Sen. Toi W. Hutchinson

Filed: 3/6/2013

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1159

2    AMENDMENT NO. ______. Amend Senate Bill 1159 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5changing Sections 203, 901, and 1501 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

 

 

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1        to the taxpayer as interest or dividends during the
2        taxable year to the extent excluded from gross income
3        in the computation of adjusted gross income, except
4        stock dividends of qualified public utilities
5        described in Section 305(e) of the Internal Revenue
6        Code;
7            (B) An amount equal to the amount of tax imposed by
8        this Act to the extent deducted from gross income in
9        the computation of adjusted gross income for the
10        taxable year;
11            (C) An amount equal to the amount received during
12        the taxable year as a recovery or refund of real
13        property taxes paid with respect to the taxpayer's
14        principal residence under the Revenue Act of 1939 and
15        for which a deduction was previously taken under
16        subparagraph (L) of this paragraph (2) prior to July 1,
17        1991, the retrospective application date of Article 4
18        of Public Act 87-17. In the case of multi-unit or
19        multi-use structures and farm dwellings, the taxes on
20        the taxpayer's principal residence shall be that
21        portion of the total taxes for the entire property
22        which is attributable to such principal residence;
23            (D) An amount equal to the amount of the capital
24        gain deduction allowable under the Internal Revenue
25        Code, to the extent deducted from gross income in the
26        computation of adjusted gross income;

 

 

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1            (D-5) An amount, to the extent not included in
2        adjusted gross income, equal to the amount of money
3        withdrawn by the taxpayer in the taxable year from a
4        medical care savings account and the interest earned on
5        the account in the taxable year of a withdrawal
6        pursuant to subsection (b) of Section 20 of the Medical
7        Care Savings Account Act or subsection (b) of Section
8        20 of the Medical Care Savings Account Act of 2000;
9            (D-10) For taxable years ending after December 31,
10        1997, an amount equal to any eligible remediation costs
11        that the individual deducted in computing adjusted
12        gross income and for which the individual claims a
13        credit under subsection (l) of Section 201;
14            (D-15) For taxable years 2001 and thereafter, an
15        amount equal to the bonus depreciation deduction taken
16        on the taxpayer's federal income tax return for the
17        taxable year under subsection (k) of Section 168 of the
18        Internal Revenue Code;
19            (D-16) If the taxpayer sells, transfers, abandons,
20        or otherwise disposes of property for which the
21        taxpayer was required in any taxable year to make an
22        addition modification under subparagraph (D-15), then
23        an amount equal to the aggregate amount of the
24        deductions taken in all taxable years under
25        subparagraph (Z) with respect to that property.
26            If the taxpayer continues to own property through

 

 

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

 

 

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

 

 

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1                person did not have as a principal purpose the
2                avoidance of Illinois income tax, and is paid
3                pursuant to a contract or agreement that
4                reflects an arm's-length interest rate and
5                terms; or
6                (iii) the taxpayer can establish, based on
7            clear and convincing evidence, that the interest
8            paid, accrued, or incurred relates to a contract or
9            agreement entered into at arm's-length rates and
10            terms and the principal purpose for the payment is
11            not federal or Illinois tax avoidance; or
12                (iv) an item of interest paid, accrued, or
13            incurred, directly or indirectly, to a person if
14            the taxpayer establishes by clear and convincing
15            evidence that the adjustments are unreasonable; or
16            if the taxpayer and the Director agree in writing
17            to the application or use of an alternative method
18            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-18) An amount equal to the amount of intangible
3        expenses and costs otherwise allowed as a deduction in
4        computing base income, and that were paid, accrued, or
5        incurred, directly or indirectly, (i) for taxable
6        years ending on or after December 31, 2004, to a
7        foreign person who would be a member of the same
8        unitary business group but for the fact that the
9        foreign person's business activity outside the United
10        States is 80% or more of that person's total business
11        activity and (ii) for taxable years ending on or after
12        December 31, 2008, to a person who would be a member of
13        the same unitary business group but for the fact that
14        the person is prohibited under Section 1501(a)(27)
15        from being included in the unitary business group
16        because he or she is ordinarily required to apportion
17        business income under different subsections of Section
18        304. The addition modification required by this
19        subparagraph shall be reduced to the extent that
20        dividends were included in base income of the unitary
21        group for the same taxable year and received by the
22        taxpayer or by a member of the taxpayer's unitary
23        business group (including amounts included in gross
24        income under Sections 951 through 964 of the Internal
25        Revenue Code and amounts included in gross income under
26        Section 78 of the Internal Revenue Code) with respect

 

 

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

 

 

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

 

 

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

 

 

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1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the stock
4        of the same person to whom the premiums and costs were
5        directly or indirectly paid, incurred, or accrued. The
6        preceding sentence does not apply to the extent that
7        the same dividends caused a reduction to the addition
8        modification required under Section 203(a)(2)(D-17) or
9        Section 203(a)(2)(D-18) of this Act.
10            (D-20) For taxable years beginning on or after
11        January 1, 2002 and ending on or before December 31,
12        2006, in the case of a distribution from a qualified
13        tuition program under Section 529 of the Internal
14        Revenue Code, other than (i) a distribution from a
15        College Savings Pool created under Section 16.5 of the
16        State Treasurer Act or (ii) a distribution from the
17        Illinois Prepaid Tuition Trust Fund, an amount equal to
18        the amount excluded from gross income under Section
19        529(c)(3)(B). For taxable years beginning on or after
20        January 1, 2007, in the case of a distribution from a
21        qualified tuition program under Section 529 of the
22        Internal Revenue Code, other than (i) a distribution
23        from a College Savings Pool created under Section 16.5
24        of the State Treasurer Act, (ii) a distribution from
25        the Illinois Prepaid Tuition Trust Fund, or (iii) a
26        distribution from a qualified tuition program under

 

 

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

 

 

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1        a qualified tuition program under Section 529 of the
2        Internal Revenue Code that is administered by the State
3        to an out-of-state program, an amount equal to the
4        amount of moneys previously deducted from base income
5        under subsection (a)(2)(Y) of this Section;
6            (D-22) For taxable years beginning on or after
7        January 1, 2009, in the case of a nonqualified
8        withdrawal or refund of moneys from a qualified tuition
9        program under Section 529 of the Internal Revenue Code
10        administered by the State that is not used for
11        qualified expenses at an eligible education
12        institution, an amount equal to the contribution
13        component of the nonqualified withdrawal or refund
14        that was previously deducted from base income under
15        subsection (a)(2)(y) of this Section, provided that
16        the withdrawal or refund did not result from the
17        beneficiary's death or disability;
18            (D-23) An amount equal to the credit allowable to
19        the taxpayer under Section 218(a) of this Act,
20        determined without regard to Section 218(c) of this
21        Act;
22            (D-24) For taxable years ending on or after
23        December 31, 2013, an amount equal to the deduction
24        allowed under Section 199 of the Internal Revenue Code
25        for the taxable year;
26    and by deducting from the total so obtained the sum of the

 

 

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

 

 

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1        paid to a resident in 2001 or thereafter by reason of
2        being a member of the Illinois National Guard or,
3        beginning with taxable years ending on or after
4        December 31, 2007, the National Guard of any other
5        state. The provisions of this subparagraph (E) are
6        exempt from the provisions of Section 250;
7            (F) An amount equal to all amounts included in such
8        total pursuant to the provisions of Sections 402(a),
9        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
10        Internal Revenue Code, or included in such total as
11        distributions under the provisions of any retirement
12        or disability plan for employees of any governmental
13        agency or unit, or retirement payments to retired
14        partners, which payments are excluded in computing net
15        earnings from self employment by Section 1402 of the
16        Internal Revenue Code and regulations adopted pursuant
17        thereto;
18            (G) The valuation limitation amount;
19            (H) An amount equal to the amount of any tax
20        imposed by this Act which was refunded to the taxpayer
21        and included in such total for the taxable year;
22            (I) An amount equal to all amounts included in such
23        total pursuant to the provisions of Section 111 of the
24        Internal Revenue Code as a recovery of items previously
25        deducted from adjusted gross income in the computation
26        of taxable income;

 

 

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

 

 

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1        and all amounts of expenses allocable to interest and
2        disallowed as deductions by Section 265(1) of the
3        Internal Revenue Code; and (ii) for taxable years
4        ending on or after August 13, 1999, Sections 171(a)(2),
5        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
6        Code, plus, for taxable years ending on or after
7        December 31, 2011, Section 45G(e)(3) of the Internal
8        Revenue Code and, for taxable years ending on or after
9        December 31, 2008, any amount included in gross income
10        under Section 87 of the Internal Revenue Code; the
11        provisions of this subparagraph are exempt from the
12        provisions of Section 250;
13            (N) An amount equal to all amounts included in such
14        total which are exempt from taxation by this State
15        either by reason of its statutes or Constitution or by
16        reason of the Constitution, treaties or statutes of the
17        United States; provided that, in the case of any
18        statute of this State that exempts income derived from
19        bonds or other obligations from the tax imposed under
20        this Act, the amount exempted shall be the interest net
21        of bond premium amortization;
22            (O) An amount equal to any contribution made to a
23        job training project established pursuant to the Tax
24        Increment Allocation Redevelopment Act;
25            (P) An amount equal to the amount of the deduction
26        used to compute the federal income tax credit for

 

 

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

 

 

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

 

 

09800SB1159sam001- 20 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 21 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 22 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 23 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 24 -LRB098 07306 HLH 42409 a

1            (AA) If the taxpayer sells, transfers, abandons,
2        or otherwise disposes of property for which the
3        taxpayer was required in any taxable year to make an
4        addition modification under subparagraph (D-15), then
5        an amount equal to that addition modification.
6            If the taxpayer continues to own property through
7        the last day of the last tax year for which the
8        taxpayer may claim a depreciation deduction for
9        federal income tax purposes and for which the taxpayer
10        was required in any taxable year to make an addition
11        modification under subparagraph (D-15), then an amount
12        equal to that addition modification.
13            The taxpayer is allowed to take the deduction under
14        this subparagraph only once with respect to any one
15        piece of property.
16            This subparagraph (AA) is exempt from the
17        provisions of Section 250;
18            (BB) Any amount included in adjusted gross income,
19        other than salary, received by a driver in a
20        ridesharing arrangement using a motor vehicle;
21            (CC) The amount of (i) any interest income (net of
22        the deductions allocable thereto) taken into account
23        for the taxable year with respect to a transaction with
24        a taxpayer that is required to make an addition
25        modification with respect to such transaction under
26        Section 203(a)(2)(D-17), 203(b)(2)(E-12),

