98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB3119

 

Introduced , by Rep. Kelly Burke

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/17.10 new
35 ILCS 5/203  from Ch. 120, par. 2-203

    Amends the State Treasurer Act. Provides that the State Treasurer may establish a program under which a person may make contributions to an account that is established for the purpose of meeting the qualified disability expenses of a designated beneficiary of the account. Amends the Illinois Income Tax Act. Creates a deduction for individual taxpayers equal to the amount contributed by the taxpayer to those accounts during the taxable year, but not to exceed $20,000 per taxable year.


LRB098 09061 HLH 39198 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3119LRB098 09061 HLH 39198 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The State Treasurer Act is amended by adding
5Section 17.10 as follows:
 
6    (15 ILCS 505/17.10 new)
7    Sec. 17.10. Accounts for individuals with a disability.
8    (a) Notwithstanding any other provision of law, the State
9Treasurer may establish a program under which a person may make
10contributions to an account that is established for the purpose
11of meeting the qualified disability expenses of the designated
12beneficiary of the account.
13    (b) For the purposes of this Section, the term "qualified
14disability expenses" means any expenses which are made for the
15benefit of an individual with a disability who is a designated
16beneficiary, including the following:
17        (1) Expenses for education, including tuition for
18    preschool thru post-secondary education, books, supplies,
19    and educational materials related to such education,
20    tutors, and special education services.
21        (2) Expenses for a primary residence, including rent,
22    purchase of a primary residence or an interest in a primary
23    residence, mortgage payments, real property taxes, and

 

 

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1    utility charges.
2        (3) Expenses for transportation, including the use of
3    mass transit, the purchase or modification of vehicles, and
4    moving expenses.
5        (4) Expenses related to obtaining and maintaining
6    employment, including job-related training, assistive
7    technology, and personal assistance supports.
8        (5) Expenses for health and wellness, including
9    premiums for health insurance, mental health, medical,
10    vision, and dental expenses, habilitation and
11    rehabilitation services, durable medical equipment,
12    therapy, respite care, long term services and supports,
13    nutritional management, communication services and
14    devices, adaptive equipment, assistive technology, and
15    personal assistance.
16        (6) Financial management and administrative services;
17    legal fees; expenses for oversight; monitoring; home
18    improvements, and modifications, maintenance and repairs,
19    at primary residence; or funeral and burial expenses.
20        (7) Expenses for assistive technology and personal
21    support with respect to any item described in this
22    subsection.
23    For the purposes of this Section, "individual with a
24disability" means and individual who (i) has a medically
25determinable physical or mental impairment, which results in
26marked and severe functional limitations, and which can be

 

 

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1expected to result in death or which has lasted or can be
2expected to last for a continuous period of not less than 12
3months or (ii) is blind.
 
4    Section 10. The Illinois Income Tax Act is amended by
5changing Section 203 as follows:
 
6    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
7    Sec. 203. Base income defined.
8    (a) Individuals.
9        (1) In general. In the case of an individual, base
10    income means an amount equal to the taxpayer's adjusted
11    gross income for the taxable year as modified by paragraph
12    (2).
13        (2) Modifications. The adjusted gross income referred
14    to in paragraph (1) shall be modified by adding thereto the
15    sum of the following amounts:
16            (A) An amount equal to all amounts paid or accrued
17        to the taxpayer as interest or dividends during the
18        taxable year to the extent excluded from gross income
19        in the computation of adjusted gross income, except
20        stock dividends of qualified public utilities
21        described in Section 305(e) of the Internal Revenue
22        Code;
23            (B) An amount equal to the amount of tax imposed by
24        this Act to the extent deducted from gross income in

 

 

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1        the computation of adjusted gross income for the
2        taxable year;
3            (C) An amount equal to the amount received during
4        the taxable year as a recovery or refund of real
5        property taxes paid with respect to the taxpayer's
6        principal residence under the Revenue Act of 1939 and
7        for which a deduction was previously taken under
8        subparagraph (L) of this paragraph (2) prior to July 1,
9        1991, the retrospective application date of Article 4
10        of Public Act 87-17. In the case of multi-unit or
11        multi-use structures and farm dwellings, the taxes on
12        the taxpayer's principal residence shall be that
13        portion of the total taxes for the entire property
14        which is attributable to such principal residence;
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 adjusted gross income;
19            (D-5) An amount, to the extent not included in
20        adjusted gross income, equal to the amount of money
21        withdrawn by the taxpayer in the taxable year from a
22        medical care savings account and the interest earned on
23        the account in the taxable year of a withdrawal
24        pursuant to subsection (b) of Section 20 of the Medical
25        Care Savings Account Act or subsection (b) of Section
26        20 of the Medical Care Savings Account Act of 2000;

