Rep. Barbara Flynn Currie

Filed: 11/7/2011

 

 


 

 


 
09700SB0397ham002LRB097 04209 HLH 59582 a

1
AMENDMENT TO SENATE BILL 397

2    AMENDMENT NO. ______. Amend Senate Bill 397 by replacing
3everything after the enacting clause with the following:
 
4    "Section 3. The Economic Development Area Tax Increment
5Allocation Act is amended by changing Sections 3, 4, 5, 8, 9,
6and 11 and by adding Section 4.5 as follows:
 
7    (20 ILCS 620/3)  (from Ch. 67 1/2, par. 1003)
8    Sec. 3. Definitions. In this Act, words or terms shall have
9the following meanings unless the context or usage clearly
10indicates that another meaning is intended.
11    (a) "Department" means the Department of Commerce and
12Economic Opportunity.
13    (b) "Economic development plan" means the written plan of a
14municipality which sets forth an economic development program
15for an economic development project area. Each economic
16development plan shall include but not be limited to (1)

 

 

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1estimated economic development project costs, (2) the sources
2of funds to pay such costs, (3) the nature and term of any
3obligations to be issued by the municipality to pay such costs,
4(4) the most recent equalized assessed valuation of the
5economic development project area, (5) an estimate of the
6equalized assessed valuation of the economic development
7project area after completion of an economic development
8project, (6) the estimated date of completion of any economic
9development project proposed to be undertaken, (7) a general
10description of any proposed developer, user, or tenant of any
11property to be located or improved within the economic
12development project area, (8) a description of the type,
13structure and general character of the facilities to be
14developed or improved in the economic development project area,
15(9) a description of the general land uses to apply in the
16economic development project area, (10) a description of the
17type, class and number of employees to be employed in the
18operation of the facilities to be developed or improved in the
19economic development project area, and (11) a commitment by the
20municipality to fair employment practices and an affirmative
21action plan with respect to any economic development program to
22be undertaken by the municipality.
23    (c) "Economic development project" means any development
24project in furtherance of the objectives of this Act.
25    (d) "Economic development project area" means any improved
26or vacant area which (1) is located within or partially within

 

 

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1or partially without the territorial limits of a municipality,
2provided that no area without the territorial limits of a
3municipality shall be included in an economic development
4project area without the express consent of the Department,
5acting as agent for the State, (2) is contiguous, (3) is not
6less in the aggregate than three hundred twenty acres, (4) is
7suitable for siting by any commercial, manufacturing,
8industrial, research or transportation enterprise of
9facilities to include but not be limited to commercial
10businesses, offices, factories, mills, processing plants,
11assembly plants, packing plants, fabricating plants,
12industrial or commercial distribution centers, warehouses,
13repair overhaul or service facilities, freight terminals,
14research facilities, test facilities or transportation
15facilities, whether or not such area has been used at any time
16for such facilities and whether or not the area has been used
17or is suitable for other uses, including commercial
18agricultural purposes, and (5) which has been approved and
19certified by the Department pursuant to this Act.
20    (e) "Economic development project costs" mean and include
21the sum total of all reasonable or necessary costs incurred by
22a municipality incidental to an economic development project,
23including, without limitation, the following:
24    (1) Costs of studies, surveys, development of plans and
25specifications, implementation and administration of an
26economic development plan, personnel and professional service

 

 

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1costs for architectural, engineering, legal, marketing,
2financial, planning, police, fire, public works or other
3services, provided that no charges for professional services
4may be based on a percentage of incremental tax revenues;
5    (2) Property assembly costs within an economic development
6project area, including but not limited to acquisition of land
7and other real or personal property or rights or interests
8therein, and specifically including payments to developers or
9other nongovernmental persons as reimbursement for property
10assembly costs incurred by such developer or other
11nongovernmental person;
12    (3) Site preparation costs, including but not limited to
13clearance of any area within an economic development project
14area by demolition or removal of any existing buildings,
15structures, fixtures, utilities and improvements and clearing
16and grading; and including installation, repair, construction,
17reconstruction, or relocation of public streets, public
18utilities, and other public site improvements within or without
19an economic development project area which are essential to the
20preparation of the economic development project area for use in
21accordance with an economic development plan; and specifically
22including payments to developers or other nongovernmental
23persons as reimbursement for site preparation costs incurred by
24such developer or nongovernmental person;
25    (4) Costs of renovation, rehabilitation, reconstruction,
26relocation, repair or remodeling of any existing buildings,

 

 

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1improvements, and fixtures within an economic development
2project area, and specifically including payments to
3developers or other nongovernmental persons as reimbursement
4for such costs incurred by such developer or nongovernmental
5person;
6    (5) Costs of construction, acquisition, and operation
7within an economic development project area of public
8improvements, including but not limited to, publicly-owned
9buildings, structures, works, utilities or fixtures;
10    (6) Financing costs, including but not limited to all
11necessary and incidental expenses related to the issuance of
12obligations, payment of any interest on any obligations issued
13hereunder which accrues during the estimated period of
14construction of any economic development project for which such
15obligations are issued and for not exceeding 36 months
16thereafter, and any reasonable reserves related to the issuance
17of such obligations;
18    (7) All or a portion of a taxing district's capital costs
19resulting from an economic development project necessarily
20incurred or estimated to be incurred by a taxing district in
21the furtherance of the objectives of an economic development
22project, to the extent that the municipality by written
23agreement accepts and approves such costs;
24    (8) Relocation costs to the extent that a municipality
25determines that relocation costs shall be paid or is required
26to make payment of relocation costs by federal or State law;

 

 

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1    (9) The estimated tax revenues from real property in an
2economic development project area acquired by a municipality
3which, according to the economic development plan, is to be
4used for a private use and which any taxing district would have
5received had the municipality not adopted tax increment
6allocation financing for an economic development project area
7and which would result from such taxing district's levies made
8after the time of the adoption by the municipality of tax
9increment allocation financing to the time the current
10equalized assessed value of real property in the economic
11development project area exceeds the total initial equalized
12value of real property in said area;
13    (10) Costs of job training, advanced vocational or career
14education, including but not limited to courses in
15occupational, semi-technical or technical fields leading
16directly to employment, incurred by one or more taxing
17districts, provided that such costs are related to the
18establishment and maintenance of additional job training,
19advanced vocational education or career education programs for
20persons employed or to be employed by employers located in an
21economic development project area, and further provided that
22when such costs are incurred by a taxing district or taxing
23districts other than the municipality they shall be set forth
24in a written agreement by or among the municipality and the
25taxing district or taxing districts, which agreement describes
26the program to be undertaken, including but not limited to the

 

 

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1number of employees to be trained, a description of the
2training and services to be provided, the number and type of
3positions available or to be available, itemized costs of the
4program and sources of funds to pay the same, and the term of
5the agreement. Such costs include, specifically, the payment by
6community college districts of costs pursuant to Sections 3-37,
73-38, 3-40 and 3-40.1 of the Public Community College Act and
8by school districts of costs pursuant to Sections 10-22.20a and
910-23.3a of The School Code;
10    (11) Private financing costs incurred by developers or
11other nongovernmental persons in connection with an economic
12development project, and specifically including payments to
13developers or other nongovernmental persons as reimbursement
14for such costs incurred by such developer or other
15nongovernmental person, provided that:
16    (A) private financing costs shall be paid or reimbursed by
17a municipality only pursuant to the prior official action of
18the municipality evidencing an intent to pay or reimburse such
19private financing costs;
20    (B) except as provided in subparagraph (D), the aggregate
21amount of such costs paid or reimbursed by a municipality in
22any one year shall not exceed 30% of such costs paid or
23incurred by the developer or other nongovernmental person in
24that year;
25    (C) private financing costs shall be paid or reimbursed by
26a municipality solely from the special tax allocation fund

 

 

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1established pursuant to this Act and shall not be paid or
2reimbursed from the proceeds of any obligations issued by a
3municipality;
4    (D) if there are not sufficient funds available in the
5special tax allocation fund in any year to make such payment or
6reimbursement in full, any amount of such interest cost
7remaining to be paid or reimbursed by a municipality shall
8accrue and be payable when funds are available in the special
9tax allocation fund to make such payment; and
10    (E) in connection with its approval and certification of an
11economic development project pursuant to Section 5 of this Act,
12the Department shall review any agreement authorizing the
13payment or reimbursement by a municipality of private financing
14costs in its consideration of the impact on the revenues of the
15municipality and the affected taxing districts of the use of
16tax increment allocation financing.
17    (f) "Municipality" means a city, village or incorporated
18town.
19    (g) "Obligations" means any instrument evidencing the
20obligation of a municipality to pay money, including without
21limitation, bonds, notes, installment or financing contracts,
22certificates, tax anticipation warrants or notes, vouchers,
23and any other evidence of indebtedness.
24    (h) "Taxing districts" means counties, townships,
25municipalities, and school, road, park, sanitary, mosquito
26abatement, forest preserve, public health, fire protection,

 

 

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1river conservancy, tuberculosis sanitarium and any other
2municipal corporations or districts with the power to levy
3taxes.
4(Source: P.A. 94-793, eff. 5-19-06.)
 
5    (20 ILCS 620/4)  (from Ch. 67 1/2, par. 1004)
6    Sec. 4. Establishment of economic development project
7areas; ordinance; notice; hearing; changes in economic
8development plan. Economic development project areas shall be
9established as follows:
10    (a) The corporate authorities of a municipality shall by
11ordinance propose the establishment of an economic development
12project area and fix a time and place for a public hearing, and
13shall submit a certified copy of the ordinance as adopted to
14the Department.
15    (b) (1) Notice of the public hearing shall be given by
16publication and mailing. Notice by publication shall be given
17by publication at least twice, the first publication to be not
18more than 30 nor less than 10 days prior to the hearing in a
19newspaper of general circulation within the taxing districts
20having property in the proposed economic development project
21area. Notice by mailing shall be given by depositing such
22notice together with a copy of the proposed economic
23development plan in the United States mails by certified mail
24addressed to the person or persons in whose name the general
25taxes for the last preceding year were paid on each lot, block,

 

 

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1tract, or parcel of land lying within the economic development
2project area. The notice shall be mailed not less than 10 days
3prior to the date set for the public hearing. In the event
4taxes for the last preceding year were not paid, the notice
5shall also be sent to the persons last listed on the tax rolls
6within the preceding 3 years as the owners of such property.
7    (2) The notices issued pursuant to this Section shall
8include the following:
9    (A) The time and place of public hearing;
10    (B) The boundaries of the proposed economic development
11project area by legal description and by street location where
12possible;
13    (C) A notification that all interested persons will be
14given an opportunity to be heard at the public hearing;
15    (D) An invitation for any person to submit alternative
16proposals or bids for any proposed conveyance, lease, mortgage
17or other disposition of land within the proposed economic
18development project area;
19    (E) A description of the economic development plan or
20economic development project if a plan or project is a subject
21matter of the hearing; and
22    (F) Such other matters as the municipality may deem
23appropriate.
24    (3) Not less than 30 days prior to the date set for
25hearing, the municipality shall give notice by mail as provided
26in this subsection (b) to all taxing districts, of which

 

 

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1taxable property is included in the economic development
2project area, and to the Department. In addition to the other
3requirements under this subsection (b), the notice shall
4include an invitation to the Department and each taxing
5district to submit comments to the municipality concerning the
6subject matter of the hearing prior to the date of hearing.
7    (c) At the public hearing any interested person, the
8Department or any affected taxing district may file written
9objections with the municipal clerk and may be heard orally
10with respect to any issues embodied in the notice. The
11municipality shall hear and determine all alternate proposals
12or bids for any proposed conveyance, lease, mortgage or other
13disposition of land and all protests and objections at the
14hearing, and the hearing may be adjourned to another date
15without further notice other than a motion to be entered upon
16the minutes fixing the time and place of the adjourned hearing.
17Public hearings with regard to an economic development plan,
18economic development project area, or economic development
19project may be held simultaneously.
20    (d) At the public hearing or at any time prior to the
21adoption by the municipality of an ordinance approving an
22economic development plan, the municipality may make changes in
23the economic development plan. Changes which (1) alter the
24exterior boundaries of the proposed economic development
25project area, (2) substantially affect the general land uses
26established in the proposed economic development plan, (3)

 

 

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1substantially change the nature of the proposed economic
2development project, (4) change the general description of any
3proposed developer, user or tenant of any property to be
4located or improved within the economic development project
5area, or (5) change the description of the type, class and
6number of employees to be employed in the operation of the
7facilities to be developed or improved within the economic
8development project area shall be made only after notice and
9hearing pursuant to the procedures set forth in this Section.
10Changes which do not (1) alter the exterior boundaries of a
11proposed economic development project area, (2) substantially
12affect the general land uses established in the proposed
13economic development plan, (3) substantially change the nature
14of the proposed economic development project, (4) change the
15general description of any proposed developer, user or tenant
16of any property to be located or improved within the economic
17development project area, or (5) change the description of the
18type, class and number of employees to be employed in the
19operation of the facilities to be developed or improved within
20the economic development project area may be made without
21further hearing, provided that the municipality shall give
22notice of its changes by mail to the Department and to each
23affected taxing district and by publication in a newspaper or
24newspapers of general circulation within the affected taxing
25districts. Such notice by mail and by publication shall each
26occur not later than 10 days following the adoption by

 

 

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1ordinance of such changes.
2    (e) At any time within 30 days of the final adjournment of
3the public hearing, a municipality may, by ordinance, approve
4the economic development plan, establish the economic
5development project area, and authorize tax increment
6allocation financing for such economic development project
7area. Any ordinance adopted which approves an economic
8development plan shall contain findings that the economic
9development project shall create or retain not less than 4,250
102,000 full-time equivalent jobs, that private investment in an
11amount not less than $100,000,000 shall occur in the economic
12development project area, that the economic development
13project will encourage the increase of commerce and industry
14within the State, thereby reducing the evils attendant upon
15unemployment and increasing opportunities for personal income,
16and that the economic development project will increase or
17maintain the property, sales and income tax bases of the
18municipality and of the State. Any ordinance adopted which
19establishes an economic development project area shall contain
20the boundaries of such area by legal description and, where
21possible, by street location. Any ordinance adopted which
22authorizes tax increment allocation financing shall provide
23that the ad valorem taxes, if any, arising from the levies upon
24taxable real property in such economic development project area
25by taxing districts and tax rates determined in the manner
26provided in subsection (b) of Section 6 of this Act each year

 

 

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1after the effective date of the ordinance until economic
2development project costs and all municipal obligations
3financing economic development project costs incurred under
4this Act have been paid shall be divided as follows:
5    (1) That portion of taxes levied upon each taxable lot,
6block, tract or parcel of real property which is attributable
7to the lower of the current equalized assessed value or the
8initial equalized assessed value of each such taxable lot,
9block, tract or parcel of real property in the economic
10development project area shall be allocated to and when
11collected shall be paid by the county collector to the
12respective affected taxing districts in the manner required by
13law in the absence of the adoption of tax increment allocation
14financing.
15    (2) That portion, if any, of such taxes which is
16attributable to the increase in the current equalized assessed
17valuation of each taxable lot, block, tract or parcel of real
18property in the economic development project area over and
19above the initial equalized assessed value of each property in
20the economic development project area shall be allocated to and
21when collected shall be paid to the municipal treasurer who
22shall deposit such taxes into a special fund called the special
23tax allocation fund of the municipality for the purpose of
24paying economic development project costs and obligations
25incurred in the payment thereof.
26    (f) After a municipality has by ordinance approved an

 

 

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1economic development plan and established an economic
2development project area, the plan may be amended and the
3boundaries of the area may be altered only as herein provided.
4Amendments which (1) alter the exterior boundaries of an
5economic development project area, (2) substantially affect
6the general land uses established pursuant to the economic
7development plan, (3) substantially change the nature of the
8economic development project, (4) change the general
9description of any proposed developer, user, or tenant of any
10property to be located or improved within the economic
11development project area, or (5) change the description of the
12type, class and number of employees to be employed in the
13operation of the facilities to be developed or improved within
14the economic development project area, shall be made only after
15notice and hearing pursuant to the procedures set forth in this
16Section. Amendments which do not (1) alter the boundaries of
17the economic development project area, (2) substantially
18affect the general land uses established in the economic
19development plan, (3) substantially change the nature of the
20economic development project, (4) change the general
21description of any proposed developer, user, or tenant of any
22property to be located or improved within the economic
23development project area, or (5) change the description of the
24type, class and number of employees to be employed in the
25operation of the facilities to be developed or improved within
26the economic development project area may be made without

 

 

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1further hearing, provided that the municipality shall give
2notice of any amendment by mail to the Department and to each
3taxing district and by publication in a newspaper or newspapers
4of general circulation within the affected taxing districts.
5Such notice by mail and by publication shall each occur not
6later than 10 days following the adoption by ordinance of any
7amendments.
8    (g) Extension of economic development project area;
9allocations; payment of outstanding claims; changes in
10equalized assessed valuation.
11    (1) Notwithstanding anything to the contrary set forth in
12this Act, upon the effective date of this amendatory Act of the
1397th General Assembly, the duration of any existing economic
14development plan created pursuant to this Act is extended to
15the maximum duration permitted under Section 8 of this Act.
16    (2) For the purposes of this Section, real estate taxes
17paid on property within the Economic Development Project Area
18during calendar year 2013 and remitted to the parties to the
19Economic Development Agreement in 2014 shall be the "base
20amount". Beginning with real estate taxes remitted in 2014, for
21any economic development plan extended by operation of item (1)
22of this subsection (g), until such time as all obligations to
23the Developer have been satisfied, the allocation of the
24special tax allocation fund shall be as follows:
25        (A) Municipality: All receipts up to and including $5
26    million (inclusive of amounts due the municipality as a

 

 

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1    participating taxing district);
2        (B) Developer: 55% of receipts above $5 million;
3        (C) Taxing Districts: 45% of receipts above $5 million
4    (excluding amounts due the municipality as a participating
5    taxing district).
6    Except as provided in this paragraph, after all current and
7future obligations under the Economic Development Agreement to
8the developer have been satisfied, the municipality shall
9receive $5 million annually (inclusive of the amount due the
10municipality as a taxing district) and the taxing districts
11shall receive the remainder in the same manner and proportion
12as the most recent distribution by the county collector to
13those taxing districts in the Economic Development Project
14Area. In the event real estate taxes collected on property
15within the Economic Development Project Area increase in any
16year by an amount sufficient to generate a distribution of more
17than $5 million for the municipality, as determined by
18calculating the distribution to the municipality in the same
19manner and proportion as the most recent distribution by the
20county collector to the municipality from real property taxes
21from real property in the Economic Development Project Area,
22without regard to the Economic Development Agreement, the
23municipality shall be entitled to its proportionate share of
24the increase as a taxing district.
25    (3) For real estate taxes paid in 2012 and remitted to the
26parties to the Economic Development Agreement in 2013 and prior

 

 

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1years, the allocation formula contained in any economic
2development plan in effect immediately prior to the effective
3date of this amendatory Act of the 97th General Assembly shall
4apply.
5    (4) All notes due and payable shall be processed and paid
6in the order received, with the oldest notes to be processed
7and paid first. Beginning January 1, 2012, all outstanding
8interest bearing notes shall bear interest at the rate of 4%
9until paid.
10    (5) Beginning with real estate taxes paid in 2014 and
11remitted to the parties to the Economic Development Agreement
12in 2015, and each year thereafter, in the event the taxes paid
13within the Economic Development Project Area change from the
14base amount, the allocation of the special tax allocation fund
15shall be as follows:
16        (A) If the amount of current year taxes paid is less
17    than the base amount, then the municipality shall receive
18    the first $5 million and the remaining allocations from the
19    special tax allocation fund to the developer and the taxing
20    districts shall be reduced pro rata.
21        (B) If the amount of current year taxes paid is greater
22    than the base amount, then 75% of the increase in real
23    estate tax receipts shall be payable to the developer, with
24    the remaining 25% of those additional receipts being
25    distributed in the taxing districts (including the
26    municipality) pursuant to the formula in this subsection.