 

 

09800SB1159sam001- 25 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 26 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 27 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 28 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 29 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 30 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 31 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 32 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 33 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 34 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 35 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 36 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 37 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 38 -LRB098 07306 HLH 42409 a

1        directly or indirectly paid, incurred, or accrued. The
2        preceding sentence does not apply to the extent that
3        the same dividends caused a reduction to the addition
4        modification required under Section 203(b)(2)(E-12) or
5        Section 203(b)(2)(E-13) of this Act;
6            (E-15) For taxable years beginning after December
7        31, 2008, any deduction for dividends paid by a captive
8        real estate investment trust that is allowed to a real
9        estate investment trust under Section 857(b)(2)(B) of
10        the Internal Revenue Code for dividends paid;
11            (E-16) An amount equal to the credit allowable to
12        the taxpayer under Section 218(a) of this Act,
13        determined without regard to Section 218(c) of this
14        Act;
15            (E-17) For taxable years ending on or after
16        December 31, 2013, an amount equal to the deduction
17        allowed under Section 199 of the Internal Revenue Code
18        for the taxable year;
19            (E-18) For taxable years ending on or after
20        December 31, 2013, any deduction allowed to the
21        taxpayer under Sections 243 through 246A of the
22        Internal Revenue Code;
23    and by deducting from the total so obtained the sum of the
24    following amounts:
25            (F) An amount equal to the amount of any tax
26        imposed by this Act which was refunded to the taxpayer

 

 

09800SB1159sam001- 39 -LRB098 07306 HLH 42409 a

1        and included in such total for the taxable year;
2            (G) An amount equal to any amount included in such
3        total under Section 78 of the Internal Revenue Code;
4            (H) In the case of a regulated investment company,
5        an amount equal to the amount of exempt interest
6        dividends as defined in subsection (b) (5) of Section
7        852 of the Internal Revenue Code, paid to shareholders
8        for the taxable year;
9            (I) With the exception of any amounts subtracted
10        under subparagraph (J), an amount equal to the sum of
11        all amounts disallowed as deductions by (i) Sections
12        171(a) (2), and 265(a)(2) and amounts disallowed as
13        interest expense by Section 291(a)(3) of the Internal
14        Revenue Code, and all amounts of expenses allocable to
15        interest and disallowed as deductions by Section
16        265(a)(1) of the Internal Revenue Code; and (ii) for
17        taxable years ending on or after August 13, 1999,
18        Sections 171(a)(2), 265, 280C, 291(a)(3), and
19        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
20        for tax years ending on or after December 31, 2011,
21        amounts disallowed as deductions by Section 45G(e)(3)
22        of the Internal Revenue Code and, for taxable years
23        ending on or after December 31, 2008, any amount
24        included in gross income under Section 87 of the
25        Internal Revenue Code and the policyholders' share of
26        tax-exempt interest of a life insurance company under

 

 

09800SB1159sam001- 40 -LRB098 07306 HLH 42409 a

1        Section 807(a)(2)(B) of the Internal Revenue Code (in
2        the case of a life insurance company with gross income
3        from a decrease in reserves for the tax year) or
4        Section 807(b)(1)(B) of the Internal Revenue Code (in
5        the case of a life insurance company allowed a
6        deduction for an increase in reserves for the tax
7        year); the provisions of this subparagraph are exempt
8        from the provisions of Section 250;
9            (J) An amount equal to all amounts included in such
10        total which are exempt from taxation by this State
11        either by reason of its statutes or Constitution or by
12        reason of the Constitution, treaties or statutes of the
13        United States; provided that, in the case of any
14        statute of this State that exempts income derived from
15        bonds or other obligations from the tax imposed under
16        this Act, the amount exempted shall be the interest net
17        of bond premium amortization;
18            (K) An amount equal to those dividends included in
19        such total which were paid by a corporation which
20        conducts business operations in a River Edge
21        Redevelopment Zone or zones created under the River
22        Edge Redevelopment Zone Act and conducts substantially
23        all of its operations in a River Edge Redevelopment
24        Zone or zones. This subparagraph (K) is exempt from the
25        provisions of Section 250;
26            (L) An amount equal to those dividends included in

 

 

09800SB1159sam001- 41 -LRB098 07306 HLH 42409 a

1        such total that were paid by a corporation that
2        conducts business operations in a federally designated
3        Foreign Trade Zone or Sub-Zone and that is designated a
4        High Impact Business located in Illinois; provided
5        that dividends eligible for the deduction provided in
6        subparagraph (K) of paragraph 2 of this subsection
7        shall not be eligible for the deduction provided under
8        this subparagraph (L);
9            (M) For any taxpayer that is a financial
10        organization within the meaning of Section 304(c) of
11        this Act, an amount included in such total as interest
12        income from a loan or loans made by such taxpayer to a
13        borrower, to the extent that such a loan is secured by
14        property which is eligible for the River Edge
15        Redevelopment Zone Investment Credit. To determine the
16        portion of a loan or loans that is secured by property
17        eligible for a Section 201(f) investment credit to the
18        borrower, the entire principal amount of the loan or
19        loans between the taxpayer and the borrower should be
20        divided into the basis of the Section 201(f) investment
21        credit property which secures the loan or loans, using
22        for this purpose the original basis of such property on
23        the date that it was placed in service in the River
24        Edge Redevelopment Zone. The subtraction modification
25        available to taxpayer in any year under this subsection
26        shall be that portion of the total interest paid by the

 

 

09800SB1159sam001- 42 -LRB098 07306 HLH 42409 a

1        borrower with respect to such loan attributable to the
2        eligible property as calculated under the previous
3        sentence. This subparagraph (M) is exempt from the
4        provisions of Section 250;
5            (M-1) For any taxpayer that is a financial
6        organization within the meaning of Section 304(c) of
7        this Act, an amount included in such total as interest
8        income from a loan or loans made by such taxpayer to a
9        borrower, to the extent that such a loan is secured by
10        property which is eligible for the High Impact Business
11        Investment Credit. To determine the portion of a loan
12        or loans that is secured by property eligible for a
13        Section 201(h) investment credit to the borrower, the
14        entire principal amount of the loan or loans between
15        the taxpayer and the borrower should be divided into
16        the basis of the Section 201(h) investment credit
17        property which secures the loan or loans, using for
18        this purpose the original basis of such property on the
19        date that it was placed in service in a federally
20        designated Foreign Trade Zone or Sub-Zone located in
21        Illinois. No taxpayer that is eligible for the
22        deduction provided in subparagraph (M) of paragraph
23        (2) of this subsection shall be eligible for the
24        deduction provided under this subparagraph (M-1). The
25        subtraction modification available to taxpayers in any
26        year under this subsection shall be that portion of the

 

 

09800SB1159sam001- 43 -LRB098 07306 HLH 42409 a

1        total interest paid by the borrower with respect to
2        such loan attributable to the eligible property as
3        calculated under the previous sentence;
4            (N) Two times any contribution made during the
5        taxable year to a designated zone organization to the
6        extent that the contribution (i) qualifies as a
7        charitable contribution under subsection (c) of
8        Section 170 of the Internal Revenue Code and (ii) must,
9        by its terms, be used for a project approved by the
10        Department of Commerce and Economic Opportunity under
11        Section 11 of the Illinois Enterprise Zone Act or under
12        Section 10-10 of the River Edge Redevelopment Zone Act.
13        This subparagraph (N) is exempt from the provisions of
14        Section 250;
15            (O) An amount equal to: (i) 85% for taxable years
16        ending on or before December 31, 1992, or, a percentage
17        equal to the percentage allowable under Section
18        243(a)(1) of the Internal Revenue Code of 1986 for
19        taxable years ending after December 31, 1992, of the
20        amount by which dividends included in taxable income
21        and received from a corporation that is not created or
22        organized under the laws of the United States or any
23        state or political subdivision thereof, including, for
24        taxable years ending on or after December 31, 1988,
25        dividends received or deemed received or paid or deemed
26        paid under Sections 951 through 965 of the Internal

 

 

09800SB1159sam001- 44 -LRB098 07306 HLH 42409 a

1        Revenue Code, exceed the amount of the modification
2        provided under subparagraph (G) of paragraph (2) of
3        this subsection (b) which is related to such dividends,
4        and including, for taxable years ending on or after
5        December 31, 2008, dividends received from a captive
6        real estate investment trust; plus (ii) 100% of the
7        amount by which dividends, included in taxable income
8        and received, including, for taxable years ending on or
9        after December 31, 1988, dividends received or deemed
10        received or paid or deemed paid under Sections 951
11        through 964 of the Internal Revenue Code and including,
12        for taxable years ending on or after December 31, 2008,
13        dividends received from a captive real estate
14        investment trust, from any such corporation specified
15        in clause (i) that would but for the provisions of
16        Section 1504 (b) (3) of the Internal Revenue Code be
17        treated as a member of the affiliated group which
18        includes the dividend recipient, exceed the amount of
19        the modification provided under subparagraph (G) of
20        paragraph (2) of this subsection (b) which is related
21        to such dividends. This subparagraph (O) shall not
22        apply to taxable years ending on or after December 31,
23        2013 is exempt from the provisions of Section 250 of
24        this Act;
25            (P) An amount equal to any contribution made to a
26        job training project established pursuant to the Tax

 

 

09800SB1159sam001- 45 -LRB098 07306 HLH 42409 a

1        Increment Allocation Redevelopment Act;
2            (Q) An amount equal to the amount of the deduction
3        used to compute the federal income tax credit for
4        restoration of substantial amounts held under claim of
5        right for the taxable year pursuant to Section 1341 of
6        the Internal Revenue Code;
7            (R) On and after July 20, 1999, in the case of an
8        attorney-in-fact with respect to whom an interinsurer
9        or a reciprocal insurer has made the election under
10        Section 835 of the Internal Revenue Code, 26 U.S.C.
11        835, an amount equal to the excess, if any, of the
12        amounts paid or incurred by that interinsurer or
13        reciprocal insurer in the taxable year to the
14        attorney-in-fact over the deduction allowed to that
15        interinsurer or reciprocal insurer with respect to the
16        attorney-in-fact under Section 835(b) of the Internal
17        Revenue Code for the taxable year; the provisions of
18        this subparagraph are exempt from the provisions of
19        Section 250;
20            (S) For taxable years ending on or after December
21        31, 1997, in the case of a Subchapter S corporation, an
22        amount equal to all amounts of income allocable to a
23        shareholder subject to the Personal Property Tax
24        Replacement Income Tax imposed by subsections (c) and
25        (d) of Section 201 of this Act, including amounts
26        allocable to organizations exempt from federal income