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        program under Section 529 of the Internal Revenue Code
2        administered by the State that is not used for
3        qualified expenses at an eligible education
4        institution, an amount equal to the contribution
5        component of the nonqualified withdrawal or refund
6        that was previously deducted from base income under
7        subsection (a)(2)(y) of this Section, provided that
8        the withdrawal or refund did not result from the
9        beneficiary's death or disability;
10            (D-23) An amount equal to the credit allowable to
11        the taxpayer under Section 218(a) of this Act,
12        determined without regard to Section 218(c) of this
13        Act;
14    and by deducting from the total so obtained the sum of the
15    following amounts:
16            (E) For taxable years ending before December 31,
17        2001, any amount included in such total in respect of
18        any compensation (including but not limited to any
19        compensation paid or accrued to a serviceman while a
20        prisoner of war or missing in action) paid to a
21        resident by reason of being on active duty in the Armed
22        Forces of the United States and in respect of any
23        compensation paid or accrued to a resident who as a
24        governmental employee was a prisoner of war or missing
25        in action, and in respect of any compensation paid to a
26        resident in 1971 or thereafter for annual training

 

 

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

 

 

HB3119- 17 -LRB098 09061 HLH 39198 b

1        agency or unit, or retirement payments to retired
2        partners, which payments are excluded in computing net
3        earnings from self employment by Section 1402 of the
4        Internal Revenue Code and regulations adopted pursuant
5        thereto;
6            (G) The valuation limitation amount;
7            (H) An amount equal to the amount of any tax
8        imposed by this Act which was refunded to the taxpayer
9        and included in such total for the taxable year;
10            (I) An amount equal to all amounts included in such
11        total pursuant to the provisions of Section 111 of the
12        Internal Revenue Code as a recovery of items previously
13        deducted from adjusted gross income in the computation
14        of taxable income;
15            (J) An amount equal to those dividends included in
16        such total which were paid by a corporation which
17        conducts business operations in a River Edge
18        Redevelopment Zone or zones created under the River
19        Edge Redevelopment Zone Act, and conducts
20        substantially all of its operations in a River Edge
21        Redevelopment Zone or zones. This subparagraph (J) is
22        exempt from the provisions of Section 250;
23            (K) An amount equal to those dividends included in
24        such total that were paid by a corporation that
25        conducts business operations in a federally designated
26        Foreign Trade Zone or Sub-Zone and that is designated a

 

 

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

 

 

HB3119- 19 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 20 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 21 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 22 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 23 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 24 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 25 -LRB098 09061 HLH 39198 b

1                30 and then divided by 70 (or "y" multiplied by
2                0.429); and
3                    (ii) for property on which a bonus
4                depreciation deduction of 50% of the adjusted
5                basis was taken, "x" equals "y" multiplied by
6                1.0.
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 (Z) is exempt from the provisions of
14        Section 250;
15            (AA) If the taxpayer sells, transfers, abandons,
16        or otherwise disposes of property for which the
17        taxpayer was required in any taxable year to make an
18        addition modification under subparagraph (D-15), then
19        an amount 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 the
22        taxpayer may claim a depreciation deduction for
23        federal income tax purposes and for which the taxpayer
24        was required in any taxable year to make an addition
25        modification under subparagraph (D-15), then an amount
26        equal to that addition modification.

 

 

HB3119- 26 -LRB098 09061 HLH 39198 b

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 (AA) is exempt from the
5        provisions of Section 250;
6            (BB) Any amount included in adjusted gross income,
7        other than salary, received by a driver in a
8        ridesharing arrangement using a motor vehicle;
9            (CC) 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 that 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 that
24        addition modification. This subparagraph (CC) is
25        exempt from the provisions of Section 250;
26            (DD) An amount equal to the interest income taken

 

 

HB3119- 27 -LRB098 09061 HLH 39198 b

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 that the foreign person's business activity
6        outside the United States is 80% or more of that
7        person's total business activity and (ii) for taxable
8        years ending on or after December 31, 2008, to a person
9        who would be a member of the same unitary business
10        group but for the fact that the person is prohibited
11        under Section 1501(a)(27) from being included in the
12        unitary business group because he or she is ordinarily
13        required to apportion business income under different
14        subsections of Section 304, but not to exceed the
15        addition modification required to be made for the same
16        taxable year under Section 203(a)(2)(D-17) for
17        interest paid, accrued, or incurred, directly or
18        indirectly, to the same person. This subparagraph (DD)
19        is exempt from the provisions of Section 250;
20            (EE) 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

 

 

HB3119- 28 -LRB098 09061 HLH 39198 b

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(a)(2)(D-18) for
11        intangible expenses and costs paid, accrued, or
12        incurred, directly or indirectly, to the same foreign
13        person. This subparagraph (EE) is exempt from the
14        provisions of Section 250;
15            (FF) An amount equal to any amount awarded to the
16        taxpayer during the taxable year by the Court of Claims
17        under subsection (c) of Section 8 of the Court of
18        Claims Act for time unjustly served in a State prison.
19        This subparagraph (FF) is exempt from the provisions of
20        Section 250; and
21            (GG) For taxable years ending on or after December
22        31, 2011, in the case of a taxpayer who was required to
23        add back any insurance premiums under Section
24        203(a)(2)(D-19), such taxpayer may elect to subtract
25        that part of a reimbursement received from the
26        insurance company equal to the amount of the expense or

