16) An amount equal to the credit allowable to
9        the taxpayer under Section 218(a) of this Act,
10        determined without regard to Section 218(c) of this
11        Act;
12    and by deducting from the total so obtained the sum of the
13    following amounts:
14            (F) An amount equal to the amount of any tax
15        imposed by this Act which was refunded to the taxpayer
16        and included in such total for the taxable year;
17            (G) An amount equal to any amount included in such
18        total under Section 78 of the Internal Revenue Code;
19            (H) In the case of a regulated investment company,
20        an amount equal to the amount of exempt interest
21        dividends as defined in subsection (b) (5) of Section
22        852 of the Internal Revenue Code, paid to shareholders
23        for the taxable year;
24            (I) With the exception of any amounts subtracted
25        under subparagraph (J), an amount equal to the sum of
26        all amounts disallowed as deductions by (i) Sections

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB6208- 44 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 45 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 46 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 47 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 48 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 49 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 50 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 51 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 52 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 53 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 54 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 55 -LRB097 22302 HLH 71055 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        taxable income as modified by subparagraphs (A), (B),
2        (C), (D), (E), (F) and (G) which are exempt from
3        taxation by this State either by reason of its statutes
4        or Constitution or by reason of the Constitution,
5        treaties or statutes of the United States; provided
6        that, in the case of any statute of this State that
7        exempts income derived from bonds or other obligations
8        from the tax imposed under this Act, the amount
9        exempted shall be the interest net of bond premium
10        amortization;
11            (L) With the exception of any amounts subtracted
12        under subparagraph (K), an amount equal to the sum of
13        all amounts disallowed as deductions by (i) Sections
14        171(a) (2) and 265(a)(2) of the Internal Revenue Code,
15        and all amounts of expenses allocable to interest and
16        disallowed as deductions by Section 265(1) of the
17        Internal Revenue Code; and (ii) for taxable years
18        ending on or after August 13, 1999, Sections 171(a)(2),
19        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
20        Code, plus, (iii) for taxable years ending on or after
21        December 31, 2011, Section 45G(e)(3) of the Internal
22        Revenue Code and, for taxable years ending on or after
23        December 31, 2008, any amount included in gross income
24        under Section 87 of the Internal Revenue Code; the
25        provisions of this subparagraph are exempt from the
26        provisions of Section 250;

 

 

HB6208- 64 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 65 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 66 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 67 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 68 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 69 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 70 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 71 -LRB097 22302 HLH 71055 b

1        exempt from the provisions of Section 250; and
2            (Y) For taxable years ending on or after December
3        31, 2011, in the case of a taxpayer who was required to
4        add back any insurance premiums under Section
5        203(c)(2)(G-14), such taxpayer may elect to subtract
6        that part of a reimbursement received from the
7        insurance company equal to the amount of the expense or
8        loss (including expenses incurred by the insurance
9        company) that would have been taken into account as a
10        deduction for federal income tax purposes if the
11        expense or loss had been uninsured. If a taxpayer makes
12        the election provided for by this subparagraph (Y), the
13        insurer to which the premiums were paid must add back
14        to income the amount subtracted by the taxpayer
15        pursuant to this subparagraph (Y). This subparagraph
16        (Y) is exempt from the provisions of Section 250; and .
17            (Z) For taxable years ending on or after December
18        31, 2012, an amount equal to any amount received by the
19        taxpayer during the taxable year as an honorarium
20        associated with competing in the Olympic or Paralympic
21        Games.
22        (3) Limitation. The amount of any modification
23    otherwise required under this subsection shall, under
24    regulations prescribed by the Department, be adjusted by
25    any amounts included therein which were properly paid,
26    credited, or required to be distributed, or permanently set

 

 

HB6208- 72 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 73 -LRB097 22302 HLH 71055 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        subsections (c) and (d) of Section 201 of this Act
2        including amounts distributable to organizations
3        exempt from federal income tax by reason of Section
4        501(a) of the Internal Revenue Code; this subparagraph
5        (I) is exempt from the provisions of Section 250;
6            (J) With the exception of any amounts subtracted
7        under subparagraph (G), an amount equal to the sum of
8        all amounts disallowed as deductions by (i) Sections
9        171(a) (2), and 265(2) of the Internal Revenue Code,
10        and all amounts of expenses allocable to interest and
11        disallowed as deductions by Section 265(1) of the
12        Internal Revenue Code; and (ii) for taxable years
13        ending on or after August 13, 1999, Sections 171(a)(2),
14        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
15        Code, plus, (iii) for taxable years ending on or after
16        December 31, 2011, Section 45G(e)(3) of the Internal
17        Revenue Code and, for taxable years ending on or after
18        December 31, 2008, any amount included in gross income
19        under Section 87 of the Internal Revenue Code; the
20        provisions of this subparagraph are exempt from the
21        provisions of Section 250;
22            (K) An amount equal to those dividends included in
23        such total which were paid by a corporation which
24        conducts business operations in an Enterprise Zone or
25        zones created under the Illinois Enterprise Zone Act,
26        enacted by the 82nd General Assembly, or a River Edge

 

 

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

 

 

HB6208- 84 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 85 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 86 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 87 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 88 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 89 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 90 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 91 -LRB097 22302 HLH 71055 b

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

 

 

HB6208- 92 -LRB097 22302 HLH 71055 b

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

 

 

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

 

 

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

 

 

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

 

 

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1account in determining gross income, adjusted gross income or
2taxable income for federal income tax purposes for the taxable
3year, or in the amount of such items entering into the
4computation of base income and net income under this Act for
5such taxable year, whether in respect of property values as of
6August 1, 1969 or otherwise.
7(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
8eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
996-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
106-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
11eff. 8-23-11.)
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.