 

 

09800SB1159sam001- 46 -LRB098 07306 HLH 42409 a

1        tax by reason of Section 501(a) of the Internal Revenue
2        Code. This subparagraph (S) is exempt from the
3        provisions of Section 250;
4            (T) For taxable years 2001 and thereafter, for the
5        taxable year in which the bonus depreciation deduction
6        is taken on the taxpayer's federal income tax return
7        under subsection (k) of Section 168 of the Internal
8        Revenue Code and for each applicable taxable year
9        thereafter, an amount equal to "x", where:
10                (1) "y" equals the amount of the depreciation
11            deduction taken for the taxable year on the
12            taxpayer's federal income tax return on property
13            for which the bonus depreciation deduction was
14            taken in any year under subsection (k) of Section
15            168 of the Internal Revenue Code, but not including
16            the bonus depreciation deduction;
17                (2) for taxable years ending on or before
18            December 31, 2005, "x" equals "y" multiplied by 30
19            and then divided by 70 (or "y" multiplied by
20            0.429); and
21                (3) for taxable years ending after December
22            31, 2005:
23                    (i) for property on which a bonus
24                depreciation deduction of 30% of the adjusted
25                basis was taken, "x" equals "y" multiplied by
26                30 and then divided by 70 (or "y" multiplied by

 

 

09800SB1159sam001- 47 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 48 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 49 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 50 -LRB098 07306 HLH 42409 a

1        transactions with (i) a foreign person who would be a
2        member of the taxpayer's unitary business group but for
3        the fact that the foreign person's business activity
4        outside the United States is 80% or more of that
5        person's total business activity and (ii) for taxable
6        years ending on or after December 31, 2008, to a person
7        who would be a member of the same unitary business
8        group but for the fact that the person is prohibited
9        under Section 1501(a)(27) from being included in the
10        unitary business group because he or she is ordinarily
11        required to apportion business income under different
12        subsections of Section 304, but not to exceed the
13        addition modification required to be made for the same
14        taxable year under Section 203(b)(2)(E-13) for
15        intangible expenses and costs paid, accrued, or
16        incurred, directly or indirectly, to the same foreign
17        person. This subparagraph (X) is exempt from the
18        provisions of Section 250;
19            (Y) For taxable years ending on or after December
20        31, 2011, in the case of a taxpayer who was required to
21        add back any insurance premiums under Section
22        203(b)(2)(E-14), such taxpayer may elect to subtract
23        that part of a reimbursement received from the
24        insurance company equal to the amount of the expense or
25        loss (including expenses incurred by the insurance
26        company) that would have been taken into account as a

 

 

09800SB1159sam001- 51 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 52 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 53 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 54 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 55 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 56 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 57 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 58 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 59 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 60 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 61 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 62 -LRB098 07306 HLH 42409 a

1        included in base income of the unitary group for the
2        same taxable year and received by the taxpayer or by a
3        member of the taxpayer's unitary business group
4        (including amounts included in gross income under
5        Sections 951 through 964 of the Internal Revenue Code
6        and amounts included in gross income under Section 78
7        of the Internal Revenue Code) with respect to the stock
8        of the same person to whom the premiums and costs were
9        directly or indirectly paid, incurred, or accrued. The
10        preceding sentence does not apply to the extent that
11        the same dividends caused a reduction to the addition
12        modification required under Section 203(c)(2)(G-12) or
13        Section 203(c)(2)(G-13) of this Act;
14            (G-15) An amount equal to the credit allowable to
15        the taxpayer under Section 218(a) of this Act,
16        determined without regard to Section 218(c) of this
17        Act;
18            (G-16) For taxable years ending on or after
19        December 31, 2013, an amount equal to the deduction
20        allowed under Section 199 of the Internal Revenue Code
21        for the taxable year;
22    and by deducting from the total so obtained the sum of the
23    following amounts:
24            (H) An amount equal to all amounts included in such
25        total pursuant to the provisions of Sections 402(a),
26        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the

 

 

09800SB1159sam001- 63 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 64 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 65 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 66 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 67 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 68 -LRB098 07306 HLH 42409 a

1        (k) of Section 168 of the Internal Revenue Code. This
2        subparagraph (R) is exempt from the provisions of
3        Section 250;
4            (S) If the taxpayer sells, transfers, abandons, or
5        otherwise disposes of property for which the taxpayer
6        was required in any taxable year to make an addition
7        modification under subparagraph (G-10), then an amount
8        equal to that addition modification.
9            If the taxpayer continues to own property through
10        the last day of the last tax year for which the
11        taxpayer may claim a depreciation deduction for
12        federal income tax purposes and 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            The taxpayer is allowed to take the deduction under
17        this subparagraph only once with respect to any one
18        piece of property.
19            This subparagraph (S) is exempt from the
20        provisions of Section 250;
21            (T) The amount of (i) any interest income (net of
22        the deductions allocable thereto) taken into account
23        for the taxable year with respect to a transaction with
24        a taxpayer that is required to make an addition
25        modification with respect to such transaction under
26        Section 203(a)(2)(D-17), 203(b)(2)(E-12),

 

 

09800SB1159sam001- 69 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 70 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 71 -LRB098 07306 HLH 42409 a

1            (W) in the case of an estate, an amount equal to
2        all amounts included in such total pursuant to the
3        provisions of Section 111 of the Internal Revenue Code
4        as a recovery of items previously deducted by the
5        decedent from adjusted gross income in the computation
6        of taxable income. This subparagraph (W) is exempt from
7        Section 250;
8            (X) an amount equal to the refund included in such
9        total of any tax deducted for federal income tax
10        purposes, to the extent that deduction was added back
11        under subparagraph (F). This subparagraph (X) is
12        exempt from the provisions of Section 250; and
13            (Y) For taxable years ending on or after December
14        31, 2011, in the case of a taxpayer who was required to
15        add back any insurance premiums under Section
16        203(c)(2)(G-14), such taxpayer may elect to subtract
17        that part of a reimbursement received from the
18        insurance company equal to the amount of the expense or
19        loss (including expenses incurred by the insurance
20        company) that would have been taken into account as a
21        deduction for federal income tax purposes if the
22        expense or loss had been uninsured. If a taxpayer makes
23        the election provided for by this subparagraph (Y), the
24        insurer to which the premiums were paid must add back
25        to income the amount subtracted by the taxpayer
26        pursuant to this subparagraph (Y). This subparagraph

 

 

09800SB1159sam001- 72 -LRB098 07306 HLH 42409 a

1        (Y) is exempt from the provisions of Section 250.
2        (3) Limitation. The amount of any modification
3    otherwise required under this subsection shall, under
4    regulations prescribed by the Department, be adjusted by
5    any amounts included therein which were properly paid,
6    credited, or required to be distributed, or permanently set
7    aside for charitable purposes pursuant to Internal Revenue
8    Code Section 642(c) during the taxable year.
 
9    (d) Partnerships.
10        (1) In general. In the case of a partnership, 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. The taxable income referred to in
14    paragraph (1) shall be modified by adding thereto the sum
15    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 taxable income;
20            (B) An amount equal to the amount of tax imposed by
21        this Act to the extent deducted from gross income for
22        the taxable year;
23            (C) The amount of deductions allowed to the
24        partnership pursuant to Section 707 (c) of the Internal
25        Revenue Code in calculating its taxable income;

 

 

09800SB1159sam001- 73 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 74 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 75 -LRB098 07306 HLH 42409 a

1        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

 

 

09800SB1159sam001- 76 -LRB098 07306 HLH 42409 a

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; and
20            (D-8) 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

 

 

09800SB1159sam001- 77 -LRB098 07306 HLH 42409 a

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 pursuant to Sections 951 through 964 of the
17        Internal Revenue Code and amounts included in gross
18        income under Section 78 of the Internal Revenue Code)
19        with respect to the stock of the same person to whom
20        the intangible expenses and costs were directly or
21        indirectly paid, incurred or accrued. The preceding
22        sentence shall not apply to the extent that the same
23        dividends caused a reduction to the addition
24        modification required under Section 203(d)(2)(D-7) of
25        this Act. As used in this subparagraph, the term
26        "intangible expenses and costs" includes (1) expenses,

 

 

09800SB1159sam001- 78 -LRB098 07306 HLH 42409 a

1        losses, and costs for, or related to, the direct or
2        indirect acquisition, use, maintenance or management,
3        ownership, sale, exchange, or any other disposition of
4        intangible property; (2) losses incurred, directly or
5        indirectly, from factoring transactions or discounting
6        transactions; (3) royalty, patent, technical, and
7        copyright fees; (4) licensing fees; and (5) other
8        similar expenses and costs. For purposes of this
9        subparagraph, "intangible property" includes patents,
10        patent applications, trade names, trademarks, service
11        marks, copyrights, mask works, trade secrets, and
12        similar types of intangible 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

 

 

09800SB1159sam001- 79 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 80 -LRB098 07306 HLH 42409 a

1            under Section 404 of this Act;
2            (D-9) For taxable years ending on or after December
3        31, 2008, an amount equal to the amount of insurance
4        premium expenses and costs otherwise allowed as a
5        deduction in computing base income, and that were paid,
6        accrued, or incurred, directly or indirectly, to a
7        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(d)(2)(D-7) or

 

 

09800SB1159sam001- 81 -LRB098 07306 HLH 42409 a

1        Section 203(d)(2)(D-8) of this Act;
2            (D-10) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6            (D-11) For taxable years ending on or after
7        December 31, 2013, an amount equal to the deduction
8        allowed under Section 199 of the Internal Revenue Code
9        for the taxable year;
10    and by deducting from the total so obtained the following
11    amounts:
12            (E) The valuation limitation amount;
13            (F) An amount equal to the amount of any tax
14        imposed by this Act which was refunded to the taxpayer
15        and included in such total for the taxable year;
16            (G) An amount equal to all amounts included in
17        taxable income as modified by subparagraphs (A), (B),
18        (C) and (D) which are exempt from taxation by this
19        State either by reason of its statutes or Constitution
20        or by reason of the Constitution, treaties or statutes
21        of the United States; provided that, in the case of any
22        statute of this State that exempts income derived from
23        bonds or other obligations from the tax imposed under
24        this Act, the amount exempted shall be the interest net
25        of bond premium amortization;
26            (H) Any income of the partnership which