 

 

HB3119- 29 -LRB098 09061 HLH 39198 b

1        loss (including expenses incurred by the insurance
2        company) that would have been taken into account as a
3        deduction for federal income tax purposes if the
4        expense or loss had been uninsured. If a taxpayer makes
5        the election provided for by this subparagraph (GG),
6        the insurer to which the premiums were paid must add
7        back to income the amount subtracted by the taxpayer
8        pursuant to this subparagraph (GG). This subparagraph
9        (GG) is exempt from the provisions of Section 250.
10            (HH) For taxable years beginning on or after
11        January 1, 2013, an amount equal to the amount
12        contributed by the taxpayer during the taxable year to
13        an account under Section 17.10 of the State Treasurer
14        Act, but not to exceed $20,000 per taxable year. This
15        subparagraph (HH) is exempt from the provisions of
16        Section 250.
 
17    (b) Corporations.
18        (1) In general. In the case of a corporation, base
19    income means an amount equal to the taxpayer's taxable
20    income for the taxable year as modified by paragraph (2).
21        (2) Modifications. The taxable income referred to in
22    paragraph (1) shall be modified by adding thereto the sum
23    of the following amounts:
24            (A) An amount equal to all amounts paid or accrued
25        to the taxpayer as interest and all distributions

 

 

HB3119- 30 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 31 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 32 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 33 -LRB098 09061 HLH 39198 b

1        allowed as a deduction in computing base income for
2        interest paid, accrued, or incurred, directly or
3        indirectly, (i) for taxable years ending on or after
4        December 31, 2004, to a foreign person who would be a
5        member of the same unitary business group but for the
6        fact the foreign person's business activity outside
7        the United States is 80% or more of the foreign
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. The addition modification
16        required by this subparagraph shall be reduced to the
17        extent that dividends were included in base income of
18        the unitary group for the same taxable year and
19        received by the taxpayer or by a member of the
20        taxpayer's unitary business group (including amounts
21        included in gross income pursuant to Sections 951
22        through 964 of the Internal Revenue Code and amounts
23        included in gross income under Section 78 of the
24        Internal Revenue Code) with respect to the stock of the
25        same person to whom the interest was paid, accrued, or
26        incurred.

 

 

HB3119- 34 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 35 -LRB098 09061 HLH 39198 b

1            terms and the principal purpose for the payment is
2            not federal or Illinois tax avoidance; or
3                (iv) an item of interest paid, accrued, or
4            incurred, directly or indirectly, to a person if
5            the taxpayer establishes by clear and convincing
6            evidence that the adjustments are unreasonable; or
7            if the taxpayer and the Director agree in writing
8            to the application or use of an alternative method
9            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            (E-13) An amount equal to the amount of intangible
20        expenses and costs otherwise allowed as a deduction in
21        computing base income, and that were paid, accrued, or
22        incurred, directly or indirectly, (i) for taxable
23        years ending on or after December 31, 2004, to a
24        foreign person who would be a member of the same
25        unitary business group but for the fact that the
26        foreign person's business activity outside the United

 

 

HB3119- 36 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 37 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 38 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 39 -LRB098 09061 HLH 39198 b

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

 

 

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1            (E-15) For taxable years beginning after December
2        31, 2008, any deduction for dividends paid by a captive
3        real estate investment trust that is allowed to a real
4        estate investment trust under Section 857(b)(2)(B) of
5        the Internal Revenue Code for dividends paid;
6            (E-16) An amount equal to the credit allowable to
7        the taxpayer under Section 218(a) of this Act,
8        determined without regard to Section 218(c) of this
9        Act;
10    and by deducting from the total so obtained the sum of the
11    following amounts:
12            (F) An amount equal to the amount of any tax
13        imposed by this Act which was refunded to the taxpayer
14        and included in such total for the taxable year;
15            (G) An amount equal to any amount included in such
16        total under Section 78 of the Internal Revenue Code;
17            (H) In the case of a regulated investment company,
18        an amount equal to the amount of exempt interest
19        dividends as defined in subsection (b) (5) of Section
20        852 of the Internal Revenue Code, paid to shareholders
21        for the taxable year;
22            (I) With the exception of any amounts subtracted
23        under subparagraph (J), an amount equal to the sum of
24        all amounts disallowed as deductions by (i) Sections
25        171(a) (2), and 265(a)(2) and amounts disallowed as
26        interest expense by Section 291(a)(3) of the Internal

 

 

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

 

 

