SB2210ham001 93RD GENERAL ASSEMBLY

Revenue Committee

Filed: 5/19/2004

09300SB2210ham001 LRB093 15836 RCE 51238 a

AMENDMENT TO SENATE BILL 2210

AMENDMENT NO. ______. Amend Senate Bill 2210 by replacing everything after the enacting clause with the following:

4		"Section 5. The Illinois Income Tax Act is amended by
5		changing Sections 203 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
17		to the taxpayer as interest or dividends during the
18		taxable year to the extent excluded from gross income
19		in the computation of adjusted gross income, except
20		stock dividends of qualified public utilities
21		described in Section 305(e) of the Internal Revenue
22		Code;
23		(B) An amount equal to the amount of tax imposed by
24		this Act to the extent deducted from gross income in

1		the computation of adjusted gross income for the
2		taxable year;
3		(C) An amount equal to the amount received during
4		the taxable year as a recovery or refund of real
5		property taxes paid with respect to the taxpayer's
6		principal residence under the Revenue Act of 1939 and
7		for which a deduction was previously taken under
8		subparagraph (L) of this paragraph (2) prior to July 1,
9		1991, the retrospective application date of Article 4
10		of Public Act 87-17. In the case of multi-unit or
11		multi-use structures and farm dwellings, the taxes on
12		the taxpayer's principal residence shall be that
13		portion of the total taxes for the entire property
14		which is attributable to such principal residence;
15		(D) An amount equal to the amount of the capital
16		gain deduction allowable under the Internal Revenue
17		Code, to the extent deducted from gross income in the
18		computation of adjusted gross income;
19		(D-5) An amount, to the extent not included in
20		adjusted gross income, equal to the amount of money
21		withdrawn by the taxpayer in the taxable year from a
22		medical care savings account and the interest earned on
23		the account in the taxable year of a withdrawal
24		pursuant to subsection (b) of Section 20 of the Medical
25		Care Savings Account Act or subsection (b) of Section
26		20 of the Medical Care Savings Account Act of 2000;
27		(D-10) For taxable years ending after December 31,
28		1997, an amount equal to any eligible remediation costs
29		that the individual deducted in computing adjusted
30		gross income and for which the individual claims a
31		credit under subsection (l) of Section 201;
32		(D-15) For taxable years 2001 and thereafter, an
33		amount equal to the bonus depreciation deduction (30%
34		of the adjusted basis of the qualified property) taken

1		on the taxpayer's federal income tax return for the
2		taxable year under subsection (k) of Section 168 of the
3		Internal Revenue Code; and
4		(D-16) If the taxpayer reports a capital gain or
5		loss on the taxpayer's federal income tax return for
6		the taxable year based on a sale or transfer of
7		property for which the taxpayer was required in any
8		taxable year to make an addition modification under
9		subparagraph (D-15), then an amount equal to the
10		aggregate amount of the deductions taken in all taxable
11		years under subparagraph (Z) with respect to that
12		property. ;
13		The taxpayer is required to make the addition
14		modification under this subparagraph only once with
15		respect to any one piece of property; . and
16		(D-17) For taxable years ending on or after
17		December 31, 2004, an amount equal to the amount
18		otherwise allowed as a deduction in computing base
19		income for interest paid, accrued, or incurred,
20		directly or indirectly, to a foreign person who would
21		be a member of the same unitary business group but for
22		the fact that foreign person's business activity
23		outside the United States is 80% or more of the foreign
24		person's total business activity. The addition
25		modification required by this subparagraph shall be
26		reduced to the extent that dividends were included in
27		base income for the same taxable year and received by
28		the taxpayer or by a member of the taxpayer's unitary
29		business group (including amounts included in gross
30		income under Sections 951 through 964 of the Internal
31		Revenue Code and amounts included in gross income under
32		Section 78 of the Internal Revenue Code) with respect
33		to the stock of the same person to whom the interest
34		was paid, accrued, or incurred. This subparagraph does

1		not apply to an item of interest paid, accrued, or
2		incurred, directly or indirectly, to a foreign person
3		that is subject in a foreign country to a tax on or
4		measured by net income with respect to such interest;
5		(D-18) For taxable years ending on or after
6		December 31, 2004, an amount equal to the amount of
7		intangible expenses and costs otherwise allowed as a
8		deduction in computing base income, and that were paid,
9		accrued, or incurred, directly or indirectly, to a
10		foreign person who would be a member of the same
11		unitary business group but for the fact that the
12		foreign person's business activity outside the United
13		States is 80% or more of that person's total business
14		activity. The addition modification required by this
15		subparagraph shall be reduced to the extent that
16		dividends were included in base income for the same
17		taxable year and received by the taxpayer or by a
18		member of the taxpayer's unitary business group
19		(including amounts included in gross income under
20		Sections 951 through 964 of the Internal Revenue Code
21		and amounts included in gross income under Section 78
22		of the Internal Revenue Code) with respect to the stock
23		of the same person to whom the intangible expenses and
24		costs were directly or indirectly paid, incurred, or
25		accrued. The preceding sentence does not apply to the
26		extent that the same dividends caused a reduction to
27		the addition modification required under Section
28		203(a)(2)(D-17) of this Act. This subparagraph shall
29		not apply to any item of intangible expenses or costs
30		paid, accrued, or incurred, directly or indirectly,
31		from a transaction with a foreign person that is
32		subject in a foreign country to a tax on or measured by
33		net income with respect to such item. As used in this
34		subparagraph, the term "intangible expenses and costs"

1		includes (1) expenses, losses, and costs for, or
2		related to, the direct or indirect acquisition, use,
3		maintenance or management, ownership, sale, exchange,
4		or any other disposition of intangible property; (2)
5		losses incurred, directly or indirectly, from
6		factoring transactions or discounting transactions;
7		(3) royalty, patent, technical, and copyright fees;
8		(4) licensing fees; and (5) other similar expenses and
9		costs. For purposes of this subparagraph, "intangible
10		property" includes patents, patent applications, trade
11		names, trademarks, service marks, copyrights, mask
12		works, trade secrets, and similar types of intangible
13		assets;
14		(D-20) (D-15) For taxable years beginning on or
15		after January 1, 2002, in the case of a distribution
16		from a qualified tuition program under Section 529 of
17		the Internal Revenue Code, other than (i) a
18		distribution from a College Savings Pool created under
19		Section 16.5 of the State Treasurer Act or (ii) a
20		distribution from the Illinois Prepaid Tuition Trust
21		Fund, an amount equal to the amount excluded from gross
22		income under Section 529(c)(3)(B);
23		and by deducting from the total so obtained the sum of the
24		following amounts:
25		(E) For taxable years ending before December 31,
26		2001, any amount included in such total in respect of
27		any compensation (including but not limited to any
28		compensation paid or accrued to a serviceman while a
29		prisoner of war or missing in action) paid to a
30		resident by reason of being on active duty in the Armed
31		Forces of the United States and in respect of any
32		compensation paid or accrued to a resident who as a
33		governmental employee was a prisoner of war or missing
34		in action, and in respect of any compensation paid to a

1		resident in 1971 or thereafter for annual training
2		performed pursuant to Sections 502 and 503, Title 32,
3		United States Code as a member of the Illinois National
4		Guard. For taxable years ending on or after December
5		31, 2001, any amount included in such total in respect
6		of any compensation (including but not limited to any
7		compensation paid or accrued to a serviceman while a
8		prisoner of war or missing in action) paid to a
9		resident by reason of being a member of any component
10		of the Armed Forces of the United States and in respect
11		of any compensation paid or accrued to a resident who
12		as a governmental employee was a prisoner of war or
13		missing in action, and in respect of any compensation
14		paid to a resident in 2001 or thereafter by reason of
15		being a member of the Illinois National Guard. The
16		provisions of this amendatory Act of the 92nd General
17		Assembly are exempt from the provisions of Section 250;
18		(F) An amount equal to all amounts included in such
19		total pursuant to the provisions of Sections 402(a),
20		402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
21		Internal Revenue Code, or included in such total as
22		distributions under the provisions of any retirement
23		or disability plan for employees of any governmental
24		agency or unit, or retirement payments to retired
25		partners, which payments are excluded in computing net
26		earnings from self employment by Section 1402 of the
27		Internal Revenue Code and regulations adopted pursuant
28		thereto;
29		(G) The valuation limitation amount;
30		(H) An amount equal to the amount of any tax
31		imposed by this Act which was refunded to the taxpayer
32		and included in such total for the taxable year;
33		(I) An amount equal to all amounts included in such
34		total pursuant to the provisions of Section 111 of the

1		Internal Revenue Code as a recovery of items previously
2		deducted from adjusted gross income in the computation
3		of taxable income;
4		(J) An amount equal to those dividends included in
5		such total which were paid by a corporation which
6		conducts business operations in an Enterprise Zone or
7		zones created under the Illinois Enterprise Zone Act,
8		and conducts substantially all of its operations in an
9		Enterprise Zone or zones;
10		(K) An amount equal to those dividends included in
11		such total that were paid by a corporation that
12		conducts business operations in a federally designated
13		Foreign Trade Zone or Sub-Zone and that is designated a
14		High Impact Business located in Illinois; provided
15		that dividends eligible for the deduction provided in
16		subparagraph (J) of paragraph (2) of this subsection
17		shall not be eligible for the deduction provided under
18		this subparagraph (K);
19		(L) For taxable years ending after December 31,
20		1983, an amount equal to all social security benefits
21		and railroad retirement benefits included in such
22		total pursuant to Sections 72(r) and 86 of the Internal
23		Revenue Code;
24		(M) With the exception of any amounts subtracted
25		under subparagraph (N), an amount equal to the sum of
26		all amounts disallowed as deductions by (i) Sections
27		171(a) (2), and 265(2) of the Internal Revenue Code of
28		1954, as now or hereafter amended, and all amounts of
29		expenses allocable to interest and disallowed as
30		deductions by Section 265(1) of the Internal Revenue
31		Code of 1954, as now or hereafter amended; and (ii) for
32		taxable years ending on or after August 13, 1999,
33		Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
34		the Internal Revenue Code; the provisions of this