 

 

09800SB1159sam001- 82 -LRB098 07306 HLH 42409 a

1        constitutes personal service income as defined in
2        Section 1348 (b) (1) of the Internal Revenue Code (as
3        in effect December 31, 1981) or a reasonable allowance
4        for compensation paid or accrued for services rendered
5        by partners to the partnership, whichever is greater;
6        this subparagraph (H) is exempt from the provisions of
7        Section 250;
8            (I) An amount equal to all amounts of income
9        distributable to an entity subject to the Personal
10        Property Tax Replacement Income Tax imposed by
11        subsections (c) and (d) of Section 201 of this Act
12        including amounts distributable to organizations
13        exempt from federal income tax by reason of Section
14        501(a) of the Internal Revenue Code; this subparagraph
15        (I) is exempt from the provisions of Section 250;
16            (J) With the exception of any amounts subtracted
17        under subparagraph (G), an amount equal to the sum of
18        all amounts disallowed as deductions by (i) Sections
19        171(a) (2), and 265(2) of the Internal Revenue Code,
20        and all amounts of expenses allocable to interest and
21        disallowed as deductions by Section 265(1) of the
22        Internal Revenue Code; and (ii) for taxable years
23        ending on or after August 13, 1999, Sections 171(a)(2),
24        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
25        Code, plus, (iii) for taxable years ending on or after
26        December 31, 2011, Section 45G(e)(3) of the Internal

 

 

09800SB1159sam001- 83 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 84 -LRB098 07306 HLH 42409 a

1        used to compute the federal income tax credit for
2        restoration of substantial amounts held under claim of
3        right for the taxable year pursuant to Section 1341 of
4        the Internal Revenue Code;
5            (O) 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

 

 

09800SB1159sam001- 85 -LRB098 07306 HLH 42409 a

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 (O) is exempt from the provisions of
14        Section 250;
15            (P) If the taxpayer sells, transfers, abandons, or
16        otherwise disposes of property for which the taxpayer
17        was required in any taxable year to make an addition
18        modification under subparagraph (D-5), then an amount
19        equal to that addition modification.
20            If the taxpayer continues to own property through
21        the last day of the last tax year for which 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-5), then an amount
26        equal to that addition modification.

 

 

09800SB1159sam001- 86 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 87 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 88 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 89 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 90 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 91 -LRB098 07306 HLH 42409 a

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

 

 

09800SB1159sam001- 92 -LRB098 07306 HLH 42409 a

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

 

 

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

 

 

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

 

 

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

 

 

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1    (g) Double deductions. Unless specifically provided
2otherwise, nothing in this Section shall permit the same item
3to be deducted more than once.
 
4    (h) Legislative intention. Except as expressly provided by
5this Section there shall be no modifications or limitations on
6the amounts of income, gain, loss or deduction taken into
7account in determining gross income, adjusted gross income or
8taxable income for federal income tax purposes for the taxable
9year, or in the amount of such items entering into the
10computation of base income and net income under this Act for
11such taxable year, whether in respect of property values as of
12August 1, 1969 or otherwise.
13(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
14eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
1596-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
166-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
17eff. 8-23-11; 97-905, eff. 8-7-12.)
 
18    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
19    Sec. 901. Collection Authority.
20    (a) In general.
21    The Department shall collect the taxes imposed by this Act.
22The Department shall collect certified past due child support
23amounts under Section 2505-650 of the Department of Revenue Law
24(20 ILCS 2505/2505-650). Except as provided in subsections (c),

 

 

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1(e), (f), and (g), and (h) of this Section, money collected
2pursuant to subsections (a) and (b) of Section 201 of this Act
3shall be paid into the General Revenue Fund in the State
4treasury; money collected pursuant to subsections (c) and (d)
5of Section 201 of this Act shall be paid into the Personal
6Property Tax Replacement Fund, a special fund in the State
7Treasury; and money collected under Section 2505-650 of the
8Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
9into the Child Support Enforcement Trust Fund, a special fund
10outside the State Treasury, or to the State Disbursement Unit
11established under Section 10-26 of the Illinois Public Aid
12Code, as directed by the Department of Healthcare and Family
13Services.
14    (b) Local Government Distributive Fund.
15    Beginning August 1, 1969, and continuing through June 30,
161994, the Treasurer shall transfer each month from the General
17Revenue Fund to a special fund in the State treasury, to be
18known as the "Local Government Distributive Fund", an amount
19equal to 1/12 of the net revenue realized from the tax imposed
20by subsections (a) and (b) of Section 201 of this Act during
21the preceding month. Beginning July 1, 1994, and continuing
22through June 30, 1995, the Treasurer shall transfer each month
23from the General Revenue Fund to the Local Government
24Distributive Fund an amount equal to 1/11 of the net revenue
25realized from the tax imposed by subsections (a) and (b) of
26Section 201 of this Act during the preceding month. Beginning

 

 

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1July 1, 1995 and continuing through January 31, 2011, the
2Treasurer shall transfer each month from the General Revenue
3Fund to the Local Government Distributive Fund an amount equal
4to the net of (i) 1/10 of the net revenue realized from the tax
5imposed by subsections (a) and (b) of Section 201 of the
6Illinois Income Tax Act during the preceding month (ii) minus,
7beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
8and beginning July 1, 2004, zero. Beginning February 1, 2011,
9and continuing through January 31, 2015, the Treasurer shall
10transfer each month from the General Revenue Fund to the Local
11Government Distributive Fund an amount equal to the sum of (i)
126% (10% of the ratio of the 3% individual income tax rate prior
13to 2011 to the 5% individual income tax rate after 2010) of the
14net revenue realized from the tax imposed by subsections (a)
15and (b) of Section 201 of this Act upon individuals, trusts,
16and estates during the preceding month and (ii) 6.86% (10% of
17the ratio of the 4.8% corporate income tax rate prior to 2011
18to the 7% corporate income tax rate after 2010) of the net
19revenue realized from the tax imposed by subsections (a) and
20(b) of Section 201 of this Act upon corporations during the
21preceding month. Beginning February 1, 2015 and continuing
22through January 31, 2025, the Treasurer shall transfer each
23month from the General Revenue Fund to the Local Government
24Distributive Fund an amount equal to the sum of (i) 8% (10% of
25the ratio of the 3% individual income tax rate prior to 2011 to
26the 3.75% individual income tax rate after 2014) of the net

 

 

09800SB1159sam001- 99 -LRB098 07306 HLH 42409 a

1revenue realized from the tax imposed by subsections (a) and
2(b) of Section 201 of this Act upon individuals, trusts, and
3estates during the preceding month and (ii) 9.14% (10% of the
4ratio of the 4.8% corporate income tax rate prior to 2011 to
5the 5.25% corporate income tax rate after 2014) of the net
6revenue realized from the tax imposed by subsections (a) and
7(b) of Section 201 of this Act upon corporations during the
8preceding month. Beginning February 1, 2025, the Treasurer
9shall transfer each month from the General Revenue Fund to the
10Local Government Distributive Fund an amount equal to the sum
11of (i) 9.23% (10% of the ratio of the 3% individual income tax
12rate prior to 2011 to the 3.25% individual income tax rate
13after 2024) of the net revenue realized from the tax imposed by
14subsections (a) and (b) of Section 201 of this Act upon
15individuals, trusts, and estates during the preceding month and
16(ii) 10% of the net revenue realized from the tax imposed by
17subsections (a) and (b) of Section 201 of this Act upon
18corporations during the preceding month. Net revenue realized
19for a month shall be defined as the revenue from the tax
20imposed by subsections (a) and (b) of Section 201 of this Act
21which is deposited in the General Revenue Fund, the Education
22Assistance Fund, the Income Tax Surcharge Local Government
23Distributive Fund, the Fund for the Advancement of Education,
24and the Commitment to Human Services Fund during the month
25minus the amount paid out of the General Revenue Fund in State
26warrants during that same month as refunds to taxpayers for

 

 

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1overpayment of liability under the tax imposed by subsections
2(a) and (b) of Section 201 of this Act.
3    (c) Deposits Into Income Tax Refund Fund.
4        (1) Beginning on January 1, 1989 and thereafter, the
5    Department shall deposit a percentage of the amounts
6    collected pursuant to subsections (a) and (b)(1), (2), and
7    (3), of Section 201 of this Act into a fund in the State
8    treasury known as the Income Tax Refund Fund. The
9    Department shall deposit 6% of such amounts during the
10    period beginning January 1, 1989 and ending on June 30,
11    1989. Beginning with State fiscal year 1990 and for each
12    fiscal year thereafter, the percentage deposited into the
13    Income Tax Refund Fund during a fiscal year shall be the
14    Annual Percentage. For fiscal years 1999 through 2001, the
15    Annual Percentage shall be 7.1%. For fiscal year 2003, the
16    Annual Percentage shall be 8%. For fiscal year 2004, the
17    Annual Percentage shall be 11.7%. Upon the effective date
18    of this amendatory Act of the 93rd General Assembly, the
19    Annual Percentage shall be 10% for fiscal year 2005. For
20    fiscal year 2006, the Annual Percentage shall be 9.75%. For
21    fiscal year 2007, the Annual Percentage shall be 9.75%. For
22    fiscal year 2008, the Annual Percentage shall be 7.75%. For
23    fiscal year 2009, the Annual Percentage shall be 9.75%. For
24    fiscal year 2010, the Annual Percentage shall be 9.75%. For
25    fiscal year 2011, the Annual Percentage shall be 8.75%. For
26    fiscal year 2012, the Annual Percentage shall be 8.75%. For

 

 

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1    fiscal year 2013, the Annual Percentage shall be 9.75%. For
2    all other fiscal years, the Annual Percentage shall be
3    calculated as a fraction, the numerator of which shall be
4    the amount of refunds approved for payment by the
5    Department during the preceding fiscal year as a result of
6    overpayment of tax liability under subsections (a) and
7    (b)(1), (2), and (3) of Section 201 of this Act plus the
8    amount of such refunds remaining approved but unpaid at the
9    end of the preceding fiscal year, minus the amounts
10    transferred into the Income Tax Refund Fund from the
11    Tobacco Settlement Recovery Fund, and the denominator of
12    which shall be the amounts which will be collected pursuant
13    to subsections (a) and (b)(1), (2), and (3) of Section 201
14    of this Act during the preceding fiscal year; except that
15    in State fiscal year 2002, the Annual Percentage shall in
16    no event exceed 7.6%. The Director of Revenue shall certify
17    the Annual Percentage to the Comptroller on the last
18    business day of the fiscal year immediately preceding the
19    fiscal year for which it is to be effective.
20        (2) Beginning on January 1, 1989 and thereafter, the
21    Department shall deposit a percentage of the amounts
22    collected pursuant to subsections (a) and (b)(6), (7), and
23    (8), (c) and (d) of Section 201 of this Act into a fund in
24    the State treasury known as the Income Tax Refund Fund. The
25    Department shall deposit 18% of such amounts during the
26    period beginning January 1, 1989 and ending on June 30,