 

 

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1    Prorations required by this Section shall be made based
2    upon the actual taxes collected during the year, without
3    regard to the date of the levy.
4(Source: P.A. 86-38.)
 
5    (20 ILCS 620/4.5 new)
6    Sec. 4.5. Recapture. In the event that the Developer
7terminates all of its operations and vacates the redevelopment
8area within 60 months after the effective date of this
9amendatory Act of the 97th General Assembly, the developer
10shall be required to remit to the Department an amount equal to
11the payments disbursed to the developer in 2014 and subsequent
12years under the Agreement. Within 30 days after receipt, the
13Department shall remit such funds to the county collector. The
14county collector shall thereafter make distribution to the
15respective taxing districts in the same manner and proportion
16as the most recent distribution by the county collector to
17those taxing districts of real property taxes from real
18property in the Economic Development Project Area.
 
19    (20 ILCS 620/5)  (from Ch. 67 1/2, par. 1005)
20    Sec. 5. Submission to Department; certification by
21Department; limitation on number of permissible economic
22development project areas. (a) The municipality shall submit
23certified copies of any ordinances adopted approving an
24economic development plan, establishing an economic

 

 

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1development project area, and authorizing tax increment
2allocation financing for such economic development project
3area to the Department, together with (1) a map of the economic
4development project area, (2) a copy of the economic
5development plan as approved, (3) an analysis, and any
6supporting documents and statistics, demonstrating that the
7economic development project shall create or retain not less
8than 4,250 2,000 full-time equivalent jobs and that private
9investment in the amount of not less than $100,000,000 shall
10occur in the economic development project area, (4) an estimate
11of the economic impact of the economic development project and
12the use of tax increment allocation financing upon the revenues
13of the municipality and the affected taxing districts, (5) a
14record of all public hearings had in connection with the
15establishment of the economic development project area, and (6)
16such other information as the Department by regulation may
17require.
18    (b) Upon receipt of an application from a municipality the
19Department shall review the application to determine whether
20the economic development project area qualifies as an economic
21development project area under this Act. At its discretion, the
22Department may accept or reject the application or may request
23such additional information as it deems necessary or advisable
24to aid its review. If any such area is found to be qualified to
25be an economic development project area, the Department shall
26approve and certify such economic development project area and

 

 

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1shall provide written notice of its approval and certification
2to the municipality and to the county clerk. In determining
3whether an economic development project area shall be approved
4and certified, the Department shall consider (1) whether,
5without public intervention, the State would suffer
6substantial economic dislocation, such as relocation of a
7commercial business or industrial or manufacturing facility to
8another state, territory or country, or would not otherwise
9benefit from private investment offering substantial
10employment opportunities and economic growth, and (2) the
11impact on the revenues of the municipality and the affected
12taxing districts of the use of tax increment allocation
13financing in connection with the economic development project.
14    (c) On or before the date which is 18 months following the
15date on which this Act becomes law, the Department shall submit
16to the General Assembly a report detailing the number of
17economic development project areas it has approved and
18certified, the number and type of jobs created or retained
19therein, the aggregate amount of private investment therein,
20the impact on the revenues of municipalities and affected
21taxing districts of the use of tax increment allocation
22financing therein, and such additional information as the
23Department may determine to be relevant. On or after the date
24which is 20 months following the date on which this Act becomes
25law the authority granted hereunder to municipalities to
26establish economic development project areas and to adopt tax

 

 

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1increment allocation financing in connection therewith and to
2the Department to approve and certify economic development
3project areas shall expire unless the General Assembly shall
4have authorized municipalities and the Department to continue
5to exercise the powers granted to them hereunder.
6(Source: P.A. 86-38.)
 
7    (20 ILCS 620/8)  (from Ch. 67 1/2, par. 1008)
8    Sec. 8. Issuance of obligations for economic development
9project costs. Obligations secured by the special tax
10allocation fund provided for in Section 7 of this Act for an
11economic development project area may be issued to provide for
12economic development project costs. Those obligations, when so
13issued, shall be retired in the manner provided in the
14ordinance authorizing the issuance of the obligations by the
15receipts of taxes levied as specified in Section 6 of this Act
16against the taxable property included in the economic
17development project area and by other revenue designated or
18pledged by the municipality. A municipality may in the
19ordinance pledge all or any part of the funds in and to be
20deposited in the special tax allocation fund created pursuant
21to Section 7 of this Act to the payment of the economic
22development project costs and obligations. Whenever a
23municipality pledges all of the funds to the credit of a
24special tax allocation fund to secure obligations issued or to
25be issued to pay economic development project costs, the

 

 

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1municipality may specifically provide that funds remaining to
2the credit of such special tax allocation fund after the
3payment of such obligations shall be accounted for annually and
4shall be deemed to be "surplus" funds, and such "surplus" funds
5shall be distributed as hereinafter provided. Whenever a
6municipality pledges less than all of the monies to the credit
7of a special tax allocation fund to secure obligations issued
8or to be issued to pay economic development project costs, the
9municipality shall provide that monies to the credit of the
10special tax allocation fund and not subject to such pledge or
11otherwise encumbered or required for payment of contractual
12obligations for specific economic development project costs
13shall be calculated annually and shall be deemed to be
14"surplus" funds, and such "surplus" funds shall be distributed
15as hereinafter provided. All funds to the credit of a special
16tax allocation fund which are deemed to be "surplus" funds
17shall be distributed annually within 180 days of the close of
18the municipality's fiscal year by being paid by the municipal
19treasurer to the county collector. The county collector shall
20thereafter make distribution to the respective taxing
21districts in the same manner and proportion as the most recent
22distribution by the county collector to those taxing districts
23of real property taxes from real property in the economic
24development project area.
25    Without limiting the foregoing in this Section the
26municipality may, in addition to obligations secured by the

 

 

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1special tax allocation fund, pledge for a period not greater
2than the term of the obligations towards payment of those
3obligations any part or any combination of the following: (i)
4net revenues of all or part of any economic development
5project; (ii) taxes levied and collected on any or all property
6in the municipality, including, specifically, taxes levied or
7imposed by the municipality in a special service area pursuant
8to "An Act to provide the manner of levying or imposing taxes
9for the provision of special services to areas within the
10boundaries of home rule units and non-home rule municipalities
11and counties", approved September 21, 1973, as now or hereafter
12amended; (iii) the full faith and credit of the municipality;
13(iv) a mortgage on part or all of the economic development
14project; or (v) any other taxes or anticipated receipts that
15the municipality may lawfully pledge.
16    Such obligations may be issued in one or more series
17bearing interest at such rate or rates as the corporate
18authorities of the municipality shall determine by ordinance,
19which rate or rates may be variable or fixed, without regard to
20any limitations contained in any law now in effect or hereafter
21adopted. Such obligations shall bear such date or dates, mature
22at such time or times not exceeding 38 20 years from their
23respective dates, but in no event exceeding 38 23 years from
24the date of establishment of the economic development project
25area, be in such denomination, be in such form, whether coupon,
26registered or book-entry, carry such registration, conversion

 

 

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1and exchange privileges, be executed in such manner, be payable
2in such medium of payment at such place or places within or
3without the State of Illinois, contain such covenants, terms
4and conditions, be subject to redemption with or without
5premium, be subject to defeasance upon such terms, and have
6such rank or priority, as such ordinance shall provide.
7Obligations issued pursuant to this Act may be sold at public
8or private sale at such price as shall be determined by the
9corporate authorities of the municipalities. Such obligations
10may, but need not, be issued utilizing the provisions of any
11one or more of the omnibus bond Acts specified in Section 1.33
12of "An Act to revise the law in relation to the construction of
13the statutes", approved March 5, 1874, as now or hereafter
14amended. No referendum approval of the electors shall be
15required as a condition to the issuance of obligations pursuant
16to this Act except as provided in this Section.
17    Whenever a municipality issues bonds for the purpose of
18financing economic development project costs, the municipality
19may provide by ordinance for the appointment of a trustee,
20which may be any trust company within the State, and for the
21establishment of the funds or accounts to be maintained by such
22trustee as the municipality shall deem necessary to provide for
23the security and payment of the bonds. If the municipality
24provides for the appointment of a trustee, the trustee shall be
25considered the assignee of any payments assigned by the
26municipality pursuant to the ordinance and this Section. Any

 

 

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1amounts paid to the trustee as assignee shall be deposited in
2the funds or accounts established pursuant to the trust
3agreement, and shall be held by the trustee in trust for the
4benefit of the holders of the bonds, and the holders shall have
5a lien on and a security interest in those bonds or accounts so
6long as the bonds remain outstanding and unpaid. Upon
7retirement of the bonds, the trustee shall pay over any excess
8amounts held to the municipality for deposit in the special tax
9allocation fund.
10    In the event the municipality authorizes the issuance of
11obligations pursuant to the authority of this Act secured by
12the full faith and credit of the municipality, or pledges ad
13valorem taxes pursuant to clause (ii) of the second paragraph
14of this Section, which obligations are other than obligations
15which may be issued under home rule powers provided by Article
16VII, Section 6 of the Illinois Constitution or which ad valorem
17taxes are other than ad valorem taxes which may be pledged
18under home rule powers provided by Article VII, Section 6 of
19the Illinois Constitution or which are levied in a special
20service area pursuant to "An Act to provide the manner of
21levying or imposing taxes for the provision of special services
22to areas within the boundaries of home rule units and non-home
23rule municipalities and counties", approved September 21,
241973, as now or hereafter amended, the ordinance authorizing
25the issuance of those obligations or pledging those taxes shall
26be published within 10 days after the ordinance has been

 

 

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1adopted, in one or more newspapers having a general circulation
2within the municipality. The publication of the ordinance shall
3be accompanied by a notice of (1) the specific number of voters
4required to sign a petition requesting the question of the
5issuance of the obligations or pledging such ad valorem taxes
6to be submitted to the electors; (2) the time within which the
7petition must be filed; and (3) the date of the prospective
8referendum. The municipal clerk shall provide a petition form
9to any individual requesting one.
10    If no petition is filed with the municipal clerk, as
11hereinafter provided in this Section, within 21 days after the
12publication of the ordinance, the ordinance shall be in effect.
13However, if within that 21 day period a petition is filed with
14the municipal clerk, signed by electors numbering not less than
1515% of the number of electors voting for the mayor or president
16at the last general municipal election, asking that the
17question of issuing obligations using full faith and credit of
18the municipality as security for the cost of paying for
19economic development project costs, or of pledging such ad
20valorem taxes for the payment of those obligations, or both, be
21submitted to the electors of the municipality, the municipality
22shall not be authorized to issue obligations of the
23municipality using the full faith and credit of the
24municipality as security or pledging such ad valorem taxes for
25the payment of those obligations, or both, until the
26proposition has been submitted to and approved by a majority of

 

 

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1the voters voting on the proposition at a regularly scheduled
2election. The municipality shall certify the proposition to the
3proper election authorities for submission in accordance with
4the general election law.
5    The ordinance authorizing the obligations may provide that
6the obligations shall contain a recital that they are issued
7pursuant to this Act, which recital shall be conclusive
8evidence of their validity and of the regularity of their
9issuance.
10    In the event the municipality authorizes issuance of
11obligations pursuant to this Act secured by the full faith and
12credit of the municipality, the ordinance authorizing the
13obligations may provide for the levy and collection of a direct
14annual tax upon all taxable property within the municipality
15sufficient to pay the principal thereof and interest thereon as
16it matures, which levy may be in addition to and exclusive of
17the maximum of all other taxes authorized to be levied by the
18municipality, which levy, however, shall be abated to the
19extent that monies from other sources are available for payment
20of the obligations and the municipality certifies the amount of
21those monies available to the county clerk.
22    A certified copy of the ordinance shall be filed with the
23county clerk of each county in which any portion of the
24municipality is situated, and shall constitute the authority
25for the extension and collection of the taxes to be deposited
26in the special tax allocation fund.

 

 

09700SB0397ham002- 29 -LRB097 04209 HLH 59582 a

1    A municipality may also issue its obligations to refund, in
2whole or in part, obligations theretofore issued by the
3municipality under the authority of this Act, whether at or
4prior to maturity. However, the last maturity of the refunding
5obligations shall not be expressed to mature later than 38 23
6years from the date of the ordinance establishing the economic
7development project area.
8    In the event a municipality issues obligations under home
9rule powers or other legislative authority, the proceeds of
10which are pledged to pay for economic development project
11costs, the municipality may, if it has followed the procedures
12in conformance with this Act, retire those obligations from
13funds in the special tax allocation fund in amounts and in such
14manner as if those obligations had been issued pursuant to the
15provisions of this Act.
16    No obligations issued pursuant to this Act shall be
17regarded as indebtedness of the municipality issuing those
18obligations or any other taxing district for the purpose of any
19limitation imposed by law.
20    Obligations issued pursuant to this Act shall not be
21subject to the provisions of "An Act to authorize public
22corporations to issue bonds, other evidences of indebtedness
23and tax anticipation warrants subject to interest rate
24limitations set forth therein", approved May 26, 1970, as
25amended.
26(Source: P.A. 86-38.)
 

 

 

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1    (20 ILCS 620/9)  (from Ch. 67 1/2, par. 1009)
2    Sec. 9. Powers of municipalities. In addition to powers
3which it may now have, any municipality has the power under
4this Act:
5    (a) To make and enter into all contracts necessary or
6incidental to the implementation and furtherance of an economic
7development plan.
8    (b) Within an economic development project area, to acquire
9by purchase, donation, lease or eminent domain, and to own,
10convey, lease, mortgage or dispose of land and other real or
11personal property or rights or interests therein; and to grant
12or acquire licenses, easements and options with respect
13thereto, all in the manner and at such price the municipality
14determines is reasonably necessary to achieve the objectives of
15the economic development project. No conveyance, lease,
16mortgage, disposition of land or other property acquired by the
17municipality, or agreement relating to the development of
18property, shall be made or executed except pursuant to prior
19official action of the municipality. No conveyance, lease,
20mortgage or other disposition of land, and no agreement
21relating to the development of property, shall be made without
22making public disclosure of the terms and disposition of all
23bids and proposals submitted to the municipality in connection
24therewith.
25    (c) To clear any area within an economic development

 

 

09700SB0397ham002- 31 -LRB097 04209 HLH 59582 a

1project area by demolition or removal of any existing
2buildings, structures, fixtures, utilities or improvements,
3and to clear and grade land.
4    (d) To install, repair, construct, reconstruct or relocate
5public streets, public utilities, and other public site
6improvements within or without an economic development project
7area which are essential to the preparation of an economic
8development project area for use in accordance with an economic
9development plan.
10    (e) To renovate, rehabilitate, reconstruct, relocate,
11repair or remodel any existing buildings, improvements, and
12fixtures within an economic development project area.
13    (f) To construct, acquire, and operate public
14improvements, including but not limited to, publicly-owned
15buildings, structures, works, utilities or fixtures within any
16economic development project area.
17    (g) To issue obligations as in this Act provided.
18    (h) To fix, charge and collect fees, rents and charges for
19the use of any building, facility or property or any portion
20thereof owned or leased by the municipality within an economic
21development project area.
22    (i) To accept grants, guarantees, donations of property or
23labor, or any other thing of value for use in connection with
24an economic development project.
25    (j) To pay or cause to be paid economic development project
26costs. Any payments to be made by the municipality to

 

 

09700SB0397ham002- 32 -LRB097 04209 HLH 59582 a

1developers or other nongovernmental persons for economic
2development project costs incurred by such developer or other
3nongovernmental person shall be made only pursuant to the prior
4official action of the municipality evidencing an intent to pay
5or cause to be paid such economic development project costs. A
6municipality is not required to obtain any right, title or
7interest in any real or personal property in order to pay
8economic development project costs associated with such
9property. The municipality shall adopt such accounting
10procedures as may be necessary to determine that such economic
11development project costs are properly paid.
12    (k) To exercise any and all other powers necessary to
13effectuate the purposes of this Act.
14    (l) To create a commission of not less than 5 or more than
1515 persons to be appointed by the mayor or president of the
16municipality with the consent of the majority of the corporate
17authorities of the municipality. Members of a commission shall
18be appointed for initial terms of 1, 2, 3, 4, and 5 years,
19respectively, in such numbers as to provide that the terms of
20not more than 1/3 of all such members shall expire in any one
21year. Their successors shall be appointed for a term of 5
22years. The commission, subject to approval of the corporate
23authorities, may exercise the powers enumerated in this
24Section. The commission shall also have the power to hold the
25public hearings required by this Act and make recommendations
26to the corporate authorities concerning the approval of

 

 

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1economic development plans, the establishment of economic
2development project areas, and the adoption of tax increment
3allocation financing for economic development project areas.
4(Source: P.A. 91-357, eff. 7-29-99.)
 
5    (20 ILCS 620/11)  (from Ch. 67 1/2, par. 1011)
6    Sec. 11. Payment of project costs; revenues from municipal
7property. Revenues received by a municipality from any
8property, building or facility owned, leased or operated by the
9municipality or any agency or authority established by the
10municipality may be used to pay economic development project
11costs, or reduce outstanding obligations of the municipality
12incurred under this Act for economic development project costs.
13The municipality may place those revenues in the special tax
14allocation fund which shall be held by the municipal treasurer
15or other person designated by the municipality. Revenue
16received by the municipality from the sale or other disposition
17of real or personal property or rights or interests therein
18acquired by the municipality with the proceeds of obligations
19funded by tax increment allocation financing may be used to
20acquire and operate other municipal property within the
21economic development project area or shall be deposited by the
22municipality in the special tax allocation fund.
23(Source: P.A. 86-38.)
 