1		subparagraph are exempt from the provisions of Section
2		250;
3		(N) An amount equal to all amounts included in such
4		total which are exempt from taxation by this State
5		either by reason of its statutes or Constitution or by
6		reason of the Constitution, treaties or statutes of the
7		United States; provided that, in the case of any
8		statute of this State that exempts income derived from
9		bonds or other obligations from the tax imposed under
10		this Act, the amount exempted shall be the interest net
11		of bond premium amortization;
12		(O) An amount equal to any contribution made to a
13		job training project established pursuant to the Tax
14		Increment Allocation Redevelopment Act;
15		(P) An amount equal to the amount of the deduction
16		used to compute the federal income tax credit for
17		restoration of substantial amounts held under claim of
18		right for the taxable year pursuant to Section 1341 of
19		the Internal Revenue Code of 1986;
20		(Q) An amount equal to any amounts included in such
21		total, received by the taxpayer as an acceleration in
22		the payment of life, endowment or annuity benefits in
23		advance of the time they would otherwise be payable as
24		an indemnity for a terminal illness;
25		(R) An amount equal to the amount of any federal or
26		State bonus paid to veterans of the Persian Gulf War;
27		(S) An amount, to the extent included in adjusted
28		gross income, equal to the amount of a contribution
29		made in the taxable year on behalf of the taxpayer to a
30		medical care savings account established under the
31		Medical Care Savings Account Act or the Medical Care
32		Savings Account Act of 2000 to the extent the
33		contribution is accepted by the account administrator
34		as provided in that Act;

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

1		determined by multiplying total health insurance and
2		long-term care insurance premiums paid by the taxpayer
3		times a number that represents the fractional
4		percentage of eligible medical expenses under Section
5		213 of the Internal Revenue Code of 1986 not actually
6		deducted on the taxpayer's federal income tax return;
7		(W) For taxable years beginning on or after January
8		1, 1998, all amounts included in the taxpayer's federal
9		gross income in the taxable year from amounts converted
10		from a regular IRA to a Roth IRA. This paragraph is
11		exempt from the provisions of Section 250;
12		(X) For taxable year 1999 and thereafter, an amount
13		equal to the amount of any (i) distributions, to the
14		extent includible in gross income for federal income
15		tax purposes, made to the taxpayer because of his or
16		her status as a victim of persecution for racial or
17		religious reasons by Nazi Germany or any other Axis
18		regime or as an heir of the victim and (ii) items of
19		income, to the extent includible in gross income for
20		federal income tax purposes, attributable to, derived
21		from or in any way related to assets stolen from,
22		hidden from, or otherwise lost to a victim of
23		persecution for racial or religious reasons by Nazi
24		Germany or any other Axis regime immediately prior to,
25		during, and immediately after World War II, including,
26		but not limited to, interest on the proceeds receivable
27		as insurance under policies issued to a victim of
28		persecution for racial or religious reasons by Nazi
29		Germany or any other Axis regime by European insurance
30		companies immediately prior to and during World War II;
31		provided, however, this subtraction from federal
32		adjusted gross income does not apply to assets acquired
33		with such assets or with the proceeds from the sale of
34		such assets; provided, further, this paragraph shall

1		only apply to a taxpayer who was the first recipient of
2		such assets after their recovery and who is a victim of
3		persecution for racial or religious reasons by Nazi
4		Germany or any other Axis regime or as an heir of the
5		victim. The amount of and the eligibility for any
6		public assistance, benefit, or similar entitlement is
7		not affected by the inclusion of items (i) and (ii) of
8		this paragraph in gross income for federal income tax
9		purposes. This paragraph is exempt from the provisions
10		of Section 250;
11		(Y) For taxable years beginning on or after January
12		1, 2002, moneys contributed in the taxable year to a
13		College Savings Pool account under Section 16.5 of the
14		State Treasurer Act, except that amounts excluded from
15		gross income under Section 529(c)(3)(C)(i) of the
16		Internal Revenue Code shall not be considered moneys
17		contributed under this subparagraph (Y). This
18		subparagraph (Y) is exempt from the provisions of
19		Section 250;
20		(Z) For taxable years 2001 and thereafter, for the
21		taxable year in which the bonus depreciation deduction
22		(30% of the adjusted basis of the qualified property)
23		is taken on the taxpayer's federal income tax return
24		under subsection (k) of Section 168 of the Internal
25		Revenue Code and for each applicable taxable year
26		thereafter, an amount equal to "x", where:
27		(1) "y" equals the amount of the depreciation
28		deduction taken for the taxable year on the
29		taxpayer's federal income tax return on property
30		for which the bonus depreciation deduction (30% of
31		the adjusted basis of the qualified property) was
32		taken in any year under subsection (k) of Section
33		168 of the Internal Revenue Code, but not including
34		the bonus depreciation deduction; and

1		(2) "x" equals "y" multiplied by 30 and then
2		divided by 70 (or "y" multiplied by 0.429).
3		The aggregate amount deducted under this
4		subparagraph in all taxable years for any one piece of
5		property may not exceed the amount of the bonus
6		depreciation deduction (30% of the adjusted basis of
7		the qualified property) taken on that property on the
8		taxpayer's federal income tax return under subsection
9		(k) of Section 168 of the Internal Revenue Code; and
10		(AA) If the taxpayer reports a capital gain or loss
11		on the taxpayer's federal income tax return for the
12		taxable year based on a sale or transfer of property
13		for which the taxpayer was required in any taxable year
14		to make an addition modification under subparagraph
15		(D-15), then an amount equal to that addition
16		modification.
17		The taxpayer is allowed to take the deduction under
18		this subparagraph only once with respect to any one
19		piece of property; and
20		(BB) (Z) Any amount included in adjusted gross
21		income, other than salary, received by a driver in a
22		ridesharing arrangement using a motor vehicle; .
23		(CC) The amount of (i) any interest income (net of
24		the deductions allocable thereto) taken into account
25		for the taxable year with respect to a transaction with
26		a taxpayer that is required to make an addition
27		modification with respect to such transaction under
28		Section 203(a)(2)(D-17), 203(b)(2)(E-13),
29		203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
30		the amount of that addition modification, and (ii) any
31		income from intangible property (net of the deductions
32		allocable thereto) taken into account for the taxable
33		year with respect to a transaction with a taxpayer that
34		is required to make an addition modification with

1		respect to such transaction under Section
2		203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or
3		203(d)(2)(D-8), but not to exceed the amount of that
4		addition modification;
5		(DD) An amount equal to the interest income taken
6		into account for the taxable year (net of the
7		deductions allocable thereto) with respect to
8		transactions with a foreign person who would be a
9		member of the taxpayer's unitary business group but for
10		the fact that the foreign person's business activity
11		outside the United States is 80% or more of that
12		person's total business activity, but not to exceed the
13		addition modification required to be made for the same
14		taxable year under Section 203(a)(2)(D-17) for
15		interest paid, accrued, or incurred, directly or
16		indirectly, to the same foreign person; and
17		(EE) 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 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, but not to exceed the
25		addition modification required to be made for the same
26		taxable year under Section 203(a)(2)(D-18) for
27		intangible expenses and costs paid, accrued, or
28		incurred, directly or indirectly, to the same foreign
29		person.
30		(b) Corporations.
31		(1) In general. In the case of a corporation, base
32		income means an amount equal to the taxpayer's taxable
33		income for the taxable year as modified by paragraph (2).

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
27		carryback or carryforward from a taxable year ending
28		prior to December 31, 1986 is an element of taxable
29		income under paragraph (1) of subsection (e) or
30		subparagraph (E) of paragraph (2) of subsection (e),
31		the amount by which addition modifications other than
32		those provided by this subparagraph (E) exceeded
33		subtraction modifications in such earlier taxable
34		year, with the following limitations applied in the

1		order that they are listed:
2		(i) the addition modification relating to the
3		net operating loss carried back or forward to the
4		taxable year from any taxable year ending prior to
5		December 31, 1986 shall be reduced by the amount of
6		addition modification under this subparagraph (E)
7		which related to that net operating loss and which
8		was taken into account in calculating the base
9		income of an earlier taxable year, and
10		(ii) 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 not exceed the amount of
14		such carryback or carryforward;
15		For taxable years in which there is a net operating
16		loss carryback or carryforward from more than one other
17		taxable year ending prior to December 31, 1986, the
18		addition modification provided in this subparagraph
19		(E) shall be the sum of the amounts computed
20		independently under the preceding provisions of this
21		subparagraph (E) for each such taxable year;
22		(E-5) For taxable years ending after December 31,
23		1997, an amount equal to any eligible remediation costs
24		that the corporation deducted in computing adjusted
25		gross income and for which the corporation claims a
26		credit under subsection (l) of Section 201;
27		(E-10) For taxable years 2001 and thereafter, an
28		amount equal to the bonus depreciation deduction (30%
29		of the adjusted basis of the qualified property) taken
30		on the taxpayer's federal income tax return for the
31		taxable year under subsection (k) of Section 168 of the
32		Internal Revenue Code; and
33		(E-11) If the taxpayer reports a capital gain or
34		loss on the taxpayer's federal income tax return for

1		the taxable year based on a sale or transfer of
2		property for which the taxpayer was required in any
3		taxable year to make an addition modification under
4		subparagraph (E-10), then an amount equal to the
5		aggregate amount of the deductions taken in all taxable
6		years under subparagraph (T) with respect to that
7		property;
8		The taxpayer is required to make the addition
9		modification under this subparagraph only once with
10		respect to any one piece of property;
11		(E-12) For taxable years ending on or after
12		December 31, 2004, to the extent not otherwise included
13		in base income, an amount equal to the amount of
14		dividends received, directly or indirectly, (including
15		amounts included in gross income pursuant to Sections
16		951 through 964 of the Internal Revenue Code and
17		amounts included in gross income under Section 78 of
18		the Internal Revenue Code) with respect to the stock of
19		a passive income affiliate, as defined in Section
20		1501(a)(29) of this Act;
21		(E-13) For taxable years ending on or after
22		December 31, 2004, an amount equal to the amount
23		otherwise allowed as a deduction in computing base
24		income for interest paid, accrued, or incurred,
25		directly or indirectly, to a foreign person who would
26		be a member of the same unitary business group but for
27		the fact the foreign person's business activity
28		outside the United States is 80% or more of the foreign
29		person's total business activity. The addition
30		modification required by this subparagraph shall be
31		reduced to the extent that dividends were included in
32		base income for the same taxable year and received by
33		the taxpayer or by a member of the taxpayer's unitary
34		business group (including amounts included in gross