 

 

09800SB1159sam001- 102 -LRB098 07306 HLH 42409 a

1    1989. Beginning with State fiscal year 1990 and for each
2    fiscal year thereafter, the percentage deposited into the
3    Income Tax Refund Fund during a fiscal year shall be the
4    Annual Percentage. For fiscal years 1999, 2000, and 2001,
5    the Annual Percentage shall be 19%. For fiscal year 2003,
6    the Annual Percentage shall be 27%. For fiscal year 2004,
7    the Annual Percentage shall be 32%. Upon the effective date
8    of this amendatory Act of the 93rd General Assembly, the
9    Annual Percentage shall be 24% for fiscal year 2005. For
10    fiscal year 2006, the Annual Percentage shall be 20%. For
11    fiscal year 2007, the Annual Percentage shall be 17.5%. For
12    fiscal year 2008, the Annual Percentage shall be 15.5%. For
13    fiscal year 2009, the Annual Percentage shall be 17.5%. For
14    fiscal year 2010, the Annual Percentage shall be 17.5%. For
15    fiscal year 2011, the Annual Percentage shall be 17.5%. For
16    fiscal year 2012, the Annual Percentage shall be 17.5%. For
17    fiscal year 2013, the Annual Percentage shall be 14%. For
18    all other fiscal years, the Annual Percentage shall be
19    calculated as a fraction, the numerator of which shall be
20    the amount of refunds approved for payment by the
21    Department during the preceding fiscal year as a result of
22    overpayment of tax liability under subsections (a) and
23    (b)(6), (7), and (8), (c) and (d) of Section 201 of this
24    Act plus the amount of such refunds remaining approved but
25    unpaid at the end of the preceding fiscal year, and the
26    denominator of which shall be the amounts which will be

 

 

09800SB1159sam001- 103 -LRB098 07306 HLH 42409 a

1    collected pursuant to subsections (a) and (b)(6), (7), and
2    (8), (c) and (d) of Section 201 of this Act during the
3    preceding fiscal year; except that in State fiscal year
4    2002, the Annual Percentage shall in no event exceed 23%.
5    The Director of Revenue shall certify the Annual Percentage
6    to the Comptroller on the last business day of the fiscal
7    year immediately preceding the fiscal year for which it is
8    to be effective.
9        (3) The Comptroller shall order transferred and the
10    Treasurer shall transfer from the Tobacco Settlement
11    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
12    in January, 2001, (ii) $35,000,000 in January, 2002, and
13    (iii) $35,000,000 in January, 2003.
14    (d) Expenditures from Income Tax Refund Fund.
15        (1) Beginning January 1, 1989, money in the Income Tax
16    Refund Fund shall be expended exclusively for the purpose
17    of paying refunds resulting from overpayment of tax
18    liability under Section 201 of this Act, for paying rebates
19    under Section 208.1 in the event that the amounts in the
20    Homeowners' Tax Relief Fund are insufficient for that
21    purpose, and for making transfers pursuant to this
22    subsection (d).
23        (2) The Director shall order payment of refunds
24    resulting from overpayment of tax liability under Section
25    201 of this Act from the Income Tax Refund Fund only to the
26    extent that amounts collected pursuant to Section 201 of

 

 

09800SB1159sam001- 104 -LRB098 07306 HLH 42409 a

1    this Act and transfers pursuant to this subsection (d) and
2    item (3) of subsection (c) have been deposited and retained
3    in the Fund.
4        (3) As soon as possible after the end of each fiscal
5    year, the Director shall order transferred and the State
6    Treasurer and State Comptroller shall transfer from the
7    Income Tax Refund Fund to the Personal Property Tax
8    Replacement Fund an amount, certified by the Director to
9    the Comptroller, equal to the excess of the amount
10    collected pursuant to subsections (c) and (d) of Section
11    201 of this Act deposited into the Income Tax Refund Fund
12    during the fiscal year over the amount of refunds resulting
13    from overpayment of tax liability under subsections (c) and
14    (d) of Section 201 of this Act paid from the Income Tax
15    Refund Fund during the fiscal year.
16        (4) As soon as possible after the end of each fiscal
17    year, the Director shall order transferred and the State
18    Treasurer and State Comptroller shall transfer from the
19    Personal Property Tax Replacement Fund to the Income Tax
20    Refund Fund an amount, certified by the Director to the
21    Comptroller, equal to the excess of the amount of refunds
22    resulting from overpayment of tax liability under
23    subsections (c) and (d) of Section 201 of this Act paid
24    from the Income Tax Refund Fund during the fiscal year over
25    the amount collected pursuant to subsections (c) and (d) of
26    Section 201 of this Act deposited into the Income Tax

 

 

09800SB1159sam001- 105 -LRB098 07306 HLH 42409 a

1    Refund Fund during the fiscal year.
2        (4.5) As soon as possible after the end of fiscal year
3    1999 and of each fiscal year thereafter, the Director shall
4    order transferred and the State Treasurer and State
5    Comptroller shall transfer from the Income Tax Refund Fund
6    to the General Revenue Fund any surplus remaining in the
7    Income Tax Refund Fund as of the end of such fiscal year;
8    excluding for fiscal years 2000, 2001, and 2002 amounts
9    attributable to transfers under item (3) of subsection (c)
10    less refunds resulting from the earned income tax credit.
11        (5) This Act shall constitute an irrevocable and
12    continuing appropriation from the Income Tax Refund Fund
13    for the purpose of paying refunds upon the order of the
14    Director in accordance with the provisions of this Section.
15    (e) Deposits into the Education Assistance Fund and the
16Income Tax Surcharge Local Government Distributive Fund.
17    On July 1, 1991, and thereafter, of the amounts collected
18pursuant to subsections (a) and (b) of Section 201 of this Act,
19minus deposits into the Income Tax Refund Fund, the Department
20shall deposit 7.3% into the Education Assistance Fund in the
21State Treasury. Beginning July 1, 1991, and continuing through
22January 31, 1993, of the amounts collected pursuant to
23subsections (a) and (b) of Section 201 of the Illinois Income
24Tax Act, minus deposits into the Income Tax Refund Fund, the
25Department shall deposit 3.0% into the Income Tax Surcharge
26Local Government Distributive Fund in the State Treasury.

 

 

09800SB1159sam001- 106 -LRB098 07306 HLH 42409 a

1Beginning February 1, 1993 and continuing through June 30,
21993, of the amounts collected pursuant to subsections (a) and
3(b) of Section 201 of the Illinois Income Tax Act, minus
4deposits into the Income Tax Refund Fund, the Department shall
5deposit 4.4% into the Income Tax Surcharge Local Government
6Distributive Fund in the State Treasury. Beginning July 1,
71993, and continuing through June 30, 1994, of the amounts
8collected under subsections (a) and (b) of Section 201 of this
9Act, minus deposits into the Income Tax Refund Fund, the
10Department shall deposit 1.475% into the Income Tax Surcharge
11Local Government Distributive Fund in the State Treasury.
12    (f) Deposits into the Fund for the Advancement of
13Education. Beginning February 1, 2015, the Department shall
14deposit the following portions of the revenue realized from the
15tax imposed upon individuals, trusts, and estates by
16subsections (a) and (b) of Section 201 of this Act during the
17preceding month, minus deposits into the Income Tax Refund
18Fund, into the Fund for the Advancement of Education:
19        (1) beginning February 1, 2015, and prior to February
20    1, 2025, 1/30; and
21        (2) beginning February 1, 2025, 1/26.
22    If the rate of tax imposed by subsection (a) and (b) of
23Section 201 is reduced pursuant to Section 201.5 of this Act,
24the Department shall not make the deposits required by this
25subsection (f) on or after the effective date of the reduction.
26    (g) Deposits into the Commitment to Human Services Fund.

 

 

09800SB1159sam001- 107 -LRB098 07306 HLH 42409 a

1Beginning February 1, 2015, the Department shall deposit the
2following portions of the revenue realized from the tax imposed
3upon individuals, trusts, and estates by subsections (a) and
4(b) of Section 201 of this Act during the preceding month,
5minus deposits into the Income Tax Refund Fund, into the
6Commitment to Human Services Fund:
7        (1) beginning February 1, 2015, and prior to February
8    1, 2025, 1/30; and
9        (2) beginning February 1, 2025, 1/26.
10    If the rate of tax imposed by subsection (a) and (b) of
11Section 201 is reduced pursuant to Section 201.5 of this Act,
12the Department shall not make the deposits required by this
13subsection (g) on or after the effective date of the reduction.
14    (h) Deposits into the Bill Payment Trust Fund. On and after
15the effective date of this amendatory Act of the 98th General
16Assembly, the Department shall deposit into the Bill Payment
17Trust Fund each month an amount equal the revenue realized from
18the tax imposed by subsections (a) and (b) of Section 201 of
19this Act during the preceding month that is attributable to the
20changes made to Section 203 and Section 1501 of this Act by
21this amendatory Act of the 98th General Assembly, net of
22deposits into the Income Tax Refund Fund.
23(Source: P.A. 96-45, eff. 7-15-09; 96-328, eff. 8-11-09;
2496-959, eff. 7-1-10; 96-1496, eff. 1-13-11; 97-72, eff. 7-1-11;
2597-732, eff. 6-30-12.)
 