24    Section 5. The Illinois Income Tax Act is amended by

 

 

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1changing Sections 201, 203, 204, 207, 212, and 304 as follows:
 
2    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
3    Sec. 201. Tax Imposed.
4    (a) In general. A tax measured by net income is hereby
5imposed on every individual, corporation, trust and estate for
6each taxable year ending after July 31, 1969 on the privilege
7of earning or receiving income in or as a resident of this
8State. Such tax shall be in addition to all other occupation or
9privilege taxes imposed by this State or by any municipal
10corporation or political subdivision thereof.
11    (b) Rates. The tax imposed by subsection (a) of this
12Section shall be determined as follows, except as adjusted by
13subsection (d-1):
14        (1) In the case of an individual, trust or estate, for
15    taxable years ending prior to July 1, 1989, an amount equal
16    to 2 1/2% of the taxpayer's net income for the taxable
17    year.
18        (2) In the case of an individual, trust or estate, for
19    taxable years beginning prior to July 1, 1989 and ending
20    after June 30, 1989, an amount equal to the sum of (i) 2
21    1/2% of the taxpayer's net income for the period prior to
22    July 1, 1989, as calculated under Section 202.3, and (ii)
23    3% of the taxpayer's net income for the period after June
24    30, 1989, as calculated under Section 202.3.
25        (3) In the case of an individual, trust or estate, for

 

 

09700SB0397ham002- 35 -LRB097 04209 HLH 59582 a

1    taxable years beginning after June 30, 1989, and ending
2    prior to January 1, 2011, an amount equal to 3% of the
3    taxpayer's net income for the taxable year.
4        (4) In the case of an individual, trust, or estate, for
5    taxable years beginning prior to January 1, 2011, and
6    ending after December 31, 2010, an amount equal to the sum
7    of (i) 3% of the taxpayer's net income for the period prior
8    to January 1, 2011, as calculated under Section 202.5, and
9    (ii) 5% of the taxpayer's net income for the period after
10    December 31, 2010, as calculated under Section 202.5.
11        (5) In the case of an individual, trust, or estate, for
12    taxable years beginning on or after January 1, 2011, and
13    ending prior to January 1, 2015, an amount equal to 5% of
14    the taxpayer's net income for the taxable year.
15        (5.1) In the case of an individual, trust, or estate,
16    for taxable years beginning prior to January 1, 2015, and
17    ending after December 31, 2014, an amount equal to the sum
18    of (i) 5% of the taxpayer's net income for the period prior
19    to January 1, 2015, as calculated under Section 202.5, and
20    (ii) 3.75% of the taxpayer's net income for the period
21    after December 31, 2014, as calculated under Section 202.5.
22        (5.2) In the case of an individual, trust, or estate,
23    for taxable years beginning on or after January 1, 2015,
24    and ending prior to January 1, 2025, an amount equal to
25    3.75% of the taxpayer's net income for the taxable year.
26        (5.3) In the case of an individual, trust, or estate,

 

 

09700SB0397ham002- 36 -LRB097 04209 HLH 59582 a

1    for taxable years beginning prior to January 1, 2025, and
2    ending after December 31, 2024, an amount equal to the sum
3    of (i) 3.75% of the taxpayer's net income for the period
4    prior to January 1, 2025, as calculated under Section
5    202.5, and (ii) 3.25% of the taxpayer's net income for the
6    period after December 31, 2024, as calculated under Section
7    202.5.
8        (5.4) In the case of an individual, trust, or estate,
9    for taxable years beginning on or after January 1, 2025, an
10    amount equal to 3.25% of the taxpayer's net income for the
11    taxable year.
12        (6) In the case of a corporation, for taxable years
13    ending prior to July 1, 1989, an amount equal to 4% of the
14    taxpayer's net income for the taxable year.
15        (7) In the case of a corporation, for taxable years
16    beginning prior to July 1, 1989 and ending after June 30,
17    1989, an amount equal to the sum of (i) 4% of the
18    taxpayer's net income for the period prior to July 1, 1989,
19    as calculated under Section 202.3, and (ii) 4.8% of the
20    taxpayer's net income for the period after June 30, 1989,
21    as calculated under Section 202.3.
22        (8) In the case of a corporation, for taxable years
23    beginning after June 30, 1989, and ending prior to January
24    1, 2011, an amount equal to 4.8% of the taxpayer's net
25    income for the taxable year.
26        (9) In the case of a corporation, for taxable years

 

 

09700SB0397ham002- 37 -LRB097 04209 HLH 59582 a

1    beginning prior to January 1, 2011, and ending after
2    December 31, 2010, an amount equal to the sum of (i) 4.8%
3    of the taxpayer's net income for the period prior to
4    January 1, 2011, as calculated under Section 202.5, and
5    (ii) 7% of the taxpayer's net income for the period after
6    December 31, 2010, as calculated under Section 202.5.
7        (10) In the case of a corporation, for taxable years
8    beginning on or after January 1, 2011, and ending prior to
9    January 1, 2015, an amount equal to 7% of the taxpayer's
10    net income for the taxable year.
11        (11) In the case of a corporation, for taxable years
12    beginning prior to January 1, 2015, and ending after
13    December 31, 2014, an amount equal to the sum of (i) 7% of
14    the taxpayer's net income for the period prior to January
15    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
16    of the taxpayer's net income for the period after December
17    31, 2014, as calculated under Section 202.5.
18        (12) In the case of a corporation, for taxable years
19    beginning on or after January 1, 2015, and ending prior to
20    January 1, 2025, an amount equal to 5.25% of the taxpayer's
21    net income for the taxable year.
22        (13) In the case of a corporation, for taxable years
23    beginning prior to January 1, 2025, and ending after
24    December 31, 2024, an amount equal to the sum of (i) 5.25%
25    of the taxpayer's net income for the period prior to
26    January 1, 2025, as calculated under Section 202.5, and

 

 

09700SB0397ham002- 38 -LRB097 04209 HLH 59582 a

1    (ii) 4.8% of the taxpayer's net income for the period after
2    December 31, 2024, as calculated under Section 202.5.
3        (14) In the case of a corporation, for taxable years
4    beginning on or after January 1, 2025, an amount equal to
5    4.8% of the taxpayer's net income for the taxable year.
6    The rates under this subsection (b) are subject to the
7provisions of Section 201.5.
8    (c) Personal Property Tax Replacement Income Tax.
9Beginning on July 1, 1979 and thereafter, in addition to such
10income tax, there is also hereby imposed the Personal Property
11Tax Replacement Income Tax measured by net income on every
12corporation (including Subchapter S corporations), partnership
13and trust, for each taxable year ending after June 30, 1979.
14Such taxes are imposed on the privilege of earning or receiving
15income in or as a resident of this State. The Personal Property
16Tax Replacement Income Tax shall be in addition to the income
17tax imposed by subsections (a) and (b) of this Section and in
18addition to all other occupation or privilege taxes imposed by
19this State or by any municipal corporation or political
20subdivision thereof.
21    (d) Additional Personal Property Tax Replacement Income
22Tax Rates. The personal property tax replacement income tax
23imposed by this subsection and subsection (c) of this Section
24in the case of a corporation, other than a Subchapter S
25corporation and except as adjusted by subsection (d-1), shall
26be an additional amount equal to 2.85% of such taxpayer's net

 

 

09700SB0397ham002- 39 -LRB097 04209 HLH 59582 a

1income for the taxable year, except that beginning on January
21, 1981, and thereafter, the rate of 2.85% specified in this
3subsection shall be reduced to 2.5%, and in the case of a
4partnership, trust or a Subchapter S corporation shall be an
5additional amount equal to 1.5% of such taxpayer's net income
6for the taxable year.
7    (d-1) Rate reduction for certain foreign insurers. In the
8case of a foreign insurer, as defined by Section 35A-5 of the
9Illinois Insurance Code, whose state or country of domicile
10imposes on insurers domiciled in Illinois a retaliatory tax
11(excluding any insurer whose premiums from reinsurance assumed
12are 50% or more of its total insurance premiums as determined
13under paragraph (2) of subsection (b) of Section 304, except
14that for purposes of this determination premiums from
15reinsurance do not include premiums from inter-affiliate
16reinsurance arrangements), beginning with taxable years ending
17on or after December 31, 1999, the sum of the rates of tax
18imposed by subsections (b) and (d) shall be reduced (but not
19increased) to the rate at which the total amount of tax imposed
20under this Act, net of all credits allowed under this Act,
21shall equal (i) the total amount of tax that would be imposed
22on the foreign insurer's net income allocable to Illinois for
23the taxable year by such foreign insurer's state or country of
24domicile if that net income were subject to all income taxes
25and taxes measured by net income imposed by such foreign
26insurer's state or country of domicile, net of all credits

 

 

09700SB0397ham002- 40 -LRB097 04209 HLH 59582 a

1allowed or (ii) a rate of zero if no such tax is imposed on such
2income by the foreign insurer's state of domicile. For the
3purposes of this subsection (d-1), an inter-affiliate includes
4a mutual insurer under common management.
5        (1) For the purposes of subsection (d-1), in no event
6    shall the sum of the rates of tax imposed by subsections
7    (b) and (d) be reduced below the rate at which the sum of:
8            (A) the total amount of tax imposed on such foreign
9        insurer under this Act for a taxable year, net of all
10        credits allowed under this Act, plus
11            (B) the privilege tax imposed by Section 409 of the
12        Illinois Insurance Code, the fire insurance company
13        tax imposed by Section 12 of the Fire Investigation
14        Act, and the fire department taxes imposed under
15        Section 11-10-1 of the Illinois Municipal Code,
16    equals 1.25% for taxable years ending prior to December 31,
17    2003, or 1.75% for taxable years ending on or after
18    December 31, 2003, of the net taxable premiums written for
19    the taxable year, as described by subsection (1) of Section
20    409 of the Illinois Insurance Code. This paragraph will in
21    no event increase the rates imposed under subsections (b)
22    and (d).
23        (2) Any reduction in the rates of tax imposed by this
24    subsection shall be applied first against the rates imposed
25    by subsection (b) and only after the tax imposed by
26    subsection (a) net of all credits allowed under this

 

 

09700SB0397ham002- 41 -LRB097 04209 HLH 59582 a

1    Section other than the credit allowed under subsection (i)
2    has been reduced to zero, against the rates imposed by
3    subsection (d).
4    This subsection (d-1) is exempt from the provisions of
5Section 250.
6    (e) Investment credit. A taxpayer shall be allowed a credit
7against the Personal Property Tax Replacement Income Tax for
8investment in qualified property.
9        (1) A taxpayer shall be allowed a credit equal to .5%
10    of the basis of qualified property placed in service during
11    the taxable year, provided such property is placed in
12    service on or after July 1, 1984. There shall be allowed an
13    additional credit equal to .5% of the basis of qualified
14    property placed in service during the taxable year,
15    provided such property is placed in service on or after
16    July 1, 1986, and the taxpayer's base employment within
17    Illinois has increased by 1% or more over the preceding
18    year as determined by the taxpayer's employment records
19    filed with the Illinois Department of Employment Security.
20    Taxpayers who are new to Illinois shall be deemed to have
21    met the 1% growth in base employment for the first year in
22    which they file employment records with the Illinois
23    Department of Employment Security. The provisions added to
24    this Section by Public Act 85-1200 (and restored by Public
25    Act 87-895) shall be construed as declaratory of existing
26    law and not as a new enactment. If, in any year, the

 

 

09700SB0397ham002- 42 -LRB097 04209 HLH 59582 a

1    increase in base employment within Illinois over the
2    preceding year is less than 1%, the additional credit shall
3    be limited to that percentage times a fraction, the
4    numerator of which is .5% and the denominator of which is
5    1%, but shall not exceed .5%. The investment credit shall
6    not be allowed to the extent that it would reduce a
7    taxpayer's liability in any tax year below zero, nor may
8    any credit for qualified property be allowed for any year
9    other than the year in which the property was placed in
10    service in Illinois. For tax years ending on or after
11    December 31, 1987, and on or before December 31, 1988, the
12    credit shall be allowed for the tax year in which the
13    property is placed in service, or, if the amount of the
14    credit exceeds the tax liability for that year, whether it
15    exceeds the original liability or the liability as later
16    amended, such excess may be carried forward and applied to
17    the tax liability of the 5 taxable years following the
18    excess credit years if the taxpayer (i) makes investments
19    which cause the creation of a minimum of 2,000 full-time
20    equivalent jobs in Illinois, (ii) is located in an
21    enterprise zone established pursuant to the Illinois
22    Enterprise Zone Act and (iii) is certified by the
23    Department of Commerce and Community Affairs (now
24    Department of Commerce and Economic Opportunity) as
25    complying with the requirements specified in clause (i) and
26    (ii) by July 1, 1986. The Department of Commerce and

 

 

09700SB0397ham002- 43 -LRB097 04209 HLH 59582 a

1    Community Affairs (now Department of Commerce and Economic
2    Opportunity) shall notify the Department of Revenue of all
3    such certifications immediately. For tax years ending
4    after December 31, 1988, the credit shall be allowed for
5    the tax year in which the property is placed in service,
6    or, if the amount of the credit exceeds the tax liability
7    for that year, whether it exceeds the original liability or
8    the liability as later amended, such excess may be carried
9    forward and applied to the tax liability of the 5 taxable
10    years following the excess credit years. The credit shall
11    be applied to the earliest year for which there is a
12    liability. If there is credit from more than one tax year
13    that is available to offset a liability, earlier credit
14    shall be applied first.
15        (2) The term "qualified property" means property
16    which:
17            (A) is tangible, whether new or used, including
18        buildings and structural components of buildings and
19        signs that are real property, but not including land or
20        improvements to real property that are not a structural
21        component of a building such as landscaping, sewer
22        lines, local access roads, fencing, parking lots, and
23        other appurtenances;
24            (B) is depreciable pursuant to Section 167 of the
25        Internal Revenue Code, except that "3-year property"
26        as defined in Section 168(c)(2)(A) of that Code is not

 

 

09700SB0397ham002- 44 -LRB097 04209 HLH 59582 a

1        eligible for the credit provided by this subsection
2        (e);
3            (C) is acquired by purchase as defined in Section
4        179(d) of the Internal Revenue Code;
5            (D) is used in Illinois by a taxpayer who is
6        primarily engaged in manufacturing, or in mining coal
7        or fluorite, or in retailing, or was placed in service
8        on or after July 1, 2006 in a River Edge Redevelopment
9        Zone established pursuant to the River Edge
10        Redevelopment Zone Act; and
11            (E) has not previously been used in Illinois in
12        such a manner and by such a person as would qualify for
13        the credit provided by this subsection (e) or
14        subsection (f).
15        (3) For purposes of this subsection (e),
16    "manufacturing" means the material staging and production
17    of tangible personal property by procedures commonly
18    regarded as manufacturing, processing, fabrication, or
19    assembling which changes some existing material into new
20    shapes, new qualities, or new combinations. For purposes of
21    this subsection (e) the term "mining" shall have the same
22    meaning as the term "mining" in Section 613(c) of the
23    Internal Revenue Code. For purposes of this subsection (e),
24    the term "retailing" means the sale of tangible personal
25    property for use or consumption and not for resale, or
26    services rendered in conjunction with the sale of tangible

 

 

09700SB0397ham002- 45 -LRB097 04209 HLH 59582 a

1    personal property for use or consumption and not for
2    resale. For purposes of this subsection (e), "tangible
3    personal property" has the same meaning as when that term
4    is used in the Retailers' Occupation Tax Act, and, for
5    taxable years ending after December 31, 2008, does not
6    include the generation, transmission, or distribution of
7    electricity.
8        (4) The basis of qualified property shall be the basis
9    used to compute the depreciation deduction for federal
10    income tax purposes.
11        (5) If the basis of the property for federal income tax
12    depreciation purposes is increased after it has been placed
13    in service in Illinois by the taxpayer, the amount of such
14    increase shall be deemed property placed in service on the
15    date of such increase in basis.
16        (6) The term "placed in service" shall have the same
17    meaning as under Section 46 of the Internal Revenue Code.
18        (7) If during any taxable year, any property ceases to
19    be qualified property in the hands of the taxpayer within
20    48 months after being placed in service, or the situs of
21    any qualified property is moved outside Illinois within 48
22    months after being placed in service, the Personal Property
23    Tax Replacement Income Tax for such taxable year shall be
24    increased. Such increase shall be determined by (i)
25    recomputing the investment credit which would have been
26    allowed for the year in which credit for such property was

 

 

09700SB0397ham002- 46 -LRB097 04209 HLH 59582 a

1    originally allowed by eliminating such property from such
2    computation and, (ii) subtracting such recomputed credit
3    from the amount of credit previously allowed. For the
4    purposes of this paragraph (7), a reduction of the basis of
5    qualified property resulting from a redetermination of the
6    purchase price shall be deemed a disposition of qualified
7    property to the extent of such reduction.
8        (8) Unless the investment credit is extended by law,
9    the basis of qualified property shall not include costs
10    incurred after December 31, 2013, except for costs incurred
11    pursuant to a binding contract entered into on or before
12    December 31, 2013.
13        (9) Each taxable year ending before December 31, 2000,
14    a partnership may elect to pass through to its partners the
15    credits to which the partnership is entitled under this
16    subsection (e) for the taxable year. A partner may use the
17    credit allocated to him or her under this paragraph only
18    against the tax imposed in subsections (c) and (d) of this
19    Section. If the partnership makes that election, those
20    credits shall be allocated among the partners in the
21    partnership in accordance with the rules set forth in
22    Section 704(b) of the Internal Revenue Code, and the rules
23    promulgated under that Section, and the allocated amount of
24    the credits shall be allowed to the partners for that
25    taxable year. The partnership shall make this election on
26    its Personal Property Tax Replacement Income Tax return for

 

 

09700SB0397ham002- 47 -LRB097 04209 HLH 59582 a

1    that taxable year. The election to pass through the credits
2    shall be irrevocable.
3        For taxable years ending on or after December 31, 2000,
4    a partner that qualifies its partnership for a subtraction
5    under subparagraph (I) of paragraph (2) of subsection (d)
6    of Section 203 or a shareholder that qualifies a Subchapter
7    S corporation for a subtraction under subparagraph (S) of
8    paragraph (2) of subsection (b) of Section 203 shall be
9    allowed a credit under this subsection (e) equal to its
10    share of the credit earned under this subsection (e) during
11    the taxable year by the partnership or Subchapter S
12    corporation, determined in accordance with the
13    determination of income and distributive share of income
14    under Sections 702 and 704 and Subchapter S of the Internal
15    Revenue Code. This paragraph is exempt from the provisions
16    of Section 250.
17    (f) Investment credit; Enterprise Zone; River Edge
18Redevelopment Zone.
19        (1) A taxpayer shall be allowed a credit against the
20    tax imposed by subsections (a) and (b) of this Section for
21    investment in qualified property which is placed in service
22    in an Enterprise Zone created pursuant to the Illinois
23    Enterprise Zone Act or, for property placed in service on
24    or after July 1, 2006, a River Edge Redevelopment Zone
25    established pursuant to the River Edge Redevelopment Zone
26    Act. For partners, shareholders of Subchapter S