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1        statute of this State that exempts income derived from
2        bonds or other obligations from the tax imposed under
3        this Act, the amount exempted shall be the interest net
4        of bond premium amortization;
5            (K) An amount equal to those dividends included in
6        such total which were paid by a corporation which
7        conducts business operations in a River Edge
8        Redevelopment Zone or zones created under the River
9        Edge Redevelopment Zone Act and conducts substantially
10        all of its operations in a River Edge Redevelopment
11        Zone or zones. This subparagraph (K) is exempt from the
12        provisions of Section 250;
13            (L) An amount equal to those dividends included in
14        such total that were paid by a corporation that
15        conducts business operations in a federally designated
16        Foreign Trade Zone or Sub-Zone and that is designated a
17        High Impact Business located in Illinois; provided
18        that dividends eligible for the deduction provided in
19        subparagraph (K) of paragraph 2 of this subsection
20        shall not be eligible for the deduction provided under
21        this subparagraph (L);
22            (M) For any taxpayer that is a financial
23        organization within the meaning of Section 304(c) of
24        this Act, an amount included in such total as interest
25        income from a loan or loans made by such taxpayer to a
26        borrower, to the extent that such a loan is secured by

 

 

HB3119- 43 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 44 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 45 -LRB098 09061 HLH 39198 b

1        Section 250;
2            (O) An amount equal to: (i) 85% for taxable years
3        ending on or before December 31, 1992, or, a percentage
4        equal to the percentage allowable under Section
5        243(a)(1) of the Internal Revenue Code of 1986 for
6        taxable years ending after December 31, 1992, of the
7        amount by which dividends included in taxable income
8        and received from a corporation that is not created or
9        organized under the laws of the United States or any
10        state or political subdivision thereof, including, for
11        taxable years ending on or after December 31, 1988,
12        dividends received or deemed received or paid or deemed
13        paid under Sections 951 through 965 of the Internal
14        Revenue Code, exceed the amount of the modification
15        provided under subparagraph (G) of paragraph (2) of
16        this subsection (b) which is related to such dividends,
17        and including, for taxable years ending on or after
18        December 31, 2008, dividends received from a captive
19        real estate investment trust; plus (ii) 100% of the
20        amount by which dividends, included in taxable income
21        and received, including, for taxable years ending on or
22        after December 31, 1988, dividends received or deemed
23        received or paid or deemed paid under Sections 951
24        through 964 of the Internal Revenue Code and including,
25        for taxable years ending on or after December 31, 2008,
26        dividends received from a captive real estate

 

 

HB3119- 46 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 47 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 48 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 49 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 50 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 51 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 52 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 53 -LRB098 09061 HLH 39198 b

1        (3) Special rule. For purposes of paragraph (2) (A),
2    "gross income" in the case of a life insurance company, for
3    tax years ending on and after December 31, 1994, and prior
4    to December 31, 2011, shall mean the gross investment
5    income for the taxable year and, for tax years ending on or
6    after December 31, 2011, shall mean all amounts included in
7    life insurance gross income under Section 803(a)(3) of the
8    Internal Revenue Code.
 
9    (c) Trusts and estates.
10        (1) In general. In the case of a trust or estate, base
11    income means an amount equal to the taxpayer's taxable
12    income for the taxable year as modified by paragraph (2).
13        (2) Modifications. Subject to the provisions of
14    paragraph (3), the taxable income referred to in paragraph
15    (1) shall be modified by adding thereto the sum of the
16    following amounts:
17            (A) An amount equal to all amounts paid or accrued
18        to the taxpayer as interest or dividends during the
19        taxable year to the extent excluded from gross income
20        in the computation of taxable income;
21            (B) In the case of (i) an estate, $600; (ii) a
22        trust which, under its governing instrument, is
23        required to distribute all of its income currently,
24        $300; and (iii) any other trust, $100, but in each such
25        case, only to the extent such amount was deducted in

 

 

HB3119- 54 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 55 -LRB098 09061 HLH 39198 b

1                (ii) the addition modification relating to the
2            net operating loss carried back or forward to the
3            taxable year from any taxable year ending prior to
4            December 31, 1986 shall not exceed the amount of
5            such carryback or carryforward;
6            For taxable years in which there is a net operating
7        loss carryback or carryforward from more than one other
8        taxable year ending prior to December 31, 1986, the
9        addition modification provided in this subparagraph
10        (E) shall be the sum of the amounts computed
11        independently under the preceding provisions of this
12        subparagraph (E) for each such taxable year;
13            (F) For taxable years ending on or after January 1,
14        1989, an amount equal to the tax deducted pursuant to
15        Section 164 of the Internal Revenue Code if the trust
16        or estate is claiming the same tax for purposes of the
17        Illinois foreign tax credit under Section 601 of this
18        Act;
19            (G) An amount equal to the amount of the capital
20        gain deduction allowable under the Internal Revenue
21        Code, to the extent deducted from gross income in the
22        computation of taxable income;
23            (G-5) For taxable years ending after December 31,
24        1997, an amount equal to any eligible remediation costs
25        that the trust or estate deducted in computing adjusted
26        gross income and for which the trust or estate claims a