 

 

09800SB1159sam001- 108 -LRB098 07306 HLH 42409 a

1    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
2    Sec. 1501. Definitions.
3    (a) In general. When used in this Act, where not otherwise
4distinctly expressed or manifestly incompatible with the
5intent thereof:
6        (1) Business income. The term "business income" means
7    all income that may be treated as apportionable business
8    income under the Constitution of the United States.
9    Business income is net of the deductions allocable thereto.
10    Such term does not include compensation or the deductions
11    allocable thereto. For each taxable year beginning on or
12    after January 1, 2003, a taxpayer may elect to treat all
13    income other than compensation as business income. This
14    election shall be made in accordance with rules adopted by
15    the Department and, once made, shall be irrevocable.
16        (1.5) Captive real estate investment trust:
17            (A) The term "captive real estate investment
18        trust" means a corporation, trust, or association:
19                (i) that is considered a real estate
20            investment trust for the taxable year under
21            Section 856 of the Internal Revenue Code;
22                (ii) the certificates of beneficial interest
23            or shares of which are not regularly traded on an
24            established securities market; and
25                (iii) of which more than 50% of the voting
26            power or value of the beneficial interest or

 

 

09800SB1159sam001- 109 -LRB098 07306 HLH 42409 a

1            shares, at any time during the last half of the
2            taxable year, is owned or controlled, directly,
3            indirectly, or constructively, by a single
4            corporation.
5            (B) The term "captive real estate investment
6        trust" does not include:
7                (i) a real estate investment trust of which
8            more than 50% of the voting power or value of the
9            beneficial interest or shares is owned or
10            controlled, directly, indirectly, or
11            constructively, by:
12                    (a) a real estate investment trust, other
13                than a captive real estate investment trust;
14                    (b) a person who is exempt from taxation
15                under Section 501 of the Internal Revenue Code,
16                and who is not required to treat income
17                received from the real estate investment trust
18                as unrelated business taxable income under
19                Section 512 of the Internal Revenue Code;
20                    (c) a listed Australian property trust, if
21                no more than 50% of the voting power or value
22                of the beneficial interest or shares of that
23                trust, at any time during the last half of the
24                taxable year, is owned or controlled, directly
25                or indirectly, by a single person;
26                    (d) an entity organized as a trust,

 

 

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1                provided a listed Australian property trust
2                described in subparagraph (c) owns or
3                controls, directly or indirectly, or
4                constructively, 75% or more of the voting power
5                or value of the beneficial interests or shares
6                of such entity; or
7                    (e) an entity that is organized outside of
8                the laws of the United States and that
9                satisfies all of the following criteria:
10                        (1) at least 75% of the entity's total
11                    asset value at the close of its taxable
12                    year is represented by real estate assets
13                    (as defined in Section 856(c)(5)(B) of the
14                    Internal Revenue Code, thereby including
15                    shares or certificates of beneficial
16                    interest in any real estate investment
17                    trust), cash and cash equivalents, and
18                    U.S. Government securities;
19                        (2) the entity is not subject to tax on
20                    amounts that are distributed to its
21                    beneficial owners or is exempt from
22                    entity-level taxation;
23                        (3) the entity distributes at least
24                    85% of its taxable income (as computed in
25                    the jurisdiction in which it is organized)
26                    to the holders of its shares or

 

 

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1                    certificates of beneficial interest on an
2                    annual basis;
3                        (4) either (i) the shares or
4                    beneficial interests of the entity are
5                    regularly traded on an established
6                    securities market or (ii) not more than 10%
7                    of the voting power or value in the entity
8                    is held, directly, indirectly, or
9                    constructively, by a single entity or
10                    individual; and
11                        (5) the entity is organized in a
12                    country that has entered into a tax treaty
13                    with the United States; or
14                (ii) during its first taxable year for which it
15            elects to be treated as a real estate investment
16            trust under Section 856(c)(1) of the Internal
17            Revenue Code, a real estate investment trust the
18            certificates of beneficial interest or shares of
19            which are not regularly traded on an established
20            securities market, but only if the certificates of
21            beneficial interest or shares of the real estate
22            investment trust are regularly traded on an
23            established securities market prior to the earlier
24            of the due date (including extensions) for filing
25            its return under this Act for that first taxable
26            year or the date it actually files that return.

 

 

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1            (C) For the purposes of this subsection (1.5), the
2        constructive ownership rules prescribed under Section
3        318(a) of the Internal Revenue Code, as modified by
4        Section 856(d)(5) of the Internal Revenue Code, apply
5        in determining the ownership of stock, assets, or net
6        profits of any person.
7        (2) Commercial domicile. The term "commercial
8    domicile" means the principal place from which the trade or
9    business of the taxpayer is directed or managed.
10        (3) Compensation. The term "compensation" means wages,
11    salaries, commissions and any other form of remuneration
12    paid to employees for personal services.
13        (4) Corporation. The term "corporation" includes
14    associations, joint-stock companies, insurance companies
15    and cooperatives. Any entity, including a limited
16    liability company formed under the Illinois Limited
17    Liability Company Act, shall be treated as a corporation if
18    it is so classified for federal income tax purposes.
19        (5) Department. The term "Department" means the
20    Department of Revenue of this State.
21        (6) Director. The term "Director" means the Director of
22    Revenue of this State.
23        (7) Fiduciary. The term "fiduciary" means a guardian,
24    trustee, executor, administrator, receiver, or any person
25    acting in any fiduciary capacity for any person.
26        (8) Financial organization.

 

 

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1            (A) The term "financial organization" means any
2        bank, bank holding company, trust company, savings
3        bank, industrial bank, land bank, safe deposit
4        company, private banker, savings and loan association,
5        building and loan association, credit union, currency
6        exchange, cooperative bank, small loan company, sales
7        finance company, investment company, or any person
8        which is owned by a bank or bank holding company. For
9        the purpose of this Section a "person" will include
10        only those persons which a bank holding company may
11        acquire and hold an interest in, directly or
12        indirectly, under the provisions of the Bank Holding
13        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
14        where interests in any person must be disposed of
15        within certain required time limits under the Bank
16        Holding Company Act of 1956.
17            (B) For purposes of subparagraph (A) of this
18        paragraph, the term "bank" includes (i) any entity that
19        is regulated by the Comptroller of the Currency under
20        the National Bank Act, or by the Federal Reserve Board,
21        or by the Federal Deposit Insurance Corporation and
22        (ii) any federally or State chartered bank operating as
23        a credit card bank.
24            (C) For purposes of subparagraph (A) of this
25        paragraph, the term "sales finance company" has the
26        meaning provided in the following item (i) or (ii):

 

 

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1                (i) A person primarily engaged in one or more
2            of the following businesses: the business of
3            purchasing customer receivables, the business of
4            making loans upon the security of customer
5            receivables, the business of making loans for the
6            express purpose of funding purchases of tangible
7            personal property or services by the borrower, or
8            the business of finance leasing. For purposes of
9            this item (i), "customer receivable" means:
10                    (a) a retail installment contract or
11                retail charge agreement within the meaning of
12                the Sales Finance Agency Act, the Retail
13                Installment Sales Act, or the Motor Vehicle
14                Retail Installment Sales Act;
15                    (b) an installment, charge, credit, or
16                similar contract or agreement arising from the
17                sale of tangible personal property or services
18                in a transaction involving a deferred payment
19                price payable in one or more installments
20                subsequent to the sale; or
21                    (c) the outstanding balance of a contract
22                or agreement described in provisions (a) or (b)
23                of this item (i).
24                A customer receivable need not provide for
25            payment of interest on deferred payments. A sales
26            finance company may purchase a customer receivable

 

 

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1            from, or make a loan secured by a customer
2            receivable to, the seller in the original
3            transaction or to a person who purchased the
4            customer receivable directly or indirectly from
5            that seller.
6                (ii) A corporation meeting each of the
7            following criteria:
8                    (a) the corporation must be a member of an
9                "affiliated group" within the meaning of
10                Section 1504(a) of the Internal Revenue Code,
11                determined without regard to Section 1504(b)
12                of the Internal Revenue Code;
13                    (b) more than 50% of the gross income of
14                the corporation for the taxable year must be
15                interest income derived from qualifying loans.
16                A "qualifying loan" is a loan made to a member
17                of the corporation's affiliated group that
18                originates customer receivables (within the
19                meaning of item (i)) or to whom customer
20                receivables originated by a member of the
21                affiliated group have been transferred, to the
22                extent the average outstanding balance of
23                loans from that corporation to members of its
24                affiliated group during the taxable year do not
25                exceed the limitation amount for that
26                corporation. The "limitation amount" for a

 

 

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1                corporation is the average outstanding
2                balances during the taxable year of customer
3                receivables (within the meaning of item (i))
4                originated by all members of the affiliated
5                group. If the average outstanding balances of
6                the loans made by a corporation to members of
7                its affiliated group exceed the limitation
8                amount, the interest income of that
9                corporation from qualifying loans shall be
10                equal to its interest income from loans to
11                members of its affiliated groups times a
12                fraction equal to the limitation amount
13                divided by the average outstanding balances of
14                the loans made by that corporation to members
15                of its affiliated group;
16                    (c) the total of all shareholder's equity
17                (including, without limitation, paid-in
18                capital on common and preferred stock and
19                retained earnings) of the corporation plus the
20                total of all of its loans, advances, and other
21                obligations payable or owed to members of its
22                affiliated group may not exceed 20% of the
23                total assets of the corporation at any time
24                during the tax year; and
25                    (d) more than 50% of all interest-bearing
26                obligations of the affiliated group payable to

 

 

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1                persons outside the group determined in
2                accordance with generally accepted accounting
3                principles must be obligations of the
4                corporation.
5            This amendatory Act of the 91st General Assembly is
6        declaratory of existing law.
7            (D) Subparagraphs (B) and (C) of this paragraph are
8        declaratory of existing law and apply retroactively,
9        for all tax years beginning on or before December 31,
10        1996, to all original returns, to all amended returns
11        filed no later than 30 days after the effective date of
12        this amendatory Act of 1996, and to all notices issued
13        on or before the effective date of this amendatory Act
14        of 1996 under subsection (a) of Section 903, subsection
15        (a) of Section 904, subsection (e) of Section 909, or
16        Section 912. A taxpayer that is a "financial
17        organization" that engages in any transaction with an
18        affiliate shall be a "financial organization" for all
19        purposes of this Act.
20            (E) For all tax years beginning on or before
21        December 31, 1996, a taxpayer that falls within the
22        definition of a "financial organization" under
23        subparagraphs (B) or (C) of this paragraph, but who
24        does not fall within the definition of a "financial
25        organization" under the Proposed Regulations issued by
26        the Department of Revenue on July 19, 1996, may

 

 

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1        irrevocably elect to apply the Proposed Regulations
2        for all of those years as though the Proposed
3        Regulations had been lawfully promulgated, adopted,
4        and in effect for all of those years. For purposes of
5        applying subparagraphs (B) or (C) of this paragraph to
6        all of those years, the election allowed by this
7        subparagraph applies only to the taxpayer making the
8        election and to those members of the taxpayer's unitary
9        business group who are ordinarily required to
10        apportion business income under the same subsection of
11        Section 304 of this Act as the taxpayer making the
12        election. No election allowed by this subparagraph
13        shall be made under a claim filed under subsection (d)
14        of Section 909 more than 30 days after the effective
15        date of this amendatory Act of 1996.
16            (F) Finance Leases. For purposes of this
17        subsection, a finance lease shall be treated as a loan
18        or other extension of credit, rather than as a lease,
19        regardless of how the transaction is characterized for
20        any other purpose, including the purposes of any
21        regulatory agency to which the lessor is subject. A
22        finance lease is any transaction in the form of a lease
23        in which the lessee is treated as the owner of the
24        leased asset entitled to any deduction for
25        depreciation allowed under Section 167 of the Internal
26        Revenue Code.