 

 

09700SB0397ham002- 48 -LRB097 04209 HLH 59582 a

1    corporations, and owners of limited liability companies,
2    if the liability company is treated as a partnership for
3    purposes of federal and State income taxation, there shall
4    be allowed a credit under this subsection (f) to be
5    determined in accordance with the determination of income
6    and distributive share of income under Sections 702 and 704
7    and Subchapter S of the Internal Revenue Code. The credit
8    shall be .5% of the basis for such property. The credit
9    shall be available only in the taxable year in which the
10    property is placed in service in the Enterprise Zone or
11    River Edge Redevelopment Zone and shall not be allowed to
12    the extent that it would reduce a taxpayer's liability for
13    the tax imposed by subsections (a) and (b) of this Section
14    to below zero. For tax years ending on or after December
15    31, 1985, the credit shall be allowed for the tax year in
16    which the property is placed in service, or, if the amount
17    of the credit exceeds the tax liability for that year,
18    whether it exceeds the original liability or the liability
19    as later amended, such excess may be carried forward and
20    applied to the tax liability of the 5 taxable years
21    following the excess credit year. The credit shall be
22    applied to the earliest year for which there is a
23    liability. If there is credit from more than one tax year
24    that is available to offset a liability, the credit
25    accruing first in time shall be applied first.
26        (2) The term qualified property means property which:

 

 

09700SB0397ham002- 49 -LRB097 04209 HLH 59582 a

1            (A) is tangible, whether new or used, including
2        buildings and structural components of buildings;
3            (B) is depreciable pursuant to Section 167 of the
4        Internal Revenue Code, except that "3-year property"
5        as defined in Section 168(c)(2)(A) of that Code is not
6        eligible for the credit provided by this subsection
7        (f);
8            (C) is acquired by purchase as defined in Section
9        179(d) of the Internal Revenue Code;
10            (D) is used in the Enterprise Zone or River Edge
11        Redevelopment Zone by the taxpayer; and
12            (E) has not been previously used in Illinois in
13        such a manner and by such a person as would qualify for
14        the credit provided by this subsection (f) or
15        subsection (e).
16        (3) The basis of qualified property shall be the basis
17    used to compute the depreciation deduction for federal
18    income tax purposes.
19        (4) If the basis of the property for federal income tax
20    depreciation purposes is increased after it has been placed
21    in service in the Enterprise Zone or River Edge
22    Redevelopment Zone by the taxpayer, the amount of such
23    increase shall be deemed property placed in service on the
24    date of such increase in basis.
25        (5) The term "placed in service" shall have the same
26    meaning as under Section 46 of the Internal Revenue Code.

 

 

09700SB0397ham002- 50 -LRB097 04209 HLH 59582 a

1        (6) If during any taxable year, any property ceases to
2    be qualified property in the hands of the taxpayer within
3    48 months after being placed in service, or the situs of
4    any qualified property is moved outside the Enterprise Zone
5    or River Edge Redevelopment Zone within 48 months after
6    being placed in service, the tax imposed under subsections
7    (a) and (b) of this Section for such taxable year shall be
8    increased. Such increase shall be determined by (i)
9    recomputing the investment credit which would have been
10    allowed for the year in which credit for such property was
11    originally allowed by eliminating such property from such
12    computation, and (ii) subtracting such recomputed credit
13    from the amount of credit previously allowed. For the
14    purposes of this paragraph (6), a reduction of the basis of
15    qualified property resulting from a redetermination of the
16    purchase price shall be deemed a disposition of qualified
17    property to the extent of such reduction.
18        (7) There shall be allowed an additional credit equal
19    to 0.5% of the basis of qualified property placed in
20    service during the taxable year in a River Edge
21    Redevelopment Zone, provided such property is placed in
22    service on or after July 1, 2006, and the taxpayer's base
23    employment within Illinois has increased by 1% or more over
24    the preceding year as determined by the taxpayer's
25    employment records filed with the Illinois Department of
26    Employment Security. Taxpayers who are new to Illinois

 

 

09700SB0397ham002- 51 -LRB097 04209 HLH 59582 a

1    shall be deemed to have met the 1% growth in base
2    employment for the first year in which they file employment
3    records with the Illinois Department of Employment
4    Security. If, in any year, the increase in base employment
5    within Illinois over the preceding year is less than 1%,
6    the additional credit shall be limited to that percentage
7    times a fraction, the numerator of which is 0.5% and the
8    denominator of which is 1%, but shall not exceed 0.5%.
9    (g) Jobs Tax Credit; Enterprise Zone, River Edge
10Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
11        (1) A taxpayer conducting a trade or business in an
12    enterprise zone or a High Impact Business designated by the
13    Department of Commerce and Economic Opportunity or for
14    taxable years ending on or after December 31, 2006, in a
15    River Edge Redevelopment Zone conducting a trade or
16    business in a federally designated Foreign Trade Zone or
17    Sub-Zone shall be allowed a credit against the tax imposed
18    by subsections (a) and (b) of this Section in the amount of
19    $500 per eligible employee hired to work in the zone during
20    the taxable year.
21        (2) To qualify for the credit:
22            (A) the taxpayer must hire 5 or more eligible
23        employees to work in an enterprise zone, River Edge
24        Redevelopment Zone, or federally designated Foreign
25        Trade Zone or Sub-Zone during the taxable year;
26            (B) the taxpayer's total employment within the

 

 

09700SB0397ham002- 52 -LRB097 04209 HLH 59582 a

1        enterprise zone, River Edge Redevelopment Zone, or
2        federally designated Foreign Trade Zone or Sub-Zone
3        must increase by 5 or more full-time employees beyond
4        the total employed in that zone at the end of the
5        previous tax year for which a jobs tax credit under
6        this Section was taken, or beyond the total employed by
7        the taxpayer as of December 31, 1985, whichever is
8        later; and
9            (C) the eligible employees must be employed 180
10        consecutive days in order to be deemed hired for
11        purposes of this subsection.
12        (3) An "eligible employee" means an employee who is:
13            (A) Certified by the Department of Commerce and
14        Economic Opportunity as "eligible for services"
15        pursuant to regulations promulgated in accordance with
16        Title II of the Job Training Partnership Act, Training
17        Services for the Disadvantaged or Title III of the Job
18        Training Partnership Act, Employment and Training
19        Assistance for Dislocated Workers Program.
20            (B) Hired after the enterprise zone, River Edge
21        Redevelopment Zone, or federally designated Foreign
22        Trade Zone or Sub-Zone was designated or the trade or
23        business was located in that zone, whichever is later.
24            (C) Employed in the enterprise zone, River Edge
25        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
26        An employee is employed in an enterprise zone or

 

 

09700SB0397ham002- 53 -LRB097 04209 HLH 59582 a

1        federally designated Foreign Trade Zone or Sub-Zone if
2        his services are rendered there or it is the base of
3        operations for the services performed.
4            (D) A full-time employee working 30 or more hours
5        per week.
6        (4) For tax years ending on or after December 31, 1985
7    and prior to December 31, 1988, the credit shall be allowed
8    for the tax year in which the eligible employees are hired.
9    For tax years ending on or after December 31, 1988, the
10    credit shall be allowed for the tax year immediately
11    following the tax year in which the eligible employees are
12    hired. If the amount of the credit exceeds the tax
13    liability for that year, whether it exceeds the original
14    liability or the liability as later amended, such excess
15    may be carried forward and applied to the tax liability of
16    the 5 taxable years following the excess credit year. The
17    credit shall be applied to the earliest year for which
18    there is a liability. If there is credit from more than one
19    tax year that is available to offset a liability, earlier
20    credit shall be applied first.
21        (5) The Department of Revenue shall promulgate such
22    rules and regulations as may be deemed necessary to carry
23    out the purposes of this subsection (g).
24        (6) The credit shall be available for eligible
25    employees hired on or after January 1, 1986.
26    (h) Investment credit; High Impact Business.

 

 

09700SB0397ham002- 54 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 55 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 56 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 57 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 58 -LRB097 04209 HLH 59582 a

1    Any credit earned on or after December 31, 1986 under this
2subsection which is unused in the year the credit is computed
3because it exceeds the tax liability imposed by subsections (a)
4and (b) for that year (whether it exceeds the original
5liability or the liability as later amended) may be carried
6forward and applied to the tax liability imposed by subsections
7(a) and (b) of the 5 taxable years following the excess credit
8year, provided that no credit may be carried forward to any
9year ending on or after December 31, 2003. This credit shall be
10applied first to the earliest year for which there is a
11liability. If there is a credit under this subsection from more
12than one tax year that is available to offset a liability the
13earliest credit arising under this subsection shall be applied
14first.
15    If, during any taxable year ending on or after December 31,
161986, the tax imposed by subsections (c) and (d) of this
17Section for which a taxpayer has claimed a credit under this
18subsection (i) is reduced, the amount of credit for such tax
19shall also be reduced. Such reduction shall be determined by
20recomputing the credit to take into account the reduced tax
21imposed by subsections (c) and (d). If any portion of the
22reduced amount of credit has been carried to a different
23taxable year, an amended return shall be filed for such taxable
24year to reduce the amount of credit claimed.
25    (j) Training expense credit. Beginning with tax years
26ending on or after December 31, 1986 and prior to December 31,

 

 

09700SB0397ham002- 59 -LRB097 04209 HLH 59582 a

12003, a taxpayer shall be allowed a credit against the tax
2imposed by subsections (a) and (b) under this Section for all
3amounts paid or accrued, on behalf of all persons employed by
4the taxpayer in Illinois or Illinois residents employed outside
5of Illinois by a taxpayer, for educational or vocational
6training in semi-technical or technical fields or semi-skilled
7or skilled fields, which were deducted from gross income in the
8computation of taxable income. The credit against the tax
9imposed by subsections (a) and (b) shall be 1.6% of such
10training expenses. For partners, shareholders of subchapter S
11corporations, and owners of limited liability companies, if the
12liability company is treated as a partnership for purposes of
13federal and State income taxation, there shall be allowed a
14credit under this subsection (j) to be determined in accordance
15with the determination of income and distributive share of
16income under Sections 702 and 704 and subchapter S of the
17Internal Revenue Code.
18    Any credit allowed under this subsection which is unused in
19the year the credit is earned may be carried forward to each of
20the 5 taxable years following the year for which the credit is
21first computed until it is used. This credit shall be applied
22first to the earliest year for which there is a liability. If
23there is a credit under this subsection from more than one tax
24year that is available to offset a liability the earliest
25credit arising under this subsection shall be applied first. No
26carryforward credit may be claimed in any tax year ending on or

 

 

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1after December 31, 2003.
2    (k) Research and development credit.
3    For tax years ending after July 1, 1990 and prior to
4December 31, 2003, and beginning again for tax years ending on
5or after December 31, 2004, and ending prior to January 1, 2016
6January 1, 2011, a taxpayer shall be allowed a credit against
7the tax imposed by subsections (a) and (b) of this Section for
8increasing research activities in this State. The credit
9allowed against the tax imposed by subsections (a) and (b)
10shall be equal to 6 1/2% of the qualifying expenditures for
11increasing research activities in this State. For partners,
12shareholders of subchapter S corporations, and owners of
13limited liability companies, if the liability company is
14treated as a partnership for purposes of federal and State
15income taxation, there shall be allowed a credit under this
16subsection to be determined in accordance with the
17determination of income and distributive share of income under
18Sections 702 and 704 and subchapter S of the Internal Revenue
19Code.
20    For purposes of this subsection, "qualifying expenditures"
21means the qualifying expenditures as defined for the federal
22credit for increasing research activities which would be
23allowable under Section 41 of the Internal Revenue Code and
24which are conducted in this State, "qualifying expenditures for
25increasing research activities in this State" means the excess
26of qualifying expenditures for the taxable year in which

 

 

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1incurred over qualifying expenditures for the base period,
2"qualifying expenditures for the base period" means the average
3of the qualifying expenditures for each year in the base
4period, and "base period" means the 3 taxable years immediately
5preceding the taxable year for which the determination is being
6made.
7    Any credit in excess of the tax liability for the taxable
8year may be carried forward. A taxpayer may elect to have the
9unused credit shown on its final completed return carried over
10as a credit against the tax liability for the following 5
11taxable years or until it has been fully used, whichever occurs
12first; provided that no credit earned in a tax year ending
13prior to December 31, 2003 may be carried forward to any year
14ending on or after December 31, 2003, and no credit may be
15carried forward to any taxable year ending on or after January
161, 2011.
17    If an unused credit is carried forward to a given year from
182 or more earlier years, that credit arising in the earliest
19year will be applied first against the tax liability for the
20given year. If a tax liability for the given year still
21remains, the credit from the next earliest year will then be
22applied, and so on, until all credits have been used or no tax
23liability for the given year remains. Any remaining unused
24credit or credits then will be carried forward to the next
25following year in which a tax liability is incurred, except
26that no credit can be carried forward to a year which is more

 

 

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1than 5 years after the year in which the expense for which the
2credit is given was incurred.
3    No inference shall be drawn from this amendatory Act of the
491st General Assembly in construing this Section for taxable
5years beginning before January 1, 1999.
6    (l) Environmental Remediation Tax Credit.
7        (i) For tax years ending after December 31, 1997 and on
8    or before December 31, 2001, a taxpayer shall be allowed a
9    credit against the tax imposed by subsections (a) and (b)
10    of this Section for certain amounts paid for unreimbursed
11    eligible remediation costs, as specified in this
12    subsection. For purposes of this Section, "unreimbursed
13    eligible remediation costs" means costs approved by the
14    Illinois Environmental Protection Agency ("Agency") under
15    Section 58.14 of the Environmental Protection Act that were
16    paid in performing environmental remediation at a site for
17    which a No Further Remediation Letter was issued by the
18    Agency and recorded under Section 58.10 of the
19    Environmental Protection Act. The credit must be claimed
20    for the taxable year in which Agency approval of the
21    eligible remediation costs is granted. The credit is not
22    available to any taxpayer if the taxpayer or any related
23    party caused or contributed to, in any material respect, a
24    release of regulated substances on, in, or under the site
25    that was identified and addressed by the remedial action
26    pursuant to the Site Remediation Program of the

 

 

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1    Environmental Protection Act. After the Pollution Control
2    Board rules are adopted pursuant to the Illinois
3    Administrative Procedure Act for the administration and
4    enforcement of Section 58.9 of the Environmental
5    Protection Act, determinations as to credit availability
6    for purposes of this Section shall be made consistent with
7    those rules. For purposes of this Section, "taxpayer"
8    includes a person whose tax attributes the taxpayer has
9    succeeded to under Section 381 of the Internal Revenue Code
10    and "related party" includes the persons disallowed a
11    deduction for losses by paragraphs (b), (c), and (f)(1) of
12    Section 267 of the Internal Revenue Code by virtue of being
13    a related taxpayer, as well as any of its partners. The
14    credit allowed against the tax imposed by subsections (a)
15    and (b) shall be equal to 25% of the unreimbursed eligible
16    remediation costs in excess of $100,000 per site, except
17    that the $100,000 threshold shall not apply to any site
18    contained in an enterprise zone as determined by the
19    Department of Commerce and Community Affairs (now
20    Department of Commerce and Economic Opportunity). The
21    total credit allowed shall not exceed $40,000 per year with
22    a maximum total of $150,000 per site. For partners and
23    shareholders of subchapter S corporations, there shall be
24    allowed a credit under this subsection to be determined in
25    accordance with the determination of income and
26    distributive share of income under Sections 702 and 704 and

 

 

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1    subchapter S of the Internal Revenue Code.
2        (ii) A credit allowed under this subsection that is
3    unused in the year the credit is earned may be carried
4    forward to each of the 5 taxable years following the year
5    for which the credit is first earned until it is used. The
6    term "unused credit" does not include any amounts of
7    unreimbursed eligible remediation costs in excess of the
8    maximum credit per site authorized under paragraph (i).
9    This credit shall be applied first to the earliest year for
10    which there is a liability. If there is a credit under this
11    subsection from more than one tax year that is available to
12    offset a liability, the earliest credit arising under this
13    subsection shall be applied first. A credit allowed under
14    this subsection may be sold to a buyer as part of a sale of
15    all or part of the remediation site for which the credit
16    was granted. The purchaser of a remediation site and the
17    tax credit shall succeed to the unused credit and remaining
18    carry-forward period of the seller. To perfect the
19    transfer, the assignor shall record the transfer in the
20    chain of title for the site and provide written notice to
21    the Director of the Illinois Department of Revenue of the
22    assignor's intent to sell the remediation site and the
23    amount of the tax credit to be transferred as a portion of
24    the sale. In no event may a credit be transferred to any
25    taxpayer if the taxpayer or a related party would not be
26    eligible under the provisions of subsection (i).