1		income pursuant to Sections 951 through 964 of the
2		Internal Revenue Code and amounts included in gross
3		income under Section 78 of the Internal Revenue Code)
4		with respect to the stock of the same person to whom
5		the interest was paid, accrued, or incurred. This
6		subparagraph shall not apply to an item of interest
7		paid, accrued, or incurred, directly or indirectly, to
8		a foreign person who is subject in a foreign country to
9		a tax on or measured by net income with respect to such
10		interest;
11		(E-14) For taxable years ending on or after
12		December 31, 2004, an amount equal to the amount of
13		intangible expenses and costs otherwise allowed as a
14		deduction in computing base income, and that were paid,
15		accrued, or incurred, directly or indirectly, to a
16		foreign person who would be a member of the same
17		unitary business group but for the fact that the
18		foreign person's business activity outside the United
19		States is 80% or more of that person's total business
20		activity. The addition modification required by this
21		subparagraph shall be reduced to the extent that
22		dividends were included in base income for the same
23		taxable year and received by the taxpayer or by a
24		member of the taxpayer's unitary business group
25		(including amounts included in gross income pursuant
26		to Sections 951 through 964 of the Internal Revenue
27		Code and amounts included in gross income under Section
28		78 of the Internal Revenue Code) with respect to the
29		stock of the same person to whom the intangible
30		expenses and costs were directly or indirectly paid,
31		incurred, or accrued. The preceding sentence shall not
32		apply to the extent that the same dividends caused a
33		reduction to the addition modification required under
34		Section 203(b)(2)(E-13) of this Act. This subparagraph

1		shall not apply to any item of intangible expenses or
2		costs paid, accrued, or incurred, directly or
3		indirectly, from a transaction with a foreign person
4		who is subject in a foreign country to a tax on or
5		measured by net income with respect to such item. As
6		used in this subparagraph, the term "intangible
7		expenses and costs" includes (1) expenses, losses, and
8		costs for, or related to, the direct or indirect
9		acquisition, use, maintenance or management,
10		ownership, sale, exchange, or any other disposition of
11		intangible property; (2) losses incurred, directly or
12		indirectly, from factoring transactions or discounting
13		transactions; (3) royalty, patent, technical, and
14		copyright fees; (4) licensing fees; and (5) other
15		similar expenses and costs. For purposes of this
16		subparagraph, "intangible property" includes patents,
17		patent applications, trade names, trademarks, service
18		marks, copyrights, mask works, trade secrets, and
19		similar types of intangible assets;
20		and by deducting from the total so obtained the sum of the
21		following amounts:
22		(F) An amount equal to the amount of any tax
23		imposed by this Act which was refunded to the taxpayer
24		and included in such total for the taxable year;
25		(G) An amount equal to any amount included in such
26		total under Section 78 of the Internal Revenue Code;
27		(H) In the case of a regulated investment company,
28		an amount equal to the amount of exempt interest
29		dividends as defined in subsection (b) (5) of Section
30		852 of the Internal Revenue Code, paid to shareholders
31		for the taxable year;
32		(I) With the exception of any amounts subtracted
33		under subparagraph (J), an amount equal to the sum of
34		all amounts disallowed as deductions by (i) Sections

1		171(a) (2), and 265(a)(2) and amounts disallowed as
2		interest expense by Section 291(a)(3) of the Internal
3		Revenue Code, as now or hereafter amended, and all
4		amounts of expenses allocable to interest and
5		disallowed as deductions by Section 265(a)(1) of the
6		Internal Revenue Code, as now or hereafter amended; and
7		(ii) for taxable years ending on or after August 13,
8		1999, Sections 171(a)(2), 265, 280C, 291(a)(3), and
9		832(b)(5)(B)(i) of the Internal Revenue Code; the
10		provisions of this subparagraph are exempt from the
11		provisions of Section 250;
12		(J) An amount equal to all amounts included in such
13		total which are exempt from taxation by this State
14		either by reason of its statutes or Constitution or by
15		reason of the Constitution, treaties or statutes of the
16		United States; provided that, in the case of any
17		statute of this State that exempts income derived from
18		bonds or other obligations from the tax imposed under
19		this Act, the amount exempted shall be the interest net
20		of bond premium amortization;
21		(K) An amount equal to those dividends included in
22		such total which were paid by a corporation which
23		conducts business operations in an Enterprise Zone or
24		zones created under the Illinois Enterprise Zone Act
25		and conducts substantially all of its operations in an
26		Enterprise Zone or zones;
27		(L) An amount equal to those dividends included in
28		such total that were paid by a corporation that
29		conducts business operations in a federally designated
30		Foreign Trade Zone or Sub-Zone and that is designated a
31		High Impact Business located in Illinois; provided
32		that dividends eligible for the deduction provided in
33		subparagraph (K) of paragraph 2 of this subsection
34		shall not be eligible for the deduction provided under

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

1		this purpose the original basis of such property on the
2		date that it was placed in service in a federally
3		designated Foreign Trade Zone or Sub-Zone located in
4		Illinois. No taxpayer that is eligible for the
5		deduction provided in subparagraph (M) of paragraph
6		(2) of this subsection shall be eligible for the
7		deduction provided under this subparagraph (M-1). The
8		subtraction modification available to taxpayers in any
9		year under this subsection shall be that portion of the
10		total interest paid by the borrower with respect to
11		such loan attributable to the eligible property as
12		calculated under the previous sentence;
13		(N) Two times any contribution made during the
14		taxable year to a designated zone organization to the
15		extent that the contribution (i) qualifies as a
16		charitable contribution under subsection (c) of
17		Section 170 of the Internal Revenue Code and (ii) must,
18		by its terms, be used for a project approved by the
19		Department of Commerce and Economic Opportunity
20		Community Affairs under Section 11 of the Illinois
21		Enterprise Zone Act;
22		(O) An amount equal to: (i) 85% for taxable years
23		ending on or before December 31, 1992, or, a percentage
24		equal to the percentage allowable under Section
25		243(a)(1) of the Internal Revenue Code of 1986 for
26		taxable years ending after December 31, 1992, of the
27		amount by which dividends included in taxable income
28		and received from a corporation that is not created or
29		organized under the laws of the United States or any
30		state or political subdivision thereof, including, for
31		taxable years ending on or after December 31, 1988,
32		dividends received or deemed received or paid or deemed
33		paid under Sections 951 through 964 of the Internal
34		Revenue Code, exceed the amount of the modification

1		provided under subparagraph (G) of paragraph (2) of
2		this subsection (b) which is related to such dividends;
3		plus (ii) 100% of the amount by which dividends,
4		included in taxable income and received, including,
5		for taxable years ending on or after December 31, 1988,
6		dividends received or deemed received or paid or deemed
7		paid under Sections 951 through 964 of the Internal
8		Revenue Code, from any such corporation specified in
9		clause (i) that would but for the provisions of Section
10		1504 (b) (3) of the Internal Revenue Code be treated as
11		a member of the affiliated group which includes the
12		dividend recipient, exceed the amount of the
13		modification provided under subparagraph (G) of
14		paragraph (2) of this subsection (b) which is related
15		to such dividends;
16		(P) An amount equal to any contribution made to a
17		job training project established pursuant to the Tax
18		Increment Allocation Redevelopment Act;
19		(Q) An amount equal to the amount of the deduction
20		used to compute the federal income tax credit for
21		restoration of substantial amounts held under claim of
22		right for the taxable year pursuant to Section 1341 of
23		the Internal Revenue Code of 1986;
24		(R) In the case of an attorney-in-fact with respect
25		to whom an interinsurer or a reciprocal insurer has
26		made the election under Section 835 of the Internal
27		Revenue Code, 26 U.S.C. 835, an amount equal to the
28		excess, if any, of the amounts paid or incurred by that
29		interinsurer or reciprocal insurer in the taxable year
30		to the attorney-in-fact over the deduction allowed to
31		that interinsurer or reciprocal insurer with respect
32		to the attorney-in-fact under Section 835(b) of the
33		Internal Revenue Code for the taxable year;
34		(S) For taxable years ending on or after December

1		31, 1997, in the case of a Subchapter S corporation, an
2		amount equal to all amounts of income allocable to a
3		shareholder subject to the Personal Property Tax
4		Replacement Income Tax imposed by subsections (c) and
5		(d) of Section 201 of this Act, including amounts
6		allocable to organizations exempt from federal income
7		tax by reason of Section 501(a) of the Internal Revenue
8		Code. This subparagraph (S) is exempt from the
9		provisions of Section 250;
10		(T) For taxable years 2001 and thereafter, for the
11		taxable year in which the bonus depreciation deduction
12		(30% of the adjusted basis of the qualified property)
13		is taken on the taxpayer's federal income tax return
14		under subsection (k) of Section 168 of the Internal
15		Revenue Code and for each applicable taxable year
16		thereafter, an amount equal to "x", where:
17		(1) "y" equals the amount of the depreciation
18		deduction taken for the taxable year on the
19		taxpayer's federal income tax return on property
20		for which the bonus depreciation deduction (30% of
21		the adjusted basis of the qualified property) was
22		taken in any year under subsection (k) of Section
23		168 of the Internal Revenue Code, but not including
24		the bonus depreciation deduction; and
25		(2) "x" equals "y" multiplied by 30 and then
26		divided by 70 (or "y" multiplied by 0.429).
27		The aggregate amount deducted under this
28		subparagraph in all taxable years for any one piece of
29		property may not exceed the amount of the bonus
30		depreciation deduction (30% of the adjusted basis of
31		the qualified property) taken on that property on the
32		taxpayer's federal income tax return under subsection
33		(k) of Section 168 of the Internal Revenue Code; and
34		(U) If the taxpayer reports a capital gain or loss

1		on the taxpayer's federal income tax return for the
2		taxable year based on a sale or transfer of property
3		for which the taxpayer was required in any taxable year
4		to make an addition modification under subparagraph
5		(E-10), then an amount equal to that addition
6		modification.
7		The taxpayer is allowed to take the deduction under
8		this subparagraph only once with respect to any one
9		piece of property; .
10		(V) The amount of: (i) any interest income (net of
11		the deductions allocable thereto) taken into account
12		for the taxable year with respect to a transaction with
13		a taxpayer that is required to make an addition
14		modification with respect to such transaction under
15		Section 203(a)(2)(D-17), 203(b)(2)(E-13),
16		203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
17		the amount of such addition modification and (ii) any
18		income from intangible property (net of the deductions
19		allocable thereto) taken into account for the taxable
20		year with respect to a transaction with a taxpayer that
21		is required to make an addition modification with
22		respect to such transaction under Section
23		203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or
24		203(d)(2)(D-8), but not to exceed the amount of such
25		addition modification;
26		(W) An amount equal to the interest income taken
27		into account for the taxable year (net of the
28		deductions allocable thereto) with respect to
29		transactions with a foreign person who would be a
30		member of the taxpayer's unitary business group but for
31		the fact that the foreign person's business activity
32		outside the United States is 80% or more of that
33		person's total business activity, but not to exceed the
34		addition modification required to be made for the same