 

 

09800SB1159sam001- 119 -LRB098 07306 HLH 42409 a

1        (9) Fiscal year. The term "fiscal year" means an
2    accounting period of 12 months ending on the last day of
3    any month other than December.
4        (9.5) Fixed place of business. The term "fixed place of
5    business" has the same meaning as that term is given in
6    Section 864 of the Internal Revenue Code and the related
7    Treasury regulations.
8        (10) Includes and including. The terms "includes" and
9    "including" when used in a definition contained in this Act
10    shall not be deemed to exclude other things otherwise
11    within the meaning of the term defined.
12        (11) Internal Revenue Code. The term "Internal Revenue
13    Code" means the United States Internal Revenue Code of 1954
14    or any successor law or laws relating to federal income
15    taxes in effect for the taxable year.
16        (11.5) Investment partnership.
17            (A) The term "investment partnership" means any
18        entity that is treated as a partnership for federal
19        income tax purposes that meets the following
20        requirements:
21                (i) no less than 90% of the partnership's cost
22            of its total assets consists of qualifying
23            investment securities, deposits at banks or other
24            financial institutions, and office space and
25            equipment reasonably necessary to carry on its
26            activities as an investment partnership;

 

 

09800SB1159sam001- 120 -LRB098 07306 HLH 42409 a

1                (ii) no less than 90% of its gross income
2            consists of interest, dividends, and gains from
3            the sale or exchange of qualifying investment
4            securities; and
5                (iii) the partnership is not a dealer in
6            qualifying investment securities.
7            (B) For purposes of this paragraph (11.5), the term
8        "qualifying investment securities" includes all of the
9        following:
10                (i) common stock, including preferred or debt
11            securities convertible into common stock, and
12            preferred stock;
13                (ii) bonds, debentures, and other debt
14            securities;
15                (iii) foreign and domestic currency deposits
16            secured by federal, state, or local governmental
17            agencies;
18                (iv) mortgage or asset-backed securities
19            secured by federal, state, or local governmental
20            agencies;
21                (v) repurchase agreements and loan
22            participations;
23                (vi) foreign currency exchange contracts and
24            forward and futures contracts on foreign
25            currencies;
26                (vii) stock and bond index securities and

 

 

09800SB1159sam001- 121 -LRB098 07306 HLH 42409 a

1            futures contracts and other similar financial
2            securities and futures contracts on those
3            securities;
4                (viii) options for the purchase or sale of any
5            of the securities, currencies, contracts, or
6            financial instruments described in items (i) to
7            (vii), inclusive;
8                (ix) regulated futures contracts;
9                (x) commodities (not described in Section
10            1221(a)(1) of the Internal Revenue Code) or
11            futures, forwards, and options with respect to
12            such commodities, provided, however, that any item
13            of a physical commodity to which title is actually
14            acquired in the partnership's capacity as a dealer
15            in such commodity shall not be a qualifying
16            investment security;
17                (xi) derivatives; and
18                (xii) a partnership interest in another
19            partnership that is an investment partnership.
20        (12) Mathematical error. The term "mathematical error"
21    includes the following types of errors, omissions, or
22    defects in a return filed by a taxpayer which prevents
23    acceptance of the return as filed for processing:
24            (A) arithmetic errors or incorrect computations on
25        the return or supporting schedules;
26            (B) entries on the wrong lines;

 

 

09800SB1159sam001- 122 -LRB098 07306 HLH 42409 a

1            (C) omission of required supporting forms or
2        schedules or the omission of the information in whole
3        or in part called for thereon; and
4            (D) an attempt to claim, exclude, deduct, or
5        improperly report, in a manner directly contrary to the
6        provisions of the Act and regulations thereunder any
7        item of income, exemption, deduction, or credit.
8        (13) Nonbusiness income. The term "nonbusiness income"
9    means all income other than business income or
10    compensation.
11        (14) Nonresident. The term "nonresident" means a
12    person who is not a resident.
13        (15) Paid, incurred and accrued. The terms "paid",
14    "incurred" and "accrued" shall be construed according to
15    the method of accounting upon the basis of which the
16    person's base income is computed under this Act.
17        (16) Partnership and partner. The term "partnership"
18    includes a syndicate, group, pool, joint venture or other
19    unincorporated organization, through or by means of which
20    any business, financial operation, or venture is carried
21    on, and which is not, within the meaning of this Act, a
22    trust or estate or a corporation; and the term "partner"
23    includes a member in such syndicate, group, pool, joint
24    venture or organization.
25        The term "partnership" includes any entity, including
26    a limited liability company formed under the Illinois

 

 

09800SB1159sam001- 123 -LRB098 07306 HLH 42409 a

1    Limited Liability Company Act, classified as a partnership
2    for federal income tax purposes.
3        The term "partnership" does not include a syndicate,
4    group, pool, joint venture, or other unincorporated
5    organization established for the sole purpose of playing
6    the Illinois State Lottery.
7        (17) Part-year resident. The term "part-year resident"
8    means an individual who became a resident during the
9    taxable year or ceased to be a resident during the taxable
10    year. Under Section 1501(a)(20)(A)(i) residence commences
11    with presence in this State for other than a temporary or
12    transitory purpose and ceases with absence from this State
13    for other than a temporary or transitory purpose. Under
14    Section 1501(a)(20)(A)(ii) residence commences with the
15    establishment of domicile in this State and ceases with the
16    establishment of domicile in another State.
17        (18) Person. The term "person" shall be construed to
18    mean and include an individual, a trust, estate,
19    partnership, association, firm, company, corporation,
20    limited liability company, or fiduciary. For purposes of
21    Section 1301 and 1302 of this Act, a "person" means (i) an
22    individual, (ii) a corporation, (iii) an officer, agent, or
23    employee of a corporation, (iv) a member, agent or employee
24    of a partnership, or (v) a member, manager, employee,
25    officer, director, or agent of a limited liability company
26    who in such capacity commits an offense specified in

 

 

09800SB1159sam001- 124 -LRB098 07306 HLH 42409 a

1    Section 1301 and 1302.
2        (18A) Records. The term "records" includes all data
3    maintained by the taxpayer, whether on paper, microfilm,
4    microfiche, or any type of machine-sensible data
5    compilation.
6        (19) Regulations. The term "regulations" includes
7    rules promulgated and forms prescribed by the Department.
8        (20) Resident. The term "resident" means:
9            (A) an individual (i) who is in this State for
10        other than a temporary or transitory purpose during the
11        taxable year; or (ii) who is domiciled in this State
12        but is absent from the State for a temporary or
13        transitory purpose during the taxable year;
14            (B) The estate of a decedent who at his or her
15        death was domiciled in this State;
16            (C) A trust created by a will of a decedent who at
17        his death was domiciled in this State; and
18            (D) An irrevocable trust, the grantor of which was
19        domiciled in this State at the time such trust became
20        irrevocable. For purpose of this subparagraph, a trust
21        shall be considered irrevocable to the extent that the
22        grantor is not treated as the owner thereof under
23        Sections 671 through 678 of the Internal Revenue Code.
24        (21) Sales. The term "sales" means all gross receipts
25    of the taxpayer not allocated under Sections 301, 302 and
26    303.

 

 

09800SB1159sam001- 125 -LRB098 07306 HLH 42409 a

1        (22) State. The term "state" when applied to a
2    jurisdiction other than this State means any state of the
3    United States, the District of Columbia, the Commonwealth
4    of Puerto Rico, any Territory or Possession of the United
5    States, and any foreign country, or any political
6    subdivision of any of the foregoing. For purposes of the
7    foreign tax credit under Section 601, the term "state"
8    means any state of the United States, the District of
9    Columbia, the Commonwealth of Puerto Rico, and any
10    territory or possession of the United States, or any
11    political subdivision of any of the foregoing, effective
12    for tax years ending on or after December 31, 1989.
13        (23) Taxable year. The term "taxable year" means the
14    calendar year, or the fiscal year ending during such
15    calendar year, upon the basis of which the base income is
16    computed under this Act. "Taxable year" means, in the case
17    of a return made for a fractional part of a year under the
18    provisions of this Act, the period for which such return is
19    made.
20        (24) Taxpayer. The term "taxpayer" means any person
21    subject to the tax imposed by this Act.
22        (25) International banking facility. The term
23    international banking facility shall have the same meaning
24    as is set forth in the Illinois Banking Act or as is set
25    forth in the laws of the United States or regulations of
26    the Board of Governors of the Federal Reserve System.