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        insurance premium expenses and costs otherwise allowed
2        as a deduction in computing base income, and that were
3        paid, accrued, or incurred, directly or indirectly, to
4        a person who would be a member of the same unitary
5        business group but for the fact that the person is
6        prohibited under Section 1501(a)(27) from being
7        included in the unitary business group because he or
8        she is ordinarily required to apportion business
9        income under different subsections of Section 304. The
10        addition modification required by this subparagraph
11        shall be reduced to the extent that dividends were
12        included in base income of the unitary group for the
13        same taxable year and received by the taxpayer or by a
14        member of the taxpayer's unitary business group
15        (including amounts included in gross income under
16        Sections 951 through 964 of the Internal Revenue Code
17        and amounts included in gross income under Section 78
18        of the Internal Revenue Code) with respect to the stock
19        of the same person to whom the premiums and costs were
20        directly or indirectly paid, incurred, or accrued. The
21        preceding sentence does not apply to the extent that
22        the same dividends caused a reduction to the addition
23        modification required under Section 203(c)(2)(G-12) or
24        Section 203(c)(2)(G-13) of this Act;
25            (G-15) An amount equal to the credit allowable to
26        the taxpayer under Section 218(a) of this Act,

 

 

HB3119- 64 -LRB098 09061 HLH 39198 b

1        determined without regard to Section 218(c) of this
2        Act;
3    and by deducting from the total so obtained the sum of the
4    following amounts:
5            (H) An amount equal to all amounts included in such
6        total pursuant to the provisions of Sections 402(a),
7        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
8        Internal Revenue Code or included in such total as
9        distributions under the provisions of any retirement
10        or disability plan for employees of any governmental
11        agency or unit, or retirement payments to retired
12        partners, which payments are excluded in computing net
13        earnings from self employment by Section 1402 of the
14        Internal Revenue Code and regulations adopted pursuant
15        thereto;
16            (I) The valuation limitation amount;
17            (J) An amount equal to the amount of any tax
18        imposed by this Act which was refunded to the taxpayer
19        and included in such total for the taxable year;
20            (K) An amount equal to all amounts included in
21        taxable income as modified by subparagraphs (A), (B),
22        (C), (D), (E), (F) and (G) which are exempt from
23        taxation by this State either by reason of its statutes
24        or Constitution or by reason of the Constitution,
25        treaties or statutes of the United States; provided
26        that, in the case of any statute of this State that

 

 

HB3119- 65 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 66 -LRB098 09061 HLH 39198 b

1        Zone or zones. This subparagraph (M) is exempt from the
2        provisions of Section 250;
3            (N) An amount equal to any contribution made to a
4        job training project established pursuant to the Tax
5        Increment Allocation Redevelopment Act;
6            (O) 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 (M) of paragraph (2) of this subsection
13        shall not be eligible for the deduction provided under
14        this subparagraph (O);
15            (P) 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            (Q) For taxable year 1999 and thereafter, an amount
21        equal to the amount of any (i) distributions, to the
22        extent includible in gross income for federal income
23        tax purposes, made to the taxpayer because of his or
24        her status as a victim of persecution for racial or
25        religious reasons by Nazi Germany or any other Axis
26        regime or as an heir of the victim and (ii) items of

 

 

HB3119- 67 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 68 -LRB098 09061 HLH 39198 b

1            (R) For taxable years 2001 and thereafter, for the
2        taxable year in which the bonus depreciation deduction
3        is taken on the taxpayer's federal income tax return
4        under subsection (k) of Section 168 of the Internal
5        Revenue Code and for each applicable taxable year
6        thereafter, an amount equal to "x", where:
7                (1) "y" equals the amount of the depreciation
8            deduction taken for the taxable year on the
9            taxpayer's federal income tax return on property
10            for which the bonus depreciation deduction was
11            taken in any year under subsection (k) of Section
12            168 of the Internal Revenue Code, but not including
13            the bonus depreciation deduction;
14                (2) for taxable years ending on or before
15            December 31, 2005, "x" equals "y" multiplied by 30
16            and then divided by 70 (or "y" multiplied by
17            0.429); and
18                (3) for taxable years ending after December
19            31, 2005:
20                    (i) for property on which a bonus
21                depreciation deduction of 30% of the adjusted
22                basis was taken, "x" equals "y" multiplied by
23                30 and then divided by 70 (or "y" multiplied by
24                0.429); and
25                    (ii) for property on which a bonus
26                depreciation deduction of 50% of the adjusted

 

 

HB3119- 69 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 70 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 71 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 72 -LRB098 09061 HLH 39198 b