 

 

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1        (iii) For purposes of this Section, the term "site"
2    shall have the same meaning as under Section 58.2 of the
3    Environmental Protection Act.
4    (m) Education expense credit. Beginning with tax years
5ending after December 31, 1999, a taxpayer who is the custodian
6of one or more qualifying pupils shall be allowed a credit
7against the tax imposed by subsections (a) and (b) of this
8Section for qualified education expenses incurred on behalf of
9the qualifying pupils. The credit shall be equal to 25% of
10qualified education expenses, but in no event may the total
11credit under this subsection claimed by a family that is the
12custodian of qualifying pupils exceed $500. In no event shall a
13credit under this subsection reduce the taxpayer's liability
14under this Act to less than zero. This subsection is exempt
15from the provisions of Section 250 of this Act.
16    For purposes of this subsection:
17    "Qualifying pupils" means individuals who (i) are
18residents of the State of Illinois, (ii) are under the age of
1921 at the close of the school year for which a credit is
20sought, and (iii) during the school year for which a credit is
21sought were full-time pupils enrolled in a kindergarten through
22twelfth grade education program at any school, as defined in
23this subsection.
24    "Qualified education expense" means the amount incurred on
25behalf of a qualifying pupil in excess of $250 for tuition,
26book fees, and lab fees at the school in which the pupil is

 

 

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1enrolled during the regular school year.
2    "School" means any public or nonpublic elementary or
3secondary school in Illinois that is in compliance with Title
4VI of the Civil Rights Act of 1964 and attendance at which
5satisfies the requirements of Section 26-1 of the School Code,
6except that nothing shall be construed to require a child to
7attend any particular public or nonpublic school to qualify for
8the credit under this Section.
9    "Custodian" means, with respect to qualifying pupils, an
10Illinois resident who is a parent, the parents, a legal
11guardian, or the legal guardians of the qualifying pupils.
12    (n) River Edge Redevelopment Zone site remediation tax
13credit.
14        (i) For tax years ending on or after December 31, 2006,
15    a taxpayer shall be allowed a credit against the tax
16    imposed by subsections (a) and (b) of this Section for
17    certain amounts paid for unreimbursed eligible remediation
18    costs, as specified in this subsection. For purposes of
19    this Section, "unreimbursed eligible remediation costs"
20    means costs approved by the Illinois Environmental
21    Protection Agency ("Agency") under Section 58.14a of the
22    Environmental Protection Act that were paid in performing
23    environmental remediation at a site within a River Edge
24    Redevelopment Zone for which a No Further Remediation
25    Letter was issued by the Agency and recorded under Section
26    58.10 of the Environmental Protection Act. The credit must

 

 

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

 

 

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1    for which the credit is first earned until it is used. This
2    credit shall be applied first to the earliest year for
3    which there is a liability. If there is a credit under this
4    subsection from more than one tax year that is available to
5    offset a liability, the earliest credit arising under this
6    subsection shall be applied first. A credit allowed under
7    this subsection may be sold to a buyer as part of a sale of
8    all or part of the remediation site for which the credit
9    was granted. The purchaser of a remediation site and the
10    tax credit shall succeed to the unused credit and remaining
11    carry-forward period of the seller. To perfect the
12    transfer, the assignor shall record the transfer in the
13    chain of title for the site and provide written notice to
14    the Director of the Illinois Department of Revenue of the
15    assignor's intent to sell the remediation site and the
16    amount of the tax credit to be transferred as a portion of
17    the sale. In no event may a credit be transferred to any
18    taxpayer if the taxpayer or a related party would not be
19    eligible under the provisions of subsection (i).
20        (iii) For purposes of this Section, the term "site"
21    shall have the same meaning as under Section 58.2 of the
22    Environmental Protection Act.
23(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
2496-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
251-13-11; 97-2, eff. 5-6-11.)
 

 

 

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1    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
2    Sec. 203. Base income defined.
3    (a) Individuals.
4        (1) In general. In the case of an individual, base
5    income means an amount equal to the taxpayer's adjusted
6    gross income for the taxable year as modified by paragraph
7    (2).
8        (2) Modifications. The adjusted gross income referred
9    to in paragraph (1) shall be modified by adding thereto the
10    sum of the following amounts:
11            (A) An amount equal to all amounts paid or accrued
12        to the taxpayer as interest or dividends during the
13        taxable year to the extent excluded from gross income
14        in the computation of adjusted gross income, except
15        stock dividends of qualified public utilities
16        described in Section 305(e) of the Internal Revenue
17        Code;
18            (B) An amount equal to the amount of tax imposed by
19        this Act to the extent deducted from gross income in
20        the computation of adjusted gross income for the
21        taxable year;
22            (C) An amount equal to the amount received during
23        the taxable year as a recovery or refund of real
24        property taxes paid with respect to the taxpayer's
25        principal residence under the Revenue Act of 1939 and
26        for which a deduction was previously taken under

 

 

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1        subparagraph (L) of this paragraph (2) prior to July 1,
2        1991, the retrospective application date of Article 4
3        of Public Act 87-17. In the case of multi-unit or
4        multi-use structures and farm dwellings, the taxes on
5        the taxpayer's principal residence shall be that
6        portion of the total taxes for the entire property
7        which is attributable to such principal residence;
8            (D) An amount equal to the amount of the capital
9        gain deduction allowable under the Internal Revenue
10        Code, to the extent deducted from gross income in the
11        computation of adjusted gross income;
12            (D-5) An amount, to the extent not included in
13        adjusted gross income, equal to the amount of money
14        withdrawn by the taxpayer in the taxable year from a
15        medical care savings account and the interest earned on
16        the account in the taxable year of a withdrawal
17        pursuant to subsection (b) of Section 20 of the Medical
18        Care Savings Account Act or subsection (b) of Section
19        20 of the Medical Care Savings Account Act of 2000;
20            (D-10) For taxable years ending after December 31,
21        1997, an amount equal to any eligible remediation costs
22        that the individual deducted in computing adjusted
23        gross income and for which the individual claims a
24        credit under subsection (l) of Section 201;
25            (D-15) For taxable years 2001 and thereafter, an
26        amount equal to the bonus depreciation deduction taken

 

 

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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-16) 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-15), then
8        an amount equal to the aggregate amount of the
9        deductions taken in all taxable years under
10        subparagraph (Z) 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 a
13        subtraction is allowed with respect to that property
14        under subparagraph (Z), the taxpayer may claim a
15        depreciation deduction for federal income tax purposes
16        and for which the taxpayer was allowed in any taxable
17        year to make a subtraction modification under
18        subparagraph (Z), then an amount equal to that
19        subtraction modification.
20            The taxpayer is required to make the addition
21        modification under this subparagraph only once with
22        respect to any one piece of property;
23            (D-17) An amount equal to the amount otherwise
24        allowed as a deduction in computing base income for
25        interest paid, accrued, or incurred, directly or
26        indirectly, (i) for taxable years ending on or after

 

 

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

 

 

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

 

 

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

 

 

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

 

 

09700SB0397ham002- 76 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 77 -LRB097 04209 HLH 59582 a

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

 

 

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1        paid, accrued, or incurred, directly or indirectly, to
2        a person who would be a member of the same unitary
3        business group but for the fact that the person is
4        prohibited under Section 1501(a)(27) from being
5        included in the unitary business group because he or
6        she is ordinarily required to apportion business
7        income under different subsections of Section 304. The
8        addition modification required by this subparagraph
9        shall be reduced to the extent that dividends were
10        included in base income of the unitary group for the
11        same taxable year and received by the taxpayer or by a
12        member of the taxpayer's unitary business group
13        (including amounts included in gross income under
14        Sections 951 through 964 of the Internal Revenue Code
15        and amounts included in gross income under Section 78
16        of the Internal Revenue Code) with respect to the stock
17        of the same person to whom the premiums and costs were
18        directly or indirectly paid, incurred, or accrued. The
19        preceding sentence does not apply to the extent that
20        the same dividends caused a reduction to the addition
21        modification required under Section 203(a)(2)(D-17) or
22        Section 203(a)(2)(D-18) of this Act.
23            (D-20) For taxable years beginning on or after
24        January 1, 2002 and ending on or before December 31,
25        2006, in the case of a distribution from a qualified
26        tuition program under Section 529 of the Internal

 

 

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

 

 

09700SB0397ham002- 80 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 81 -LRB097 04209 HLH 59582 a

1        that was previously deducted from base income under
2        subsection (a)(2)(y) of this Section, provided that
3        the withdrawal or refund did not result from the
4        beneficiary's death or disability;
5            (D-23) 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            (E) For taxable years ending before December 31,
12        2001, any amount included in such total in respect of
13        any compensation (including but not limited to any
14        compensation paid or accrued to a serviceman while a
15        prisoner of war or missing in action) paid to a
16        resident by reason of being on active duty in the Armed
17        Forces of the United States and in respect of any
18        compensation paid or accrued to a resident who as a
19        governmental employee was a prisoner of war or missing
20        in action, and in respect of any compensation paid to a
21        resident in 1971 or thereafter for annual training
22        performed pursuant to Sections 502 and 503, Title 32,
23        United States Code as a member of the Illinois National
24        Guard or, beginning with taxable years ending on or
25        after December 31, 2007, the National Guard of any
26        other state. For taxable years ending on or after

 

 

09700SB0397ham002- 82 -LRB097 04209 HLH 59582 a

1        December 31, 2001, any amount included in such total in
2        respect of any compensation (including but not limited
3        to any compensation paid or accrued to a serviceman
4        while a prisoner of war or missing in action) paid to a
5        resident by reason of being a member of any component
6        of the Armed Forces of the United States and in respect
7        of any compensation paid or accrued to a resident who
8        as a governmental employee was a prisoner of war or
9        missing in action, and in respect of any compensation
10        paid to a resident in 2001 or thereafter by reason of
11        being a member of the Illinois National Guard or,
12        beginning with taxable years ending on or after
13        December 31, 2007, the National Guard of any other
14        state. The provisions of this subparagraph (E) are
15        exempt from the provisions of Section 250;
16            (F) An amount equal to all amounts included in such
17        total pursuant to the provisions of Sections 402(a),
18        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
19        Internal Revenue Code, or included in such total as
20        distributions under the provisions of any retirement
21        or disability plan for employees of any governmental
22        agency or unit, or retirement payments to retired
23        partners, which payments are excluded in computing net
24        earnings from self employment by Section 1402 of the
25        Internal Revenue Code and regulations adopted pursuant
26        thereto;

 

 

09700SB0397ham002- 83 -LRB097 04209 HLH 59582 a

1            (G) The valuation limitation amount;
2            (H) An amount equal to the amount of any tax
3        imposed by this Act which was refunded to the taxpayer
4        and included in such total for the taxable year;
5            (I) An amount equal to all amounts included in such
6        total pursuant to the provisions of Section 111 of the
7        Internal Revenue Code as a recovery of items previously
8        deducted from adjusted gross income in the computation
9        of taxable income;
10            (J) An amount equal to those dividends included in
11        such total which were paid by a corporation which
12        conducts business operations in an Enterprise Zone or
13        zones created under the Illinois Enterprise Zone Act or
14        a River Edge Redevelopment Zone or zones created under
15        the River Edge Redevelopment Zone Act, and conducts
16        substantially all of its operations in an Enterprise
17        Zone or zones or a River Edge Redevelopment Zone or
18        zones. This subparagraph (J) is exempt from the
19        provisions of Section 250;
20            (K) An amount equal to those dividends included in
21        such total that were paid by a corporation that
22        conducts business operations in a federally designated
23        Foreign Trade Zone or Sub-Zone and that is designated a
24        High Impact Business located in Illinois; provided
25        that dividends eligible for the deduction provided in
26        subparagraph (J) of paragraph (2) of this subsection

 

 

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1        shall not be eligible for the deduction provided under
2        this subparagraph (K);
3            (L) For taxable years ending after December 31,
4        1983, an amount equal to all social security benefits
5        and railroad retirement benefits included in such
6        total pursuant to Sections 72(r) and 86 of the Internal
7        Revenue Code;
8            (M) With the exception of any amounts subtracted
9        under subparagraph (N), an amount equal to the sum of
10        all amounts disallowed as deductions by (i) Sections
11        171(a) (2), and 265(2) of the Internal Revenue Code,
12        and all amounts of expenses allocable to interest and
13        disallowed as deductions by Section 265(1) of the
14        Internal Revenue Code; and (ii) for taxable years
15        ending on or after August 13, 1999, Sections 171(a)(2),
16        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
17        Code, plus, for taxable years ending on or after
18        December 31, 2011, Section 45G(e)(3) of the Internal
19        Revenue Code and, for taxable years ending on or after
20        December 31, 2008, any amount included in gross income
21        under Section 87 of the Internal Revenue Code; the
22        provisions of this subparagraph are exempt from the
23        provisions of Section 250;
24            (N) 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

 

 

09700SB0397ham002- 85 -LRB097 04209 HLH 59582 a

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            (O) An amount equal to any contribution made to a
8        job training project established pursuant to the Tax
9        Increment Allocation Redevelopment Act;
10            (P) An amount equal to the amount of the deduction
11        used to compute the federal income tax credit for
12        restoration of substantial amounts held under claim of
13        right for the taxable year pursuant to Section 1341 of
14        the Internal Revenue Code or of any itemized deduction
15        taken from adjusted gross income in the computation of
16        taxable income for restoration of substantial amounts
17        held under claim of right for the taxable year;
18            (Q) An amount equal to any amounts included in such
19        total, received by the taxpayer as an acceleration in
20        the payment of life, endowment or annuity benefits in
21        advance of the time they would otherwise be payable as
22        an indemnity for a terminal illness;
23            (R) An amount equal to the amount of any federal or
24        State bonus paid to veterans of the Persian Gulf War;
25            (S) An amount, to the extent included in adjusted
26        gross income, equal to the amount of a contribution

 

 

09700SB0397ham002- 86 -LRB097 04209 HLH 59582 a

1        made in the taxable year on behalf of the taxpayer to a
2        medical care savings account established under the
3        Medical Care Savings Account Act or the Medical Care
4        Savings Account Act of 2000 to the extent the
5        contribution is accepted by the account administrator
6        as provided in that Act;
7            (T) An amount, to the extent included in adjusted
8        gross income, equal to the amount of interest earned in
9        the taxable year on a medical care savings account
10        established under the Medical Care Savings Account Act
11        or the Medical Care Savings Account Act of 2000 on
12        behalf of the taxpayer, other than interest added
13        pursuant to item (D-5) of this paragraph (2);
14            (U) For one taxable year beginning on or after
15        January 1, 1994, an amount equal to the total amount of
16        tax imposed and paid under subsections (a) and (b) of
17        Section 201 of this Act on grant amounts received by
18        the taxpayer under the Nursing Home Grant Assistance
19        Act during the taxpayer's taxable years 1992 and 1993;
20            (V) Beginning with tax years ending on or after
21        December 31, 1995 and ending with tax years ending on
22        or before December 31, 2004, an amount equal to the
23        amount paid by a taxpayer who is a self-employed
24        taxpayer, a partner of a partnership, or a shareholder
25        in a Subchapter S corporation for health insurance or
26        long-term care insurance for that taxpayer or that

 

 

09700SB0397ham002- 87 -LRB097 04209 HLH 59582 a

1        taxpayer's spouse or dependents, to the extent that the
2        amount paid for that health insurance or long-term care
3        insurance may be deducted under Section 213 of the
4        Internal Revenue Code, has not been deducted on the
5        federal income tax return of the taxpayer, and does not
6        exceed the taxable income attributable to that
7        taxpayer's income, self-employment income, or
8        Subchapter S corporation income; except that no
9        deduction shall be allowed under this item (V) if the
10        taxpayer is eligible to participate in any health
11        insurance or long-term care insurance plan of an
12        employer of the taxpayer or the taxpayer's spouse. The
13        amount of the health insurance and long-term care
14        insurance subtracted under this item (V) shall be
15        determined by multiplying total health insurance and
16        long-term care insurance premiums paid by the taxpayer
17        times a number that represents the fractional
18        percentage of eligible medical expenses under Section
19        213 of the Internal Revenue Code of 1986 not actually
20        deducted on the taxpayer's federal income tax return;
21            (W) For taxable years beginning on or after January
22        1, 1998, all amounts included in the taxpayer's federal
23        gross income in the taxable year from amounts converted
24        from a regular IRA to a Roth IRA. This paragraph is
25        exempt from the provisions of Section 250;
26            (X) For taxable year 1999 and thereafter, an amount

 

 

09700SB0397ham002- 88 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 89 -LRB097 04209 HLH 59582 a

1        victim. The amount of and the eligibility for any
2        public assistance, benefit, or similar entitlement is
3        not affected by the inclusion of items (i) and (ii) of
4        this paragraph in gross income for federal income tax
5        purposes. This paragraph is exempt from the provisions
6        of Section 250;
7            (Y) For taxable years beginning on or after January
8        1, 2002 and ending on or before December 31, 2004,
9        moneys contributed in the taxable year to a College
10        Savings Pool account under Section 16.5 of the State
11        Treasurer Act, except that amounts excluded from gross
12        income under Section 529(c)(3)(C)(i) of the Internal
13        Revenue Code shall not be considered moneys
14        contributed under this subparagraph (Y). For taxable
15        years beginning on or after January 1, 2005, a maximum
16        of $10,000 contributed in the taxable year to (i) a
17        College Savings Pool account under Section 16.5 of the
18        State Treasurer Act or (ii) the Illinois Prepaid
19        Tuition Trust Fund, except that amounts excluded from
20        gross income under Section 529(c)(3)(C)(i) of the
21        Internal Revenue Code shall not be considered moneys
22        contributed under this subparagraph (Y). For purposes
23        of this subparagraph, contributions made by an
24        employer on behalf of an employee, or matching
25        contributions made by an employee, shall be treated as
26        made by the employee. This subparagraph (Y) is exempt

 

 

09700SB0397ham002- 90 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 91 -LRB097 04209 HLH 59582 a

1                depreciation deduction of 50% of the adjusted
2                basis was taken, "x" equals "y" multiplied by
3                1.0; and .
4                    (iii) for property on which a bonus
5                depreciation deduction of 100% of the adjusted
6                basis was taken in a taxable year ending on or
7                after December 31, 2011, "x" equals the
8                depreciation deduction that would be allowed
9                on that property if the taxpayer had made the
10                election under Section 168(k)(2)(D)(iii) of
11                the Internal Revenue Code to not claim bonus
12                depreciation on that property.
13            The aggregate amount deducted under this
14        subparagraph in all taxable years for any one piece of
15        property may not exceed the amount of the bonus
16        depreciation deduction taken on that property on the
17        taxpayer's federal income tax return under subsection
18        (k) of Section 168 of the Internal Revenue Code. This
19        subparagraph (Z) is exempt from the provisions of
20        Section 250;
21            (AA) If the taxpayer sells, transfers, abandons,
22        or otherwise disposes of property for which the
23        taxpayer was required in any taxable year to make an
24        addition modification under subparagraph (D-15), then
25        an amount equal to that addition modification.
26            If the taxpayer continues to own property through

 

 

09700SB0397ham002- 92 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 93 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 94 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 95 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 96 -LRB097 04209 HLH 59582 a

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

 

 

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

 

 

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

 

 

09700SB0397ham002- 99 -LRB097 04209 HLH 59582 a

1        modification under this subparagraph only once with
2        respect to any one piece of property;
3            (E-12) 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 the 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 pursuant to Sections 951
25        through 964 of the Internal Revenue Code and amounts
26        included in gross income under Section 78 of the

 

 

09700SB0397ham002- 100 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 101 -LRB097 04209 HLH 59582 a

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

 

 

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

 

 

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

 

 

09700SB0397ham002- 104 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 105 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 106 -LRB097 04209 HLH 59582 a

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

 

 

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

 

 

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

 

 

09700SB0397ham002- 109 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 110 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 111 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 112 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 113 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 114 -LRB097 04209 HLH 59582 a