 

 

09800SB1159sam001- 126 -LRB098 07306 HLH 42409 a

1        (26) Income Tax Return Preparer.
2            (A) The term "income tax return preparer" means any
3        person who prepares for compensation, or who employs
4        one or more persons to prepare for compensation, any
5        return of tax imposed by this Act or any claim for
6        refund of tax imposed by this Act. The preparation of a
7        substantial portion of a return or claim for refund
8        shall be treated as the preparation of that return or
9        claim for refund.
10            (B) A person is not an income tax return preparer
11        if all he or she does is
12                (i) furnish typing, reproducing, or other
13            mechanical assistance;
14                (ii) prepare returns or claims for refunds for
15            the employer by whom he or she is regularly and
16            continuously employed;
17                (iii) prepare as a fiduciary returns or claims
18            for refunds for any person; or
19                (iv) prepare claims for refunds for a taxpayer
20            in response to any notice of deficiency issued to
21            that taxpayer or in response to any waiver of
22            restriction after the commencement of an audit of
23            that taxpayer or of another taxpayer if a
24            determination in the audit of the other taxpayer
25            directly or indirectly affects the tax liability
26            of the taxpayer whose claims he or she is

 

 

09800SB1159sam001- 127 -LRB098 07306 HLH 42409 a

1            preparing.
2        (27) Unitary business group.
3            (A) The term "unitary business group" means a group
4        of persons related through common ownership whose
5        business activities are integrated with, dependent
6        upon and contribute to each other. The group will not
7        include those members whose business activity outside
8        the United States is 80% or more of any such member's
9        total business activity; for purposes of this
10        paragraph and clause (a)(3)(B)(ii) of Section 304,
11        business activity within the United States shall be
12        measured by means of the factors ordinarily applicable
13        under subsections (a), (b), (c), (d), or (h) of Section
14        304 except that, in the case of members ordinarily
15        required to apportion business income by means of the 3
16        factor formula of property, payroll and sales
17        specified in subsection (a) of Section 304, including
18        the formula as weighted in subsection (h) of Section
19        304, such members shall not use the sales factor in the
20        computation and the results of the property and payroll
21        factor computations of subsection (a) of Section 304
22        shall be divided by 2 (by one if either the property or
23        payroll factor has a denominator of zero). The
24        computation required by the preceding sentence shall,
25        in each case, involve the division of the member's
26        property, payroll, or revenue miles in the United

 

 

09800SB1159sam001- 128 -LRB098 07306 HLH 42409 a

1        States, insurance premiums on property or risk in the
2        United States, or financial organization business
3        income from sources within the United States, as the
4        case may be, by the respective worldwide figures for
5        such items. Common ownership in the case of
6        corporations is the direct or indirect control or
7        ownership of more than 50% of the outstanding voting
8        stock of the persons carrying on unitary business
9        activity. Unitary business activity can ordinarily be
10        illustrated where the activities of the members are:
11        (1) in the same general line (such as manufacturing,
12        wholesaling, retailing of tangible personal property,
13        insurance, transportation or finance); or (2) are
14        steps in a vertically structured enterprise or process
15        (such as the steps involved in the production of
16        natural resources, which might include exploration,
17        mining, refining, and marketing); and, in either
18        instance, the members are functionally integrated
19        through the exercise of strong centralized management
20        (where, for example, authority over such matters as
21        purchasing, financing, tax compliance, product line,
22        personnel, marketing and capital investment is not
23        left to each member).
24            (B) In no event, for taxable years ending prior to
25        December 31, 2013, shall any unitary business group
26        include members which are ordinarily required to

 

 

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1        apportion business income under different subsections
2        of Section 304 except that for tax years ending on or
3        after December 31, 1987 this prohibition shall not
4        apply to a holding company that would otherwise be a
5        member of a unitary business group with taxpayers that
6        apportion business income under any of subsections
7        (b), (c), (c-1), or (d) of Section 304. If a unitary
8        business group would, but for the preceding sentence,
9        include members that are ordinarily required to
10        apportion business income under different subsections
11        of Section 304, then for each subsection of Section 304
12        for which there are two or more members, there shall be
13        a separate unitary business group composed of such
14        members. For purposes of the preceding two sentences, a
15        member is "ordinarily required to apportion business
16        income" under a particular subsection of Section 304 if
17        it would be required to use the apportionment method
18        prescribed by such subsection except for the fact that
19        it derives business income solely from Illinois. As
20        used in this paragraph, the phrase "United States"
21        means only the 50 states and the District of Columbia,
22        but does not include any territory or possession of the
23        United States or any area over which the United States
24        has asserted jurisdiction or claimed exclusive rights
25        with respect to the exploration for or exploitation of
26        natural resources.

 

 

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1            (C) Holding companies.
2                (i) For purposes of this subparagraph, a
3            "holding company" is a corporation (other than a
4            corporation that is a financial organization under
5            paragraph (8) of this subsection (a) of Section
6            1501 because it is a bank holding company under the
7            provisions of the Bank Holding Company Act of 1956
8            (12 U.S.C. 1841, et seq.) or because it is owned by
9            a bank or a bank holding company) that owns a
10            controlling interest in one or more other
11            taxpayers ("controlled taxpayers"); that, during
12            the period that includes the taxable year and the 2
13            immediately preceding taxable years or, if the
14            corporation was formed during the current or
15            immediately preceding taxable year, the taxable
16            years in which the corporation has been in
17            existence, derived substantially all its gross
18            income from dividends, interest, rents, royalties,
19            fees or other charges received from controlled
20            taxpayers for the provision of services, and gains
21            on the sale or other disposition of interests in
22            controlled taxpayers or in property leased or
23            licensed to controlled taxpayers or used by the
24            taxpayer in providing services to controlled
25            taxpayers; and that incurs no substantial expenses
26            other than expenses (including interest and other

 

 

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1            costs of borrowing) incurred in connection with
2            the acquisition and holding of interests in
3            controlled taxpayers and in the provision of
4            services to controlled taxpayers or in the leasing
5            or licensing of property to controlled taxpayers.
6                (ii) The income of a holding company which is a
7            member of more than one unitary business group
8            shall be included in each unitary business group of
9            which it is a member on a pro rata basis, by
10            including in each unitary business group that
11            portion of the base income of the holding company
12            that bears the same proportion to the total base
13            income of the holding company as the gross receipts
14            of the unitary business group bears to the combined
15            gross receipts of all unitary business groups (in
16            both cases without regard to the holding company)
17            or on any other reasonable basis, consistently
18            applied.
19                (iii) A holding company shall apportion its
20            business income under the subsection of Section
21            304 used by the other members of its unitary
22            business group. The apportionment factors of a
23            holding company which would be a member of more
24            than one unitary business group shall be included
25            with the apportionment factors of each unitary
26            business group of which it is a member on a pro

 

 

09800SB1159sam001- 132 -LRB098 07306 HLH 42409 a

1            rata basis using the same method used in clause
2            (ii).
3                (iv) The provisions of this subparagraph (C)
4            are intended to clarify existing law.
5            (D) If including the base income and factors of a
6        holding company in more than one unitary business group
7        under subparagraph (C) does not fairly reflect the
8        degree of integration between the holding company and
9        one or more of the unitary business groups, the
10        dependence of the holding company and one or more of
11        the unitary business groups upon each other, or the
12        contributions between the holding company and one or
13        more of the unitary business groups, the holding
14        company may petition the Director, under the
15        procedures provided under Section 304(f), for
16        permission to include all base income and factors of
17        the holding company only with members of a unitary
18        business group apportioning their business income
19        under one subsection of subsections (a), (b), (c), or
20        (d) of Section 304. If the petition is granted, the
21        holding company shall be included in a unitary business
22        group only with persons apportioning their business
23        income under the selected subsection of Section 304
24        until the Director grants a petition of the holding
25        company either to be included in more than one unitary
26        business group under subparagraph (C) or to include its

 

 

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1        base income and factors only with members of a unitary
2        business group apportioning their business income
3        under a different subsection of Section 304.
4            (E) If the unitary business group members'
5        accounting periods differ, the common parent's
6        accounting period or, if there is no common parent, the
7        accounting period of the member that is expected to
8        have, on a recurring basis, the greatest Illinois
9        income tax liability must be used to determine whether
10        to use the apportionment method provided in subsection
11        (a) or subsection (h) of Section 304. The prohibition
12        against membership in a unitary business group for
13        taxpayers ordinarily required to apportion income
14        under different subsections of Section 304 does not
15        apply to taxpayers required to apportion income under
16        subsection (a) and subsection (h) of Section 304. The
17        provisions of this amendatory Act of 1998 apply to tax
18        years ending on or after December 31, 1998.
19        (28) Subchapter S corporation. The term "Subchapter S
20    corporation" means a corporation for which there is in
21    effect an election under Section 1362 of the Internal
22    Revenue Code, or for which there is a federal election to
23    opt out of the provisions of the Subchapter S Revision Act
24    of 1982 and have applied instead the prior federal
25    Subchapter S rules as in effect on July 1, 1982.
26        (30) Foreign person. The term "foreign person" means

 

 

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1    any person who is a nonresident alien individual and any
2    nonindividual entity, regardless of where created or
3    organized, whose business activity outside the United
4    States is 80% or more of the entity's total business
5    activity.
 
6    (b) Other definitions.
7        (1) Words denoting number, gender, and so forth, when
8    used in this Act, where not otherwise distinctly expressed
9    or manifestly incompatible with the intent thereof:
10            (A) Words importing the singular include and apply
11        to several persons, parties or things;
12            (B) Words importing the plural include the
13        singular; and
14            (C) Words importing the masculine gender include
15        the feminine as well.
16        (2) "Company" or "association" as including successors
17    and assigns. The word "company" or "association", when used
18    in reference to a corporation, shall be deemed to embrace
19    the words "successors and assigns of such company or
20    association", and in like manner as if these last-named
21    words, or words of similar import, were expressed.
22        (3) Other terms. Any term used in any Section of this
23    Act with respect to the application of, or in connection
24    with, the provisions of any other Section of this Act shall
25    have the same meaning as in such other Section.

 

 

09800SB1159sam001- 135 -LRB098 07306 HLH 42409 a

1(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11;
297-636, eff. 6-1-12.)
 
3    Section 10. The State Finance Act is amended by adding
4Sections 5.826 and 6z-98 as follows:
 
5    (30 ILCS 105/5.826 new)
6    Sec. 5.826. The Bill Payment Trust Fund.
 
7    (30 ILCS 105/6z-98 new)
8    Sec. 6z-98. Bill Payment Trust Fund; creation. The Bill
9Payment Trust Fund is created as a special fund in the State
10Treasury. Moneys in the Fund shall be used to make payments to
11bona fide creditors of the State who:
12        (1) have submitted a bill or invoice to the State that
13    (A) was properly approved under rules adopted under Section
14    3-3 of the State Prompt Payment Act, and (B) is more than
15    90 days past due; or
16        (2) are entitled to payment from State funds if the
17    State is more than 90 days delinquent in the payment of
18    those funds. For the purposes of this Section, the term
19    "bona fide creditor" includes, but is not limited to,
20    healthcare providers, public and private universities,
21    school districts, units of local government, and State
22    vendors.
23    The Bill Payment Trust Fund is not subject to

 

 

09800SB1159sam001- 136 -LRB098 07306 HLH 42409 a

1administrative charges or chargebacks, including, but not
2limited to, those authorized under Section 8h of the State
3Finance Act.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.".