1        subsections of Section 304, but not to exceed the
2        addition modification required to be made for the same
3        taxable year under Section 203(c)(2)(G-13) for
4        intangible expenses and costs paid, accrued, or
5        incurred, directly or indirectly, to the same foreign
6        person. This subparagraph (V) is exempt from the
7        provisions of Section 250;
8            (W) in the case of an estate, an amount equal to
9        all amounts included in such total pursuant to the
10        provisions of Section 111 of the Internal Revenue Code
11        as a recovery of items previously deducted by the
12        decedent from adjusted gross income in the computation
13        of taxable income. This subparagraph (W) is exempt from
14        Section 250;
15            (X) an amount equal to the refund included in such
16        total of any tax deducted for federal income tax
17        purposes, to the extent that deduction was added back
18        under subparagraph (F). This subparagraph (X) is
19        exempt from the provisions of Section 250; and
20            (Y) For taxable years ending on or after December
21        31, 2011, in the case of a taxpayer who was required to
22        add back any insurance premiums under Section
23        203(c)(2)(G-14), such taxpayer may elect to subtract
24        that part of a reimbursement received from the
25        insurance company equal to the amount of the expense or
26        loss (including expenses incurred by the insurance

 

 

HB3119- 73 -LRB098 09061 HLH 39198 b

1        company) that would have been taken into account as a
2        deduction for federal income tax purposes if the
3        expense or loss had been uninsured. If a taxpayer makes
4        the election provided for by this subparagraph (Y), the
5        insurer to which the premiums were paid must add back
6        to income the amount subtracted by the taxpayer
7        pursuant to this subparagraph (Y). This subparagraph
8        (Y) is exempt from the provisions of Section 250.
9        (3) Limitation. The amount of any modification
10    otherwise required under this subsection shall, under
11    regulations prescribed by the Department, be adjusted by
12    any amounts included therein which were properly paid,
13    credited, or required to be distributed, or permanently set
14    aside for charitable purposes pursuant to Internal Revenue
15    Code Section 642(c) during the taxable year.
 
16    (d) Partnerships.
17        (1) In general. In the case of a partnership, base
18    income means an amount equal to the taxpayer's taxable
19    income for the taxable year as modified by paragraph (2).
20        (2) Modifications. The taxable income referred to in
21    paragraph (1) shall be modified by adding thereto the sum
22    of the following amounts:
23            (A) An amount equal to all amounts paid or accrued
24        to the taxpayer as interest or dividends during the
25        taxable year to the extent excluded from gross income

 

 

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1        in the computation of taxable income;
2            (B) An amount equal to the amount of tax imposed by
3        this Act to the extent deducted from gross income for
4        the taxable year;
5            (C) The amount of deductions allowed to the
6        partnership pursuant to Section 707 (c) of the Internal
7        Revenue Code in calculating its taxable income;
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 taxable income;
12            (D-5) For taxable years 2001 and thereafter, an
13        amount equal to the bonus depreciation deduction taken
14        on the taxpayer's federal income tax return for the
15        taxable year under subsection (k) of Section 168 of the
16        Internal Revenue Code;
17            (D-6) If the taxpayer sells, transfers, abandons,
18        or otherwise disposes of property for which the
19        taxpayer was required in any taxable year to make an
20        addition modification under subparagraph (D-5), then
21        an amount equal to the aggregate amount of the
22        deductions taken in all taxable years under
23        subparagraph (O) with respect to that property.
24            If the taxpayer continues to own property through
25        the last day of the last tax year for which the
26        taxpayer may claim a depreciation deduction for

 

 

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

 

 

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1        received by the taxpayer or by a member of the
2        taxpayer's unitary business group (including amounts
3        included in gross income pursuant to Sections 951
4        through 964 of the Internal Revenue Code and amounts
5        included in gross income under Section 78 of the
6        Internal Revenue Code) with respect to the stock of the
7        same person to whom the interest was paid, accrued, or
8        incurred.
9            This paragraph shall not apply to the following:
10                (i) an item of interest paid, accrued, or
11            incurred, directly or indirectly, to a person who
12            is subject in a foreign country or state, other
13            than a state which requires mandatory unitary
14            reporting, to a tax on or measured by net income
15            with respect to such interest; or
16                (ii) an item of interest paid, accrued, or
17            incurred, directly or indirectly, to a person if
18            the taxpayer can establish, based on a
19            preponderance of the evidence, both of the
20            following:
21                    (a) the person, during the same taxable
22                year, paid, accrued, or incurred, the interest
23                to a person that is not a related member, and
24                    (b) the transaction giving rise to the
25                interest expense between the taxpayer and the
26                person did not have as a principal purpose the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        and amounts included in gross income under Section 78
2        of the Internal Revenue Code) with respect to the stock
3        of the same person to whom the premiums and costs were
4        directly or indirectly paid, incurred, or accrued. The
5        preceding sentence does not apply to the extent that
6        the same dividends caused a reduction to the addition
7        modification required under Section 203(d)(2)(D-7) or
8        Section 203(d)(2)(D-8) of this Act;
9            (D-10) 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 following
14    amounts:
15            (E) The valuation limitation amount;
16            (F) An amount equal to the amount of any tax
17        imposed by this Act which was refunded to the taxpayer
18        and included in such total for the taxable year;
19            (G) An amount equal to all amounts included in
20        taxable income as modified by subparagraphs (A), (B),
21        (C) and (D) which are exempt from taxation by this
22        State either by reason of its statutes or Constitution
23        or by reason of the Constitution, treaties or statutes
24        of the United States; provided that, in the case of any
25        statute of this State that exempts income derived from
26        bonds or other obligations from the tax imposed under