1		taxable year under Section 203(b)(2)(E-13) for
2		interest paid, accrued, or incurred, directly or
3		indirectly, to the same foreign person; and
4		(X) An amount equal to the income from intangible
5		property taken into account for the taxable year (net
6		of the deductions allocable thereto) with respect to
7		transactions with 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, but not to exceed the
12		addition modification required to be made for the same
13		taxable year under Section 203(b)(2)(E-14) for
14		intangible expenses and costs paid, accrued, or
15		incurred, directly or indirectly, to the same foreign
16		person.
17		(3) Special rule. For purposes of paragraph (2) (A),
18		"gross income" in the case of a life insurance company, for
19		tax years ending on and after December 31, 1994, shall mean
20		the gross investment income for the taxable year.
21		(c) Trusts and estates.
22		(1) In general. In the case of a trust or estate, base
23		income means an amount equal to the taxpayer's taxable
24		income for the taxable year as modified by paragraph (2).
25		(2) Modifications. Subject to the provisions of
26		paragraph (3), the taxable income referred to in paragraph
27		(1) shall be modified by adding thereto the sum of the
28		following amounts:
29		(A) An amount equal to all amounts paid or accrued
30		to the taxpayer as interest or dividends during the
31		taxable year to the extent excluded from gross income
32		in the computation of taxable income;
33		(B) In the case of (i) an estate, $600; (ii) a

1		trust which, under its governing instrument, is
2		required to distribute all of its income currently,
3		$300; and (iii) any other trust, $100, but in each such
4		case, only to the extent such amount was deducted in
5		the computation of taxable income;
6		(C) An amount equal to the amount of tax imposed by
7		this Act to the extent deducted from gross income in
8		the computation of taxable income for the taxable year;
9		(D) The amount of any net operating loss deduction
10		taken in arriving at taxable income, other than a net
11		operating loss carried forward from a taxable year
12		ending prior to December 31, 1986;
13		(E) For taxable years in which a net operating loss
14		carryback or carryforward from a taxable year ending
15		prior to December 31, 1986 is an element of taxable
16		income under paragraph (1) of subsection (e) or
17		subparagraph (E) of paragraph (2) of subsection (e),
18		the amount by which addition modifications other than
19		those provided by this subparagraph (E) exceeded
20		subtraction modifications in such taxable year, with
21		the following limitations applied in the order that
22		they are listed:
23		(i) the addition modification relating to the
24		net operating loss carried back or forward to the
25		taxable year from any taxable year ending prior to
26		December 31, 1986 shall be reduced by the amount of
27		addition modification under this subparagraph (E)
28		which related to that net operating loss and which
29		was taken into account in calculating the base
30		income of an earlier taxable year, and
31		(ii) the addition modification relating to the
32		net operating loss carried back or forward to the
33		taxable year from any taxable year ending prior to
34		December 31, 1986 shall not exceed the amount of

1		such carryback or carryforward;
2		For taxable years in which there is a net operating
3		loss carryback or carryforward from more than one other
4		taxable year ending prior to December 31, 1986, the
5		addition modification provided in this subparagraph
6		(E) shall be the sum of the amounts computed
7		independently under the preceding provisions of this
8		subparagraph (E) for each such taxable year;
9		(F) For taxable years ending on or after January 1,
10		1989, an amount equal to the tax deducted pursuant to
11		Section 164 of the Internal Revenue Code if the trust
12		or estate is claiming the same tax for purposes of the
13		Illinois foreign tax credit under Section 601 of this
14		Act;
15		(G) An amount equal to the amount of the capital
16		gain deduction allowable under the Internal Revenue
17		Code, to the extent deducted from gross income in the
18		computation of taxable income;
19		(G-5) For taxable years ending after December 31,
20		1997, an amount equal to any eligible remediation costs
21		that the trust or estate deducted in computing adjusted
22		gross income and for which the trust or estate claims a
23		credit under subsection (l) of Section 201;
24		(G-10) For taxable years 2001 and thereafter, an
25		amount equal to the bonus depreciation deduction (30%
26		of the adjusted basis of the qualified property) taken
27		on the taxpayer's federal income tax return for the
28		taxable year under subsection (k) of Section 168 of the
29		Internal Revenue Code; and
30		(G-11) If the taxpayer reports a capital gain or
31		loss on the taxpayer's federal income tax return for
32		the taxable year based on a sale or transfer of
33		property for which the taxpayer was required in any
34		taxable year to make an addition modification under

1		subparagraph (G-10), then an amount equal to the
2		aggregate amount of the deductions taken in all taxable
3		years under subparagraph (R) with respect to that
4		property;
5		The taxpayer is required to make the addition
6		modification under this subparagraph only once with
7		respect to any one piece of property;
8		(G-12) For taxable years ending on or after
9		December 31, 2004, an amount equal to the amount
10		otherwise allowed as a deduction in computing base
11		income for interest paid, accrued, or incurred,
12		directly or indirectly, to a foreign person who would
13		be a member of the same unitary business group but for
14		the fact that the foreign person's business activity
15		outside the United States is 80% or more of the foreign
16		person's total business activity. The addition
17		modification required by this subparagraph shall be
18		reduced to the extent that dividends were included in
19		base income for the same taxable year and received by
20		the taxpayer or by a member of the taxpayer's unitary
21		business group (including amounts included in gross
22		income pursuant to Sections 951 through 964 of the
23		Internal Revenue Code and amounts included in gross
24		income under Section 78 of the Internal Revenue Code)
25		with respect to the stock of the same person to whom
26		the interest was paid, accrued, or incurred. This
27		subparagraph shall not apply to an item of interest
28		paid, accrued, or incurred, directly or indirectly, to
29		a foreign person that is subject in a foreign country
30		to a tax on or measured by net income with respect to
31		such interest;
32		(G-13) For taxable years ending on or after
33		December 31, 2004, an amount equal to the amount of
34		intangible expenses and costs otherwise allowed as a

1		deduction in computing base income, and that were paid,
2		accrued, or incurred, directly or indirectly, 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. The addition modification required by this
8		subparagraph shall be reduced to the extent that
9		dividends were included in base income for the same
10		taxable year and received by the taxpayer or by a
11		member of the taxpayer's unitary business group
12		(including amounts included in gross income pursuant
13		to Sections 951 through 964 of the Internal Revenue
14		Code and amounts included in gross income under Section
15		78 of the Internal Revenue Code) with respect to the
16		stock of the same person to whom the intangible
17		expenses and costs were directly or indirectly paid,
18		incurred, or accrued. The preceding sentence shall not
19		apply to the extent that the same dividends caused a
20		reduction to the addition modification required under
21		Section 203(c)(2)(G-12) of this Act. This subparagraph
22		shall not apply to any item of intangible expenses or
23		costs paid, accrued, or incurred, directly or
24		indirectly, from a transaction with a foreign person
25		who is subject in a foreign country to a tax on or
26		measured by net income with respect to such item. As
27		used in this subparagraph, the term "intangible
28		expenses and costs" includes: (1) expenses, losses,
29		and costs for or related to the direct or indirect
30		acquisition, use, maintenance or management,
31		ownership, sale, exchange, or any other disposition of
32		intangible property; (2) losses incurred, directly or
33		indirectly, from factoring transactions or discounting
34		transactions; (3) royalty, patent, technical, and

1		copyright fees; (4) licensing fees; and (5) other
2		similar expenses and costs. For purposes of this
3		subparagraph, "intangible property" includes patents,
4		patent applications, trade names, trademarks, service
5		marks, copyrights, mask works, trade secrets, and
6		similar types of intangible assets;
7		and by deducting from the total so obtained the sum of the
8		following amounts:
9		(H) An amount equal to all amounts included in such
10		total pursuant to the provisions of Sections 402(a),
11		402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
12		Internal Revenue Code or included in such total as
13		distributions under the provisions of any retirement
14		or disability plan for employees of any governmental
15		agency or unit, or retirement payments to retired
16		partners, which payments are excluded in computing net
17		earnings from self employment by Section 1402 of the
18		Internal Revenue Code and regulations adopted pursuant
19		thereto;
20		(I) The valuation limitation amount;
21		(J) An amount equal to the amount of any tax
22		imposed by this Act which was refunded to the taxpayer
23		and included in such total for the taxable year;
24		(K) An amount equal to all amounts included in
25		taxable income as modified by subparagraphs (A), (B),
26		(C), (D), (E), (F) and (G) which are exempt from
27		taxation by this State either by reason of its statutes
28		or Constitution or by reason of the Constitution,
29		treaties or statutes of the United States; provided
30		that, in the case of any statute of this State that
31		exempts income derived from bonds or other obligations
32		from the tax imposed under this Act, the amount
33		exempted shall be the interest net of bond premium
34		amortization;

1		(L) With the exception of any amounts subtracted
2		under subparagraph (K), an amount equal to the sum of
3		all amounts disallowed as deductions by (i) Sections
4		171(a) (2) and 265(a)(2) of the Internal Revenue Code,
5		as now or hereafter amended, and all amounts of
6		expenses allocable to interest and disallowed as
7		deductions by Section 265(1) of the Internal Revenue
8		Code of 1954, as now or hereafter amended; and (ii) for
9		taxable years ending on or after August 13, 1999,
10		Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
11		the Internal Revenue Code; the provisions of this
12		subparagraph are exempt from the provisions of Section
13		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 an Enterprise Zone or
17		zones created under the Illinois Enterprise Zone Act
18		and conducts substantially all of its operations in an
19		Enterprise Zone or Zones;
20		(N) An amount equal to any contribution made to a
21		job training project established pursuant to the Tax
22		Increment Allocation Redevelopment Act;
23		(O) An amount equal to those dividends included in
24		such total that were paid by a corporation that
25		conducts business operations in a federally designated
26		Foreign Trade Zone or Sub-Zone and that is designated a
27		High Impact Business located in Illinois; provided
28		that dividends eligible for the deduction provided in
29		subparagraph (M) of paragraph (2) of this subsection
30		shall not be eligible for the deduction provided under
31		this subparagraph (O);
32		(P) An amount equal to the amount of the deduction
33		used to compute the federal income tax credit for
34		restoration of substantial amounts held under claim of