1        thereafter, an amount equal to "x", where:
2                (1) "y" equals the amount of the depreciation
3            deduction taken for the taxable year on the
4            taxpayer's federal income tax return on property
5            for which the bonus depreciation deduction was
6            taken in any year under subsection (k) of Section
7            168 of the Internal Revenue Code, but not including
8            the bonus depreciation deduction;
9                (2) for taxable years ending on or before
10            December 31, 2005, "x" equals "y" multiplied by 30
11            and then divided by 70 (or "y" multiplied by
12            0.429); and
13                (3) for taxable years ending after December
14            31, 2005:
15                    (i) for property on which a bonus
16                depreciation deduction of 30% of the adjusted
17                basis was taken, "x" equals "y" multiplied by
18                30 and then divided by 70 (or "y" multiplied by
19                0.429); and
20                    (ii) for property on which a bonus
21                depreciation deduction of 50% of the adjusted
22                basis was taken, "x" equals "y" multiplied by
23                1.0; and .
24                    (iii) for property on which a bonus
25                depreciation deduction of 100% of the adjusted
26                basis was taken in a taxable year ending on or

 

 

09700SB0397ham002- 115 -LRB097 04209 HLH 59582 a

1                after December 31, 2011, "x" equals the
2                depreciation deduction that would be allowed
3                on that property if the taxpayer had made the
4                election under Section 168(k)(2)(D)(iii) of
5                the Internal Revenue Code to not claim bonus
6                depreciation on that property.
7            The aggregate amount deducted under this
8        subparagraph in all taxable years for any one piece of
9        property may not exceed the amount of the bonus
10        depreciation deduction taken on that property on the
11        taxpayer's federal income tax return under subsection
12        (k) of Section 168 of the Internal Revenue Code. This
13        subparagraph (T) is exempt from the provisions of
14        Section 250;
15            (U) If the taxpayer sells, transfers, abandons, or
16        otherwise disposes of property for which the taxpayer
17        was required in any taxable year to make an addition
18        modification under subparagraph (E-10), then an amount
19        equal to that addition modification.
20            If the taxpayer continues to own property through
21        the last day of the last tax year for which a
22        subtraction is allowed with respect to that property
23        under subparagraph (T), the taxpayer may claim a
24        depreciation deduction for federal income tax purposes
25        and for which the taxpayer was required in any taxable
26        year to make an addition modification under

 

 

09700SB0397ham002- 116 -LRB097 04209 HLH 59582 a

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

 

 

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

 

 

09700SB0397ham002- 118 -LRB097 04209 HLH 59582 a

1            (X) An amount equal to the income from intangible
2        property taken into account for the taxable year (net
3        of the 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 that 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(b)(2)(E-13) for
18        intangible expenses and costs paid, accrued, or
19        incurred, directly or indirectly, to the same foreign
20        person. This subparagraph (X) is exempt from the
21        provisions of Section 250;
22            (Y) For taxable years ending on or after December
23        31, 2011, in the case of a taxpayer who was required to
24        add back any insurance premiums under Section
25        203(b)(2)(E-14), such taxpayer may elect to subtract
26        that part of a reimbursement received from the

 

 

09700SB0397ham002- 119 -LRB097 04209 HLH 59582 a

1        insurance company equal to the amount of the expense or
2        loss (including expenses incurred by the insurance
3        company) that would have been taken into account as a
4        deduction for federal income tax purposes if the
5        expense or loss had been uninsured. If a taxpayer makes
6        the election provided for by this subparagraph (Y), the
7        insurer to which the premiums were paid must add back
8        to income the amount subtracted by the taxpayer
9        pursuant to this subparagraph (Y). This subparagraph
10        (Y) is exempt from the provisions of Section 250; and
11            (Z) The difference between the nondeductible
12        controlled foreign corporation dividends under Section
13        965(e)(3) of the Internal Revenue Code over the taxable
14        income of the taxpayer, computed without regard to
15        Section 965(e)(2)(A) of the Internal Revenue Code, and
16        without regard to any net operating loss deduction.
17        This subparagraph (Z) is exempt from the provisions of
18        Section 250.
19        (3) Special rule. For purposes of paragraph (2) (A),
20    "gross income" in the case of a life insurance company, for
21    tax years ending on and after December 31, 1994, and prior
22    to December 31, 2011, shall mean the gross investment
23    income for the taxable year and, for tax years ending on or
24    after December 31, 2011, shall mean all amounts included in
25    life insurance gross income under Section 803(a)(3) of the
26    Internal Revenue Code.
 

 

 

09700SB0397ham002- 120 -LRB097 04209 HLH 59582 a

1    (c) Trusts and estates.
2        (1) In general. In the case of a trust or estate, base
3    income means an amount equal to the taxpayer's taxable
4    income for the taxable year as modified by paragraph (2).
5        (2) Modifications. Subject to the provisions of
6    paragraph (3), the taxable income referred to in paragraph
7    (1) shall be modified by adding thereto the sum of the
8    following amounts:
9            (A) An amount equal to all amounts paid or accrued
10        to the taxpayer as interest or dividends during the
11        taxable year to the extent excluded from gross income
12        in the computation of taxable income;
13            (B) In the case of (i) an estate, $600; (ii) a
14        trust which, under its governing instrument, is
15        required to distribute all of its income currently,
16        $300; and (iii) any other trust, $100, but in each such
17        case, only to the extent such amount was deducted in
18        the computation of taxable income;
19            (C) An amount equal to the amount of tax imposed by
20        this Act to the extent deducted from gross income in
21        the computation of taxable income for the taxable year;
22            (D) The amount of any net operating loss deduction
23        taken in arriving at taxable income, other than a net
24        operating loss carried forward from a taxable year
25        ending prior to December 31, 1986;

 

 

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

 

 

09700SB0397ham002- 122 -LRB097 04209 HLH 59582 a

1        addition modification provided in this subparagraph
2        (E) shall be the sum of the amounts computed
3        independently under the preceding provisions of this
4        subparagraph (E) for each such taxable year;
5            (F) For taxable years ending on or after January 1,
6        1989, an amount equal to the tax deducted pursuant to
7        Section 164 of the Internal Revenue Code if the trust
8        or estate is claiming the same tax for purposes of the
9        Illinois foreign tax credit under Section 601 of this
10        Act;
11            (G) An amount equal to the amount of the capital
12        gain deduction allowable under the Internal Revenue
13        Code, to the extent deducted from gross income in the
14        computation of taxable income;
15            (G-5) For taxable years ending after December 31,
16        1997, an amount equal to any eligible remediation costs
17        that the trust or estate deducted in computing adjusted
18        gross income and for which the trust or estate claims a
19        credit under subsection (l) of Section 201;
20            (G-10) For taxable years 2001 and thereafter, an
21        amount equal to the bonus depreciation deduction taken
22        on the taxpayer's federal income tax return for the
23        taxable year under subsection (k) of Section 168 of the
24        Internal Revenue Code; and
25            (G-11) If the taxpayer sells, transfers, abandons,
26        or otherwise disposes of property for which the

 

 

09700SB0397ham002- 123 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 124 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 125 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 126 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 127 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 128 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 129 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 130 -LRB097 04209 HLH 59582 a

1        included in the unitary business group because he or
2        she is ordinarily required to apportion business
3        income under different subsections of Section 304. The
4        addition modification required by this subparagraph
5        shall be reduced to the extent that dividends were
6        included in base income of the unitary group for the
7        same taxable year and received by the taxpayer or by a
8        member of the taxpayer's unitary business group
9        (including amounts included in gross income under
10        Sections 951 through 964 of the Internal Revenue Code
11        and amounts included in gross income under Section 78
12        of the Internal Revenue Code) with respect to the stock
13        of the same person to whom the premiums and costs were
14        directly or indirectly paid, incurred, or accrued. The
15        preceding sentence does not apply to the extent that
16        the same dividends caused a reduction to the addition
17        modification required under Section 203(c)(2)(G-12) or
18        Section 203(c)(2)(G-13) of this Act;
19            (G-15) An amount equal to the credit allowable to
20        the taxpayer under Section 218(a) of this Act,
21        determined without regard to Section 218(c) of this
22        Act;
23    and by deducting from the total so obtained the sum of the
24    following amounts:
25            (H) An amount equal to all amounts included in such
26        total pursuant to the provisions of Sections 402(a),

 

 

09700SB0397ham002- 131 -LRB097 04209 HLH 59582 a

1        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
2        Internal Revenue Code or included in such total as
3        distributions under the provisions of any retirement
4        or disability plan for employees of any governmental
5        agency or unit, or retirement payments to retired
6        partners, which payments are excluded in computing net
7        earnings from self employment by Section 1402 of the
8        Internal Revenue Code and regulations adopted pursuant
9        thereto;
10            (I) The valuation limitation amount;
11            (J) An amount equal to the amount of any tax
12        imposed by this Act which was refunded to the taxpayer
13        and included in such total for the taxable year;
14            (K) An amount equal to all amounts included in
15        taxable income as modified by subparagraphs (A), (B),
16        (C), (D), (E), (F) and (G) which are exempt from
17        taxation by this State either by reason of its statutes
18        or Constitution or by reason of the Constitution,
19        treaties or statutes of the United States; provided
20        that, in the case of any statute of this State that
21        exempts income derived from bonds or other obligations
22        from the tax imposed under this Act, the amount
23        exempted shall be the interest net of bond premium
24        amortization;
25            (L) With the exception of any amounts subtracted
26        under subparagraph (K), an amount equal to the sum of

 

 

09700SB0397ham002- 132 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 133 -LRB097 04209 HLH 59582 a

1        Increment Allocation Redevelopment Act;
2            (O) An amount equal to those dividends included in
3        such total that were paid by a corporation that
4        conducts business operations in a federally designated
5        Foreign Trade Zone or Sub-Zone and that is designated a
6        High Impact Business located in Illinois; provided
7        that dividends eligible for the deduction provided in
8        subparagraph (M) of paragraph (2) of this subsection
9        shall not be eligible for the deduction provided under
10        this subparagraph (O);
11            (P) An amount equal to the amount of the deduction
12        used to compute the federal income tax credit for
13        restoration of substantial amounts held under claim of
14        right for the taxable year pursuant to Section 1341 of
15        the Internal Revenue Code;
16            (Q) For taxable year 1999 and thereafter, an amount
17        equal to the amount of any (i) distributions, to the
18        extent includible in gross income for federal income
19        tax purposes, made to the taxpayer because of his or
20        her status as a victim of persecution for racial or
21        religious reasons by Nazi Germany or any other Axis
22        regime or as an heir of the victim and (ii) items of
23        income, to the extent includible in gross income for
24        federal income tax purposes, attributable to, derived
25        from or in any way related to assets stolen from,
26        hidden from, or otherwise lost to a victim of

 

 

09700SB0397ham002- 134 -LRB097 04209 HLH 59582 a

1        persecution for racial or religious reasons by Nazi
2        Germany or any other Axis regime immediately prior to,
3        during, and immediately after World War II, including,
4        but not limited to, interest on the proceeds receivable
5        as insurance under policies issued to a victim of
6        persecution for racial or religious reasons by Nazi
7        Germany or any other Axis regime by European insurance
8        companies immediately prior to and during World War II;
9        provided, however, this subtraction from federal
10        adjusted gross income does not apply to assets acquired
11        with such assets or with the proceeds from the sale of
12        such assets; provided, further, this paragraph shall
13        only apply to a taxpayer who was the first recipient of
14        such assets after their recovery and who is a victim of
15        persecution for racial or religious reasons by Nazi
16        Germany or any other Axis regime or as an heir of the
17        victim. The amount of and the eligibility for any
18        public assistance, benefit, or similar entitlement is
19        not affected by the inclusion of items (i) and (ii) of
20        this paragraph in gross income for federal income tax
21        purposes. This paragraph is exempt from the provisions
22        of Section 250;
23            (R) For taxable years 2001 and thereafter, for the
24        taxable year in which the bonus depreciation deduction
25        is taken on the taxpayer's federal income tax return
26        under subsection (k) of Section 168 of the Internal

 

 

09700SB0397ham002- 135 -LRB097 04209 HLH 59582 a

1        Revenue Code and for each applicable taxable year
2        thereafter, an amount equal to "x", where:
3                (1) "y" equals the amount of the depreciation
4            deduction taken for the taxable year on the
5            taxpayer's federal income tax return on property
6            for which the bonus depreciation deduction was
7            taken in any year under subsection (k) of Section
8            168 of the Internal Revenue Code, but not including
9            the bonus depreciation deduction;
10                (2) for taxable years ending on or before
11            December 31, 2005, "x" equals "y" multiplied by 30
12            and then divided by 70 (or "y" multiplied by
13            0.429); and
14                (3) for taxable years ending after December
15            31, 2005:
16                    (i) for property on which a bonus
17                depreciation deduction of 30% of the adjusted
18                basis was taken, "x" equals "y" multiplied by
19                30 and then divided by 70 (or "y" multiplied by
20                0.429); and
21                    (ii) for property on which a bonus
22                depreciation deduction of 50% of the adjusted
23                basis was taken, "x" equals "y" multiplied by
24                1.0; and .
25                    (iii) for property on which a bonus
26                depreciation deduction of 100% of the adjusted

 

 

09700SB0397ham002- 136 -LRB097 04209 HLH 59582 a

1                basis was taken in a taxable year ending on or
2                after December 31, 2011, "x" equals the
3                depreciation deduction that would be allowed
4                on that property if the taxpayer had made the
5                election under Section 168(k)(2)(D)(iii) of
6                the Internal Revenue Code to not claim bonus
7                depreciation on that property.
8            The aggregate amount deducted under this
9        subparagraph in all taxable years for any one piece of
10        property may not exceed the amount of the bonus
11        depreciation deduction taken on that property on the
12        taxpayer's federal income tax return under subsection
13        (k) of Section 168 of the Internal Revenue Code. This
14        subparagraph (R) is exempt from the provisions of
15        Section 250;
16            (S) If the taxpayer sells, transfers, abandons, or
17        otherwise disposes of property for which the taxpayer
18        was required in any taxable year to make an addition
19        modification under subparagraph (G-10), then an amount
20        equal to that addition modification.
21            If the taxpayer continues to own property through
22        the last day of the last tax year for which a
23        subtraction is allowed with respect to that property
24        under subparagraph (R), the taxpayer may claim a
25        depreciation deduction for federal income tax purposes
26        and for which the taxpayer was required in any taxable

 

 

09700SB0397ham002- 137 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 138 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 139 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 140 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 141 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 142 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 143 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 144 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 145 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 146 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 147 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 148 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 149 -LRB097 04209 HLH 59582 a

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

 

 

09700SB0397ham002- 150 -LRB097 04209 HLH 59582 a

1        and included in such total for the taxable year;
2            (G) An amount equal to all amounts included in
3        taxable income as modified by subparagraphs (A), (B),
4        (C) and (D) which are exempt from taxation by this
5        State either by reason of its statutes or Constitution
6        or by reason of the Constitution, treaties or statutes
7        of the United States; provided that, in the case of any
8        statute of this State that exempts income derived from
9        bonds or other obligations from the tax imposed under
10        this Act, the amount exempted shall be the interest net
11        of bond premium amortization;
12            (H) Any income of the partnership which
13        constitutes personal service income as defined in
14        Section 1348 (b) (1) of the Internal Revenue Code (as
15        in effect December 31, 1981) or a reasonable allowance
16        for compensation paid or accrued for services rendered
17        by partners to the partnership, whichever is greater;
18        this subparagraph (H) is exempt from the provisions of
19        Section 250;
20            (I) An amount equal to all amounts of income
21        distributable to an entity subject to the Personal
22        Property Tax Replacement Income Tax imposed by
23        subsections (c) and (d) of Section 201 of this Act
24        including amounts distributable to organizations
25        exempt from federal income tax by reason of Section
26        501(a) of the Internal Revenue Code; this subparagraph

 

 

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

 

 

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

 

 

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1            deduction taken for the taxable year on the
2            taxpayer's federal income tax return on property
3            for which the bonus depreciation deduction was
4            taken in any year under subsection (k) of Section
5            168 of the Internal Revenue Code, but not including
6            the bonus depreciation deduction;
7                (2) for taxable years ending on or before
8            December 31, 2005, "x" equals "y" multiplied by 30
9            and then divided by 70 (or "y" multiplied by
10            0.429); and
11                (3) for taxable years ending after December
12            31, 2005:
13                    (i) for property on which a bonus
14                depreciation deduction of 30% of the adjusted
15                basis was taken, "x" equals "y" multiplied by
16                30 and then divided by 70 (or "y" multiplied by
17                0.429); and
18                    (ii) for property on which a bonus
19                depreciation deduction of 50% of the adjusted
20                basis was taken, "x" equals "y" multiplied by
21                1.0; and .
22                    (iii) for property on which a bonus
23                depreciation deduction of 100% of the adjusted
24                basis was taken in a taxable year ending on or
25                after December 31, 2011, "x" equals the
26                depreciation deduction that would be allowed

 

 

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

 

 

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

 

 

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

 

 

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1        group but for the fact that the person is prohibited
2        under Section 1501(a)(27) from being included in the
3        unitary business group because he or she is ordinarily
4        required to apportion business income under different
5        subsections of Section 304, but not to exceed the
6        addition modification required to be made for the same
7        taxable year under Section 203(d)(2)(D-8) for
8        intangible expenses and costs paid, accrued, or
9        incurred, directly or indirectly, to the same person.
10        This subparagraph (S) is exempt from Section 250; and
11            (T) For taxable years ending on or after December
12        31, 2011, in the case of a taxpayer who was required to
13        add back any insurance premiums under Section
14        203(d)(2)(D-9), such taxpayer may elect to subtract
15        that part of a reimbursement received from the
16        insurance company equal to the amount of the expense or
17        loss (including expenses incurred by the insurance
18        company) that would have been taken into account as a
19        deduction for federal income tax purposes if the
20        expense or loss had been uninsured. If a taxpayer makes
21        the election provided for by this subparagraph (T), the
22        insurer to which the premiums were paid must add back
23        to income the amount subtracted by the taxpayer
24        pursuant to this subparagraph (T). This subparagraph
25        (T) is exempt from the provisions of Section 250.
 