 

 

HB3119- 83 -LRB098 09061 HLH 39198 b

1        this Act, the amount exempted shall be the interest net
2        of bond premium amortization;
3            (H) Any income of the partnership which
4        constitutes personal service income as defined in
5        Section 1348 (b) (1) of the Internal Revenue Code (as
6        in effect December 31, 1981) or a reasonable allowance
7        for compensation paid or accrued for services rendered
8        by partners to the partnership, whichever is greater;
9        this subparagraph (H) is exempt from the provisions of
10        Section 250;
11            (I) An amount equal to all amounts of income
12        distributable to an entity subject to the Personal
13        Property Tax Replacement Income Tax imposed by
14        subsections (c) and (d) of Section 201 of this Act
15        including amounts distributable to organizations
16        exempt from federal income tax by reason of Section
17        501(a) of the Internal Revenue Code; this subparagraph
18        (I) is exempt from the provisions of Section 250;
19            (J) With the exception of any amounts subtracted
20        under subparagraph (G), an amount equal to the sum of
21        all amounts disallowed as deductions by (i) Sections
22        171(a) (2), and 265(2) of the Internal Revenue Code,
23        and all amounts of expenses allocable to interest and
24        disallowed as deductions by Section 265(1) of the
25        Internal Revenue Code; and (ii) for taxable years
26        ending on or after August 13, 1999, Sections 171(a)(2),

 

 

HB3119- 84 -LRB098 09061 HLH 39198 b

1        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
2        Code, plus, (iii) for taxable years ending on or after
3        December 31, 2011, Section 45G(e)(3) of the Internal
4        Revenue Code and, for taxable years ending on or after
5        December 31, 2008, any amount included in gross income
6        under Section 87 of the Internal Revenue Code; the
7        provisions of this subparagraph are exempt from the
8        provisions of Section 250;
9            (K) An amount equal to those dividends included in
10        such total which were paid by a corporation which
11        conducts business operations in a River Edge
12        Redevelopment Zone or zones created under the River
13        Edge Redevelopment Zone Act and conducts substantially
14        all of its operations from a River Edge Redevelopment
15        Zone or zones. This subparagraph (K) is exempt from the
16        provisions of Section 250;
17            (L) An amount equal to any contribution made to a
18        job training project established pursuant to the Real
19        Property Tax Increment Allocation Redevelopment Act;
20            (M) 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 (K) of paragraph (2) of this subsection

 

 

HB3119- 85 -LRB098 09061 HLH 39198 b

1        shall not be eligible for the deduction provided under
2        this subparagraph (M);
3            (N) An amount equal to the amount of the deduction
4        used to compute the federal income tax credit for
5        restoration of substantial amounts held under claim of
6        right for the taxable year pursuant to Section 1341 of
7        the Internal Revenue Code;
8            (O) For taxable years 2001 and thereafter, for the
9        taxable year in which the bonus depreciation deduction
10        is taken on the taxpayer's federal income tax return
11        under subsection (k) of Section 168 of the Internal
12        Revenue Code and for each applicable taxable year
13        thereafter, an amount equal to "x", where:
14                (1) "y" equals the amount of the depreciation
15            deduction taken for the taxable year on the
16            taxpayer's federal income tax return on property
17            for which the bonus depreciation deduction was
18            taken in any year under subsection (k) of Section
19            168 of the Internal Revenue Code, but not including
20            the bonus depreciation deduction;
21                (2) for taxable years ending on or before
22            December 31, 2005, "x" equals "y" multiplied by 30
23            and then divided by 70 (or "y" multiplied by
24            0.429); and
25                (3) for taxable years ending after December
26            31, 2005:

 

 

HB3119- 86 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 87 -LRB098 09061 HLH 39198 b

1        was required in any taxable year to make an addition
2        modification under subparagraph (D-5), then an amount
3        equal to that addition modification.
4            The taxpayer is allowed to take the deduction under
5        this subparagraph only once with respect to any one
6        piece of property.
7            This subparagraph (P) is exempt from the
8        provisions of Section 250;
9            (Q) 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 (Q) is exempt
25        from Section 250;
26            (R) An amount equal to the interest income taken

 

 