1		right for the taxable year pursuant to Section 1341 of
2		the Internal Revenue Code of 1986;
3		(Q) For taxable year 1999 and thereafter, an amount
4		equal to the amount of any (i) distributions, to the
5		extent includible in gross income for federal income
6		tax purposes, made to the taxpayer because of his or
7		her status as a victim of persecution for racial or
8		religious reasons by Nazi Germany or any other Axis
9		regime or as an heir of the victim and (ii) items of
10		income, to the extent includible in gross income for
11		federal income tax purposes, attributable to, derived
12		from or in any way related to assets stolen from,
13		hidden from, or otherwise lost to a victim of
14		persecution for racial or religious reasons by Nazi
15		Germany or any other Axis regime immediately prior to,
16		during, and immediately after World War II, including,
17		but not limited to, interest on the proceeds receivable
18		as insurance under policies issued to a victim of
19		persecution for racial or religious reasons by Nazi
20		Germany or any other Axis regime by European insurance
21		companies immediately prior to and during World War II;
22		provided, however, this subtraction from federal
23		adjusted gross income does not apply to assets acquired
24		with such assets or with the proceeds from the sale of
25		such assets; provided, further, this paragraph shall
26		only apply to a taxpayer who was the first recipient of
27		such assets after their recovery and who is a victim of
28		persecution for racial or religious reasons by Nazi
29		Germany or any other Axis regime or as an heir of the
30		victim. The amount of and the eligibility for any
31		public assistance, benefit, or similar entitlement is
32		not affected by the inclusion of items (i) and (ii) of
33		this paragraph in gross income for federal income tax
34		purposes. This paragraph is exempt from the provisions

1		of Section 250;
2		(R) For taxable years 2001 and thereafter, for the
3		taxable year in which the bonus depreciation deduction
4		(30% of the adjusted basis of the qualified property)
5		is taken on the taxpayer's federal income tax return
6		under subsection (k) of Section 168 of the Internal
7		Revenue Code and for each applicable taxable year
8		thereafter, an amount equal to "x", where:
9		(1) "y" equals the amount of the depreciation
10		deduction taken for the taxable year on the
11		taxpayer's federal income tax return on property
12		for which the bonus depreciation deduction (30% of
13		the adjusted basis of the qualified property) 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; and
17		(2) "x" equals "y" multiplied by 30 and then
18		divided by 70 (or "y" multiplied by 0.429).
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 (30% of the adjusted basis of
23		the qualified property) taken on that property on the
24		taxpayer's federal income tax return under subsection
25		(k) of Section 168 of the Internal Revenue Code; and
26		(S) If the taxpayer reports a capital gain or loss
27		on the taxpayer's federal income tax return for the
28		taxable year based on a sale or transfer of property
29		for which the taxpayer was required in any taxable year
30		to make an addition modification under subparagraph
31		(G-10), then an amount equal to that addition
32		modification.
33		The taxpayer is allowed to take the deduction under
34		this subparagraph only once with respect to any one

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

1		the fact that the foreign person's business activity
2		outside the United States is 80% or more of that
3		person's total business activity, but not to exceed the
4		addition modification required to be made for the same
5		taxable year under Section 203(c)(2)(G-13) for
6		intangible expenses and costs paid, accrued, or
7		incurred, directly or indirectly, to the same foreign
8		person.
9		(3) Limitation. The amount of any modification
10		otherwise required under this subsection shall, under
11		regulations prescribed by the Department, be adjusted by
12		any amounts included therein which were properly paid,
13		credited, or required to be distributed, or permanently set
14		aside for charitable purposes pursuant to Internal Revenue
15		Code Section 642(c) during the taxable year.
16		(d) Partnerships.
17		(1) In general. In the case of a partnership, base
18		income means an amount equal to the taxpayer's taxable
19		income for the taxable year as modified by paragraph (2).
20		(2) Modifications. The taxable income referred to in
21		paragraph (1) shall be modified by adding thereto the sum
22		of the following amounts:
23		(A) An amount equal to all amounts paid or accrued
24		to the taxpayer as interest or dividends during the
25		taxable year to the extent excluded from gross income
26		in the computation of taxable income;
27		(B) An amount equal to the amount of tax imposed by
28		this Act to the extent deducted from gross income for
29		the taxable year;
30		(C) The amount of deductions allowed to the
31		partnership pursuant to Section 707 (c) of the Internal
32		Revenue Code in calculating its taxable income;
33		(D) An amount equal to the amount of the capital

1		gain deduction allowable under the Internal Revenue
2		Code, to the extent deducted from gross income in the
3		computation of taxable income;
4		(D-5) For taxable years 2001 and thereafter, an
5		amount equal to the bonus depreciation deduction (30%
6		of the adjusted basis of the qualified property) 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; and
10		(D-6) If the taxpayer reports a capital gain or
11		loss on the taxpayer's federal income tax return for
12		the taxable year based on a sale or transfer of
13		property for which the taxpayer was required in any
14		taxable year to make an addition modification under
15		subparagraph (D-5), then an amount equal to the
16		aggregate amount of the deductions taken in all taxable
17		years under subparagraph (O) with respect to that
18		property;
19		The taxpayer is required to make the addition
20		modification under this subparagraph only once with
21		respect to any one piece of property;
22		(D-7) For taxable years ending on or after December
23		31, 2004, an amount equal to the amount otherwise
24		allowed as a deduction in computing base income for
25		interest paid, accrued, or incurred, directly or
26		indirectly, to a foreign person who would be a member
27		of the same unitary business group but for the fact the
28		foreign person's business activity outside the United
29		States is 80% or more of the foreign person's total
30		business activity. The addition modification required
31		by this subparagraph shall be reduced to the extent
32		that dividends were included in base income for the
33		same taxable year and received by the taxpayer or by a
34		member of the taxpayer's unitary business group

1		(including amounts included in gross income pursuant
2		to Sections 951 through 964 of the Internal Revenue
3		Code and amounts included in gross income under Section
4		78 of the Internal Revenue Code) with respect to the
5		stock of the same person to whom the interest was paid,
6		accrued, or incurred. This subparagraph shall not
7		apply to an item of interest paid, accrued, or
8		incurred, directly or indirectly, to a foreign person
9		that is subject in a foreign country to a tax on or
10		measured by net income with respect to such interest;
11		and
12		(D-8) For taxable years ending on or after December
13		31, 2004, an amount equal to the amount of intangible
14		expenses and costs otherwise allowed as a deduction in
15		computing base income, and that were paid, accrued, or
16		incurred, directly or indirectly, to a foreign person
17		who would be a member of the same unitary business
18		group but for the fact that the foreign person's
19		business activity outside the United States is 80% or
20		more of that person's total business activity. The
21		addition modification required by this subparagraph
22		shall be reduced to the extent that dividends were
23		included in base income 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
27		through 964 of the Internal Revenue Code and amounts
28		included in gross income under Section 78 of the
29		Internal Revenue Code) with respect to the stock of the
30		same person to whom the intangible expenses and costs
31		were directly or indirectly paid, incurred or accrued.
32		The preceding sentence shall not apply to the extent
33		that the same dividends caused a reduction to the
34		addition modification required under Section

1		203(d)(2)(D-7) of this Act. This subparagraph shall
2		not apply to any item of intangible expenses or costs
3		paid, accrued, or incurred, directly or indirectly,
4		from a transaction with a foreign person that is
5		subject in a foreign country to a tax on or measured by
6		net income with respect to such item. 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		and by deducting from the total so obtained the following
22		amounts:
23		(E) The valuation limitation amount;
24		(F) An amount equal to the amount of any tax
25		imposed by this Act which was refunded to the taxpayer
26		and included in such total for the taxable year;
27		(G) An amount equal to all amounts included in
28		taxable income as modified by subparagraphs (A), (B),
29		(C) and (D) which are exempt from taxation by this
30		State either by reason of its statutes or Constitution
31		or by reason of the Constitution, treaties or statutes
32		of the United States; provided that, in the case of any
33		statute of this State that exempts income derived from
34		bonds or other obligations from the tax imposed under

1		this Act, the amount exempted shall be the interest net
2		of bond premium amortization;
3		(H) Any income of the partnership which
4		constitutes personal service income as defined in
5		Section 1348 (b) (1) of the Internal Revenue Code (as
6		in effect December 31, 1981) or a reasonable allowance
7		for compensation paid or accrued for services rendered
8		by partners to the partnership, whichever is greater;
9		(I) An amount equal to all amounts of income
10		distributable to an entity subject to the Personal
11		Property Tax Replacement Income Tax imposed by
12		subsections (c) and (d) of Section 201 of this Act
13		including amounts distributable to organizations
14		exempt from federal income tax by reason of Section
15		501(a) of the Internal Revenue Code;
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 of
20		1954, as now or hereafter amended, and all amounts of
21		expenses allocable to interest and disallowed as
22		deductions by Section 265(1) of the Internal Revenue
23		Code, as now or hereafter amended; and (ii) for taxable
24		years ending on or after August 13, 1999, Sections
25		171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
26		Internal Revenue Code; the provisions of this
27		subparagraph are exempt from the provisions of Section
28		250;
29		(K) An amount equal to those dividends included in
30		such total which were paid by a corporation which
31		conducts business operations in an Enterprise Zone or
32		zones created under the Illinois Enterprise Zone Act,
33		enacted by the 82nd General Assembly, and conducts
34		substantially all of its operations in an Enterprise

1		Zone or Zones;
2		(L) An amount equal to any contribution made to a
3		job training project established pursuant to the Real
4		Property Tax Increment Allocation Redevelopment Act;
5		(M) An amount equal to those dividends included in
6		such total that were paid by a corporation that
7		conducts business operations in a federally designated
8		Foreign Trade Zone or Sub-Zone and that is designated a
9		High Impact Business located in Illinois; provided
10		that dividends eligible for the deduction provided in
11		subparagraph (K) of paragraph (2) of this subsection
12		shall not be eligible for the deduction provided under
13		this subparagraph (M);
14		(N) An amount equal to the amount of the deduction
15		used to compute the federal income tax credit for
16		restoration of substantial amounts held under claim of
17		right for the taxable year pursuant to Section 1341 of
18		the Internal Revenue Code of 1986;
19		(O) For taxable years 2001 and thereafter, for the
20		taxable year in which the bonus depreciation deduction
21		(30% of the adjusted basis of the qualified property)
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
27		deduction taken for the taxable year on the
28		taxpayer's federal income tax return on property
29		for which the bonus depreciation deduction (30% of
30		the adjusted basis of the qualified property) was
31		taken in any year under subsection (k) of Section
32		168 of the Internal Revenue Code, but not including
33		the bonus depreciation deduction; and
34		(2) "x" equals "y" multiplied by 30 and then