 

 

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1    (e) Gross income; adjusted gross income; taxable income.
2        (1) In general. Subject to the provisions of paragraph
3    (2) and subsection (b) (3), for purposes of this Section
4    and Section 803(e), a taxpayer's gross income, adjusted
5    gross income, or taxable income for the taxable year shall
6    mean the amount of gross income, adjusted gross income or
7    taxable income properly reportable for federal income tax
8    purposes for the taxable year under the provisions of the
9    Internal Revenue Code. Taxable income may be less than
10    zero. However, for taxable years ending on or after
11    December 31, 1986, net operating loss carryforwards from
12    taxable years ending prior to December 31, 1986, may not
13    exceed the sum of federal taxable income for the taxable
14    year before net operating loss deduction, plus the excess
15    of addition modifications over subtraction modifications
16    for the taxable year. For taxable years ending prior to
17    December 31, 1986, taxable income may never be an amount in
18    excess of the net operating loss for the taxable year as
19    defined in subsections (c) and (d) of Section 172 of the
20    Internal Revenue Code, provided that when taxable income of
21    a corporation (other than a Subchapter S corporation),
22    trust, or estate is less than zero and addition
23    modifications, other than those provided by subparagraph
24    (E) of paragraph (2) of subsection (b) for corporations or
25    subparagraph (E) of paragraph (2) of subsection (c) for
26    trusts and estates, exceed subtraction modifications, an

 

 

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1    addition modification must be made under those
2    subparagraphs for any other taxable year to which the
3    taxable income less than zero (net operating loss) is
4    applied under Section 172 of the Internal Revenue Code or
5    under subparagraph (E) of paragraph (2) of this subsection
6    (e) applied in conjunction with Section 172 of the Internal
7    Revenue Code.
8        (2) Special rule. For purposes of paragraph (1) of this
9    subsection, the taxable income properly reportable for
10    federal income tax purposes shall mean:
11            (A) Certain life insurance companies. In the case
12        of a life insurance company subject to the tax imposed
13        by Section 801 of the Internal Revenue Code, life
14        insurance company taxable income, plus the amount of
15        distribution from pre-1984 policyholder surplus
16        accounts as calculated under Section 815a of the
17        Internal Revenue Code;
18            (B) Certain other insurance companies. In the case
19        of mutual insurance companies subject to the tax
20        imposed by Section 831 of the Internal Revenue Code,
21        insurance company taxable income;
22            (C) Regulated investment companies. In the case of
23        a regulated investment company subject to the tax
24        imposed by Section 852 of the Internal Revenue Code,
25        investment company taxable income;
26            (D) Real estate investment trusts. In the case of a

 

 

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1        real estate investment trust subject to the tax imposed
2        by Section 857 of the Internal Revenue Code, real
3        estate investment trust taxable income;
4            (E) Consolidated corporations. In the case of a
5        corporation which is a member of an affiliated group of
6        corporations filing a consolidated income tax return
7        for the taxable year for federal income tax purposes,
8        taxable income determined as if such corporation had
9        filed a separate return for federal income tax purposes
10        for the taxable year and each preceding taxable year
11        for which it was a member of an affiliated group. For
12        purposes of this subparagraph, the taxpayer's separate
13        taxable income shall be determined as if the election
14        provided by Section 243(b) (2) of the Internal Revenue
15        Code had been in effect for all such years;
16            (F) Cooperatives. In the case of a cooperative
17        corporation or association, the taxable income of such
18        organization determined in accordance with the
19        provisions of Section 1381 through 1388 of the Internal
20        Revenue Code, but without regard to the prohibition
21        against offsetting losses from patronage activities
22        against income from nonpatronage activities; except
23        that a cooperative corporation or association may make
24        an election to follow its federal income tax treatment
25        of patronage losses and nonpatronage losses. In the
26        event such election is made, such losses shall be

 

 

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1        computed and carried over in a manner consistent with
2        subsection (a) of Section 207 of this Act and
3        apportioned by the apportionment factor reported by
4        the cooperative on its Illinois income tax return filed
5        for the taxable year in which the losses are incurred.
6        The election shall be effective for all taxable years
7        with original returns due on or after the date of the
8        election. In addition, the cooperative may file an
9        amended return or returns, as allowed under this Act,
10        to provide that the election shall be effective for
11        losses incurred or carried forward for taxable years
12        occurring prior to the date of the election. Once made,
13        the election may only be revoked upon approval of the
14        Director. The Department shall adopt rules setting
15        forth requirements for documenting the elections and
16        any resulting Illinois net loss and the standards to be
17        used by the Director in evaluating requests to revoke
18        elections. Public Act 96-932 is declaratory of
19        existing law;
20            (G) Subchapter S corporations. In the case of: (i)
21        a Subchapter S corporation for which there is in effect
22        an election for the taxable year under Section 1362 of
23        the Internal Revenue Code, the taxable income of such
24        corporation determined in accordance with Section
25        1363(b) of the Internal Revenue Code, except that
26        taxable income shall take into account those items

 

 

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1        which are required by Section 1363(b)(1) of the
2        Internal Revenue Code to be separately stated; and (ii)
3        a Subchapter S corporation for which there is in effect
4        a federal election to opt out of the provisions of the
5        Subchapter S Revision Act of 1982 and have applied
6        instead the prior federal Subchapter S rules as in
7        effect on July 1, 1982, the taxable income of such
8        corporation determined in accordance with the federal
9        Subchapter S rules as in effect on July 1, 1982; and
10            (H) Partnerships. In the case of a partnership,
11        taxable income determined in accordance with Section
12        703 of the Internal Revenue Code, except that taxable
13        income shall take into account those items which are
14        required by Section 703(a)(1) to be separately stated
15        but which would be taken into account by an individual
16        in calculating his taxable income.
17        (3) Recapture of business expenses on disposition of
18    asset or business. Notwithstanding any other law to the
19    contrary, if in prior years income from an asset or
20    business has been classified as business income and in a
21    later year is demonstrated to be non-business income, then
22    all expenses, without limitation, deducted in such later
23    year and in the 2 immediately preceding taxable years
24    related to that asset or business that generated the
25    non-business income shall be added back and recaptured as
26    business income in the year of the disposition of the asset

 

 

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1    or business. Such amount shall be apportioned to Illinois
2    using the greater of the apportionment fraction computed
3    for the business under Section 304 of this Act for the
4    taxable year or the average of the apportionment fractions
5    computed for the business under Section 304 of this Act for
6    the taxable year and for the 2 immediately preceding
7    taxable years.
 
8    (f) Valuation limitation amount.
9        (1) In general. The valuation limitation amount
10    referred to in subsections (a) (2) (G), (c) (2) (I) and
11    (d)(2) (E) is an amount equal to:
12            (A) The sum of the pre-August 1, 1969 appreciation
13        amounts (to the extent consisting of gain reportable
14        under the provisions of Section 1245 or 1250 of the
15        Internal Revenue Code) for all property in respect of
16        which such gain was reported for the taxable year; plus
17            (B) The lesser of (i) the sum of the pre-August 1,
18        1969 appreciation amounts (to the extent consisting of
19        capital gain) for all property in respect of which such
20        gain was reported for federal income tax purposes for
21        the taxable year, or (ii) the net capital gain for the
22        taxable year, reduced in either case by any amount of
23        such gain included in the amount determined under
24        subsection (a) (2) (F) or (c) (2) (H).
25        (2) Pre-August 1, 1969 appreciation amount.

 

 

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1            (A) If the fair market value of property referred
2        to in paragraph (1) was readily ascertainable on August
3        1, 1969, the pre-August 1, 1969 appreciation amount for
4        such property is the lesser of (i) the excess of such
5        fair market value over the taxpayer's basis (for
6        determining gain) for such property on that date
7        (determined under the Internal Revenue Code as in
8        effect on that date), or (ii) the total gain realized
9        and reportable for federal income tax purposes in
10        respect of the sale, exchange or other disposition of
11        such property.
12            (B) If the fair market value of property referred
13        to in paragraph (1) was not readily ascertainable on
14        August 1, 1969, the pre-August 1, 1969 appreciation
15        amount for such property is that amount which bears the
16        same ratio to the total gain reported in respect of the
17        property for federal income tax purposes for the
18        taxable year, as the number of full calendar months in
19        that part of the taxpayer's holding period for the
20        property ending July 31, 1969 bears to the number of
21        full calendar months in the taxpayer's entire holding
22        period for the property.
23            (C) The Department shall prescribe such
24        regulations as may be necessary to carry out the
25        purposes of this paragraph.
 

 

 

09700SB0397ham002- 165 -LRB097 04209 HLH 59582 a

1    (g) Double deductions. Unless specifically provided
2otherwise, nothing in this Section shall permit the same item
3to be deducted more than once.
 
4    (h) Legislative intention. Except as expressly provided by
5this Section there shall be no modifications or limitations on
6the amounts of income, gain, loss or deduction taken into
7account in determining gross income, adjusted gross income or
8taxable income for federal income tax purposes for the taxable
9year, or in the amount of such items entering into the
10computation of base income and net income under this Act for
11such taxable year, whether in respect of property values as of
12August 1, 1969 or otherwise.
13(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
14eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1596-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
166-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
17eff. 8-23-11.)
 
18    (35 ILCS 5/204)  (from Ch. 120, par. 2-204)
19    Sec. 204. Standard Exemption.
20    (a) Allowance of exemption. In computing net income under
21this Act, there shall be allowed as an exemption the sum of the
22amounts determined under subsections (b), (c) and (d),
23multiplied by a fraction the numerator of which is the amount
24of the taxpayer's base income allocable to this State for the

 

 

09700SB0397ham002- 166 -LRB097 04209 HLH 59582 a

1taxable year and the denominator of which is the taxpayer's
2total base income for the taxable year.
3    (b) Basic amount. For the purpose of subsection (a) of this
4Section, except as provided by subsection (a) of Section 205
5and in this subsection, each taxpayer shall be allowed a basic
6amount of $1000, except that for corporations the basic amount
7shall be zero for tax years ending on or after December 31,
82003, and for individuals the basic amount shall be:
9        (1) for taxable years ending on or after December 31,
10    1998 and prior to December 31, 1999, $1,300;
11        (2) for taxable years ending on or after December 31,
12    1999 and prior to December 31, 2000, $1,650;
13        (3) for taxable years ending on or after December 31,
14    2000 and prior to December 31, 2012, $2,000; .
15        (4) for taxable years ending on or after December 31,
16    2012, $2,000 plus the cost-of-living adjustment under
17    subsection (d-5).
18For taxable years ending on or after December 31, 1992, a
19taxpayer whose Illinois base income exceeds the basic amount
20and who is claimed as a dependent on another person's tax
21return under the Internal Revenue Code shall not be allowed any
22basic amount under this subsection.
23    (c) Additional amount for individuals. In the case of an
24individual taxpayer, there shall be allowed for the purpose of
25subsection (a), in addition to the basic amount provided by
26subsection (b), an additional exemption equal to the basic

 

 

09700SB0397ham002- 167 -LRB097 04209 HLH 59582 a

1amount for each exemption in excess of one allowable to such
2individual taxpayer for the taxable year under Section 151 of
3the Internal Revenue Code.
4    (d) Additional exemptions for an individual taxpayer and
5his or her spouse. In the case of an individual taxpayer and
6his or her spouse, he or she shall each be allowed additional
7exemptions as follows:
8        (1) Additional exemption for taxpayer or spouse 65
9    years of age or older.
10            (A) For taxpayer. An additional exemption of
11        $1,000 for the taxpayer if he or she has attained the
12        age of 65 before the end of the taxable year.
13            (B) For spouse when a joint return is not filed. An
14        additional exemption of $1,000 for the spouse of the
15        taxpayer if a joint return is not made by the taxpayer
16        and his spouse, and if the spouse has attained the age
17        of 65 before the end of such taxable year, and, for the
18        calendar year in which the taxable year of the taxpayer
19        begins, has no gross income and is not the dependent of
20        another taxpayer.
21        (2) Additional exemption for blindness of taxpayer or
22    spouse.
23            (A) For taxpayer. An additional exemption of
24        $1,000 for the taxpayer if he or she is blind at the
25        end of the taxable year.
26            (B) For spouse when a joint return is not filed. An

 

 

09700SB0397ham002- 168 -LRB097 04209 HLH 59582 a

1        additional exemption of $1,000 for the spouse of the
2        taxpayer if a separate return is made by the taxpayer,
3        and if the spouse is blind and, for the calendar year
4        in which the taxable year of the taxpayer begins, has
5        no gross income and is not the dependent of another
6        taxpayer. For purposes of this paragraph, the
7        determination of whether the spouse is blind shall be
8        made as of the end of the taxable year of the taxpayer;
9        except that if the spouse dies during such taxable year
10        such determination shall be made as of the time of such
11        death.
12            (C) Blindness defined. For purposes of this
13        subsection, an individual is blind only if his or her
14        central visual acuity does not exceed 20/200 in the
15        better eye with correcting lenses, or if his or her
16        visual acuity is greater than 20/200 but is accompanied
17        by a limitation in the fields of vision such that the
18        widest diameter of the visual fields subtends an angle
19        no greater than 20 degrees.
20    (d-5) Cost-of-living adjustment. For purposes of item (4)
21of subsection (b), the cost-of-living adjustment for any
22calendar year and for taxable years ending prior to the end of
23the subsequent calendar year is equal to $2,000 times the
24percentage (if any) by which:
25        (1) the Consumer Price Index for the preceding calendar
26    year, exceeds

 

 

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1        (2) the Consumer Price Index for the calendar year
2    2010.
3    The Consumer Price Index for any calendar year is the
4average of the Consumer Price Index as of the close of the
512-month period ending on August 31 of that calendar year.
6    The term "Consumer Price Index" means the last Consumer
7Price Index for All Urban Consumers published by the United
8States Department of Labor or any successor agency.
9    If any cost-of-living adjustment is not a multiple of $25,
10that adjustment shall be rounded to the next lowest multiple of
11$25.
12    (e) Cross reference. See Article 3 for the manner of
13determining base income allocable to this State.
14    (f) Application of Section 250. Section 250 does not apply
15to the amendments to this Section made by Public Act 90-613.
16(Source: P.A. 97-507, eff. 8-23-11.)
 
17    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
18    Sec. 207. Net Losses.
19    (a) If after applying all of the (i) modifications provided
20for in paragraph (2) of Section 203(b), paragraph (2) of
21Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
22allocation and apportionment provisions of Article 3 of this
23Act and subsection (c) of this Section, the taxpayer's net
24income results in a loss;
25        (1) for any taxable year ending prior to December 31,

 

 

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1    1999, such loss shall be allowed as a carryover or
2    carryback deduction in the manner allowed under Section 172
3    of the Internal Revenue Code;
4        (2) for any taxable year ending on or after December
5    31, 1999 and prior to December 31, 2003, such loss shall be
6    allowed as a carryback to each of the 2 taxable years
7    preceding the taxable year of such loss and shall be a net
8    operating loss carryover to each of the 20 taxable years
9    following the taxable year of such loss; and
10        (3) for any taxable year ending on or after December
11    31, 2003, such loss shall be allowed as a net operating
12    loss carryover to each of the 12 taxable years following
13    the taxable year of such loss, except as provided in
14    subsection (d).
15    (a-5) Election to relinquish carryback and order of
16application of losses.
17            (A) For losses incurred in tax years ending prior
18        to December 31, 2003, the taxpayer may elect to
19        relinquish the entire carryback period with respect to
20        such loss. Such election shall be made in the form and
21        manner prescribed by the Department and shall be made
22        by the due date (including extensions of time) for
23        filing the taxpayer's return for the taxable year in
24        which such loss is incurred, and such election, once
25        made, shall be irrevocable.
26            (B) The entire amount of such loss shall be carried

 

 

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1        to the earliest taxable year to which such loss may be
2        carried. The amount of such loss which shall be carried
3        to each of the other taxable years shall be the excess,
4        if any, of the amount of such loss over the sum of the
5        deductions for carryback or carryover of such loss
6        allowable for each of the prior taxable years to which
7        such loss may be carried.
8    (b) Any loss determined under subsection (a) of this
9Section must be carried back or carried forward in the same
10manner for purposes of subsections (a) and (b) of Section 201
11of this Act as for purposes of subsections (c) and (d) of
12Section 201 of this Act.
13    (c) Notwithstanding any other provision of this Act, for
14each taxable year ending on or after December 31, 2008, for
15purposes of computing the loss for the taxable year under
16subsection (a) of this Section and the deduction taken into
17account for the taxable year for a net operating loss carryover
18under paragraphs (1), (2), and (3) of subsection (a) of this
19Section, the loss and net operating loss carryover shall be
20reduced in an amount equal to the reduction to the net
21operating loss and net operating loss carryover to the taxable
22year, respectively, required under Section 108(b)(2)(A) of the
23Internal Revenue Code, multiplied by a fraction, the numerator
24of which is the amount of discharge of indebtedness income that
25is excluded from gross income for the taxable year (but only if
26the taxable year ends on or after December 31, 2008) under

 

 

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1Section 108(a) of the Internal Revenue Code and that would have
2been allocated and apportioned to this State under Article 3 of
3this Act but for that exclusion, and the denominator of which
4is the total amount of discharge of indebtedness income
5excluded from gross income under Section 108(a) of the Internal
6Revenue Code for the taxable year. The reduction required under
7this subsection (c) shall be made after the determination of
8Illinois net income for the taxable year in which the
9indebtedness is discharged.
10    (d) In the case of a corporation (other than a Subchapter S
11corporation), no carryover deduction shall be allowed under
12this Section for any taxable year ending after December 31,
132010 and prior to December 31, 2012 December 31, 2014; provided
14that, for purposes of determining the taxable years to which a
15net loss may be carried under subsection (a) of this Section,
16no taxable year for which a deduction is disallowed under this
17subsection shall be counted.
18    (e) In the case of a residual interest holder in a real
19estate mortgage investment conduit subject to Section 860E of
20the Internal Revenue Code, the net loss in subsection (a) shall
21be equal to:
22        (1) the amount computed under subsection (a), without
23    regard to this subsection (e), or if that amount is
24    positive, zero;
25        (2) minus an amount equal to the amount computed under
26    subsection (a), without regard to this subsection (e),

 

 

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1    minus the amount that would be computed under subsection
2    (a) if the taxpayer's federal taxable income were computed
3    without regard to Section 860E of the Internal Revenue Code
4    and without regard to this subsection (e).
5    The modification in this subsection (e) is exempt from the
6provisions of Section 250.
7(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11.)
 
8    (35 ILCS 5/212)
9    Sec. 212. Earned income tax credit.
10    (a) With respect to the federal earned income tax credit
11allowed for the taxable year under Section 32 of the federal
12Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer
13is entitled to a credit against the tax imposed by subsections
14(a) and (b) of Section 201 in an amount equal to 5% of the
15federal tax credit for each taxable year beginning on or after
16January 1, 2000 and ending prior to December 31, 2012; (ii) 10%
17of the federal tax credit for each taxable year beginning on or
18after January 1, 2012 and ending prior to December 31, 2013;
19and (iii) 15% of the federal tax credit for each taxable year
20beginning on or after January 1, 2013.
21    For a non-resident or part-year resident, the amount of the
22credit under this Section shall be in proportion to the amount
23of income attributable to this State.
24    (b) For taxable years beginning before January 1, 2003, in
25no event shall a credit under this Section reduce the

 

 

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1taxpayer's liability to less than zero. For each taxable year
2beginning on or after January 1, 2003, if the amount of the
3credit exceeds the income tax liability for the applicable tax
4year, then the excess credit shall be refunded to the taxpayer.
5The amount of a refund shall not be included in the taxpayer's
6income or resources for the purposes of determining eligibility
7or benefit level in any means-tested benefit program
8administered by a governmental entity unless required by
9federal law.
10    (c) This Section is exempt from the provisions of Section
11250.
12(Source: P.A. 95-333, eff. 8-21-07.)
 