HB3119- 88 -LRB098 09061 HLH 39198 b

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 that the foreign person's business activity
6        outside the United States is 80% or more of that
7        person's total business activity and (ii) for taxable
8        years ending on or after December 31, 2008, to a person
9        who would be a member of the same unitary business
10        group but for the fact that the person is prohibited
11        under Section 1501(a)(27) from being included in the
12        unitary business group because he or she is ordinarily
13        required to apportion business income under different
14        subsections of Section 304, but not to exceed the
15        addition modification required to be made for the same
16        taxable year under Section 203(d)(2)(D-7) for interest
17        paid, accrued, or incurred, directly or indirectly, to
18        the same person. This subparagraph (R) is exempt from
19        Section 250;
20            (S) 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

 

 

HB3119- 89 -LRB098 09061 HLH 39198 b

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(d)(2)(D-8) for
11        intangible expenses and costs paid, accrued, or
12        incurred, directly or indirectly, to the same person.
13        This subparagraph (S) is exempt from Section 250; and
14            (T) For taxable years ending on or after December
15        31, 2011, in the case of a taxpayer who was required to
16        add back any insurance premiums under Section
17        203(d)(2)(D-9), such taxpayer may elect to subtract
18        that part of a reimbursement received from the
19        insurance company equal to the amount of the expense or
20        loss (including expenses incurred by the insurance
21        company) that would have been taken into account as a
22        deduction for federal income tax purposes if the
23        expense or loss had been uninsured. If a taxpayer makes
24        the election provided for by this subparagraph (T), the
25        insurer to which the premiums were paid must add back
26        to income the amount subtracted by the taxpayer

 

 

HB3119- 90 -LRB098 09061 HLH 39198 b

1        pursuant to this subparagraph (T). This subparagraph
2        (T) is exempt from the provisions of Section 250.
 
3    (e) Gross income; adjusted gross income; taxable income.
4        (1) In general. Subject to the provisions of paragraph
5    (2) and subsection (b) (3), for purposes of this Section
6    and Section 803(e), a taxpayer's gross income, adjusted
7    gross income, or taxable income for the taxable year shall
8    mean the amount of gross income, adjusted gross income or
9    taxable income properly reportable for federal income tax
10    purposes for the taxable year under the provisions of the
11    Internal Revenue Code. Taxable income may be less than
12    zero. However, for taxable years ending on or after
13    December 31, 1986, net operating loss carryforwards from
14    taxable years ending prior to December 31, 1986, may not
15    exceed the sum of federal taxable income for the taxable
16    year before net operating loss deduction, plus the excess
17    of addition modifications over subtraction modifications
18    for the taxable year. For taxable years ending prior to
19    December 31, 1986, taxable income may never be an amount in
20    excess of the net operating loss for the taxable year as
21    defined in subsections (c) and (d) of Section 172 of the
22    Internal Revenue Code, provided that when taxable income of
23    a corporation (other than a Subchapter S corporation),
24    trust, or estate is less than zero and addition
25    modifications, other than those provided by subparagraph

 

 

HB3119- 91 -LRB098 09061 HLH 39198 b

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

 

 

HB3119- 92 -LRB098 09061 HLH 39198 b

1        imposed by Section 852 of the Internal Revenue Code,
2        investment company taxable income;
3            (D) Real estate investment trusts. In the case of a
4        real estate investment trust subject to the tax imposed
5        by Section 857 of the Internal Revenue Code, real
6        estate investment trust taxable income;
7            (E) Consolidated corporations. In the case of a
8        corporation which is a member of an affiliated group of
9        corporations filing a consolidated income tax return
10        for the taxable year for federal income tax purposes,
11        taxable income determined as if such corporation had
12        filed a separate return for federal income tax purposes
13        for the taxable year and each preceding taxable year
14        for which it was a member of an affiliated group. For
15        purposes of this subparagraph, the taxpayer's separate
16        taxable income shall be determined as if the election
17        provided by Section 243(b) (2) of the Internal Revenue
18        Code had been in effect for all such years;
19            (F) Cooperatives. In the case of a cooperative
20        corporation or association, the taxable income of such
21        organization determined in accordance with the
22        provisions of Section 1381 through 1388 of the Internal
23        Revenue Code, but without regard to the prohibition
24        against offsetting losses from patronage activities
25        against income from nonpatronage activities; except
26        that a cooperative corporation or association may make

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1        regulations as may be necessary to carry out the
2        purposes of this paragraph.
 
3    (g) Double deductions. Unless specifically provided
4otherwise, nothing in this Section shall permit the same item
5to be deducted more than once.
 
6    (h) Legislative intention. Except as expressly provided by
7this Section there shall be no modifications or limitations on
8the amounts of income, gain, loss or deduction taken into
9account in determining gross income, adjusted gross income or
10taxable income for federal income tax purposes for the taxable
11year, or in the amount of such items entering into the
12computation of base income and net income under this Act for
13such taxable year, whether in respect of property values as of
14August 1, 1969 or otherwise.
15(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
16eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1796-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
186-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
19eff. 8-23-11; 97-905, eff. 8-7-12.)