1		divided by 70 (or "y" multiplied by 0.429).
2		The aggregate amount deducted under this
3		subparagraph in all taxable years for any one piece of
4		property may not exceed the amount of the bonus
5		depreciation deduction (30% of the adjusted basis of
6		the qualified property) taken on that property on the
7		taxpayer's federal income tax return under subsection
8		(k) of Section 168 of the Internal Revenue Code; and
9		(P) If the taxpayer reports a capital gain or loss
10		on the taxpayer's federal income tax return for the
11		taxable year based on a sale or transfer of property
12		for which the taxpayer was required in any taxable year
13		to make an addition modification under subparagraph
14		(D-5), then an amount equal to that addition
15		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		(Q) The amount of (i) any interest income (net of
20		the deductions allocable thereto) taken into account
21		for the taxable year with respect to a transaction with
22		a taxpayer that is required to make an addition
23		modification with respect to such transaction under
24		Section 203(a)(2)(D-17), 203(b)(2)(E-13),
25		203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
26		the amount of such addition modification and (ii) any
27		income from intangible property (net of the deductions
28		allocable thereto) taken into account for the taxable
29		year with respect to a transaction with a taxpayer that
30		is required to make an addition modification with
31		respect to such transaction under Section
32		203(a)(2)(D-18), 203(b)(2)(E-14), 203(c)(2)(G-13), or
33		203(d)(2)(D-8), but not to exceed the amount of such
34		addition modification;

1		(R) An amount equal to the interest income taken
2		into account for the taxable year (net of the
3		deductions allocable thereto) with respect to
4		transactions with a foreign person who would be a
5		member of the taxpayer's unitary business group but for
6		the fact that the foreign person's business activity
7		outside the United States is 80% or more of that
8		person's total business activity, but not to exceed the
9		addition modification required to be made for the same
10		taxable year under Section 203(d)(2)(D-7) for interest
11		paid, accrued, or incurred, directly or indirectly, to
12		the same foreign person; and
13		(S) An amount equal to the income from intangible
14		property taken into account for the taxable year (net
15		of the deductions allocable thereto) with respect to
16		transactions with a foreign person who would be a
17		member of the taxpayer's unitary business group but for
18		the fact that the foreign person's business activity
19		outside the United States is 80% or more of that
20		person's total business activity, but not to exceed the
21		addition modification required to be made for the same
22		taxable year under Section 203(d)(2)(D-8) for
23		intangible expenses and costs paid, accrued, or
24		incurred, directly or indirectly, to the same foreign
25		person.
26		(e) Gross income; adjusted gross income; taxable income.
27		(1) In general. Subject to the provisions of paragraph
28		(2) and subsection (b) (3), for purposes of this Section
29		and Section 803(e), a taxpayer's gross income, adjusted
30		gross income, or taxable income for the taxable year shall
31		mean the amount of gross income, adjusted gross income or
32		taxable income properly reportable for federal income tax
33		purposes for the taxable year under the provisions of the

1		Internal Revenue Code. Taxable income may be less than
2		zero. However, for taxable years ending on or after
3		December 31, 1986, net operating loss carryforwards from
4		taxable years ending prior to December 31, 1986, may not
5		exceed the sum of federal taxable income for the taxable
6		year before net operating loss deduction, plus the excess
7		of addition modifications over subtraction modifications
8		for the taxable year. For taxable years ending prior to
9		December 31, 1986, taxable income may never be an amount in
10		excess of the net operating loss for the taxable year as
11		defined in subsections (c) and (d) of Section 172 of the
12		Internal Revenue Code, provided that when taxable income of
13		a corporation (other than a Subchapter S corporation),
14		trust, or estate is less than zero and addition
15		modifications, other than those provided by subparagraph
16		(E) of paragraph (2) of subsection (b) for corporations or
17		subparagraph (E) of paragraph (2) of subsection (c) for
18		trusts and estates, exceed subtraction modifications, an
19		addition modification must be made under those
20		subparagraphs for any other taxable year to which the
21		taxable income less than zero (net operating loss) is
22		applied under Section 172 of the Internal Revenue Code or
23		under subparagraph (E) of paragraph (2) of this subsection
24		(e) applied in conjunction with Section 172 of the Internal
25		Revenue Code.
26		(2) Special rule. For purposes of paragraph (1) of this
27		subsection, the taxable income properly reportable for
28		federal income tax purposes shall mean:
29		(A) Certain life insurance companies. In the case
30		of a life insurance company subject to the tax imposed
31		by Section 801 of the Internal Revenue Code, life
32		insurance company taxable income, plus the amount of
33		distribution from pre-1984 policyholder surplus
34		accounts as calculated under Section 815a of the

1		Internal Revenue Code;
2		(B) Certain other insurance companies. In the case
3		of mutual insurance companies subject to the tax
4		imposed by Section 831 of the Internal Revenue Code,
5		insurance company taxable income;
6		(C) Regulated investment companies. In the case of
7		a regulated investment company subject to the tax
8		imposed by Section 852 of the Internal Revenue Code,
9		investment company taxable income;
10		(D) Real estate investment trusts. In the case of a
11		real estate investment trust subject to the tax imposed
12		by Section 857 of the Internal Revenue Code, real
13		estate investment trust taxable income;
14		(E) Consolidated corporations. In the case of a
15		corporation which is a member of an affiliated group of
16		corporations filing a consolidated income tax return
17		for the taxable year for federal income tax purposes,
18		taxable income determined as if such corporation had
19		filed a separate return for federal income tax purposes
20		for the taxable year and each preceding taxable year
21		for which it was a member of an affiliated group. For
22		purposes of this subparagraph, the taxpayer's separate
23		taxable income shall be determined as if the election
24		provided by Section 243(b) (2) of the Internal Revenue
25		Code had been in effect for all such years;
26		(F) Cooperatives. In the case of a cooperative
27		corporation or association, the taxable income of such
28		organization determined in accordance with the
29		provisions of Section 1381 through 1388 of the Internal
30		Revenue Code;
31		(G) Subchapter S corporations. In the case of: (i)
32		a Subchapter S corporation for which there is in effect
33		an election for the taxable year under Section 1362 of
34		the Internal Revenue Code, the taxable income of such

1		corporation determined in accordance with Section
2		1363(b) of the Internal Revenue Code, except that
3		taxable income shall take into account those items
4		which are required by Section 1363(b)(1) of the
5		Internal Revenue Code to be separately stated; and (ii)
6		a Subchapter S corporation for which there is in effect
7		a federal election to opt out of the provisions of the
8		Subchapter S Revision Act of 1982 and have applied
9		instead the prior federal Subchapter S rules as in
10		effect on July 1, 1982, the taxable income of such
11		corporation determined in accordance with the federal
12		Subchapter S rules as in effect on July 1, 1982; and
13		(H) Partnerships. In the case of a partnership,
14		taxable income determined in accordance with Section
15		703 of the Internal Revenue Code, except that taxable
16		income shall take into account those items which are
17		required by Section 703(a)(1) to be separately stated
18		but which would be taken into account by an individual
19		in calculating his taxable income.
20		(f) Valuation limitation amount.
21		(1) In general. The valuation limitation amount
22		referred to in subsections (a) (2) (G), (c) (2) (I) and
23		(d)(2) (E) is an amount equal to:
24		(A) The sum of the pre-August 1, 1969 appreciation
25		amounts (to the extent consisting of gain reportable
26		under the provisions of Section 1245 or 1250 of the
27		Internal Revenue Code) for all property in respect of
28		which such gain was reported for the taxable year; plus
29		(B) The lesser of (i) the sum of the pre-August 1,
30		1969 appreciation amounts (to the extent consisting of
31		capital gain) for all property in respect of which such
32		gain was reported for federal income tax purposes for
33		the taxable year, or (ii) the net capital gain for the

1		taxable year, reduced in either case by any amount of
2		such gain included in the amount determined under
3		subsection (a) (2) (F) or (c) (2) (H).
4		(2) Pre-August 1, 1969 appreciation amount.
5		(A) If the fair market value of property referred
6		to in paragraph (1) was readily ascertainable on August
7		1, 1969, the pre-August 1, 1969 appreciation amount for
8		such property is the lesser of (i) the excess of such
9		fair market value over the taxpayer's basis (for
10		determining gain) for such property on that date
11		(determined under the Internal Revenue Code as in
12		effect on that date), or (ii) the total gain realized
13		and reportable for federal income tax purposes in
14		respect of the sale, exchange or other disposition of
15		such property.
16		(B) If the fair market value of property referred
17		to in paragraph (1) was not readily ascertainable on
18		August 1, 1969, the pre-August 1, 1969 appreciation
19		amount for such property is that amount which bears the
20		same ratio to the total gain reported in respect of the
21		property for federal income tax purposes for the
22		taxable year, as the number of full calendar months in
23		that part of the taxpayer's holding period for the
24		property ending July 31, 1969 bears to the number of
25		full calendar months in the taxpayer's entire holding
26		period for the property.
27		(C) The Department shall prescribe such
28		regulations as may be necessary to carry out the
29		purposes of this paragraph.
30		(g) Double deductions. Unless specifically provided
31		otherwise, nothing in this Section shall permit the same item
32		to be deducted more than once.

1		(h) Legislative intention. Except as expressly provided by
2		this Section there shall be no modifications or limitations on
3		the amounts of income, gain, loss or deduction taken into
4		account in determining gross income, adjusted gross income or
5		taxable income for federal income tax purposes for the taxable
6		year, or in the amount of such items entering into the
7		computation of base income and net income under this Act for
8		such taxable year, whether in respect of property values as of
9		August 1, 1969 or otherwise.
10		(Source: P.A. 91-192, eff. 7-20-99; 91-205, eff. 7-20-99;
11		91-357, eff. 7-29-99; 91-541, eff. 8-13-99; 91-676, eff.
12		12-23-99; 91-845, eff. 6-22-00; 91-913, eff. 1-1-01; 92-16,
13		eff. 6-28-01; 92-244, eff. 8-3-01; 92-439, eff. 8-17-01;
14		92-603, eff. 6-28-02; 92-626, eff. 7-11-02; 92-651, eff.
15		7-11-02; 92-846, eff. 8-23-02; revised 10-15-03.)
16		(35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
17		Sec. 1501. Definitions.
18		(a) In general. When used in this Act, where not otherwise
19		distinctly expressed or manifestly incompatible with the
20		intent thereof:
21		(1) Business income. The term "business income" means
22		income arising from transactions and activity in the
23		regular course of the taxpayer's trade or business, net of
24		the deductions allocable thereto, and includes income from
25		tangible and intangible property if the acquisition,
26		management, and disposition of the property constitute
27		integral parts of the taxpayer's regular trade or business
28		operations. Such term does not include compensation or the
29		deductions allocable thereto. For each taxable year
30		beginning on or after January 1, 2003, a taxpayer may elect
31		to treat all income other than compensation as business
32		income. This election shall be made in accordance with
33		rules adopted by the Department and, once made, shall be