13    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
14    Sec. 304. Business income of persons other than residents.
15    (a) In general. The business income of a person other than
16a resident shall be allocated to this State if such person's
17business income is derived solely from this State. If a person
18other than a resident derives business income from this State
19and one or more other states, then, for tax years ending on or
20before December 30, 1998, and except as otherwise provided by
21this Section, such person's business income shall be
22apportioned to this State by multiplying the income by a
23fraction, the numerator of which is the sum of the property
24factor (if any), the payroll factor (if any) and 200% of the
25sales factor (if any), and the denominator of which is 4

 

 

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1reduced by the number of factors other than the sales factor
2which have a denominator of zero and by an additional 2 if the
3sales factor has a denominator of zero. For tax years ending on
4or after December 31, 1998, and except as otherwise provided by
5this Section, persons other than residents who derive business
6income from this State and one or more other states shall
7compute their apportionment factor by weighting their
8property, payroll, and sales factors as provided in subsection
9(h) of this Section.
10    (1) Property factor.
11        (A) The property factor is a fraction, the numerator of
12    which is the average value of the person's real and
13    tangible personal property owned or rented and used in the
14    trade or business in this State during the taxable year and
15    the denominator of which is the average value of all the
16    person's real and tangible personal property owned or
17    rented and used in the trade or business during the taxable
18    year.
19        (B) Property owned by the person is valued at its
20    original cost. Property rented by the person is valued at 8
21    times the net annual rental rate. Net annual rental rate is
22    the annual rental rate paid by the person less any annual
23    rental rate received by the person from sub-rentals.
24        (C) The average value of property shall be determined
25    by averaging the values at the beginning and ending of the
26    taxable year but the Director may require the averaging of

 

 

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1    monthly values during the taxable year if reasonably
2    required to reflect properly the average value of the
3    person's property.
4    (2) Payroll factor.
5        (A) The payroll factor is a fraction, the numerator of
6    which is the total amount paid in this State during the
7    taxable year by the person for compensation, and the
8    denominator of which is the total compensation paid
9    everywhere during the taxable year.
10        (B) Compensation is paid in this State if:
11            (i) The individual's service is performed entirely
12        within this State;
13            (ii) The individual's service is performed both
14        within and without this State, but the service
15        performed without this State is incidental to the
16        individual's service performed within this State; or
17            (iii) Some of the service is performed within this
18        State and either the base of operations, or if there is
19        no base of operations, the place from which the service
20        is directed or controlled is within this State, or the
21        base of operations or the place from which the service
22        is directed or controlled is not in any state in which
23        some part of the service is performed, but the
24        individual's residence is in this State.
25            (iv) Compensation paid to nonresident professional
26        athletes.

 

 

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1            (a) General. The Illinois source income of a
2        nonresident individual who is a member of a
3        professional athletic team includes the portion of the
4        individual's total compensation for services performed
5        as a member of a professional athletic team during the
6        taxable year which the number of duty days spent within
7        this State performing services for the team in any
8        manner during the taxable year bears to the total
9        number of duty days spent both within and without this
10        State during the taxable year.
11            (b) Travel days. Travel days that do not involve
12        either a game, practice, team meeting, or other similar
13        team event are not considered duty days spent in this
14        State. However, such travel days are considered in the
15        total duty days spent both within and without this
16        State.
17            (c) Definitions. For purposes of this subpart
18        (iv):
19                (1) The term "professional athletic team"
20            includes, but is not limited to, any professional
21            baseball, basketball, football, soccer, or hockey
22            team.
23                (2) The term "member of a professional
24            athletic team" includes those employees who are
25            active players, players on the disabled list, and
26            any other persons required to travel and who travel

 

 

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1            with and perform services on behalf of a
2            professional athletic team on a regular basis.
3            This includes, but is not limited to, coaches,
4            managers, and trainers.
5                (3) Except as provided in items (C) and (D) of
6            this subpart (3), the term "duty days" means all
7            days during the taxable year from the beginning of
8            the professional athletic team's official
9            pre-season training period through the last game
10            in which the team competes or is scheduled to
11            compete. Duty days shall be counted for the year in
12            which they occur, including where a team's
13            official pre-season training period through the
14            last game in which the team competes or is
15            scheduled to compete, occurs during more than one
16            tax year.
17                    (A) Duty days shall also include days on
18                which a member of a professional athletic team
19                performs service for a team on a date that does
20                not fall within the foregoing period (e.g.,
21                participation in instructional leagues, the
22                "All Star Game", or promotional "caravans").
23                Performing a service for a professional
24                athletic team includes conducting training and
25                rehabilitation activities, when such
26                activities are conducted at team facilities.

 

 

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1                    (B) Also included in duty days are game
2                days, practice days, days spent at team
3                meetings, promotional caravans, preseason
4                training camps, and days served with the team
5                through all post-season games in which the team
6                competes or is scheduled to compete.
7                    (C) Duty days for any person who joins a
8                team during the period from the beginning of
9                the professional athletic team's official
10                pre-season training period through the last
11                game in which the team competes, or is
12                scheduled to compete, shall begin on the day
13                that person joins the team. Conversely, duty
14                days for any person who leaves a team during
15                this period shall end on the day that person
16                leaves the team. Where a person switches teams
17                during a taxable year, a separate duty-day
18                calculation shall be made for the period the
19                person was with each team.
20                    (D) Days for which a member of a
21                professional athletic team is not compensated
22                and is not performing services for the team in
23                any manner, including days when such member of
24                a professional athletic team has been
25                suspended without pay and prohibited from
26                performing any services for the team, shall not

 

 

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1                be treated as duty days.
2                    (E) Days for which a member of a
3                professional athletic team is on the disabled
4                list and does not conduct rehabilitation
5                activities at facilities of the team, and is
6                not otherwise performing services for the team
7                in Illinois, shall not be considered duty days
8                spent in this State. All days on the disabled
9                list, however, are considered to be included in
10                total duty days spent both within and without
11                this State.
12                (4) The term "total compensation for services
13            performed as a member of a professional athletic
14            team" means the total compensation received during
15            the taxable year for services performed:
16                    (A) from the beginning of the official
17                pre-season training period through the last
18                game in which the team competes or is scheduled
19                to compete during that taxable year; and
20                    (B) during the taxable year on a date which
21                does not fall within the foregoing period
22                (e.g., participation in instructional leagues,
23                the "All Star Game", or promotional caravans).
24                This compensation shall include, but is not
25            limited to, salaries, wages, bonuses as described
26            in this subpart, and any other type of compensation

 

 

09700SB0397ham002- 181 -LRB097 04209 HLH 59582 a

1            paid during the taxable year to a member of a
2            professional athletic team for services performed
3            in that year. This compensation does not include
4            strike benefits, severance pay, termination pay,
5            contract or option year buy-out payments,
6            expansion or relocation payments, or any other
7            payments not related to services performed for the
8            team.
9                For purposes of this subparagraph, "bonuses"
10            included in "total compensation for services
11            performed as a member of a professional athletic
12            team" subject to the allocation described in
13            Section 302(c)(1) are: bonuses earned as a result
14            of play (i.e., performance bonuses) during the
15            season, including bonuses paid for championship,
16            playoff or "bowl" games played by a team, or for
17            selection to all-star league or other honorary
18            positions; and bonuses paid for signing a
19            contract, unless the payment of the signing bonus
20            is not conditional upon the signee playing any
21            games for the team or performing any subsequent
22            services for the team or even making the team, the
23            signing bonus is payable separately from the
24            salary and any other compensation, and the signing
25            bonus is nonrefundable.
26    (3) Sales factor.

 

 

09700SB0397ham002- 182 -LRB097 04209 HLH 59582 a

1        (A) The sales factor is a fraction, the numerator of
2    which is the total sales of the person in this State during
3    the taxable year, and the denominator of which is the total
4    sales of the person everywhere during the taxable year.
5        (B) Sales of tangible personal property are in this
6    State if:
7            (i) The property is delivered or shipped to a
8        purchaser, other than the United States government,
9        within this State regardless of the f. o. b. point or
10        other conditions of the sale; or
11            (ii) The property is shipped from an office, store,
12        warehouse, factory or other place of storage in this
13        State and either the purchaser is the United States
14        government or the person is not taxable in the state of
15        the purchaser; provided, however, that premises owned
16        or leased by a person who has independently contracted
17        with the seller for the printing of newspapers,
18        periodicals or books shall not be deemed to be an
19        office, store, warehouse, factory or other place of
20        storage for purposes of this Section. Sales of tangible
21        personal property are not in this State if the seller
22        and purchaser would be members of the same unitary
23        business group but for the fact that either the seller
24        or purchaser is a person with 80% or more of total
25        business activity outside of the United States and the
26        property is purchased for resale.

 

 

09700SB0397ham002- 183 -LRB097 04209 HLH 59582 a

1        (B-1) Patents, copyrights, trademarks, and similar
2    items of intangible personal property.
3            (i) Gross receipts from the licensing, sale, or
4        other disposition of a patent, copyright, trademark,
5        or similar item of intangible personal property, other
6        than gross receipts governed by paragraph (B-7) of this
7        item (3), are in this State to the extent the item is
8        utilized in this State during the year the gross
9        receipts are included in gross income.
10            (ii) Place of utilization.
11                (I) A patent is utilized in a state to the
12            extent that it is employed in production,
13            fabrication, manufacturing, or other processing in
14            the state or to the extent that a patented product
15            is produced in the state. If a patent is utilized
16            in more than one state, the extent to which it is
17            utilized in any one state shall be a fraction equal
18            to the gross receipts of the licensee or purchaser
19            from sales or leases of items produced,
20            fabricated, manufactured, or processed within that
21            state using the patent and of patented items
22            produced within that state, divided by the total of
23            such gross receipts for all states in which the
24            patent is utilized.
25                (II) A copyright is utilized in a state to the
26            extent that printing or other publication

 

 

09700SB0397ham002- 184 -LRB097 04209 HLH 59582 a

1            originates in the state. If a copyright is utilized
2            in more than one state, the extent to which it is
3            utilized in any one state shall be a fraction equal
4            to the gross receipts from sales or licenses of
5            materials printed or published in that state
6            divided by the total of such gross receipts for all
7            states in which the copyright is utilized.
8                (III) Trademarks and other items of intangible
9            personal property governed by this paragraph (B-1)
10            are utilized in the state in which the commercial
11            domicile of the licensee or purchaser is located.
12            (iii) If the state of utilization of an item of
13        property governed by this paragraph (B-1) cannot be
14        determined from the taxpayer's books and records or
15        from the books and records of any person related to the
16        taxpayer within the meaning of Section 267(b) of the
17        Internal Revenue Code, 26 U.S.C. 267, the gross
18        receipts attributable to that item shall be excluded
19        from both the numerator and the denominator of the
20        sales factor.
21        (B-2) Gross receipts from the license, sale, or other
22    disposition of patents, copyrights, trademarks, and
23    similar items of intangible personal property, other than
24    gross receipts governed by paragraph (B-7) of this item
25    (3), may be included in the numerator or denominator of the
26    sales factor only if gross receipts from licenses, sales,

 

 

09700SB0397ham002- 185 -LRB097 04209 HLH 59582 a

1    or other disposition of such items comprise more than 50%
2    of the taxpayer's total gross receipts included in gross
3    income during the tax year and during each of the 2
4    immediately preceding tax years; provided that, when a
5    taxpayer is a member of a unitary business group, such
6    determination shall be made on the basis of the gross
7    receipts of the entire unitary business group.
8        (B-5) For taxable years ending on or after December 31,
9    2008, except as provided in subsections (ii) through (vii),
10    receipts from the sale of telecommunications service or
11    mobile telecommunications service are in this State if the
12    customer's service address is in this State.
13            (i) For purposes of this subparagraph (B-5), the
14        following terms have the following meanings:
15            "Ancillary services" means services that are
16        associated with or incidental to the provision of
17        "telecommunications services", including but not
18        limited to "detailed telecommunications billing",
19        "directory assistance", "vertical service", and "voice
20        mail services".
21            "Air-to-Ground Radiotelephone service" means a
22        radio service, as that term is defined in 47 CFR 22.99,
23        in which common carriers are authorized to offer and
24        provide radio telecommunications service for hire to
25        subscribers in aircraft.
26            "Call-by-call Basis" means any method of charging

 

 

09700SB0397ham002- 186 -LRB097 04209 HLH 59582 a

1        for telecommunications services where the price is
2        measured by individual calls.
3            "Communications Channel" means a physical or
4        virtual path of communications over which signals are
5        transmitted between or among customer channel
6        termination points.
7            "Conference bridging service" means an "ancillary
8        service" that links two or more participants of an
9        audio or video conference call and may include the
10        provision of a telephone number. "Conference bridging
11        service" does not include the "telecommunications
12        services" used to reach the conference bridge.
13            "Customer Channel Termination Point" means the
14        location where the customer either inputs or receives
15        the communications.
16            "Detailed telecommunications billing service"
17        means an "ancillary service" of separately stating
18        information pertaining to individual calls on a
19        customer's billing statement.
20            "Directory assistance" means an "ancillary
21        service" of providing telephone number information,
22        and/or address information.
23            "Home service provider" means the facilities based
24        carrier or reseller with which the customer contracts
25        for the provision of mobile telecommunications
26        services.

 

 

09700SB0397ham002- 187 -LRB097 04209 HLH 59582 a

1            "Mobile telecommunications service" means
2        commercial mobile radio service, as defined in Section
3        20.3 of Title 47 of the Code of Federal Regulations as
4        in effect on June 1, 1999.
5            "Place of primary use" means the street address
6        representative of where the customer's use of the
7        telecommunications service primarily occurs, which
8        must be the residential street address or the primary
9        business street address of the customer. In the case of
10        mobile telecommunications services, "place of primary
11        use" must be within the licensed service area of the
12        home service provider.
13            "Post-paid telecommunication service" means the
14        telecommunications service obtained by making a
15        payment on a call-by-call basis either through the use
16        of a credit card or payment mechanism such as a bank
17        card, travel card, credit card, or debit card, or by
18        charge made to a telephone number which is not
19        associated with the origination or termination of the
20        telecommunications service. A post-paid calling
21        service includes telecommunications service, except a
22        prepaid wireless calling service, that would be a
23        prepaid calling service except it is not exclusively a
24        telecommunication service.
25            "Prepaid telecommunication service" means the
26        right to access exclusively telecommunications

 

 

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1        services, which must be paid for in advance and which
2        enables the origination of calls using an access number
3        or authorization code, whether manually or
4        electronically dialed, and that is sold in
5        predetermined units or dollars of which the number
6        declines with use in a known amount.
7            "Prepaid Mobile telecommunication service" means a
8        telecommunications service that provides the right to
9        utilize mobile wireless service as well as other
10        non-telecommunication services, including but not
11        limited to ancillary services, which must be paid for
12        in advance that is sold in predetermined units or
13        dollars of which the number declines with use in a
14        known amount.
15            "Private communication service" means a
16        telecommunication service that entitles the customer
17        to exclusive or priority use of a communications
18        channel or group of channels between or among
19        termination points, regardless of the manner in which
20        such channel or channels are connected, and includes
21        switching capacity, extension lines, stations, and any
22        other associated services that are provided in
23        connection with the use of such channel or channels.
24            "Service address" means:
25                (a) The location of the telecommunications
26            equipment to which a customer's call is charged and

 

 

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1            from which the call originates or terminates,
2            regardless of where the call is billed or paid;
3                (b) If the location in line (a) is not known,
4            service address means the origination point of the
5            signal of the telecommunications services first
6            identified by either the seller's
7            telecommunications system or in information
8            received by the seller from its service provider
9            where the system used to transport such signals is
10            not that of the seller; and
11                (c) If the locations in line (a) and line (b)
12            are not known, the service address means the
13            location of the customer's place of primary use.
14            "Telecommunications service" means the electronic
15        transmission, conveyance, or routing of voice, data,
16        audio, video, or any other information or signals to a
17        point, or between or among points. The term
18        "telecommunications service" includes such
19        transmission, conveyance, or routing in which computer
20        processing applications are used to act on the form,
21        code or protocol of the content for purposes of
22        transmission, conveyance or routing without regard to
23        whether such service is referred to as voice over
24        Internet protocol services or is classified by the
25        Federal Communications Commission as enhanced or value
26        added. "Telecommunications service" does not include:

 

 

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1                (a) Data processing and information services
2            that allow data to be generated, acquired, stored,
3            processed, or retrieved and delivered by an
4            electronic transmission to a purchaser when such
5            purchaser's primary purpose for the underlying
6            transaction is the processed data or information;
7                (b) Installation or maintenance of wiring or
8            equipment on a customer's premises;
9                (c) Tangible personal property;
10                (d) Advertising, including but not limited to
11            directory advertising.
12                (e) Billing and collection services provided
13            to third parties;
14                (f) Internet access service;
15                (g) Radio and television audio and video
16            programming services, regardless of the medium,
17            including the furnishing of transmission,
18            conveyance and routing of such services by the
19            programming service provider. Radio and television
20            audio and video programming services shall include
21            but not be limited to cable service as defined in
22            47 USC 522(6) and audio and video programming
23            services delivered by commercial mobile radio
24            service providers, as defined in 47 CFR 20.3;
25                (h) "Ancillary services"; or
26                (i) Digital products "delivered

 

 

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1            electronically", including but not limited to
2            software, music, video, reading materials or ring
3            tones.
4            "Vertical service" means an "ancillary service"
5        that is offered in connection with one or more
6        "telecommunications services", which offers advanced
7        calling features that allow customers to identify
8        callers and to manage multiple calls and call
9        connections, including "conference bridging services".
10            "Voice mail service" means an "ancillary service"
11        that enables the customer to store, send or receive
12        recorded messages. "Voice mail service" does not
13        include any "vertical services" that the customer may
14        be required to have in order to utilize the "voice mail
15        service".
16            (ii) Receipts from the sale of telecommunications
17        service sold on an individual call-by-call basis are in
18        this State if either of the following applies:
19                (a) The call both originates and terminates in
20            this State.
21                (b) The call either originates or terminates
22            in this State and the service address is located in
23            this State.
24            (iii) Receipts from the sale of postpaid
25        telecommunications service at retail are in this State
26        if the origination point of the telecommunication

 

 

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1        signal, as first identified by the service provider's
2        telecommunication system or as identified by
3        information received by the seller from its service
4        provider if the system used to transport
5        telecommunication signals is not the seller's, is
6        located in this State.
7            (iv) Receipts from the sale of prepaid