1		irrevocable.
2		(2) Commercial domicile. The term "commercial
3		domicile" means the principal place from which the trade or
4		business of the taxpayer is directed or managed.
5		(3) Compensation. The term "compensation" means wages,
6		salaries, commissions and any other form of remuneration
7		paid to employees for personal services.
8		(4) Corporation. The term "corporation" includes
9		associations, joint-stock companies, insurance companies
10		and cooperatives. Any entity, including a limited
11		liability company formed under the Illinois Limited
12		Liability Company Act, shall be treated as a corporation if
13		it is so classified for federal income tax purposes.
14		(5) Department. The term "Department" means the
15		Department of Revenue of this State.
16		(6) Director. The term "Director" means the Director of
17		Revenue of this State.
18		(7) Fiduciary. The term "fiduciary" means a guardian,
19		trustee, executor, administrator, receiver, or any person
20		acting in any fiduciary capacity for any person.
21		(8) Financial organization.
22		(A) The term "financial organization" means any
23		bank, bank holding company, trust company, savings
24		bank, industrial bank, land bank, safe deposit
25		company, private banker, savings and loan association,
26		building and loan association, credit union, currency
27		exchange, cooperative bank, small loan company, sales
28		finance company, investment company, or any person
29		which is owned by a bank or bank holding company. For
30		the purpose of this Section a "person" will include
31		only those persons which a bank holding company may
32		acquire and hold an interest in, directly or
33		indirectly, under the provisions of the Bank Holding
34		Company Act of 1956 (12 U.S.C. 1841, et seq.), except

1		where interests in any person must be disposed of
2		within certain required time limits under the Bank
3		Holding Company Act of 1956.
4		(B) For purposes of subparagraph (A) of this
5		paragraph, the term "bank" includes (i) any entity that
6		is regulated by the Comptroller of the Currency under
7		the National Bank Act, or by the Federal Reserve Board,
8		or by the Federal Deposit Insurance Corporation and
9		(ii) any federally or State chartered bank operating as
10		a credit card bank.
11		(C) For purposes of subparagraph (A) of this
12		paragraph, the term "sales finance company" has the
13		meaning provided in the following item (i) or (ii):
14		(i) A person primarily engaged in one or more
15		of the following businesses: the business of
16		purchasing customer receivables, the business of
17		making loans upon the security of customer
18		receivables, the business of making loans for the
19		express purpose of funding purchases of tangible
20		personal property or services by the borrower, or
21		the business of finance leasing. For purposes of
22		this item (i), "customer receivable" means:
23		(a) a retail installment contract or
24		retail charge agreement within the meaning of
25		the Sales Finance Agency Act, the Retail
26		Installment Sales Act, or the Motor Vehicle
27		Retail Installment Sales Act;
28		(b) an installment, charge, credit, or
29		similar contract or agreement arising from the
30		sale of tangible personal property or services
31		in a transaction involving a deferred payment
32		price payable in one or more installments
33		subsequent to the sale; or
34		(c) the outstanding balance of a contract

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

1		originated by all members of the affiliated
2		group. If the average outstanding balances of
3		the loans made by a corporation to members of
4		its affiliated group exceed the limitation
5		amount, the interest income of that
6		corporation from qualifying loans shall be
7		equal to its interest income from loans to
8		members of its affiliated groups times a
9		fraction equal to the limitation amount
10		divided by the average outstanding balances of
11		the loans made by that corporation to members
12		of its affiliated group;
13		(c) the total of all shareholder's equity
14		(including, without limitation, paid-in
15		capital on common and preferred stock and
16		retained earnings) of the corporation plus the
17		total of all of its loans, advances, and other
18		obligations payable or owed to members of its
19		affiliated group may not exceed 20% of the
20		total assets of the corporation at any time
21		during the tax year; and
22		(d) more than 50% of all interest-bearing
23		obligations of the affiliated group payable to
24		persons outside the group determined in
25		accordance with generally accepted accounting
26		principles must be obligations of the
27		corporation.
28		This amendatory Act of the 91st General Assembly is
29		declaratory of existing law.
30		(D) Subparagraphs (B) and (C) of this paragraph are
31		declaratory of existing law and apply retroactively,
32		for all tax years beginning on or before December 31,
33		1996, to all original returns, to all amended returns
34		filed no later than 30 days after the effective date of

1		this amendatory Act of 1996, and to all notices issued
2		on or before the effective date of this amendatory Act
3		of 1996 under subsection (a) of Section 903, subsection
4		(a) of Section 904, subsection (e) of Section 909, or
5		Section 912. A taxpayer that is a "financial
6		organization" that engages in any transaction with an
7		affiliate shall be a "financial organization" for all
8		purposes of this Act.
9		(E) For all tax years beginning on or before
10		December 31, 1996, a taxpayer that falls within the
11		definition of a "financial organization" under
12		subparagraphs (B) or (C) of this paragraph, but who
13		does not fall within the definition of a "financial
14		organization" under the Proposed Regulations issued by
15		the Department of Revenue on July 19, 1996, may
16		irrevocably elect to apply the Proposed Regulations
17		for all of those years as though the Proposed
18		Regulations had been lawfully promulgated, adopted,
19		and in effect for all of those years. For purposes of
20		applying subparagraphs (B) or (C) of this paragraph to
21		all of those years, the election allowed by this
22		subparagraph applies only to the taxpayer making the
23		election and to those members of the taxpayer's unitary
24		business group who are ordinarily required to
25		apportion business income under the same subsection of
26		Section 304 of this Act as the taxpayer making the
27		election. No election allowed by this subparagraph
28		shall be made under a claim filed under subsection (d)
29		of Section 909 more than 30 days after the effective
30		date of this amendatory Act of 1996.
31		(F) Finance Leases. For purposes of this
32		subsection, a finance lease shall be treated as a loan
33		or other extension of credit, rather than as a lease,
34		regardless of how the transaction is characterized for

1		any other purpose, including the purposes of any
2		regulatory agency to which the lessor is subject. A
3		finance lease is any transaction in the form of a lease
4		in which the lessee is treated as the owner of the
5		leased asset entitled to any deduction for
6		depreciation allowed under Section 167 of the Internal
7		Revenue Code.
8		(9) Fiscal year. The term "fiscal year" means an
9		accounting period of 12 months ending on the last day of
10		any month other than December.
11		(10) Includes and including. The terms "includes" and
12		"including" when used in a definition contained in this Act
13		shall not be deemed to exclude other things otherwise
14		within the meaning of the term defined.
15		(11) Internal Revenue Code. The term "Internal Revenue
16		Code" means the United States Internal Revenue Code of 1954
17		or any successor law or laws relating to federal income
18		taxes in effect for the taxable year.
19		(12) Mathematical error. The term "mathematical error"
20		includes the following types of errors, omissions, or
21		defects in a return filed by a taxpayer which prevents
22		acceptance of the return as filed for processing:
23		(A) arithmetic errors or incorrect computations on
24		the return or supporting schedules;
25		(B) entries on the wrong lines;
26		(C) omission of required supporting forms or
27		schedules or the omission of the information in whole
28		or in part called for thereon; and
29		(D) an attempt to claim, exclude, deduct, or
30		improperly report, in a manner directly contrary to the
31		provisions of the Act and regulations thereunder any
32		item of income, exemption, deduction, or credit.
33		(13) Nonbusiness income. The term "nonbusiness income"
34		means all income other than business income or

1		compensation.
2		(14) Nonresident. The term "nonresident" means a
3		person who is not a resident.
4		(15) Paid, incurred and accrued. The terms "paid",
5		"incurred" and "accrued" shall be construed according to
6		the method of accounting upon the basis of which the
7		person's base income is computed under this Act.
8		(16) Partnership and partner. The term "partnership"
9		includes a syndicate, group, pool, joint venture or other
10		unincorporated organization, through or by means of which
11		any business, financial operation, or venture is carried
12		on, and which is not, within the meaning of this Act, a
13		trust or estate or a corporation; and the term "partner"
14		includes a member in such syndicate, group, pool, joint
15		venture or organization.
16		The term "partnership" includes any entity, including
17		a limited liability company formed under the Illinois
18		Limited Liability Company Act, classified as a partnership
19		for federal income tax purposes.
20		The term "partnership" does not include a syndicate,
21		group, pool, joint venture, or other unincorporated
22		organization established for the sole purpose of playing
23		the Illinois State Lottery.
24		(17) Part-year resident. The term "part-year resident"
25		means an individual who became a resident during the
26		taxable year or ceased to be a resident during the taxable
27		year. Under Section 1501(a)(20)(A)(i) residence commences
28		with presence in this State for other than a temporary or
29		transitory purpose and ceases with absence from this State
30		for other than a temporary or transitory purpose. Under
31		Section 1501(a)(20)(A)(ii) residence commences with the
32		establishment of domicile in this State and ceases with the
33		establishment of domicile in another State.
34		(18) Person. The term "person" shall be construed to

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

1		303.
2		(22) State. The term "state" when applied to a
3		jurisdiction other than this State means any state of the
4		United States, the District of Columbia, the Commonwealth
5		of Puerto Rico, any Territory or Possession of the United
6		States, and any foreign country, or any political
7		subdivision of any of the foregoing. For purposes of the
8		foreign tax credit under Section 601, the term "state"
9		means any state of the United States, the District of
10		Columbia, the Commonwealth of Puerto Rico, and any
11		territory or possession of the United States, or any
12		political subdivision of any of the foregoing, effective
13		for tax years ending on or after December 31, 1989.
14		(23) Taxable year. The term "taxable year" means the
15		calendar year, or the fiscal year ending during such
16		calendar year, upon the basis of which the base income is
17		computed under this Act. "Taxable year" means, in the case
18		of a return made for a fractional part of a year under the
19		provisions of this Act, the period for which such return is
20		made.
21		(24) Taxpayer. The term "taxpayer" means any person
22		subject to the tax imposed by this Act.
23		(25) International banking facility. The term
24		international banking facility shall have the same meaning
25		as is set forth in the Illinois Banking Act or as is set
26		forth in the laws of the United States or regulations of
27		the Board of Governors of the Federal Reserve System.
28		(26) Income Tax Return Preparer.
29		(A) The term "income tax return preparer" means any
30		person who prepares for compensation, or who employs
31		one or more persons to prepare for compensation, any
32		return of tax imposed by this Act or any claim for
33		refund of tax imposed by this Act. The preparation of a
34		substantial portion of a return or claim for refund

1		shall be treated as the preparation of that return or
2		claim for refund.
3		(B) A person is not an income tax return preparer
4		if all he or she does is
5		(i) furnish typing, reproducing, or other
6		mechanical assistance;
7		(ii) prepare returns or claims for refunds for
8		the employer by whom he or she is regularly and
9		continuously employed;
10		(iii) prepare as a fiduciary returns or claims
11		for refunds for any person; or
12		(iv) prepare claims for refunds for a taxpayer
13		in response to any notice of deficiency issued to
14		that taxpayer or in response to any waiver of
15		restriction after the commencement of an audit of
16		that taxpayer or of another taxpayer if a
17		determination in the audit of the other taxpayer
18		directly or indirectly affects the tax liability
19		of the taxpayer whose claims he or she is
20		preparing.
21		(27) Unitary business group. The term "unitary
22		business group" means a group of persons related through
23		common ownership whose business activities are integrated
24		with, dependent upon and contribute to each other. The
25		group will not include those members who, in taxable years
26		ending on or after December 31, 2004, are foreign persons
27		and whose business activity outside the United States is
28		80% or more of any such member's total business activity;
29		for purposes of this paragraph and clause (a)(3)(B)(ii) of
30		Section 304, business activity within the United States
31		shall be measured by means of the factors ordinarily
32		applicable under subsections (a), (b), (c), (d), or (h) of
33		Section 304 except that, in the case of members ordinarily
34		required to apportion business income by means of the 3

1		factor formula of property, payroll and sales specified in
2		subsection (a) of Section 304, including the formula as
3		weighted in subsection (h) of Section 304, such members
4		shall not use the sales factor in the computation and the
5		results of the property and payroll factor computations of
6		subsection (a) of Section 304 shall be divided by 2 (by one
7		if either the property or payroll factor has a denominator
8		of zero). The computation required by the preceding
9		sentence shall, in each case, involve the division of the
10		member's property, payroll, or revenue miles in the United
11		States, insurance premiums on property or risk in the
12		United States, or financial organization business income
13		from sources within the United States, as the case may be,
14		by the respective worldwide figures for such items. Common
15		ownership in the case of corporations is the direct or
16		indirect control or ownership of more than 50% of the
17		outstanding voting stock of the persons carrying on unitary
18		business activity. Unitary business activity can
19		ordinarily be illustrated where the activities of the
20		members are: (1) in the same general line (such as
21		manufacturing, wholesaling, retailing of tangible personal
22		property, insurance, transportation or finance); or (2)
23		are steps in a vertically structured enterprise or process
24		(such as the steps involved in the production of natural
25		resources, which might include exploration, mining,
26		refining, and marketing); and, in either instance, the
27		members are functionally integrated through the exercise
28		of strong centralized management (where, for example,
29		authority over such matters as purchasing, financing, tax
30		compliance, product line, personnel, marketing and capital
31		investment is not left to each member). For taxable years
32		ending before December 31, 2004, a In no event, however,
33		will any unitary business group will not include members
34		which are ordinarily required to apportion business income

1		under different subsections of Section 304 except that for
2		tax years ending on or after December 31, 1987 and before
3		December 31, 2004 this prohibition shall not apply to a
4		unitary business group composed of one or more taxpayers
5		all of which apportion business income pursuant to
6		subsection (b) of Section 304, or all of which apportion
7		business income pursuant to subsection (d) of Section 304,
8		and a holding company of such single-factor taxpayers (see
9		definition of "financial organization" for rule regarding
10		holding companies of financial organizations). If a
11		unitary business group would, but for the preceding
12		sentence, include members that are ordinarily required to
13		apportion business income under different subsections of
14		Section 304, then for each subsection of Section 304 for
15		which there are two or more members, there shall be a
16		separate unitary business group composed of such members.
17		For purposes of the preceding two sentences, a member is
18		"ordinarily required to apportion business income" under a
19		particular subsection of Section 304 if it would be
20		required to use the apportionment method prescribed by such
21		subsection except for the fact that it derives business
22		income solely from Illinois. Pursuant to rules adopted by
23		the Department, the members of a unitary business group (as
24		defined in this Section) may jointly elect to include in
25		the group for any taxable year ending on or after December
26		31, 2004, a passive income affiliate, as defined in
27		paragraph (29) of this subsection. Where the election is
28		made to include a passive income affiliate in the unitary
29		business group, for purposes of computing the affiliate's
30		base income under Section 203 of this Act, the affiliate's
31		federal taxable income shall be deemed to consist solely of
32		its passive income, as defined in subparagraph (B) of
33		paragraph (29) of this subection, net of related expenses.
34		As used in this paragraph, for taxable years ending on or

1		after December 31, 2004, the phrase "United States" means
2		the 50 states, the District of Columbia, any territory or
3		possession of the United States, and any area over which
4		the United States has asserted jurisdiction or claimed
5		exclusive rights with respect to the exploration for or
6		exploitation of natural resources. This definition
7		includes, but is not limited to, Puerto Rico and the outer
8		continental shelf and any artificial islands and
9		structures therein.
10		If the unitary business group members' accounting
11		periods differ, the common parent's accounting period or,
12		if there is no common parent, the accounting period of the
13		member that is expected to have, on a recurring basis, the
14		greatest Illinois income tax liability must be used to
15		determine whether to use the apportionment method provided
16		in subsection (a) or subsection (h) of Section 304. The
17		prohibition against membership in a unitary business group
18		for taxpayers ordinarily required to apportion income
19		under different subsections of Section 304 does not apply
20		to taxpayers required to apportion income under subsection
21		(a) and subsection (h) of Section 304. The provisions of
22		this amendatory Act of 1998 apply to tax years ending on or
23		after December 31, 1998.
24		(28) Subchapter S corporation. The term "Subchapter S
25		corporation" means a corporation for which there is in
26		effect an election under Section 1362 of the Internal
27		Revenue Code, or for which there is a federal election to
28		opt out of the provisions of the Subchapter S Revision Act
29		of 1982 and have applied instead the prior federal
30		Subchapter S rules as in effect on July 1, 1982.
31		(29) Passive income affiliate.
32		(A) In general. The term "passive income
33		affiliate" means any person if (i) the person would be
34		a member of a unitary business group under paragraph

1		(27) of this subsection except for the fact that the
2		person is a foreign person and 80% or more of the
3		person's business activity is outside the United
4		States (as determined under paragraph (27)) and (ii) at
5		least 50% of the person's total gross income (as
6		defined in this Section) for the taxable year consists
7		of "passive income" as set forth in subparagraph (B) of
8		this paragraph.
9		(B) Passive income. For purpose of subparagraph
10		(A), "passive income" includes the following items
11		(whether or not business income):
12		(i) dividends, interest, annuities, and
13		royalties (except that "royalties" does not
14		include "active business computer software
15		royalties", as defined in Section 543(d) of the
16		Internal Revenue Code);
17		(ii) gains from the sale or exchange of stock
18		or securities;
19		(iii) gains from futures transactions in any
20		commodity on or subject to the rules of a board of
21		trade or commodity exchange (except that, pursuant
22		to rules adopted by the Department, gains by a
23		producer, processor, merchant, or handler of the
24		commodity that arise out of bona fide hedging
25		transactions reasonably necessary to the conduct
26		of its business in the manner in which the business
27		is customarily and usually conducted by others
28		shall not be included);
29		(iv) amounts included in income under part I of
30		subchapter J of the Internal Revenue Code and gains
31		from the sale of other disposition of any interest
32		in an estate or trust;
33		(v) amounts received as compensation (however
34		designated and from whomever received) for the use

1		of, or the right to use, property of the person in
2		any case where the party entitled to the use of the
3		property (whether the right is obtained directly
4		from the person or by means of a sublease or other
5		arrangement) would be a member of the person's
6		unitary business group under paragraph (27) of
7		this subsection but for the fact that the person's
8		business activity outside the United States is 80%
9		or more of total business activity as determined
10		under paragraph (27);
11		(vi) rents, unless constituting 50% or more of
12		the gross income. The term "rents" as used in this
13		subparagraph means compensation, however
14		designated, for the use of, or right to use,
15		property but does not include amounts described in
16		subparagraph (v); and
17		(vii) pursuant to rules adopted by the
18		Department, amounts similar to the items set forth
19		in (i) through (vi) above.
20		(C) Gross income and special rules.
21		(i) Gross income. The term "gross income"
22		means the gross income of the person computed under
23		Section 61 of the Internal Revenue Code (without
24		regard to the provisions of subchapter N of the
25		Internal Revenue Code) in any case as if such
26		person were a domestic corporation, partnership,
27		or trust, as applicable. Gross income determined
28		with respect to transactions described in
29		subparagraphs (ii) and (iii) of subparagraph (B)
30		of this paragraph shall include only the excess of
31		gains over losses from such transactions.
32		(ii) 80/20 dividends. Dividends received by a
33		person, directly or indirectly, with respect to
34		the stock of a corporation that is not a passive

1		income affiliate (as defined in this paragraph)
2		and that would be a member of that person's unitary
3		business group under paragraph (27) of this
4		subsection but for the fact that the corporation or
5		person conducts 80% or more of their business
6		activities outside the United States (as
7		determined under paragraph (27) of this
8		subsection) shall not be considered passive income
9		under subparagraph (B) of this paragraph.
10		(iii) Exclusion of banks. A person that is
11		organized and doing business under the banking or
12		credit laws of a state or foreign country shall not
13		be considered a passive income affiliate if it is
14		established to the satisfaction of the Director
15		that the person is not formed or availed of for the
16		purpose of avoiding federal income tax or Illinois
17		income tax. If the Director is satisfied that the
18		person is not so formed or availed of, the Director
19		shall issue to the person annually or at other
20		periodic intervals a certification that the person
21		is not a passive income affiliate.
22		(30) Foreign person. The term "foreign person" means
23		any person who is a nonresident alien individual and any
24		nonindividual other than a person created or organized in
25		the United States or under the law of the United States or
26		of any State.
27		(b) Other definitions.
28		(1) Words denoting number, gender, and so forth, when
29		used in this Act, where not otherwise distinctly expressed
30		or manifestly incompatible with the intent thereof:
31		(A) Words importing the singular include and apply
32		to several persons, parties or things;
33		(B) Words importing the plural include the

1		singular; and
2		(C) Words importing the masculine gender include
3		the feminine as well.
4		(2) "Company" or "association" as including successors
5		and assigns. The word "company" or "association", when used
6		in reference to a corporation, shall be deemed to embrace
7		the words "successors and assigns of such company or
8		association", and in like manner as if these last-named
9		words, or words of similar import, were expressed.
10		(3) Other terms. Any term used in any Section of this
11		Act with respect to the application of, or in connection
12		with, the provisions of any other Section of this Act shall
13		have the same meaning as in such other Section.
14		(Source: P.A. 91-535, eff. 1-1-00; 91-913, eff. 1-1-01; 92-846,
15		eff. 8-23-02.)".